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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 10, 1999
SOVEREIGN BANCORP, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 0-16533 23-2453088
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Ident. No.)
2000 Market Street, Philadelphia Pennsylvania 19103
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215)557-4630
N/A
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(Former name or former address, if changed since last report.)
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Item 5. Other Events.
Sovereign Bancorp, Inc. (the "Company") is filing this Current Report
to provide certain information concerning the Company that may be of importance
to security holders.
On November 15, 1999, the Company completed its previously announced
public offerings of $300 million of Common Stock, $700 million of Senior Notes
and $250 million of Units of Trust Preferred Securities and Warrants. The
underwriters exercised their 15% over-allotment option in connection with the
Company's sale of Common Stock and Units of Trust Preferred Securities and
Warrants.
Copies of the forepart of the prospectus supplements forming a portion
of the Company's registration statement on Form S-3 filed under the Securities
Act of 1933, as amended and used in connection with the Company's offers and
sales of Common Stock, Senior Notes and Units of Trust Preferred Securities and
Warrants, are incorporated herein by reference as Exhibits 99.1, 99.2 and 99.3,
respectively. In connection with the sale of the Senior Notes and the Units of
Trust Preferred Securities and Warrants, the Company entered into various
agreements attached hereto as Exhibits 10.1, 10.2, 10.3, 10.4, 10.5, 10.6 and
10.7, respectively, and are incorporated herein by reference.
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Item 7. Financial Statements and Exhibits.
(a) Exhibits.
The following exhibits are filed herewith:
4.1 Warrant Agreement relating to Units of Trust Preferred
Securities, dated as of November 15, 1999, between Sovereign
Bancorp, Inc. and The Bank of New York.
4.2 Unit Agreement relating to Units of Trust Preferred Securities,
dated as of November 15, 1999 among Sovereign Bancorp, Inc.,
Sovereign Capital Trust II and The Bank of New York.
4.3 Amended and Restated Declaration of Trust relating to Units of
Trust Preferred Securities, dated November 15, 1999 among
Sovereign Bancorp, Inc., named individuals as the initial
Administrative Trustees, The Bank of New York and the Bank of New
York (Delaware).
4.4 First Supplemental Indenture, dated as of November 15, 1999
between Sovereign Bancorp, Inc. and Harris Trust and Savings Bank
relating to 7.5% Junior Subordinated Debentures.
4.5 Pledge and Escrow Agreement, dated as of November 15, 1999
between Sovereign Bancorp, Inc. and Harris Trust and Savings Bank
relating to the Senior Notes.
4.6 First Supplemental Indenture, dates as of November 15, 1999 to
the Senior Indenture dated as of February 1, 1994 among
Sovereign Bancorp, Inc. and Harris Trust and Savings Bank
relating to the Senior Notes.
4.7 Guarantee Agreement, dated as of November 15, 1999 between
Sovereign Bancorp, Inc. and The Bank of New York relating to
Units of Trust Preferred Securities.
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99.1 Pages S-1 through S-122 of the Final Prospectus Supplement dated
November 8, 1999 of Sovereign Bancorp, Inc. regarding shares of
Common Stock (incorporated herein by reference to Sovereign's
Final Prospectus Supplement filed with the SEC on November 10,
1999 under Rule 424(b)(2) with respect to shares of Common
Stock).
99.2 Pages S-1 through S-157 of the Final Prospectus Supplement dated
November 9, 1999 of Sovereign Bancorp, Inc. regarding Senior
Notes (incorporated herein by reference to Sovereign's Final
Prospectus Supplement filed with the SEC on November 12, 1999
under Rule 424(b)(2) with respect to Senior Notes).
99.3 Pages S-1 through S-180 of the Final Prospectus Supplement dated
November 8, 1999 of Sovereign Bancorp, Inc. regarding Units of
Trust Preferred Securities and Warrants (incorporated herein by
reference to Sovereign's Final Prospectus Supplement filed with
the SEC on November 8, 1999 under Rule 424(b)(2) with respect to
Units).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SOVEREIGN BANCORP, INC.
Dated: November 15, 1999
/s/ Lawrence M. Thompson, Jr.
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Lawrence M. Thompson, Jr.
Chief Operating Officer
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EXHIBIT INDEX
Exhibit
Number Description
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4.1 Warrant Agreement relating to Units of Trust Preferred Securities,
dated as of November 15, 1999, between Sovereign Bancorp, Inc. and The
Bank of New York.
4.2 Unit Agreement relating to Units of Trust Preferred Securities, dated
as of November 15, 1999 among Sovereign Bancorp, Inc., Sovereign
Capital Trust II and The Bank of New York.
4.3 Amended and Restated Declaration of Trust relating to Units of Trust
Preferred Securities, dated November 15, 1999 among Sovereign
Bancorp, named individuals as the initial Administrative Trustees, The
Bank of New York and the Bank of New York (Delaware).
4.4 First Supplemental Indenture, dated as of November 15, 1999 between
Sovereign Bancorp, Inc. and Harris Trust and Savings Bank relating to
7.5% Junior Subordinated Debentures.
4.5 Pledge and Escrow Agreement, dated as of November 15, 1999 between
Sovereign Bancorp, Inc. and Harris Trust and Savings Bank relating to
the Senior Notes.
4.6 First Supplemental Indenture, dates as of November 15, 1999 to the
Senior Indenture dated as of February 1, 1994 among Sovereign Bancorp,
Inc. and Harris Trust and Savings Bank relating to the Senior Notes.
4.7 Guarantee Agreement, dated as of November 15, 1999 between Sovereign
Bancorp, Inc. and The Bank of New York relating to Units of Trust
Preferred Securities.
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99.1 Pages S-1 through S-122 of the Final Prospectus Supplement dated
November 8, 1999 of Sovereign Bancorp, Inc. regarding shares of Common
Stock (incorporated herein by reference to Sovereign's Final Prospectus
Supplement filed with the SEC on November 10, 1999 under Rule 424(b)(2)
with respect to shares of Common Stock).
99.2 Pages S-1 through S-157 of the Final Prospectus Supplement dated
November 9, 1999 of Sovereign Bancorp, Inc. regarding Senior Notes
(incorporated herein by reference to Sovereign's Final Prospectus
Supplement filed with the SEC on November 12, 1999 under Rule 424(b)(2)
with respect to Senior Notes).
99.3 Pages S-1 through S-180 of the Final Prospectus Supplement dated
November 8, 1999 of Sovereign Bancorp, Inc. regarding Units of Trust
Preferred Securities and Warrants (incorporated herein by reference to
Sovereign's Final Prospectus Supplement filed with the SEC on November
8, 1999 under Rule 424(b)(2) with respect to Units).
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SOVEREIGN BANCORP, INC.
and
THE BANK OF NEW YORK,
Warrant Agent
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WARRANT AGREEMENT
Dated as of November 15, 1999
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS
Section 1.01 Defined Terms ................................................ 2
Section 1.02 Interpretive Provisions ...................................... 7
ARTICLE II
ISSUANCE OF WARRANTS; EXECUTION AND DELIVERY OF WARRANT CERTIFICATES
Section 2.01 Issuance of Warrants ......................................... 9
Section 2.02 Form, Denomination and Execution of Warrant Certificates ..... 9
Section 2.03 Issuance and Delivery of Warrant Certificates ................ 10
Section 2.04 Temporary Warrant Certificates ............................... 11
Section 2.05 Lost, Stolen, Destroyed or Mutilated Warrant Certificates .... 11
Section 2.06 Payment of Certain Taxes ..................................... 11
Section 2.07 Holders of Warrants; Rights of Holders ....................... 12
ARTICLE III
DURATION AND EXERCISE OF WARRANTS
Section 3.01 Duration of Warrants ........................................ 13
Section 3.02. Exercise of Warrants ........................................ 13
Section 3.03. Redemption of Warrants ...................................... 14
Section 3.04. Redemption Procedures ....................................... 15
ARTICLE IV
ANTI-DILUTION PROVISIONS
Section 4.01. Warrant Adjustments .......................................... 16
Section 4.02 Merger, Consolidation, Sale, Transfer or Conveyance;
Change of Control ............................................ 23
Section 4.03 Other Events ................................................. 25
Section 4.04 Notice of Adjustment ......................................... 26
Section 4.05 Notice of Certain Transactions. .............................. 26
Section 4.06 Adjustment to Warrant Certificate. ........................... 27
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Page
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ARTICLE V
EXCHANGE AND TRANSFER OF WARRANTS
Section 5.01 Warrant Register; Exchange and Transfer of Warrants .......... 28
Section 5.02 Treatment of Holders of Warrant Certificates ................. 30
Section 5.03 Cancellation of Warrant Certificates ......................... 30
ARTICLE VI
CONCERNING THE WARRANT AGENT
Section 6.01 Warrant Agent ................................................ 31
Section 6.02 Conditions of Warrant Agent's Obligations .................... 31
Section 6.03 Resignation and Removal; Appointment of Successor ............ 33
Section 6.04 Compliance With Applicable Laws .............................. 34
Section 6.05 Office ....................................................... 34
ARTICLE VII
COVENANTS
Section 7.01 Financial Statements and Reports of the Company .............. 35
Section 7.02 Notices and Demands to the Company and Warrant Agent ......... 35
Section 7.03 Governmental Approvals ....................................... 35
Section 7.04 Satisfaction of Exercise Conditions .......................... 35
Section 7.05 Reservation of Shares ........................................ 35
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Supplements and Amendments ................................... 37
Section 8.02 Addresses for Notices ........................................ 37
Section 8.03 Governing Law ................................................ 38
Section 8.04 Persons Having Rights Under Warrant Agreement ................ 38
Section 8.05 Headings ..................................................... 38
Section 8.06 Counterparts ................................................. 38
Section 8.07 Inspection of Agreement ...................................... 38
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THIS WARRANT AGREEMENT, dated as of November 15, 1999, between
Sovereign Bancorp, Inc., a Pennsylvania corporation (the "Company"), and The
Bank of New York, a New York banking corporation, as warrant agent (the "Warrant
Agent").
RECITALS:
WHEREAS, the Company proposes to issue warrants (the
"Warrants") representing the right to purchase, under certain circumstances
described herein, Common Stock (as defined herein); and
WHEREAS, the Company desires that the Warrant Agent act on
behalf of the Company in connection with the issuance of the Warrants as
provided herein and the Warrant Agent is willing to so act; and
WHEREAS, the Company has duly authorized the execution and
delivery of this Warrant Agreement to provide for the issuance of Warrants to be
exercisable at such times and for such prices, and to have such other
provisions, as shall be hereinafter provided; and
WHEREAS, the Company and the Trust are entering into a unit
agreement (the "Unit Agreement") with, among others, The Bank of New York, as
unit agent (the "Unit Agent"), whereby the Units, which will each consist of a
Preferred Security and a Warrant, will be issued;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms. Whenever used in this Warrant Agreement,
the following words and phrases, unless the context otherwise requires, shall
have the meanings specified in this Article. Capitalized terms used herein but
not otherwise defined shall have the meanings ascribed thereto in the Unit
Agreement or the Declaration, as the case may be.
"Applicable Procedures" shall mean, with respect to any transfer or
exchange of or for the beneficial interests in the Global Certificate, the rules
and procedures of the Depositary that apply to such transfer or exchange.
"Board of Directors" shall mean the board of directors of the Company.
"Board Resolution" shall mean a resolution duly adopted by the Board of
Directors, a copy of which, certified by the Secretary or an Assistant Secretary
of the Company to be in full force and effect on the date of such certification,
shall have been delivered to the Warrant Agent.
"Book-Entry Warrant" shall mean a Warrant evidenced by a Global
Certificate.
"Business Day" shall mean any day other than a Saturday or a Sunday
that is not a day on which banking institutions in the Borough of Manhattan, the
City of New York, Wyomissing, Pennsylvania or Wilmington, Delaware are
authorized or required by law, regulation or executive order to close.
"Calculation Agent" shall have the meaning ascribed thereto in Section
6.02(l).
"Cash Payment" shall mean, with respect to any Warrant, the payment by
the Holder thereof of the Exercise Price of such Warrant in lawful money of the
United States of America, in cash or by certified or official bank check to the
Warrant Agent, or by wire transfer to the account indicated to such Holder by
the Warrant Agent, as designated by the Company by notice to the Warrant Agent.
"Cede" shall mean Cede & Co., the nominee of DTC.
"Change of Control" shall have the meaning ascribed thereto in the Unit
Agreement.
"Change of Control Notice Date" shall have the meaning ascribed thereto
in Section 4.02(b).
"Change of Control Redemption" shall have the meaning ascribed thereto
in Section 4.02(b).
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"Change of Control Redemption Date" shall have the meaning ascribed
thereto in Section 4.02(b).
"Change of Control Redemption Right" shall have the meaning ascribed
thereto in Section 4.02(b).
"Closing Price" of any security on any date of determination shall
mean:
(i) the closing sale price (or, if no closing sale price is
reported, the last reported sale price) of such security on the New
York Stock Exchange on such date;
(ii) if such security is not listed for trading on the New
York Stock Exchange on any such date, the closing sale price as
reported in the composite transactions for the principal U.S.
securities exchange on which such security is so listed;
(iii) if such security is not so listed on a U.S. national or
regional securities exchange, the closing sale price as reported by the
NASDAQ National Market;
(iv) if such security is not so reported, the last quoted bid
price for such security in the over-the-counter market as reported by
the National Quotation Bureau or similar organization; or
(v) if such bid price is not available, the average of the
mid-point of the last bid and ask prices of such security on such date
from at least three nationally recognized independent investment
banking firms retained for such purpose by the Company.
"Common Stock" shall mean the common stock of the Company.
"Conditions to a Remarketing" shall mean the conditions to a
Remarketing specified in the Declaration and the Remarketing Agreement. A Failed
Remarketing shall not be considered an inability to satisfy the Conditions to a
Remarketing.
"Date of Determination" shall mean, with respect to the Exercise Price
of a Warrant (i) in connection with a Redemption of such Warrant or an exercise
of such Warrant in lieu of Redemption pursuant to Section 3.03, the end of the
day on the day preceding the Remarketing Date, and (ii) otherwise, the date of
exercise (or, in the case of a determination of the Warrant Value pursuant to
Section 4.02(b), the date of redemption) of such Warrant.
"Declaration" shall mean the amended and restated declaration of trust
of the Trust.
"Definitive Warrant" shall mean a Warrant Certificate in definitive,
registered form.
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"Discount" shall mean $17.50.
"DTC" shall mean The Depository Trust Company, and its successors.
"Ex Date" shall mean:
(i) with respect to any issuance or distribution, the first
date on which the Common Stock trades regular way on the relevant
exchange or in the relevant market from which the Closing Price was
obtained without the right to receive such issuance or distribution;
(ii) with respect to any subdivision or combination of shares
of Common Stock, the first date on which the Common Stock trades
regular way on such exchange or in such market after the time at which
such subdivision or combination becomes effective, and
(iii) with respect to any tender or exchange offer, the first
date on which the Common Stock trades regular way on such exchange or
in such market after the Tender Expiration Time of such offer.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exercise Amount" shall mean 5.3355; provided, that such amount may be
subject to adjustment as provided in Article IV.
"Exercise Conditions" shall mean, with respect to any Warrant on any
date on which such Warrant is to be exercised by the Holder thereof, that (i)
(a) the Company shall have a registration statement in effect under the
Securities Act covering the issuance and sale of the related Exercise Amount of
Common Stock upon exercise of such Warrant, or (b) the sale of such shares of
Common Stock shall be exempt from the registration requirements of the
Securities Act, (ii) such shares of Common Stock shall have been registered,
qualified or are deemed to be exempt under the securities laws of the state of
residence of the exercising Holder, and (iii) a then-current prospectus relating
to the Common Stock shall be delivered to such exercising Holder.
"Exercise Price" shall mean, with respect to a Warrant as of any date,
$32.50, plus the accrual of Discount calculated from November 15, 1999 to the
Date of Determination, at the all-in yield of 11.74% per annum on a quarterly
bond equivalent yield basis using a 360-day year of twelve 30-day months until
such sum equals $50 on November 15, 2029.
"Expiration Date" shall mean, with respect to any Warrant, the earlier
of 5:00 p.m., New York time, on (i) November 20, 2029 and (ii) the Redemption
Date.
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"Failed Remarketing" shall mean the inability of the Remarketing Agent
by 4:00 p.m., New York time, on the Remarketing Date, to remarket, pursuant to
the Remarketing Agreement, all of the Preferred Securities deemed tendered for
purchase.
"Fair Market Value" shall mean the amount which a willing buyer would
pay a willing seller in an arm's length transaction.
"Global Certificate" shall have the meaning set forth in Section
2.02(a).
"Holder" shall mean, with respect to a Warrant Certificate at any date,
(i) if such Warrant Certificate is not held pursuant to the Unit Agreement, the
person or persons in whose name such Warrant Certificate shall then be
registered as set forth in the Warrant Register maintained by the Warrant Agent
pursuant to Section 5.01(a) for such purpose or (ii) if such Warrant is held
pursuant to the Unit Agreement, the person or persons in whose name the related
Unit is registered as set forth in the Unit Register.
"Market Capitalization" shall mean, with respect to the Company as of
any date, the product of (i) the aggregate Market Price of all shares of Common
Stock outstanding (excluding treasury shares) as of such date and (ii) the
number of shares of Common Stock outstanding as of such date.
"Market Price" shall mean the average of the daily Closing Prices per
share of Common Stock for the ten consecutive Trading Days immediately prior to
the date in question; provided, however, that if:
(i) the Ex Date for any event (other than the issuance or
distribution requiring such computation) that requires an adjustment to
the Exercise Amount pursuant to Section 4.01 (a), (b), (c), (d), (e) or
(f) occurs during such ten consecutive Trading Days, the Closing Price
for each Trading Day prior to the Ex Date for such other event shall be
adjusted by multiplying such Closing Price by the same fraction by
which the Exercise Amount is so required to be adjusted as a result of
such other event;
(ii) the Ex Date for any event (other than the issuance or
distribution requiring such computation) that requires an adjustment to
the Exercise Amount pursuant to Section 4.01 (a), (b), (c), (d), (e) or
(f) occurs on or after the Ex Date for the issuance or distribution
requiring such computation and prior to the day in question, the
Closing Price for each Trading Day on and after the Ex Date for such
other event shall be adjusted by multiplying such Closing Price by the
reciprocal of the fraction by which the Exercise Amount is so required
to be adjusted as a result of such other event; and
(iii) the Ex Date for the issuance or distribution requiring
such computation is prior to the day in question, after taking into
account any adjustment required pursuant to clause (i) or (ii) above,
the Closing Price for each Trading Day on or after such Ex Date shall
be adjusted by adding thereto the amount of any cash and the Fair
Market Value (as determined by the Board of Directors in a manner
consistent with any determination of such value for purposes of Section
4.01 (d) or (f), whose determination shall be conclusive and set forth
in a Board Resolution) of the evidences of indebtedness, shares of
capital stock or assets being distributed applicable to one share of
Common Stock as of the close of business on the day before such Ex
Date.
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For purposes of any computation under Section 4.01 (f), the Market
Price of the Common Stock on any date shall be deemed to be the average of the
daily Closing Prices per share of Common Stock for such day and the next two
succeeding Trading Days; provided, however, that if the Ex Date for any event
(other than the tender offer requiring such computation) that requires an
adjustment to the Exercise Amount pursuant to Section 4.01 (a), (b), (c), (d),
(e) or (f) occurs on or after the Tender Expiration Time for the tender or
exchange offer requiring such computation and prior to the day in question, the
Closing Price for each Trading Day on and after the Ex Date for such other event
shall be adjusted by multiplying such Closing Price by the reciprocal of the
fraction by which the Exercise Amount is so required to be adjusted as a result
of such other event.
"Non-Electing Share" shall have the meaning ascribed thereto in Section
4.02(a).
"Participant" shall have the meaning set forth in Section 5.01(e).
"Purchased Shares" shall have the meaning set forth in Section 4.01(f).
"Record Date" shall mean, with respect to any dividend, distribution or
other transaction or event in which the holders of Common Stock have the right
to receive any cash, securities or other property or in which the Common Stock
(or other applicable security) is exchanged for or converted into any
combination of cash, securities or other property, the date fixed for
determination of stockholders entitled to receive such cash, securities or other
property (whether such date is fixed by the Board of Directors or by statute,
contract or otherwise).
"Redemption" shall mean a redemption of the Warrants pursuant to
Sections 3.03 and 3.04.
"Redemption Conditions" shall mean, with respect to any proposed
Redemption, that (i) as of the date on which the Company elects to redeem the
Warrants and on the Redemption Date, the Exercise Conditions shall be satisfied
(provided, however, that clause (iii) of the definition of "Exercise Conditions"
need only be satisfied on the Redemption Date), (ii) on the Redemption Date, the
Company shall have complied with all other applicable laws and regulations, if
any (including, without limitation, the Securities Act), necessary to permit the
redemption of the Warrants, and (iii) in the case of a Remarketing upon a
Trading Remarketing Event or a Legal Cause Remarketing Event, the Company shall
have satisfied the applicable conditions to a Remarketing set forth in the
Declaration and the Remarketing Agreement.
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"Redemption Date" shall mean the Remarketing Settlement Date for the
contemporaneous Remarketing of Preferred Securities.
"Reference Period" shall have the meaning set forth in Section 4.01(d).
"Remarketing Payment" shall mean, with respect to any Warrant that is
held pursuant to the Unit Agreement, the application of the proceeds of the
Remarketing of the related Preferred Security in an amount equal to the Exercise
Price of such Warrant in accordance with the Remarketing Agreement and the Unit
Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Successful Remarketing" shall mean, with respect to any Redemption
Date, the contemporaneous settlement scheduled to occur on such Redemption Date
of the Remarketing that commenced on the Remarketing Date.
"Tender Expiration Time" shall have the meaning set forth in Section
4.01(f).
"Trading Day" shall mean:
(i) if the applicable security is listed or admitted for
trading on the New York Stock Exchange or another national security
exchange, a day on which the New York Stock Exchange or such other
national security exchange is open for business;
(ii) if the applicable security is quoted on the NASDAQ
National Market, a day on which trades may be made thereon; or
(iii) if the applicable security is not so listed, admitted
for trading or quoted, any day other than a Saturday or Sunday or a day
on which banking institutions in the State of New York are authorized
or obligated by law or executive order to close.
"Trigger Event" shall have the meaning ascribed thereto in Section
4.01(d).
"Trust" shall mean Sovereign Capital Trust II.
"Unit Agent" shall have the meaning set forth in the Recitals.
"Unit Agreement" shall have the meaning set forth in the Recitals.
"Unit Register" shall mean the register to be maintained by the Unit
Agent pursuant to the Unit Agreement.
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"Warrant" shall have the meaning set forth in the Recitals.
"Warrant Certificate" shall mean each registered certificate
(including, without limitation, the Global Certificate) issued by the Company
pursuant to this Warrant Agreement evidencing a Warrant, substantially in the
form of Exhibit A hereto.
"Warrant Register" shall have the meaning set forth in Section 5.01(a).
"Warrant Value" shall mean, with respect to any Warrant as of any date,
$50 less the Exercise Price.
Section 1.02 Interpretive Provisions. With respect to all terms in this
Warrant Agreement, the singular includes the plural and the plural the singular;
words importing any gender include the other gender; references to "writing"
include printing, typing, lithography, and other means of reproducing words in a
visible form; references to agreements and other contractual instruments include
all subsequent amendments thereto or changes therein entered into in accordance
with their respective terms and not prohibited by this Indenture; references to
"persons" include their permitted successors and assigns; and the term
"including" means "including without limitation." All references herein to
Articles, Sections, Subsections and Exhibits are references to Articles,
Sections, Subsections and Exhibits contained in or attached to this Warrant
Agreement unless otherwise specified, and each such Exhibit is part of the terms
hereof.
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ARTICLE II
ISSUANCE OF WARRANTS AND EXECUTION AND DELIVERY
OF WARRANT CERTIFICATES
Section 2.01 Issuance of Warrants.
The Company hereby issues the Warrants described herein, each of which
evidences the right of the Holder thereof, under the terms and conditions
provided for herein and in the related Warrant Certificate, to purchase the
Exercise Amount (subject to adjustment as provided in Article IV) of fully paid
and non-assessable shares of Common Stock at the Exercise Price. Each Warrant
shall be, after issuance thereof, separately transferable from the Preferred
Security which, together with such Warrant, comprises the related Unit.
Section 2.02 Form, Denomination and Execution of Warrant Certificates.
(a) Upon the execution and delivery of this Agreement, the Warrants
will be issued as a component of a Unit, in definitive, fully registered form
(the "Global Unit Certificate"), substantially in the form set forth in Exhibit
A of the Unit Agreement. In addition, the Warrants shall initially be issued in
the forms of one or more global Warrants in definitive, fully registered form
(the "Global Certificate"), substantially in the form set forth in Exhibit A,
duly executed by the Company and countersigned by the Warrant Agent as
hereinafter provided. Each Warrant Certificate, upon issuance, shall be dated
the date hereof and may have such letters, numbers or other identifying marks
and such legends or endorsements printed, lithographed or engraved thereon as
are not inconsistent with the provisions of this Warrant Agreement, or as may be
required to comply with any applicable law, rule or regulation, or to conform to
usage, as the officer of the Company executing the same may approve (such
officer's execution thereof to be conclusive evidence of such approval), and
shall bear the legends required by paragraph (e) below. Each Warrant Certificate
shall evidence one or more Warrants. Upon the execution and delivery of this
Agreement, the Global Certificate shall represent no outstanding Warrants, as
specified in the "Schedule of Exchanges of Interests of Global Certificate"
attached thereto or otherwise in accordance with the Applicable Procedures, and
the Global Unit Certificate shall represent 5,000,000 outstanding Warrants, as
specified in the "Schedule of Exchanges of Interests of Global Certificate"
attached thereto or otherwise in accordance with the Applicable Procedures.
Thereafter, each of the Global Certificate and the Global Unit Certificate shall
represent such outstanding Warrants as shall be specified in the "Schedule of
Exchanges and Interests in Global Certificate" attached to such certificate or
otherwise in accordance with the Applicable Procedures.
(b) The Warrant Certificates shall be signed in the name and on behalf
of the Company by its Chairman of the Board of Directors, its Vice Chairman of
the Board of Directors, its President, any Executive Vice President, any Senior
Vice President or its Treasurer, and by its Secretary or an Assistant Secretary.
Such signatures may be manual or facsimile signatures of the present or any
future holder of any such office and may be imprinted or otherwise reproduced on
the Warrant Certificates.
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(c) No Warrant Certificate shall be valid for any purpose, and no
Warrant evidenced thereby shall be deemed issued or exercisable, until such
Warrant Certificate has been countersigned by the manual or facsimile 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.
(d) In case any officer of the Company who shall have signed any
Warrant Certificate either manually or by facsimile signature shall cease to be
such officer before the Warrant Certificate so signed shall have been
countersigned and delivered by the Warrant Agent, such Warrant Certificate
nevertheless may be countersigned and delivered as though the person who signed
such Warrant Certificate had not ceased to be such officer of the Company; and
any Warrant Certificate may be signed on behalf of the Company by such person
as, at the actual date of the execution of such Warrant Certificate, shall be a
proper officer of the Company, although at the date of the execution of this
Warrant Agreement such person was not such an officer.
(e) Each Global Certificate deposited with DTC shall bear the following
legend:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY 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 IS
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.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
WARRANT AGREEMENT REFERRED TO HEREIN.
Section 2.03 Issuance and Delivery of Warrant Certificates. Upon the
execution and delivery of this Agreement, the Company shall deliver one or more
Global Certificates executed by the Company to the Warrant Agent for
countersignature. Except as provided in the following sentence, the Warrant
Agent shall thereupon countersign such Warrant Certificates and deliver the same
to DTC. Subsequent to the original issuance, the Warrant Agent shall countersign
new Warrant Certificates only if such Warrant Certificates are issued in
exchange or substitution for one or more previously countersigned Warrant
Certificates or in connection with their transfer, as hereinafter provided.
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Section 2.04 Temporary Warrant Certificates. Pending the preparation of
Definitive Warrants, the Company may execute, and upon the order of the Company
the Warrant Agent shall countersign and deliver, temporary Warrant Certificates
that are printed, lithographed, typewritten, mimeographed or otherwise produced,
substantially of the tenor of the Definitive Warrants in lieu of which they are
issued and with such appropriate insertions, omissions, substitutions and other
variations as the officer executing such Warrant Certificates may determine, as
evidenced by such officer's execution of such Warrant Certificates.
If temporary Warrant Certificates are issued, the Company will cause
Definitive Warrants to be prepared without unreasonable delay. After the
preparation of Definitive Warrants, the temporary Warrant Certificates shall be
exchangeable for Definitive Warrants upon surrender of the temporary Warrant
Certificates at the corporate trust office of the Warrant Agent, without charge
to the Holder thereof. Upon surrender for cancellation of any one or more
temporary Warrant Certificates, the Company shall execute and the Warrant Agent
shall countersign and deliver in exchange therefor Definitive Warrants
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 Warrant Agreement as Definitive Warrants.
Section 2.05 Lost, Stolen, Destroyed or Mutilated Warrant Certificates.
Upon receipt by the Company and the Warrant Agent of evidence reasonably
satisfactory to them of the ownership of and the loss, theft, destruction or
mutilation of any Warrant Certificate and of indemnity (other than in connection
with any mutilated Warrant Certificates surrendered to the Warrant Agent for
cancellation) reasonably satisfactory to them, the Company shall execute, and
Warrant Agent shall countersign and deliver, in exchange for or in lieu of each
lost, stolen, destroyed or mutilated Warrant Certificate, a new Warrant
Certificate evidencing a like number of Warrants of the same title. Upon the
issuance of a new Warrant Certificate under this Section, the Company may
require the payment of a sum sufficient to cover any stamp or other tax or other
governmental charge that may be imposed in connection therewith 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 a contractual obligation of the Company, whether or not such
lost, stolen or destroyed Warrant Certificate shall be at any time enforceable
by anyone, and shall be entitled to the benefits of this Warrant Agreement
equally and proportionately with any and all other Warrant rights and remedies
with respect to the replacement of lost, stolen, destroyed or mutilated Warrant
Certificates.
Section 2.06 Payment of Certain Taxes . The Company shall pay all stamp
and other duties, if any, to which this Warrant Agreement or the original
issuance of the Warrants or Warrant Certificates may be subject under the laws
of the United States of America or any state or locality.
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Section 2.07 Holders of Warrants; Rights of Holders.
(a) At any time that a Warrant is held pursuant to the Unit Agreement,
the Company shall, or shall cause the Unit Registrar to, make available to the
Warrant Agent at all times such information as to holders of Units as may be
necessary to keep the Warrant Register up to date.
(b) No Warrant or Warrant Certificate shall entitle the Holder thereof
to any of the rights, preferences and privileges of a holder of Common Stock,
including without limitation any dividend, voting, redemption, conversion,
exchange or liquidation rights.
(c) Any Holder may, without the consent of the Warrant Agent, enforce,
and may institute and maintain, any suit, action or proceeding against the
Company suitable to enforce, or otherwise in respect of, its right to exercise
its Warrants as provided in the related Warrant Certificates and this Warrant
Agreement.
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ARTICLE III
DURATION AND EXERCISE OF WARRANTS
Section 3.01 Duration of Warrants. Each Warrant shall be exercisable
on any date prior to the Expiration Date by the Holder thereof at the Exercise
Price for such date, provided that the Exercise Conditions are met as of such
date. Each Warrant not exercised at or before 5:00 p.m., New York time, on its
Expiration Date shall become void, and all rights of the Holder of such Warrant
under the related Warrant Certificate and under this Agreement shall cease.
Section 3.02. Exercise of Warrants.
(a) Subject to Section 3.03 and Article IV, the Holder of a Warrant
shall have the right, prior to the Expiration Date, at such Holder's option, to
exercise such Warrant and purchase the Exercise Amount of Common Stock at the
Exercise Price. A Warrant may be exercised by giving notice to the Warrant Agent
no later than 5:00 p.m. New York time on the Business Day preceding the proposed
date of exercise of such Warrant and completing the form of election to purchase
set forth on the reverse side of such Warrant Certificate, and delivering the
same, together with the related Warrant Certificate (in the case of Definitive
Warrants), to the Warrant Agent no later than 5:00 p.m., New York time, on the
date of such exercise, together with a Cash Payment (unless, in accordance with
Section 3.03(c), a Remarketing Payment is to be made). In no event may a Holder
satisfy its obligation to pay the Exercise Price by tendering Preferred
Securities.
(b) On the date of exercise of a Warrant, the Company shall issue, and
the Warrant Agent shall deliver, to or upon the order of the Holder of such
Warrant, the Exercise Amount of Common Stock to which such Holder is entitled,
registered in such name or names as may be directed by such Holder. The date on
which such Warrant Certificate and payment are received by the Warrant Agent as
aforesaid shall be deemed to be the date on which the related Warrant is
exercised and the related Common Stock is issued. Notwithstanding anything to
the contrary in this paragraph (b), (i) no fractional shares of Common Stock
shall be issued by the Company upon the exercise of any Warrant, (ii) if more
than one Warrant shall be exercised at the same time by the same Holder, the
number of shares of Common Stock issuable in connection with such exercise shall
be computed on the basis of the aggregate Exercise Amount of the Warrants so
exercised, and (iii) on the date a Holder exercises such Holder's Warrant, the
Company shall pay such Holder an amount in cash equal to the then-current Market
Price (multiplied by the related fraction) of Common Stock for such fractional
shares, computed to the nearest whole cent.
(c) If fewer than all of the Warrants evidenced by a Warrant
Certificate are exercised, the Company shall execute, and an authorized officer
of the Warrant Agent shall countersign and deliver, a new Warrant Certificate
evidencing the number of Warrants remaining unexercised.
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(d) The Warrant Agent shall deposit all funds received by it in
connection with a Cash Payment of the Exercise Price into the account of the
Company maintained with it for such purpose by notice in writing to the Warrant
Agent, and shall notify the Company by telephone by 5:00 p.m., New York time, of
each day on which a Cash Payment of the Exercise Price for Warrants is so
deposited of the amount of such deposit into its account. The Warrant Agent
shall promptly confirm such notice in writing to the Company.
(e) The Warrant Agent shall, from time to time, as promptly as
practicable, advise the Company of (i) the number of Warrants exercised as
provided herein, (ii) the instructions of each Holder with respect to delivery
of the Common Stock to which such Holder is entitled upon such exercise, and
(iii) such other information as the Company shall reasonably require. Such
notice may be given by telephone to be promptly confirmed in writing.
(f) The Company shall pay all documentary stamp taxes attributable to
the initial issuance of Warrants or to the issuance of Common Stock to the
registered Holder of such Warrants upon exercise thereof; provided, however,
that such Holder, and not the Company, shall be required to pay any stamp or
other tax or other governmental charge that may be imposed in connection with
any transfer involved in the issuance of the Common Stock; and in the event that
any such transfer is involved, the Company shall not be required to issue any
Common Stock (and such Holder's purchase of the Common Stock issued upon the
exercise of such Holder's Warrant shall not be deemed to have been consummated)
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.
Section 3.03. Redemption of Warrants.
(a) Subject to satisfaction of the Redemption Conditions, the Company
shall redeem the Warrants on the Redemption Date for cash in an amount equal to
the Warrant Value as of the Remarketing Date in accordance with Section 3.04.
(b) A Holder may elect to exercise a Warrant in lieu of Redemption, if
(i) such Warrant is held pursuant to the Unit Agreement, and such Holder has
opted out of participating in the Remarketing, by notice given to the Warrant
Agent and the Unit Agent as provided in the Unit Agreement; or (ii) such Warrant
is not held pursuant to the Unit Agreement, by notice given to the Warrant
Agent, in each case prior to 5:00 p.m., New York time, on the Business Day prior
to the related Redemption Date. In the absence of an election to exercise a
Warrant in lieu of a Redemption, a Holder will be deemed to have elected to have
its Warrants redeemed on the Redemption Date.
(c) If a Holder elects to exercise a Warrant pursuant to paragraph (b)
above, then such Holder shall tender the Exercise Price for such Warrant as a
Cash Payment, and shall follow the procedures set forth in Section 3.02;
provided, however, that if (i) such Warrant is, on the Remarketing Date, held
pursuant to the Unit Agreement, (ii) such Holder has not opted out of
participating in the Remarketing, and (iii) a Successful Remarketing shall have
occurred, then the Exercise Price of such Warrant shall be deemed to have been
paid by a Remarketing Payment, and the Remarketing Agent will, in connection
with such Remarketing Payment, apply the proceeds of the Remarketing of the
related Preferred Security in accordance with the terms of the Remarketing
Agreement and the Unit Agreement.
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(d) Any Warrant redeemed or exercised pursuant to the provisions of
this Section shall, upon such redemption or exercise, cease to be outstanding.
(e) If a Redemption cannot occur because of an inability to satisfy the
Redemption Conditions, the Company shall promptly notify the Warrant Agent and
each Holder (at its address specified in the Warrant Register) thereof. Such
event shall not constitute a default under this Agreement so long as the Company
is exercising its best efforts to satisfy the Redemption Conditions and is not
otherwise in violation of this Agreement (including the provisions of Article
VII hereof) and the Company may, under such circumstances, subsequently seek to
remarket the Preferred Securities and contemporaneously redeem the Warrants.
Section 3.04. Redemption Procedures.
(a) The Company shall, contemporaneously with the giving of notice of
Remarketing pursuant to Section 6.6 of the Declaration, furnish notice of
Redemption to the Warrant Agent, which shall, within two (2) Business Days of
receipt thereof, furnish notice of such Redemption to Holders of Definitive
Warrants, and the Company shall request, not later than 15 nor more than 30
calendar days prior to the Remarketing Date, that DTC notify its Participants
holding Warrants of the Remarketing. The Company shall cause notice of such
redemption to be published in a newspaper of general circulation in New York
City, once a week for two successive weeks commencing not less than 20 nor more
than 60 days prior to the Redemption Date. If the Company gives a notice of
Redemption of the Warrants, then by 12:00 noon, New York time, on the Redemption
Date, the Company shall deposit irrevocably with DTC consideration sufficient to
pay the Warrant Value for all Book-Entry Warrants (other than Warrants held by
persons electing to exercise their Warrants in lieu of a Redemption). If any
Warrants are not represented by one or more Global Certificates, the Company
shall irrevocably deposit with the Warrant Agent consideration sufficient to pay
the applicable Warrant Value, and shall give the Warrant Agent irrevocable
instructions and authority to pay the Warrant Value to the related Holders upon
surrender of the related Warrant Certificates. If notice of redemption shall
have been given and consideration deposited or paid as required hereby, then,
immediately prior to 5:00 p.m., New York time, on the Redemption Date, all
rights of Holders shall cease, except the right of Holders to receive the
Warrant Value (or Common Stock if the related Holder elected to exercise such
Holder's Warrant on or prior to 5:00 p.m., New York time, on the Redemption
Date), and the Warrants shall cease to be outstanding.
(b) Notwithstanding anything herein to the contrary, and subject to
applicable law, the Company and its subsidiaries may at any time, and from time
to time, purchase outstanding Warrants by tender, in the open market or by
private agreement.
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ARTICLE IV
ANTI-DILUTION PROVISIONS
Section 4.01. Warrant Adjustments. The Exercise Amount shall be subject
to adjustments, calculated by the Company, from time to time as follows:
(a) In case the Company shall hereafter pay a dividend or make a
distribution to all holders of the outstanding Common Stock in shares
of Common Stock, the Exercise Amount in effect at the opening of
business on the date following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution
shall be increased by multiplying such Exercise Amount by a fraction,
(i) the numerator of which shall be the sum of the
number of shares of Common Stock outstanding at the close of
business on the Record Date fixed for such determination and
the total number of shares constituting such dividend or other
distribution, and
(ii) the denominator of which shall be the number of
shares of Common Stock outstanding at the close of business on
the Record Date fixed for such determination.
Such increase shall become effective immediately after the opening of
business on the day following the Record Date. If any dividend or
distribution of the type described in this paragraph (a) is declared
but not so paid or made, the Exercise Amount shall again be adjusted to
the Exercise Amount which would then be in effect if such dividend or
distribution had not been declared.
(b) In case the outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the
Exercise Amount in effect at the opening of business on the day
following the day upon which such subdivision becomes effective shall
be proportionately increased, and conversely, in case outstanding
shares of Common Stock shall be combined into a smaller number of
shares of Common Stock, the Exercise Amount in effect at the opening of
business on the day following the day upon which such combination
becomes effective shall be proportionately decreased, such reduction or
increase, as the case may be, to become effective immediately after the
opening of business on the day following the day upon which such
subdivision or combination becomes effective.
(c) In case the Company shall issue rights or warrants (other
than any rights or warrants referred to in paragraph (d) below) to all
holders of its outstanding shares of Common Stock entitling them to
subscribe for or purchase shares of Common Stock (or securities
convertible into Common Stock) at a price per share (or having a
conversion price per share) less than the Market Price on the Record
Date fixed for the determination of stockholders entitled to receive
such rights or warrants, the Exercise Amount shall be adjusted so that
the same shall equal the amount determined by multiplying the Exercise
Amount in effect at the opening of business on the date after such
Record Date by a fraction:
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(i) the numerator of which shall be the number of
shares of Common Stock outstanding on the close of business on
the Record Date plus the total number of additional shares of
Common Stock so offered for subscription or purchase (or into
which the convertible securities so offered are convertible),
and
(ii) the denominator of which shall be the number of
shares of Common Stock outstanding at the close of business on
the Record Date plus the number of shares which the aggregate
offering price of the total number of shares so offered for
subscription or purchase (or the aggregate conversion price of
the convertible securities so offered) would purchase at such
Market Price.
Such adjustment shall become effective immediately after the opening of
business on the day following the Record Date fixed for determination
of stockholders entitled to receive such rights or warrants. To the
extent that shares of Common Stock (or securities convertible into
Common Stock) are not delivered pursuant to such rights or warrants,
upon the expiration or termination of such rights or warrants the
Exercise Amount shall be readjusted to the Exercise Amount which would
then be in effect had the adjustments made upon the issuance of such
rights or warrants been made on the basis of the delivery of only the
number of shares of Common Stock (or securities convertible into Common
Stock) actually delivered. In the event that such rights or warrants
are not so issued, the Exercise Amount shall again be adjusted to be
the Exercise Amount which would then be in effect if such date fixed
for the determination of stockholders entitled to receive such rights
or warrants had not been fixed. In determining whether any rights or
warrants entitle the holders to subscribe for or purchase shares of
Common Stock at less than such Market Price, and in determining the
aggregate offering price of such shares of Common Stock, there shall be
taken into account any consideration received for such rights or
warrants, the value of such consideration if other than cash, to be
determined by the Board of Directors.
(d) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock shares of any class of
capital stock of the Company (other than any dividends or distributions
to which paragraph (a) above applies) or evidences of its indebtedness,
cash or other assets, including securities, but excluding (i) any
rights or warrants referred to in paragraph (c) above, (ii) any stock,
securities or other property or assets (including cash) distributed in
connection with a reclassification, change, merger, consolidation,
statutory share exchange, combination, sale or conveyance to which
Section 4.02 hereof applies and (iii) dividends and distributions paid
exclusively in cash, then, in each such case, subject to the second
succeeding paragraph of this paragraph (d), the Exercise Amount shall
be increased so that the same shall be equal to the amount determined
by multiplying the Exercise Amount in effect immediately prior to the
close of business on the Record Date with respect to such distribution
by a fraction:
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(i) the numerator of which shall be the Market Price
on such date plus the Fair Market Value (as determined by the
Board of Directors, whose determination shall be conclusive
and set forth in a Board Resolution) on such date of the
portion of the securities so distributed applicable to one
share of Common Stock (determined on the basis of the number
of shares of the Common Stock outstanding on the Record Date),
and
(ii) the denominator of which shall be such Market
Price.
Such increase shall become effective immediately prior to the opening
of business on the day following the Record Date. However, in the event
that the then Fair Market Value (as so determined) of the portion of
the securities so distributed applicable to one share of Common Stock
is equal to or greater than the Market Price on the Record Date, in
lieu of the foregoing adjustment, adequate provision shall be made so
that each Holder shall have the right to receive upon exercise of a
Warrant the amount of securities such Holder would have received had
such Holder exercised such Warrant immediately prior to such Record
Date. In the event that such dividend or distribution is not so paid or
made, the Exercise Amount shall again be adjusted to be the Exercise
Amount which would then be in effect if such dividend or distribution
had not been declared.
If the Board of Directors determines the Fair Market
Value of any distribution for purposes of this paragraph (d) by
reference to the actual or when issued trading market for any
securities comprising all or part of such distribution, it must in
doing so consider the prices in such market over the same period (the
"Reference Period") used in computing the Market Price pursuant to
paragraph (g) below to the extent possible, unless the Board of
Directors in a Board Resolution determines in good faith that
determining the Fair Market Value during the Reference Period would not
be in the best interest of the Holders.
Rights or warrants distributed by the Company to all
holders of Common Stock entitling the holders thereof to subscribe for
or purchase shares of the Company's capital stock (either initially or
under certain circumstances), which rights or warrants, until the
occurrence of a specified event or events ("Trigger Event"):
(1) are deemed to be transferred with such shares of
Common Stock;
(2) are not exercisable; and
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(3) are also issued in respect of future issuances of
Common Stock, shall be deemed not to have been distributed for purposes
of this paragraph (d) (and no adjustment to the Exercise Amount under
this paragraph (d) will be required) until the occurrence of the
earliest Trigger Event. If such right or warrant is subject to
subsequent events, upon the occurrence of which such right or warrant
shall become exercisable to purchase different securities, evidences of
indebtedness or other assets or entitle the holder to purchase a
different number or amount of the foregoing or to purchase any of the
foregoing at a different purchase price, then the occurrence of each
such event shall be deemed to be the date of issuance and record date
with respect to a new right or warrant (and a termination or expiration
of the existing right or warrant without exercise by the holder
thereof). In addition, in the event of any distribution (or deemed
distribution) of rights or warrants, or any Trigger Event or other
event (of the type described in the preceding sentence) with respect
thereto, that resulted in an adjustment to the Exercise Amount under
this paragraph (d):
(x) in the case of any such rights or warrants which
shall all have been redeemed or repurchased without exercise
by any holders thereof, the Exercise Amount shall be
readjusted upon such final redemption or repurchase to give
effect to such distribution or Trigger Event, as the case may
be, as though it were a cash distribution, equal to the per
share redemption or repurchase price received by a holder of
Common Stock with respect to such rights or warrant (assuming
such holder had retained such rights or warrants), made to all
holders of Common Stock as of the date of such redemption or
repurchase, and
(y) in the case of such rights or warrants all of
which shall have expired or been terminated without exercise,
the Exercise Amount shall be readjusted as if such rights and
warrants had never been issued.
For purposes of this paragraph (d) and paragraphs (a), (b) and
(c), any dividend or distribution to which this paragraph (d) is
applicable that also includes shares of Common Stock, a subdivision or
combination of Common Stock to which paragraph (c) applies, or rights
or warrants to subscribe for or purchase shares of Common Stock to
which paragraph (c) applies (or any combination thereof), shall be
deemed instead to be:
(I) a dividend or distribution of the evidences of
indebtedness, assets, shares of capital stock, rights or
warrants other than such shares of Common Stock, such
subdivision or combination or such rights or warrants to which
paragraphs (a), (b) and (c) above apply, respectively (and any
Exercise Amount increase required by this paragraph (d) with
respect to such dividend or distribution shall then be made),
immediately followed by,
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(II) a dividend or distribution of such shares of
Common Stock, such subdivision or combination or such rights
or warrants (and any further Exercise Amount increase required
by paragraphs (a), (b) and (c) with respect to such dividend
or distribution shall then be made), except:
(A) the Record Date of such dividend or
distribution shall be substituted as (x) "the date
fixed for the determination of stockholders entitled
to receive such dividend or other distribution",
"Record Date fixed for such determinations" and
"Record Date" within the meaning of paragraph (a)
above, (y) "the day upon which such subdivision
becomes effective" and "the day upon which such
combination becomes effective" within the meaning of
paragraph (b) above, and (z) as "the date fixed for
the determination of stockholders entitled to receive
such rights or warrants", "the Record Date fixed for
the determination of the stockholders entitled to
receive such rights or warrants" and such "Record
Date" within the meaning of paragraph (c) above, and
(B) any shares of Common Stock included in
such dividend or distribution shall not be deemed
"outstanding at the close of business on the date
fixed for such determination" within the meaning of
paragraph (a) above and any reduction or increase in
the number of shares of Common Stock resulting from
such subdivision or combination shall be disregarded
in connection with such dividend or distribution..
(e) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock cash (excluding any cash
that is distributed upon a reclassification, change, merger,
consolidation, statutory share exchange, combination, sale or
conveyance to which Section 4.02 hereof applies or as part of a
distribution referred to in paragraph (d) hereof), in an aggregate
amount that, combined together with:
(i) the aggregate amount of any other such
distributions to all holders of Common Stock made exclusively
in cash within the 12 months preceding the date of payment of
such distribution, and in respect of which no adjustment
pursuant to this paragraph (e) has been made, and
(ii) the aggregate of any cash plus the Fair Market
Value (as determined by the Board of Directors, whose
determination shall be conclusive and set forth in a Board
Resolution) of consideration payable in respect of any tender
offer by the Company or any of its subsidiaries for all or any
portion of the Common Stock concluded within the 12 months
preceding the date of such distribution, and in respect of
which no adjustment pursuant to paragraph (f) below has been
made,
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exceeds 10% of the product of the Market Price (determined as provided
in paragraph (g) below) on the Record Date with respect to such
distribution times the number of shares of Common Stock outstanding on
such date, then and in each such case, immediately after the close of
business on such date, the Exercise Amount shall be increased so that
the same shall equal the amount determined by multiplying the Exercise
Amount in effect immediately prior to the close of business on such
Record Date by a fraction:
(i) the numerator of which shall be equal to the
Market Price on such Record Date, and
(ii) the denominator of which shall be equal to the
Market Price on such Record Date less an amount equal to the
quotient of (x) the excess of such combined amount over such
10% and (y) the number of shares of Common Stock outstanding
on such Record Date.
However, in the event that the then Fair Market Value (as so
determined) of the portion of the securities so distributed applicable
to one share of Common Stock is equal to or greater than the Market
Price on the Record Date, in lieu of the foregoing adjustment, adequate
provision shall be made so that each Holder shall have the right to
receive upon exercise of a Warrant the amount of cash such Holder would
have received had such Holder exercised such Warrant immediately prior
to such Record Date. In the event that such dividend or distribution is
not so paid or made, the Exercise Amount shall again be adjusted to be
the Exercise Amount which would then be in effect if such dividend or
distribution had not been declared.
(f) In case a tender offer made by the Company or any of its
subsidiaries for all or any portion of the Common Stock shall expire
and such tender offer (as amended upon the expiration thereof) shall
require the payment to stockholders (based on the acceptance (up to any
maximum specified in the terms of the tender offer) of Purchased
Shares) of an aggregate consideration having a Fair Market Value (as
determined by the Board of Directors, whose determination shall be
conclusive and set forth in a Board Resolution) that combined together
with:
(i) the aggregate of the cash plus the Fair Market
Value (as determined by the Board of Directors, whose
determination shall be conclusive and set forth in a Board
Resolution), as of the expiration of such tender offer, of
consideration payable in respect of any other tender offers,
by the Company or any of its subsidiaries for all or any
portion of the Common Stock expiring within the 12 months
preceding the expiration of such tender offer and in respect
of which no adjustment pursuant to this paragraph (f) has been
made, and
(ii) the aggregate amount of any distributions to all
holders of Common Stock made exclusively in cash within 12
months preceding the expiration of such tender offer and in
respect of which no adjustment pursuant to paragraph (e) has
been made,
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exceeds 10% of the product of the Market Price (determined as provided
in paragraph (g) below) as of the last time (the "Tender Expiration
Time") tenders could have been made pursuant to such tender offer (as
it may be amended) times the number of shares of Common Stock
outstanding (including any tendered shares) on the Tender Expiration
Time, then, and in each such case, immediately prior to the opening of
business on the day after the date of the Tender Expiration Time, the
Exercise Amount shall be adjusted so that the same shall equal the
amount determined by multiplying the Exercise Amount in effect
immediately prior to close of business on the date of the Tender
Expiration Time by a fraction:
(A) the numerator of which shall be the sum of (x)
the Fair Market Value (determined as aforesaid) of the
aggregate consideration payable to stockholders based on the
acceptance (up to any maximum specified in the terms of the
tender offer) of all shares validly tendered and not withdrawn
as of the Tender Expiration Time (the shares deemed so
accepted, up to any such maximum, being referred to as the
"Purchased Shares") and (y) the product of the number of
shares of Common Stock outstanding (less any Purchased Shares)
on the Tender Expiration Time and the Market Price of the
Common Stock on the Trading Day next succeeding the Tender
Expiration Time, and
(B) the denominator shall be the number of shares of
Common Stock outstanding (including any tendered shares) at
the Tender Expiration Time multiplied by the Market Price of
the Common Stock on the Trading Day next succeeding the Tender
Expiration Time.
Such increase (if any) shall become effective immediately prior to the
opening of business on the day following the Tender Expiration Time. In
the event that the Company is obligated to purchase shares pursuant to
any such tender offer, but the Company is permanently prevented by
applicable law from effecting any such purchases or all such purchases
are rescinded, the Exercise Amount shall again be adjusted to be the
Exercise Amount which would then be in effect if such tender offer had
not been made. If the application of this paragraph (f) to any tender
offer would result in a decrease in the Exercise Amount, no adjustment
shall be made for such tender offer under this paragraph (f).
(g) Notwithstanding the foregoing, whenever successive
adjustments to the Exercise Amount are called for pursuant to this
Section 4.01, such adjustments shall be made to the Market Price as may
be necessary or appropriate to effectuate the intent of this Section
4.01 and to avoid unjust or inequitable results as determined in good
faith by the Board of Directors.
(h) The Company may make such reductions in the Exercise Price
as the Board of Directors considers to be advisable to avoid or
diminish any income tax to holders of Common Stock or rights to
purchase Common Stock resulting from any dividend or distribution of
stock (or rights to acquire stock) or from any event treated as such
for income tax purposes.
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To the extent permitted by applicable law, the Company from
time to time may reduce the Exercise Price by any amount for any period
of time if the period is at least 20 days and the reduction is
irrevocable during the period and the Board of Directors determines in
good faith that such reduction would be in the best interests of the
Company, which determination shall be conclusive and set forth in a
Board Resolution. Whenever the Exercise Price is reduced pursuant to
the preceding sentence, the Company shall mail to the Warrant Agent and
each Holder at the address of such Holder as it appears in the Warrant
Register a notice of the reduction at least 15 days prior to the date
the reduced Exercise Price takes effect, and such notice shall state
the reduced Exercise Price and the period during which it will be in
effect.
(i) Notwithstanding anything to the contrary in this Section
4.01, no adjustment in the Exercise Amount shall be required unless
such adjustment would require an increase or decrease of at least 1% in
such amount; provided, however, that any adjustments which by reason of
this paragraph (i) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All calculations
under this Article IV shall be made by the Company and shall be made to
the nearest cent or to the nearest one hundredth of a share, as the
case may be. No adjustment need be made for a change in the par value
or no par value of the Common Stock.
(j) In any case in which this Section provides that an
adjustment shall become effective immediately after a Record Date for
an event, the Company may defer until the occurrence of such event (i)
issuing to any Holder of a Warrant exercised after such Record Date and
before the occurrence of such event the additional shares of Common
Stock issuable upon such exercise by reason of the adjustment required
by such event over and above the Common Stock issuable upon such
exercise before giving effect to such adjustment and (ii) paying to
such Holder any amount in cash in lieu of any fraction pursuant to
Section 3.02(b) hereof.
(k) For purposes of this Section, the number of shares of Common
Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in respect of
scrip certificates issued in lieu of fractions of shares of Common
Stock. The Company shall not pay any dividend or make any distribution
on shares of Common Stock held in the treasury of the Company.
(l) If the distribution date for the rights provided in the
Company's rights agreement, if any, occurs prior to the date a Warrant
is exercised, the Holder who exercises such Warrant after the
distribution date is not entitled to receive the rights that would
otherwise be attached (but for the date of exercise) to the shares of
Common Stock received upon such exercise; provided, however, that an
adjustment shall be made to the Exercise Amount pursuant to paragraph
(b) above as if the rights were being distributed to the common
stockholders of the Company immediately prior to such exercise. If such
an adjustment is made and the rights are later redeemed, invalidated or
terminated, then a corresponding reversing adjustment shall be made to
the Exercise Amount, on an equitable basis, to take account of such
event.
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Section 4.02 Merger, Consolidation, Sale, Transfer or Conveyance;
Change of Control.
(a) If any of following events occur, namely:
(i) 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 as a result of a
subdivision or combination),
(ii) any merger, consolidation, statutory share exchange or
combination of the Company with another corporation as a result of
which holders of Common Stock shall be entitled to receive stock,
securities or other property or assets (including cash) with respect to
or in exchange for such Common Stock, or
(iii) any sale or conveyance of the properties and assets of
the Company as, or substantially as, an entirety to any other
corporation as a result of which holders of Common Stock shall be
entitled to receive stock, securities or other property or assets
(including cash) with respect to or in exchange for such Common Stock,
the Company or the successor or purchasing corporation, as the case may be,
shall execute with the Warrant Agent an amendment to this Warrant Agreement
providing that the Warrants shall, upon exercise, entitle the Holder thereof to
the kind and amount of shares of stock and other securities or property or
assets (including cash) which such Holder would have been entitled to receive
upon such reclassification, change, merger, consolidation, statutory share
exchange, combination, sale or conveyance had such Warrants been exercised
immediately prior to such reclassification, change, merger, consolidation,
statutory share exchange, combination, sale or conveyance, assuming such holder
of Common Stock did not exercise its rights of election, if any, as to the kind
or amount of securities, cash or other property receivable upon such merger,
consolidation, statutory share exchange, sale or conveyance (provided that, if
the kind or amount of securities, cash or other property receivable upon such
merger, consolidation, statutory share exchange, sale or conveyance is not the
same for each share of Common Stock in respect of which such rights of election
shall not have been exercised ("Non-Electing Share"), then for the purposes of
this Section, the kind and amount of securities, cash or other property
receivable upon such merger, consolidation, statutory share exchange, sale or
conveyance for each Non-Electing Share shall be deemed to be the kind and amount
so receivable per share by a plurality of the Non-Electing Shares). Such
amendment shall provide for adjustments which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Article IV. If, in
the case of any such reclassification, change, merger, consolidation, statutory
share exchange, combination, sale or conveyance, the stock or other securities
and assets receivable thereupon by a holder of shares of Common Stock includes
shares of stock or other securities and assets of a corporation other than the
successor or purchasing corporation, as the case may be, in such
reclassification, change, merger, consolidation, statutory share exchange,
combination, sale or conveyance, then such amendment shall also be executed by
such other corporation and shall contain such additional provisions to protect
the interests of the Holders as the Board of Directors shall reasonably consider
necessary by reason of the foregoing.
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The Company shall cause notice of the execution of such amendment to be
mailed to each Holder, at the address of such Holder as it appears on the
Warrant Register, within 20 days after execution thereof. Failure to deliver
such notice shall not affect the legality or validity of such amendment.
The above provisions of this Section shall similarly apply to
successive reclassifications, mergers, consolidations, statutory share
exchanges, combinations, sales and conveyances.
If this Section applies to any event or occurrence, Section
4.01 hereof shall not apply.
(b) Notwithstanding paragraph (a) above, if a Change of Control
occurs, each Holder shall have the right (a "Change of Control Redemption
Right") to require the Company to redeem such Holder's Warrants (a "Change of
Control Redemption") on the date that is 45 days after the Change of Control
Notice Date (the "Change of Control Redemption Date"), at the Warrant Value on
such Change of Control Redemption Date. Within 30 days after the date of
occurrence of a Change of Control (the "Change of Control Notice Date"), the
Company shall give notice to each Holder and the Warrant Agent of the
transaction that gave rise to such Change of Control and of the resulting Change
of Control Redemption Right. To exercise such Change of Control Redemption
Right, a Holder shall deliver, on or prior to the 30th day after the Change of
Control Notice Date, irrevocable written notice to the Warrant Agent of such
Holder's election to exercise such Change of Control Redemption Right and the
number of Warrants to be so redeemed. On the Change of Control Redemption Date,
the Company shall redeem the related Warrants at the Warrant Value on such date
in accordance with the procedures for Redemption set forth in Section 3.04(a)
In connection with a Change of Control Redemption, not less than three
Business Days prior to the Change of Control Redemption Date:
(i) if the Warrants to be redeemed are represented by
a Global Certificate, the Warrant Agent shall make the necessary
endorsement to the "Schedule of Increases or Decreases in Global
Certificate" attached to the Global Certificate to reduce the amount of
Warrants represented thereby; and
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(ii) if the Warrants to be redeemed are Definitive
Warrants, the Holder of such Definitive Warrants shall present the
related Warrant Certificate to the Warrant Agent for cancellation in
accordance with Section 5.03.
The Company shall comply with the requirements of the Exchange Act and
any other applicable securities laws and regulations thereunder to the extent
such laws and regulations are applicable in connection with any redemption of
the Warrants by the Company pursuant to this paragraph (b).
Section 4.03 Other Events. If any event occurs as to which the
foregoing provisions of this Article IV are not strictly applicable or, if
strictly applicable, would not, in the good faith judgment of the board of
directors of the Company, fairly and adequately protect the rights of the
Holders of the Warrants in accordance with the essential intent and principles
of such provisions, then the board of directors of the Company shall make such
adjustments in the application of such provisions, in accordance with such
essential intent and principles, as shall be reasonably necessary, in their good
faith opinion, to protect such purchase rights as aforesaid, but in no event
shall any such adjustment have the effect of decreasing the Exercise Amount of
any Warrant.
Section 4.04 Notice of Adjustment. Whenever the Exercise Amount is
adjusted as herein provided (other than in the case of an adjustment pursuant to
the second paragraph of Section 4.01(h) for which the notice required by such
paragraph has been provided), the Company shall promptly file with the Warrant
Agent an Officers' Certificate setting forth the adjusted Exercise Amount and
showing in reasonable detail the facts upon which such adjustment is based.
Promptly after delivery of such Officers' Certificate, the Company shall prepare
a notice stating that the Exercise Amount has been adjusted and setting forth
the adjusted Exercise Amount and the date on which each adjustment becomes
effective, and shall mail such notice to each Holder at the address of such
Holder as it appears in the Warrant Register within 20 days of the effective
date of such adjustment. Failure to deliver such notice shall not effect the
legality or validity of any such adjustment.
Section 4.05 Notice of Certain Transactions. In case at any time after
the date hereof:
(a) the Company shall declare a dividend (or any other distribution) on
its Common Stock payable otherwise than in cash out of its capital surplus or
its consolidated retained earnings;
(b) the Company 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 securities convertible into shares of capital
stock of any class) or of any other rights;
(c) there shall occur any reclassification of the Common Stock of the
Company (other than a subdivision or combination of its outstanding Common
Stock, a change in par value, a change from par value to no par value or a
change from no par value to par value), or any merger, consolidation, statutory
share exchange or combination to which the Company is a party and for which
approval of any shareholders of the Company is required, or the sale, transfer
or conveyance of all or substantially all of the assets of the Company; or
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(d) there shall occur the voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then the Company shall cause to be filed at each the corporate trust office of
the Warrant Agent, and shall cause to be provided to the Warrant Agent and all
Holders in accordance with Section 8.02 hereof, at least 20 days (or 10 days in
any case specified in paragraph (a) or (b) above) prior to the applicable record
or effective date hereinafter specified, a notice stating:
(i) the date on which a record is to be taken for the purpose
of such dividend, distribution, rights or warrants, 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, rights or
warrants are to be determined, or
(ii) the date on which such reclassification, merger,
consolidation, statutory share exchange, combination, sale, transfer,
conveyance, 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, cash or other property deliverable upon
such reclassification, merger, consolidation, statutory share exchange,
sale, transfer, dissolution, liquidation or winding up.
Neither the failure to give such notice nor any defect therein
shall affect the legality or validity of the proceedings or actions described in
clauses (a) through (d) of this Section.
Section 4.06 Adjustment to Warrant Certificate. The form of Warrant
Certificate need not be changed because of any adjustment made pursuant to this
Article IV, and Warrant Certificates issued after such adjustment may state the
same Exercise Amount as is stated in the Warrant Certificates initially issued
pursuant to this Warrant Agreement. The Company, however, may at any time in its
sole discretion make any change in the form of Warrant Certificate that it may
deem appropriate to give effect to such adjustments and that does not affect the
substance of the Warrant Certificate, and any Warrant Certificate thereafter
issued or countersigned, whether in exchange or substitution for an outstanding
Warrant Certificate or otherwise, may be in the form as so changed.
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ARTICLE V
EXCHANGE AND TRANSFER OF WARRANTS
Section 5.01 Warrant Register; Exchange and Transfer of Warrants.
(a) The Warrant Agent shall maintain, at its corporate trust office, a
register (the "Warrant Register") in which, upon the issuance of the Warrants,
and subject to such reasonable regulations as the Warrant Agent may prescribe,
it shall register Warrant Certificates and exchanges and transfers thereof
(including in connection with any change by a Holder from holding a Warrant
pursuant to the Unit Agreement to not holding such Warrant pursuant to the Unit
Agreement). The Warrant Register shall be in written form or in any other form
capable of being converted into written form within a reasonable time.
(b) The Warrant Certificates shall be issued in registered form only
and shall be transferable only upon surrender thereof for registration of
transfer. When a Warrant Certificate is presented to the Warrant Agent with a
request to register a transfer thereof, the Warrant Agent shall register such
transfer as requested.
(c) Except as provided in the following sentence, upon surrender at the
corporate trust office of the Warrant Agent, Warrant Certificates may be
exchanged for one or more other Warrant Certificates evidencing the same
aggregate number of Warrants of the same title, or may be transferred in whole
or in part. A Warrant Certificate evidencing Warrants that are then held
pursuant to the Unit Agreement may be exchanged or transferred prior to the date
such Warrant is not held pursuant to the Unit Agreement only pursuant to and in
accordance with the Unit Agreement. A transfer shall be registered upon
surrender of a Warrant Certificate to the Warrant Agent at its corporate trust
office for transfer, properly endorsed or accompanied by appropriate instruments
of transfer and written instructions for transfer, all in form satisfactory to
the Company and the Warrant Agent, duly signed by the registered holder or
holders thereof or by the duly appointed legal representative thereof or by a
duly authorized attorney, such signature to be guaranteed by (a) a bank or trust
company, (b) a broker or dealer that is a member of the National Association of
Securities Dealers, Inc. (the "NASD") or (c) a member of a national securities
exchange. Upon any such registration of transfer, a new Warrant Certificate
shall be issued to the transferee. Whenever a Warrant Certificate is surrendered
for exchange or transfer, the Company shall execute, and the Warrant Agent shall
countersign and deliver to the person or persons entitled thereto, one or more
Warrant Certificates, as so requested. The Warrant Agent shall not be required
to effect any exchange or transfer which will result in the issuance of a
Warrant Certificate evidencing a fraction of a Warrant. All Warrant Certificates
issued upon any exchange or transfer of a Warrant Certificate shall be the valid
obligations of the Company, evidencing the same obligations, and entitled to the
same benefits under this Warrant Agreement, as the Warrant Certificate
surrendered for such exchange or transfer. No service charge shall be made for
any exchange or transfer of Warrants, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any such exchange or transfer, in accordance with Section
3.02(f) hereof.
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(d) As noted in Section 2.02, the Global Certificate shall represent
such of the outstanding Warrants as shall be specified in the "Schedule of
Exchanges of Interests of Global Certificate" attached thereto or otherwise in
accordance with the Applicable Procedures, initially equal to zero Warrants. At
any time after issuance, the Preferred Security and Warrant components of any
Unit may be transferred separately. In the event of any separation of the
components of a Unit, the Unit Agreement provides (i) if such Unit is
represented by a definitive certificate, the holder shall present such
definitive certificate to the Unit Agent for cancellation and the Unit Agent
shall deliver the Warrant component of such Unit to the Warrant Agent with an
instruction for it to countersign and deliver to, or upon the instruction of,
such holder a Warrant not held pursuant to the Unit Agreement, bearing the
separate "CUSIP" number assigned to the Warrant (and not the Unit) and (ii) if
such Unit is represented by the Global Unit Certificate, the Unit Agent will
make the necessary endorsement to the "Schedule of Exchanges of Interests of
Global Certificate" attached to the Global Unit Certificate or otherwise comply
with the Applicable Procedures to reduce the amount of Units represented thereby
and will instruct the Warrant Agent to effect a corresponding increase in the
Warrants represented by the Global Certificate and bearing a separate "CUSIP"
number. The Warrant Agent shall make such other necessary endorsements to the
Global Certificate consistent with the terms of this agreement to reflect the
appropriate number of Warrants represented thereby.
Once not held pursuant to the Unit Agreement, the Preferred Security
and Warrant components of a Unit may at a later time be held pursuant to the
Unit Agreement. In the event a holder of a Preferred Security and a Holder of a
Warrant desire to cause such Preferred Security and Warrant to once again be
held pursuant to the Unit Agreement, (i) if the constituent components are
represented by definitive certificates, the holder shall present (x) the
Preferred Security to the Property Trustee and (y) the Warrant to the Warrant
Agent, in each case for cancellation and the Property Trustee and the Warrant
Agent shall so notify the Unit Agent, who shall in turn so notify the Unit
registrar with an instruction for the Unit registrar to countersign and deliver
to, or upon the instruction of, such holder a Unit bearing the separate "CUSIP"
number assigned to the Units and (ii) if the constituent components are
represented by global certificates, each of the Property Trustee and the Warrant
Agent shall make the necessary endorsement to their respective global
certificates or otherwise comply with the Applicable Procedures to reduce the
amount of Preferred Securities and Warrants, respectively, represented thereby
and shall instruct Unit Agent to effect a corresponding increase in the Units
represented by the Global Unit Certificate bearing a separate "CUSIP" number.
The Warrant Agent shall make such other necessary endorsements to the Global
Certificate consistent with the terms of this Agreement to reflect the
appropriate number.
(e) Notwithstanding any other provisions of this Section, unless and
until it is exchanged in whole or in part for Definitive Warrants, the Global
Certificate may not be transferred except as a whole by DTC to a nominee of DTC
or by a nominee of DTC to DTC or another nominee of DTC or by DTC or any such
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nominee to a successor depositary or a nominee of such successor depositary.
Interests of beneficial owners in the Global Certificate may be transferred in
accordance with the rules and procedures of DTC. Members of, or participants in,
DTC ("Participants") shall have no rights under this Agreement with respect to
the Global Certificate held on their behalf by DTC or the Warrant Agent as its
custodian, and DTC may be treated by the Company, the Warrant Agent and any
agent of the Company or the Warrant Agent as the absolute owner of such Global
Certificate for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Warrant Agent or any agent of the Company
or the Warrant Agent from giving effect to any written certification, proxy or
other authorization furnished by DTC, or impair, as between DTC and its
Participants, the operation of customary practices governing the exercise of the
rights of a Holder of any Warrants. The registered Holder of the Global
Certificate may grant proxies and otherwise authorize any person, including
Participants and persons that may hold interest through Participants, to take
any action which a Holder is entitled to take under this Warrant Agreement or
the Warrants.
If DTC notifies the Company that it is unwilling or unable to continue
as depositary for the Global Certificate, or if at any time DTC shall no longer
be eligible under the next sentence of this paragraph, the Company shall appoint
a successor depositary with respect to the Warrants. Each depositary appointed
pursuant to this Section shall, at the time of its appointment and at all times
while it serves as depositary, be a clearing agency registered under the
Exchange Act, and any other applicable statute or regulation. The Company shall
execute, and the Warrant Agent, upon receipt of written instructions from the
Company, shall countersign and deliver, Warrants in definitive registered form
in any authorized denominations, in an aggregate amount equal to the amount of
the Global Certificate or Certificates if DTC notifies the Company that it is
unwilling or unable to continue as depositary therefor or if at any time DTC
shall no longer be eligible to serve as depositary and a successor depositary
for the Warrants is not appointed by the Company within 60 days after the
Company receives such notice or becomes aware of such ineligibility or if there
shall have occurred and be continuing a default by the Company in respect of its
obligations under this Warrant Agreement, the Indenture, the Declaration or the
Unit Agreement.
Section 5.02 Treatment of Holders of Warrant Certificates. At all such
times as any Warrant is held pursuant to the Unit Agreement, the Company, the
Warrant Agent and all other persons may treat the holder of the related Unit as
the Holder of the Warrant Certificate evidencing such Warrant for any purpose
and as the person entitled to exercise the rights relating to such Warrant and
Warrant Certificate, any notice to the contrary notwithstanding. After the date
that a Warrant is no longer held pursuant to the Unit Agreement and prior to due
presentment of the related Warrant Certificate for registration of transfer, the
Company and the Warrant Agent may treat the registered Holder of such Warrant
Certificate as the absolute Holder thereof for any purpose and as the person
entitled to exercise the rights relating to such Warrant and Warrant
Certificate, any notice to the contrary notwithstanding.
Section 5.03 Cancellation of Warrant Certificates. In the event that
the Company shall purchase, redeem or otherwise acquire any Warrants after the
issuance thereof pursuant to the terms of this Warrant Agreement, the Warrant
Certificate or Warrant Certificates evidencing such Warrants shall thereupon be
delivered to the Warrant Agent and be canceled by it. The Warrant Agent shall
also cancel any Warrant Certificate delivered to it for exercise, in whole or in
part, or for exchange or transfer. Warrant Certificates so canceled shall be
delivered by the Warrant Agent to the Company from time to time, or disposed of
in accordance with the instructions of the Company; provided, that the Warrant
Agent shall not be required to destroy the Warrant Certificates.
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ARTICLE VI
CONCERNING THE WARRANT AGENT
Section 6.01 Warrant Agent. The Company hereby appoints The Bank of New
York as Warrant Agent, upon the terms and subject to the conditions set forth
herein; and The Bank of New York 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
acceptable to it 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 6.02 Conditions of Warrant Agent's Obligations. The Warrant
Agent accepts its obligations set forth herein 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 shall be subject:
(a) Compensation and Indemnification. The Company agrees to promptly
pay the Warrant Agent the compensation set forth in Exhibit B hereto (or as
otherwise agreed to in writing from time to time by the Company and the Warrant
Agent), and to reimburse the Warrant Agent for reasonable out-of-pocket expenses
(including counsel fees and expenses) incurred 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 (including the reasonable costs and
expenses of defending against any claim of liability) incurred without
negligence or bad faith on the part of the Warrant Agent arising out of or in
connection with its appointment, status or service as Warrant Agent hereunder.
(b) Agent for the Company. In acting under this Warrant Agreement and
in connection with any Warrant Certificate, the Warrant Agent is acting solely
as agent of the Company and does not assume any obligation or relationship of
agency or trust for or with any Holder.
(c) Counsel. The Warrant Agent may consult with counsel satisfactory to
it, and the 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.
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(d) Documents. The Warrant Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
reliance upon any 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) Officer's Certificate. Whenever in the performance of its duties
hereunder the Warrant Agent shall reasonably deem it necessary that any fact or
matter be proved or established by the Company prior to taking, suffering or
omitting any action hereunder, the Warrant Agent may (unless other evidence in
respect thereof be herein specifically prescribed), in the absence of bad faith
on its part, rely upon a certificate signed by the Chairman of the Board of
Directors, the Vice Chairman of the Board of Directors, the President, an
Executive Vice President, the Treasurer, an Assistant Treasurer, the Secretary
or an Assistant Secretary of the Company delivered by the Company to the Warrant
Agent.
(f) Actions Through Agents. 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 or agents, and the Warrant Agent
shall not be answerable or accountable for any act, default, neglect or
misconduct of any such attorney or agent or for any loss to the Company
resulting from such neglect or misconduct; provided, however, that reasonable
care shall have been exercised in the selection and continued employment of such
attorneys and agents.
(g) Certain Transactions. The Warrant Agent, and any officer, director
or employee thereof, may become the owner of, or acquire any interest in, any
Warrant, with the same rights that he, she or it would have if it were not the
Warrant Agent, and, to the extent permitted by applicable law, he, she or it may
engage or be interested in any financial or other transaction with the Company
and may serve on, or as depository, trustee or agent for, any committee or body
of holders of Common Stock or other obligations of the Company as if it were not
the Warrant Agent.
(h) No Liability For Interest. The Warrant Agent shall not be liable
for interest on any monies at any time received by it pursuant to any of the
provisions of this Warrant Agreement or of the Warrant Certificates, except as
otherwise agreed with the Company.
(i) No Liability For Invalidity. The Warrant Agent shall incur no
liability with respect to the validity of this Warrant Agreement (except as to
the due execution hereof by the Warrant Agent) or any Warrant Certificate
(except as to the countersignature thereof by the Warrant Agent).
(j) No Responsibility For Company Representations. The Warrant Agent
shall not be responsible for any of the recitals or representations contained
herein (except as to such statements or recitals as describe the Warrant Agent
or action taken or to be taken by it) or in any Warrant Certificate (except as
to the Warrant Agent's countersignature on such Warrant Certificate), all of
which recitals and representations are made solely by the Company.
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(k) No Implied Obligations. The Warrant Agent shall be obligated to
perform only such duties as are specifically set forth herein, and no other
duties or obligations shall be implied. The Warrant Agent shall not be under any
obligation to take any action hereunder that may subject it to 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 Warrant
Certificate countersigned by the Warrant Agent and delivered by it to the
Company pursuant to this Warrant Agreement or for the application by the Company
of the proceeds of the issuance or exercise of Warrants. 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 any Warrant
Certificate or in case of the receipt of any written demand from a Holder 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 7.02 hereof,
to make any demand upon the Company.
(l) No Liability for Calculations by Calculation Agent. The Warrant
Agent shall be entitled to conclusively rely upon any determination by the
Calculation Agent under the Calculation Agency Agreement dated as of November
15, 1999, between the Company and Lehman Brothers Inc., as calculation agent
(the "Calculation Agent"), of the Accreted Value or Discount relating to the
Preferred Securities and shall not incur any liability to the Company any Holder
relating to inaccuracies in calculating such Accreted Value or Discount.
Section 6.03 Resignation and Removal; Appointment of Successor.
(a) The Company agrees, for the benefit of the Holders of the Warrants,
that there shall at all times be a Warrant Agent hereunder until all Warrants
have expired.
(b) The Warrant Agent may at any time resign as such by giving written
notice to the Company, specifying the date on which its desired resignation
shall become effective; provided that such date shall not be less than 30 days
after the date on which such notice if given unless the Company agrees to accept
a shorter notice. 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 date when it shall become effective.
Notwithstanding the provisions of this paragraph (b), 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 banking institution
organized and doing business under the laws of the United States of America, any
State thereof or the District of Columbia, authorized under the laws of such
jurisdiction to exercise corporate trust powers and having at the time of its
appointment as Warrant Agent a combined capital and surplus (as set forth in its
most recent published report of financial condition) of at least $50,000,000)
and the acceptance of such appointment by such successor Warrant Agent. In the
event a successor Warrant Agent has not been appointed and has not accepted its
duties within 30 days of the Warrant Agent's notice of resignation, the Warrant
Agent may apply to any court of competent jurisdiction for the designation of a
successor Warrant Agent. The obligations of the Company under Section 6.02(a)
shall continue to the extent set forth therein notwithstanding the resignation
or removal of the Warrant Agent.
33
<PAGE>
(c) In case at any time the Warrant Agent shall resign, or shall be
removed, or shall become incapable of acting, or shall file a petition seeking
relief under Title 11 of the United States Code, as now constituted or hereafter
amended or under any other applicable federal or state bankruptcy law or similar
law, or make an assignment for the benefit of its creditors or consent to the
appointment of a receiver or custodian of all or any substantial part of its
property, or shall admit in writing its inability to pay or meet its debts as
they mature, or if a receiver or custodian of it or all or any substantial part
of its property shall be appointed, or if an order of any court shall be entered
for relief against it under the provisions of Title 11 of the United States
Code, as now constituted or hereafter amended, or under any other applicable
federal or state bankruptcy or similar law, or if any public officer shall have
taken charge or control of the Warrant Agent or of its property or affairs, for
the purpose of rehabilitation, conservation 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
latter of such appointment, the Warrant Agent so superseded 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 moneys,
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 of the assets and business of the Warrant Agent, provided that such
corporation shall be qualified as aforesaid, shall be the successor Warrant
Agent under this Warrant Agreement without the execution or filing of any paper
or any further act on the part of any of the parties hereto.
Section 6.04 Compliance With Applicable Laws. The Warrant Agent agrees
to comply with all applicable federal and state laws imposing obligations on it
in respect of the services rendered by it under this Warrant Agreement and in
connection with the Warrants, including (but not limited to) the provisions of
United States federal income tax laws regarding information reporting and backup
withholding. The Warrant Agent expressly assumes all liability for its failure
to comply with any such laws imposing obligations on it, including (but not
limited to) any liability for failure to comply with any applicable provisions
of United States federal income tax laws regarding information reporting and
backup withholding.
34
<PAGE>
Section 6.05 Office. The Company will maintain an office or agency
where Warrant Certificates may be presented for exchange, transfer or exercise.
The office initially designated for this purpose shall be the corporate trust
office of the Warrant Agent at its address set forth in Section 8.02.
ARTICLE VII
COVENANTS
Section 7.01 Financial Statements and Reports of the Company. The
Company agrees (a) to provide to each Holder, without cost to such Holder,
copies of the annual and quarterly reports and documents that the Company files
with the Commission (to the extent such filings are accepted by the Commission
and whether or not the Company has a class of securities registered under the
Exchange Act) or that the Company would be required to file were it subject to
Section 13 or 15 of the Exchange Act, within 15 days after the date of such
filing or the date on which the Company would be required to file such reports
or documents, and all such annual or quarterly reports shall include the
geographic segment financial information as has heretofore been disclosed by the
Company in its public filings with the Commission, and (b) if filing such
reports and documents is not accepted by the Commission or is prohibited under
the Exchange Act, to supply at the Company's expense copies of such reports and
documents to any prospective Holder promptly upon request.
Section 7.02 Notices and Demands to the Company and Warrant Agent. If
the Warrant Agent shall receive any notice or demand addressed to the Company by
any Holder pursuant to the provisions of the Warrant Certificates, the Warrant
Agent shall promptly forward such notice or demand to the Company.
Section 7.03 Governmental Approvals. The Company shall from time to
time use all reasonable efforts to obtain and keep effective any and all
permits, consents and approvals of governmental agencies and authorities and the
national securities exchange on which the Warrants may be listed or authorized
for trading from time to time and will make all filings under the federal and
state securities laws (including without limitation the Securities Act), as may
be or become requisite in connection with the issuance, sale, trading, transfer
or delivery of the Warrants and Warrant Certificates, the exercise of the
Warrants and the issuance, sale and delivery of the Common Stock issued upon the
exercise of the Warrants.
Section 7.04 Satisfaction of Exercise Conditions. Subject to Section
3.03(e), the Company shall at all times exercise its best efforts to satisfy or
cause to be satisfied the Exercise Conditions. In connection therewith, the
Company shall exercise its best efforts to (a) prior to the exercise of any
Warrant (whether in connection with a Redemption or otherwise), furnish the
Warrant Agent with sufficient copies of a then-current prospectus relating to
the Common Stock deliverable upon exercise of any outstanding Warrants (and the
Warrant Agent, upon receipt thereof, if any, shall deliver, at the expense of
the Company, the same to exercising Holders), (b) cause the related registration
statement to be effective until the expiration of all Warrants, and (c)
otherwise cause to be satisfied the Exercise Conditions.
35
<PAGE>
Section 7.05 Reservation of Shares. The Company shall at all times keep
reserved out of its authorized shares of Common Stock a number of shares of
Common Stock sufficient to provide for the exercise of all outstanding Warrants.
The registrar for the Common Stock shall at all times, until the Warrants have
expired, reserve such number of authorized shares as shall be required for such
purpose. All Common Stock issued upon exercise of Warrants shall, and the
Company covenants that it will, upon issuance, be fully paid, nonassessable,
free of preemptive rights and free from all taxes, liens, charges and security
interests with respect to the issue thereof.
36
<PAGE>
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Supplements and Amendments.
(a) The Company and Warrant Agent may from time to time supplement or
amend this Warrant Agreement without the approval or consent of any Holder in
order to cure any ambiguity, to correct or supplement any provision contained
herein that may be defective or inconsistent with any other provisions herein,
or to make any other provision in regard to matters or questions arising
hereunder that the Company and the Warrant Agent may deem necessary or desirable
and that shall not adversely affect the interests of the Holders. Every Holder
of Warrants, whether issued before or after any such supplement or amendment,
shall be bound thereby. Promptly after the effectiveness of any supplement or
amendment that affects the interest of the Holders, the Company shall give
notice thereof, as provided in Section 8.02 hereof, to the Holders affected
thereby, setting forth in general terms the substance of such supplement or
amendment.
(b) The Company and the Warrant Agent may modify or amend this Warrant
Agreement and the Warrant Certificates with the consent of the Holders of not
fewer than a majority in number of the then-outstanding unexercised Warrants,
for any purpose; provided, however, that no such modification or amendment that
(i) changes the Exercise Price of the Warrants other than in accordance with
Section 4.01(h), (ii) reduces the Exercise Amount other than in accordance with
Article IV, (iii) accelerates the Expiration Date of the Warrants, (iv)
materially and adversely affects the rights of any Holder, or (v) reduces the
percentage of outstanding unexercised Warrants the consent of the Holders of
which is required hereunder for modification or amendment of this Warrant
Agreement or the Warrants, may be made without the consent of each Holder.
Section 8.02 Addresses for Notices. Any communications from the Company
to the Warrant Agent with respect to this Warrant Agreement shall be addressed
to The Bank of New York, 101 Barclay Street, Floor 21 West, New York, New York
10286, Attention: Corporate Trust Administration; any communications 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: Treasurer (with a copy to the Secretary); or such other
addresses as shall be specified in writing by the Warrant Agent or by the
Company, as the case may be.
Any notice or communication mailed to a Holder shall be mailed to the
Holder at the Holder's address as it appears on the Warrant Register and shall
be sufficiently given if so mailed within the time prescribed.
37
<PAGE>
Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. If a notice
or communication is mailed in the manner provided above, it is duly given,
whether or not the addressee receives it.
Section 8.03 Governing Law. This Warrant Agreement and the Warrant
Certificates shall be governed by the laws of the State of New York.
Section 8.04 Persons Having Rights Under Warrant Agreement. Nothing in
this Warrant Agreement, express or implied, and nothing that may be inferred
from any of the provisions hereof is intended, or shall be construed, to confer
upon, or give to, any person or corporation other than the Company, the Warrant
Agent and the Holders any right, remedy or claim under or by reason of this
Warrant Agreement or of any covenant, condition, stipulation, promise or
agreement hereof; and all covenants, conditions, stipulations, promises and
agreements in this Warrant Agreement contained shall be for the sole and
exclusive benefit of the Company and the Warrant Agent and their respective
successors and of the Holders.
Section 8.05 Headings. The descriptive headings of the several Articles
and Sections and the Table of Contents of this Warrant Agreement are for
convenience only and shall not control or affect the meaning or construction of
any of the provisions hereof.
Section 8.06 Counterparts. This Warrant Agreement may be executed by
the parties hereto in any number of counterparts, each of which when so executed
and delivered shall be deemed to be an original; but all such counterparts shall
together constitute but one and the same instrument.
Section 8.07 Inspection of Agreement. A copy of this Warrant Agreement
shall be available at all reasonable times at the principal corporate trust
office of the Warrant Agent, for inspection by the Holders of Warrants.
38
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be duly executed as of the day and year first above written.
/s/ SOVEREIGN BANCORP, INC.
/s/ THE BANK OF NEW YORK,
as Warrant Agent
39
<PAGE>
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE WERE INITIALLY ISSUED AS PART OF AN
ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF A WARRANT TO PURCHASE 5.3355 SHARES
(SUBJECT TO ANTI-DILUTION ADJUSTMENTS) OF COMMON STOCK OF THE COMPANY AT THE
EXERCISE PRICE SET FORTH IN THE BELOW-REFERENCED WARRANT AGREEMENT AND A
PREFERRED SECURITY OF SOVEREIGN CAPITAL TRUST II (THE "TRUST"). THE WARRANTS AND
THE PREFERRED SECURITIES MAY BE SEPARATED AND TRANSFERRED SEPARATELY, AND
RE-ATTACHED, IN ACCORDANCE WITH THE PROVISIONS OF THE UNIT AGREEMENT.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO
THE COMPANY 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 IS 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.]
[TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE WARRANT
AGREEMENT.]
No. { } Certificate for [_____ Warrants]
[Number of Warrants set forth on Schedule A hereto]
WARRANTS TO PURCHASE COMMON STOCK OF
SOVEREIGN BANCORP, INC.
THIS CERTIFIES THAT __________, or its registered assigns, is the
registered holder of the number of Warrants set forth above (the "Warrants").
Each Warrant entitles the holder thereof (the "Holder"), at its option and
subject to the provisions contained herein and in the Warrant Agreement referred
to below, to purchase from Sovereign Bancorp, Inc., a Pennsylvania corporation
("the Company"), 5.3355 shares (subject to certain adjustments as set forth in
the Warrant Agreement) of common stock of the Company (the "Common Stock") at
the Exercise Price. This Warrant Certificate shall terminate and become void,
and the related Warrants shall expire, as of 5:00 p.m., New York time, on the
earlier of (i) November 20, 2029 or (ii) the date the Warrants are redeemed by
the Company pursuant to the terms of the Warrant Agreement, as described below
(the "Expiration Date"), or upon the earlier exercise hereof as to all the
shares of Common Stock subject hereto. The number of shares issuable upon
exercise of the Warrants shall be subject to adjustment from time to time as set
forth in the Warrant Agreement.
A-1
<PAGE>
This Warrant Certificate is issued under and in accordance
with a Warrant Agreement dated as of November 15, 1999 (the "Warrant
Agreement"), between the Company and The Bank of New York, as warrant agent (the
"Warrant Agent", which term includes any successor Warrant Agent under the
Warrant Agreement), 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. The Warrant Agreement is
hereby incorporated herein by reference and made a part hereof. Reference is
hereby made to the Warrant Agreement for a full statement of the respective
rights, limitations of rights, duties and obligations of the Company, the
Warrant Agent and the Holders of the Warrants. Capitalized terms used but not
defined herein shall have the meanings ascribed thereto in the Warrant
Agreement. A copy of the Warrant Agreement may be obtained for inspection by the
Holder hereof upon written request to the Warrant Agent at its address for
notices specified in the Warrant Agreement.
Subject to redemption as described below, the Holder of this Warrant
Certificate shall have the right, prior to the Expiration Date, at such Holder's
option, to exercise the related Warrant and purchase the Exercise Amount
(subject to certain adjustments set forth in the Warrant Agreement) of Common
Stock at the Exercise Price, provided that the Exercise Conditions are met as of
such date. If the Warrant evidenced by this Warrant Certificate is not exercised
at or before 5:00 p.m., New York time, on its Expiration Date, such Warrant
shall become void, and all rights of the Holder of this Warrant Certificate
hereunder and under the Warrant Agreement shall cease. The Warrant or Warrants
evidenced by this Warrant Certificate may be exercised by giving notice to the
Warrant Agent no later than 5:00 p.m., New York time, on the Business Day
preceding the proposed date of exercise of such Warrants and completing the form
of election to purchase set forth on the reverse hereof, and delivering the
same, together with this Warrant Certificate (if this Warrant Certificate shall
then be held in definitive form), to the Warrant Agent no later than 5:00 p.m.,
New York time, on the date of such exercise, together with a Cash Payment
(unless, in accordance with the Warrant Agreement, a Remarketing Payment is to
be made). In no event may a Holder satisfy its obligation to pay the Exercise
Price by tendering Preferred Securities.
On the date of exercise of the Warrant or Warrants evidenced by this
Warrant Certificate, the Company shall issue, and the Warrant Agent shall
deliver, to or upon the order of the Holder hereof, the Exercise Amount of
Common Stock to which such Holder is entitled, registered in such name or names
as may be directed by such Holder. The date on which this Warrant Certificate
and payment are received by the Warrant Agent as aforesaid shall be deemed to be
the date on which the related Warrant is exercised and the related Common Stock
is issued.
A-2
<PAGE>
Notwithstanding anything to the contrary in this Warrant Certificate or
in the Warrant Agreement, (i) no fractional shares of Common Stock shall be
issued by the Company upon the exercise of any Warrant, (ii) if more than one
Warrant shall be exercised at the same time by the same Holder, the number of
shares of Common Stock issuable in connection with such exercise shall be
computed on the basis of the aggregate Exercise Amount of the Warrants so
exercised, and (iii) on the date a Holder exercises such Holder's Warrant, the
Company shall pay such Holder an amount in cash equal to the then-current Market
Price (multiplied by the related fraction) of Common Stock for such fractional
shares, computed to the nearest whole cent.
If fewer than all of the Warrants evidenced by this Warrant Certificate
are exercised, the Company shall execute, and an authorized officer of the
Warrant Agent shall countersign and deliver, a new Warrant Certificate
evidencing the number of Warrants remaining unexercised.
The "Exercise Conditions" require that, with respect to any Warrant on
any date on which such Warrant is or is proposed to be exercised by the Holder
thereof, that (i) (a) the Company shall have a registration statement in effect
under the Securities Act covering the issuance and sale of the related Exercise
Amount of Common Stock upon exercise of such Warrant, or (b) the sale of such
shares of Common Stock shall be exempt from the registration requirements of the
Securities Act, (ii) such shares of Common Stock shall have been registered,
qualified or are deemed to be exempt under the securities laws of the state of
residence of the exercising Holder, and (iii) a then-current prospectus relating
to the Common Stock shall be delivered to such exercising Holder.
As provided in the Warrant Agreement, the number of shares of Common
Stock issuable upon the exercise of the Warrants is subject to an anti-dilution
adjustment upon the happening of certain events. The Warrant Agreement also
provides for certain adjustments and/or distributions in the event of certain
events relating to a merger or combination of the Company, and similar events.
Subject to satisfaction of the Exercise Conditions and certain other
conditions, the Company may elect to cause a remarketing of the Preferred
Securities and a contemporaneous redemption of the Warrants on the Redemption
Date, for cash, in an amount equal to the Warrant Value as of the Remarketing
Date, in accordance with the Warrant Agreement and related agreements.
A Holder (i) may elect to exercise a Warrant in lieu of Redemption, if
(A) such Warrant is held pursuant to the Unit Agreement, and such Holder has
opted out of participating in the Remarketing, by notice given to the Warrant
Agent and the Unit Agent; or (B) such Warrant is not held pursuant to the Unit
Agreement, by notice given to the Warrant Agent, in each case prior to 5:00
p.m., New York time, on the Business Day prior to the related Redemption Date;
and (ii) as provided in the Unit Agreement, shall be deemed to have elected to
exercise such Warrant in lieu of Redemption, if such Warrant is held pursuant to
the Unit Agreement and such Holder has not opted out of participating in the
Remarketing. In the absence of an election to exercise a Warrant in lieu of a
Redemption, including a deemed election pursuant to clause (ii) of the preceding
sentence, a Holder will be deemed to have elected to have its Warrants redeemed
on the Redemption Date.
A-3
<PAGE>
If a Holder elects or is deemed to have elected to exercise a Warrant
pursuant to the preceding paragraph, then such Holder must tender the Exercise
Price for such Warrant as a Cash Payment, and must follow certain procedures set
forth in the Warrant Agreement; provided, however, that if (i) such Warrant is,
on the Remarketing Date, held pursuant to the Unit Agreement, (ii) such Holder
has not opted out of participating in the Remarketing, and (iii) a Successful
Remarketing shall have occurred, then the Exercise Price of such Warrant will be
deemed to have been paid by a Remarketing Payment, and the Remarketing Agent
will, in connection with such Remarketing Payment, apply the proceeds of the
Remarketing of the related Preferred Security in accordance with the terms of
the Remarketing Agreement and the Unit Agreement.
Any Warrant so redeemed or exercised will, upon such redemption or
exercise, cease to be outstanding.
If a Redemption cannot occur because of an inability, following the
Company's best efforts, to satisfy the Redemption Conditions, the Company will
promptly notify the Warrant Agent and each Holder (at its address specified in
the Warrant Register) thereof. Such event will not constitute a default under
the Warrant Agreement so long as the Company is not otherwise in violation
thereof; and the Company may, under such circumstances, subsequently seek to
remarket the Preferred Securities and contemporaneously redeem the Warrants.
The Company will, contemporaneously with the giving of notice of
Remarketing, furnish notice of Redemption to the Warrant Agent, which will,
within two (2) Business Days after receipt thereof, furnish notice of such
Redemption to Holders of Definitive Warrants, and the Company will request, not
later than 15 nor more than 30 calendar days prior to the Remarketing Date, that
DTC notify its Participants holding Warrants of the Remarketing.
The Company may require payment of a sum sufficient to pay all taxes,
assessments or other governmental charges in connection with the transfer or
exchange of the Warrant Certificates pursuant to the Warrant Agreement, but not
for any exchange or original issuance (not involving a transfer) with respect to
temporary Warrant Certificates, the exercise of the Warrants or the issuance of
the Common Stock.
This Warrant Certificate may be exchanged at the office of the Warrant
Agent by presenting this Warrant Certificate properly endorsed with a request to
exchange this Warrant Certificate for other Warrant Certificates evidencing an
equal number of Warrants, in accordance with the Warrant Agreement.
A-4
<PAGE>
All shares of Common Stock issuable by the Company upon the exercise of
the Warrants shall, upon such issue, be duly and validly issued and fully paid
and non-assessable.
The holder in whose name this Warrant Certificate is registered may be
deemed and treated by the Company and the Warrant Agent as the absolute owner of
this Warrant Certificate for all purposes whatsoever and neither the Company nor
the Warrant Agent shall be affected by notice to the contrary.
Neither this Warrant Certificate, nor the Warrant evidenced hereby,
entitles the Holder hereof to any of the rights of a shareholder of the Company.
This Warrant Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Warrant Agent.
SOVEREIGN BANCORP, INC.
By: ___________________________
Name:
Title:
DATED:
Countersigned:
- ------------------------------
THE BANK OF NEW YORK,
as Warrant Agent
By ___________________________
Authorized Signatory
A-5
<PAGE>
[REVERSE OF WARRANT CERTIFICATE]
FORM OF ELECTION TO PURCHASE COMMON STOCK
(to be executed only upon exercise of Warrants)
SOVEREIGN BANCORP, INC.
The undersigned hereby irrevocably elects to exercise ___ Warrants at an
Exercise Price of $______ per Warrant to acquire the Exercise Amount (as
determined pursuant to the Warrant Agreement) per Warrant of Common Stock of
Sovereign Bancorp, Inc. on the terms and conditions specified within this
Warrant Certificate and the Warrant Agreement therein referred to, surrenders
this Warrant Certificate and all right, title and interest therein and directs
that the shares of Common Stock deliverable upon such exercise be registered or
placed in the name and at the address specified below and delivered thereto.
The signature below must correspond with the name as written upon the
face of the within Warrant Certificate in every particular, without alteration
or enlargement or any change whatsoever, and must be guaranteed.
Dated: ____________, ____
-------------------------------------
(Signature of Holder)
-------------------------------------
(Street Address)
-------------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
-------------------------------------
{Signature must be guaranteed by an
eligible guarantor institution (banks,
stock brokers, savings and loan
associations and credit unions) with
membership in an approved guarantee
medallion program pursuant to Securities
and Exchange Commission Rule 17Ad-5)
A-6
<PAGE>
Common Stock to be issued to:
Please insert social security or identifying number:
Name:____________________________________________
Street Address:__________________________________
City, State and Zip Code:________________________
Any unexercised Warrants represented by the Warrant Certificate to be issued to:
Please insert social security or identifying number:
Name:____________________________________________
Street Address:__________________________________
City, State and Zip Code:________________________
A-7
<PAGE>
[TO BE ATTACHED TO GLOBAL CERTIFICATES]
SCHEDULE A
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE
This Global Certificate shall represent [0] Warrants unless otherwise
indicated below.
The following increases or decreases in this Global Certificate have
been made:
<TABLE>
<CAPTION>
====================================================================================================================
Amount of decrease Amount of increase Number of Warrants Signature of
in Number of in Number of evidenced by the authorized officer
Warrants evidenced Warrants evidenced Global Certificate of Agent
by the Global by the Global following such
Date Certificate Certificate decrease or increase
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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====================================================================================================================
EXHIBIT B
[Compensation of Warrant Agent]
</TABLE>
A-8
<PAGE>
================================================================================
SOVEREIGN BANCORP, INC.
SOVEREIGN CAPITAL TRUST II
and
THE BANK OF NEW YORK,
as Warrant Agent
THE BANK OF NEW YORK,
as Property Trustee
THE BANK OF NEW YORK,
as Agent
UNIT AGREEMENT
Dated as of November 15, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
RECITALS ....................................................................1
ARTICLE I
Definitions and Other Provisions of General Applications
Section 1.1. Definitions ....................................................2
Section 1.2. Compliance Certificates and Opinions ...........................9
Section 1.3. Form of Documents Delivered to Agent ...........................9
Section 1.4. Acts of Holders; Record Dates .................................10
Section 1.5. Notices .......................................................11
Section 1.6. Notice to Holders; Waiver .....................................12
Section 1.7. Effect of Headings and Table of Contents ......................13
Section 1.8. Successors and Assigns ........................................13
Section 1.9. Separability Clause ...........................................13
Section 1.10. Benefits of Agreement ........................................13
Section 1.11. Governing Law. ...............................................13
Section 1.12. Legal Holidays ...............................................13
Section 1.13. Counterparts .................................................14
Section 1.14. Inspection of Agreement ......................................14
-i-
<PAGE>
Page
----
ARTICLE II
Certificate Forms
Section 2.1. Forms of Certificates Generally ...............................14
Section 2.2. Form of Agent's Certificate of Authentication .................15
ARTICLE III
The Securities
Section 3.1. Amount; Form and Denominations ................................15
Section 3.2. Rights and Obligations Evidenced by the Certificates ..........16
Section 3.3. Execution, Authentication, Delivery and Dating ................16
Section 3.4. Temporary Certificates ........................................17
Section 3.5. Registration; Registration of Transfer and Exchange ...........18
Section 3.6. Separation and Rejoining of Units .............................19
Section 3.7. Book-Entry Interests ..........................................20
Section 3.8. Notices to Holders ............................................21
Section 3.9. Appointment of Successor Clearing Agency ......................21
Section 3.10. Definitive Certificates ......................................21
Section 3.11. Mutilated, Destroyed, Lost and Stolen Certificates ...........21
Section 3.12. Persons Deemed Owners ........................................22
Section 3.13. Cancellation .................................................23
Section 3.14. CUSIP Numbers ................................................23
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ARTICLE IV
The Preferred Securities
Section 4.1. Payment of Distribution; Rights to Distributions
Preserved; Distribution Rate Reset............................ 23
Section 4.2. Notice and Voting. ............................................24
Section 4.3. Distribution of Debentures ....................................24
ARTICLE V
Remarketing and Redemption; Early Exercise
Section 5.1. Remarketing and Redemption ....................................25
Section 5.2. Early Exercise of Warrants; Exchange of Preferred
Securities and Repurchase of Debentures .......................28
Section 5.3. Change in Control. ............................................28
Section 5.4. Certain Rights Following a Remarketing. .......................29
ARTICLE VI
Remedies
Section 6.1. Unconditional Right of Holders to Receive Payments and
to Purchase Common Stock ......................................29
Section 6.2. Restoration of Rights and Remedies ............................29
Section 6.3. Rights and Remedies Cumulative ................................30
Section 6.4. Delay or Omission Not Waiver ..................................30
Section 6.5. Undertaking for Costs .........................................30
Section 6.6. Waiver of Stay or Extension Laws ..............................30
ARTICLE VII
The Agent
Section 7.1. Certain Duties and Responsibilities ...........................31
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Section 7.2. Notice of Default .............................................32
Section 7.3. Certain Rights of Agent .......................................32
Section 7.4. Not Responsible for Recitals or Issuance of Securities ........33
Section 7.5. May Hold Securities ...........................................33
Section 7.6. Money Held in Custody .........................................33
Section 7.7. Compensation and Reimbursement ................................33
Section 7.8. Corporate Agent Required; Eligibility .........................34
Section 7.9. Resignation and Removal; Appointment of Successor .............34
Section 7.10. Acceptance of Appointment by Successor .......................35
Section 7.11. Merger, Conversion, Consolidation or Succession to Business ..36
Section 7.12. Preservation of Information; Communications to Holders .......36
Section 7.13. No Obligations of Agent ......................................37
Section 7.14. Tax Compliance ...............................................37
ARTICLE VIII
Supplemental Agreements
Section 8.1. Supplemental Agreements Without Consent of Holders ............37
Section 8.2. Supplemental Agreements With Consent of Holders ...............38
Section 8.3. Execution of Supplemental Agreements ..........................39
Section 8.4. Effect of Supplemental Agreements .............................39
Section 8.5. Reference to Supplemental Agreements ..........................39
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ARTICLE IX
Consolidation, Merger, Sale or Conveyance
Section 9.1. Covenant Not to Merge, Consolidate, Sell or Convey
Property Except Under Certain Conditions ......................39
Section 9.2. Rights and Duties of Successor Corporation ....................40
Section 9.3. Opinion of Counsel Given to Agent .............................40
ARTICLE X
Covenants
Section 10.1. Performance Under Agreements .................................40
Section 10.2. Maintenance of Office or Agency ..............................41
Section 10.3. Statements of Officers of Sovereign as to Default ............41
Section 10.4. ERISA ........................................................41
ARTICLE XI
Representations of the Agent
Section 11.1. Representations and Warranties of the Agent ..................42
ARTICLE XII
The Warrant Agent and The Property Trustee
Section 12.1. Certain Duties and Responsibilities ..........................42
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EXHIBIT A Form of Certificate
EXHIBIT B Instruction to Disregard Remarketing
EXHIBIT C Notice of Electing Remarketing Holder
EXHIBIT D Notice of Change of Control Redemption Election
EXHIBIT E Notice of Change of Control Exchange and Repurchase
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UNIT AGREEMENT, dated as of November 15, 1999, among Sovereign Bancorp,
Inc., a Pennsylvania corporation, Sovereign Capital Trust II, a statutory
Delaware business trust, The Bank of New York, as Property Trustee for the
Trust, The Bank of New York, as Warrant Agent, and The Bank of New York, acting
as unit agent for the Holders of the Securities from time to time (the "Agent").
RECITALS:
WHEREAS, the Issuers desire to issue Trust Preferred Income Equity
Redeemable Securities (PIERS) Units consisting of:
(i) Preferred Securities (stated liquidation amount $50 per
preferred security) issued by the Trust pursuant to the Declaration of
Trust and guaranteed (the "Guarantee"; together with the Preferred
Securities, the "Trust Securities") by Sovereign, to the extent set
forth in the Guarantee Agreement; and
(ii) Warrants issued by Sovereign pursuant to the Warrant
Agreement.
WHEREAS, concurrently with the issuance of the Trust Securities, the
Trust will invest the proceeds thereof (together with the proceeds of the
issuance to Sovereign of the common securities of the Trust) in Debentures.
WHEREAS the Issuers have duly authorized the execution and delivery of
this Agreement and the Certificates evidencing the Trust Securities.
WHEREAS, all things necessary to make the Preferred Securities, when
the Certificates are executed by the Trust and authenticated, executed on behalf
of the Holders and delivered by the Agent, as provided in this Agreement, the
valid obligations of the Trust, and to constitute these presents a valid
agreement of the Trust, in accordance with its terms, have been done.
WHEREAS, all things necessary to make the Warrants and the Debentures,
when the Certificates are executed by Sovereign and authenticated, executed on
behalf of the Holders and delivered by the Agent, as provided in this Agreement,
the valid obligations of Sovereign, and to constitute these presents a valid
agreement of Sovereign, in accordance with its terms, have been done.
W I T N E S S E T H :
NOW, THEREFORE, for and in consideration of the premises and the
purchase of the Securities by the Holders thereof, it is mutually agreed as
follows:
<PAGE>
ARTICLE I
Definitions and Other Provisions of
General Applications
Section 1.1. Definitions.
For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular, and nouns and pronouns of the masculine gender include the
feminine and neutral genders;
(b) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles in the United States;
(c) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to
any particular Article, Section, Exhibit or other subdivision;
(d) the following terms have the meanings given to them in
this Section 1.1(d):
"Accreted Value" has the meaning given to it in the Declaration.
"Act," when used with respect to any Holder, has the meaning given to
it in Section 1.4.
"Action Expiration Date" has the meaning given to it in Section 1.4(e).
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent" means the Person named as the "Agent" in the first paragraph of
this instrument until a successor Agent shall have become such pursuant to the
applicable provisions of this Agreement, and thereafter "Agent" shall mean such
Person.
"Agreement" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more agreements
supplemental hereto entered into pursuant to the applicable provisions hereof.
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"Applicable Procedures" means, with respect to any transfer or exchange
of or for the beneficial interests in the Global Certificate, the rules and
procedures of the Depositary that apply to such transfer or exchange.
"Bankruptcy Code" means title 11 of the United States Code, or any
other law of the United States that from time to time provides a uniform system
of bankruptcy laws.
"Beneficial Owner" means, with respect to a Global Certificate, a
Person who is the beneficial owner of such Book-Entry Interest as reflected on
the books of the Clearing Agency or on the books of a Person maintaining an
account with such Clearing Agency (directly as a Clearing Agency Participant or
as an indirect participant, in each case in accordance with the rules of such
Clearing Agency).
"Board of Directors" means the board of directors of Sovereign or a
duly authorized committee of that board.
"Board Resolution" means one or more resolutions of the Board of
Directors, a copy of which has been certified by the Secretary or an Assistant
Secretary of Sovereign to have been duly adopted by the Board of Directors and
to be in full force and effect on the date of such certification and delivered
to the Agent.
"Book-Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as described in Section 3.7.
"Business Day" means any day other than a Saturday or Sunday or a day
on which banking institutions in The City of New York or Philadelphia,
Pennsylvania are authorized or required by law or executive order to remain
closed or a day on which the Indenture Trustee, or the principal office of the
Property Trustee under the Declaration, is closed for business.
"Calculation Agent" means The Bank of New York, as initial Calculation
Agent under the Calculation Agreement, and any successor thereto.
"Calculation Agreement" means the Calculation Agency Agreement dated as
of November 15, 1999 between Sovereign and the Calculation Agent, as amended,
supplemented or replaced from time to time.
"Certificate" means a certificate evidencing the rights and obligations
of a Holder in respect of the number of Securities specified on such
Certificate, substantially in the form of Exhibit A hereto.
"Change of Control" has the meaning given to it in the Declaration.
"Change of Control Notice Date" has the meaning given to it in
Section 5.3.
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"Change of Control Redemption Right" has the meaning given to it in
Section 5.3.
"Change of Control Repurchase Right" has the meaning given to it in
Section 5.3.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as a
depositary for the Securities and in whose name, or in the name of a nominee of
that organization, shall be registered a Global Certificate and which shall
undertake to effect book entry transfers and pledges of the Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the common stock, without par value, of Sovereign.
"Corporate Trust Office" means the principal corporate trust office of
the Agent at which, at any particular time, its corporate trust business shall
be administered, which office at the date hereof is located at 101 Barclay
Street, 21 West, New York, New York 10286 Attention: Corporate Trust
Administration.
"Coupon Rate" means the percentage rate per annum at which each
Debenture will bear interest initially which rate, on and after the Remarketing
Date, will be the Reset Rate established in the Remarketing on the Remarketing
Date.
"Debenture Certificates" has the meaning given to it in Section 3.10.
"Debentures" means the 7.50% Junior Subordinated Deferrable Interest
Debentures due January 15, 2030 to be issued by Sovereign pursuant to the
Indenture.
"Declaration" means the Amended and Restated Declaration of Trust of
Sovereign Capital Trust II, dated as of November 15, 1999, among Sovereign, as
the sponsor and the trustees named therein.
"Definitive Certificates" means definitive, physical fully registered
Certificates delivered in accordance with Section 3.10.
"Depositary" means DTC until another Clearing Agency becomes its
successor.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
"Electing Remarketing Holder" has the meaning given to it in
Section 5.1.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934 and any
statute successor thereto, in each case as amended from time to time, and the
rules and regulations promulgated
thereunder.
"Exchange Agent" has the meaning given to it in the Declaration.
"Exercise Price" has the meaning given to it in the Warrant Agreement.
"Expiration Date" has the meaning given to it in the Warrant Agreement.
"Global Certificate" means a Certificate that evidences all or part of
the Securities and is registered in the name of a Clearing Agency or a nominee
thereof.
"Guarantee" has the meaning assigned to it in the Recitals hereto.
"Guarantee Agreement" means the Guarantee Agreement dated as of
November 15, 1999 between Sovereign and the Guarantee Trustee, as amended or
supplemented from time to time.
"Guarantee Trustee" means The Bank of New York, as trustee under the
Guarantee Agreement, or any successor thereto
"Holder," when used with respect to a Security, means the Person in
whose name the Security evidenced by a Certificate is registered in the
Register; provided, however, that in determining whether the Holders of the
requisite number of Securities have voted on any matter, then for the purpose of
such determination only (and not for any other purpose hereunder), if the
Security remains in the form of one or more Global Certificates and if the
Clearing Agency which is the holder of such Global Certificate has sent an
omnibus proxy assigning voting rights to the Clearing Agency Participants to
whose accounts the Securities are credited on the record date, the term "Holder"
shall mean such Clearing Agency Participant acting at the direction of the
Beneficial Owners.
"Indenture" means the Indenture, dated as of September 1, 1999, between
Sovereign and the Indenture Trustee, as amended by the First Supplemental
Indenture dated as of November 15, 1999, as further amended and supplemented
(including any provisions of the TIA that are deemed incorporated therein),
pursuant to which the Debentures are to be issued.
"Indenture Trustee" means Harris Trust and Savings Bank, as trustee
under the Indenture, or any successor thereto.
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"Issuer Order" or "Issuer Request" means a written request or order
signed in the name of Sovereign by its Chairman of the Board, its President or
one of its Vice Presidents, and by its Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary, and delivered to the Agent.
"Issuers" is a collective reference to Sovereign and the Trust.
"Legal Cause Remarketing Event" has the meaning given to it in the
Declaration.
"Maturity Remarketing Date" has the meaning given to it in the
Declaration.
"Notice of Remarketing" means a Notice of Remarketing delivered
pursuant to the Declaration.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, its President or one of its Vice Presidents, and by the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary, of Sovereign, and
delivered to the Agent. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Agreement shall
include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for Sovereign (and who may be an employee of Sovereign), and who shall
be reasonably acceptable to the Agent. An opinion of counsel may rely on
certificates as to matters of fact.
"Outstanding Securities," with respect to any Security means, as of the
date of determination, all Securities evidenced by Certificates theretofore
authenticated, executed and delivered under this Agreement, except:
(i) Securities evidenced by Certificates theretofore cancelled
by the Agent or delivered to the Agent for cancellation or deemed
cancelled pursuant to the provisions of this Agreement; and
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(ii) Securities evidenced by Certificates in exchange for or
in lieu of which other Certificates have been authenticated, executed
on behalf of the Holder and delivered pursuant to this Agreement, other
than any such Certificate in respect of which there shall have been
presented to the Agent proof satisfactory to it that such Certificate
is held by a bona fide purchaser in whose hands the Security evidenced
by such Certificate are valid obligations of Sovereign;
provided, however, that in determining whether the Holders of the requisite
number of the Securities have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Securities owned by Sovereign or
any Affiliate of Sovereign shall be disregarded and deemed not to be Outstanding
Securities, except that, in determining whether the Agent shall be protected in
relying upon any such request, demand, authorization, direction, notice, consent
or waiver, only Securities which a Responsible Officer of the Agent knows to be
so owned shall be so disregarded. Securities so owned which have been pledged in
good faith may be regarded as Outstanding Securities if the pledgee establishes
to the satisfaction of the Agent the pledgee's right so to act with respect to
such Securities and that the pledgee is not Sovereign or any Affiliate of
Sovereign.
"Party" or "Parties" have the respective meanings given to them in
Section 12.1.
"Payment Date" means each February 15, May 15, August 15 and November
15, commencing February 15, 2000.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint-stock company, limited
liability company, trust, unincorporated organization or government or any
agency or political subdivision thereof or any other entity of whatever nature.
"Plan" means an employee benefit plan that is subject to ERISA, a plan
or individual retirement account that is subject to Section 4975 of the Code or
any entity whose assets are considered assets of any such plan.
"Predecessor Certificate" of any particular Certificate means every
previous Certificate evidencing all or a portion of the rights and obligations
of the Issuers and the Holder under the Securities evidenced thereby; and, for
the purposes of this definition, any Certificate authenticated and delivered
under Section 3.11 in exchange for or in lieu of a mutilated, destroyed, lost or
stolen Certificate shall be deemed to evidence the same rights and obligations
of the Issuers and the Holder as the mutilated, destroyed, lost or stolen
Certificate.
"Preferred Securities" means the Preferred Securities of the Trust,
each having a stated liquidation amount of $50, representing preferred undivided
beneficial ownership interests in the assets of the Trust.
"Property Trustee" means The Bank of New York, as property trustee
under the Declaration, or any successor thereto.
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"Record Date" with respect to any Payment Date, means the Business Day
immediately preceding such Payment Date.
"Register" and "Registrar" have the respective meanings given to them
in Section 3.5.
"Remarketing" has the meaning given to it in the Declaration.
"Remarketing Agent" means the remarketing agent under the Remarketing
Agreement.
"Remarketing Agreement" means a Remarketing Agreement to be entered
into among Sovereign, the Trust and the Remarketing Agent.
"Remarketing Date" has the meaning given to it in the Declaration.
"Remarketing Event" has the meaning given to it in the Declaration.
"Remarketing Settlement Date" with respect to any Remarketing, means
the date which is three Business Days following the applicable Remarketing Date.
"Required Repurchase Date" has the meaning given to it in the
Declaration.
"Reset Rate" has the meaning given to it in the Declaration.
"Responsible Officer," when used with respect to the Agent, means any
officer within the corporate trust department of the Agent, including any vice
president, assistant vice president, assistant secretary, assistant treasurer,
trust officer or any other officer of the Agent who customarily performs
functions similar to those performed by the Persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of such person's knowledge of and familiarity with the particular
subject and who shall have direct responsibility for the administration of this
Agreement.
"Security" means the collective rights and obligations of a Holder of a
Certificate in respect of a Preferred Security, a Debenture and a Warrant.
"Sovereign" means Sovereign Bancorp, Inc., a Pennsylvania corporation,
until there shall be a successor thereto pursuant to the applicable provision of
this Agreement, and thereafter "Sovereign" shall mean such successor.
"Trading Remarketing Event" has the meaning given to it in the
Declaration.
"Trust" means Sovereign Capital Trust II, a statutory business trust
formed under the laws of the State of Delaware, or any successor thereto by
merger or consolidation.
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"Trust Securities" has the meaning given to it in the Recitals hereto.
"Vice President" means any vice president, whether or not designated by
a number or a word or words added before or after the title "vice president."
"Warrant" means the Warrants issued by Sovereign pursuant to the
Warrant Agreement representing the right to purchase Common Stock.
"Warrant Agent" means The Bank of New York, as warrant agent under the
Warrant Agreement, or any successor thereto.
"Warrant Agreement" means the Warrant Agreement dated as of November
15, 1999 between Sovereign and the Warrant Agent, as amended and supplemented,
pursuant to which the Warrants are issued.
"Warrant Value" has the meaning given to it in the Warrant Agreement.
1.2.Section Compliance Certificates and Opinions.
Except as otherwise expressly provided by this Agreement, upon any
application or request by Sovereign to the Agent to take any action in
accordance with any provision of this Agreement, Sovereign shall furnish to the
Agent an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Agreement relating to the proposed action have been
complied with and, if requested by the Agent, an Opinion of Counsel stating
that, in the opinion of such counsel, all such conditions precedent, if any,
have been complied with, except that in the case of any such application or
request as to which the furnishing of such documents is specifically required by
any provision of this Agreement relating to such particular application or
request, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Agreement shall include:
(1) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual,
he or she has made such examination or investigation as is necessary to
enable such individual to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
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(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.3. Form of Documents Delivered to Agent.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of Sovereign may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of Sovereign stating that the
information with respect to such factual matters is in the possession of
Sovereign unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 1.4. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Agent and, where it is hereby expressly required, to Sovereign. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Agreement and (subject to Section 7.1) conclusive in favor of the Agent and
Sovereign, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner which the Agent deems
sufficient.
(c) The ownership of Securities shall be proved by the Register.
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(d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Certificate shall bind every future
Holder of the same Certificate and the Holder of every Certificate issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Agent or
Sovereign in reliance thereon, whether or not notation of such action is made
upon such Certificate.
(e) Sovereign may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Agreement to be given, made or taken by
Holders of Securities. If any record date is set pursuant to this paragraph, the
Holders of the Outstanding Securities, on such record date, and no other
Holders, shall be entitled to take the relevant action with respect to the
Securities, whether or not such Holders remain Holders after such record date;
provided that no such action shall be effective hereunder unless taken on or
prior to the applicable Action Expiration Date by Holders of the requisite
number of Outstanding Securities on such record date. Nothing in this paragraph
shall be construed to prevent Sovereign from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and with
no action by any Person be cancelled and be of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite number of Outstanding Securities on the date such action is
taken. Promptly after any record date is set pursuant to this paragraph,
Sovereign, at its own expense, shall cause notice of such record date, the
proposed action by Holders and the applicable Expiration Date to be given to the
Agent in writing and to each Holder of Securities in the manner set forth in
Section 1.6.
With respect to any record date set pursuant to this Section, Sovereign
may designate any date as the "Action Expiration Date" and from time to time may
change the Expiration Date to any earlier or later day; provided that no such
change shall be effective unless notice of the proposed new Action Expiration
Date is given to the Agent in writing, and to each Holder of Securities in the
manner set forth in Section 1.6, on or prior to the existing Action Expiration
Date. If an Action Expiration Date is not designated with respect to any record
date set pursuant to this Section, Sovereign shall be deemed to have initially
designated the 180th day after such record date as the Action Expiration Date
with respect thereto, subject to its right to change the Action Expiration Date
as provided in this paragraph. Notwithstanding the foregoing, no Action
Expiration Date shall be later than the 180th day after the applicable record
date.
Section 1.5. Notices.
Any notice or communication is duly given if in writing and delivered
in Person or mailed by first class mail (registered or certified, return receipt
requested), telecopier (with receipt confirmed) or overnight air courier
guaranteeing next day delivery, to the others' address; provided that notice
shall be deemed given to the Agent only upon receipt thereof:
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If to the Agent:
The Bank of New York
101 Barclay Street
New York, New York 10286
Telecopier No.: 212-815-5915
Attention: Corporate Trust Administration
If to Sovereign:
Sovereign Bancorp, Inc.
1130 Berkshire Boulevard
Wyomissing, Pennsylvania 19610
Telecopier No.: 610-320-8448
Attention: Treasurer
If to the Trust:
c/o Sovereign Bancorp, Inc.
1130 Berkshire Boulevard
Wyomissing, Pennsylvania 19610
Telecopier No.: 610-320-8448
Attention: Treasurer
If to the Warrant Agent:
The Bank of New York
101 Barclay Street
New York, New York 10286
Telecopier No.: 212-815-5915
Attention: Corporate Trust Administration
If to the Property Trustee:
The Bank of New York
101 Barclay Street
New York, New York 10286
Telecopier No.: 212-815-5915
Attention: Corporate Trust Administration
If to the Indenture Trustee:
Harris Trust and Savings Bank
311 West Monroe Street
Chicago, Illinois 60606
Telecopier No.: 312-461-3525
Attention: Daniel G. Donovan
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Section 1.6. Notice to Holders; Waiver.
Where this Agreement provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at its address as it appears in the Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Holders is given by mail, neither
the failure to mail such notice, nor any defect in any notice so mailed to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Where this Agreement provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Agent, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Agent shall
constitute a sufficient notification for every purpose hereunder.
Section 1.7. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 1.8. Successors and Assigns.
All covenants and agreements in this Agreement by Sovereign shall bind
its successors and assigns, whether so expressed or not.
Section 1.9. Separability Clause.
In case any provision in this Agreement or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions hereof and thereof shall not in any way be affected or
impaired thereby.
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Section 1.10. Benefits of Agreement.
Nothing in this Agreement or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder and, to the extent provided hereby, the Holders, any benefits or any
legal or equitable right, remedy or claim under this Agreement. The Holders from
time to time shall be beneficiaries of this Agreement and shall be bound by all
of the terms and conditions hereof and of the Securities evidenced by their
Certificates by their acceptance of delivery of such Certificates.
Section 1.11. Governing Law.
This Agreement and the Securities shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of laws.
Section 1.12. Legal Holidays.
In any case where any Payment Date shall not be a Business Day, then
(notwithstanding any other provision of this Agreement or the Certificates)
payment of any amounts otherwise payable on such date shall not be made on such
date, but such payments shall be made on the next succeeding Business Day with
the same force and effect as if made on such Payment Date, provided that no
interest shall accrue or be payable for the period from and after any such
Payment Date, except that, if such next succeeding Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day with the same force and effect as if made on such Payment
Date.
Section 1.13. Counterparts.
This Agreement may be executed in any number of counterparts by the
parties hereto on separate counterparts, each of which, when so executed and
delivered, shall be deemed an original, but all such counterparts shall together
constitute one and the same instrument.
Section 1.14. Inspection of Agreement.
A copy of this Agreement shall be available at all reasonable times during
normal business hours at the Corporate Trust Office for inspection by any Holder
or Beneficial Owner.
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ARTICLE II
Certificate Forms
Section 2.1. Forms of Certificates Generally.
Each Security will consist of one Preferred Security and one Warrant.
The Certificates shall be in substantially the form set forth in Exhibit A
hereto, with such letters, numbers or other marks of identification or
designation and such legends or endorsements printed, lithographed or engraved
thereon as may be required by the rules of any securities exchange on which the
Securities are listed or any depositary therefor, or as may, consistently
herewith, be determined by the officers of Sovereign executing such
Certificates, as evidenced by their execution of the Certificates.
The Certificates shall be printed, lithographed or engraved on steel
engraved borders or may be produced in any other manner, all as determined by
the officers of Sovereign executing the Securities evidenced by such
Certificates, consistent with the provisions of this Agreement, as evidenced by
their execution thereof.
Every Global Certificate authenticated, executed on behalf of the
Holders and delivered hereunder shall bear a legend in substantially the
following form:
"THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE
UNIT AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE
"DEPOSITARY"), OR A NOMINEE OF THE DEPOSITARY. THIS CERTIFICATE IS
EXCHANGEABLE FOR CERTIFICATES REGISTERED IN THE NAME OF A PERSON OTHER
THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE UNIT AGREEMENT AND NO TRANSFER OF THIS CERTIFICATE
(OTHER THAN A TRANSFER OF THIS CERTIFICATE AS A WHOLE BY THE DEPOSITARY
TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE
DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED
EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY 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 THE
DEPOSITARY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE
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BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE
& CO., HAS AN INTEREST HEREIN.
THE CONSTITUENT COMPONENTS OF THIS UNIT MUST BE SEPARATED PRIOR TO
TRANSFER (EXCEPT AS PART OF A UNIT) AS PROVIDED IN THE UNIT AGREEMENT."
Section 2.2. Form of Agent's Certificate of Authentication.
The form of the Agent's certificate of authentication of the Securities
shall be in substantially the form set forth on the form of the Certificates.
ARTICLE III
The Securities
Section 3.1. Amount; Form and Denominations.
The aggregate number of Securities evidenced by Certificates
authenticated, executed on behalf of the Holders and delivered hereunder is
limited to 5,750,000 except for Certificates authenticated, executed and
delivered upon registration of transfer of, in exchange for, or in lieu of,
other Certificates pursuant to Section 3.4, 3.5, 3.10, 3.13 or 8.5.
The Certificates shall be issuable only in registered form and only in
denominations of a single Security and any integral multiple thereof.
On the date of issuance of the Units, Sovereign shall allocate $32.50
of the purchase price thereof to the Preferred Securities and $17.50 of the
purchase price to the Warrants.
Section 3.2. Rights and Obligations Evidenced by the Certificates.
Each Certificate shall evidence the number of Securities specified
therein, with each such Security representing the ownership by the Holder
thereof of a beneficial interest in a Preferred Security (or Debenture upon a
liquidation of the Trust) and a Warrant and entitled to the benefits of the
Declaration, the Indenture, the Warrant Agreement and all agreements ancillary
thereto.
Section 3.3. Execution, Authentication, Delivery and Dating.
Subject to the provisions of Section 3.6 hereof, upon the execution and
delivery of this Agreement, and at any time and from time to time thereafter,
Sovereign and the Trust may deliver Certificates executed by Sovereign and an
Administrative Trustee on behalf of the Trust to the Agent for authentication,
execution on behalf of the Holders and delivery, together with its Issuer Order
for
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authentication of such Certificates, and the Agent in accordance with such
Issuer Order shall authenticate, execute on behalf of the Holders and deliver
such Certificates. In authenticating such Securities, and accepting the
additional responsibilities under this Indenture in relation to such Securities,
the Agent shall be entitled to receive, and, shall be fully protected in relying
upon:
(a) A copy of the resolution or resolutions of the Board of
Directors in or pursuant to which the terms and form of the Securities
were established, certified by the Secretary or an Assistant Secretary
of the Company to have been duly adopted by the Board of Directors and
to be in full force and effect as of the date of such certificate, and
if the terms and form of such Securities are established by an
Officers' Certificate pursuant to general authorization of the Board of
Directors, such Officers' Certificate;
(b) an Officers' Certificate delivered in accordance with
Section 1.3; and
(c) an Opinion of Counsel which shall state:
(1) that the terms of such Securities have been
established in accordance with Section 2.1 and in
conformity with the other provisions of this Agreement;
(2) that such Securities, when authenticated and delivered
by the Agent and issued by the Company in the manner and
subject to any conditions specified in such Opinion of
Counsel, will constitute valid and legally binding
obligations of the Company, enforceable in accordance with
their terms, subject to bankruptcy, insolvency,
reorganization and other laws of general applicability
relating to or affecting the enforcement of creditors'
rights and to general equity principles; and
(3) that all laws and requirements in respect of the
execution and delivery by the Company of such Securities
have been complied with.
The Agent shall have the right to decline to authenticate and deliver
any Securities under this Section if the Agent, being advised by counsel,
determines that such action may not lawfully be taken or if the Agent in good
faith shall determine that such action would expose the Agent to personal
liability to existing Holders.
The Certificates shall be executed on behalf of Sovereign (in respect
of the Warrants) by its Chairman of the Board, its President or one of its Vice
Presidents, and shall be executed on behalf of the Trust (in respect of the
Preferred Securities) by an Administrative Trustee. The signature of any of
these officers on the Certificates may be manual or facsimile.
Certificates bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of Sovereign shall bind Sovereign,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificates or did not
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hold such offices at the date of such Certificates. Certificates bearing the
manual or facsimile signatures of individuals who were at any time
Administrative Trustees of the Trust shall bind the Trust, notwithstanding that
such individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Certificates or did not hold such offices at
the date of such Certificates.
Each Certificate shall be dated the date of its authentication.
No Certificate shall be entitled to any benefit under this Agreement or
be valid or obligatory for any purpose unless there appears on such Certificate
a certificate of authentication substantially in the form provided for herein
executed by an authorized signatory of the Agent by manual signature, and such
certificate upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder.
Section 3.4. Temporary Certificates.
Pending the preparation of definitive Certificates, Sovereign shall
execute and deliver to the Agent, and the Agent shall authenticate, execute on
behalf of the Holders, and deliver, in lieu of such definitive Certificates,
temporary Certificates which are in substantially the form set forth in Exhibit
A hereto, with such letters, numbers or other marks of identification or
designation and such legends or endorsements printed, lithographed or engraved
thereon as may be required by the rules of any securities exchange on which the
Securities are listed, or as may, consistently herewith, be determined by the
officers of Sovereign executing such Certificates, as evidenced by their
execution of the Certificates.
If temporary Certificates are issued, Sovereign will cause definitive
Certificates to be prepared without unreasonable delay. After the preparation of
definitive Certificates, the temporary Certificates shall be exchangeable for
definitive Certificates upon surrender of the temporary Certificates at the
Corporate Trust Office, at the expense of Sovereign and without charge to the
Holder. Upon surrender for cancellation of any one or more temporary
Certificates, Sovereign shall execute and deliver to the Agent, and the Agent
shall authenticate, execute on behalf of the Holder, and deliver in exchange
therefor, one or more definitive Certificates of like tenor and denominations
and evidencing a like number of Securities as the temporary Certificate or
Certificates so surrendered. Until so exchanged, the temporary Certificates
shall in all respects evidence the same benefits and the same obligations with
respect to the Securities evidenced thereby as definitive Certificates.
Section 3.5. Registration; Registration of Transfer and Exchange.
(a) The Agent shall keep at the Corporate Trust Office a register (the
"Register") in which, subject to such reasonable regulations as it may
prescribe, the Agent shall provide for the registration of Certificates and of
transfers of Certificates (the Agent, in such capacity, the "Registrar").
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No beneficial interest in a Warrant or a Preferred Security that is a
component of a Security represented by a Certificate may be transferred or
exchanged (except by a transfer or exchange of such Security) until such
components have been separated in accordance with Section 3.6 hereof, and each
Certificate shall bear a legend to that effect.
Upon surrender for registration of transfer of any Certificate at the
Corporate Trust Office, Sovereign shall execute and deliver to the Agent, and
the Agent shall authenticate, execute on behalf of the designated transferee or
transferees, and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of any authorized denominations, like
tenor, and evidencing a like number of Securities.
At the option of the Holder, Certificates may be exchanged for other
Certificates, of any authorized denominations and evidencing a like number of
Securities upon surrender of the Certificates to be exchanged at the Corporate
Trust Office. Whenever any Certificates are so surrendered for exchange,
Sovereign and the Trust shall execute and deliver to the Agent, and the Agent
shall authenticate, execute on behalf of the Holder, and deliver the
Certificates which the Holder making the exchange is entitled to receive.
All Certificates issued upon any registration of transfer or exchange
of a Certificate shall evidence the ownership of the same number of Securities,
and be entitled to the same benefits and subject to the same obligations, under
this Agreement as the Securities evidenced by the Certificate surrendered upon
such registration of transfer or exchange.
Every Certificate presented or surrendered for registration of transfer
or for exchange shall (if so required by the Agent) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to
Sovereign, the Trust and the Agent duly executed, by the Holder thereof or its
attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of a Certificate, but Sovereign and the Agent may require payment from
the Holder of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any registration of transfer or exchange
of Certificates, other than any exchanges pursuant to Sections 3.6, 3.7 and 8.5
not involving any transfer and the Trust.
Notwithstanding the foregoing, Sovereign and the Trust shall not be
obligated to execute and deliver to the Agent, and the Agent shall not be
obligated to authenticate, execute on behalf of the Holder and deliver any
Certificate in exchange for any other Certificate presented or surrendered for
registration of transfer or for exchange on or after the Business Day
immediately preceding the Expiration Date. In lieu of delivery of a new
Certificate, upon satisfaction of the applicable conditions specified above in
this Section and receipt of appropriate registration or transfer instructions
from such Holder, the Agent shall deliver the consideration received on such
Expiration Date (which may be shares of Common Stock issuable in respect of the
exercise of Warrants forming a part of the Securities evidenced by such other
Certificate, Warrant Value receivable upon a redemption of such
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Warrants or Remarketing Proceeds receivable upon a contemporaneous remarketing
of the Preferred Securities forming a part of the Securities evidenced by such
other Certificate), subject to the applicable conditions and in accordance with
the applicable provisions of Article Five hereof.
Section 3.6. Separation and Rejoining of Units.
The Global Certificate shall represent such of the outstanding
Securities as shall be specified in the "Schedule of Exchanges of Interests of
Global Certificate" attached thereto or otherwise in accordance with the
Applicable Procedures. At any time after issuance, the Preferred Security and
Warrant components of any Security may be separated by the Holder and thereafter
transferred separately and, (i) in the event of an election to exercise the
Warrant component prior to the Remarketing Settlement Date (as provided in
Section 5.2), (ii) in the event of an election to have Warrants redeemed or
Preferred Securities repurchased upon a Change of Control (in each case,
pursuant to Section 5.3) or (iii) in the event of a Remarketing, the Preferred
Security and Warrant components of any Security shall be separated. In the event
of any separation of the components of a Security, (i) if such Security is
represented by a Definitive Certificate, the Holder shall present such
Definitive Certificate to the Agent for cancellation and the Agent shall so
notify the Registrar and shall return the Preferred Security and Warrant
components of such Security to the Property Trustee and Warrant Agent,
respectively, with an instruction for them to countersign and deliver to, or
upon the instruction of, such Holder a separated Preferred Security and a
separated Warrant, bearing the separate "CUSIP" number assigned to the Preferred
Security and the Warrant, respectively, and (ii) if such Security is represented
by the Global Certificate, the Agent shall make the necessary endorsement to the
"Schedule of Exchanges of Interests of Global Certificate" attached to the
Global Certificate or otherwise comply with the Applicable Procedures to reduce
the amount of Securities represented thereby and shall instruct the Property
Trustee and the Warrant Agent to effect a corresponding increase in the
Preferred Securities and the Warrants, respectively, represented by global
certificates bearing separate "CUSIP" numbers. The Agent shall make such other
necessary endorsements to the Global Certificate consistent with the terms of
this agreement to reflect the appropriate number of Securities represented
thereby.
Following a Remarketing of the Preferred Securities components of a
Security, (i) if such Security is represented by a Definitive Certificate, the
Holder shall present such Definitive Certificate to the Agent for cancellation
and the Agent shall so notify the Registrar and shall return the Preferred
Security and Warrant components of such Security to the Property Trustee with an
instruction for them to countersign and deliver to, or upon the instruction of
the Remarketing Agent a Preferred Security bearing the separate "CUSIP" number
assigned to the Preferred Security and (ii) if such Security is represented by
the Global Certificate, the Agent shall, in accordance with the instructions of
the Remarketing Agent, make the necessary endorsement to the "Schedule of
Exchanges of Interests of Global Certificate" attached to the Global Certificate
or otherwise comply with the Applicable Procedures to reduce the amount of
Securities represented thereby and shall instruct the Property Trustee to effect
a corresponding increase in the Preferred Securities represented by global
certificates bearing the separate "CUSIP" number. The Agent shall make such
other necessary endorsements to
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the Global Certificate consistent with the terms of this agreement to reflect
the appropriate number of Securities represented thereby.
Once separated in accordance with Section 5.2, a Preferred Security and
a Warrant may be rejoined to form a Security, whether or not such securities
were at one time components of the same Security. In the event a holder of a
Preferred Security and a Warrant desires to rejoin a Security, (i) if the
constituent components are represented by Definitive Certificates, the holder
shall present (x) the Preferred Security to the Property Trustee and (y) the
Warrant to the Warrant Agent, in each case for cancellation and the Property
Trustee and the Warrant Agent shall so notify the Agent, who shall in turn so
notify the Registrar with an instruction for the Registrar to countersign and
deliver to, or upon the instruction of, such holder a Security bearing the
separate "CUSIP" number assigned to the Securities, respectively, and (ii) if
the constituent components are represented by global certificates, each of the
Property Trustee and the Warrant Agent shall make the necessary endorsement to
their respective global certificates or otherwise comply with the Applicable
Procedures to reduce the amount of Preferred Securities and Warrants,
respectively, represented thereby and shall instruct Agent to effect a
corresponding increase in the Securities represented by the Global Certificate
bearing separate "CUSIP" number. The Agent, the Property Trustee, and the
Warrant Agent shall make such other necessary endorsements to their respective
global certificates consistent with the terms of this agreement to reflect the
appropriate number of Securities, Preferred Securities and Warrants, as
appropriate, represented thereby.
The Agent is authorized to deliver such further directions to the
Property Trustee, the Warrant Agent, the Exchange Agent and others, and to take
such further actions as shall be necessary to effect the exchanges, separations,
transfer and recreations contemplated by Section 3.5 and 3.6.
Section 3.7. Book-Entry Interests.
The Certificates, on original issuance, will be issued in the form of
one or more fully registered Global Certificates, to be delivered to the
Depositary by, or on behalf of, Sovereign. Such Global Certificate shall
initially be registered on the books and records of Sovereign and the Trust in
the name of Cede & Co., the nominee of the Depositary, and no Beneficial Owner
will receive a Definitive Certificate representing such Beneficial Owner's
interest in such Global Certificate, except as provided in Section 3.10. The
Agent shall enter into an agreement with the Depositary if so requested by
Sovereign. Unless and until Definitive Certificates have been issued to
Beneficial Owners pursuant to Section 3.10:
(a) the provisions of this Section 3.7 shall be in full force and
effect;
(b) Sovereign shall be entitled to deal with the Clearing Agency for
all purposes of this Agreement as the Holder of the Securities and the sole
holder of the Global Certificate(s) and shall have no obligation to the
Beneficial Owners;
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(c) to the extent that the provisions of this Section 3.7 conflict with
any other provisions of this Agreement, the provisions of this Section 3.7 shall
control; and
(d) the rights of the Beneficial Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by law and
agreements between such Beneficial Owners and the Clearing Agency and/or the
Clearing Agency Participants.
Section 3.8. Notices to Holders.
Whenever a notice or other communication to the Holders is required to
be given under this Agreement, Sovereign or Sovereign's agent shall give such
notices and communications to the Holders and, with respect to any Securities
registered in the name of a Clearing Agency or the nominee of a Clearing Agency,
Sovereign or Sovereign's agent shall, except as set forth herein, have no
obligations to the Beneficial Owners.
Section 3.9. Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as securities
depositary with respect to the Securities, Sovereign may, in its sole
discretion, appoint a successor Clearing Agency with respect to the Securities.
Section 3.10. Definitive Certificates.
If (i) a Clearing Agency elects to discontinue its services as
securities depositary with respect to the Securities and a successor Clearing
Agency is not appointed within 90 days after such discontinuance pursuant to
Section 3.9 or (ii) there shall have occurred and be continuing a default by
Sovereign in respect of its obligations under the Warrant Agreement, the
Indenture, the Declaration or this Agreement, upon surrender of the Global
Certificates representing the Securities by the Clearing Agency, accompanied by
registration instructions, Sovereign and the Trust shall cause Definitive
Certificates to be delivered to Beneficial Owners in accordance with the
instructions of the Clearing Agency. Sovereign shall not be liable for any delay
in delivery of such instructions and may conclusively rely on and shall be
protected in relying on, such instructions.
Section 3.11. Mutilated, Destroyed, Lost and Stolen Certificates.
If any mutilated Certificate is surrendered to the Agent, Sovereign
shall execute and deliver to the Agent, and the Agent shall authenticate,
execute on behalf of the Holder, and deliver in exchange therefor, a new
Certificate, evidencing the same number of Securities and bearing a Certificate
number not contemporaneously outstanding.
If there shall be delivered to Sovereign and the Agent (i) evidence to
their satisfaction of the destruction, loss or theft of any Certificate, and
(ii) such security or indemnity as may be required by them to hold each of them
and any agent of any of them harmless, then, in the absence of notice to
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Sovereign and the Trust or the Agent that such Certificate has been acquired by
a bona fide purchaser, Sovereign and the Trust shall execute and deliver to the
Agent, and the Agent shall authenticate, execute on behalf of the Holder, and
deliver to the Holder, in lieu of any such destroyed, lost or stolen
Certificate, a new Certificate, evidencing the same number of Securities and
bearing a Certificate number not contemporaneously outstanding.
Notwithstanding the foregoing, Sovereign shall not be obligated to
execute and deliver to the Agent, and the Agent shall not be obligated to
authenticate, execute on behalf of the Holder, and deliver to the Holder, a
Certificate on or after the Business Day immediately preceding the Expiration
Date. In lieu of delivery of a new Certificate, upon satisfaction of the
applicable conditions specified above in this Section and receipt of appropriate
registration or transfer instructions from such Holder, the Agent shall deliver
the consideration received on such Expiration Date (which may be (i) shares of
Common Stock issuable in respect of the exercise of Warrants pursuant to the
Warrant Agreement, (ii) the Warrant Value receivable upon a redemption of such
Warrants pursuant to the Warrant Agreement or (iii) proceeds of a Remarketing
receivable upon a contemporaneous remarketing of the Preferred Securities
forming a part of the Securities evidenced by such other Certificate as provided
in the Declaration).
Upon the issuance of any new Certificate under this Section, Sovereign,
the Trust, and the Agent may require the payment by the Holder 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
Agent) connected therewith.
Every new Certificate issued pursuant to this Section in lieu of any
destroyed, lost or stolen Certificate shall constitute an original additional
contractual obligation of Sovereign and of the Holder in respect of the Security
evidenced thereby, whether or not the destroyed, lost or stolen Certificate (and
the Securities evidenced thereby) shall be at any time enforceable by anyone,
and shall be entitled to all the benefits and be subject to all the obligations
of this Agreement equally and proportionately with any and all other
Certificates 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 or
payment of mutilated, destroyed, lost or stolen Certificates.
Section 3.12. Persons Deemed Owners.
Prior to due presentment of a Certificate for registration of transfer,
Sovereign, the Trust and the Agent, and any agent of Sovereign, the Trust or the
Agent, may treat the Person in whose name such Certificate is registered as the
owner of the Security evidenced thereby, for the purpose of receiving payments
on the Preferred Securities, the Debentures or the Warrants and for all other
purposes whatsoever, whether or not any payments on the Preferred Securities,
the Debentures or the Warrants shall be overdue and notwithstanding any notice
to the contrary, and none of Sovereign, the Trust, the Agent, nor any agent of
Sovereign or the Agent, shall be affected by notice to the contrary.
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Notwithstanding the foregoing, with respect to any Global Certificate,
nothing herein shall prevent Sovereign, the Agent or any agent of Sovereign, the
Trust or the Agent, from giving effect to any written certification, proxy or
other authorization furnished by any Clearing Agency (or its nominee), as a
Holder, with respect to such Global Certificate or impair, as between such
Clearing Agency and owners of beneficial interests in such Global Certificate,
the operation of customary practices governing the exercise of rights of such
Clearing Agency (or its nominee) as Holder of such Global Certificate.
Section 3.13. Cancellation.
All Certificates surrendered (i) for separation as provided in Section
3.6 hereof, (ii) in connection with a remarketing and redemption as provided in
the Declaration, the Warrant Agreement and Article V hereof or (iii) upon the
transfer of Preferred Securities, Debentures or Warrants upon the registration
of a transfer or exchange of a Security or any of its components shall, if
surrendered to any Person other than the Agent, be delivered to the Agent and,
if not already cancelled, shall be promptly cancelled by it. Sovereign and the
Trust may at any time deliver to the Agent for cancellation any Certificates
previously authenticated, executed and delivered hereunder which Sovereign and
the Trust may have acquired in any manner whatsoever, and all Certificates so
delivered shall, upon Issuer Order, be promptly cancelled by the Agent. No
Certificates shall be authenticated, executed on behalf of the Holder and
delivered in lieu of or in exchange for any Certificates cancelled as provided
in this Section, except as expressly permitted by this Agreement. All cancelled
Certificates held by the Agent shall be held by the Agent or returned to
Sovereign pursuant to an Issuer Order.
If Sovereign, the Trust or any Affiliate of Sovereign shall acquire any
Certificate, such acquisition shall not operate as a cancellation of such
Certificate unless and until such Certificate is delivered to the Agent
cancelled or for cancellation.
Section 3.14. CUSIP Numbers.
Sovereign, in issuing the Securities, may use "CUSIP" numbers (if then
generally in use), and, if so, the Agent shall use "CUSIP" numbers in notices of
redemption as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness of such numbers either as
printed on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers. Sovereign will promptly notify the Agent of any change
in the "CUSIP" numbers.
ARTICLE IV
The Preferred Securities
Section 4.1. Payment of Distribution; Rights to Distributions Preserved;
Distribution Rate Reset.
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Distributions on the Preferred Securities which are made on any Payment
Date shall, subject to receipt thereof by the Agent, be payable to the Holders
as they appear on the books and records of the Agent at the close of business on
the relevant Record Dates. Distributions on the Preferred Securities which are
made on any Remarketing Settlement Date shall, subject to receipt thereof by the
Agent, be payable to (or, in the case of Section 5.1, for the account of) the
Holders as they appear on the books and records of the Agent at the close of
business on the Remarketing Date. If the Securities are represented by one or
more Global Certificates, the relevant Record Dates shall be the close of
business on the Business Day preceding the corresponding Payment Date, unless a
different Record Date is established or provided for the corresponding
distribution son the Preferred Securities. If the Securities are not represented
by one or more Global Certificates, the relevant Record Dates shall be the
fifteenth Business Day prior to the corresponding Payment Dates, or such other
dates as may be selected by the Agent.
Each Certificate evidencing Preferred Securities (or Debentures)
delivered under this Agreement upon registration of transfer of or in exchange
for or in lieu of any other Certificate shall carry the rights to distributions
accumulated and unpaid, and to accumulate distributions, which were carried by
the Preferred Securities (or Debentures) underlying such other Certificate. The
applicable Coupon Rate on the Debentures on and after the Remarketing Date shall
be equal to the Reset Rate established in the remarketing on such date.
Section 4.2. Notice and Voting.
The Agent will be entitled to exercise the voting and any other
consensual rights pertaining to the Preferred Securities, Debentures and
Warrants, as the case may be, but only to the extent instructed in writing by
the Holders as described below and in Article V. Upon receipt of notice of any
meeting at which holders of Preferred Securities, Debentures or Warrants are
entitled to vote or upon any solicitation of consents, waivers or proxies of
holders of Preferred Securities, Debentures or Warrants, the Agent shall, as
soon as practicable thereafter, mail to the Holders of Securities a notice (a)
containing such information as is contained in the notice or solicitation, (b)
stating that each Holder on the record date set by the Agent therefor (which, to
the extent possible, shall be the same date as the record date for determining
the holders of Preferred Securities, Debentures or Warrants, as the case may be,
entitled to vote) shall be entitled to instruct the Agent as to the exercise of
the voting rights pertaining to such Preferred Securities, Debentures or
Warrants underlying their Security and (c) stating the manner in which such
instructions may be given. Upon the written request of the Holders of Securities
on such record date received by the Agent at least six days prior to such
meeting, the Agent shall endeavor insofar as practicable to vote or cause to be
voted, in accordance with the instructions set forth in such requests, the
maximum number of Preferred Securities, Debentures or Warrants, as the case may
be, as to which any particular voting instructions are received. In the absence
of specific instructions from the Holder of a Security, the Agent shall abstain
from voting the Preferred Securities, Debentures or Warrants underlying such
Security. Sovereign hereby agrees to solicit Holders of Securities to timely
instruct the Agent in order to enable the Agent to vote such Preferred
Securities, Debentures or Warrants and the Trust shall covenant to such effect
in the Declaration.
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Section 4.3. Distribution of Debentures.
Upon the liquidation of the Trust in accordance with the Declaration, a
principal amount at maturity of Debentures constituting the assets of the Trust
and underlying the Preferred Securities equal to the aggregate stated
liquidation amount of the Preferred Securities shall be delivered to the Agent
in exchange for the Preferred Securities. Thereafter, the Debentures will be
substituted for the Preferred Securities as a component of the Securities.
Following the liquidation of the Trust, the Holders shall have such rights and
obligations with respect to the Debentures as the Holders had in respect of the
Preferred Securities. Sovereign may cause to be made in any Certificates
thereafter to be issued such change in phraseology and form (but not in
substance) as may be appropriate to reflect the liquidation of the Trust and the
substitution of Debentures for Preferred Securities.
ARTICLE V
Remarketing and Redemption; Early Exercise
Section 5.1. Remarketing and Redemption
Pursuant to a Remarketing Agreement to be entered into, Sovereign will
engage a Remarketing Agent to sell the Preferred Securities (or, if the
Debentures have been distributed upon liquidation of the Trust, the Debentures)
upon the occurrence of a Remarketing Event. In connection with a Remarketing of
the Preferred Securities:
(i) in connection with a Remarketing upon a Trading
Remarketing Event or a Legal Cause Remarketing Event, the Accreted
Value of the Debentures as of the end of the day on the day next
preceding the Remarketing Date shall become due on the date which is 60
days following the Remarketing Date, and, as a result, the Accreted
Value of the Preferred Securities as of the end of the day on the day
next preceding the Remarketing Date shall be redeemed on the date which
is 60 days following the Remarketing Date;
(ii) on the Remarketing Date, the rate of interest per annum
on the Accreted Value of the Debentures shall become the Reset Rate
established in the Remarketing of the Preferred Securities, and, as a
result, the Distribution rate per annum on the Accreted Value of the
Preferred Securities shall become the Reset Rate established in the
Remarketing;
(iii) on the Remarketing Settlement Date, interest accrued and
unpaid on the Debentures from and including the immediately preceding
Interest Payment Date to, but excluding, the Remarketing Settlement
Date shall be payable to the holders of the Debentures, and, as a
result, Distributions accumulated and unpaid on the Securities from and
including the immediately preceding Distribution Date to, but
excluding, the Remarketing Settlement Date shall be payable to the
Holders of the Securities;
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(iv) in connection with a Remarketing upon a Trading
Remarketing Event or a Legal Cause Remarketing Event, Sovereign shall
be obligated to redeem the Warrants on the Remarketing Settlement Date
at a redemption price per Warrant equal to the Warrant Value as of the
end of the day on the day next preceding the Remarketing Date; and
(v) on and after the Remarketing Date, the Warrants shall be
exercisable at the Exercise Price.
Upon receipt from Sovereign of a Notice of Remarketing as provided in
the Declaration and of a notice of a Redemption as provided in the Warrant
Agreement, the Agent shall, as soon as practicable thereafter, mail to the
Holders of Securities a notice of such receipt, together with a copy of each
such notice.
IN THE ABSENCE OF AN AFFIRMATIVE ELECTION NOT TO PARTICIPATE IN THE
REMARKETING, EACH HOLDER WILL BE DEEMED TO HAVE ELECTED TO PARTICIPATE
IN SUCH REMARKETING AND, IF APPLICABLE, TO HAVE ITS WARRANTS REDEEMED
ON THE RELATED REMARKETING SETTLEMENT DATE AT THE WARRANT VALUE.
Each Holder of a Security who desires NOT to participate in the
Remarketing shall notify the Agent of such intention by use of a notice in
substantially the form of Exhibit B hereto. Such notice shall be given to the
Agent prior to 5:00 p.m., New York City time, on the seventh Business Day
immediately preceding the Remarketing Date specified in the Notice of
Remarketing. A Holder of Security must affirmatively elect NOT to participate in
a Remarketing on or prior to 5:00 p.m. New York City time on the seventh
Business Day immediately preceding the Remarketing Date. Subject to the next
paragraph, an election by a Holder NOT to participate in the Remarketing will
not alter the deemed election by such Holder to have its Warrants redeemed on
the Remarketing Settlement Date. Any such notice shall be irrevocable and may
not be conditioned upon the level at which the Reset Rate is established in the
Remarketing. The Agent, based on such notices, shall notify the Remarketing
Agent, promptly after 11:00 a.m., New York City time, on the fifth Business Day
immediately preceding the Remarketing Date, of the aggregate number of Preferred
Securities (or, if the Debentures have been distributed in connection with a
liquidation of the Trust, the Debentures) that are a component of Securities to
be remarketed. Upon receipt of such notice from the Agent, the Remarketing Agent
shall, on the Remarketing Date, use commercially reasonable efforts to remarket
such Preferred Securities (or Debentures) on such date at a price equal to: (i)
in connection with a Remarketing upon a Trading Remarketing Event or a Legal
Cause Remarketing Event, 100% of the aggregate Accreted Value of such Preferred
Securities (or Debentures) as of the end of the day on the day next preceding
the Remarketing Date; and (ii) on the Maturity Remarketing Date, 100% of the
stated liquidation amount (or principal amount).
Each Holder of a Security who desires to exercise its Warrants on the
Remarketing Settlement Date at the Exercise Price per Warrant described in
clause (v) above in this Section 5.1, instead of having such Warrants redeemed
on such date, shall notify the Agent and the Warrant Agent of such
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intention by use of a notice in substantially the form of Exhibit C hereto. Such
notice shall be given to the Agent and the Warrant Agent prior to 3:00 p.m., New
York City time, on the Business Day immediately preceding the Remarketing
Settlement Date specified in the related Notice of Remarketing. As provided
above, any Holder who does not notify the Agent and the Warrant Agent of an
election to exercise its Warrants on the Warrant Settlement Date shall be deemed
to have elected to have such Warrants redeemed. Upon receipt of the foregoing
notices the Agent shall provide notice to the Warrant Agent, no later than 5:00
p.m., New York City time, on the Business Day immediately preceding the related
Remarketing Settlement Date specified in the related Notice of Remarketing, of
the number of Warrants to be exercised and shall, no later than 5:00 p.m., New
York City time, on the Remarketing Settlement Date, deliver to the Warrant Agent
a duly completed form of election to purchase set forth on the reverse side of
the Warrant Certificate, a form of which is attached to the Global Certificate,
together with the proceeds of the Remarketing referred to in the following
paragraph. Upon receipt of the Common Stock deliverable upon exercise of the
Warrants, the Warrant Agent shall deliver such shares to or upon the order of
the Agent.
Each Holder who elects to participate in the Remarketing and to
exercise its Warrants on the related Remarketing Settlement Date is referred to
as an "Electing Remarketing Holder". The Agent shall instruct the Remarketing
Agent to deliver the proceeds from the Remarketing of Preferred Securities of
each Electing Remarketing Holder to the Warrant Agent, and the Warrant Agent
shall apply such amounts to satisfy in full such Holders' obligation to pay the
Exercise Price for the Common Stock under the related Warrants on the
Remarketing Settlement Date. Any Holder (other than an Electing Remarketing
Holder) of a Security affirmatively electing to exercise Warrants on the
Remarketing Settlement Date may do so by following the procedures set forth in
Section 5.2 and in the Warrant Agreement. The proceeds from a redemption of the
Warrants which form a part of the Securities shall be paid to the Holders of
such Securities.
The Declaration provides that if, by 4:00 p.m. New York City time, on a
Remarketing Date, the Remarketing Agent is unable to remarket all of the
Preferred Securities deemed tendered for purchase, a "Failed Remarketing" shall
be deemed to have occurred and the Remarketing Agent shall so advise by
telephone the Clearing Agency, the Property Trustee, the Warrant Agent, the
Indenture Trustee, the Administrative Trustees on behalf of the Trust and
Sovereign. Sovereign shall then give notice of the Failed Remarketing to the
Agent no later than 12:00 noon, New York City time, on the Business Day
following the Failed Remarketing and the Agent will, in turn, give notice to the
Holders of the Preferred Securities prior to the close of business on the
Business Day following the Failed Remarketing. Sovereign promptly shall cause a
notice of such Failed Remarketing to be published on the second Business Day
immediately preceding the Remarketing Settlement Date in a daily newspaper in
the English language of general circulation in New York City, which is expected
to be The Wall Street Journal. Notice of a Failed Remarketing shall be deemed to
constitute a withdrawal of each previously delivered election to exercise
Warrants on the related Remarketing Settlement Date. Following any such
withdrawal a holder may still elect to exercise its Warrants in accordance with
the procedures specified in Section 3.6 hereof and in the Warrant Agreement.
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Upon the occurrence of a Trading Remarketing Event or a Legal Cause
Remarketing Event and the election by Sovereign to cause a Remarketing of the
Preferred Securities, and on the Maturity Remarketing Date, as long as the
Securities are evidenced by one or more Global Certificates, deposited with the
Clearing Agency, Sovereign shall request, not later than 15 nor more than 30
days prior to the Remarketing Date, that the Clearing Agency notify the Holders
of the Securities of the Remarketing of the Preferred Securities and of the
procedures that must be followed if such Holder of Securities wishes to elect
not to participate in the Remarketing of the Preferred Securities.
Section 5.2. Early Exercise of Warrants; Exchange of Preferred Securities and
Repurchase of Debentures.
A Holder of a Security may elect to exercise the Warrants which form a
part of such Security at any time in accordance with the terms of the Warrant
Agreement. Each Holder, other than an Electing Holder, who desires to exercise
its Warrants shall, prior to any such exercise, separate the Warrant and the
Preferred Security components of the Security in accordance with Section 3.6. In
no event may a Holder satisfy its obligation to pay the Exercise Price by
tendering Preferred Securities.
Following the exercise of a Warrant on a day other than the Remarketing
Settlement Date, the Holder of the Security of which such Warrant formed a part
may require the Trust to exchange the Preferred Securities which formed the
other part of such Security for Debentures having an Accreted Value equal to the
Accreted Value of the Preferred Securities being exchanged and to require
Sovereign to repurchase such Debentures on the applicable Required Repurchase
Date which is no less than 60 days from such exercise date, as specified in the
Declaration.
Section 5.3. Change in Control.
Following a Change in Control, each Holder will have the right to (i)
require the Trust to distribute to such Holder Debentures having an Accreted
Value equal to Accreted Value of the Preferred Securities components of such
Holder's Securities in exchange for its Preferred Securities and (ii) cause
Sovereign to repurchase (a "Change of Control Repurchase Right") such Holder's
Debentures and redeem (a "Change of Control Redemption Right") such Holder's
Warrants at the amounts and on the dates specified in the Warrant Agreement, the
Declaration and the Indenture, as applicable.
Upon receipt from Sovereign of notice of a Change of Control (as
provided in the Declaration and the Warrant Agreement), the Agent shall, as soon
as practicable thereafter, mail to the Holders of Securities a notice of such
receipt, together with a copy of such notice of Change of Control. The date
specified in the notice from Sovereign will be the "Change of Control Notice
Date".
(a) Warrants. To exercise the Change of Control Redemption Right, a
Holder must deliver to the Agent, prior to the 30 day following the Change of
Control Notice Date, irrevocable th written notice in the form of Exhibit D
hereto, of such Holder's election to have Warrants redeemed on the date
specified in the Warrant Agreement. The Agent, based on such notices, shall
notify the
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Warrant Agent no later than the 30 day following the Change in Control Notice
Date of the aggregate th number of Warrants to be redeemed. An election to have
Warrants redeemed shall also constitute an election to separate the related
Securities into their component parts and the Agent and the Warrant Agent shall
follow the procedures specified in Section 3.6.
(b) Preferred Securities. To exercise the Change of Control Repurchase
Right, a Holder who has not separated its Securities pursuant to clause (a)
above must deliver to the Agent, no earlier than the 60 and no later than the 90
day following the Change of Control Notice Date, irrevocable th th written
notice in the form of Exhibit E hereto, of such Holder's election to have
Preferred Securities components of its Securities exchanged for an equivalent
Accreted Amount of Debentures and to have such Debentures repurchased on the
date specified in the Indenture. The Agent, based on such notices, shall notify
the Trust, Sovereign, the Property Trustee and the Exchange Agent, no later than
the 90 th day following the Change of Control Notice Date of the aggregate
number of Preferred Securities to be exchanged for Debentures by the Trust and
to be repurchased by Sovereign. An election to exchange Preferred Securities for
Debentures and to have such Debentures repurchased by Sovereign shall also
constitute an election to separate the related Securities into their component
parts and the Agent, the Exchange Agent and the Property Trustee shall follow
the procedures specified in Section 3.6 hereof (and Section 6.8 of the
Declaration).
Section 5.4. Certain Rights Following a Remarketing.
Following a Remarketing Settlement Date (unless there has been a
"Failed Remarketing" under the Declaration) and a Redemption or exercise of the
Warrants (including the delivery of all shares of Common Stock pursuant to the
exercise of a Warrant or the payment of the Warrant Value payable upon the
related Redemption and the payment of any amounts payable upon the related
Remarketing), a Security shall thereafter represent the right to receive the
Preferred Securities (or if the Debentures have been distributed upon
liquidation of the Trust, the Debentures) forming a part of such Securities.
ARTICLE VI
Remedies
Section 6.1. Unconditional Right of Holders to Receive Payments and to Purchase
Common Stock.
The Holder of any Security shall have all the rights provided to a
holder of Preferred Securities under the Declaration and to a holder of Warrants
under the Warrant Agreement, including the right to institute suit for the
enforcement of any such payments or obligations thereunder, and such rights
shall not be impaired except as provided in the Declaration and the Warrant
Agreement.
Section 6.2. Restoration of Rights and Remedies.
If any Holder has instituted any proceeding to enforce any right or
remedy under this Agreement and such proceeding has been discontinued or
abandoned for any reason, or has been
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determined adversely to such Holder, then and in every such case, subject to any
determination in such proceeding, Sovereign and such Holder shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of such Holder shall continue as though no such
proceeding had been instituted.
Section 6.3. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Certificates in the last paragraph of
Section 3.11, no right or remedy herein conferred upon or reserved to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 6.4. Delay or Omission Not Waiver.
No delay or omission of any Holder to exercise any right or remedy upon
a default shall impair any such right or remedy or constitute a waiver of any
such right. Every right and remedy given by this Article or by law to the
Holders may be exercised from time to time, and as often as may be deemed
expedient, by such Holders.
Section 6.5. Undertaking for Costs.
All parties to this Agreement agree, and each Holder of a Security, by
its acceptance of such Security shall be deemed to have agreed, that any court
may in its discretion require, in any suit for the enforcement of any right or
remedy under this Agreement, or in any suit against the Agent for any action
taken, suffered or omitted by it as Agent, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such court
may in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; provided
that the provisions of this Section shall not apply to any suit instituted by
Sovereign, to any suit instituted by the Agent, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% of the
Outstanding Securities, or to any suit instituted by any Holder for the
enforcement of distributions on any Preferred Securities on or after the
respective Payment Date therefor in respect of any Security held by such Holder,
or for enforcement of the right to purchase shares of Common Stock under the
Warrants constituting part of any Security held by such Holder.
Section 6.6. Waiver of Stay or Extension Laws.
Sovereign covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants
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or the performance of this Agreement; and Sovereign (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Agent or the Holders, but will suffer and permit the
execution of every such power as though no such law had been enacted.
ARTICLE VII
The Agent
Section 7.1. Certain Duties and Responsibilities.
(a) (1) The Agent undertakes to perform, with respect to the
Securities, such duties and only such duties as are specifically set
forth in this Agreement, and no implied covenants or obligations shall
be read into this Agreement against the Agent; and
(2) in the absence of bad faith or negligence on its part, the
Agent may, with respect to the Securities, conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Agent and
conforming to the requirements of this Agreement but in the case of any
certificates or opinions which by any provision hereof are specifically
required to be furnished to the Agent, the Agent shall be under a duty
to examine the same to determine whether or not they conform to the
requirements of this Agreement (but need not confirm or investigate the
accuracy of mathematical calculations or other facts stated therein).
(b) No provision of this Agreement shall be construed to relieve the
Agent from liability for its own negligent action, its own negligent failure to
act, or its own wilful misconduct, except that
(1) this Subsection shall not be construed to limit the effect
of Subsection (a) of this Section;
(2) the Agent shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved
that the Agent was negligent in ascertaining the pertinent facts;
(3) no provision of this Agreement shall require the Agent to
expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if adequate indemnity is not provided
to it; and
(4) no provision of this Agreement shall require the Agent to
expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it.
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(c) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Agent shall be subject to the provisions of this
Section.
Section 7.2. Notice of Default.
Within 30 days after the occurrence of any default by Sovereign
hereunder of which a Responsible Officer of the Agent has actual knowledge, the
Agent shall transmit by mail to Sovereign and the Holders of Securities, as
their names and addresses appear in the Register, notice of such default
hereunder, unless such default shall have been cured or waived.
Section 7.3. Certain Rights of Agent.
Subject to the provisions of Section 7.1:
(a) the Agent may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(b) any request or direction of Sovereign mentioned herein shall be
sufficiently evidenced by an Officers' Certificate, Issuer Order or Issuer
Request, and any resolution of the Board of Directors of Sovereign may be
sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Agreement the Agent shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Agent (unless other evidence be
herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate of Sovereign;
(d) the Agent may consult with counsel of its selection and the advice
of such counsel or any Opinion of 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 reliance thereon;
(e) the Agent shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the Agent,
in its discretion, may make reasonable further inquiry or investigation into
such facts or matters as it may see fit, and, if the Agent shall determine to
make such further inquiry or investigation, it shall be given a reasonable
opportunity to examine the books, records and premises of Sovereign, personally
or by agent or attorney at the sole cost of Sovereign, and shall incur no
liability or additional liability of any kind by reason of such inquiry or
investigation;
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(f) the Agent may execute any of the powers hereunder or perform any
duties hereunder either directly or by or through agents or attorneys or an
Affiliate and the Agent shall not be responsible for any misconduct or
negligence on the part of any agent or attorney or an Affiliate appointed with
due care by it hereunder;
(g) with respect to the calculation of the Accreted Value and the
Warrant Value, the Agent may conclusively rely upon the calculations thereof
determined by the Calculation Agent;
(h) the Agent shall not be liable for any action taken, suffered, or
omitted to be taken by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Agreement;
(i) the Agent shall not be deemed or have notice of any Default or
Event of Default unless a Responsible Officer of the Agent has actual knowledge
thereof or unless written notice of any event which is in fact such a default is
received by the Agent at the Corporate Trust Office of the Agent, and such
notice references the Securities and this Agreement; and
(j) the rights, privileges, protections, immunities and benefits given
to the Agent, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Agent in each of its capacities
hereunder, and to each agent, custodian and other Person employed to act
hereunder.
Section 7.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Certificates shall be taken as
the statements of Sovereign, and the Agent assumes no responsibility for their
accuracy. The Agent makes no representations as to the validity or sufficiency
of either this Agreement or of the Securities. The Agent shall not be
accountable for the use or application by Sovereign of Securities or the
proceeds thereof.
Section 7.5. May Hold Securities.
Any Registrar or any other agent of Sovereign, or the Agent and its
Affiliates, in their individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with Sovereign or any other Person
with the same rights it would have if it were not Registrar or such other agent,
or the Agent.
Section 7.6. Money Held in Custody.
Money held by the Agent in custody hereunder need not be segregated
from the other funds except to the extent required by law or provided herein.
The Agent shall be under no obligation to
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invest or pay interest on any money received by it hereunder except as otherwise
agreed in writing with Sovereign.
Section 7.7. Compensation and Reimbursement.
Sovereign agrees:
(1) to pay to the Agent from time to time such compensation as
shall from time to time be agreed to in writing by Sovereign and the
Agent for all services rendered by it hereunder;
(2) except as otherwise expressly provided for herein, to
reimburse the Agent upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Agent in accordance
with any provision of this Agreement (including the reasonable
compensation and the expenses and disbursements of its agents and
counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
(3) to indemnify the Agent and any predecessor Agent for, and
to hold it harmless against, any loss, liability or expense, including
taxes (other than taxes based upon, measured by or determined by the
income of the Agent) incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or
administration of its duties hereunder, including the costs and
expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or
duties hereunder.
The Agent shall have a lien prior to the Securities as to all property
and funds held by it hereunder for any amount owing it or any predecessor Agent
pursuant to this Section 7.7, except with respect to funds held in trust for the
benefit of the Holders of particular Securities.
The provisions of this Section shall survive the termination of this
Agreement.
Section 7.8. Corporate Agent Required; Eligibility.
There shall at all times be an Agent hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia, authorized under such
laws to exercise corporate trust powers, having (or being a member of a bank
holding company having) a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by Federal or State authority and having a
Corporate Trust Office in the Borough of Manhattan, The City of New York, if
there be such a corporation in the Borough of Manhattan, The City of New York,
qualified and eligible under this Article and willing to act on reasonable
terms. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Agent shall cease to be eligible in
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accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.
Section 7.9. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Agent and no appointment of a
successor Agent pursuant to this Article shall become effective until the
acceptance of appointment by the successor Agent in accordance with the
applicable requirements of Section 7.10.
(b) The Agent may resign at any time by giving written notice thereof
to Sovereign 60 days prior to the effective date of such resignation. If the
instrument of acceptance by a successor Agent required by Section 7.10 shall not
have been delivered to the Agent within 30 days after the giving of such notice
of resignation, the resigning Agent may petition any court of competent
jurisdiction for the appointment of a successor Agent.
(c) The Agent may be removed at any time by Act of the Holders of a
majority in number of the Outstanding Securities delivered to the Agent and
Sovereign.
(d) If at any time
(1) the Agent fails to comply with Section 310(b) of the TIA,
as if the Agent were an indenture trustee under an indenture qualified
under the TIA, after written request therefor by Sovereign or by any
Holder who has been a bona fide Holder of a Security for at least six
months, or
(2) the Agent shall cease to be eligible under Section 7.8 and
shall fail to resign after written request therefor by Sovereign or by
any such Holder, or
(3) the Agent shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Agent or of its
property shall be appointed or any public officer shall take charge or
control of the Agent or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) Sovereign by a Board Resolution may remove the
Agent, or (ii) any Holder who has been a bona fide Holder of a Security for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Agent and
the appointment of a successor Agent.
(e) If the Agent shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Agent for any cause,
Sovereign, by a Board Resolution, shall promptly appoint a successor Agent and
shall comply with the applicable requirements of Section 7.10. If no successor
Agent shall have been so appointed by Sovereign and accepted appointment in the
manner required by Section 7.10, any Holder who has been a bona fide Holder of a
Security for at least six
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months may, on behalf of itself and all others similarly situated, petition any
court of competent jurisdiction for the appointment of a successor Agent.\
(f) Sovereign shall give, or shall cause such successor Agent to give,
notice of each resignation and each removal of the Agent and each appointment of
a successor Agent by mailing written notice of such event by first-class mail,
postage prepaid, to all Holders as their names and addresses appear in the
applicable Register. Each notice shall include the name of the successor Agent
and the address of its Corporate Trust Office.
Section 7.10. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Agent, every
such successor Agent so appointed shall execute, acknowledge and deliver to
Sovereign and to the retiring Agent an instrument accepting such appointment,
and thereupon the resignation or removal of the retiring Agent shall become
effective and such successor Agent, without any further act, deed or conveyance,
shall become vested with all the rights, powers, agencies and duties of the
retiring Agent; but, on the request of Sovereign or the successor Agent, such
retiring Agent shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Agent all the rights, powers and
trusts of the retiring Agent and shall duly assign, transfer and deliver to such
successor Agent all property and money held by such retiring Agent hereunder. If
an instrument of acceptance by a successor Agent shall not have been delivered
to the Agent within 30 days after the giving of such notice of removal, the
Agent being removed may petition, at the expense of Sovereign, any court of
competent jurisdiction for the appointment of a successor Agent with respect to
the Securities of such series.
(b) Upon request of any such successor Agent, Sovereign shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Agent all such rights, powers and agencies referred to in
paragraph (a) of this Section.
(c) No successor Agent shall accept its appointment unless at the time
of such acceptance such successor Agent shall be qualified and eligible under
this Article.
Section 7.11. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Agent may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Agent shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Agent, shall be the successor of the Agent hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article, with
the execution or filing of any paper or any further act on the part of any of
the parties hereto. In case any Certificates shall have been authenticated and
executed on behalf of the Holders, but not delivered, by the Agent then in
office, any successor by merger, conversion or consolidation to such Agent may
adopt such authentication and execution and deliver the Certificates so
authenticated and executed with the same effect as if such successor Agent had
itself authenticated and executed such Securities.
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Section 7.12. Preservation of Information; Communications to Holders.
(a) The Agent shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders received by the Agent in its
capacity as Registrar.
(b) If three or more Holders (herein referred to as "applicants") apply
in writing to the Agent, and furnish to the Agent reasonable proof that each
such applicant has owned a Security for a period of at least six months
preceding the date of such application, and such application states that the
applicants desire to communicate with other Holders with respect to their rights
under this Agreement or under the Securities and is accompanied by a copy of the
form of proxy or other communication which such applicants propose to transmit,
then the Agent shall mail to all the Holders copies of the form of proxy or
other communication which is specified in such request, with reasonable
promptness after a tender to the Agent of the materials to be mailed and of
payment, or provision for the payment, of the reasonable expenses of such
mailing.
Section 7.13. No Obligations of Agent.
Except to the extent otherwise expressly provided in this Agreement,
the Agent assumes no obligations and shall not be subject to any liability under
this Agreement in respect of the obligations of the Holder of any Security
hereunder. Sovereign agrees, and each Holder of a Certificate, by his acceptance
thereof, shall be deemed to have agreed, that the Agent's execution of the
Certificates on behalf of the Holders shall be solely as agent and
attorney-in-fact for the Holders, and that the Agent shall have no obligation
thereunder except to the extent expressly provided in Article Five hereof.
Anything in this Agreement to the contrary notwithstanding, in no event shall
the Agent or its officers, employees or agents be liable under this Agreement to
any third party for indirect, special, punitive, or consequential loss or damage
of any kind whatsoever, including lost profits, whether or not the likelihood of
such loss or damage was known to the Agent, incurred without any act or deed
that is found to be attributable to gross negligence or willful misconduct on
the part of the Agent.
Section 7.14. Tax Compliance.
(a) Sovereign will comply with all applicable certification,
information reporting and withholding (including "backup" withholding)
requirements imposed by applicable tax laws, regulations or administrative
practice with respect to (i) any payments made with respect to the Securities or
(ii) the issuance, delivery, holding, transfer, redemption or exercise of rights
under the Securities. Such compliance shall include, without limitation, the
preparation and timely filing of required returns and the timely payment of all
amounts required to be withheld to the appropriate taxing authority or its
designated agent.
(b) The Agent shall comply in accordance with the terms hereof with any
written direction received from Sovereign with respect to the execution or
certification of any required documentation and the application of such
requirements to particular payments or Holders or in other particular
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circumstances, and may for purposes of this Agreement rely on any such direction
in accordance with the provisions of Section 7.1(a)(2) hereof.
(c) The Agent shall maintain all appropriate records documenting
compliance with such requirements, and shall make such records available, on
written request, to Sovereign or its authorized representative within a
reasonable period of time after receipt of such request.
ARTICLE VIII
Supplemental Agreements
Section 8.1. Supplemental Agreements Without Consent of Holders.
Without the consent of any Holders or any other party hereto, Sovereign
and the Agent, at any time and from time to time, may enter into one or more
agreements supplemental hereto, in form satisfactory to Sovereign and the Agent,
for any of the following purposes:
(1) to evidence the succession of another Person to Sovereign,
and the assumption by any such successor of the covenants of Sovereign
herein and in the Certificates; or
(2) to add to the covenants of Sovereign for the benefit of
the Holders, or to surrender any right or power herein conferred upon
Sovereign; or
(3) to evidence and provide for the acceptance of appointment
hereunder by a successor Agent; or
(4) to cure any ambiguity, to correct or supplement any
provisions herein which may be inconsistent with any other provisions
herein, or to make any other provisions with respect to such matters or
questions arising under this Agreement, provided such action shall not
adversely affect the interests of the Holders.
Section 8.2. Supplemental Agreements With Consent of Holders; Other Fiduciaries.
With the consent of the Holders of not less than a majority in number
of the Outstanding Securities voting together as one class, by Act of said
Holders delivered to Sovereign and the Agent, Sovereign, when authorized by a
Board Resolution, the Trust and the Agent may enter into an agreement or
agreements supplemental hereto for the purpose of modifying in any manner the
provisions of this Agreement or the rights of the Holders in respect of the
Securities; provided, however, that, except as contemplated herein, no such
supplemental agreement shall, without the unanimous consent of the Holders of
each Outstanding Security affected thereby,
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(1) materially and adversely affect such Holder's rights under
a Security; or
(2) reduce the percentage of the Outstanding Securities the
consent of whose Holders is required for any such supplemental
agreement;
provided, that any modification of the Declaration or Warrant Agreement in
accordance with the terms thereof shall be binding on the rights of the Holders
under this Agreement without the need for any further consent.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental agreement, but it shall
be sufficient if such Act shall approve the substance thereof.
No agreement supplemental hereto shall modify in any way any of the
rights or obligations of the Agent, the Property Trustee, the Indenture Trustee,
the Warrant Agent or the Remarketing Agent without such Person's consent.
Sovereign may, but shall not be obligated to, fix a record date for the
purpose of determining the Persons entitled to consent to any indenture
supplemental hereto. If a record date is fixed, the Holders on such record date,
or their duly designated proxies, and only such Persons, shall be entitled to
consent to such supplemental indenture, whether or not such Holders remain
Holders after such record date; provided, that unless such consent shall have
become effective by virtue of the requisite percentage having been obtained
prior to the date which is 90 days after such record date, any such consent
previously given shall automatically and without further action by any Holder be
canceled and of no further effect.
Section 8.3. Execution of Supplemental Agreements.
In executing, or accepting the additional agencies created by, any
supplemental agreement permitted by this Article or the modifications thereby of
the agencies created by this Agreement, the Agent shall be entitled to receive,
and (subject to Section 7.1) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental agreement is
authorized or permitted by this Agreement. The Agent may, but shall not be
obligated to, enter into any such supplemental agreement which affects the
Agent's own rights, duties or immunities under this Agreement or otherwise.
Section 8.4. Effect of Supplemental Agreements.
Upon the execution of any supplemental agreement under this Article,
this Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of this Agreement for all purposes; and every Holder
of Certificates theretofore or thereafter authenticated, executed on behalf of
the Holders and delivered hereunder, shall be bound thereby.
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Section 8.5. Reference to Supplemental Agreements.
Certificates authenticated, executed on behalf of the Holders and
delivered after the execution of any supplemental agreement pursuant to this
Article may, and shall if required by the Agent, bear a notation in form
approved by the Agent as to any matter provided for in such supplemental
agreement. If Sovereign shall so determine, new Certificates so modified as to
conform, in the opinion of the Agent and Sovereign, to any such supplemental
agreement may be prepared and executed by Sovereign and authenticated, executed
on behalf of the Holders and delivered by the Agent in exchange for Certificates
representing Outstanding Securities.
ARTICLE IX
Consolidation, Merger, Sale or Conveyance
Section 9.1. Covenant Not to Merge, Consolidate, Sell or Convey Property Except
Under Certain Conditions.
Sovereign covenants that it will not merge or consolidate with any
other Person or sell, assign, transfer, lease or convey all or substantially all
of its properties and assets to any Person or group of affiliated Persons in one
transaction or a series of related transactions, unless (i) either Sovereign
shall be the continuing corporation, or the successor (if other than Sovereign)
shall be a corporation organized and existing under the laws of the United
States of America or a State thereof or the District of Columbia and such
corporation shall expressly assume all the obligations of Sovereign under this
Agreement by one or more supplemental agreements in form reasonably satisfactory
to the Agent, executed and delivered to the Agent by such corporation, and (ii)
Sovereign or such successor corporation, as the case may be, shall not,
immediately after such merger or consolidation, or such sale, assignment,
transfer, lease or conveyance, be in default in the performance of any covenant
or condition hereunder or under any of the Securities (including the component
parts thereof).
Section 9.2. Rights and Duties of Successor Corporation.
In case of any such consolidation, merger, sale, assignment, transfer,
lease or conveyance and upon any such assumption by a successor corporation in
accordance with Section 9.1, such successor corporation shall succeed to and be
substituted for Sovereign with the same effect as if it had been named herein as
Sovereign. Such successor corporation thereupon may cause to be signed, and may
issue either in its own name or in the name of Sovereign Bancorp, Inc., any or
all of the Certificates evidencing Securities issuable hereunder which
theretofore shall not have been signed by Sovereign and delivered to the Agent;
and, upon the order of such successor corporation, instead of Sovereign, and
subject to all the terms, conditions and limitations in this Agreement
prescribed, the Agent shall authenticate and execute on behalf of the Holders
and deliver any Certificates which previously shall have been signed and
delivered by the officers of Sovereign to the Agent for authentication and
execution, and any Certificate evidencing Securities which such successor
corporation thereafter shall cause to be signed and delivered to the Agent for
that purpose. All the Certificates issued shall in all
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respects have the same legal rank and benefit under this Agreement as the
Certificates theretofore or thereafter issued in accordance with the terms of
this Agreement as though all of such Certificates had been issued at the date of
the execution hereof.
In case of any such consolidation, merger, sale, assignment, transfer,
lease or conveyance such change in phraseology and form (but not in substance)
may be made in the Certificates evidencing Securities thereafter to be issued as
may be appropriate.
Section 9.3. Opinion of Counsel Given to Agent.
The Agent, subject to Sections 7.1 and 7.3, shall receive an Opinion of
Counsel as conclusive evidence that any such consolidation, merger, sale,
assignment, transfer, lease or conveyance, and any such assumption, complies
with the provisions of this Article and that all conditions precedent to the
consummation of any such consolidation, merger, sale, assignment, transfer,
lease or conveyance have been met.
ARTICLE X
Covenants
Section 10.1. Performance Under Agreements.
Sovereign covenants and agrees for the benefit of the Holders from time
to time of the Securities that it will duly and punctually perform its
obligations under the Warrants Agreement and the Declaration in accordance with
the terms thereof and this Agreement.
Section 10.2. Maintenance of Office or Agency.
Sovereign will maintain in the Borough of Manhattan, The City of New
York an office or agency where Certificates may be presented or surrendered for
registration of transfer or exchange, separation or re-establishment of a
Security and where notices and demands to or upon Sovereign in respect of the
Securities and this Agreement may be served. Sovereign will give prompt written
notice to the Agent of the location, and any change in the location, of such
office or agency. If at any time Sovereign shall fail to maintain any such
required office or agency or shall fail to furnish the Agent with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office, and Sovereign hereby appoints the Agent as
its agent to receive all such presentations, surrenders, notices and demands.
Sovereign may also from time to time designate one or more other
offices or agencies where Certificates may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve Sovereign of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York for such purposes. Sovereign will
give prompt written notice to the Agent of any such
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designation or rescission and of any change in the location of any such other
office or agency. Sovereign hereby designates as the place of payment for the
Securities the Corporate Trust Office and appoints the Agent at its Corporate
Trust Office as paying agent in such city.
Section 10.3. Statements of Officers of Sovereign as to Default.
Sovereign will deliver to the Agent, within 120 days after the end of
each fiscal year of Sovereign (which as of the date hereof is December 31)
ending after the date hereof, an Officers' Certificate (one of the signers of
which shall be the principal executive officer, principal financial officer or
principal accounting officer of Sovereign), stating whether or not to the best
knowledge of the signers thereof Sovereign is in default in the performance and
observance of any of the terms, provisions and conditions hereof, and if
Sovereign shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge.
Section 10.4. ERISA.
Each Holder from time to time of the Security which is a Plan hereby
represents that its acquisition of the Security and the holding of the same
satisfies the applicable fiduciary requirements of ERISA and that it is entitled
to exemption relief from the prohibited transaction provisions of ERISA and the
Code in accordance with one or more prohibited transaction exemptions or
otherwise will not result in a nonexempt prohibited transaction.
ARTICLE XI
Representations of the Agent
Section 11.1. Representations and Warranties of the Agent.
The initial Agent represents and warrants to the Trust and to Sovereign
at the date of this Agreement, and each successor Agent represents and warrants
to the Trust and Sovereign at the time of the successor Agent's acceptance of
its appointment as Agent, that:
(a) the Agent is a banking corporation duly organized, validly existing
and in good standing under the laws of the State of New York, with trust powers
and authority to execute and deliver, and to carry out and perform its
obligations under the terms of, this Agreement;
(b) the Agent satisfies the requirements set forth in Section 7.8;
(c) the execution, delivery and performance by the Agent of this
Agreement has been duly authorized by all necessary corporate action on the part
of the Agent; this Agreement has been duly executed and delivered by the Agent
and constitutes a legal, valid and binding obligation of the Agent enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency and other similar laws affecting
creditors' rights generally and to
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general principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in equity
or at law);
(d) the execution, delivery and performance of this Agreement by the
Agent does not conflict with, or constitute a breach of, the charter or by-laws
of the Agent; and
(e) no consent, approval or authorization of, or registration with or
notice to, any New York State or federal banking authority is required for the
execution, delivery or performance by the Agent of this Agreement.
ARTICLE XII
The Warrant Agent and The Property Trustee
Section 12.1. Certain Duties and Responsibilities.
(a) (1) The Warrant Agent and the Property Trustee (each, a "Party",
together, the "Parties") undertake to perform, with respect to this Agreement,
such duties and only such duties as are specifically set forth in this
Agreement, and no implied covenants or obligations shall be read into this
Agreement against any Party. The provisions regarding the appointment, removal,
resignation, vacancies, meetings, delegation of power and merger, conversion,
consolidation or succession to business applicable to such Party in the
Declaration or Warrant Agreement, as to which such Person is a party, shall
apply to the performance of such Persons duties and obligations hereunder.
Without limiting the foregoing,
(a) In the absence of bad faith or negligence on its part, any Party
may, with respect to the Securities, conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to such Party and conforming to the
requirements of this Agreement but in the case of any certificates or opinions
which by any provision hereof are specifically required to be furnished to a
Party, such Party shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Agreement.
(b) No provision of this Agreement shall be construed to relieve any
Party from liability for its own negligent action, its own negligent failure to
act, or its own wilful misconduct, except that
(1) this Subsection shall not be construed to limit the effect
of Subsection (a) of this Section;
(2) no Party shall be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that
such Party was negligent in ascertaining the pertinent facts; and
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(3) no provision of this Agreement shall require any Party to
expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if adequate indemnity is not provided
to it.
(c) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Parties shall be subject to the provisions of this
Section.
(d) Any Party may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(e) Any request or direction of Sovereign mentioned herein shall be
sufficiently evidenced by an Officers' Certificate, Issuer Order or Issuer
Request, and any resolution of the Board of Directors of Sovereign may be
sufficiently evidenced by a Board Resolution;
(f) Whenever in the administration of this Agreement any Party shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, such Party (unless other evidence be
herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate of Sovereign;
(g) Any Party may consult with counsel of its selection and the advice
of such counsel or any Opinion of 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 reliance thereon;
(h) No Party shall be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document, but any Party, in its
discretion, may make reasonable further inquiry or investigation into such facts
or matters as it may see fit, and, if such Party shall determine to make such
further inquiry or investigation, it shall be given a reasonable opportunity to
examine the books, records and premises of Sovereign, personally or by agent or
attorney at the sole cost of Sovereign and shall incur no liability or
additional liability of any kind by reason of such inquiry or investigation; and
(i) Any Party may execute any of the powers hereunder or perform any
duties hereunder either directly or by or through agents or attorneys or an
Affiliate and no Party shall be responsible for any misconduct or negligence on
the part of any agent or attorney or an Affiliate appointed with due care by it
hereunder.
(j) No Party shall be liable for any action taken, suffered, or omitted
to be taken by it in good faith and reasonably believed by it to be authorized
or within the discretion or rights or powers conferred upon it by this
Agreement;
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(k) No Party shall be deemed or have notice of any default or event of
default unless an officer in the corporate trust department of such Party the
Agent has actual knowledge thereof or unless written notice of any event which
is in fact such a default is received by such Party at its address identified in
this Agreement, and such notice references the Securities and this Agreement.
(l) The rights, privileges, protections, immunities and benefits given
to each Party, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the such Party in each of its
capacities hereunder, and to each agent, custodian and other Person employed to
act hereunder.
(m) The recitals contained herein and in the Certificates shall be
taken as the statements of Sovereign, and no Party assumes any responsibility
for their accuracy. No Party makes any representations as to the validity or
sufficiency of either this Agreement or of the Securities.
(n) Any Party in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with Sovereign or any
other Person with the same rights it would have if it were not a Party.
(o) Sovereign agrees to pay each Party such compensation, and to
reimburse each Party for such expenses, as shall be provided from time to time
in the Declaration and the Warrant Agreement to which such Party is a signatory.
(p) The provisions of this Section shall survive the termination of
this Agreement.
(q) No Party shall be accountable for the use or application by Sovereign of
Securities or the proceeds thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
/s/ SOVEREIGN BANCORP, INC.
/s/ THE BANK OF NEW YORK, as
Agent
/s/ THE BANK OF NEW YORK, as Warrant
Agent
/s/ THE BANK OF NEW YORK, as Property
Trustee
/s/ SOVEREIGN CAPITAL TRUST II
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EXHIBIT A
FACE OF CERTIFICATE
"THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE
UNIT AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE "DEPOSITARY"), OR A
NOMINEE OF THE DEPOSITARY. THIS CERTIFICATE IS EXCHANGEABLE FOR CERTIFICATES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY
IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE UNIT AGREEMENT AND NO TRANSFER OF
THIS CERTIFICATE (OTHER THAN A TRANSFER OF THIS CERTIFICATE AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN
LIMITED CIRCUMSTANCES.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY 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 THE DEPOSITARY (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE CONSTITUENT COMPONENTS OF THIS UNIT MUST BE SEPARATED PRIOR TO
TRANSFER (EXCEPT AS PART OF A UNIT) AS PROVIDED IN THE UNIT AGREEMENT."
Certificate No.: _____ Cusip No.: 845905306
Number of Securities: ___________
SOVEREIGN BANCORP, INC.
SOVEREIGN CAPITAL TRUST II
Unit Security
This Certificate certifies that Cede & Co. is the registered Holder of
the number of Securities set forth above. Each Security consists of (i)
beneficial ownership by the Holder of one Preferred Security (the "Preferred
Security") of Sovereign Capital Trust II, a Delaware statutory business trust
(the "Trust"), having a stated liquidation amount of $50, the form of which is
attached as Annex A hereto and (ii) the rights and obligations of the Holder
under one Warrant to purchase common shares of Sovereign Bancorp, Inc., a
Pennsylvania corporation (the "Company"), the form of which is attached
as Annex B hereto. All capitalized terms used herein which are defined in the
Unit Agreement (as defined on the reverse hereof) have the meaning set forth
therein.
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Distributions on any Preferred Security forming part of a Security
evidenced hereby, which are payable quarterly in arrears on February 15, May 15,
August 15, and November 15 of each year, commencing on February 15, 2000 (a
"Payment Date"), shall, subject to receipt thereof by the Agent, be paid to the
Person in whose name this Certificate (or a Predecessor Certificate) is
registered at the close of business on the Record Date for such Payment Date,
except that the proceeds of a Remarketing will be paid to the Warrant Agent in
satisfaction of each Electing Remarketing Holder's obligations to pay the
Exercise Price of Warrants constituting a part of this Security.
Distributions on the Preferred Securities will be payable at the office
of the Agent in The City of New York or, at the option of Sovereign, by check
mailed to the address of the Person entitled thereto as such address appears on
the Register.
Reference is hereby made to the further provisions set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Agent by manual signature, this Certificate shall not be entitled to any
benefit under the Unit Agreement, the Warrant Agreement or the Declaration or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the undersigned have caused this instrument to be
duly executed.
SOVEREIGN BANCORP, INC.
By: _______________________________
Name:
Title:
SOVEREIGN CAPITAL TRUST II
By: _______________________________
Name:
Title: Administrative Trustee.
A-2
<PAGE>
AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within mentioned
Unit Agreement.
Dated: By: THE BANK OF NEW YORK, as
Agent
By: _______________________________
Authorized Signatory
A-3
<PAGE>
(FORM OF REVERSE OF CERTIFICATE)
Each Security evidenced hereby is governed by a Unit Agreement, dated
as of November 15, 1999 (as may be supplemented from time to time, the "Unit
Agreement"), among Sovereign, The Bank of New York, as unit agent (including its
successors hereunder, the "Agent"), The Bank of New York, as Warrant Agent, and
The Bank of New York, as Property Trustee, to which Agreement and supplemental
agreements thereto reference is hereby made for a description of the respective
rights, limitations of rights, obligations, duties and immunities thereunder of
the Agent, Sovereign, and the Holders and of the terms upon which the
Certificates are, and are to be, executed and delivered. Pursuant to the Unit
Agreement, the rights, limitations or rights, obligations, duties and immunities
of the Agent, Sovereign, and the Holders, and the Certificates include the
rights, obligations, duties and immunities set forth in the Warrant Agreement
and the Declaration, to which reference is further made for a description
thereof.
Each Security evidenced hereby consists of (i) beneficial ownership by
the Holder of one Preferred Security of Sovereign Capital Trust II having a
stated liquidation amount of $50, the form of which is attached as Annex A
hereto and (ii) the rights and obligations of the Holder under one Warrant to
purchase shares of common stock of Sovereign, the form of which is attached as
Annex B hereto.
Sovereign may, under the circumstances described in the Declaration,
cause a Remarketing of the outstanding Preferred Securities which form a part of
this Security. In connection therewith, Sovereign will, as described in the
Warrant Agreement, redeem all Warrants which form a part of this Security.
In no event may a Holder pay the Exercise Price of a Warrant by
tendering a Preferred Security. In accordance with the terms of the Declaration
and the Unit Agreement, the Holder of this Certificate may pay the Exercise
Price for the shares of Common Stock purchased pursuant to each Warrant
constituting a part of this Security by applying the proceeds of a remarketing
of the related Preferred Securities.
A Holder of a Security who does not affirmatively elect NOT to
participate in a Remarketing on or prior to 5:00 p.m. New York City time on the
seventh Business Day immediately preceding the Remarketing Date, will be deemed
to have consented to participation in such Remarketing. A Holder of a Security
who does not affirmatively elect on or prior to 5:00 p.m. on the Business Day
preceding a Remarketing Settlement Date to exercise the Warrants related to such
Security will be deemed to have consented to a redemption of such Warrants on
the Remarketing Settlement Date. A Remarketing sale will be made by the
Remarketing Agent pursuant to the terms of the Remarketing Agreement on the
Remarketing Date.
A holder may exercise the Warrants which form a part of the Securities
evidenced by this Certificate at any time upon compliance with the procedures
specified in the Warrant Agreement. A Holder of a Security evidenced by this
Certificate who elects to exercise Warrants prior to the
A-4
<PAGE>
Remarketing Settlement Date shall have the right to require the Trust to
exchange the related Preferred Securities for Debentures having an Accreted
Value equal to the Accreted Value of such Preferred Securities and to require
Sovereign to repurchase such Debentures on the next Required Repurchase Date
which is no less than 60 days after the applicable exercise date.
Upon receipt of notice of any meeting at which holders of Preferred
Securities are entitled to vote or upon the solicitation of consents, waivers or
proxies of holders of Preferred Securities, the Agent shall, as soon as
practicable thereafter, mail to the Holders a notice (a) containing such
information as is contained in the notice or solicitation, (b) stating that each
Holder on the record date set by the Agent therefor (which, to the extent
possible, shall be the same date as the record date for determining the holders
of Preferred Securities entitled to vote) shall be entitled to instruct the
Agent as to the exercise of the voting rights pertaining to the Preferred
Securities constituting a part of such Holder's Security and (c) stating the
manner in which such instructions may be given. Upon the written request of the
Holders on such record date, the Agent shall endeavor insofar as practicable to
vote or cause to be voted, in accordance with the instructions set forth in such
requests, the maximum number of Preferred Securities as to which any particular
voting instructions are received. In the absence of specific instructions from
the Holder of a Security, the Agent shall abstain from voting the Preferred
Security evidenced by such Security.
Upon the liquidation of the Trust, a principal amount of the Debentures
constituting the assets of the Trust and underlying the Preferred Securities
equal to the aggregate Accreted Value of the Preferred Securities shall be
delivered to the Agent in exchange for the Preferred Securities. Thereafter, the
Holders shall have such rights and obligations with respect to the Debentures as
the Holders had in respect of the Preferred Securities and any reference herein
to the Preferred Securities shall be deemed to be a reference to the Debentures.
The Certificates are issuable only in registered form and only in
denominations of a single Security and any integral multiple thereof. The
transfer of any Certificate will be registered and Certificates may be exchanged
as provided in the Unit Agreement. The Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents
permitted by the Unit Agreement. No service charge shall be required for any
such registration of transfer or exchange, but Sovereign and the Agent may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. A Security shall be separable into its
components, and Securities may be recreated as provided in the Unit Agreement;
provided, however, this Certificate shall not represent more than 5,750,000
Securities. All such adjustments to the equivalent aggregate principal amount of
this Certificate shall be duly recorded by placing an appropriate notation on
the Schedule attached hereto.
The Holder of this Certificate, by its acceptance hereof, expressly
withholds any consent to the assumption (i.e., affirmance) of the Warrant
Agreement or the Warrants by Sovereign or its trustee in the event that
Sovereign becomes the subject of a case under the Bankruptcy Code.
The Holder of this Certificate, by its acceptance hereof, expressly
agrees to be bound by the terms and provisions of the Unit Agreement, the
Warrant Agreement and the Declaration.
A-5
<PAGE>
Subject to certain exceptions, the provisions of the Unit Agreement may
be amended with the consent of the Holders of a majority in number of the
Securities.
Sovereign, the Agent and its Affiliates and any agent of Sovereign or
the Agent may treat the Person in whose name this Certificate is registered as
the owner of the Security evidenced hereby for the purpose of receiving payments
of distributions payable quarterly on the Preferred Securities and for all other
purposes whatsoever, whether or not any payments in respect thereof be overdue
and notwithstanding any notice to the contrary, and neither Sovereign, the Agent
nor any such agent shall be affected by notice to the contrary.
The Warrants shall not, prior to the exercise thereof, entitle the
Holder to any of the rights of a holder of shares of Common Stock.
A copy of the Unit Agreement, the Warrant Agreement, the Declaration
and all exhibits to each such agreement is available for inspection at the
offices of the Agent.
This Security shall be governed by the laws of the State of New York,
without regard to principles of conflicts of law.
A-6
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
UNIF GIFT MIN ACT - ---------------Custodian---------------
(cust) (minor)
Under Uniform Gifts to Minors Act of _______
____________________________________________
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship
and not as tenants in common
Additional abbreviations may also be used though not in the above list.
-------------------------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto_______________________________________________________________
_______________________________________________________________________________
(Please insert Social Security or Taxpayer I.D. or other
Identifying Number of Assignee)
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please Print or Type Name and Address Including Postal Zip Code of Assignee)
the within Certificates and all rights thereunder, hereby irrevocably
constituting and appointing attorney to transfer said Certificates on the books
of [Name of Company] with full power of substitution in the premises.
Dated: ___________________ ______________________________________________
Signature
NOTICE: The signature to this assignment must
correspond with the name as it appears upon the
face of the within Certificates in every
particular, without alteration or enlargement or
any change whatsoever.
Signature Guarantee: ___________________________________
A-7
<PAGE>
[TO BE ATTACHED TO GLOBAL CERTIFICATES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE
This Global Certificate shall represent 5,750,000 Securities unless otherwise
indicated below.
The following increases or decreases in this Global Certificate have been made:
<TABLE>
<CAPTION>
===================================================================================================================================
Number of Securities
Amount of decrease in Amount of increase in evidenced by this
Number of Securities Number of Securities Global Certificate Signature of
evidenced by the evidenced by the following such authorized officer of
Date Global Certificate Global Certrificate decrease or increase Agent
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
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- -----------------------------------------------------------------------------------------------------------------------------------
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- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
===================================================================================================================================
</TABLE>
A-8
<PAGE>
ANNEX A
[FORM OF PREFERRED SECURITY CERTIFICATE]
This Preferred Security is a Global Preferred Security within the meaning of the
Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company, a New York corporation (the "Clearing Agency"), or a
nominee of the Clearing Agency. This Preferred Security is exchangeable for
Preferred Securities registered in the name of a person other than the Clearing
Agency or its nominee only in the limited circumstances described in the
Declaration, and no transfer of this Preferred Security (other than a transfer
of this Preferred Security as a whole by the Clearing Agency to a nominee of the
Clearing Agency or by a nominee of the Clearing Agency to the Clearing Agency or
another nominee of the Clearing Agency) may be registered except in limited
circumstances. Unless this certificate is presented by an authorized
representative of the Clearing Agency to Sovereign Capital Trust II 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 the Clearing Agency (and any payment hereon is made
to Cede & Co. or to such other entity as is requested by an authorized
representative of the Clearing Agency), and except as otherwise provided in the
Declaration, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has
an interest herein.(1)
CERTIFICATE EVIDENCING PREFERRED SECURITIES
of
SOVEREIGN CAPITAL TRUST II
7.50% Preferred Securities
(stated liquidation amount $50 per Preferred Security)
Certificate No.:____ Number of Preferred Securities ______________
CUSIP No.: US84603L207
Sovereign Capital Trust II, a statutory business trust created under
the laws of the State of Delaware (the "Trust"), hereby certifies that
______________ (the "Holder") is the registered
- ------------
1. Insert in Global Preferred Securities only.
A-9
<PAGE>
owner of _________ preferred securities of the Trust representing undivided
beneficial ownership interests in the assets of the Trust designated the
Preferred Securities (stated liquidation amount $50 per Preferred Security) (the
"Preferred Securities"). The Preferred Securities are transferable on the books
and records of the Trust, in person or by a duly authorized attorney, upon
surrender of this certificate duly endorsed and in proper form for transfer as
provided in the Declaration. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities
represented hereby are issued and shall in all respects be subject to the
provisions of the Amended and Restated Declaration of Trust of the Trust, dated
as of November 15, 1999 (as the same may be amended from time to time (the
"Declaration"), among Sovereign Bancorp, Inc., as Sponsor, Mark R. McCollom and
Jacquelyn Blue, as Administrative Trustees, The Bank of New York, as Property
Trustee, and The Bank of New York (Delaware), as Delaware Trustee. Capitalized
terms used but not defined herein shall have the meaning given them in the
Declaration. The Holder is entitled to the benefits of the Guarantee Agreement,
dated as of November 15, 1999, between Sovereign Bancorp, Inc., as Guarantor and
The Bank of New York, as Guarantee Trustee, in respect of the Preferred
Securities. The Sponsor will provide a copy of the Declaration, the Guarantee
Agreement and the Indenture (including any supplemental indenture) to a Holder
without charge upon written request to the Sponsor at its principal place of
business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
A-10
<PAGE>
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Preferred Securities
as evidence of undivided indirect beneficial ownership interests in the
Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this _____
day of _________________, 1999.
SOVEREIGN CAPITAL TRUST II
By:________________________________
Name:
Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Preferred Securities referred to in the within-mentioned
Declaration.
Dated: ____________, 1999
THE BANK OF NEW YORK,
as Property Trustee
By:_________________________
Authorized Signatory
A-11
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to:
_______________________________________________________________________________
(Insert assignee's social security or tax identification number)
_______________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints _________________________ agent to transfer this
Preferred Security Certificate on the books and records of the Trust. The agent
may substitute another to act for him.
Date:_____________________
Signature:________________
(Sign exactly as your name appears on the Preferred Security Certificate)
Signature Guarantee*:
- ---------
* Signature must be guaranteed by an "eligible guarantor institution" that is a
bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities and Exchange Act of 1934, as amended.
A-12
<PAGE>
SCHEDULE OF INCREASES OR DECREASES IN
GLOBAL PREFERRED SECURITY(2)
This Global Preferred Security shall represent 0 Preferred Securities
unless otherwise indicated below.
The following increases or decreases in this Global Preferred Security
have been made:
<TABLE>
<CAPTION>
===================================================================================================================================
Number of Preferred
Amount of decrease in Amount of increase in Securities evidenced by
Number of Preferred Number of Preferred this
Securities evidenced by Securities evidenced by Global Preferred Signature of
this Global Preferred this Global Preferred Security following such authorized officer of
Date Security Security decrease or increase Agent
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
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- -----------------------------------------------------------------------------------------------------------------------------------
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===================================================================================================================================
</TABLE>
- ----------------
2. Insert in Global preferred Securities only.
A-13
<PAGE>
ANNEX B
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE WERE INITIALLY ISSUED AS PART OF AN
ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF A WARRANT TO PURCHASE 5.3355 SHARES
(SUBJECT TO ANTI-DILUTION ADJUSTMENTS) OF COMMON STOCK OF THE COMPANY AT THE
EXERCISE PRICE SET FORTH IN THE BELOW-REFERENCED WARRANT AGREEMENT AND A
PREFERRED SECURITY OF SOVEREIGN CAPITAL TRUST II (THE "TRUST"). THE WARRANTS AND
THE PREFERRED SECURITIES MAY BE SEPARATED AND TRANSFERRED SEPARATELY, AND
RE-ATTACHED, IN ACCORDANCE WITH THE PROVISIONS OF THE UNIT AGREEMENT.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO
THE COMPANY 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 IS 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.]
[TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE WARRANT
AGREEMENT.]
No. { } Certificate for _____ Warrants
CUSIP No.: 845905116
WARRANTS TO PURCHASE COMMON STOCK OF
SOVEREIGN BANCORP, INC.
THIS CERTIFIES THAT __________, or its registered assigns, is the
registered holder of the number of Warrants set forth above (the "Warrants").
Each Warrant entitles the holder thereof (the "Holder"), at its option and
subject to the provisions contained herein and in the Warrant Agreement referred
to below, to purchase from Sovereign Bancorp, Inc., a Pennsylvania corporation
("the Company"), 5.3355 shares (subject to certain adjustments as set forth in
the Warrant Agreement) of common stock of the Company (the "Common Stock") at
the Exercise Price. This Warrant Certificate
A-14
<PAGE>
shall terminate and become void, and the related Warrants shall expire, as of
5:00 p.m., New York time, on the earlier of (i) November 20, 2029 or (ii) the
date the Warrants are redeemed by the Company pursuant to the terms of the
Warrant Agreement, as described below (the "Expiration Date"), or upon the
earlier exercise hereof as to all the shares of Common Stock subject hereto. The
number of shares issuable upon exercise of the Warrants shall be subject to
adjustment from time to time as set forth in the Warrant Agreement.
This Warrant Certificate is issued under and in accordance with a
Warrant Agreement dated as of November 15, 1999 (the "Warrant Agreement"),
between the Company and The Bank of New York, as warrant agent (the "Warrant
Agent", which term includes any successor Warrant Agent under the Warrant
Agreement), 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. The Warrant Agreement is hereby
incorporated herein by reference and made a part hereof. Reference is hereby
made to the Warrant Agreement for a full statement of the respective rights,
limitations of rights, duties and obligations of the Company, the Warrant Agent
and the Holders of the Warrants. Capitalized terms used but not defined herein
shall have the meanings ascribed thereto in the Warrant Agreement. A copy of the
Warrant Agreement may be obtained for inspection by the Holder hereof upon
written request to the Warrant Agent at its address for notices specified in the
Warrant Agreement.
Subject to redemption as described below, the Holder of this Warrant
Certificate shall have the right, prior to the Expiration Date, at such Holder's
option, to exercise the related Warrant and purchase the Exercise Amount
(subject to certain adjustments set forth in the Warrant Agreement) of Common
Stock at the Exercise Price, provided that the Exercise Conditions are met as of
such date. If the Warrant evidenced by this Warrant Certificate is not exercised
at or before 5:00 p.m., New York time, on its Expiration Date, such Warrant
shall become void, and all rights of the Holder of this Warrant Certificate
hereunder and under the Warrant Agreement shall cease. The Warrant or Warrants
evidenced by this Warrant Certificate may be exercised by giving notice to the
Warrant Agent no later than 5:00 p.m., New York time, on the Business Day
preceding the proposed date of exercise of such Warrants and completing the form
of election to purchase set forth on the reverse hereof, and delivering the
same, together with this Warrant Certificate (if this Warrant Certificate shall
then be held in definitive form), to the Warrant Agent no later than 5:00 p.m.,
New York time, on the date of such exercise, together with a Cash Payment
(unless, in accordance with the Warrant Agreement, a Remarketing Payment is to
be made). In no event may a Holder satisfy its obligation to pay the Exercise
Price by tendering Preferred Securities.
On the date of exercise of the Warrant or Warrants evidenced by this
Warrant Certificate, the Company shall issue, and the Warrant Agent shall
deliver, to or upon the order of the Holder hereof, the Exercise Amount of
Common Stock to which such Holder is entitled, registered in such name or names
as may be directed by such Holder. The date on which this Warrant Certificate
and payment are received by the Warrant Agent as aforesaid shall be deemed to be
the date on which the related Warrant is exercised and the related Common Stock
is issued.
A-15
<PAGE>
Notwithstanding anything to the contrary in this Warrant Certificate or
in the Warrant Agreement, (i) no fractional shares of Common Stock shall be
issued by the Company upon the exercise of any Warrant, (ii) if more than one
Warrant shall be exercised at the same time by the same Holder, the number of
shares of Common Stock issuable in connection with such exercise shall be
computed on the basis of the aggregate Exercise Amount of the Warrants so
exercised, and (iii) on the date a Holder exercises such Holder's Warrant, the
Company shall pay such Holder an amount in cash equal to the then-current Market
Price (multiplied by the related fraction) of Common Stock for such fractional
shares, computed to the nearest whole cent.
If fewer than all of the Warrants evidenced by this Warrant Certificate
are exercised, the Company shall execute, and an authorized officer of the
Warrant Agent shall countersign and deliver, a new Warrant Certificate
evidencing the number of Warrants remaining unexercised.
The "Exercise Conditions" require that, with respect to any Warrant on
any date on which such Warrant is or is proposed to be exercised by the Holder
thereof, that (i) (a) the Company shall have a registration statement in effect
under the Securities Act covering the issuance and sale of the related Exercise
Amount of Common Stock upon exercise of such Warrant, or (b) the sale of such
shares of Common Stock shall be exempt from the registration requirements of the
Securities Act, (ii) such shares of Common Stock shall have been registered,
qualified or are deemed to be exempt under the securities laws of the state of
residence of the exercising Holder, and (iii) a then-current prospectus relating
to the Common Stock shall be delivered to such exercising Holder.
As provided in the Warrant Agreement, the number of shares of Common
Stock issuable upon the exercise of the Warrants is subject to an anti-dilution
adjustment upon the happening of certain events. The Warrant Agreement also
provides for certain adjustments and/or distributions in the event of certain
events relating to a merger or combination of the Company, and similar events.
Subject to satisfaction of the Exercise Conditions and certain other
conditions, the Company may elect to cause a remarketing of the Preferred
Securities and a contemporaneous redemption of the Warrants on the Redemption
Date, for cash, in an amount equal to the Warrant Value as of the Remarketing
Date, in accordance with the Warrant Agreement and related agreements.
A Holder (i) may elect to exercise a Warrant in lieu of Redemption, if
(A) such Warrant is held pursuant to the Unit Agreement, and such Holder has
opted out of participating in the Remarketing, by notice given to the Warrant
Agent and the Unit Agent; or (B) such Warrant is not held pursuant to the Unit
Agreement, by notice given to the Warrant Agent, in each case prior to 5:00
p.m., New York time, on the Business Day prior to the related Redemption Date;
and (ii) as provided in the Unit Agreement, shall be deemed to have elected to
exercise such Warrant in lieu of Redemption, if such Warrant is held pursuant to
the Unit Agreement and such Holder has not opted out of participating in the
Remarketing. In the absence of an election to exercise a Warrant in lieu of a
Redemption, including a deemed election pursuant to clause (ii) of the preceding
sentence, a Holder will be deemed to have elected to have its Warrants redeemed
on the Redemption Date.
A-16
<PAGE>
If a Holder elects or is deemed to have elected to exercise a Warrant
pursuant to the preceding paragraph, then such Holder must tender the Exercise
Price for such Warrant as a Cash Payment, and must follow certain procedures set
forth in the Warrant Agreement; provided, however, that if (i) such Warrant is,
on the Remarketing Date, held pursuant to the Unit Agreement, (ii) such Holder
has not opted out of participating in the Remarketing, and (iii) a Successful
Remarketing shall have occurred, then the Exercise Price of such Warrant will be
deemed to have been paid by a Remarketing Payment, and the Remarketing Agent
will, in connection with such Remarketing Payment, apply the proceeds of the
Remarketing of the related Preferred Security in accordance with the terms of
the Remarketing Agreement and the Unit Agreement.
Any Warrant so redeemed or exercised will, upon such redemption or
exercise, cease to be outstanding.
If a Redemption cannot occur because of an inability, following the
Company's best efforts, to satisfy the Redemption Conditions, the Company will
promptly notify the Warrant Agent and each Holder (at its address specified in
the Warrant Register) thereof. Such event will not constitute a default under
the Warrant Agreement so long as the Company is not otherwise in violation
thereof; and the Company may, under such circumstances, subsequently seek to
remarket the Preferred Securities and contemporaneously redeem the Warrants.
The Company will, contemporaneously with the giving of notice of
Remarketing, furnish notice of Redemption to the Warrant Agent, which will,
within two Business Days of receipt of such notice, furnish notice thereof to
the Holders of Definitive Warrants, and the Company will request, not later than
15 nor more than 30 calendar days prior to the Remarketing Date, that DTC notify
its Participants holding Warrants of the Remarketing.
The Company may require payment of a sum sufficient to pay all taxes,
assessments or other governmental charges in connection with the transfer or
exchange of the Warrant Certificates pursuant to the Warrant Agreement, but not
for any exchange or original issuance (not involving a transfer) with respect to
temporary Warrant Certificates, the exercise of the Warrants or the issuance of
the Common Stock.
This Warrant Certificate may be exchanged at the office of the Warrant
Agent by presenting this Warrant Certificate properly endorsed with a request to
exchange this Warrant Certificate for other Warrant Certificates evidencing an
equal number of Warrants, in accordance with the Warrant Agreement.
All shares of Common Stock issuable by the Company upon the exercise of
the Warrants shall, upon such issue, be duly and validly issued and fully paid
and non-assessable.
The holder in whose name this Warrant Certificate is registered may be
deemed and treated by the Company and the Warrant Agent as the absolute owner of
this Warrant Certificate for all purposes whatsoever and neither the Company nor
the Warrant Agent shall be affected by notice to the contrary.
A-17
<PAGE>
Neither this Warrant Certificate, nor the Warrant evidenced hereby,
entitles the Holder hereof to any of the rights of a shareholder of the Company.
This Warrant Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Warrant Agent.
SOVEREIGN BANCORP, INC.
By: ___________________________
Name:
Title:
DATED:
Countersigned:
- ------------------------------
THE BANK OF NEW YORK,
as Warrant Agent
By ___________________________
Authorized Signatory
A-18
<PAGE>
FORM OF ELECTION TO PURCHASE COMMON STOCK
(to be executed only upon exercise of Warrants)
SOVEREIGN BANCORP, INC.
The undersigned hereby irrevocably elects to exercise ___ Warrants at
an Exercise Price of $______ per Warrant to acquire the Exercise Amount (as
determined pursuant to the Warrant Agreement) per Warrant of Common Stock of
Sovereign Bancorp, Inc. on the terms and conditions specified within this
Warrant Certificate and the Warrant Agreement therein referred to, surrenders
this Warrant Certificate and all right, title and interest therein and directs
that the shares of Common Stock deliverable upon such exercise be registered or
placed in the name and at the address specified below and delivered thereto.
The signature below must correspond with the name as written upon the
face of the within Warrant Certificate in every particular, without alteration
or enlargement or any change whatsoever, and must be guaranteed.
Dated: ____________, ____
-------------------------------------
(Signature of Holder)
-------------------------------------
(Street Address)
-------------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
-------------------------------------
{Signature must be guaranteed by an
eligible guarantor institution (banks,
stock brokers, savings and loan
associations and credit unions) with
membership in an approved guarantee
medallion program pursuant to Securities
and Exchange Commission Rule 17Ad-5).
A-19
<PAGE>
Common Stock to be issued to:
Please insert social security or identifying number:
Name:____________________________________________
Street Address:__________________________________
City, State and Zip Code:________________________
Any unexercised Warrants represented by the Warrant Certificate to be issued to:
Please insert social security or identifying number:
Name:____________________________________________
Street Address:__________________________________
City, State and Zip Code:________________________
A-20
<PAGE>
[TO BE ATTACHED TO GLOBAL CERTIFICATES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE
This Global Certificate shall represent 0 Warrants unless otherwise
indicated below.
The following increases or decreases in this Global Certificate have been
made:
<TABLE>
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Number of Securities
Amount of decrease in Amount of increase in evidenced by the
Number of Warrants Number of Warrants Global Certificate Signature of
evidenced by the evidenced by the following such authorized officer of
Date Global Certificate Global Certrificate decrease or increase Agent
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<S> <C> <C> <C> <C>
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A-21
<PAGE>
EXHIBIT B
INSTRUCTION TO DISREGARD REMARKETING
THE BANK OF NEW YORK
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
Re: ________ Trust Preferred Income Equity Redeemable Securities (PIERS)
Units ("Securities") of Sovereign Bancorp, Inc. and Sovereign Capital
Trust II
The undersigned Holder hereby advises you that it has elected NOT to
participate in the Remarketing set forth below with respect to the corresponding
number of Preferred Securities that are a component of Securities of which the
undersigned is the beneficial owner:
Remarketing Settlement
Date: ______________________
B-1
<PAGE>
Number of Preferred
Securities NOT to
Remarket: ______________________
The notification to the Remarketing Agent to be sent by you on the
fifth Business Day immediately preceding the above Remarketing Date shall NOT
include the aggregate number of Preferred Securities set forth above. Unless
otherwise defined herein, terms defined in the Unit Agreement dated November 15,
1999 with Sovereign Bancorp, Inc. and Sovereign Capital Trust II are used herein
as defined therein. This notice is being delivered pursuant to Section 5.1 of
the Unit Agreement relating to the Securities.
Date: _______________________ _______________________________________
Signature
Signature Guarantee:___________________
Please print name and address of Registered Holder:
B-2
<PAGE>
______________________________ ______________________________________________
Name Social Security or other Taxpayer Identification
Number, if any
Address
______________________________
______________________________
______________________________
B-3
<PAGE>
EXHIBIT C
NOTICE OF ELECTING REMARKETING HOLDER
THE BANK OF NEW YORK
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
LEHMAN BROTHERS INC.
[Address]
Attention:
Re: ________ Trust Preferred Income Equity Redeemable Securities (PIERS)
Units ("Securities") of Sovereign Bancorp, Inc. and Sovereign Capital
Trust II
Reference is made to Sovereign Bancorp, Inc.'s notice of Redemption
dated o, 20__ notifying Holders of the Securities of the redemption of the
Warrants on o, 20__. This notice constitutes an election by the undersigned NOT
to redeem the Warrants identified below. The undersigned hereby
C-1
<PAGE>
advises you of its election to exercise the following number of Warrants which
constitute component parts of Securities beneficially owned by the
undersigned:
Number of Warrants to
Be Exercised: _________________.
Unless otherwise defined herein, terms defined in the Unit Agreement
dated __________, 1999 with Sovereign Bancorp, Inc. and Sovereign Capital Trust
II are used herein as defined therein. This notice is being delivered pursuant
to Section 5.1 of the Unit Agreement.
Date: _______________________ ____________________________________
Signature
Signature Guarantee:____________________
Please print name and address of Registered Holder:
C-2
<PAGE>
______________________________ ______________________________________________
Name Social Security or other Taxpayer Identification
Number, if any
Address
______________________________
______________________________
______________________________
C-3
<PAGE>
EXHIBIT D
NOTICE OF CHANGE OF CONTROL REDEMPTION ELECTION
THE BANK OF NEW YORK
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
Re: ________ Trust Preferred Income Equity Redeemable Securities (PIERS)
Units ("Securities") of Sovereign Bancorp, Inc. and Sovereign Capital
Trust II
Reference is made to Sovereign Bancorp, Inc.'s notice of a Change of
Control dated o, 20__ . The undersigned hereby advises you of its election to
have the following number of Warrants which constitute component parts of
Securities beneficially owned by the undersigned redeemed as aforesaid:
Number of Warrants to
Be Redeemed: _________________.
D-1
<PAGE>
Unless otherwise defined herein, terms defined in the Unit Agreement
dated __________, 1999 with Sovereign Bancorp, Inc. and Sovereign Capital Trust
II are used herein as defined therein. This notice is being delivered pursuant
to Section 5.3 of the Unit Agreement.
Date: _______________________ ____________________________________
Signature
Signature Guarantee:____________________
Please print name and address of Registered Holder:
D-2
<PAGE>
______________________________ ______________________________________________
Name Social Security or other Taxpayer Identification
Number, if any
Address
______________________________
______________________________
______________________________
D-3
<PAGE>
EXHIBIT E
NOTICE OF CHANGE OF CONTROL EXCHANGE AND REPURCHASE
THE BANK OF NEW YORK
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
Re: ________ Trust Preferred Income Equity Redeemable Securities (PIERS)
Units ("Securities") of Sovereign Bancorp, Inc. and Sovereign Capital
Trust II
Reference is made to Sovereign Bancorp, Inc.'s notice of a Change of
Control dated o, 20__ . The undersigned Holder hereby advises you that it has
elected (i) to have the number of Preferred Securities set forth below exchanged
for an equivalent Accreted Value of Debentures and (ii) to have such Debentures
repurchased by Sovereign Bancorp Inc., or its successor, as provided in the Unit
Agreement, the Declaration and the Indenture:
Number of Preferred
Securities to Exchange: ______________________
Number of Debentures
to Repurchase: ______________________
E-1
<PAGE>
Unless otherwise defined herein, terms defined in the Unit Agreement
dated November 15, 1999 with Sovereign Bancorp, Inc. and Sovereign Capital Trust
II (the "Unit Agreement") are used herein as defined therein. This notice is
being delivered pursuant to Section 5.3 of the Unit Agreement.
Date: _______________________ ____________________________________
Signature
Signature Guarantee:____________________
Please print name and address of Registered Holder:
E-2
<PAGE>
______________________________ ______________________________________________
Name Social Security or other Taxpayer Identification
Number, if any
Address
______________________________
______________________________
______________________________
E-3
<PAGE>
AMENDED AND RESTATED DECLARATION OF TRUST
SOVEREIGN CAPITAL TRUST II
Dated as of November 15, 1999
<PAGE>
CROSS-REFERENCE TABLE(1)
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
- ------------------- -----------
310(a) ................................................... 5.3
310(b) ................................................... 5.3(c); 5.3(d)
310(c) ................................................... Not Applicable
311(a) ................................................... 2.2(b)
311(b) ................................................... 2.2(b)
311(c) ................................................... Not Applicable
312(a) ................................................... 2.2(a)
312(b) ................................................... 2.2(b)
312(c) ................................................... Not Applicable
313(a) ................................................... 2.3
313(b) ................................................... 2.3
313(c) ................................................... 2.3
313(d) ................................................... 2.3
314(a) ................................................... 2.4; 3.7(i)
314(b) ................................................... Not Applicable
314(c) ................................................... 2.5
314(d) ................................................... Not Applicable
314(e) ................................................... 2.5
314(f) ................................................... Not Applicable
315(a) ...................................................3.9(a); 3.10(a)
315(b) ................................................... 2.7(a)
315(c) ................................................... 3.9(a)
315(d) ................................................... 3.9(b)
316(a) .............................................2.6; 6.10(b); 6.11(c)
316(b) ................................................... Not Applicable
316(c) ................................................... Not Applicable
317(a) ................................................... 3.8(h); 3.16
317(b) ................................................... Not Applicable
- -----------
(1) This Cross-Reference Table does not constitute part of the Declaration and
shall not affect the interpretation of any of its terms or provisions.
<PAGE>
TABLE OF CONTENTS
<TABLE>
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<S> <C> <C>
ARTICLE I
INTERPRETATION AND DEFINITIONS .................................................. 1
Section 1.1 Interpretation ................................................ 1
Section 1.2 Definitions ................................................... 2
ARTICLE II
TRUST INDENTURE ACT .............................................................17
Section 2.1 Trust Indenture Act; Application ..............................17
Section 2.2 Lists of Holders ..............................................17
Section 2.3 Reports by the Property Trustee ...............................18
Section 2.4 Periodic Reports to the Property Trustee ......................18
Section 2.5 Evidence of Compliance with Conditions Precedent ..............18
Section 2.6 Trust Enforcement Events; Waiver ..............................19
Section 2.7 Trust Enforcement Events; Notice ..............................20
ARTICLE III
ORGANIZATION ....................................................................20
Section 3.1 Name ..........................................................20
Section 3.2 Office ........................................................21
Section 3.3 Purpose .......................................................21
Section 3.4 Authority. ....................................................21
Section 3.5 Title to Property of the Trust ................................22
Section 3.6 Prohibition of Actions by the Trust and the Trustees ..........22
Section 3.7 Powers and Duties of the Administrative Trustees ..............23
Section 3.8 Powers and Duties of the Property Trustee .....................25
Section 3.9 Certain Duties and Responsibilities of the Property Trustee ...27
Section 3.10 Certain Rights of the Property Trustee ........................29
Section 3.11 Powers and Duties of the Delaware Trustee .....................31
Section 3.12 Execution of Documents ........................................32
Section 3.13 Not Responsible for Recitals or Issuance of Securities ........32
Section 3.14 Duration of the Trust .........................................32
Section 3.15 Mergers, Consolidations, Conversions, Amalgamations or
Replacements of the Trust ...................................32
Section 3.16 Property Trustee May File Proofs of Claim .....................34
ARTICLE IV
SPONSOR .........................................................................35
Section 4.1 Responsibilities of the Sponsor. ..............................35
Section 4.2 Indemnification and Expenses of the Trustees. .................35
Section 4.3 Right to Proceed ..............................................36
</TABLE>
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ARTICLE V
TRUSTEES ........................................................................36
Section 5.1 Number of Trustees ............................................36
Section 5.2 Delaware Trustee; Eligibility .................................36
Section 5.3 Property Trustee; Eligibility .................................37
Section 5.4 Qualifications of Administrative Trustees Generally ...........38
Section 5.5 Initial Administrative Trustees ...............................38
Section 5.6 Appointment, Removal and Resignation of Trustees ..............38
Section 5.7 Vacancies among Trustees ......................................40
Section 5.8 Effect of Vacancies ...........................................40
Section 5.9 Meetings ......................................................40
Section 5.10 Delegation of Power by the Administrative Trustees ............41
Section 5.11 Merger, Conversion, Consolidation or Succession to Business ...41
ARTICLE VI
THE SECURITIES ..................................................................41
Section 6.1 General Provisions Regarding the Securities ...................41
Section 6.2 Execution and Authentication ..................................42
Section 6.3 Form and Dating ...............................................43
Section 6.4 The Sponsor's Purchase of the Common Securities. ..............44
Section 6.5 Distributions. ................................................45
Section 6.6 Remarketing. ..................................................47
Section 6.7 Limited Right to Require Exchange of Preferred Securities
and Repurchase of Debentures. ...............................54
Section 6.8 Change of Control Right to Require Exchange of Preferred
Securities and Repurchase of Debentures. ....................55
Section 6.9 Redemption ....................................................56
Section 6.10 Distribution of Debentures in Exchange for Securities
Upon the Occurrence of a Special Event. .....................58
Section 6.11 Voting Rights of the Preferred Securities .....................60
Section 6.12 Voting Rights of the Common Securities ........................63
Section 6.13 Ranking .......................................................64
Section 6.14 Registrar, Paying Agent and Transfer Agent ....................64
Section 6.15 Paying Agent to Hold Money in Trust ...........................65
Section 6.16 Replacement Securities ........................................65
Section 6.17 Outstanding Preferred Securities ..............................66
Section 6.18 Preferred Securities in Treasury ..............................66
Section 6.19 Deemed Security Holders. ......................................66
Section 6.20 Cancellation ..................................................66
Section 6.21 CUSIP Numbers .................................................67
Section 6.22 Global Preferred Securities. ..................................67
</TABLE>
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ARTICLE VII
TRANSFER OF SECURITIES ..........................................................70
Section 7.1 Transfer of Securities ........................................70
Section 7.2 Separation and Rejoining of Units. ............................71
Section 7.3 Book-Entry Interests. .........................................72
Section 7.4 Notices to Clearing Agency ....................................72
Section 7.5 Appointment of Successor Clearing Agency ......................73
ARTICLE VIII
DISSOLUTION AND TERMINATION OF THE TRUST ........................................73
Section 8.1 Dissolution and Termination of the Trust ......................73
Section 8.2 Liquidation Distribution Upon Dissolution or
Termination of the Trust ....................................74
ARTICLE IX
LIMITATION OF LIABILITY OF THE HOLDERS, THE TRUSTEES OR OTHERS ..................75
Section 9.1 Liability .....................................................75
Section 9.2 Exculpation ...................................................75
Section 9.3 Fiduciary Duty ................................................76
Section 9.4 Indemnification ...............................................77
Section 9.5 Outside Businesses ............................................80
ARTICLE X
ACCOUNTING ......................................................................80
Section 10.1 Fiscal Year ...................................................80
Section 10.2 Certain Accounting Matters ....................................81
Section 10.3 Banking .......................................................81
Section 10.4 Withholding ...................................................81
ARTICLE XI
AMENDMENTS AND MEETINGS .........................................................82
Section 11.1 Amendments ....................................................82
Section 11.2 Meetings of the Holders; Action by Written Consent ............84
ARTICLE XII
REPRESENTATIONS OF THE PROPERTY TRUSTEEAND THE DELAWARE TRUSTEE .................86
Section 12.1 Representations and Warranties of the Property Trustee ........86
Section 12.2 Representations and Warranties of The Delaware Trustee ........86
ARTICLE XIII
MISCELLANEOUS ...................................................................87
Section 13.1 Notices .......................................................87
Section 13.2 Governing Law .................................................88
Section 13.3 Intention of the Parties ......................................89
Section 13.4 Headings ......................................................89
Section 13.5 Successors and Assigns ........................................89
Section 13.6 Partial Enforceability ........................................89
Section 13.7 Counterparts ..................................................89
Section 13.8 The Exchange Agent ............................................89
EXHIBIT A Form of Preferred Security Certificate ..............................A-1
EXHIBIT B Form of Common Security Certificate .................................B-1
</TABLE>
<PAGE>
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration")
dated and effective as of November 15, 1999, by Sovereign Bancorp, Inc., a
Pennsylvania corporation, as Sponsor, Mark R. McCollom and Jacquelyn Blue, as
the initial Administrative Trustees, The Bank of New York, as the initial
Property Trustee, and The Bank of New York (Delaware), as the initial Delaware
Trustee, not in their individual capacities but solely as Trustees.
WHEREAS, the Trustees and the Sponsor established Sovereign
Capital Trust II (the "Trust"), a business trust formed under the Delaware
Business Trust Act pursuant to a Declaration of Trust dated as of September 8,
1999 (the "Original Declaration"), and a Certificate of Trust filed with the
Secretary of State of the State of Delaware on September 10, 1999, for the sole
purpose of issuing and selling certain securities representing undivided
beneficial ownership interests in the assets of the Trust and investing the
proceeds from such sales in certain Debentures issued by the Debenture Issuer,
and engaging in only those other activities necessary, advisable or incidental
thereto; and
WHEREAS, all of the Trustees and the Sponsor, by this
Declaration, amend and restate each and every term and provision of the Original
Declaration.
NOW, THEREFORE, it being the intention of the parties hereto
to continue the Trust as a statutory business trust under the Business Trust Act
and that this Declaration constitute the governing instrument of such business
trust, the Trustees declare that all assets contributed to the Trust will be
held in trust for the benefit of the Holders, from time to time, of the
Securities (as defined herein) representing undivided beneficial ownership
interests in the assets of the Trust issued hereunder, subject to the provisions
of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
1.1 Section Interpretation .
Unless the context otherwise requires:
(a) capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in Section 1.2;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "this Declaration" are to this Declaration as
modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles, Sections and Exhibits
are to Articles and Sections of and Exhibits to this Declaration unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Declaration unless otherwise defined in this Declaration; and
<PAGE>
(f) a reference to the singular includes the plural and vice versa, and a
reference to any masculine form of a term includes the feminine form of such
term, as applicable.
1.2 Section Definitions .
The following terms have the following meanings:
"Accreted Value" means, on the date of determination:
(1) with respect to any Security, the Accreted Value of a Debenture
having an aggregate principal amount equal to the aggregate stated
liquidation amount of such Security; and
(2) with respect to any Debenture, the sum of:
(i) $32.50, which is (A) the purchase price paid by the Sponsor
for each Common Security and (B) the portion of the initial purchase
price of a Unit that is allocated to a Preferred Security (as
provided under Section 3.1 of the Unit Agreement); plus
(ii) accrual of the Discount, calculated from November 15, 1999
to the date of determination at an all-in-yield of 11.74% per annum
on a quarterly bond equivalent yield basis using a 360-day year of
twelve 30-days months until such sum equals $50 on November 15,
2029; less
(iii) cash interest accrued during such period.
The "Discount" equals the difference between the principal amount of $50 payable
in respect of such Debenture on November 15, 2029 and the initial purchase price
of $32.50.
"Administrative Trustee" has the meaning set forth in Section 5.4.
"Affiliate" has the same meaning as given to that term in Rule 405 under
the Securities Act or any successor rule thereunder.
"Agent" means any Paying Agent, Registrar or Transfer Agent.
"Authorized Officer" of a Person means any other Person that is
authorized to legally bind such former Person.
2
<PAGE>
"Book-Entry Interest" means a beneficial interest in the Global Preferred
Securities registered in the name of a Clearing Agency or its nominee, ownership
and transfers of which shall be maintained and made through book-entries by a
Clearing Agency.
"Business Day" means any day other than a Saturday or a Sunday or a day
on which banking institutions in (i) the Borough of Manhattan in the City of New
York, (ii) Wyomissing, Pennsylvania or (iii) Wilmington, Delaware are authorized
or required by law, regulation or executive order to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code,
12 Del. Code Section 3801 et seq., as it may be amended from time to time, or
any successor legislation.
"Calculation Agency Agreement" means the Calculation Agency Agreement,
dated as of November 15, 1999, between the Sponsor and the Calculation Agent, as
amended, supplemented or replaced from time to time.
"Calculation Agent" means Reinsel & Company LLP as initial Calculation
Agent under the Calculation Agreement, and any successor thereto.
"Certificate" means a Common Securities Certificate or a Preferred
Securities Certificate.
"Change of Control" shall be deemed to have occurred if:
(1) the acquisition (other than open market purchases on any
national securities exchange on which the Sponsor's capital stock is
traded) by any person, including any syndicate or group deemed to be a
"person" under Section 13(d)(3) of the Exchange Act of beneficial
ownership, directly or indirectly, through a purchase, merger or other
acquisition transaction or series of purchase, merger or other
acquisition transactions of shares of the Sponsor's capital stock
entitling that person to exercise 50% or more of the total voting power
of all shares of the Sponsor's capital stock entitled to vote generally
in elections of directors, other than any acquisition by the Sponsor, any
of the Sponsor's subsidiaries or any of the Sponsor's employee benefit
plans; or
(2) the consolidation or merger of the Sponsor with or into any
other person, any merger of another person into the Sponsor, or any
conveyance, transfer, sale, lease or other disposition of all or
substantially all of the Sponsor's properties and assets to another
person, other than:
3
<PAGE>
(a) any transaction (A) that does not result in any
reclassification, conversion, exchange or cancellation of
outstanding shares of the Sponsor's capital stock and (B)
notwithstanding such transaction, during any period of two
consecutive years after such transaction individuals who at the
beginning of such period constituted the Board of Directors of the
Sponsor (together with any new directors whose election or
appointment by such Board or whose nomination for election by the
shareholders of the Sponsor was approved by a vote of not less than
two-thirds of the Directors then still in office who were either
directors at the beginning of such period or whose election or
nomination for election was previously so approved) continue to
constitute a majority of the Board of Directors of the Sponsor then
in office; or
(b) any merger solely for the purpose of changing the Sponsor's
jurisdiction of incorporation and resulting in a reclassification,
conversion or exchange of outstanding shares of common stock solely
into shares of common stock of the surviving entity;
provided, that, a Change of Control shall not be deemed to have occurred if:
(1) the closing sale price per share of the Sponsor's common stock
for any five Trading Days within the period of 10 consecutive Trading
Days ending immediately after the later of the Change of Control or the
public announcement of the Change of Control, in the case of a Change of
Control under the first clause above, or the period of 10 consecutive
Trading Days ending immediately before the Change of Control, in the case
of a Change of Control under the second clause above, equals or exceeds
110% of the Exercise Price of the Warrants in effect on each such Trading
Day; or
(2) at least 90% of the consideration in the transaction or
transactions constituting a Change of Control consists of shares of
common stock traded or to be traded immediately following such Change of
Control on a national securities exchange or the Nasdaq National Market
and, as a result of such transaction or transactions, the warrants become
exercisable solely into such common stock (and any rights attached
thereto).
A beneficial owner shall be determined in accordance with Rule 13d-3 promulgated
by the SEC under the Exchange Act. The term "person" includes any syndicate or
group which would be deemed to be a "person" under Section 13(d)(3) of the
Exchange Act.
"Change of Control Notice Date" has the meaning set forth in Section 6.8.
"Change of Control Repurchase Date" means the date which is 105 days
following the Change of Control Notice Date.
4
<PAGE>
"Change of Control Repurchase Price" means the Accreted Value of the
Debentures that are exchanged for Preferred Securities upon the exercise of the
Change of Control Repurchase Right plus accrued and unpaid interest (including
deferred interest) on such Debentures to, but excluding, the Change of Control
Repurchase Date.
"Change of Control Repurchase Right" has the meaning set forth in 6.8.
"Clearing Agency" means an organization registered as a "Clearing Agency"
pursuant to Section 17A of the Exchange Act that is acting as depositary for the
Preferred Securities and in whose name or in the name of a nominee of that
organization shall be registered the Global Preferred Securities and which shall
undertake to effect book-entry transfers and pledges of the Preferred
Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency,
"Closing Date" means the "Closing Date" under the Underwriting Agreement.
"Closing Price" of any security on any date of determination means:
(1) the closing sale price (or, if no closing sale price is
reported, the last reported sale price) of such security on the New York
Stock Exchange on such date;
(2) if such security is not listed for trading on the New York Stock
Exchange on any such date, the closing sale price as reported in the
composite transactions for the principal U.S. securities exchange on
which such security is so listed;
(3) if such security is not so listed on a U.S. national or regional
securities exchange, the closing sale price as reported by the Nasdaq
National Market;
(4) if such security is not so reported, the last quoted bid price
for such security in the over-the-counter market as reported by the
National Quotation Bureau or similar organization; or
(5) if such bid price is not available, the average of the mid-point
of the last bid and ask prices of such security on such date from at
least three nationally recognized independent investment banking firms
retained for this purpose by the Company.
5
<PAGE>
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation. A reference to a specific section of the
Code refers not only to such specific section but also to any corresponding
provision of any federal tax statute enacted after the date of this Declaration,
as such specific section or corresponding provision is in effect on the date of
application of the provisions of this Declaration containing such reference.
"Commission" means the United States Securities and Exchange Commission
as from time to time constituted, or if at any time after the execution of this
Declaration such Commission is not existing and performing the duties now
assigned to it under applicable federal securities laws, then the body
performing such duties at such time.
"Common Securities" has the meaning set forth in Section 6.1(a).
"Common Securities Certificate" means a certificate in fully registered
form representing Common Securities, substantially in the form of Exhibit B.
"Common Stock" means the common stock of the Sponsor.
"Compounded Distributions" has the meaning set forth in Section 6.5(b).
"Corporate Trust Office" means the office of the Property Trustee at
which the corporate trust business of the Property Trustee shall, at any
particular time, be principally administered, which office at the date of
execution of this Declaration is located at 101 Barclay Street, 21 West, New
York, New York 10286.
"Coupon Rate" has the meaning set forth in Section 6.5(a).
"Covered Person" means:
(1) any officer, director, shareholder, partner, member,
representative, employee or agent of (a) the Trust or (b) the Trust's
Affiliates; and
(2) any Holder.
"Debenture Distribution Notice" has the meaning set forth in Section
6.10(b).
"Debenture Issuer" means Sovereign Bancorp, Inc., a Pennsylvania
corporation, or any successor entity resulting from any consolidation,
amalgamation, merger or other business combination, in its capacity as issuer of
the Debentures under the Indenture.
"Debenture Issuer Indemnified Person" means:
6
<PAGE>
(1) any Administrative Trustee;
(2) any Affiliate of any Administrative Trustee;
(3) any officers, directors, shareholders, members, partners,
employees, representatives or agents of any Administrative Trustee; or
(4) any officer, employee or agent of the Trust or its Affiliates.
"Debenture Trustee" means Harris Trust and Savings Bank, an Illinois
banking corporation, as trustee under the Indenture until a successor is
appointed thereunder, and thereafter means such successor trustee.
"Debentures" means the 7.50% Junior Subordinated Deferrable Interest
Debentures due January 15, 2030 to be issued by the Debenture Issuer pursuant to
the Indenture and to be purchased by the Trust and held by the Property Trustee.
"Definitive Preferred Securities" has the meaning set forth in Section
6.3.
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Direct Action" has the meaning set forth in Section 3.8(e).
"Distribution" means a distribution payable to Holders in accordance with
Section 6.5.
"Distribution Date" has the meaning set forth in Section 6.5(b).
"DTC" means The Depository Trust Company, the initial Clearing Agency.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, or any successor legislation, and the rules and regulations
promulgated thereunder.
"Exchange Agent" means, initially, The Bank of New York in its separate
capacity as Exchange Agent, and any successor thereto.
"Exchange Notice " has the meaning set forth in Section 8.2(c).
"Exercise Price" has the meaning set forth in the Warrant Agreement.
"Extension Period" has the meaning set forth in Section 6.5(c).
"Failed Remarketing " has the meaning set forth in Section 6.6(m).
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"Failed Remarketing Date" means a Remarketing Date on which a Failed
Remarketing occurs.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.
"Fiduciary Indemnified Person" has the meaning set forth in Section
9.4(b).
"First Supplemental Indenture" means the First Supplemental Indenture,
dated as of November 15, 1999, between the Debenture Issuer and the Debenture
Trustee.
"Fiscal Year" has the meaning set forth in Section 10.1.
"Global Preferred Security" has the meaning set forth in Section 6.3.
"Global Unit Certificate" has the meaning set forth in Section 6.3.
"Guarantee " means the Guarantee Agreement, dated as of November 15,
1999, between the Sponsor, as Guarantor in respect of the Securities, and The
Bank of New York, as Guarantee Trustee, as amended or supplemented from time to
time.
"Holder" means a Person in whose name a Security is registered, such
Person being a beneficial owner within the meaning of the Business Trust Act,
provided that solely for the purposes of determining whether the Holders of the
requisite liquidation amount of Preferred Securities have voted on any matter
provided for in this Declaration, so long as Definitive Preferred Securities
have not been issued and the Preferred Securities remain in the form of one or
more Global Preferred Securities and if the Clearing Agency that is the holder
of such Global Preferred Securities has sent an omnibus proxy to the Clearing
Agency Participants to whose accounts the Preferred Securities are credited on
the record date, the term "Holders" means such Clearing Agency Participants
acting at the direction of the Preferred Security Beneficial Owners.
"Indemnified Person" means a Debenture Issuer Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the Indenture, dated as of September 1, 1999, between
the Debenture Issuer and the Debenture Trustee, as amended or supplemented from
time to time, including the First Supplemental Indenture, dated as of November
15, 1999, between the Debenture Issuer and the Debenture Trustee, pursuant to
which the Debentures are to be issued.
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"Indenture Event of Default " means an Event of Default (as such term is
defined in the Indenture) under the Indenture.
"Interest Payment Date" has the meaning set forth in the First
Supplemental Indenture.
"Investment Company" means an investment company as defined in the
Investment Company Act and the rules and regulations promulgated thereunder.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time, or any successor legislation, and the rules and
regulations promulgated thereunder.
"Investment Company Event" means the receipt by the Trust of an Opinion
of Counsel, rendered by an independent law firm having a recognized national
securities practice, to the effect that as a result of the occurrence of a
change in law or regulation or a change in interpretation or application of law
or regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in Investment Company Act Law"), there is more than an
insubstantial risk that the Trust is or will be considered an Investment Company
that is required to be registered under the Investment Company Act, which Change
in Investment Company Act Law becomes effective on or after the date on which
the Preferred Securities were initially issued and sold.
"Legal Action" has the meaning set forth in Section 3.7(f).
"Legal Cause Remarketing Event" means a Remarketing Event that occurs
upon the occurrence of:
(1) (a) a Tax Event or an Investment Company Event, provided that
the Administrative Trustees have been informed by an independent law firm
that such firm, for substantive reasons, cannot deliver a No Recognition
Opinion; or
(b) a Regulatory Capital Event; and
(2) the Sponsor elects to cause a Remarketing of the Preferred
Securities to occur and causes written notice of its election to be given
to the Holders of the Preferred Securities, the holders of the Units and
the holders of the Warrants.
"Legal Requirements" mean compliance with all applicable laws and
regulations, if any, including, without limitation, the Securities Act,
necessary to permit the Remarketing of the Preferred Securities (and the
subsequent exchange of Preferred Securities for Debentures if a purchaser in the
Remarketing so elects to exchange its purchased Preferred Securities for
Debentures pursuant to Section 6.6(c)), the contemporaneous modifications to the
terms of the Debentures pursuant to the Indenture and the contemporaneous
redemption of the Warrants.
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"Like Amount" means, with respect to a redemption of the Securities,
Securities having an Accreted Value equal to the Accreted Value of Debentures to
be repaid in accordance with their terms.
"Liquidation" has the meaning set forth in Section 8.2(a).
"Liquidation Distribution" has the meaning set forth in Section 8.2(b).
"List of Holders" has the meaning set forth in Section 2.2(a).
"Majority in Liquidation Amount" means, except as provided in the terms
of the Preferred Securities or by the Trust Indenture Act, Holders of
outstanding Securities voting together as a single class, or, as the context may
require, Holders of outstanding Preferred Securities or Holders of outstanding
Common Securities voting separately as a class, who are the record owners of
more than 50% of the aggregate liquidation amount (including the stated amount
that would be paid on redemption, liquidation or otherwise, plus accumulated and
unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities or all outstanding Securities of the
relevant class, as the case may be.
"Maturity Remarketing Date" means November 15, 2029.
"90 Day Period" has the meaning set forth in Section 6.10(a).
"No Recognition Opinion" has the meaning set forth in Section 6.10(b)(i).
"Officers' Certificate" means, when delivered by the Trust, a certificate
signed by a majority of the Administrative Trustees and, when delivered by the
Sponsor, a certificate signed by any two of the Chairman, a Vice Chairman, the
Chief Executive Officer, the President, a Vice President, the Chief Financial
Officer, the Treasurer, the Chief Accounting Officer, the Secretary or an
Assistant Secretary of the Sponsor. Any Officers' Certificate delivered with
respect to compliance with a condition or covenant provided for in this
Declaration shall include, where applicable:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
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(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, rendered by an
independent law firm which shall be acceptable to the Property Trustee.
"Original Declaration" has the meaning set forth in the Recitals hereto.
"Paying Agent" has the meaning set forth in Section 6.14.
"Payment Amount" has the meaning set forth in Section 6.5(f).
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Preferred Securities" has the meaning set forth in Section 6.1(a).
"Preferred Securities Certificate" means a certificate in fully
registered form representing Preferred Securities, substantially in the form of
Exhibit A.
"Preferred Security Beneficial Owner" means, with respect to a Book-Entry
Interest, a Person who is the beneficial owner of such Book-Entry Interest, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in accordance with the
rules of such Clearing Agency).
"Property Account" means a segregated non-interest bearing trust account
maintained with a banking institution, the rating on whose long-term unsecured
indebtedness is at least equal to the rating assigned to the Preferred
Securities by a "nationally recognized statistical rating organization" within
the meaning of Rule 436(g)(2) under the Securities Act.
"Property Trustee" has the meaning set forth in Section 5.3(a).
"Pro Rata" means pro rata to each Holder according to the aggregate
stated liquidation amount of the Securities held by such Holder in relation to
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the aggregate stated liquidation amount of all Securities outstanding unless, in
relation to a payment, a Trust Enforcement Event has occurred and is continuing,
in which case any funds available to make such payment shall be paid first to
each Holder of the Preferred Securities pro rata according to the aggregate
stated liquidation amount of Preferred Securities held by the relevant Holder
relative to the aggregate stated liquidation amount of all Preferred Securities
outstanding, and only after satisfaction of all amounts owed to the Holders of
the Preferred Securities, to each Holder of Common Securities pro rata according
to the aggregate stated liquidation amount of Common Securities held by the
relevant Holder relative to the aggregate stated liquidation amount of all
Common Securities outstanding.
"Quorum" means a majority of the Administrative Trustees or, if there are
only two Administrative Trustees, both of them.
"Redemption Date" has the meaning set forth in Section 6.9(a).
"Redemption Notice" has the meaning set forth in Section 6.9(c).
"Redemption Price" has the meaning set forth in Section 6.9(a).
"Registrar" has the meaning set forth in Section 6.14.
"Regular Record Date" means the date on which determination is made as to
which Holders Distributions are payable.
"Regulatory Capital Event" means that the Sponsor shall have become, or
pursuant to law or regulation will become within 180 days, subject to capital
requirements under which, in the Opinion of Counsel, rendered by an independent
bank regulatory law firm experienced in such matters, the Preferred Securities
would not constitute Tier 1 Capital applied as if the Sponsor (or its successor)
were a bank holding company (as that concept is used in the guidelines or
regulations issued by the Federal Reserve Board (or its then equivalent)).
"Remarketing" means the operation of the procedures for remarketing set
forth in Section 6.6.
"Remarketing Agent" means the remarketing agent (or any successor
remarketing agent) selected by the Sponsor.
"Remarketing Agreement" means the Remarketing Agreement to be entered
into among the Sponsor, the Trust and the Remarketing Agent, as amended or
supplemented from time to time.
"Remarketing Date " means:
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(1) with respect to a Trading Remarketing Event, a date selected by
the Sponsor not less than 20 nor more than 60 days after the notice is
given to the holders of the Units and the Holders of the Preferred
Securities;
(2) with respect to a Legal Cause Remarketing Event, a date selected
by the Sponsor not less than 20 nor more than 60 days after the notice is
given to the holders of the Units and the Holders of the Preferred
Securities and no more than 90 days following the occurrence of the Legal
Cause Remarketing Event; and
(3) the Maturity Remarketing Date.
"Remarketing Event" means the occurrence of a Trading Remarketing Event
or a Legal Cause Remarketing Event or the Maturity Remarketing Date.
"Remarketing Settlement Date " means, with respect to any Remarketing
Date, three Business Days following such Remarketing Date.
"Repurchase Price" means the Accreted Value of the Debentures that are
received in exchange for Preferred Securities upon the exercise of the
Repurchase Right plus accrued and unpaid interest (including deferred interest)
on such Debentures to, but excluding, the applicable Required Repurchase Date.
"Repurchase Right" has the meaning set forth in Section 6.7(a).
"Required Repurchase Date" shall be the applicable January 15, February
15, March 15, April 15, May 15, June 15, July 15, August 15, September 15,
October 15, November 15 and December 15 of each year on which the Repurchase
Price shall payable if a Holder of a Preferred Security elects to exercise its
Repurchase Right.
"Reset Rate " means the interest rate per annum on the Debentures (and,
as a result, the Distribution rate per annum on the Securities), that is
determined pursuant to the Remarketing of the Preferred Securities; provided
that if a Failed Remarketing occurs, the Reset Rate shall equal 13.75% per
annum.
"Responsible Officer" means, with respect to the Property Trustee, any
officer within the corporate trust department of the Property Trustee, including
any vice president, assistant vice president, assistant secretary, assistant
treasurer, trust officer or any other officer of the Property Trustee who
customarily performs functions similar to those performed by the Persons who at
the time shall be such officers, respectively, or to whom any corporate trust
matter is referred because of such person's knowledge of and familiarity with
the particular subject and who shall have direct responsibility for the
administration of this Declaration.
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"Rule 3a-5" means Rule 3a-5 under the Investment Company Act, or any
successor rule or regulation thereunder, and the rules and regulations
promulgated thereunder.
"Securities" mean the Common Securities and the Preferred Securities.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, or any successor legislation, and the rules and regulations promulgated
thereunder.
"66 2/3% in Liquidation Amount" shall mean Holders of outstanding
Securities voting together as a single class or, as the context may require,
Holders of outstanding Preferred Securities or Holders of outstanding Common
Securities voting separately as a class, who are the record owners of 66 2/3% or
more of the aggregate liquidation amount (including the stated amount that would
be paid on redemption, liquidation or otherwise, plus accumulated and unpaid
Distributions to the date upon which the voting percentages are determined) of
all outstanding Securities or all outstanding Securities of the relevant class,
as the case may be.
"Special Event" has the meaning set forth in Section 6.10(a).
"Special Record Date" means the Remarketing Date.
"Sponsor" means Sovereign Bancorp, Inc., a Pennsylvania corporation, or
any successor entity resulting from any merger, consolidation, amalgamation or
replacement by or conveyance, transfer or lease of its properties as an entirety
or substantially as an entirety, in its capacity as sponsor of the Trust.
"Successor Delaware Trustee" has the meaning set forth in Section
5.6(b)(ii).
"Successor Entity" has the meaning set forth in Section 3.15(b)(i).
"Successor Property Trustee" has the meaning set forth in Section
5.6(b)(i).
"Successor Securities" has the meaning set forth in Section
3.15(b)(i)(B).
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
"Tax Event" means the receipt by the Trust of an Opinion of Counsel,
rendered by an independent law firm having a recognized national tax practice,
to the effect that, as a result of:
(1) any amendment to, or change in or announced proposed change in,
the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein; or
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(2) any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations,
which amendment or change is effective or proposed change, administrative
pronouncement or judicial decision is announced on or after the Closing Date,
there is more than an insubstantial risk that:
(a) the Trust is, or will be within 90 days of the date of such
opinion, subject to United States federal income tax with respect to
interest received or accrued on the Debentures; or
(b) the Trust is, or will be within 90 days of the date of such
opinion, subject to more than a de minimis amount of other taxes, duties
or other governmental charges.
"10% in Liquidation Amount" means, except as provided in the terms of the
Preferred Securities or by the Trust Indenture Act, Holders of outstanding
Securities voting together as a single class or, as the context may require,
Holders of outstanding Preferred Securities or Holders of outstanding Common
Securities voting separately as a class, who are the record owners of 10% or
more of the aggregate liquidation amount (including the stated amount that would
be paid on redemption, liquidation or otherwise, plus accumulated and unpaid
Distributions to the date upon which the voting percentages are determined) of
all outstanding Securities or all outstanding Securities of the relevant class,
as the case may be.
"Trading Day" means:
(1) if the Common Stock or other capital stock then issuable upon
exercise of the Warrants is listed or admitted for trading on the New
York Stock Exchange, a day on which the New York Stock Exchange is open
for business;
(2) if the Common Stock or other capital stock then issuable upon
exercise of the Warrants is not listed or admitted for trading on the New
York Stock Exchange but is listed or admitted for trading on a national
securities exchange, a day on which such national securities exchange is
open for business;
(3) if the Common Stock or other capital stock then issuable upon
exercise of the Warrants is not listed or admitted for trading on the New
York Stock Exchange or other national securities exchange but is quoted
on the Nasdaq National Market, a day on which trades may be made thereon;
or
(4) if the Common Stock or other capital stock then issuable upon
exercise of the Warrants is not so listed or admitted for trading on the
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New York Stock Exchange or other national securities exchange or quoted
on the Nasdaq National Market, a day on which the applicable securities
market in which such security is traded is open for business.
"Trading Remarketing Event" means a Remarketing Event that occurs
because:
(1) on any date after November 20, 2002 but prior to November 15,
2029, the Closing Price of a share of the Common Stock exceeds and has
exceeded for at least 20 Trading Days within the immediately preceding 30
consecutive Trading Days, the following related price per share:
if after November 20, 2002: $14.9939
if after November 15, 2003: $13.1197
if after November 15, 2004: $11.2454; and
(2) within ten Business Days of such date, the Sponsor elects to
cause a Remarketing of the Preferred Securities to occur and causes
written notice of its election to be given to the Holders of the
Preferred Securities, the holders of the Units and the holders of the
Warrants.
"Transfer Agent" has the meaning set forth in Section 6.14.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trust" has the meaning set forth in the Recitals hereto.
"Trustee" or "Trustees" means each Person who has signed this Declaration
as a trustee, so long as such Person shall continue in office in accordance with
the terms hereof, and all other Persons who may from time to time be duly
appointed, qualified and serving as trustees in accordance with the provisions
hereof, and references herein to a Trustee or the Trustees shall refer to such
Person or Persons solely in their capacity as trustees hereunder.
"Trust Enforcement Event" means, with respect to the Securities, an event
of default under this Declaration, which occurs upon the happening of an
Indenture Event of Default.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended
from time to time, or any successor legislation.
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"Underwriters" mean Lehman Brothers Inc., Salomon Smith Barney Inc. and
Merrill Lynch, Pierce, Fenner & Smith Incorporated.
"Underwriting Agreement" means the underwriting agreement, dated November
8, 1999, between the Sponsor, an Administrative Trustee and the Underwriters
with respect to the initial offering and sale of the Units, Preferred Securities
and Warrants.
"Unit" means the collective rights and obligations of a holder of a unit
certificate issued under the Unit Agreement in respect of a Preferred Security,
a Debenture and a Warrant.
"Unit Agent" means The Bank of New York as initial Unit Agent under the
Unit Agreement, and any successor thereto.
"Unit Agreement" means the Unit Agreement, dated November 15, 1999, among
Sovereign Bancorp, Inc., the Trust, The Bank of New York, as Unit Agent, the
Property Trustee and the Warrant Agent, as amended or supplemented from time to
time.
"Warrant" has the meaning set forth in the Warrant Agreement.
"Warrant Agent" means The Bank of New York as initial Warrant Agent under
the Warrant Agreement, and any successor thereto.
"Warrant Agreement" means the Warrant Agreement, dated November 15, 1999,
between Sovereign Bancorp, Inc. and The Bank of New York, as Warrant Agent, as
amended or supplemented from time to time.
"Warrant Requirements" mean:
(1) a registration statement covering the issuance and sale of
Common Stock to the holders of Warrants upon exercise of such Warrants
shall be effective under the Securities Act, or such issuance and sale
shall be exempt from the registration requirements of the Securities Act;
(2) the shares of Common Stock shall be registered, qualified or
deemed to be exempt under the securities laws of the state of residence
of such holder of Warrants; and
(3) a then current prospectus shall be available for delivery to
exercising holders of the Warrants.
"Warrant Value" has the meaning set forth in the Warrant Agreement.
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ARTICLE II
TRUST INDENTURE ACT
Section 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the Trust Indenture
Act that are required to be part of this Declaration in order for this
Declaration to be qualified under the Trust Indenture Act and shall be governed,
to the extent applicable, by such provisions.
(b) The Property Trustee shall be the only Trustee which is a Trustee for
the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration limits,
qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this Declaration shall
not affect the Trust's classification as a grantor trust for United States
federal income tax purposes and shall not affect the nature of the Securities as
equity securities representing undivided beneficial ownership interests in the
assets of the Trust.
2.2 Section Lists of Holders.
(a) Except when the Property Trustee is the Registrar, each of the
Sponsor and the Administrative Trustees on behalf of the Trust shall provide the
Property Trustee a list, in such form as the Property Trustee may reasonably
require, of the names and addresses of the Holders ("List of Holders"):
(i) as of the record date relating to the payment of any
Distribution, at least one Business Day prior to the date for payment of
such Distribution, except while the Preferred Securities are represented
by one or more Global Preferred Securities, and
(ii) at any other time, within 30 days of receipt by the Trust of a
written request from the Property Trustee for a List of Holders as of a
date no more than fifteen days before such List of Holders is given to
the Property Trustee.
If at any time the List of Holders does not differ from the most recent List of
Holders provided to the Property Trustee by the Sponsor and the Administrative
Trustees on behalf of the Trust, then neither the Sponsor nor the Administrative
Trustees shall be obligated to deliver such List of Holders. The Property
Trustee shall preserve, in as current a form as is reasonably practicable, all
information contained in Lists of Holders given to it or which it receives in
the capacity as Paying Agent (if acting in such capacity), provided that the
Property Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
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(b) The Property Trustee shall comply with its obligations under,
and shall be entitled to the benefits of, Sections 311(a), 311(b) and
312(b) of the Trust Indenture Act.
Section 2.3 Reports by the Property Trustee.
Within 60 days after January 15 of each year (commencing with the year of
the first anniversary of the issuance of the Preferred Securities), the Property
Trustee shall provide to the Holders of the Preferred Securities such reports as
are required by Section 313 of the Trust Indenture Act, if any, in the form and
in the manner provided by Section 313 of the Trust Indenture Act. The Property
Trustee also shall comply with the requirements of Section 313(d) of the Trust
Indenture Act.
Section 2.4 Periodic Reports to the Property Trustee.
Each of the Sponsor and the Administrative Trustees on behalf of the
Trust shall provide to the Property Trustee such documents, reports and
information as are required by Section 314 of the Trust Indenture Act, if any,
and the compliance certificate required by Section 314 of the Trust Indenture
Act in the form, in the manner and at the times required by Section 314 of the
Trust Indenture Act.
Section 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Administrative Trustees on behalf of the
Trust shall provide to the Property Trustee annually such evidence of compliance
with any conditions precedent provided for in this Declaration that relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) of the Trust Indenture Act may be given in the form of an Officers'
Certificate.
Section 2.6 Trust Enforcement Events; Waiver.
(a) The Holders of a Majority in Liquidation Amount of the Preferred
Securities may waive, by vote or written consent, on behalf of the Holders of
all of the Preferred Securities, any past Trust Enforcement Events in respect of
the Preferred Securities and its consequences, provided that, if the underlying
Indenture Event of Default:
(i) is not waivable under the Indenture, the related Trust
Enforcement Event under this Declaration also shall not be waivable; or
(ii) requires the vote or consent of the holders of greater than a
majority in aggregate principal amount of the Debentures (a "Super
Majority") to be waived under the Indenture, the related Trust
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Enforcement Event under this Declaration only may be waived by the vote
or written consent of the Holders of at least the proportion in aggregate
liquidation amount of the Preferred Securities that the relevant Super
Majority represents of the aggregate principal amount of the Debentures
outstanding.
The foregoing provisions of this Section 2.6(a) shall be in
lieu of Section 316(a)(1)(B) of the Trust Indenture Act and Section 316(a)(1)(B)
of the Trust Indenture Act is hereby expressly excluded from this Declaration
and the Securities, as permitted by the Trust Indenture Act. Upon such waiver,
any such Trust Enforcement Event in respect of the Preferred Securities arising
therefrom shall be deemed to have been cured for every purpose of this
Declaration, but no such waiver shall extend to any subsequent or other Trust
Enforcement Event with respect to the Preferred Securities or impair any right
consequent thereon. Any waiver by the Holders of the Preferred Securities of a
Trust Enforcement Event with respect to the Preferred Securities also shall be
deemed to constitute a waiver by the Holders of the Common Securities of any
such Trust Enforcement Event with respect to the Common Securities for all
purposes of this Declaration without any further act, vote or consent of the
Holders of the Common Securities.
(b) The Holders of a Majority in Liquidation Amount of the Common Securities may
waive, by vote or written consent, on behalf of the Holders of all of the Common
Securities, any past Trust Enforcement Event in respect of the Common Securities
and its consequences, provided that, if the underlying Indenture Event of
Default is not waivable under the Indenture, except where the Holders of the
Common Securities are deemed to have waived such Trust Enforcement Event as
provided below in this Section 2.6(b), the related Trust Enforcement Event under
this Declaration also shall not be waivable. The Holders of Common Securities
shall be deemed to have waived any and all Trust Enforcement Events with respect
to the Common Securities and the consequences thereof until all Trust
Enforcement Events with respect to the Preferred Securities have been cured,
waived or otherwise eliminated. Until all Trust Enforcement Events in respect of
the Preferred Securities shall have been so cured, waived or otherwise
eliminated, the Property Trustee shall be deemed to be acting solely on behalf
of the Holders of the Preferred Securities and only the Holders of the Preferred
Securities shall have the right to direct the Property Trustee in accordance
with the terms of the Securities.
The foregoing provisions of this Section 2.6(b) shall be in
lieu of Section 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act, and
Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby
expressly excluded from this Declaration and the Securities, as permitted by the
Trust Indenture Act. Subject to the foregoing provisions of this Section 2.6(b),
upon such cure, waiver or other elimination, any such default shall cease to
exist and any Trust Enforcement Event with respect to the Common Securities
arising therefrom shall be deemed to have been cured for every purpose of this
Declaration, but no such waiver shall extend to any subsequent or other default
or Trust Enforcement Event with respect to the Common Securities or impair any
right consequent thereon.
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(c) A waiver of an Indenture Event of Default by the Property Trustee at
the direction of the Holders of the Preferred Securities constitutes a waiver of
the related Trust Enforcement Event under this Declaration. The foregoing
provisions of this Section 2.6(c) shall be in lieu of Section 316(a)(1)(B) of
the Trust Indenture Act, and Section 316(a)(1)(B) of the Trust Indenture Act is
hereby expressly excluded from this Declaration and the Securities, as permitted
by the Trust Indenture Act.
Section 2.7 Trust Enforcement Events; Notice.
(a) The Property Trustee shall, within 90 days after the occurrence of a
Trust Enforcement Event actually known to a Responsible Officer, transmit by
mail, first class postage prepaid, to the Holders, notice of such Trust
Enforcement Event unless such Trust Enforcement Event has been cured before the
giving of such notice; provided that, except for a default in the payment of
principal of (or premium, if any) or interest on any of the Debentures, the
Property Trustee shall be protected in withholding such notice if and so long as
a Responsible Officer in good faith determines that the withholding of such
notice is in the interests of the Holders.
(b) The Property Trustee shall not be deemed to have knowledge of any
Trust Enforcement Event except for:
(i) a default under Sections 2.10(a) and 2.10(b) of the First
Supplemental Indenture; or
(ii) any default as to which the Property Trustee shall have
received written notice or of which a Responsible Officer charged with the
administration of this Declaration shall have actual knowledge.
ARTICLE III ORGANIZATION
Section 3.1 Name.
The Trust is named "Sovereign Capital Trust II", as such name may be
modified from time to time by the Administrative Trustees following written
notice to the Holders. The Trust's activities may be conducted under the name of
the Trust or any other name deemed advisable by the Administrative Trustees.
Section 3.2 Office.
The address of the principal office of the Trust is c/o Sovereign
Bancorp, Inc., 103 Foulk Road, Suite 200, Wilmington, Delaware 19803. On ten
Business Days' written notice to the Holders, the Administrative Trustees may
designate another principal office.
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Section 3.3 Purpose.
The exclusive purposes and functions of the Trust are:
(a) to issue and sell the Securities;
(b) to use the proceeds from the sale of the Securities to acquire
the Debentures; and
(c) except as otherwise limited herein, to engage in only those
other activities necessary, advisable or incidental thereto and to the
issuance of the Units.
By acceptance of this Trust, none of the Trustees, the Sponsor, the
Holders or the Preferred Security Beneficial Owners will take any
position that is contrary to the classification of the Trust as a grantor
trust for United States federal income tax purposes.
Section 3.4 Authority.
(a) Subject to the limitations provided in this Declaration and to
the specific duties of the Property Trustee, the Administrative Trustees shall
have exclusive authority to carry out the purposes of the Trust. Any action
taken by the Administrative Trustees in accordance with their powers shall
constitute the act of and shall serve to bind the Trust, and any action taken by
the Property Trustee on behalf of the Trust in accordance with its powers shall
constitute the act of and shall serve to bind the Trust. In dealing with the
Trustees acting on behalf of the Trust, no Person shall be required to inquire
into the authority of the Trustees to bind the Trust. Persons dealing with the
Trust are entitled to rely conclusively on the power and authority of the
Trustees as set forth in this Declaration.
(b) Except as expressly set forth in this Declaration and except if
a meeting of the Administrative Trustees is called with respect to any matter
over which the Administrative Trustees have power to act, any power of the
Administrative Trustees may be exercised by, or with the consent of, any one
such Administrative Trustee.
(c) Unless otherwise determined by the Administrative Trustees and
except as otherwise required by the Business Trust Act or applicable law, any
Administrative Trustee is authorized to execute on behalf of the Trust any
documents which the Administrative Trustees have the power and authority to
cause the Trust to execute pursuant to Section 3.7.
Section 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the Debentures and
the Property Account or as otherwise provided in this Declaration, legal title
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to all assets of the Trust shall be vested in the Trust. The Holders shall not
have legal title to any part of the assets of the Trust, but shall have an
undivided beneficial ownership interest in the assets of the Trust.
Section 3.6 Prohibition of Actions by the Trust and the Trustees.
The Trust shall not, and the Trustees (including the Property
Trustee and the Delaware Trustee) shall cause the Trust not to, engage in any
activity other than as required or authorized by this Declaration. In
particular, the Trust shall not, and the Trustees (including the Property
Trustee and the Delaware Trustee) shall cause the Trust not to:
(i) invest any proceeds received by the Trust in connection with
its ownership of Debentures, but shall distribute all such proceeds to
Holders pursuant to the terms of this Declaration and of the Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess any power or otherwise act in such a way as to vary
the Trust assets;
(iv) possess property for any purpose other than a Trust purpose;
(v) make any loans or incur any indebtedness other than loans
represented by the Debentures;
(vi) mortgage or pledge any of its assets;
(vii) possess any power or otherwise act in such a way as to vary
the terms of the Securities in any way whatsoever (except to the extent
expressly authorized in this Declaration or by the terms of the
Securities);
(viii) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the
Securities;
(ix) other than as provided in this Declaration or by the terms
of the Securities:
(A) direct the time, method and place of conducting any
proceeding with respect to any remedy available to the Debenture
Trustee, or exercising any trust or power conferred upon the
Debenture Trustee with respect to the Debentures;
(B) waive any past Indenture Event of Default that is waivable
under the Indenture;
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(C) exercise any right to rescind or annul any declaration
that the principal of all the Debentures shall be due and
payable; or
(D) consent to any amendment, modification or termination
of the Indenture or the Debentures where such consent shall be
required, unless the Trust shall have received an opinion of a
nationally recognized independent tax counsel experienced in
such matters to the effect that such amendment, modification
or termination will not cause more than an insubstantial risk
that the Trust will not be classified as a grantor trust for
United States federal income tax purposes;
(x) take any action inconsistent with the status of the Trust as a
grantor trust for United States federal income tax purposes; or
(xi) revoke any action previously authorized or approved by vote of
the Holders of the Preferred Securities.
Section 3.7 Powers and Duties of the Administrative Trustees.
The Administrative Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities to:
(a) establish the terms and forms of the Securities in the manner
specified in Section 6.1 and to issue and sell the Securities in accordance with
this Declaration; provided, however, that:
(i) the Trust may issue no more than one series of Preferred
Securities and no more than one series of Common Securities;
(ii) there shall be no interests in the Trust other than the
Securities, and
(iii) the issuance of Securities shall be limited to a one-time,
simultaneous issuance of both Preferred Securities and Common
Securities on the Closing Date;
(b) acquire the Debentures with the proceeds of the sale of the
Securities; provided, however, that the Administrative Trustees shall cause
legal title to the Debentures to be held of record in the name of the Property
Trustee for the benefit of the Holders;
(c) give the Sponsor and the Property Trustee prompt written notice
of the occurrence of a Special Event;
(d) establish a record date with respect to all actions to be taken
hereunder that require a record date be established, including and with respect
to, for the purposes of Section
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316(c) of the Trust Indenture Act, Distributions, voting rights, redemptions and
exchanges, and to issue relevant notices to the Holders as to such actions and
applicable record dates;
(e) take all actions and perform such duties as may be required of
the Administrative Trustees pursuant to the terms of this Declaration, the Unit
Agreement and the Securities;
(f) bring or defend, pay, collect, compromise, arbitrate, resort to
legal action, or otherwise adjust claims or demands of or against the Trust
("Legal Action"), unless pursuant to Section 3.8(e) the Property Trustee has the
exclusive power to bring such Legal Action;
(g) employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors and
consultants to conduct only those services that the Administrative Trustees have
authority to conduct directly, and to pay reasonable compensation for such
services;
(h) cause the Trust to comply with the Trust's obligations under the
Trust Indenture Act;
(i) give to the Property Trustee the certificate required by Section
314(a)(4) of the Trust Indenture Act, which certificate may be executed by any
Administrative Trustee;
(j) incur expenses that are necessary or incidental to carry out any
of the purposes of the Trust;
(k) act as, or appoint another Person to act as, Registrar and
Transfer Agent for the Securities or to appoint a Paying Agent for the
Securities as provided in Section 6.14;
(l) give prompt written notice to the Property Trustee and to
Holders of any notice received from the Debenture Issuer of its election to
defer payments of interest on the Debentures by extending the interest payment
period under the Indenture;
(m) take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders or to enable the Trust
to effect the purposes for which the Trust was created;
(n) take any action not inconsistent with this Declaration or with
applicable law that the Administrative Trustees determine in their discretion to
be necessary or desirable in carrying out the purposes and functions of the
Trust as set forth in Section 3.3 or the activities of the
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Trust as set out in this Section 3.7, as long as such action does not materially
adversely affect the interests of the Holders, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the Investment Company Act;
(ii) causing the Trust to be classified as a grantor trust for
United States federal income tax purposes; and
(iii) cooperating with the Debenture Issuer to ensure that the
Debentures will be treated as indebtedness of the Debenture Issuer
for United States federal
(o) take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to the
Trust to be duly prepared and filed by the Administrative Trustees on behalf of
the Trust; and
(p) execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing.
The Administrative Trustees shall exercise the powers set forth in
this Section 3.7 in a manner that is consistent with the purposes and functions
of the Trust set out in Section 3.3, and the Administrative Trustees shall have
no power to, and shall not, take any action that is inconsistent with the
purposes and functions of the Trust set forth in Section 3.3.
Subject to this Section 3.7, the Administrative Trustees shall have
none of the powers or the authority of the Property Trustee set forth in Section
3.8.
Any expenses incurred by the Administrative Trustees pursuant to
this Section 3.7 shall be reimbursed by the Debenture Issuer.
Section 3.8 Powers and Duties of the Property Trustee.
(a) The legal title to the Debentures shall be owned by and held of
record in the name of the Property Trustee in trust for the benefit of the Trust
and the Holders. The right, title and interest of the Property Trustee to the
Debentures shall vest automatically in each Person who may hereafter be
appointed as Property Trustee in accordance with Section 5.6. Such vesting and
cessation of title shall be effective whether or not conveyancing documents with
regard to the Debentures have been executed and delivered.
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(b) The Property Trustee shall not transfer its right, title and
interest in the Debentures to the Administrative Trustees or to the Delaware
Trustee (if the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain the Property Account in the name of
and under the exclusive control of the Property Trustee on behalf of
the Holders and, upon the receipt of payments of funds made in
respect of the Debentures, deposit such funds into the Property
Account and make payments or (cause the Paying Agent to make
payments) to the Holders from the Property Account in accordance
with Section 6.5. Funds in the Property Account shall be held
uninvested until disbursed in accordance with this Declaration;
(ii) engage in such ministerial activities as shall be necessary
or appropriate to effect the redemption of the Securities to the
extent the Debentures are redeemed or mature; and
(iii) upon written direction by the Sponsor to dissolve the
Trust, engage in such ministerial activities as shall be necessary
or appropriate to effect the distribution of the Debentures to the
Holders in exchange for the Securities.
(d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to the
terms of this Declaration, the Unit Agreement and the Securities.
(e) Subject to Section 3.9(a), the Property Trustee shall take any
Legal Action which arises out of or in connection with:
(i) a Trust Enforcement Event of which a Responsible Officer has
actual knowledge; or
(ii) the Property Trustee's duties and obligations under this
Declaration or the Trust Indenture Act;
provided however, that if a Trust Enforcement Event has occurred and is
continuing and such Trust Enforcement Event is attributable to the failure of
the Debenture Issuer to pay the principal of or premium, if any, or interest on
the Debentures on the date such principal, premium, if any, or interest is
otherwise payable (or in connection with a distribution of Debentures in
exchange for Preferred Securities and repurchase of Debentures under Sections
6.7 and 6.8), a Holder of Preferred Securities may institute a proceeding
directly against the Debenture Issuer to enforce payment to such Holder of the
principal of or premium, if any, or interest on the Debentures having an
aggregate principal amount equal to the aggregate liquidation amount of the
Preferred Securities of such Holder (a "Direct Action")
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on or after the respective due date specified in the Debentures. In connection
with such Direct Action, the rights of the Holders of the Common Securities will
be subrogated to the rights of such Holder of Preferred Securities to the extent
of any payment made by the Debenture Issuer to such Holder of Preferred
Securities in such Direct Action. Except as provided in the preceding sentences,
the Holders of Preferred Securities will not be able to exercise directly any
other remedy available to the holders of the Debentures.
(f) The Property Trustee shall continue to serve as a Trustee until
either:
(i) the Trust has been completely liquidated and the proceeds of
the liquidation distributed to the Holders pursuant to the terms of
the Securities; or
(ii) a Successor Property Trustee has been appointed and has
accepted that appointment in accordance with Section 5.6.
(g) The Property Trustee shall have the legal power to exercise all
of the rights, powers and privileges of a holder of Debentures under the
Indenture and, if a Trust Enforcement Event actually known to a Responsible
Officer occurs and is continuing, the Property Trustee shall enforce, for the
benefit of Holders, its rights as holder of the Debentures subject to the rights
of the Holders pursuant to the terms of such Securities.
(h) The Property Trustee shall be authorized to undertake any
actions set forth in Section 317(a) of the Trust Indenture Act.
(i) The Property Trustee may authorize one or more Persons to act as
additional Paying Agents and to pay Distributions, redemption payments or
liquidation payments on behalf of the Trust with respect to all Securities, and
any such Paying Agent shall comply with Section 317(b) of the Trust Indenture
Act. Any such additional Paying Agent may be removed by the Property Trustee at
any time, and a successor Paying Agent or additional Paying Agents may be
appointed at any time by the Property Trustee.
(j) Subject to this Section 3.8, the Property Trustee shall have
none of the duties, liabilities, powers or the authority of the Administrative
Trustees set forth in Section 3.7.
The Property Trustee shall exercise the powers set forth in this
Section 3.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Property Trustee shall have no power
to, and shall not, take any action that is inconsistent with the purposes and
functions of the Trust set out in Section 3.3.
Section 3.9 Certain Duties and Responsibilities of the Property Trustee.
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(a) The Property Trustee, before the occurrence of any Trust
Enforcement Event and after the cure or waiver of all Trust Enforcement Events
that may have occurred, shall undertake to perform only such duties as are
specifically set forth in this Declaration and in the Securities, and no implied
covenants shall be read into this Declaration against the Property Trustee. If a
Trust Enforcement Event has occurred (that has not been cured or waived pursuant
to Section 2.6) of which a Responsible Officer has actual knowledge, the
Property Trustee shall exercise such of the rights and powers vested in it by
this Declaration, and shall use the same degree of care and skill in its
exercise as a prudent person would exercise or use under the circumstances in
the conduct of his own affairs.
(b) No provision of this Declaration shall be construed to relieve
the Property Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of a Trust Enforcement Event and
after the cure or waiver of all such Trust Enforcement Events that
may have occurred:
(A) the duties and obligations of the Property Trustee
shall be determined solely by the express provisions of this
Declaration and in the Securities, and the Property Trustee
shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this
Declaration and in the Securities, and no implied covenants or
obligations shall be read into this Declaration against the
Property Trustee; and
(B) in the absence of bad faith on the part of the
Property Trustee, the Property Trustee may conclusively rely, as
to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Property Trustee and conforming to the
requirements of this Declaration; provided, however, that in the
case of any such certificates or opinions that by any provision
hereof are specifically required to be furnished to the Property
Trustee, the Property Trustee shall be under a duty to examine
such certificates or opinions to determine whether or not they
conform to the requirements of this Declaration (but need not
confirm or investigate the accuracy of mathematical calculations
or other facts stated therein);
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it
shall be proved that the Property Trustee was negligent in
ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect to
any action taken or omitted to be taken by it without negligence, in
good faith in accordance with the direction of the Holders of not
less than a Majority in Liquidation Amount of the Securities
relating to the time, method and place of conducting any proceeding
for any remedy available to the Property
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Trustee, or exercising any trust or power conferred upon the
Property Trustee under this Declaration;
(iv) no provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in
the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Declaration or indemnity reasonably satisfactory to the Property
Trustee against such risk or liability is not reasonably assured to
it;
(v) the Property Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Debentures
and the Property Account shall be to deal with such property in a
similar manner as the Property Trustee deals with similar property
for its own account, subject to the protections and limitations on
liability afforded to the Property Trustee under this Declaration
and the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or liability for or
with respect to the value, genuineness, existence or sufficiency of
the Debentures or the payment of any taxes or assessments levied
thereon or in connection therewith;
(vii) the Property Trustee shall not be liable for any interest
on any money received by it except as it may otherwise agree in
writing with the Sponsor, and money held by the Property Trustee
need not be segregated from other funds held by it except in
relation to the Property Account maintained by the Property Trustee
pursuant to Section 3.8(c)(i) and except to the extent otherwise
required by law; and
(viii) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrative Trustees or the
Sponsor with their respective duties under this Declaration, nor
shall the Property Trustee be liable for any default or misconduct
of the Administrative Trustees or the Sponsor.
Section 3.10 Certain Rights of the Property Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed
by it to be genuine and to have been signed, sent or presented by
the proper party or parties;
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(ii) any direction or act of the Sponsor or the Administrative
Trustees contemplated by this Declaration shall be sufficiently
evidenced by an Officers' Certificate;
(iii) whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action
hereunder, the Property Trustee (unless other evidence is herein
specifically prescribed) may request, in the absence of bad faith
on its part, and conclusively rely upon an Officers' Certificate
which, upon receipt of such request, shall be promptly delivered by
the Sponsor or the Administrative Trustees;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or
securities laws) or any rerecording, refiling or registration
thereof;
(v) the Property Trustee may consult with counsel or other
experts of its selection and the advice or opinion of such counsel
and experts with respect to legal matters or advice within the
scope of such experts' area of expertise shall be full and complete
authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance
with such advice or opinion. Such counsel may be counsel to the
Sponsor or any of its Affiliates and may include any of its
employees. The Property Trustee shall have the right at any time to
seek instructions concerning the administration of this Declaration
from any court of competent jurisdiction;
(vi) the Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
Declaration at the request or direction of any Holder, unless such
Holder shall have provided to the Property Trustee security and
indemnity, reasonably satisfactory to the Property Trustee, against
the costs, expenses (including reasonable attorneys' fees and
expenses and the expenses of the Property Trustee's agents,
nominees or custodians) and liabilities that might be incurred by
it in complying with such request or direction, including such
reasonable advances as may be requested by the Property Trustee;
provided, that, nothing contained in this Section 3.10(a)(vi) shall
be taken to relieve the Property Trustee, upon the occurrence of an
Indenture Event of Default, of its obligation to exercise the
rights and powers vested in it by this Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document, but the
Property Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it sees fit;
(viii) the Property Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or
by or through agents, custodians, nominees or
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attorneys, and the Property Trustee shall not be responsible for
any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder;
(ix) any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders, and the signature
of the Property Trustee or its agents alone shall be sufficient and
effective to perform any such action, and no third party shall be
required to inquire as to the authority of the Property Trustee to
so act or as to its compliance with any of the terms and provisions
of this Declaration, both of which shall be conclusively evidenced
by the Property Trustee's or its agent's taking such action;
(x) whenever in the administration of this Declaration the
Property Trustee shall deem it desirable to receive instructions
with respect to enforcing any remedy or right or taking any other
action hereunder, the Property Trustee:
(A) may request instructions from the Holders which
instructions may only be given by the Holders of the same
proportion in liquidation amount of the Securities as would be
entitled to direct the Property Trustee under the terms of the
Securities in respect of such remedy, right or action;
(B) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received;
and
(C) shall be protected in conclusively relying on or
acting in accordance with such instructions;
(xi) except as otherwise expressly provided by this
Declaration, the Property Trustee shall not be under any obligation
to take any action that is discretionary under the provisions of
this Declaration;
(xii) with respect to the calculation of the Accreted Value,
the Property Trustee may conclusively rely upon the calculation
thereof determined by the Calculation Agent; and
(xiii) the Property Trustee shall not be liable for any action
taken, suffered, or omitted to be taken by it without negligence,
in good faith and reasonably believed by it to be authorized or
within the discretion, rights or powers conferred upon it by this
Declaration.
(b) No provision of this Declaration shall be deemed to impose any
duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.
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Section 3.11 Powers and Duties of the Delaware Trustee.
Notwithstanding any other provision of this Declaration other than
Section 5.2, the Delaware Trustee shall not be entitled to exercise any powers
of, nor shall the Delaware Trustee have any of the duties and responsibilities
of, the Administrative Trustees or the Property Trustee described in this
Declaration. Except as set forth in Section 5.2, the Delaware Trustee shall be a
Trustee for the sole and limited purpose of fulfilling the requirements of
Section 3807 of the Business Trust Act.
Section 3.12 Execution of Documents.
Except as otherwise required by the Business Trust Act, a majority
of the Administrative Trustees or, if there are only two, any Administrative
Trustee or, if there is only one, such Administrative Trustee is authorized to
execute on behalf of the Trust any documents that the Administrative Trustees
have the power and authority to execute pursuant to Section 3.7.
Section 3.13 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities shall
be taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as to
the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration, the Securities, the Debentures or the Indenture.
Section 3.14 Duration of the Trust.
The Trust, unless dissolved or terminated pursuant to the provisions
of Article VIII, shall have existence up to January 15, 2030.
Section 3.15 Mergers, Consolidations, Conversions, Amalgamations or Replacements
of the Trust.
(a) The Trust may not merge with or into, consolidate with, convert
into, amalgamate with, be replaced by or convey, transfer or lease its
properties and assets as an entirety or substantially as an entirety to, any
Person, except as described in Section 3.15(b) and 3.15(c).
(b) At the request of the Sponsor and with the consent of the
Administrative Trustees or, if there are more than two, a majority of the
Administrative Trustees and without the consent of the Holders, the Delaware
Trustee or the Property Trustee, the Trust may merge with or into, consolidate
with, convert into, amalgamate with, be replaced by or convey, transfer or lease
its properties and assets as an entirety or substantially as an entirety to, a
trust organized as such under the laws of any state; provided that:
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(i) if the Trust is not the successor entity, such successor
entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust
with respect to the Securities; or
(B) substitutes for the Securities other securities having
substantially the same terms as the Securities (the "Successor
Securities"), so long as the Successor Securities rank the same
as the Securities rank with respect to Distributions and
payments upon liquidation, redemption and otherwise;
(ii) if the Trust is not the successor entity, the Sponsor
expressly appoints a trustee of the Successor Entity that possesses
the same powers and duties as the Property Trustee as the holder of
the Debentures;
(iii) the Successor Securities are, or upon notification of
issuance will be, listed (or eligible for trading) on any national
securities exchange or with any other organization on which the
Preferred Securities are listed or quoted (or otherwise eligible
for trading) prior to such merger, consolidation, conversion,
amalgamation, replacement, conveyance, transfer or lease;
(iv) if the Preferred Securities (including any Successor
Securities) are rated by any nationally recognized statistical
rating organization prior to such transaction, such merger,
consolidation, conversion, amalgamation, replacement, conveyance,
transfer or lease does not cause the Preferred Securities
(including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization;
(v) such merger, consolidation, conversion, amalgamation,
replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the Holders
(including any Successor Securities) in any material respect (other
than with respect to any dilution of such Holders' interests in the
new entity);
(vi) such Successor Entity has a purpose identical in all
material respects to that of the Trust;
(vii) prior to such merger, consolidation, conversion,
amalgamation, replacement, conveyance, transfer or lease, the
Sponsor has received an Opinion of Counsel to the Trust, rendered
by an independent law firm experienced in such matters, to the
effect that:
(A) such merger, consolidation, conversion, amalgamation,
replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the Holders
(including any Successor Securities) in any material respect
(other than with respect to any dilution of the Holders'
interest in the new entity);
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(B) following such merger, consolidation, conversion,
amalgamation, replacement, conveyance, transfer or lease,
neither the Trust nor the Successor Entity will be required to
register as an Investment Company; and
(C) following such merger, consolidation, conversion,
amalgamation, replacement, conveyance, transfer or lease, the
Trust (or the Successor Entity) will continue to be classified
as a grantor trust for United States federal income tax
purposes;
(viii) if the Trust is not the successor entity, the Sponsor or
any permitted successor or assignee owns all of the common
securities of such Successor Entity and guarantees the obligations
of such Successor Entity under the Successor Securities at least to
the extent provided by the Guarantee; and
(ix) the Successor Entity expressly assumes all of the
obligations of the Trust.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except
with the consent of Holders of 100% in aggregate liquidation amount of the
Securities, merge with or into, consolidate with, convert into, amalgamate with,
be replaced by, or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to, any other Person or permit any
other Person to merge with or into, consolidate with, convert into, amalgamate
with, replace it, if such merger, consolidation, conversion, amalgamation,
replacement, conveyance, transfer or lease would cause the Trust or the
Successor Entity to be classified as other than a grantor trust for United
States federal income tax purposes or would cause each Holder not to be treated
as owning an undivided beneficial ownership interest in the Debentures.
Section 3.16 Property Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other similar judicial proceeding relative to the Trust or any other obligor
upon the Securities or the property of the Trust or of such other obligor or
their creditors, the Property Trustee (irrespective of whether any Distributions
on the Securities are then due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Property Trustee has
made any demand on the Trust for the payment of any past due Distributions)
shall be entitled and empowered, to the fullest extent permitted by law, by
intervention in such proceeding or otherwise to:
(a) file and prove a claim for the whole amount of any
Distributions owing and unpaid in respect of the Securities (or, if the
Securities are original issue discount securities, such portion of the
liquidation amount as may be specified in the terms of such securities) and to
file such other papers or documents as may be necessary or advisable in order to
have the claims of the Property Trustee (including any claim for the reasonable
compensation, expenses,
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disbursements and advances of the Property Trustee, its agents and counsel) and
of the Holders allowed in such judicial proceeding; and
(b) collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Property Trustee and, in the event the
Property Trustee consents to the making of such payments directly to the
Holders, to pay to the Property Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel, and any other amounts due the Property Trustee.
Nothing contained herein shall be deemed to authorize the Property
Trustee to authorize or consent to or accept or adopt, on behalf of any Holder,
any plan of reorganization, arrangement, adjustment or compensation affecting
the Securities or the rights of any Holder or to authorize the Property Trustee
to vote in respect of the claim of any Holder in any such proceeding.
ARTICLE IV
SPONSOR
Section 4.1 Responsibilities of the Sponsor.
In connection with the issue and sale of the Preferred Securities,
the Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to determine the states in which to take appropriate action to
qualify or register for sale all or part of the Preferred Securities and to do
any and all such acts, other than actions which must be taken by the Trust, and
advise the Trust of actions it must take, and prepare for execution and filing
any documents to be executed and filed by the Trust, as the Sponsor deems
necessary or advisable in order to comply with the applicable laws of any such
states; and
(b) if the Preferred Securities are separately traded from the Units
and the applicable exchange listing requirements are met, to prepare for
execution and filing by the Trust an application to permit the Preferred
Securities to trade or be quoted or listed in or on the New York Stock Exchange
or any other national securities exchange, quotation system or the Nasdaq
National Market for listing or quotation upon notice of issuance of the
Preferred Securities.
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Section 4.2 Indemnification and Expenses of the Trustees.
The Sponsor, in its capacity as Debenture Issuer, agrees to
indemnify the Property Trustee and the Delaware Trustee for, and to hold each of
them harmless against, any loss, liability or expense incurred without
negligence or bad faith on the part of the Property Trustee or the Delaware
Trustee, as the case may be, arising out of or in connection with the acceptance
or administration of the trust or trusts hereunder, including the costs and
expenses of defending either of them against any claim or liability in
connection with the exercise or performance of any of their respective powers or
duties hereunder. The provisions of this Section 4.2 shall survive the
resignation or removal of the Delaware Trustee or the Property Trustee and the
termination of this Declaration.
Section 4.3 Right to Proceed.
The Sponsor acknowledges the rights of the Holders of Preferred
Securities, in the event that a failure of the Trust to pay Distributions on the
Preferred Securities is attributable to the failure of the Debenture Issuer to
pay interest or principal on the Debentures, to institute a Direct Action
against the Debenture Issuer for enforcement of its payment obligations on the
Debentures.
ARTICLE V
TRUSTEES
Section 5.1 Number of Trustees.
The number of Trustees initially shall be four, and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees may
be increased or decreased by vote of the Holders of a Majority in Liquidation
Amount of the Common Securities at a meeting of the Holders of the Common
Securities or by written consent in lieu of such meeting;
provided, however, that, the number of Trustees shall in no event be less than
three; and provided further that:
(1) one Trustee shall be the Delaware Trustee;
(2) one Trustee shall be the Property Trustee, which, for so long as
this Declaration is required to qualify as an indenture under the Trust
Indenture Act, shall meet the requirements of applicable law; provided that the
Property Trustee also may serve as Delaware Trustee if it meets the applicable
requirements; and
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(3) at least one Trustee shall be an Administrative Trustee who
shall be an employee or officer of, or shall be affiliated with, the Sponsor.
Section 5.2 Delaware Trustee; Eligibility.
(a) If required by the Business Trust Act, one Trustee (the
"Delaware Trustee") shall be:
(i) a natural person who is a resident of the State of Delaware;
or
(ii) if not a natural person, an entity which has its principal
place of business in the State of Delaware and otherwise meets the
requirements of applicable law,
provided that, if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
the Property Trustee also shall be the Delaware Trustee and Section 3.11 shall
have no application.
(b) The initial Delaware Trustee shall be:
The Bank of New York (Delaware)
23 White Clay Center
Route 273
Newark, Delaware 19711
Section 5.3 Property Trustee; Eligibility.
(a) There shall at all times be one Trustee which shall act as
Property Trustee (the "Property Trustee"). The Property Trustee shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any state or territory
thereof or of the District of Columbia, or a corporation or Person
permitted by the Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at
least $50,000,000, and subject to supervision or examination by
federal, state, territorial or District of Columbia authority. If
such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the supervising or
examining authority referred to above, then for the purposes of this
Section 5.3(a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus
as set forth in its most recent report of condition so published.
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(b) If at any time the Property Trustee shall cease to be eligible
to so act under Section 5.3(a), the Property Trustee shall immediately resign in
the manner and with the effect set forth in Section 5.6(c).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Property Trustee and the Holders of the Common Securities (as if it were the
obligor referred to in Section 310(b) of the Trust Indenture Act) shall comply
in all respects with the provisions of Section 310(b) of the Trust Indenture
Act.
(d) The Guarantee shall be deemed to be specifically described in
this Declaration for purposes of clause (i) of the first provision contained in
Section 310(b) of the Trust Indenture Act.
(e) The initial Property Trustee shall be:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
Section 5.4 Qualifications of Administrative Trustees Generally.
Each Administrative Trustee (each, an "Administrative Trustee")
shall be either a natural person who is at least 21 years of age or a legal
entity that shall act through one or more Authorized Officers.
Section 5.5 Initial Administrative Trustees.
The initial Administrative Trustees shall be Mark R. McCollom and
Jacquelyn Blue, the business address of both of whom is c/o Sovereign Bancorp
Inc., 1130 Berkshire Boulevard, Wyomissing, Pennsylvania 19610.
Section 5.6 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.6(b), the Trustees may be appointed or
removed without cause at any time:
(i) until the issuance of any Securities, by written instrument
executed by the Sponsor;
(ii) unless a Trust Enforcement Event shall have occurred and be
continuing after the issuance of any Securities, by vote of the
Holders of a Majority in Liquidation Amount of
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the Common Securities at a meeting of the Holders of the Common
Securities or by written consent in lieu of such meeting; and
(iii) if a Trust Enforcement Event shall have occurred and be
continuing after the issuance of the Securities, with respect to the
Property Trustee or the Delaware Trustee, by vote of Holders of a
Majority in Liquidation Amount of the Preferred Securities at a
meeting of Holders of the Preferred Securities or by written consent
in lieu of such meeting.
(b) (i) The Property Trustee shall not be removed in accordance with
Section 5.6(a) until a successor Trustee possessing the qualifications to act as
Property Trustee under Section 5.3(a) (a "Successor Property Trustee") has been
appointed and has accepted such appointment by written instrument executed by
such Successor Property Trustee and delivered to the Administrative Trustees and
the Sponsor.
(ii) The Delaware Trustee shall not be removed in accordance with
Section 5.6(a) until a successor Trustee possessing the qualifications to act as
Delaware Trustee under Section 5.2(a) (a "Successor Delaware Trustee") has been
appointed and has accepted such appointment by written instrument executed by
such Successor Delaware Trustee and delivered to the Administrative Trustees and
the Sponsor.
(c) A Trustee appointed to office shall hold office until a
successor shall have been appointed or until death, dissolution, removal or
resignation. Any Trustee may resign from office (without need for prior or
subsequent accounting) by a written instrument signed by such Trustee and
delivered to the Sponsor, the Trust and the other Trustees, which resignation
shall take effect upon such delivery or upon such later date as is specified
therein; provided, however, that:
(i) no such resignation of the Property Trustee shall be
effective:
(A) until a Successor Property Trustee has been appointed
and has accepted such appointment by written instrument executed
by such Successor Property Trustee and delivered to the Trust,
the Administrative Trustees, the Sponsor and the resigning
Property Trustee; or
(B) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the Holders;
and
(ii) no such resignation of the Delaware Trustee shall be
effective until a Successor Delaware Trustee has been appointed and
has accepted such appointment by written instrument executed by such
Successor Delaware Trustee and delivered to the Trust, the
Administrative Trustees, the Sponsor and the resigning Delaware
Trustee.
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(d) The Holders of the Common Securities or, if a Trust Enforcement
Event shall have occurred and be continuing after the issuance of the
Securities, the Holders of the Preferred Securities, shall use their best
efforts to promptly appoint a Successor Property Trustee or Successor Delaware
Trustee, as the case may be, if the Property Trustee or the Delaware Trustee
delivers an instrument of resignation in accordance with this Section 5.6.
(e) If no Successor Property Trustee or Successor Delaware Trustee,
as the case may be, shall have been appointed and accepted appointment as
provided in this Section 5.6 within 30 days after delivery of an instrument of
resignation or removal, the Property Trustee or Delaware Trustee resigning or
being removed, as applicable, may petition any court of competent jurisdiction
for appointment of a Successor Property Trustee or Successor Delaware Trustee,
as applicable. Such court may thereupon, after prescribing such notice, if any,
as it may deem proper and prescribe, appoint a Successor Property Trustee or
Successor Delaware Trustee, as the case may be.
(f) No Property Trustee or Delaware Trustee shall be liable for the
acts or omissions to act of any Successor Property Trustee or Successor Delaware
Trustee, as the case may be.
Section 5.7 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Administrative Trustees or, if
there are more than two, a majority of the Administrative Trustees shall be
conclusive evidence of the existence of such vacancy. The vacancy shall be
filled with a Trustee appointed in accordance with Section 5.6.
Section 5.8 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of a
Trustee shall not operate to dissolve, terminate or annul the Trust or terminate
this Declaration. Whenever a vacancy in the number of Administrative Trustees
shall occur, until such vacancy is filled by the appointment of an
Administrative Trustee in accordance with Section 5.6, the Administrative
Trustees in office, regardless of their number, shall have all the powers
granted to the Administrative Trustees and shall discharge all the duties
imposed upon the Administrative Trustees by this Declaration.
Section 5.9 Meetings.
If there is more than one Administrative Trustee, meetings of the
Administrative Trustees shall be held from time to time upon the call of any
Administrative Trustee. Regular meetings of the Administrative Trustees may be
held at a time and place fixed by resolution of the Administrative
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Trustees. Notice of any in-person meetings of the Administrative Trustees shall
be hand delivered or otherwise delivered in writing (including by facsimile,
with a hard copy by overnight courier) not less than 24 hours before such
meeting. Notice of any telephonic meetings of the Administrative Trustees or any
committee thereof shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 24
hours before a meeting. Notices shall contain a brief statement of the time,
place and anticipated purposes of the meeting. The presence (whether in person
or by telephone) of an Administrative Trustee at a meeting shall constitute a
waiver of notice of such meeting except where an Administrative Trustee attends
a meeting for the express purpose of objecting to the transaction of any
activity on the ground that the meeting has not been lawfully called or
convened. Unless provided otherwise in this Declaration, any action of the
Administrative Trustees may be taken at a meeting by vote of a majority of the
Administrative Trustees present (whether in person or by telephone) and eligible
to vote with respect to such matter, provided that a Quorum is present, or
without a meeting by the unanimous written consent of the Administrative
Trustees. In the event there is only one Administrative Trustee, any and all
action of such Administrative Trustee shall be evidenced by a written consent of
such Administrative Trustee.
Section 5.10 Delegation of Power by the Administrative Trustees.
(a) Any Administrative Trustee may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21 his
power for the purpose of executing any documents which the Administrative
Trustees have power and authority to cause the Trust to execute pursuant to
Section 3.7.
(b) The Administrative Trustees shall have power to delegate from
time to time to such of their number or to officers of the Trust the doing of
such things and the execution of such instruments either in the name of the
Trust or the names of the Administrative Trustees or otherwise as the
Administrative Trustees may deem expedient, to the extent such delegation is not
prohibited by applicable law or contrary to the provisions of the Trust, as set
forth herein.
Section 5.11 Merger, Conversion, Consolidation or Succession to Business.
Any Person into which the Property Trustee, the Delaware Trustee or
any Administrative Trustee that is not a natural person, as the case may be, may
be merged or converted or with which such Trustee may be consolidated, or any
Person resulting from any merger, conversion or consolidation to which such
Trustee shall be a party, or any Person succeeding to all or substantially all
the corporate trust business of such Trustee, shall be the successor of such
Trustee under this Declaration without the execution or filing of any paper or
any further act on the part of any of the parties hereto, provided such Person
shall be otherwise qualified and eligible under this Article V.
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ARTICLE VI
THE SECURITIES
Section 6.1 General Provisions Regarding the Securities.
(a) The Administrative Trustees shall issue on behalf of the Trust
one class of Preferred Securities representing undivided beneficial ownership
interests in the assets of the Trust (the "Preferred Securities") and one class
of common securities representing undivided beneficial ownership interests in
the assets of the Trust (the "Common Securities").
(i) The Preferred Securities of the Trust shall number 5,000,000
(or 5,750,000 if the Underwriters' over-allotment option with
respect to the Units is exercised in full) and shall have an
aggregate stated liquidation amount with respect to the assets of
the Trust of $250,000,000 (or $287,500,000 if the Underwriters'
over-allotment option with respect to the Units is exercised in
full), a stated liquidation amount with respect to the assets of the
Trust of $50 per Preferred Security and an accreted value at any
time equal to the Accreted Value. The Preferred Securities are
hereby designated for the purposes of identification only as the
Preferred Securities. The Preferred Securities Certificates
evidencing the Preferred Securities shall be substantially in the
form of Exhibit A, with such changes and additions thereto or
deletions therefrom as may be required by ordinary usage, custom or
practice.
(ii) The Common Securities of the Trust shall number 154,640 (or
177,836 if the Underwriters' over-allotment option with respect to
the Units is exercised in full) and shall have an aggregate
liquidation amount with respect to the assets of the Trust of
$7,732,000 (or $8,891,800 if the Underwriters' over-allotment option
with respect to the Units is exercised in full), a stated
liquidation amount with respect to the assets of the Trust of $50
per Common Security and an accreted value at any time equal to the
Accreted Value. The Common Securities are hereby designated for the
purposes of identification only as the Common Securities. The Common
Securities Certificates evidencing the Common Securities shall be
substantially in the form of Exhibit B, with such changes and
additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice.
(b) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
(c) Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued, fully paid and
nonassessable beneficial ownership interests in the assets of the Trust.
(d) Each Person, by virtue of having become a Holder or a Preferred
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by, this Declaration, the Guarantee, the Indenture and the Debentures.
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(e) Payment of Distributions on, and any payment of the Redemption
Price upon a redemption of, the Securities shall be made on a Pro Rata basis
based on the liquidation amount of such Securities; provided that if, on any
date on which payment of a Distribution or the Redemption Price is to be made,
an Indenture Event of Default has occurred and is continuing, then such payment
shall not be made on any of the Common Securities, and no other payment on
account of the redemption, liquidation or other acquisition of such Common
Securities shall be made, until all accumulated and unpaid Distributions or
payments of the Redemption Price, as the case may be, on all of the outstanding
Preferred Securities for which Distributions are to be paid or that have been
called for redemption, as the case may be, are fully paid. All funds available
to the Property Trustee shall first be applied to the payment in full in cash of
all Distributions on, or the Redemption Price of, the Preferred Securities then
due and payable.
(f) The Holders of the Securities shall not have any preemptive or
similar rights.
Section 6.2 Execution and Authentication.
(a) Each Certificate shall be signed on behalf of the Trust by an
Administrative Trustee by manual or facsimile signature. If any Administrative
Trustee of the Trust who shall have signed any of the Securities shall cease to
be such Administrative Trustee before the Securities so signed shall be
delivered by the Trust, such Securities nevertheless may be delivered as though
the person who signed such Securities had not ceased to be such Administrative
Trustee; and any Securities may be signed on behalf of the Trust by such persons
who, at the actual date of execution of such Security, shall be the
Administrative Trustees of the Trust, although at the date of the execution and
delivery of this Declaration any such person was not such an Administrative
Trustee.
(b) A Preferred Securities Certificate shall not be valid until
authenticated by the manual signature of an authorized signatory of the Property
Trustee. The signature shall be conclusive evidence that such Preferred
Securities Certificate has been authenticated under this Declaration.
Upon a written order of the Trust signed by one Administrative
Trustee, the Property Trustee shall authenticate the Preferred Securities
Certificates for original issue. The aggregate number of Preferred Securities
outstanding at any time shall not exceed the aggregate stated liquidation amount
set forth in Section 6.1(a)(i).
The Property Trustee shall have the right to decline to authenticate
and deliver any Securities under this Section if the Property Trustee, being
advised by counsel, determines that such action may not lawfully be taken or if
the Trustee in good faith shall determine that such action would expose the
Property Trustee to personal liability to existing Holders.
The Property Trustee may appoint an authenticating agent acceptable
to the Trust to authenticate Preferred Securities Certificates. An
authenticating agent may authenticate Preferred Securities Certificates whenever
the Property Trustee may do so. Each reference in this Declaration to
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authentication by the Property Trustee includes authentication by such agent. An
authenticating agent has the same rights as the Property Trustee to deal with
the Sponsor or an Affiliate.
Section 6.3 Form and Dating.
The Preferred Securities shall be substantially in the form of
Exhibit A and the Common Securities shall be substantially in the form of
Exhibit B. The Property Trustee's certificate of authentication shall be
substantially in the form set forth in Exhibit A.
The terms and provisions of the Securities set forth in Exhibits A
and B are part of the terms of this Declaration and to the extent applicable,
the Property Trustee and the Sponsor, by their execution and delivery of this
Declaration, expressly agree to such terms and provisions and to be bound
thereby.
The Certificates shall be printed, lithographed or engraved or may
be produced in any other manner as is reasonably acceptable to the
Administrative Trustees, as evidenced by their execution thereof. The
Certificates may have letters, CUSIP or other numbers, notations or other marks
of identification or designation and such legends or endorsements as the
Administrative Trustees may deem appropriate, or as may be required by law,
stock exchange rule, agreements to which the Trust is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Trust).
Each Security shall be dated the date of its authentication.
Upon the execution and delivery of this Declaration, the Preferred
Securities shall be issued as a component of a Unit, in fully registered form
without Distribution coupons (the "Global Unit Certificate"), substantially in
the form set forth in Exhibit A of the Unit Agreement. The Preferred Securities
also initially shall be issued in the form of one or more permanent global
Certificates in fully registered form without Distribution coupons and with the
appropriate global legends (each, a "Global Preferred Security"), substantially
in the form of Exhibit A. The Global Preferred Securities shall be registered in
the name of the Clearing Agency or a nominee of the Clearing Agency, duly
executed by the Trust and authenticated by the Property Trustee, and deposited
on behalf of the purchasers of the Preferred Securities represented thereby with
the Property Trustee, at the Corporate Trust Office, as custodian for the
Clearing Agency. The Global Preferred Securities shall represent such of the
outstanding Preferred Securities as shall be specified in the "Schedule of
Increases or Decreases in Global Preferred Security" attached thereto (or on the
books and records of the Property Trustee and the Clearing Agency or its
nominee). The Global Preferred Securities shall initially represent no Preferred
Securities. Thereafter, the number of Preferred Securities represented by the
Global Preferred Securities may from time to time be increased or decreased by
adjustments made on the "Schedule of Increases or Decreases in Global Preferred
Security" attached thereto (or books and records of the Property Trustee and the
Clearing Agency or its nominee) as hereinafter provided.
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Except as provided in Sections 6.21(e) and 6.21(f), Preferred
Security Beneficial Owners shall not be entitled to receive physical delivery of
definitive, fully registered Preferred Securities Certificates ("Definitive
Preferred Securities").
Section 6.4 The Sponsor's Purchase of the Common Securities.
(a) On the Closing Date, the Sponsor shall purchase all of the
Common Securities issued by the Trust, in an aggregate liquidation amount equal
to at least 3% of the total capital of the Trust, at such time as the Preferred
Securities are sold and issued. The aggregate stated liquidation amount of the
Common Securities outstanding at any time shall not be less than 3% of the total
capital of the Trust.
(b) For so long as the Preferred Securities remain outstanding, the
Sponsor shall covenant:
(i) to maintain, directly or indirectly, 100% ownership of the
Common Securities; provided, however, that any permitted successor
of the Sponsor (in its capacity as Debenture Issuer) under the
Indenture may succeed to the Sponsor's ownership of such Common
Securities;
(ii) to cause the Trust to (a) remain a statutory business
trust, except in connection with the distribution of the Debentures
to the Holders, the redemption of all of the Securities, or certain
mergers, consolidations, conversions or amalgamations, each as
permitted by this Declaration, (b) not to voluntarily dissolve, wind
up, liquidate or be terminated, except as permitted by this
Declaration and (c) otherwise continue to be classified as a grantor
trust for United States federal income tax purposes;
(iii) to use its commercially reasonable efforts to ensure that
the Trust will not be an Investment Company required to be
registered under the Investment Company Act; and
(iv) not to take any action that would be reasonably likely to
cause the Trust to be classified as an association or a publicly
traded partnership taxable as a corporation for United States
federal income tax purposes.
Section 6.5 Distributions.
(a) Holders shall be entitled to receive Distributions that shall be
payable at a rate per annum of 7.50% (the "Coupon Rate") of the stated
liquidation amount of $50 per Security from and including November 15, 1999 to,
but excluding, the Remarketing Date, and at the Reset Rate of the Accreted Value
of the Security on the Remarketing Date to, but excluding, the date of
redemption.
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At all times, the Distribution rate shall correspond to the interest rate on the
Debentures. The amount of a Distribution payable shall be computed:
(i) for any full 90-day quarterly Distribution period, on the
basis of a 360-day year consisting of twelve 30-day months;
(ii) for any period shorter than a full 90-day quarterly
Distribution period, on the basis of a 30-day month; and
(iii) for any period shorter than a 30-day month, on the basis
of the actual number of days elapsed in the 30-day month.
Subject to Section 6.1(e), Distributions shall be made on the Securities on a
Pro Rata basis. Distributions shall be payable on the Distribution Dates only to
the extent that payments are made to the Trust in respect of the Debentures held
by the Property Trustee and to the extent the Trust has funds available for the
payment of such Distributions in the Property Account.
(b) Distributions on the Securities shall accumulate from the date
of original issue, shall be cumulative and shall be payable quarterly in arrears
on February 15, May 15, August 15 and November 15 of each year (each, a
"Distribution Date"), commencing on February 15, 2000 when, as and if available
for payment, except as otherwise provided in this Declaration. Interest not paid
on the Debentures on the scheduled Interest Payment Dates shall accrue and
compound quarterly at the Coupon Rate of the aggregate principal amount or the
Reset Rate of the Accreted Value on the Remarketing Date, as applicable, and, as
a result, Distributions not paid on the scheduled Distribution Dates shall
accumulate and compound quarterly at the Coupon Rate of the aggregate stated
liquidation amount or the Reset Rate of the Accreted Value on the Remarketing
Date, as applicable ("Compounded Distributions"). The terms "Distribution" shall
mean ordinary quarterly distributions together with any Compounded
Distributions.
(c) As long as no Indenture Event of Default has occurred and is
continuing and as long as a Failed Remarketing has not occurred, the Debenture
Issuer has the right under the Indenture to defer payments of interest on the
Debentures by extending the interest payment period, at any time and from time
to time, on the Debentures for a period not exceeding 20 consecutive quarters
(each, an "Extension Period"), during which Extension Period no interest shall
be due and payable on the Debentures, provided that no Extension Period shall
end on a date other than an Interest Payment Date or extend beyond the stated
maturity of the Debentures. Upon the occurrence of a Failed Remarketing, any
such Extension Period shall terminate and interest shall be payable on the next
Interest Payment Date. As a consequence of such deferral, Distributions also
shall be deferred. Despite such deferral, interest on the Debentures shall
continue to accrue with additional interest thereon (to the extent permitted by
applicable law) and, as a result, Distributions shall continue to accumulate
with additional Distributions thereon (to the extent permitted by applicable
law) at the Coupon Rate of the stated liquidation amount or at the Reset Rate of
the Accreted Value on the
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Remarketing Date, as the case may be, compounded quarterly during any such
Extension Period. Prior to the termination of any such Extension Period, the
Debenture Issuer may further defer payments of interest by further extending
such Extension Period; provided that such Extension Period, together with all
such previous and further extensions of such Extension Period, may not exceed 20
consecutive quarters or extend beyond the stated maturity date of the
Debentures. Upon the termination of any Extension Period and the payment of all
amounts then due, the Debenture Issuer may commence a new Extension Period,
subject to the above requirements.
(d) Distributions on the Securities shall be payable to the Holders
as they appear on the books and records of the Trust at the close of business on
the relevant Regular Record Dates; provided that Distributions payable on the
Remarketing Settlement Date shall be payable to the Holders as they appear on
the books and records of the Trust at the close of business on the Special
Record Date. If the Preferred Securities are represented by one or more Global
Preferred Securities, the relevant Regular Record Dates shall be the close of
business on the Business Day preceding the corresponding Distribution Date,
unless a different Regular Record Date is established or provided for the
corresponding Interest Payment Date on the Debentures. If the Preferred
Securities are not represented by one or more Global Preferred Securities, the
relevant Regular Record Dates for the Preferred Securities shall be the
fifteenth Business Day prior to the corresponding Distribution Dates, or such
other dates as may be selected by the Administrative Trustees. The record dates
for the Common Securities shall be the same as the record dates for the
Preferred Securities. At all times, the Distribution Dates shall correspond to
the Interest Payment Dates on the Debentures.
Distributions payable on any Securities that are not punctually paid
on any Distribution Date, as a result of the Debenture Issuer having failed to
make a payment under the Debentures, shall cease to be payable to the Person in
whose name such Securities are registered on the relevant record date, and such
defaulted Distribution instead shall be payable to the Person in whose name such
Securities are registered on the special record date or other specified date
determined in accordance with the Indenture for payment of the corresponding
defaulted interest on the Debentures.
(e) If any date on which a Distribution is payable on the Securities
is not a Business Day, payment of the Distribution payable on such date will be
made on the next day that is a Business Day (and without any additional
Distribution or other payment in respect of any such delay), except that if such
Business Day is in the next calendar year, such payment shall be made on the
immediately preceding Business Day with the same force and effect as if made on
the date such payment was originally payable.
(f) If and to the extent that the Debenture Issuer makes a payment
of principal of and premium, if any, and interest on the Debentures held by the
Property Trustee (the amount of any such payment being a "Payment Amount"), the
Property Trustee shall and is directed, to the extent funds are available for
that purpose, to make a distribution of the Payment Amount to the Holders on a
Pro Rata basis, subject to Section 6.1(e).
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(g) In the event that there is any money or other property held by
or for the Trust that is not accounted for hereunder, such property shall be
distributed on a Pro Rata basis among the Holders subject to 6.1(e).
Section 6.6 Remarketing.
(a) In connection with a Remarketing of the Preferred Securities:
(i) in connection with a Remarketing upon a Trading Remarketing
Event or a Legal Cause Remarketing Event, the Accreted Value of the
Debentures as of the end of the day on the day next preceding the
Remarketing Date shall become due on the date which is 60 days
following the Remarketing Date, and, as a result, the Accreted Value
of the Securities as of the end of the day on the day next preceding
the Remarketing Date shall be redeemed on the date which is 60 days
following the Remarketing Date;
(ii) on the Remarketing Date, the rate of interest per annum on
the Accreted Value of the Debentures shall become the Reset Rate on
the Accreted Value of the Securities established in the Remarketing
of the Preferred Securities, and, as a result, the Distribution rate
per annum on the Accreted Value of the Securities shall become the
Reset Rate established in the Remarketing of the Preferred
Securities;
(iii) on the Remarketing Settlement Date, interest accrued and
unpaid on the Debentures from and including the immediately
preceding Interest Payment Date to, but excluding, the Remarketing
Settlement Date shall be payable to the holders of the Debentures on
the Special Record Date, and, as a result, Distributions accumulated
and unpaid on the Securities from and including the immediately
preceding Distribution Date to, but excluding, the Remarketing
Settlement Date shall be payable to the Holders of the Securities on
the Special Record Date;
(iv) in connection with a Remarketing upon a Trading Remarketing
Event or a Legal Cause Remarketing Event, the Sponsor shall be
obligated to redeem the Warrants on the Remarketing Settlement Date
at a redemption price per Warrant equal to the Warrant Value as of
the end of the day on the day next preceding the Remarketing Date;
and
(v) on and after the Remarketing Date, the Warrants shall be
exercisable at the Exercise Price.
(b) The proceeds from the Remarketing of the Preferred Securities
shall be paid to the selling Holders, provided that, upon a Trading Remarketing
Event or a Legal Cause Remarketing Event, the proceeds from the Remarketing of
the Preferred Securities that are held pursuant to the Unit Agreement for which
the holders of such Units have elected to exercise their Warrants shall be paid
directly to the Warrant Agent to satisfy in full the Exercise Price of the
Warrants held by such holders.
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(c) In connection with a Remarketing of the Preferred Securities and
at any time thereafter, a purchaser may exchange its Preferred Securities for
its pro rata share of Debentures. In such event, the Administrative Trustees
shall cause Debentures held by the Property Trustee, having an aggregate
Accreted Value equal to the aggregate Accreted Value of the Preferred Securities
purchased by such purchaser and with accrued and unpaid interest equal to the
accumulated and unpaid Distributions on the Preferred Securities purchased by
such purchaser, to be distributed to such purchaser in exchange for such
Holders' pro rata interest in the Trust. In such event, the Debentures held by
the Trust shall decrease by the amount of Debentures delivered to the purchaser
of Preferred Securities.
(d) Upon the occurrence of a Trading Remarketing Event, the Sponsor
may elect to cause a Remarketing of the Preferred Securities and select a
Remarketing Date, provided that the following conditions precedent are
satisfied:
(i) as of the date of which the Sponsor elects to cause a
Remarketing of the Preferred Securities, the Closing Price of a
share of the Common Stock exceeds and has exceeded for at least 20
Trading Days within the immediately preceding 30 consecutive Trading
Days, the following related price per share:
if after November 20, 2002: $14.9939
if after November 15, 2003: $13.1197
if after November 15, 2004: $11.2454;
(ii) as of the date of which the Sponsor elects to cause a
Remarketing of the Preferred Securities and on the Remarketing Date,
no Trust Enforcement Event or deferral of Distributions to Holders
of the Preferred Securities shall have occurred and be continuing;
(iii) as of the date of which the Sponsor elects to cause a
Remarketing of the Preferred Securities and on the Remarketing Date,
a registration statement covering the issuance and sale of Common
Stock to the holders of Warrants upon exercise of such Warrants
shall be effective under the Securities Act, or the issuance and
sale of Common Stock to the holders of Warrants upon exercise of
such Warrants shall be effective under the Securities Act; and
(iv) on the Remarketing Date, the Legal Requirements shall have
been satisfied.
The settlement of the Remarketing shall occur on the Remarketing Settlement
Date, provided that the following conditions precedent are satisfied on the
Remarketing Settlement Date:
(A) the Warrant Requirements shall be satisfied; and
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(B) pursuant to the Warrant Agreement, a redemption of the
Warrants of those holders who have not elected to exercise their
Warrants prior to or on such date shall have been consummated.
If any of the foregoing conditions precedent are not satisfied, the Remarketing
of the Preferred Securities cannot occur and the contemporaneous redemption of
Warrants shall be canceled; provided, however, that if:
(x) the Remarketing cannot occur because of a failure to
satisfy either the Warrant Requirements or the Legal
Requirements as of or on the relevant date or dates; and
(y) the Sponsor is using its best efforts to satisfy such
Requirements;
the Sponsor shall have the right to cause a Remarketing of the Preferred
Securities on a subsequent date which is no later than November 15, 2029,
provided that all applicable requirements and conditions precedents (including
the timely occurrence of a Trading Remarketing Event) are satisfied.
(e) Upon the occurrence of a Legal Cause Remarketing Event, the
Sponsor may elect to cause a Remarketing of the Preferred Securities and select
a Remarketing Date, provided that the following conditions precedent are
satisfied:
(i) as of the date of which the Sponsor elects to cause a
Remarketing of the Preferred Securities and on the Remarketing Date,
no Trust Enforcement Event shall have occurred and be continuing;
(ii) as of the date of which the Sponsor elects to cause a
Remarketing of the Preferred Securities and on the Remarketing Date,
a registration statement covering the issuance and sale of Common
Stock to the holders of Warrants upon exercise of such Warrants
shall be effective under the Securities Act, or the issuance and
sale of Common Stock to the holders of Warrants upon exercise of
such Warrants shall be effective under the Securities Act; and
(iii) on the Remarketing Date, the Legal Requirements shall have
been satisfied.
The settlement of the Remarketing shall occur on the Remarketing Settlement
Date, provided that the following conditions precedent are satisfied on the
Remarketing Settlement Date:
(A) the Warrant Requirements shall be satisfied; and
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(B) a redemption of the Warrants of those holders who have
not elected to exercise their Warrants prior to or on such date
shall have been consummated pursuant to the Warrant Agreement.
If any of the foregoing conditions precedent are not satisfied, the Remarketing
cannot occur and the contemporaneous redemption of Warrants shall be canceled;
provided, however, that if:
(x) the Remarketing cannot occur because of a failure to
satisfy either the Warrant Requirements or the Legal
Requirements as of or on the relevant date or dates; and
(y) the Sponsor is using its best efforts to satisfy such
Requirements;
the Sponsor shall have the right to cause a Remarketing of the Preferred
Securities on a subsequent date which is no later than November 15, 2029,
provided that all applicable requirements and conditions precedents (including
the timely occurrence of a Legal Cause Remarketing Event) are satisfied.
(f) On the Maturity Remarketing Date, a Remarketing of the Preferred
Securities shall occur, provided that on such date, the Legal Requirements (to
the extent applicable) shall have been satisfied.
If, for any reason, a Remarketing of the Preferred Securities does
not occur on the Maturity Remarketing Date, the Administrative Trustees shall
give notice thereof to all Holders of Preferred Securities (whether or not held
pursuant to the Unit Agreement) prior to the close of business on the following
Business Day. In such event:
(i) the rate of interest per annum on the Accreted Value of the
Debentures (which, on the Maturity Remarketing Date, shall be equal
to the principal amount of the Debentures) shall become the Reset
Rate, and, as a result, the rate of Distribution per annum on the
Accreted Value of the Securities (which, on the Maturity Remarketing
Date, shall be equal to the stated liquidation amount of the
Securities) shall become the Reset Rate; and
(ii) pursuant to the Indenture, the Debenture Issuer no longer
shall have the option to defer payments of interest on the
Debentures.
(g) Upon the occurrence of a Trading Remarketing Event or a Legal
Cause Remarketing Event and the election by the Sponsor to cause a Remarketing
of the Preferred Securities, or upon the Maturity Remarketing Date, as long as
the Preferred Securities are evidenced by Global Preferred Securities, deposited
with the Clearing Agency, the Sponsor shall request, not later than 15 nor more
than 30 days prior to the Remarketing Date, that the Clearing Agency notify the
Holders of the Preferred Securities of the Remarketing of the Preferred
Securities and of the procedures that must
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be followed if such Holder of Preferred Securities wishes to elect not to
participate in the Remarketing of the Preferred Securities.
(h) Upon the occurrence of a Remarketing Event, all of the Preferred
Securities (excluding the Preferred Securities as to which the Holders thereof
have elected not to participate in the Remarketing) shall be remarketed by the
Remarketing Agent. Not later than 5:00 p.m. (New York City time) on the seventh
Business Day preceding the Remarketing Date, each Holder of Preferred Securities
may elect not to have the Preferred Securities held by such Holder remarketed in
the Remarketing. Holders of Preferred Securities that are not held pursuant to
the Unit Agreement shall give such notice to the Property Trustee, and Holders
of Preferred Securities that are held pursuant to the Unit Agreement shall give
such notice to the Unit Agent. Holders of Preferred Securities that are not held
pursuant to the Unit Agreement and Holders of Preferred Securities that are held
pursuant to the Unit Agreement that do not give notice of their intention not to
participate in the Remarketing shall be deemed to have consented to the
disposition of their Preferred Securities in the Remarketing. Any such notice
shall be irrevocable and may not be conditioned upon the level at which the
Reset Rate is established in the Remarketing.
Not later than 5:00 p.m. (New York City time) on the fifth Business
Day preceding the Remarketing Date, the Property Trustee and the Unit Agent, as
applicable, based on the notices received by it prior to such time, shall notify
the Trust, the Sponsor and the Remarketing Agent of the number of Preferred
Securities to be tendered for purchase in the Remarketing.
(i) The right of each Holder to have Preferred Securities
tendered for purchase shall be limited to the extent that:
(i) the Remarketing Agent conducts a Remarketing pursuant to
the terms of the Remarketing Agreement;
(ii) the Remarketing Agent is able to find a purchaser or
purchasers for the Preferred Securities deemed tendered; and
(iii) such purchaser or purchasers deliver the purchase
price therefor to the Remarketing Agent.
(j) On the Remarketing Date, the Remarketing Agent shall use
commercially reasonable efforts to remarket the Preferred Securities deemed
tendered for purchase at a price equal to:
(i) in connection with a Remarketing upon a Trading Remarketing
Event or a Legal Cause Remarketing Event, 100% of the aggregate
Accreted Value as of the end of the day on the day next preceding
the Remarketing Date; and
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(ii) on the Maturity Remarketing Date, 100% of the stated
liquidation amount.
(k) If, as a result of the efforts described in 6.6(j), the
Remarketing Agent determines that it will be able to remarket all of the
Preferred Securities deemed tendered for purchase at the purchase price set
forth in Section 6.6(j) prior to 4:00 p.m. (New York City time) on the
Remarketing Date, the Remarketing Agent shall determine the Reset Rate, which
shall be the rate per annum (rounded to the nearest one-thousandth (0.001) of 1%
per annum) that the Remarketing Agent determines, in its sole judgment, to be
the lowest rate per annum that will enable it to remarket all of the Preferred
Securities deemed tendered for Remarketing.
(l) If none of the Holders of the Preferred Securities or the
holders of the Units elects to have their Preferred Securities remarketed in the
Remarketing, the Reset Rate shall equal the rate determined by the Remarketing
Agent, in its sole discretion, as the rate that would have been established had
a Remarketing been held on the Remarketing Date, and the related modifications
to the other terms of the Preferred Securities and to the terms of the
Debentures and the Warrants shall be effective as of the Remarketing Date.
(m) If, by 4:00 p.m. (New York City time) on the Remarketing Date,
the Remarketing Agent is unable to remarket all of the Preferred Securities
deemed tendered for purchase, a "Failed Remarketing" shall be deemed to have
occurred and the Remarketing Agent shall so advise by telephone the Clearing
Agency, the Property Trustee, the Debenture Trustee, the Administrative Trustees
on behalf of the Trust and the Sponsor. The Administrative Trustees shall then
give notice of the Failed Remarketing to the Holders of the Preferred Securities
prior to the close of business on the Business Day following the Failed
Remarketing Date and shall cause a notice of such Failed Remarketing to be
published on the second Business Day following the Failed Remarketing Date in a
daily newspaper in the English language of general circulation in The City of
New York, which is expected to be the Wall Street Journal, and on Bloomberg
News. In the event of a Failed Remarketing:
(i) the Accreted Value of the Debentures as of the end of the
day on the day next preceding the Remarketing Date shall become due
on the date which is 60 days following the Failed Remarketing Date,
and, as a result, the Accreted Value of the Securities as of the end
of the day on the day next preceding the Remarketing Date shall be
redeemed on the date which is 60 days following the Failed
Remarketing Date;
(ii) the rate of interest per annum on the Accreted Value of the
Debentures shall become the Reset Rate, and, as a result, the rate
of Distribution per annum on the Accreted Value of the Securities
shall become the Reset Rate; and .
(iii) pursuant to the Indenture, the Debenture Issuer no longer
shall have the option to defer payments of interest on the
Debentures.
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Notwithstanding a Failed Remarketing, subject to the satisfaction of the Legal
Requirements, the Warrants shall be redeemed at the Warrant Value and a holder
of Warrants shall have the option to exercise its Warrants in lieu of such
redemption, as provided in the Unit Agreement and the Warrant Agreement.
(n) By approximately 4:30 p.m. (New York City time) on the
Remarketing Date, provided that there has not been a Failed Remarketing, the
Remarketing Agent shall advise, by telephone:
(i) the Clearing Agency, the Property Trustee, the Debenture
Trustee, the Trust and the Sponsor of the Reset Rate determined in
the Remarketing and the number of Preferred Securities sold in the
Remarketing;
(ii) each purchaser (or the Clearing Agency Participant thereof)
of the Reset Rate and the number of Preferred Securities such
purchaser is to purchase; and
(iii) each purchaser to give instructions to its Clearing Agency
Participant to pay the purchase price on the Remarketing Settlement
Date in same day funds against delivery of the Preferred Securities
purchased through the facilities of the Clearing Agency.
(o) In accordance with the Clearing Agency's normal procedures, on
the Remarketing Settlement Date, the transactions described above with respect
to each Preferred Security deemed tendered for purchase and sold in the
Remarketing shall be executed through the Clearing Agency, and the accounts of
the respective Clearing Agency Participants shall be debited and credited and
such Preferred Securities delivered by book-entry as necessary to effect
purchases and sales of such Preferred Securities. The Clearing Agency shall make
payment in accordance with its normal procedures.
(p) If any Holder of the Preferred Securities selling such Preferred
Securities (or any holder of Units selling the Preferred Securities that are
held pursuant to the Unit Agreement) in the Remarketing fails to deliver such
Preferred Securities, the Clearing Agency Participant of such selling holder and
of any other Person that was to have purchased Preferred Securities in the
Remarketing may deliver to any such other Person a number of Preferred
Securities that is less than the number of Preferred Securities that otherwise
was to be purchased by such Person. In such event, the number of Preferred
Securities to be so delivered shall be determined by such Clearing Agency
Participant, and delivery of such lesser number of Preferred Securities shall
constitute good delivery.
(q) The Remarketing Agent is not obligated to purchase any Preferred
Securities that otherwise would remain unsold in the Remarketing. Neither the
Trust, any Trustee, the Sponsor nor the Remarketing Agent shall be obligated in
any case to provide funds to make payment upon tender of the Preferred
Securities for Remarketing.
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(r) Under the Remarketing Agreement, the Sponsor, in its capacity as
Debenture Issuer, shall be liable for, and shall pay, any and all costs and
expenses incurred in connection with the Remarketing, and the Trust shall not
have any liabilities for such costs and expenses.
(s) The tender and settlement procedures set in this Section 6.6,
including provisions for payment by purchasers of the Preferred Securities in
the Remarketing, shall be subject to modification to the extent required by the
Clearing Agency or if the book-entry system is no longer available for the
Preferred Securities at the time of the Remarketing, to facilitate the tendering
and remarketing of the Preferred Securities in definitive form. In addition, the
Remarketing Agent may modify the settlement procedures set forth herein in order
to facilitate the settlement process.
Section 6.7 Limited Right to Require Exchange of Preferred Securities and
Repurchase of Debentures.
(a) Upon the exercise of Warrants by a holder of Units on a date
other than a Remarketing Settlement Date, such Holder shall have the right (the
"Repurchase Right"), on the next Required Repurchase Date which is no less than
60 days following the exercise date of such Warrants, to require the Trust to
exchange the Preferred Securities for Debentures having an Accreted Value on the
date of exchange equal to the Accreted Value of such Preferred Securities on
such exchange date, and to require the Debenture Issuer to repurchase such
Debentures on the applicable Required Repurchase Date.
(b) To exercise its Repurchase Right, a Unit holder shall:
(i) provide the Trust, the Debenture Issuer, the Property
Trustee and the Exchange Agent with notice of its election to
exercise its Repurchase Right no less than 30 days prior to the
Required Repurchase Date on which such repurchase is to be effected;
(ii) specify the number of Preferred Securities to be exchanged
for Debentures by the Trust; and
(iii) certify to the Trust, the Debenture Issuer, the Property
Trustee and the Exchange Agent that such holder (A) has exercised
the Warrants that are held pursuant to the Unit Agreement, each of
which has an Exercise Price no less than the Accreted Value of the
Preferred Security sought to be exchanged, and (B) is the beneficial
owner of the Preferred Securities to be exchanged.
(c) No less than three Business Days prior to the applicable
Required Repurchase Date:
(i) if the Preferred Securities to be exchanged are represented
by a Global Preferred Security, the Property Trustee shall make, in
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accordance with the instructions of the Exchange Agent, the
necessary endorsement to the "Schedule of Increases or Decreases in
Global Preferred Security" attached to the Global Preferred Security
to reduce the amount of Preferred Securities represented thereby and
shall instruct the Debenture Trustee to transfer to the Exchange
Agent a corresponding Accreted Value of Debentures; and
(ii) if the Preferred Securities to be exchanged are represented
by Definitive Preferred Securities, (x) the Holder of such Preferred
Securities shall present such Definitive Preferred Securities to the
Property Trustee for cancellation and the Property Trustee shall so
notify the Registrar and (y) the Property Trustee shall instruct the
Debenture Trustee to deliver to such Holder, definitive Debentures
having an Accreted Value equal to the Accreted Value of the
cancelled Preferred Securities of such Holder.
(d) On the applicable Required Repurchase Date, the Debenture Issuer
shall repurchase, pursuant to the Indenture, the Debentures which were the
subject of an exchange notice received by the Debenture Issuer pursuant to
Section 6.7(b) at the Repurchase Price.
Section 6.8 Change of Control Right to Require Exchange of Preferred Securities
and Repurchase of Debentures.
(a) Upon the occurrence of a Change of Control, each Holder of a
Preferred Security shall have the right (a "Change of Control Repurchase Right")
to exchange any or all of such Holder's Preferred Securities for Debentures
having an Accreted Value on the date of exchange equal to the Accreted Value of
such Preferred Securities on such exchange date, and to require the Debenture
Issuer to repurchase such Debentures on the Change of Control Repurchase Date.
(b) Within 30 days after the occurrence of a Change of Control, the
Sponsor shall give notice to each Holder of a Preferred Security and the
Property Trustee of the transaction that constitutes the Change of Control,
identifying such transaction as constituting a Change of Control and setting
forth the resulting repurchase right (the date of such notice, the "Change of
Control Notice Date").
(c) To exercise its Change of Control Repurchase Right, a Holder of
Preferred Securities shall:
(i) provide the Trust, the Debenture Issuer, the Property
Trustee and the Exchange Agent with notice of its election to
exercise its Change of Control Repurchase Right no earlier than 60
days and no later than 90 days following the Change of Control
Notice Date; and
(ii) specify the number of Preferred Securities to be exchanged
for Debentures by the Trust.
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(d) No less than three Business Days prior to the Change of Control
Repurchase Date:
(i) if the Preferred Securities to be exchanged are represented
by a Global Preferred Security, the Property Trustee shall make, in
accordance with the instructions of the Exchange Agent, the
necessary endorsement to the "Schedule of Increases or Decreases in
Global Preferred Security" attached to the Global Preferred Security
to reduce the amount of Preferred Securities represented thereby and
shall instruct the Debenture Trustee to transfer to the Exchange
Agent a corresponding Accreted Value of Debentures; and
(ii) if the Preferred Securities to be exchanged are represented
by Definitive Preferred Securities, (x) the Holder of such Preferred
Securities shall present such Definitive Preferred Securities to the
Property Trustee for cancellation and the Property Trustee shall so
notify the Registrar and (y) the Property Trustee shall instruct the
Debenture Trustee to deliver to such Holder, definitive Debentures
having an Accreted Value equal to the Accreted Value of the
cancelled Preferred Securities of such Holder.
(e) On the Change of Control Repurchase Date, the Debenture Issuer
shall repurchase, pursuant to the Indenture, the Debentures which were the
subject of an exchange notice received by the Debenture Issuer pursuant to
Section 6.8(c) at the Change of Control Repurchase Price.
Section 6.9 Redemption.
(a) Except as provided in Sections 6.7 and 6.8, upon the repayment
of the Debentures held by the Trust, in whole or in part, whether at Stated
Maturity (as adjusted in connection with a Remarketing, if applicable) or
otherwise, the proceeds from such repayment shall be simultaneously applied by
the Property Trustee (subject to the Property Trustee having received notice no
later than 45 days prior to such repayment) to redeem a Like Amount of the
Securities at a redemption price equal to the redemption price in respect of the
Debentures plus an amount equal to accumulated and unpaid Distributions on the
Securities through the date of redemption (the "Redemption Price"). The
Redemption Price shall be payable on the date of redemption (the "Redemption
Date") only to the extent that the Trust has sufficient funds available for the
payment of such Redemption Price.
(b) If the Debentures are repaid in part, the Securities shall be
redeemed in part. Except as provided in Section 6.13, the proceeds from such
repayment of Debentures shall be allocated on a Pro Rata basis to the redemption
of the Securities.
(c) The procedure with respect to redemptions of Securities shall be
as follows:
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(i) Notice of any redemption of Securities (a "Redemption
Notice"), which notice shall be irrevocable, shall be given by the
Trust by mail to each Holder of Securities to be redeemed not fewer
than 30 nor more than 60 days before the Redemption Date, which
shall be the date fixed for repayment of the Debentures. A
Redemption Notice shall be deemed to be given on the day such notice
is first mailed by first-class mail, postage prepaid, to Holders. No
defect in the Redemption Notice or in the mailing of the Redemption
Notice with respect to any Holder shall affect the validity of the
redemption proceedings with respect to any other Holder.
(ii) Each Redemption Notice shall be sent by the Property
Trustee on behalf of the Trust to:
(A) in respect of the Preferred Securities, the Clearing
Agency or its nominee (or any successor Clearing Agency or its
nominee) if the Global Preferred Securities have been issued or,
the Holders thereof if Definitive Preferred Securities have been
issued, and
(B) in respect of the Common Securities, the Holder (or
Holders) thereof.
(iii) Once the Trust gives a Redemption Notice:
(A) with respect to Preferred Securities issued in
book-entry form, by 12:00 noon (New York City time) on the
Redemption Date of such Preferred Securities, provided that the
Debenture Issuer has paid the Property Trustee a sufficient
amount of cash in connection with the related repayment of the
Debentures by 10:00 a.m. (New York City time) on the maturity
date, the Property Trustee shall deposit irrevocably with the
Clearing Agency or its nominee (or successor Clearing Agency or
its nominee) funds sufficient to pay the applicable Redemption
Price with respect to such Global Preferred Securities and shall
give the Clearing Agency irrevocable instructions and authority
to pay the Redemption Price to the relevant Clearing Agency
Participants, and
(B) with respect to Preferred Securities issued in
definitive form and Common Securities, by 12:00 noon (New York
City time) on the Redemption Date of such Securities, provided
that the Debenture Issuer has paid the Property Trustee a
sufficient amount of cash in connection with the related
repayment of the Debentures by 10:00 a.m. (New York City time)
on the maturity date, the Property Trustee shall deposit
irrevocably with the Paying Agent funds sufficient to pay the
applicable Redemption Price with respect to such Definitive
Preferred Securities and Common Securities and shall give the
Paying Agent irrevocable instructions and authority to pay the
Redemption Price to the relevant Holders upon surrender of their
Certificates evidencing their Securities.
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(iv) If a Redemption Notice shall have been given and funds
deposited as required, then, immediately prior to the close of
business on the Redemption Date, Distributions shall cease to
accumulate on the Securities called for redemption and all rights of
Holders of Securities called for redemption, except the right of
such Holders to receive the Redemption Price (but without interest
on such Redemption Price), shall cease, and such Securities shall
cease to be outstanding.
(v) Payment of accumulated and unpaid Distributions on the
Redemption Date of the Securities shall be subject to the rights of
Holders on the close of business on a Regular Record Date in respect
of a Distribution Date occurring prior to or on such Redemption
Date.
(vi) If any Redemption Date is not a Business Day, payment of
the Redemption Price payable on such Redemption Date shall be made
on the next day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such
next Business Day falls in the next calendar year, such payment
shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on the date such
payment was originally payable.
(vii) If payment of the Redemption Price in respect of any
Securities called for redemption is improperly withheld or refused
and not paid either by the Property Trustee or by the Sponsor
pursuant to the Guarantee, Distributions on such Securities shall
continue to accumulate from the redemption date originally
established by the Trust to the date such Redemption Price is
actually paid, in which case the actual payment date shall be the
Redemption Date for purposes of calculating the Redemption Price.
(viii) Subject to the foregoing and applicable law (including,
without limitation, United States federal securities laws and
banking laws), the Sponsor or any of its subsidiaries may at any
time and from time to time purchase outstanding Preferred Securities
by tender, in the open market or by private agreement.
Section 6.10 Distribution of Debentures in Exchange for Securities Upon the
Occurrence of a Special Event.
(a) If at any time either a Tax Event or an Investment Company Act
Event occurs (each, a "Special Event") and certain conditions set forth in
Section 6.10(b) are satisfied, the Administrative Trustees may dissolve the
Trust and, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, cause the Debentures held by the Property Trustee to
be distributed to the Holders in liquidation of such Holders' interests in the
Trust on a Pro Rata basis, upon not less than 30 nor more than 60 days notice,
within the 90 days following the occurrence of such Special Event (the "90 Day
Period"), and, simultaneous with such distribution, to cause a Like Amount of
the Securities to be exchanged by the Trust on a Pro Rata basis.
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(b) The dissolution of the Trust and distribution of the Debentures
pursuant to Section 6.10(a) shall be permitted only upon satisfaction of the
following three conditions:
(i) the receipt by the Administrative Trustees of an Opinion of
Counsel, rendered by an independent law firm having a recognized
national tax practice, to the effect that the Holder shall not
recognize any gain or loss for United States federal income tax
purposes as a result of the dissolution of the Trust and the
distribution of the Debentures (a "No Recognition Opinion");
provided that if a Special Event occurs and the Administrative
Trustees are informed by an independent counsel that such counsel
cannot deliver a No Recognition Opinion to the Trust, and thus a
dissolution of the Trust and distribution of the Debentures shall
not be permitted, the Debenture Issuer shall have the right to
cause a Remarketing of the Preferred Securities as set forth in
Section 6.6 within the 90 Day Period;
(ii) neither the Trust nor the Debenture Issuer being able to
eliminate, which elimination shall be complete within the 90 Day
Period, such Special Event by taking some ministerial action (such
as filing a form, making an election or pursuing some other
reasonable measure) that:
(A) has no material adverse effect on the Trust, the
Debenture Issuer or the Holders; or
(B) does not subject any of them to more than de minimis
regulatory requirements; and
(iii) the receipt by the Administrative Trustees of the prior
written consent of the Debenture Issuer.
(c) Notice of any distribution of Debentures in exchange for the
Securities (a "Debenture Distribution Notice"), which notice shall be
irrevocable, shall be given by the Trust by mail to each Holder of Securities
not fewer than 30 nor more than 60 days before the date of distribution of the
Debentures. A Debenture Distribution Notice shall be deemed to be given on the
day such notice is first mailed by first-class mail, postage prepaid, to
Holders. No defect in the Debenture Distribution Notice or in the mailing of the
Debenture Distribution Notice with respect to any Holder shall affect the
validity of the exchange proceedings with respect to any other Holder.
Each Debenture Distribution Notice shall be sent by the Property
Trustee on behalf of the Trust to:
(i) in respect of the Preferred Securities, the Clearing Agency
or its nominee (or any successor Clearing Agency or its nominee) if
the Global Preferred Securities have been issued or, the Holders
thereof if Definitive Preferred Securities have been issued, and
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(ii) in respect of the Common Securities, the Holder (or
Holders) thereof.
(d) On and from the date fixed by the Property Trustee for any
distribution of Debentures and liquidation of the Trust:
(i) the Securities no longer shall be deemed to be outstanding;
(ii) the Clearing Agency or its nominee (or any successor
Clearing Agency or its nominee), as the Holder of the Preferred
Securities, will receive a registered global certificate or
certificates representing the Debentures to be delivered upon such
distribution; and
(iii) any certificates representing Securities not held by the
Clearing Agency or its nominee (or any successor Clearing Agency or
its nominee) shall be deemed to represent Debentures having an
aggregate principal amount equal to the aggregate liquidation
amount of such Securities and bearing accrued and unpaid interest
in an amount equal to the accumulated and unpaid Distributions on
such Securities, until such certificates are presented for
cancellation, at which time the Debenture Issuer shall issue, and
the Debenture Trustee shall authenticate, a certificate
representing such Debentures.
(e) In the event of a dissolution of the Trust and a distribution
of the Debentures, pursuant to the Indenture, the Debenture Issuer shall have
the same rights, and shall be subject to same terms and conditions, to cause a
Remarketing of the Debentures as the Sponsor has and is subject to under Section
6.6 to cause a Remarketing of the Preferred Securities.
Section 6.11 Voting Rights of the Preferred Securities.
(a) Except as provided under this Section 6.11 and 11.1 and as
otherwise required by the Business Trust Act, this Declaration and other
applicable law, the Holders of the Preferred Securities shall have no voting
rights.
(b) Subject to the requirement of the Property Trustee obtaining a
tax opinion in certain circumstances set forth in Section 6.11(d), the Holders
of a Majority in Liquidation Amount of the Preferred Securities, voting
separately as a class, shall have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Property Trustee,
or to direct the exercise of any trust or power conferred upon the Property
Trustee under this Declaration, including the right to direct the Property
Trustee, as Holder of the Debentures, to:
(i) exercise the remedies available to it under the Indenture;
(ii) consent to any amendment or modification of the Indenture
or the Debentures where such consent is required; or
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(iii) waive any past default and its consequences that are
waivable under Section 2.11 of the First Supplemental Indenture;
provided that if an Indenture Event of Default has occurred and is continuing,
the Holders of at least 25% of the aggregate stated liquidation amount of the
Preferred Securities may direct the Property Trustee to declare the principal of
and premium, if any, and interest on the Debentures due and payable; and
provided further that where a consent or action under the Indenture would
require the consent or act of the Holders of a Super Majority of the aggregate
principal amount of Debentures affected thereby, the Property Trustee may give
such consent or take such action only at the direction of the Holders of at
least the proportion in aggregate liquidation amount of the Preferred Securities
that the relevant Super Majority represents of the aggregate principal amount of
the Debentures outstanding.
(c) If the Property Trustee fails to enforce its rights under the
Debentures after a Holder of Preferred Securities has made a written request,
such Holder of Preferred Securities may institute, to the fullest extent
permitted by law, a legal proceeding directly against the Debenture Issuer to
enforce the Property Trustee's rights under the Indenture without first
instituting any legal proceeding against the Property Trustee or any other
Person. In addition, if a Trust Enforcement Event has occurred and is continuing
and such event is attributable to the failure of the Debenture Issuer to make
any interest, principal or other required payments when due under the Indenture,
then a Holder of Preferred Securities may institute a Direct Action against the
Debenture Issuer on or after the respective due date specified in the
Debentures.
(d) The Property Trustee shall notify all Holders of the Preferred
Securities of any notice of any Indenture Event of Default received from the
Debenture Issuer with respect to the Debentures. Such notice shall state that
such Indenture Event of Default also constitutes a Trust Enforcement Event.
Except with respect to directing the time, method and place of conducting a
proceeding for a remedy, the Property Trustee shall be under no obligation to
take any of the actions described in clauses (i) and (ii) of Section 6.10(b),
unless the Property Trustee has obtained an Opinion of Counsel, rendered by an
independent law firm experienced in such matters, to the effect that the Trust
will not fail to be classified as a grantor trust for United States federal
income tax purposes as a result of such action, and that each Holder of
Preferred Securities shall be treated as owning an undivided beneficial
ownership interest in the Debentures.
(e) If the consent of the Property Trustee, as the Holder of the
Debentures, is required under the Indenture with respect to any amendment or
modification of the Indenture, the Property Trustee shall request the direction
of the Holders with respect to such amendment or modification and shall vote
with respect to such amendment or modification as directed by a Majority in
Liquidation Amount of the Securities voting together as a single class; provided
that where a consent under the Indenture would require the consent of the
Holders of a Super Majority of the aggregate principal amount of the Debentures,
the Property Trustee may give such consent only at the direction of the Holders
of at least the proportion in aggregate liquidation amount of the Securities
that the relevant Super Majority represents of the aggregate principal amount of
the Debentures outstanding. The
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Property Trustee shall not take any such action in accordance with the
directions of the Holders of the Securities unless the Property Trustee has
obtained an Opinion of Counsel, rendered by an independent law firm experienced
in such matters, to the effect that the Trust will not fail to be classified as
a grantor trust for United States federal income tax purposes as a result of
such action, and that each Holder of Securities will be treated as owning an
undivided beneficial ownership interest in the Debentures.
(f) A waiver of an Indenture Event of Default with respect to the
Debentures shall constitute a waiver of the corresponding Trust Enforcement
Event.
(g) Any required approval or direction of the Holders of the
Preferred Securities may be given at a separate meeting of the Holders of the
Preferred Securities convened for such purpose, at a meeting of all of the
Holders of the Securities or pursuant to written consent. The Administrative
Trustees shall cause a notice of any meeting at which Holders of the Preferred
Securities are entitled to vote to be mailed to each Holder of record of
Preferred Securities. Each such notice shall include a statement setting forth:
(i) the date of such meeting;
(ii) a description of any resolution proposed for adoption at
such meeting on which such Holders are entitled to vote; and
(iii) instructions for the delivery of proxies.
(h) No vote or consent of the Holders of the Preferred Securities
shall be required for the Trust to redeem and cancel the Preferred Securities or
distribute the Debentures in accordance with this Declaration and the terms of
the Securities.
(i) Notwithstanding that the Holders of the Preferred Securities
are entitled to vote or consent under any of the circumstances described above,
any of the Preferred Securities that are owned at such time by the Sponsor, the
Trustees or any Affiliate of the Sponsor or any Trustee shall not be entitled to
vote or consent and shall be treated, for purposes of such vote or consent, as
if such Preferred Securities were not outstanding.
(j) Except as provided under Section 6.11(k), the Holders of the
Preferred Securities shall have no rights to appoint or remove the Trustees, who
may be appointed, removed or replaced solely by the Holders of the Common
Securities.
(k) If an Indenture Event of Default has occurred and is
continuing, the Property Trustee and the Delaware Trustee may be removed and
replaced by a Majority in Liquidation Amount of the Preferred Securities.
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Section 6.12 Voting Rights of the Common Securities.
(a) Except as provided in Section 5.1(b), this Section 6.12 and
Section 11.1 and as otherwise required by the Business Trust Act, the Trust
Indenture Act or other applicable law, the Holders of the Common Securities
shall have no voting rights.
(b) Subject to Section 6.11(k), the Holders of the Common
Securities shall be entitled to vote to appoint, remove or replace any Trustee
or to increase or decrease the number of Trustees in accordance with Article V.
(c) Subject to Section 2.6 and only after all Trust Enforcement
Events with respect to the Preferred Securities have been cured, waived or
otherwise eliminated and subject to the requirement of the Property Trustee
obtaining an Opinion of Counsel, rendered by an independent law firm experienced
in such matters, in certain circumstances set forth in this Section 6.12(c), the
Holders of the Common Securities shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Property
Trustee, or to direct the exercise of any trust or power conferred upon the
Property Trustee under this Declaration, including the right to direct the
Property Trustee, as the holder of the Debentures, to:
(i) exercise the remedies available to it under the Indenture;
(ii) consent to any amendment or modification of the Indenture
or the Debentures where such consent is required; or
(iii) waive any past default and its consequences that are
waivable under Section 2.11 of the First Supplemental Indenture;
provided that where a consent or action under the Indenture would require the
consent or act of the Holders of a Super Majority of the aggregate principal
amount of Debentures affected thereby, only the Holders of at least the
proportion in aggregate liquidation amount of the Common Securities that the
relevant Super Majority represents of the aggregate principal amount of the
Debentures may direct the Property Trustee to give such consent or take such
action. Except with respect to directing the time, method and place of
conducting a proceeding for a remedy, the Property Trustee shall be under no
obligation to take any of the actions described in clauses (i) and (ii) of this
Section 6.11(c) unless the Property Trustee has obtained an Opinion of Counsel,
rendered by an independent law firm experienced in such matters, to the effect
that the Trust will not fail to be classified as a grantor trust for United
States federal income tax purposes as a result of such action, and each Holder
will be treated as owning an undivided beneficial ownership interest in the
Debentures.
(d) If the Property Trustee fails to enforce its rights under the
Debentures after the Holders of the Common Securities have made a written
request pursuant to Section 6.11(c), the Holders of the Common Securities may
institute, to the fullest extent permitted by law, a legal
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proceeding directly against the Debenture Issuer to enforce the Property
Trustee's rights under the Debentures without first instituting any legal
proceeding against the Property Trustee or any other Person.
(e) A waiver of an Indenture Event of Default with respect to the
Debentures shall constitute a waiver of the corresponding Trust Enforcement
Event.
(f) Any required approval or direction of the Holders of the Common
Securities may be given at a separate meeting of the Holders of the Common
Securities convened for such purpose, at a meeting of all of the Holders of the
Securities or pursuant to written consent. The Administrative Trustees shall
cause a notice of any meeting at which the Holders of the Common Securities are
entitled to vote to be mailed to the Holders of the Common Securities. Such
notice shall include a statement setting forth:
(i) the date of such meeting;
(ii) a description of any resolution proposed for adoption at
such meeting on which the Holders of the Common Securities are
entitled to vote; and
(iii) instructions for the delivery of proxies.
(g) No vote or consent of the Holders of the Common Securities
shall be required for the Trust to redeem and cancel the Common Securities or to
distribute the Debentures in accordance with this Declaration and the terms of
the Securities.
Section 6.13 Ranking.
The Preferred Securities rank pari passu with the Common Securities
and payment thereon shall be made on a Pro Rata basis with the Common
Securities, except that, if a Trust Enforcement Event occurs and is continuing,
no payments in respect of Distributions on, or payments upon liquidation,
redemption or otherwise with respect to, the Common Securities shall be made
until the Holders of the Preferred Securities shall be paid in full the
Distributions, Redemption Price, Liquidation Distribution and other payments to
which they are entitled at such time.
Section 6.14 Registrar, Paying Agent and Transfer Agent.
The Trust shall maintain in the Borough of Manhattan, The City of
New York:
(i) an office or agency where Preferred Securities may be
presented for registration of transfer ("Registrar"),
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(ii) an office or agency where Definitive Preferred Securities
may be presented for payment, if any Preferred Securities are not
represented by one or more Global Preferred Securities ("Paying
Agent"); and
(iii) an office or agency where Securities may be presented for
transfer and exchange ("Transfer Agent").
The Registrar shall keep a register of the Preferred Securities and
of their transfer. The term "Registrar" includes any additional registrar,
"Paying Agent" includes any additional paying agent and the term "Transfer
Agent" includes any additional transfer agent. The Administrative Trustees on
behalf of the Trust may appoint the Registrar, the Paying Agent and the Transfer
Agent. If the Administrative Trustees fail to appoint or maintain another entity
as Registrar, Paying Agent or Transfer Agent, the Property Trustee shall act as
such. The Trust or any of its Affiliates may act as Paying Agent, Registrar, or
Transfer Agent. The Administrative Trustees on behalf of the Trust may change
any Registrar, Paying Agent or Transfer Agent without prior notice to any
Holder. The Paying Agent shall be permitted to resign as Paying Agent upon 30
days' written notice to the Administrative Trustees. The Administrative Trustees
on behalf of the Trust shall notify the Property Trustee and the Holders of any
change in the location of the office or agency of any Agent.
The Trust shall act as Paying Agent, Registrar and Transfer Agent
for the Common Securities.
The Trust initially appoints the Property Trustee as Registrar,
Paying Agent, and Transfer Agent for the Preferred Securities.
Section 6.15 Paying Agent to Hold Money in Trust.
The Trust shall require each Paying Agent other than the Property
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Property Trustee all money held by the Paying Agent
for the payment of Distributions, Redemption Price or Liquidation Amounts, and
will notify the Property Trustee if there are insufficient funds for such
purpose. While any such insufficiency continues, the Property Trustee may
require a Paying Agent to pay all money held by it to the Property Trustee. The
Trust at any time may require a Paying Agent to pay all money held by it to the
Property Trustee and to account for any money disbursed by it. Upon payment over
to the Property Trustee, the Paying Agent (if other than the Trust or an
Affiliate of the Trust) shall have no further liability for the money. If the
Trust or the Sponsor or any Affiliate of the Trust or the Sponsor acts as Paying
Agent, it shall segregate and hold in a separate trust fund for the benefit of
the Holders all money held by it as Paying Agent.
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Section 6.16 Replacement Securities.
If a Holder claims that a Security owned by it has been lost,
destroyed or wrongfully taken or if such Security is mutilated and is
surrendered to the Trust or in the case of the Preferred Securities to the
Property Trustee, the Trust shall issue and the Property Trustee shall, upon
written order of the Trust, authenticate a replacement Security if the Property
Trustee's and the Trust's requirements, as the case may be, are met. An
indemnity bond must be provided by the Holder which, in the judgment of the
Property Trustee, is sufficient to protect the Trustees, the Sponsor, the Trust
or any authenticating agent from any loss which any of them may suffer if a
Security is replaced. The Trust may charge such Holder for its expenses in
replacing a Security.
Section 6.17 Outstanding Preferred Securities.
The Preferred Securities outstanding at any time are all the
Preferred Securities authenticated by the Property Trustee and, in the case of
the Global Preferred Securities, specified in the "Schedule of Increases or
Decreases in Global Preferred Security" attached thereto (or on the books and
records of the Property Trustee and the Clearing Agency or its nominee), except
for those canceled by it, those delivered to it for cancellation, and those
described in this Section as not outstanding.
A Preferred Security does not cease to be outstanding because the
Sponsor, one of the Trustees or any Affiliate of the Sponsor or any of the
Trustees owns the Security.
Section 6.18 Preferred Securities in Treasury.
In determining whether the Holders of the required amount of
Securities have concurred in any direction, waiver or consent, Preferred
Securities owned by the Sponsor, the Trustees or any Affiliate of the Sponsor or
any Trustees, as the case may be, shall be disregarded and deemed not to be
outstanding, except that for the purposes of determining whether the Property
Trustee shall be fully protected in relying on any such direction, waiver or
consent, only Securities which the Property Trustee actually knows are so owned
shall be so disregarded.
Section 6.19 Deemed Security Holders.
The Trustees may treat the Person in whose name any Security shall
be registered on the books and records of the Trust as the sole owner of such
Security for purposes of receiving Distributions and for all other purposes
whatsoever. Accordingly, the Trustees shall not be bound to recognize any
equitable or other claim to or interest in such Security on the part of any
Person, whether or not the Trust shall have actual or other notice thereof.
Section 6.20 Cancellation.
The Trust at any time may deliver Preferred Securities to the
Property Trustee for cancellation. The Registrar, Paying Agent and Transfer
Agent shall forward to the Property Trustee
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any Preferred Securities surrendered to them for registration of transfer,
redemption, exchange or payment. The Property Trustee shall promptly cancel all
Preferred Securities surrendered for registration of transfer, redemption,
exchange, payment, replacement or cancellation and shall dispose of cancelled
Preferred Securities as the Trust directs in writing, provided that the Property
Trustee shall not be obligated to destroy Preferred Securities. The Trust may
not issue new Preferred Securities to replace Preferred Securities that it has
paid or that have been delivered to the Property Trustee for cancellation or
that any Holder has exchanged.
Section 6.21 CUSIP Numbers.
The Trust in issuing the Preferred Securities may use "CUSIP"
numbers (if then generally in use), and, if so, the Property Trustee shall use
"CUSIP" numbers in Redemption Notices, Distribution Notices and notices of
Remarketing or as a convenience to Holders of Preferred Securities; provided
that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Preferred Securities or as
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Preferred Securities, and any
such redemption shall not be affected by any defect in or omission of such
numbers. The Sponsor will promptly notify the Property Trustee of any change in
the CUSIP numbers.
Section 6.22 Global Preferred Securities.
(a) The Preferred Securities initially shall be issued in the form
of one or more Global Preferred Securities. An Administrative Trustee shall
execute, and the Property Trustee shall authenticate and deliver, one or more
Global Preferred Securities that:
(i) shall be registered in the name of the Clearing Agency or
the nominee of such Clearing Agency; and
(ii) shall be delivered by the Property Trustee to such
Clearing Agency or pursuant to such Clearing Agency's instructions.
The Global Preferred Securities shall represent such of the outstanding
Preferred Securities as shall be specified in the "Schedule of Increases or
Decreases in Global Preferred Security" attached thereto (or on the books and
records of the Property Trustee and the Clearing Agency or its nominee). The
Global Preferred Securities shall initially represent no Preferred Securities
and shall not, at any time, represent more than 5,000,000 (or 5,750,000 if the
Underwriters' over-allotment option with respect to the Units is exercised in
full) Preferred Securities with a maximum liquidation value of $250,000,000 (or
$287,500,000 if the Underwriters' over-allotment option with respect to the
Units is exercised in full).
Global Preferred Securities shall bear a legend substantially to
the following effect:
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"This Preferred Security is a Global Preferred Security within the
meaning of the Declaration hereinafter referred to and is registered in
the name of The Depository Trust Company, a New York corporation (the
"Clearing Agency"), or a nominee of the Clearing Agency. This Preferred
Security is exchangeable for Preferred Securities registered in the name
of a person other than the Clearing Agency or its nominee only in the
limited circumstances described in the Declaration, and no transfer of
this Preferred Security (other than a transfer of this Preferred
Security as a whole by the Clearing Agency to a nominee of the Clearing
Agency or by a nominee of the Clearing Agency to the Clearing Agency or
another nominee of the Clearing Agency) may be registered except in
limited circumstances. Unless this certificate is presented by an
authorized representative of the Clearing Agency to Sovereign Capital
Trust II 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 the
Clearing Agency (and any payment hereon is made to Cede & Co. or to such
other entity as is requested by an authorized representative of the
Clearing Agency), and except as otherwise provided in the Declaration,
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co.,
has an interest herein."
(b) Preferred Securities not represented by a Global Preferred
Security issued in exchange for all or a part of a Global Preferred Security
pursuant to this Section 6.22 shall be registered in such names and in such
authorized denominations as the Clearing Agency, pursuant to instructions from
its direct or indirect participants or otherwise, shall instruct the Property
Trustee. Upon execution and authentication, the Property Trustee shall deliver
any Preferred Securities not represented by a Global Preferred Security to the
Persons in whose names such Definitive Preferred Securities are so registered.
(c) At such time as all interests in Global Preferred Securities
have been redeemed, repurchased or canceled, such Global Preferred Securities
shall be canceled, upon receipt thereof, by the Property Trustee in accordance
with standing procedures of the Clearing Agency. At any time prior to such
cancellation, if any interest in a Global Preferred Security is exchanged for
Preferred Securities not represented by a Global Preferred Security, redeemed,
canceled or transferred to a transferee who receives Preferred Securities not
represented by a Global Preferred Security, or if any Preferred Security not
represented by a Global Preferred Security is exchanged or transferred for part
of a Global Preferred Security, then, in accordance with the standing procedures
of the Clearing Agency, the aggregate stated liquidation amount of such Global
Preferred Security shall be reduced or increased, as the case may be, and an
endorsement shall be made on such Global Preferred Security by the Property
Trustee to reflect such reduction or increase in the "Schedule of Increases or
Decreases in Global Preferred Security" attached thereto.
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(d) The Trust and the Property Trustee, as the authorized
representative of the Holders of the Preferred Securities, may deal with the
Clearing Agency for all purposes of this Declaration, including the making of
payments due on the Preferred Securities and exercising the rights of Holders of
the Preferred Securities hereunder. The rights of any Preferred Security
Beneficial Owners shall be limited to those established by law and agreements
between such owners and Clearing Agency Participants; provided that no such
agreement shall give to any Person any rights against the Trust or the Property
Trustee without the written consent of the parties so affected. Multiple
requests and directions from and votes of the Clearing Agency as the Holder of
the Preferred Securities represented by Global Preferred Securities with respect
to any particular matter shall not be deemed inconsistent to the extent they do
not represent an amount of Preferred Securities in excess of those held in the
name of the Clearing Agency or its nominee.
(e) If at any time the Clearing Agency notifies the Trust that it
is unwilling or unable to continue as Clearing Agency for the Preferred
Securities or if at any time the Clearing Agency no longer is eligible to serve
as Clearing Agency, the Administrative Trustees shall appoint a successor
Clearing Agency with respect to the Preferred Securities. If a successor
Clearing Agency is not appointed by the Trust within 90 days after the Trust
receives such notice or becomes aware of such ineligibility, the Trust's
election that the Preferred Securities be represented by one or more Global
Preferred Securities shall no longer be effective, and an Administrative Trustee
shall execute, and the Property Trustee shall authenticate and deliver,
Definitive Preferred Securities, in any authorized denominations, in an
aggregate stated liquidation amount equal to the aggregate stated liquidation
amount of the Global Preferred Securities representing the Preferred Securities,
in exchange for such Global Preferred Securities. An Administrative Trustee also
shall execute, and the Property Trustee also shall authenticate and deliver,
Definitive Preferred Securities, in any authorized denominations, in an
aggregate stated liquidation amount equal to the aggregate stated liquidation
amount of the Global Preferred Securities representing the Preferred Securities,
in exchange for such Global Preferred Securities, if (1) the Sponsor in its sole
discretion elects to cause the issuance of the Preferred Securities in
definitive form or (2) there shall have occurred and be continuing any event
which after notice or lapse of time or both would be a Trust Enforcement Event.
(f) The Administrative Trustees at any time and in their sole
discretion may determine that the Preferred Securities issued in the form of one
or more Global Preferred Securities shall no longer be represented by Global
Preferred Securities. In such event an Administrative Trustee on behalf of the
Trust shall execute, and the Property Trustee shall authenticate and deliver,
Definitive Preferred Securities, in any authorized denominations, in an
aggregate stated liquidation amount equal to the aggregate stated liquidation
amount of the Global Preferred Securities representing the Preferred Securities,
in exchange for such Global Preferred Securities.
(g) Notwithstanding any other provisions of this Declaration (other
than the provisions set forth in Section 7.1), Global Preferred Securities may
not be transferred as a whole except by the Clearing Agency to a nominee of the
Clearing Agency or by a nominee of the Clearing
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Agency to the Clearing Agency or another nominee of the Clearing Agency or by
the Clearing Agency or any such nominee to a successor Clearing Agency or a
nominee of such successor Clearing Agency.
(h) Interests of Preferred Security Beneficial Owners may be
transferred or exchanged for Preferred Securities not represented by a Global
Preferred Security, and Preferred Securities not represented by a Global
Preferred Security may be transferred or exchanged for a Global Preferred
Security or Securities, in accordance with rules of the Clearing Agency and the
provisions of Section 7.1.
ARTICLE VII
TRANSFER OF SECURITIES
Section 7.1 Transfer of Securities.
(a) The Preferred Securities may be transferred, in whole or in
part, only in accordance with the terms and conditions set forth in this
Declaration and in the terms of the Preferred Securities. To the fullest extent
permitted by law, any transfer or purported transfer of any Preferred Security
not made in accordance with this Declaration shall be null and void.
(b) Subject to this Section 7.1 and Section 6.22, the Preferred
Securities shall be freely transferrable.
(c) The Common Securities shall not be transferrable except as
provided in the Indenture.
(d) The Trust shall cause to be kept at the Corporate Trust Office
the books and records in which, subject to such reasonable regulations as it may
prescribe, the Trust shall provide for the registration of Preferred Securities
and of transfers of Preferred Securities.
(e) Upon surrender for registration of transfer of any Preferred
Securities at an office or agency of the Trust designated for such purpose, an
Administrative Trustee shall execute, and the Property Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Preferred Securities of any authorized
denominations and of a like aggregate principal amount.
(f) At the option of the Holder, Preferred Securities may be
exchanged for other Preferred Securities of any authorized denominations and of
a like aggregate stated liquidation amount, upon surrender of the Preferred
Securities to be exchanged at such office or agency. Whenever any Preferred
Securities are so surrendered for exchange, an Administrative Trustee shall
execute, and the Property Trustee shall authenticate and deliver, the Preferred
Securities that the Holder making the exchange is entitled to receive.
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(g) If so required by the Property Trustee, every Preferred Security
presented or surrendered for registration of transfer or for exchange shall be
duly endorsed, or accompanied by a duly executed written instrument of transfer
in form satisfactory to the Property Trustee and the Registrar, by the Holder
thereof or his attorney duly authorized in writing.
(h) No service charge shall be made for any registration of transfer
or exchange of Preferred Securities, but the Trust may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Preferred
Securities.
(i) If the Preferred Securities are to be redeemed in part,
neither the Administrative Trustees nor the Trust shall be required
to register the transfer of or exchange any Preferred Securities:
(i) during a period beginning on the opening of business
15 days before the day of the mailing of a Redemption Notice or
any notice of selection of Securities for redemption; or
(ii) so selected for redemption, except the unredeemed
portion of any such Preferred Securities being redeemed in part.
Section 7.2 Separation and Rejoining of Units.
At any time after issuance, the Preferred Security and Warrant
components of any Unit may be separated by the holder and thereafter transferred
separately. In the event of any separation of the components of a Unit:
(a) if such Unit is represented by a definitive certificate, the
holder shall present such definitive certificate to the Unit Agent for
cancellation and the Unit Agent shall so notify the Unit registrar and shall
return the Preferred Security component of such Unit to the Property Trustee
with an instruction to countersign and deliver to, or upon the instruction of,
such holder a separated Preferred Security bearing the separate "CUSIP" number
assigned to the Preferred Security; and
(b) if such Unit is represented by a global certificate, the Unit
Agent shall make the necessary endorsement to the "Schedule of Exchanges of
Interests of Global Preferred Security" attached to the global unit certificate
or otherwise comply with its procedures to reduce the amount of Units
represented thereby and shall instruct the Property Trustee to effect a
corresponding increase in the Preferred Securities represented by the Global
Preferred Securities bearing a separate "CUSIP" number.
Once separated, a Preferred Security and Warrant may be rejoined to
form a Unit. In the event a holder of a Preferred Security and a Warrant desires
to rejoin a Unit:
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(i) if the constituent components are represented by definitive
certificates, the holder shall present (A) the Preferred Security to
the Property Trustee and (B) the Warrant to the Warrant Agent, in
each case for cancellation and the Property Trustee and the Warrant
Agent shall so notify the Unit Agent, who shall in turn so notify
the Unit registrar with an instruction for the Unit registrar to
countersign and deliver to, or upon the instruction of, such holder
a Unit certificate bearing the separate "CUSIP" number assigned to
the Units; and
(ii) if the constituent components are represented by global
certificates, each of the Property Trustee and the Warrant Agent
shall make the necessary endorsement to their respective global
certificates or otherwise comply with their procedures to reduce the
amount of Preferred Securities and Warrants, respectively,
represented thereby and shall instruct the Unit Agent to effect a
corresponding increase in the Units represented by the global unit
certificate bearing a separate "CUSIP" number. The Property Trustee
shall make such other necessary endorsements to the Global Preferred
Securities consistent with the terms of this agreement to reflect
the appropriate number of Units and Preferred Securities, as
appropriate, represented thereby.
Section 7.3 Book-Entry Interests.
Unless Definitive Preferred Securities have been issued to the
Preferred Security Beneficial Owners pursuant to Sections 6.21(e) and 6.21(f):
(a) the provisions of this Section 7.3 shall be in full force and
effect;
(b) to the extent that the provisions of this Section 7.3 conflict
with any other provisions of this Declaration, the provisions of this Section
7.3 shall control;
(c) the Trust, the Sponsor and the Trustees shall be entitled to
deal with the Clearing Agency for all purposes of this Declaration (including
the payment of Distributions on the Global Preferred Securities and receiving
approvals, votes or consents hereunder) as the Holder of the Preferred
Securities and the absolute owner of the Global Preferred Securities for all
purposes whatsoever and shall have no obligation to the Preferred Security
Beneficial Owners; and
(d) the rights of the Preferred Security Beneficial Owners shall be
exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Preferred Security Beneficial
Owners and the Clearing Agency and/or the Clearing Agency Participants. The
Clearing Agency shall make book-entry transfers among the Clearing Agency
Participants and shall receive and transmit payments of Distributions on the
Global Preferred Securities to such Clearing Agency Participants; provided that
solely for the purposes of determining whether the Holders of the requisite
liquidation amount of Preferred Securities have voted on any matter provided for
in this Declaration, so
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long as Definitive Preferred Securities have not been issued and the Preferred
Securities remain in the form of one or more Global Preferred Securities, the
Trustees may rely conclusively on, and shall be protected in relying on, any
written instrument (including a proxy) delivered to the Trustees by the Clearing
Agency setting forth the votes of the Preferred Security Beneficial Owners or
assigning the right to vote on any matter to any other Persons either in whole
or in part.
Section 7.4 Notices to Clearing Agency.
Whenever a notice or other communication to the Preferred Security
Holders is required under this Declaration, the Trustees shall give all such
notices and communications specified herein to be given to the Holders of Global
Preferred Securities to the Clearing Agency, and shall have no notice
obligations to the Preferred Security Beneficial Owners.
Section 7.5 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Preferred Securities, the
Administrative Trustees may, in their sole discretion, appoint a successor
Clearing Agency with respect to such Preferred Securities.
ARTICLE VIII
DISSOLUTION AND TERMINATION OF THE TRUST
Section 8.1 Dissolution and Termination of the Trust.
(a) The Trust shall automatically dissolve upon the earliest to
occur of:
(i) the bankruptcy of the Sponsor;
(ii) the filing of a certificate of dissolution or its
equivalent with respect to the Sponsor; or the revocation of the
Sponsor's charter and the expiration of 90 days after the date of
revocation without a reinstatement thereof;
(iii) the entry of a decree of judicial dissolution of the
Sponsor or the Trust by a court of competent jurisdiction;
(iv) the time when all of the Securities shall have been called
for redemption and the amounts necessary for redemption thereof
shall have been paid to the Holders in accordance with the terms of
the Securities;
(v) the written notice from the Sponsor directing the Property
Trustee, in its sole discretion, to distribute the Debentures to the
Holders in exchange for all of the Securities; provided that the
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Sponsor has provided to the Property Trustee an Opinion of a Counsel
experienced in such matters to the effect that the Holders will not
recognize any gain or loss for United States federal income tax
purposes as a result of the distribution of Debentures and the
dissolution of the Trust;
(vi) the time when all of the Administrative Trustees and the
Sponsor have consented to the dissolution of the Trust, provided
that such action is taken before the issuance of any Securities; and
(vii) the expiration of the term of the Trust provided in
Section 3.14.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a), the Administrative Trustees shall terminate the
Trust by executing and filing a certificate of cancellation with the Secretary
of State of the State of Delaware.
(c) The provisions of Section 4.2 and Article IX shall survive the
termination of the Trust.
Section 8.2 Liquidation Distribution Upon Dissolution or Termination of the
Trust.
(a) In the event of any voluntary or involuntary dissolution or
termination of the Trust pursuant to Section 8.1(a)(i), 8.1(a)(ii), 8.1(a)(iii)
or 8.1(a)(v) (each a "Liquidation"), the Trust shall be liquidated by the
Administrative Trustees as expeditiously as the Administrative Trustees
determine to be possible by distributing to the Holders, after satisfaction of
liabilities to creditors of the Trust, if any, as provided by applicable law,
Debentures in an aggregate principal amount equal to the aggregate stated
liquidation amount of, with an interest rate identical to the Distribution rate
of, and accrued and unpaid interest equal to accumulated and unpaid
Distributions on, such Securities in exchange for such Securities.
(b) If, notwithstanding the other provisions of this Section 8.2,
distribution of the Debentures in the manner set forth in Section 8.2(a)(i) is
determined by the Property Trustee not to be practical, the assets of the Trust
shall be liquidated, and the Trust shall be wound-up by the Property Trustee in
such manner as the Property Trustee determines. In such event, the Holders shall
be entitled to receive out of the assets of the Trust available for distribution
to the Holders, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, an amount equal to the Accreted Value of the
Securities plus accumulated and unpaid Distributions thereon to the date of
payment (such amount being the "Liquidation Distribution"). If, upon any such
Liquidation, the Liquidation Distribution can be paid only in part because the
Trust has insufficient assets available to pay the aggregate Liquidation
Distribution in full, then the amounts payable directly by the Trust on the
Securities shall be paid on a Pro Rata basis, provided that if an Indenture
Event of Default has occurred and is continuing, then the Preferred Securities
shall have a preference over the Common Securities with regard to the
Liquidation Distribution.
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(c) Notice of any distribution of Debentures in exchange for the
Securities (an "Exchange Notice"), which notice shall be irrevocable, shall be
given by the Administrative Trustees on behalf of the Trust by mail to each
Holder at least 30 but no more than 60 days before the date fixed for such
distribution. For purposes of the calculation of the date of distribution and
the dates on which notices are given pursuant to this Section 8.2(c), an
Exchange Notice shall be deemed to be given on the day such notice is first
mailed by first-class mail, postage prepaid, to the Holders. Each Exchange
Notice shall be addressed to the Holders at the address of each such Holder
appearing on the books and records of the Trust. No defect in the Exchange
Notice or in the mailing of either thereof with respect to any Holder shall
affect the validity of the distribution proceedings with respect to any other
Holder.
(d) On and from the date fixed for any distribution of Debentures
upon dissolution of the Trust:
(i) the Securities no longer shall be deemed to be outstanding;
(ii) the Clearing Agency or its nominee (or any successor
Clearing Agency or its nominee), as the Holder of the Preferred
Securities, will receive a registered global certificate or
certificates representing the Debentures to be delivered upon such
distribution; and
(iii) any certificates representing Securities not held by the
Clearing Agency or its nominee (or any successor Clearing Agency or
its nominee) shall be deemed to represent Debentures having an
aggregate principal amount equal to the aggregate liquidation amount
of such Securities and bearing accrued and unpaid interest in an
amount equal to the accumulated and unpaid Distributions on such
Securities, until such certificates are presented for cancellation,
at which time the Debenture Issuer shall issue, and the Debenture
Trustee shall authenticate, a certificate representing such
Debentures.
ARTICLE IX
LIMITATION OF LIABILITY OF THE HOLDERS, THE TRUSTEES OR OTHERS
Section 9.1 Liability.
(a) Except as expressly set forth in this Declaration, the Guarantee
and the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the
capital contributions (or any return thereon) of the Holders which
shall be made solely from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder any deficit
upon dissolution of the Trust or otherwise.
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(b) The Sponsor, in its capacity as Debenture Issuer, shall be
liable for all of the debts and obligations of the Trust (other than in respect
of the Securities) to the extent such debts and obligations are not satisfied
out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust Act, the
Holders shall be entitled to the same limitation of personal liability extended
to stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware.
Section 9.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Declaration or by law,
except that an Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Indemnified Person's gross negligence (or, in
the case of the Property Trustee, negligence) or willful misconduct with respect
to such acts or omissions.
(b) Each Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters such
Indemnified Person reasonably believes to be within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Trust, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders might properly be paid.
Section 9.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified Person
has duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and liabilities of
an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Property Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between a
Covered Person and an Indemnified Person; or
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(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified Person
shall act in a manner that is, or provides terms that are, fair and
reasonable to the Trust or any Holder,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted
or required to make a decision:
(i) in its "discretion" or under a grant of similar authority,
the Indemnified Person shall be entitled to consider such interests
and factors as it desires, including its own interests, and shall
have no duty or obligation to give any consideration to any interest
of or factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall
not be subject to any other or different standard imposed by this
Declaration or by applicable law.
Section 9.4 Indemnification.
(a) (i) Pursuant to the Indenture, the Debenture Issuer shall
indemnify, to the fullest extent permitted by law, any Debenture Issuer
Indemnified Person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Trust) by reason of the fact that he is or was a Debenture Issuer
Indemnified Person against expenses (including attorneys' fees and expenses),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the Debenture Issuer Indemnified Person did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Trust, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
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(ii) The Debenture Issuer shall indemnify, to the fullest
extent permitted by law, any Debenture Issuer Indemnified Person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Trust to procure a judgment
in its favor by reason of the fact that he is or was a Debenture Issuer
Indemnified Person against expenses (including attorneys' fees and expenses)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the Trust
and except that no such indemnification shall be made in respect of any claim,
issue or matter as to which such Debenture Issuer Indemnified Person shall have
been adjudged to be liable to the Trust, unless and only to the extent that the
Court of Chancery of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such Person is
fairly and reasonably entitled to indemnity for such expenses which such Court
of Chancery or such other court shall deem proper.
(iii) To the extent that a Debenture Issuer Indemnified Person
shall be successful on the merits or otherwise (including dismissal of an action
without prejudice or the settlement of an action without admission of liability)
in defense of any action, suit or proceeding referred to in paragraphs (i) and
(ii) of this Section 9.4(a), or in defense of any claim, issue or matter
therein, he shall be indemnified, to the fullest extent permitted by law,
against expenses (including attorneys' fees and expenses) actually and
reasonably incurred by him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this
Section 9.4(a) (unless ordered by a court) shall be made by the Debenture Issuer
only as authorized in the specific case upon a determination that
indemnification of the Debenture Issuer Indemnified Person is proper in the
circumstances because he has met the applicable standard of conduct set forth in
paragraphs (i) and (ii). Such determination shall be made:
(A) by a majority vote of a Quorum of the Administrative
Trustees who were not parties to such action, suit or
proceeding;
(B) if such a Quorum is not obtainable, or, even if
obtainable, if a Quorum of disinterested Administrative Trustees
so directs, by independent legal counsel in a written opinion;
or
(C) by the Holders of the Common Securities.
(v) Expenses (including attorneys' fees and expenses) incurred
by a Debenture Issuer Indemnified Person in defending a civil, criminal,
administrative or investigative action, suit or proceeding referred to in
paragraphs (i) and (ii) of this Section 9.4(a) shall be paid by the Debenture
Issuer in advance of the final disposition of such action, suit or proceeding
upon
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receipt of an undertaking by or on behalf of such Debenture Issuer Indemnified
Person to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Debenture Issuer as authorized in this Section
9.4(a). Notwithstanding the foregoing, no advance shall be made by the Debenture
Issuer if a determination is reasonably and promptly made:
(A) by a majority vote of a Quorum of disinterested
Administrative Trustees;
(B) if such a Quorum is not obtainable, or, even if
obtainable, if a Quorum of disinterested Administrative
Trustees so directs, by independent legal counsel in a written
opinion; or
(C) the Holder of the Common Securities,
that, based upon the facts known to the Administrative Trustees, independent
legal counsel or Holders of the Common Securities at the time such determination
is made, such Debenture Issuer Indemnified Person acted in bad faith or in a
manner that such person did not believe to be in or not opposed to the best
interests of the Trust, or, with respect to any criminal proceeding, that such
Debenture Issuer Indemnified Person believed or had reasonable cause to believe
his conduct was unlawful.
In no event shall any advance be made in instances where the
Administrative Trustees, independent legal counsel or Holders of the Common
Securities reasonably determine that such person deliberately breached his duty
to the Trust or the Holders.
(vi) The indemnification and advancement of expenses provided
by, or granted pursuant to, the other paragraphs of this Section 9.4(a) shall
not be deemed exclusive of any other rights to which those seeking
indemnification and advancement of expenses may be entitled under any agreement,
vote of stockholders or disinterested directors of the Debenture Issuer or
Holders of the Preferred Securities or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office. All rights to indemnification under this Section 9.4(a) shall be deemed
to be provided by a contract between the Debenture Issuer and each Debenture
Issuer Indemnified Person who serves in such capacity at any time while this
Section 9.4(a) is in effect. Any repeal or modification of this Section 9.4(a)
shall not affect any rights or obligations then existing.
(vii) The Debenture Issuer or the Trust may purchase and
maintain insurance on behalf of any person who is or was a Debenture Issuer
Indemnified Person against any liability asserted against him and incurred by
him in any such capacity, or arising out of his status as such, whether or not
the Debenture Issuer would have the power to indemnify him against such
liability under the provisions of this Section 9.4(a).
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(viii) For purposes of this Section 9.4(a), references to "the
Trust" shall include, in addition to the resulting or surviving entity, any
constituent entity (including any constituent of a constituent) absorbed in a
consolidation or merger, so that any person who is or was a director, trustee,
officer or employee of such constituent entity, or is or was serving at the
request of such constituent entity as a director, trustee, officer, employee or
agent of another entity, shall stand in the same position under the provisions
of this Section 9.4(a) with respect to the resulting or surviving entity as he
would have with respect to such constituent entity if its separate existence had
continued.
(ix) The indemnification and advancement of expenses provided
by, or granted pursuant to, this Section 9.4(a) shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to be a
Debenture Issuer Indemnified Person and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(b) The Debenture Issuer agrees to indemnify:
(i) the Property Trustee;
(ii) the Delaware Trustee;
(iii) any Affiliate of the Property Trustee and the Delaware
Trustee; and
(iv) any officers, directors, shareholders, members, partners,
employees, representatives, custodians, nominees or agents of the
Property Trustee and the Delaware Trustee (each of the Persons in
(i) through (iv) being referred to as a "Fiduciary Indemnified
Person")
for, and to hold each Fiduciary Indemnified Person harmless against, any and all
loss, liability, damage, claim or expense including taxes (other than taxes
based on the income of such Fiduciary Indemnified Person) incurred without gross
negligence (or, in the case of the Property Trustee, negligence) or bad faith on
its part, arising out of or in connection with the acceptance or administration
of the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against or investigating
any claim or liability in connection with the exercise or performance of any of
its powers or duties hereunder. The obligation to indemnify as set forth in this
Section 9.4(b) shall survive the satisfaction and discharge of this Declaration.
Section 9.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the
Property Trustee may engage in or possess an interest in other business ventures
of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders shall
have no rights by virtue of this Declaration in and to such independent ventures
or the
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income or profits derived therefrom, and the pursuit of any such venture, even
if competitive with the business of the Trust, shall not be deemed wrongful or
improper. No Covered Person, the Sponsor, the Delaware Trustee or the Property
Trustee shall be obligated to present any particular investment or other
opportunity to the Trust even if such opportunity is of a character that, if
presented to the Trust, could be taken by the Trust, and any Covered Person, the
Sponsor, the Delaware Trustee and the Property Trustee shall have the right to
take for its own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment or other opportunity. Any
Covered Person, the Delaware Trustee and the Property Trustee may engage or be
interested in any financial or other transaction with the Sponsor or any
Affiliate of the Sponsor, or may act as depositary for, trustee or agent for, or
act on any committee or body of holders of, securities or other obligations of
the Sponsor or its Affiliates.
ARTICLE X
ACCOUNTING
Section 10.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
Section 10.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the
Administrative Trustees shall keep, or cause to be kept, full books of account,
records and supporting documents, which shall reflect in reasonable detail each
transaction of the Trust. The books of account shall be maintained on the
accrual method of accounting, in accordance with generally accepted accounting
principles, consistently applied. The books of account and the records of the
Trust shall be examined by and reported upon as of the end of each Fiscal Year
of the Trust by a firm of independent certified public accountants selected by
the Administrative Trustees.
(b) The Administrative Trustees shall cause to be prepared and
delivered to each Holder, within 90 days after the end of each Fiscal Year of
the Trust, annual financial statements of the Trust, including a balance sheet
of the Trust as of the end of such Fiscal Year, and the related statements of
income or loss.
(c) The Administrative Trustees shall cause to be duly prepared and
delivered to each Holder, an annual United States federal income tax information
statement, required by the Code, containing such information with regard to the
Securities held by each Holder as is required by the Code and the Treasury
Regulations. Notwithstanding any right under the Code to deliver any such
statement at a later date, the Administrative Trustees shall endeavor to deliver
all such information statements within 30 days after the end of each Fiscal Year
of the Trust.
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(d) The Administrative Trustees shall cause to be duly prepared and
filed with the appropriate taxing authority an annual United States federal
income tax return, on Form 1041 or such other form required by United States
federal income tax law, and any other annual income tax returns required to be
filed on behalf of the Trust with any state or local taxing authority.
Section 10.3 Banking.
The Trust may maintain one or more bank accounts in the name and
for the sole benefit of the Trust; provided, however, that all payments of funds
in respect of the Debentures held by the Property Trustee shall be made directly
to the Property Account and no other funds of the Trust shall be deposited in
the Property Account. The sole signatories for such accounts shall be designated
by the Administrative Trustees; provided, however, that the Property Trustee
shall designate the signatories for the Property Account.
Section 10.4 Withholding.
The Trust and the Administrative Trustees shall comply with all
withholding requirements under United States federal, state and local law. The
Administrative Trustees shall request, and the Holders shall provide to the
Trust, such forms or certificates as are necessary to establish an exemption
from withholding with respect to each Holder, and any representations and forms
as shall reasonably be requested by the Administrative Trustees to assist them
in determining the extent of, and in fulfilling, the Trust's withholding
obligations. The Administrative Trustees shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the Holder
to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to Distributions
or allocations to any Holder, the amount withheld shall be deemed to be a
Distribution in the amount of the withholding to such Holder. In the event of
any claimed over-withholding, the Holder shall be limited to an action against
the applicable jurisdiction. If the amount required to be withheld was not
withheld from actual Distributions made, the Trust may reduce subsequent
Distributions by the amount of such withholding.
ARTICLE XI
AMENDMENTS AND MEETINGS
Section 11.1 Amendments.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended only by
a written instrument approved and executed by:
(i) the Sponsor;
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(ii) the Administrative Trustees (or if there are more than two
Administrative Trustees a majority of the Administrative Trustees);
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Property Trustee, the Property
Trustee; and
(iv) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware
Trustee.
(b) No amendment shall be made, and any such purported amendment
shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the Property
Trustee shall have first received an Officers' Certificate from
each of the Trust and the Sponsor that such amendment is permitted
by, and conforms to, the terms of this Declaration (including the
terms of the Securities);
(ii) unless, in the case of any proposed amendment which
affects the rights, powers, duties, obligations or immunities of
the Property Trustee, the Property Trustee shall have first
received:
(A) an Officers' Certificate from each of the Trust and the
Sponsor that such amendment is permitted by, and conforms to,
the terms of this Declaration (including the terms of the
Securities); and
(B) an Opinion of Counsel (who may be counsel to the
Sponsor or the Trust) that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the terms
of the Securities) and that all conditions precedent, if any,
in this Declaration to the execution and delivery of such
amendment have been satisfied; and
(iii) to the extent the result of such amendment would be to:
(A) cause the Trust to be classified other than as a
grantor trust for purposes of United States federal income
taxation;
(B) reduce or otherwise adversely affect the powers of the
Property Trustee in contravention of the Trust Indenture Act;
or
(C) cause the Trust to be deemed to be an Investment
Company required to be registered under the Investment Company
Act.
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<PAGE>
(c) This declaration shall not be amended without the consent of
the Sponsor, a majority of the Administrative Trustees and the Holders of at
least a 66b% in Liquidation Amount of the Securities if such amendment would:
(A) adversely affect the powers, preferences or special
rights of the Securities, whether by way of amendment to this
Declaration or otherwise; or
(B) result in the dissolution, winding-up or termination of
the Trust other than pursuant to the terms of this Declaration;
provided that if any amendment referred to in clause (A) above would adversely
affect only the Preferred Securities or the Common Securities, then only the
Holders of the affected class will be entitled to vote on such amendment, and
such amendment shall not be effective except with the approval of a 66b% in
Liquidation Amount of the Holders of the class of Securities affected thereby.
(d) Neither Article IV nor the rights of the holders of the Common
Securities under Article V to increase or decrease the number of, and appoint
and remove, Trustees shall be amended without the consent of the Holders of a
Majority in Liquidation Amount of the Common Securities.
(e) This Section 11.1 shall not be amended without the consent of
all of the Holders.
(f) This Declaration may not be amended without the consent of each
Holder affected thereby to:
(i) change the amount or timing of any Distribution of the
Securities or otherwise adversely affect the amount of any
Distribution required to be made in respect of the Securities as of
a specified date;
(ii) restrict the right of a Holder to institute suit for the
enforcement of any such payment on or after the due date of such
payment; or
(iii) change the Repurchase Right of any holder of a Unit.
(g) This Declaration may be amended without the consent of the
Holders to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration
that may be inconsistent with any other provision of this
Declaration;
(iii) add to the covenants, restrictions or obligations of the
Sponsor;
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<PAGE>
(iv) conform to any change in Rule 3a-5 or written change in
interpretation or application of Rule 3a-5 by any legislative body,
court, government agency or regulatory authority;
(v) modify, eliminate or add to any provisions of this
Declaration to such extent as shall be necessary to ensure that the
Trust will be classified as a grantor trust for United States
federal income tax purposes at all times that any Securities are
outstanding or to ensure that the Trust will not be required to
register as an Investment Company under the Investment Company Act;
or
(vi) facilitate the tendering, remarketing and settlement of
the Preferred Securities as contemplated by Section 6.6(s).
provided, however, that none of the foregoing actions shall adversely affect in
any material respect the interests of the Holders, and any amendments of this
Declaration shall become effective when notice thereof is given to the Holders.
Section 11.2 Meetings of the Holders; Action by Written Consent.
(a) Meetings of the Holders of any class of Securities may be
called at any time by the Administrative Trustees (or as provided in the terms
of the Securities) to consider and act on any matter on which Holders of such
class of Securities are entitled to act under the terms of this Declaration, the
terms of the Securities or the rules of any stock exchange on which the
Preferred Securities are listed or admitted for trading. The Administrative
Trustees shall call a meeting of the Holders of such class if directed to do so
by the Holders of at least 10% in Liquidation Amount of such class of
Securities. Such direction shall be given by delivering to the Administrative
Trustees one or more notices in writing stating that the signing Holders wish to
call a meeting and indicating the general or specific purpose for which the
meeting is to be called. Any Holder or Holders calling a meeting shall specify
in writing the Securities held by the Holder or Holders exercising the right to
call a meeting and only those Securities specified shall be counted for purposes
of determining whether the required percentage set forth in the second sentence
of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders:
(i) Notice of any such meeting shall be given to all the
Holders having a right to vote thereat at least seven days and not
more than 60 days before the date of such meeting. Whenever a vote,
consent or approval of the Holders is permitted or required under
this Declaration or the rules of any stock exchange on which the
Preferred Securities are listed or admitted for trading, such vote,
consent or approval may be given at a meeting of the Holders. Any
action that may be taken at a meeting of the Holders may be taken
87
<PAGE>
without a meeting if a consent in writing setting forth the action
so taken is signed by the Holders owning not less than the minimum
amount of Securities in liquidation amount that would be necessary
to authorize or take such action at a meeting at which all Holders
having a right to vote thereon were present and voting. Prompt
notice of the taking of action without a meeting shall be given to
the Holders entitled to vote who have not consented in writing. The
Administrative Trustees may specify that any written ballot
submitted to the Holders for the purpose of taking any action
without a meeting shall be returned to the Trust within the time
specified by the Administrative Trustees.
(ii) Each Holder may authorize any Person to act for it by
proxy on any and all matters in which such Holder is entitled to
participate, including waiving notice of any meeting, or voting or
participating at a meeting. No proxy shall be valid after the
expiration of eleven months from the date thereof unless otherwise
provided in the proxy. Every proxy shall be revocable at the
pleasure of the Holder executing such proxy. Except as otherwise
provided herein, all matters relating to the giving, voting or
validity of proxies shall be governed by the General Corporation
Law of the State of Delaware relating to proxies, and judicial
interpretations thereunder, as if the Trust were a Delaware
corporation and the Holders were stockholders of a Delaware
corporation.
(iii) Each meeting of the Holders shall be conducted by the
Administrative Trustees or by such other Person that the
Administrative Trustees may designate.
(iv) Unless the Business Trust Act, this Declaration, the terms
of the Securities, the Trust Indenture Act or the listing rules of
any stock exchange on which the Preferred Securities are then
listed or trading otherwise provides, the Administrative Trustees,
in their sole discretion, shall establish all other provisions
relating to meetings of Holders, including notice of the time,
place or purpose of any meeting at which any matter is to be voted
on by any Holders, waiver of any such notice, action by consent
without a meeting, the establishment of a record date, quorum
requirements, voting in person or by proxy or any other matter with
respect to the exercise of any such right to vote.
ARTICLE XII
REPRESENTATIONS OF THE PROPERTY TRUSTEE
AND THE DELAWARE TRUSTEE
Section 12.1 Representations and Warranties of the Property Trustee.
The initial Property Trustee represents and warrants to the Trust
and to the ponsor at the date of this Declaration, and each Successor Property
Trustee represents and warrants to the Trust and the Sponsor at the time of the
Successor Property Trustee's acceptance of its appointment as Property Trustee,
that:
(a) the Property Trustee is a banking corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, with trust powers and
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<PAGE>
authority to execute and deliver, and to carry out and perform its obligations
under the terms of, this Declaration;
(b) the Property Trustee satisfies the requirements set forth in
Section 5.3(a);
(c) the execution, delivery and performance by the Property Trustee
of this Declaration has been duly authorized by all necessary corporate action
on the part of the Property Trustee; this Declaration has been duly executed and
delivered by the Property Trustee and constitutes a legal, valid and binding
obligation of the Property Trustee enforceable against it in accordance with its
terms, subject to applicable bankruptcy, reorganization, moratorium, insolvency
and other similar laws affecting creditors' rights generally and to general
principles of equity and the discretion of the court (regardless of whether the
enforcement of such remedies is considered in a proceeding in equity or at law);
(d) the execution, delivery and performance of this Declaration by
the Property Trustee does not conflict with, or constitute a breach of, the
charter or by-laws of the Property Trustee; and
(e) no consent, approval or authorization of, or registration with
or notice to, any federal or state banking authority is required for the
execution, delivery or performance by the Property Trustee of this Declaration.
Section 12.2 Representations and Warranties of The Delaware Trustee.
The initial Delaware Trustee represents and warrants to the Trust
and to the Sponsor at the date of this Declaration, and each Successor Delaware
Trustee represents and warrants to the Trust and the Sponsor at the time of the
Successor Delaware Trustee's acceptance of its appointment as Delaware Trustee,
that:
(a) the Delaware Trustee is, if not a natural person, a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, with trust power and authority to execute and deliver, and to
carry out and perform its obligations under the terms of, this Declaration;
(b) the Delaware Trustee satisfies the requirements set forth in
Section 5.2(a);
(c) the execution, delivery and performance by the Delaware Trustee
of this Declaration has been duly authorized, if the Delaware Trustee is not a
natural person, by all necessary corporate action on the part of the Delaware
Trustee; this Declaration has been duly executed and delivered by the Delaware
Trustee and constitutes a legal, valid and binding obligation of the Delaware
Trustee enforceable against it in accordance with its terms, subject to
applicable bankruptcy, reorganization, moratorium, insolvency and other similar
laws affecting creditors' rights generally and to
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<PAGE>
general principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in equity
or at law);
(d) the execution, delivery and performance of this Declaration by
the Delaware Trustee, if not a natural person, does not conflict with, or
constitute a breach of, the charter or by-laws of the Delaware Trustee; and
(e) no consent, approval or authorization of, or registration with
or notice to, any federal or state banking authority is required for the
execution, delivery or performance by the Delaware Trustee of this Declaration.
ARTICLE XIII
MISCELLANEOUS
Section 13.1 Notices.
All notices provided for in this Declaration shall be in writing,
duly signed by the party giving such notice, and shall be delivered, telecopied
or mailed by first class mail, as follows:
(a) if given to the Trust or the Administrative Trustees, at the
Trust's mailing address set forth below (or such other address as the Trust may
give notice of to the Property Trustee, the Delaware Trustee and the Holders):
Sovereign Capital Trust II
1130 Berkshire Boulevard
Wyomissing, PA 19610
Attention: Administrative Trustee
Facsimile No.: (610) 320-8448
(b) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as Delaware Trustee may give notice of to the
Administrative Trustees, the Property Trust and the Holders):
The Bank of New York (Delaware)
23 White Clay Center
Route 273
Newark, Delaware 19711
Attention: Corporate Trust Department
(c) if given to the Property Trustee, at the Property Trustee's
mailing address set forth below (or such other address as the Property Trustee
may give notice of to the Administrative Trustees, the Delaware Trustee and the
Holders):
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<PAGE>
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
Facsimile No.: (212) 815-5915
(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the Holder of
the Common Securities may give notice to the Property Trustee, the Delaware
Trustee and the Trust):
Sovereign Bancorp, Inc.
1130 Berkshire Boulevard
Wyomissing, PA 19610
Attention: Chief Financial Officer
Facsimile No.: (610) 320-8448
(e) if given to any Holder of Preferred Securities, to the Clearing
Agency, and if Definitive Preferred Securities have been issued, at such
Holder's address set forth on the books and records of the Trust.
All such notices shall be deemed to have been given when received in person,
telecopied with receipt confirmed, or mailed by first class mail, postage
prepaid except that if a notice or other document is refused delivery or cannot
be delivered because of a changed address of which no notice was given, such
notice or other document shall be deemed to have been delivered on the date of
such refusal or inability to deliver.
Section 13.2 Governing Law.
This Declaration shall be governed by, and construed in accordance
with, the laws of the State of Delaware.
Section 13.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust be
classified as a grantor trust for United States federal income tax purposes. The
provisions of this Declaration shall be interpreted to further this intention of
the parties.
Section 13.4 Headings.
Headings contained in this Declaration are inserted for convenience
of reference only and do not affect the interpretation of this Declaration or
any provision.
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<PAGE>
Section 13.5 Successors and Assigns.
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
Section 13.6 Partial Enforceability.
If any provision of this Declaration or the application of such
provision to any Person or circumstance shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
Section 13.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
Section 13.8 The Exchange Agent.
The Exchange Agent undertakes to perform, with respect to the
Preferred Securities, such duties and only such duties as are specifically set
forth in this Declaration, and no implied covenants or obligations shall be read
into this Declaration against the Exchange Agent. In the performance of such
duties, the Exchange Agent shall be entitled to the same rights and powers as
are granted to the Property Trustee, except that the Exchange Agent shall act as
agent solely for the Holders of the Preferred Securities who seek to exchange
such Preferred Securities pursuant to Sections 6.7 and 6.8.
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<PAGE>
IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
/s/ SOVEREIGN BANCORP, INC., as Sponsor
/s/ Mark R. McCollom, as Administrative
Trustee
/s/ Jacquelyn Blue, as Administrative
Trustee
/s/ THE BANK OF NEW YORK, as Property
Trustee
/s/ THE BANK OF NEW YORK (Delaware), as
Delaware Trustee
93
<PAGE>
EXHIBIT A
[FORM OF PREFERRED SECURITY CERTIFICATE]
This Preferred Security is a Global Preferred Security within the meaning of the
Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company, a New York corporation (the "Clearing Agency"), or a
nominee of the Clearing Agency. This Preferred Security is exchangeable for
Preferred Securities registered in the name of a person other than the Clearing
Agency or its nominee only in the limited circumstances described in the
Declaration, and no transfer of this Preferred Security (other than a transfer
of this Preferred Security as a whole by the Clearing Agency to a nominee of the
Clearing Agency or by a nominee of the Clearing Agency to the Clearing Agency or
another nominee of the Clearing Agency) may be registered except in limited
circumstances. Unless this certificate is presented by an authorized
representative of the Clearing Agency to Sovereign Capital Trust II 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 the Clearing Agency (and any payment hereon is made
to Cede & Co. or to such other entity as is requested by an authorized
representative of the Clearing Agency), and except as otherwise provided in the
Declaration, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has
an interest herein.(1)
CERTIFICATE EVIDENCING PREFERRED SECURITIES
of
SOVEREIGN CAPITAL TRUST II
7.50% Preferred Securities
(stated liquidation amount $50 per Preferred Security)
Certificate No.: ____ Number of Preferred Securities ______________
CUSIP No.:US84603L207
- ------------------
(1) Insert in Global Preferred Securities only.
A-1
<PAGE>
Sovereign Capital Trust II, a statutory business trust created
under the laws of the State of Delaware (the "Trust"), hereby certifies that
______________ (the "Holder") is the registered owner of _________ preferred
securities of the Trust representing undivided beneficial ownership interests in
the assets of the Trust designated the Preferred Securities (stated liquidation
amount $50 per Preferred Security) (the "Preferred Securities"). The Preferred
Securities are transferable on the books and records of the Trust, in person or
by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer as provided in the Declaration. The designation,
rights, privileges, restrictions, preferences and other terms and provisions of
the Preferred Securities represented hereby are issued and shall in all respects
be subject to the provisions of the Amended and Restated Declaration of Trust of
the Trust, dated as of November 15, 1999 (as the same may be amended from time
to time (the "Declaration"), among Sovereign Bancorp, Inc., as Sponsor, Mark R.
McCollom and Jacquelyn Blue, as Administrative Trustees, The Bank of New York,
as Property Trustee, and The Bank of New York (Delaware), as Delaware Trustee.
Capitalized terms used but not defined herein shall have the meaning given them
in the Declaration. The Holder is entitled to the benefits of the Guarantee
Agreement, dated as of November 15, 1999, between Sovereign Bancorp, Inc., as
Guarantor, and The Bank of New York, as Guarantee Trustee, in respect of the
Preferred Securities. The Sponsor will provide a copy of the Declaration, the
Guarantee Agreement and the Indenture (including any supplemental indenture) to
a Holder without charge upon written request to the Sponsor at its principal
place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
A-2
<PAGE>
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Preferred
Securities as evidence of undivided indirect beneficial ownership interests in
the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this
_____ day of _________________, 1999.
SOVEREIGN CAPITAL TRUST II
By:________________________________
Name:
Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Preferred Securities referred to in the within-mentioned
Declaration.
Dated: ____________, 1999
THE BANK OF NEW YORK,
as Property Trustee
By:_________________________
Authorized Signatory
A-3
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to:
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints _________________________ agent to transfer this
Preferred Security Certificate on the books and records of the Trust. The agent
may substitute another to act for him.
Date: _____________________________
Signature:_________________________
(Sign exactly as your name appears on the Preferred Security Certificate)
Signature Guarantee*:
- ---------
* Signature must be guaranteed by an "eligible guarantor institution" that is a
bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities and Exchange Act of 1934, as amended.
A-4
<PAGE>
SCHEDULE OF INCREASES OR DECREASES IN
GLOBAL PREFERRED SECURITY(2)
This Global Preferred Security shall represent 0 Preferred
Securities unless otherwise indicated below.
The following increases or decreases in this Global Preferred
Security have been made:
<TABLE>
<CAPTION>
=========================================================================================================================
Number of Preferred
Amount of decrease in Amount of increase in Securities evidence by
Number of Preferred Number of Preferred this
Securities evidenced by Securities evidenced by Global Preferred Signature of
this Global Preferred this Global Preferred Security following such authorized office of
Date Security Security decrease or increase Agent
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
========================================================================================================================
</TABLE>
- ----------
(2) Insert in Global Preferred Securities only.
A-5
<PAGE>
[BLANK PAGE]
EXHIBIT B
[FORM OF COMMON SECURITY CERTIFICATE]
THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT AS
PROVIDED IN THE DECLARATION (AS DEFINED BELOW)
CERTIFICATE EVIDENCING COMMON SECURITIES
of
SOVEREIGN CAPITAL TRUST II
7.50% Common Securities
(stated liquidation amount $50 per Common Security)
Certificate No.:____ Number of Common Securities ______________
Sovereign Capital Trust II, a statutory business trust created
under the laws of the State of Delaware (the "Trust"), hereby certifies that
Sovereign Bancorp, Inc. (the "Holder") is the registered owner of _________
common securities of the Trust representing undivided beneficial ownership
interests in the assets of the Trust designated the Common Securities (stated
liquidation amount $50 per Common Security) (the "Common Securities"). Except as
provided in the Declaration (as defined below), the Common Securities are not
transferable, and any attempted transfer thereof shall be void. The designation,
rights, privileges, restrictions, preferences and other terms and provisions of
the Common Securities represented hereby are issued and shall in all respects be
subject to the provisions of the Amended and Restated Declaration of Trust of
the Trust, dated as of November 15, 1999 (as the same may be amended from time
to time (the "Declaration"), among Sovereign Bancorp, Inc., as Sponsor, Mark R.
McCollom and Jacquelyn Blue, as Administrative Trustees, The Bank of New York,
as Property Trustee, and The Bank of New York (Delaware), as Delaware Trustee.
Capitalized terms used but not defined herein shall have the meaning given them
in the Declaration. The Holder is entitled to the benefits of the Guarantee
Agreement, dated as of November 15, 1999, between Sovereign Bancorp, Inc., as
Guarantor, and The Bank of New York, as Guarantee Trustee, in respect of the
Common Securities. The Sponsor will provide a copy of the Declaration, the
Guarantee Agreement and the Indenture (including any supplemental indenture) to
a Holder without charge upon written request to the Sponsor at its principal
place of business.
B-1
<PAGE>
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
B-2
<PAGE>
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Common
Securities as evidence of undivided indirect beneficial ownership interests in
the Debentures.
B-3
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate this
______ day of _________________, 1999.
SOVEREIGN CAPITAL TRUST II
By:_______________________________
Name:
Administrative Trustee
<PAGE>
- --------------------------------------------------------------------------------
SOVEREIGN BANCORP, INC.
To
HARRIS TRUST AND SAVINGS BANK,
as Trustee
---------------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of November 15, 1999
---------------------
7.50% Junior Subordinated Deferrable Interest Debentures due 2030
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS .................................................2
Section 1.1 Definition of Terms .........................................2
ARTICLE II TERMS AND CONDITIONS OF THE DEBENTURES ......................7
Section 2.1 Designation and Principal Amount . ..........................7
Section 2.2 Maturity . ..................................................7
Section 2.3 Global Debentures ...........................................7
Section 2.4 Interest. ...................................................8
Section 2.5 Optional Deferral of Interest. ..............................9
Section 2.6 Redemption. ................................................10
Section 2.7 Limited Right to Require Exchange of Preferred Securities
and Repurchase of Debentures.. .............................10
Section 2.8 Change of Control Right to Require Exchange of Preferred
Securities and Repurchase of Debentures. ...................11
Section 2.9 Distribution of Debentures in Exchange for Trust Securities
Upon the Occurrence of a Special Event. ....................12
Section 2.10 Events of Default. .........................................13
Section 2.11 Amendment; Supplement; Waiver ..............................14
Section 2.12 Defeasance .................................................17
Section 2.13 Paying Agent; Security Registrar ...........................19
ARTICLE III FORM OF DEBENTURE ..........................................19
Section 3.1 Form of Debenture. .........................................19
ARTICLE IV EXPENSES ...................................................20
Section 4.1 Payment of Expenses. .......................................20
ARTICLE V COVENANTS ..................................................20
Section 5.1 Covenants in the Event of an Event of Default or of
a Deferral of Interest.. ...................................20
Section 5.2 Additional Covenants Relating to the Trust. ................21
Section 5.3 Covenant to List on Exchange. ..............................22
Section 5.4 Additional Covenant Relating to the Guarantee. .............22
i
<PAGE>
ARTICLE VI SUBORDINATION ..............................................22
Section 6.1 Debentures Subordinated to Senior Indebtedness. ............22
Section 6.2 Subrogation. ...............................................24
Section 6.3 Obligation of the Company is Absolute and Unconditional. ...25
Section 6.4 Maturity of or Default on Senior Indebtedness. .............25
Section 6.5 Payments on Debentures Permitted. ..........................25
Section 6.6 Effectuation of Subordination by Trustee. ..................25
Section 6.7 Knowledge of Trustee. ......................................26
Section 6.8 Trustee's Relation to Senior Indebtedness ..................26
Section 6.9 Rights of Holders of Senior Indebtedness Not Impaired. .....27
Section 6.10 Modification of Terms of Senior Indebtedness.. .............27
ARTICLE VII RIGHTS OF HOLDERS OF PREFERRED SECURITIES ..................27
Section 7.1 Preferred Security Holders' Rights. ........................27
Section 7.2 Direct Action. .............................................27
Section 7.3 Payments Pursuant to Direct Actions. .......................28
ARTICLE VIII REMARKETING ................................................28
Section 8.1 Effectiveness of this Article. .............................28
Section 8.2 Remarketing. ...............................................28
ARTICLE IX MISCELLANEOUS ..............................................35
Section 9.1 Ratification of Indenture. .................................35
Section 9.2 Trustee Not Responsible for Recitals. ......................35
Section 9.3 Governing Law. .............................................35
Section 9.4 Severability. ..............................................35
Section 9.5 Counterparts. ..............................................35
EXHIBIT A FORM OF DEBENTURE .........................................A-1
ii
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of November 15, 1999 (this
"First Supplemental Indenture"), between SOVEREIGN BANCORP, INC., a Pennsylvania
corporation (the "Company"), having its principal place of business at 1130
Berkshire Boulevard, Wyomissing, Pennsylvania 19610 and HARRIS TRUST AND SAVINGS
BANK, an Illinois corporation, as trustee (the "Trustee"), having its corporate
trust office at 311 West Monroe Street, 12th Floor, Chicago, Illinois 60606,
under the Indenture, dated as of September 1, 1999, between the Company and the
Trustee (the "Base Indenture", together with the First Supplemental Indenture,
the "Indenture").
WHEREAS, the Company executed and delivered the Base Indenture to
the Trustee to provide for the issuance from time to time of the Company's
unsecured debentures, notes or other evidences of indebtedness (collectively the
"Debt Securities", and individually, a "Debt Security") to be issued in one or
more series as might be determined by the Company under the Base Indenture, in
an unlimited aggregate principal amount which may be authenticated and delivered
as provided in the Base Indenture;
WHEREAS, pursuant to the terms of the First Supplemental
Indenture, the Company desires to provide for the establishment of a new series
of Debt Securities to be known as the 7.50% Junior Subordinated Deferrable
Interest Debentures due 2030 (the "Debentures"), the form and substance of such
Debentures and the terms, provisions and conditions thereof to be as set forth
in the Indenture;
WHEREAS, Sovereign Capital Trust II, a Delaware statutory
business trust (the "Trust"), has offered to the public $250,000,000 (or
$287,500,000 if the Underwriters' over-allotment option with respect to the
Units is exercised in full) in aggregate stated liquidation amount of its 7.50%
Preferred Securities (the "Preferred Securities") and, in connection therewith,
the Company has agreed to purchase $7,732,000 (or $8,891,800 if the
Underwriters' over-allotment option with respect to the Units is exercised in
full) in aggregate stated liquidation amount of the Trust's common securities
(the "Common Securities" and, together with the Preferred Securities, the "Trust
Securities"), each representing an undivided beneficial ownership interest in
the assets of the Trust, and proposes to invest the proceeds from such offerings
in $257,732,000 (or $296,391,800 if the Underwriters' over-allotment option with
respect to the Units is exercised in full) aggregate principal amount of the
Debentures; and
WHEREAS, the Company has requested that the Trustee execute and
deliver this First Supplemental Indenture, all requirements necessary to make
this First Supplemental Indenture a valid instrument in accordance with its
terms (and to make the Debentures, when executed by the Company and
authenticated and delivered by the Trustee, the valid obligations of the
Company) have been performed, and the execution and delivery of this First
Supplemental Indenture has been duly authorized in all respects.
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NOW, THEREFORE, in consideration of the purchase and acceptance
of the Debentures by the Holders (as defined below) thereof, and for the purpose
of setting forth, as provided in the Indenture, the form and substance of the
Debentures and the terms, provisions and conditions thereof, the Company
covenants and agree with the Trustee as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 Definition of Terms.
Unless the context otherwise requires:
(a) a term not defined herein that is defined in the Base
Indenture has the same meaning when used in this First Supplemental Indenture;
(b) a term defined anywhere in this First Supplemental Indenture
has the same meaning throughout;
(c) the singular includes the plural and vice versa;
(d) a reference to a Section or Article is to a Section or
Article of this First Supplemental Indenture;
(e) headings are for convenience of reference only and do not
affect interpretation;
(f) the following terms have the following meanings:
"Accreted Value" has the meaning set forth in the Declaration.
"Administrative Trustees" has the meaning set forth in the
Declaration.
"Base Indenture" has the meaning set forth in the Recitals.
"Business Day" has the meaning set forth in the Declaration.
"Change of Control" has the meaning set forth in the Declaration.
"Change of Control Repurchase Date" has the meaning set forth in
the Declaration.
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"Change of Control Repurchase Price" has the meaning set forth in
the Declaration.
"Change of Control Repurchase Right" has the meaning set forth in
the Declaration.
"Common Securities" has the meaning set forth in the Recitals.
"Company" has the meaning set forth in the Recitals.
"Compounded Interest" has the meaning set forth in Section
2.5(a).
"Coupon Rate" has the meaning set forth in Section 2.4(a).
"Debenture Distribution Notice" has the meaning set forth in the
Declaration.
"Debenture Issuer" has the meaning set forth in the Declaration.
"Debentures" has the meaning set forth in the Recitals.
"Debt Securities" or "Debt Security" has the meaning set forth in
the Recitals.
"Declaration" means the Amended and Restated Declaration of Trust
of the Trust, dated as of November 15, 1999, among the Debenture Issuer, in its
capacity as Sponsor, the initial Administrative Trustees, The Bank of New York,
as Property Trustee, and The Bank of New York (Delaware), as Delaware Trustee,
as amended and restated from time to time.
"Delaware Trustee" has the meaning set forth in the Declaration.
"Direct Action" has the meaning set forth in Section 7.2.
"Distribution Date" has the meaning set forth in the Declaration.
"Distributions" have the meaning set forth in the Declaration.
"Exchange Agent" has the meaning set forth in the Declaration.
"Exercise Price" has the meaning set forth in the Warrant
Agreement.
"Extension Period" has the meaning set forth in Section 2.5(a).
"Failed Remarketing" has the meaning set forth in the
Declaration.
"Failed Remarketing Date" has the meaning set forth in the
Declaration.
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"First Supplemental Indenture" has the meaning set forth in the
Recitals.
"Global Debenture" has the meaning set forth in Section 2.3(a).
"Guarantee" has the meaning set forth in the Declaration.
"Holder" means a Person in whose name a Debenture is registered.
"Indenture" has the meaning set forth in the Recitals.
"Legal Cause Remarketing Event" has the meaning set forth in the
Declaration.
"Legal Requirements" has the meaning set forth in the
Declaration.
"Like Amount" has the meaning set forth in the Declaration.
"90 Day Period" has the meaning set forth in the Declaration.
"Non Book-Entry Preferred Securities" has the meaning set forth
in Section 2.3(b).
"No Recognition Opinion" has the meaning set forth in the
Declaration.
"Officers' Certificate" has the meaning set forth in the
Declaration.
"Opinion of Counsel" means the written opinion of counsel
rendered by an independent law firm which shall be acceptable to the Trustee.
"Payment Blockage Notice" has the meaning set forth in Section
6.1(d).
"Preferred Securities" has the meaning set forth in the Recitals.
"Preferred Security Certificate" has the meaning set forth in the
Declaration.
"Property Trustee" has the meaning set forth in the Declaration.
"Pro Rata" has the meaning set forth in the Declaration.
"Quotation Agent" means (i) Lehman Brothers Inc. and its
respective successors, provided that if Lehman Brothers Inc. ceases to be a
Primary Treasury Dealer, the Company will substitute another Primary Treasury
Dealer therefor, or (ii) any other Primary Treasury Dealer selected by the
Company.
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"Remarketing" means:
(i) as long as the Trust has not been liquidated, the
operation of the procedures for remarketing specified in Section
6.6 of the Declaration; and
(ii) if the Trust has been liquidated, the operation of the
procedures for remarketing specified in Article VIII.
"Remarketing Agent" has the meaning set forth in the Declaration.
"Remarketing Agreement" has the meaning set forth in the
Declaration.
"Remarketing Date" has the meaning set forth in the Declaration.
"Remarketing Settlement Date" has the meaning set forth in the
Declaration.
"Repurchase Price" has the meaning set forth in the Declaration.
"Repurchase Right" has the meaning set forth in the Declaration.
"Required Repurchase Date" has the meaning set forth in the
Declaration.
"Reset Rate" has the meaning set forth in the Declaration.
"Senior Indebtedness" means the principal of, premium, if any,
interest (including all interest accruing subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding) on and all fees, costs,
expenses and other amounts accrued or due on or in connection with:
(1) all indebtedness, obligations and other liabilities
(contingent or otherwise) of the Company for borrowed money
(including obligations of the Company in respect of overdrafts,
foreign exchange contracts, currency exchange agreements,
interest rate protection agreements, and any loans or advances
from banks, whether or not evidenced by notes or similar
instruments) or evidenced by bonds, debentures, notes or other
instruments for the payment of money, or incurred in connection
with the acquisition of any properties or assets (whether or not
the recourse of the lender is to the whole of the assets of the
Company or to only a portion thereof), other than any account
payable or other accrued current liability or obligation to trade
creditors incurred in the ordinary course of business in
connection with the obtaining of materials or services;
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(2) all obligations and liabilities (contingent or otherwise)
in respect of leases of the Company required or permitted, in
conformity with generally accepted accounting principles, to be
accounted for as capitalized lease obligations on the balance
sheet of the Company;
(3) all direct or indirect guaranties or similar agreements
by the Company in respect of, and obligations or liabilities
(contingent or otherwise) of the Company to purchase or otherwise
acquire or otherwise assure a creditor against loss in respect
of, indebtedness, obligations or liabilities of another Person of
the kind described in clauses (1) and (2);
(4) any and all amendments, renewals, extensions and
refundings of any indebtedness, obligation or liability of the
kind described in clauses (1) through (3),
unless in the case of any particular indebtedness the instrument creating or
evidencing the same or the assumption or guarantee thereof expressly provides
that such indebtedness shall not be senior in right of payment to the Debentures
or expressly provides that such Indebtedness is pari passu or junior to the
Debentures.
"Special Event" has the meaning set forth in the Declaration.
"Special Record Date" has the meaning set forth in the
Declaration.
"Trading Remarketing Event" has the meaning set forth in the
Declaration.
"Trust" has the meaning set forth in the Recitals.
"Trust Securities" has the meaning set forth in the Recitals.
"Trustee" has the meaning set forth in the Recitals.
"Underwriters" has the meaning set forth in the Declaration.
"Underwriting Agreement" has the meaning set forth in the
Declaration.
"Unit" has the meaning set forth in the Declaration.
"Warrant" has the meaning set forth in the Warrant Agreement.
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"Warrant Agreement" has the meaning set forth in the Declaration.
"Warrant Requirements" has the meaning set forth in the
Declaration.
ARTICLE II
TERMS AND CONDITIONS OF THE DEBENTURES
Section 2.1 Designation and Principal Amount.
There is hereby authorized a series of Debt Securities designated
the "7.50% Junior Subordinated Deferrable Interest Debentures due 2030", limited
in aggregate principal amount to $257,732,000 (or $296,391,800 if the
Underwriters' over-allotment option with respect to the Units is exercised in
full).
Section 2.2 Maturity.
The Stated Maturity shall be January 15, 2030, unless reset in
connection with a Remarketing to 60 days following the Remarketing Date.
Section 2.3 Global Debentures.
If distributed to holders of Trust Securities in connection with
the involuntary or voluntary dissolution of the Trust:
(a) The Debentures in definitive form may be presented to the
Trustee by the Property Trustee in exchange for a global security in an
aggregate principal amount equal to all Outstanding Debentures (a "Global
Debenture"). The Company upon any such presentation shall execute a Global
Debenture in such aggregate principal amount and deliver the same to the Trustee
for authentication and delivery in accordance with the Base Indenture and this
First Supplemental Indenture. The Depositary for the Debentures will be The
Depository Trust Company. The Global Debentures will be registered in the name
of the Depositary or its nominee, Cede & Co., and delivered by the Trustee to
the Depositary or a custodian appointed by the Depositary for crediting to the
accounts of its participants pursuant to the instructions of the Administrative
Trustees. Payments on the Debentures issued as a Global Debenture will be made
to the Depositary or its nominee.
(b) If any Preferred Securities are held in definitive form, the
Debentures in definitive form may be presented to the Trustee by the Property
Trustee, and any Preferred Security Certificate which represents Preferred
Securities other than Preferred Securities held by the depositary for the
Preferred Securities or its nominee ("Non Book-Entry Preferred Securities") will
be deemed to represent beneficial ownership interests in Debentures presented to
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the Trustee by the Property Trustee having an aggregate principal amount equal
to the aggregate stated liquidation amount of the Non Book-Entry Preferred
Securities until such Preferred Security Certificates are presented to the
Security Registrar for transfer or reissuance, at which time such Preferred
Security Certificates will be canceled and a Debenture registered in the name of
the holder of the Preferred Security Certificate or the transferee of the holder
of such Preferred Security Certificate, as the case may be, with an aggregate
principal amount equal to the aggregate stated liquidation amount of the
Preferred Security Certificate canceled will be executed by the Company and
delivered to the Trustee for authentication and delivery in accordance with the
Base Indenture and this First Supplemental Indenture. On issue of such
Debentures, Debentures with an equivalent aggregate principal amount that were
presented by the Property Trustee to the Trustee will be deemed to have been
canceled.
Section 2.4 Interest.
(a) Each Debenture will bear interest at a rate per annum of
7.50% (the "Coupon Rate") of the principal amount of $50 per Debenture from and
including November 15, 1999 to, but excluding, the Remarketing Date, and at the
Reset Rate of the Accreted Value of the Debenture from and including the
Remarketing Date to, but excluding, the Stated Maturity, payable quarterly in
arrears on February 15, May 15, August 15 and November 15 of each year (each, an
"Interest Payment Date"), commencing on February 15, 2000.
(b) Interest not paid on the scheduled Interest Payment Date will
accrue and compound quarterly at the Coupon Rate of the principal amount of the
Debentures or the Reset Rate of the Accreted Value of the Debentures, as the
case may be.
(c) The Regular Record Dates for the Debentures shall be:
(i) as long as the Debentures are represented by a Global
Debenture, the Business Day preceding the corresponding Interest
Payment Date; or
(ii) if the Debentures are issued in definitive form, the
fifteenth Business Day prior to the corresponding Interest
Payment Date.
(d) The amount of interest payable on the Debentures for any
period will be computed:
(i) for any full 90-day quarterly period, on the basis of a
360-day year of twelve 30-day months;
(ii) for any period shorter than a full 90-day quarterly
period, on the basis of a 30-day month; and
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(iii) for any period shorter than a 30-day month, on the
basis of the actual number of days elapsed in the 30-day month.
In the event that any date on which interest is payable on the
Debentures is not a Business Day, payment of the interest payable on such date
will be made on the next day that is a Business Day (and without any additional
interest or other payment in respect of any such delay), except that, if such
Business Day is in the next calendar year, such payment will be made on the
preceding Business Day with the same force and effect as if made on the date
such payment was originally payable.
Section 2.5 Optional Deferral of Interest.
(a) As long as no Event of Default has occurred and is
continuing, and as long as a Failed Remarketing has not occurred, the Company
has the right, at any time and from time to time, to defer payments of interest
on the Debentures by extending the interest payment period on the Debentures for
a period (each, an "Extension Period") not exceeding 20 consecutive quarters,
during which Extension Period no interest shall be due and payable on the
Debentures, provided that no Extension Period shall end on a date other than an
Interest Payment Date for the Debentures or extend beyond the Stated Maturity.
Upon the occurrence of a Failed Remarketing, any such Extension Period shall
terminate, and interest shall become payable in cash on the next Interest
Payment Date. Despite such deferral, interest shall continue to accrue with
additional interest thereon (to the extent permitted by applicable law) at the
Coupon Rate of the principal amount of the Debentures or the Reset Rate of the
Accreted Value of the Debentures, as applicable, compounded quarterly during any
such Extension Period ("Compounded Interest"). Prior to the termination of any
such Extension Period, the Company may further defer payments of interest by
further extending such Extension Period; provided that such Extension Period,
together with all such previous and further extensions of such Extension Period,
may not exceed 20 consecutive quarters or extend beyond the Stated Maturity. At
the termination of any Extension Period, the Company shall pay all interest then
accrued and unpaid, plus Compounded Interest. Upon the termination of any
Extension Period and the payment of all amounts then due, the Company may
commence a new Extension Period, subject to the above requirements.
(b) The procedure the Company must follow to exercise its option
to defer payments of interest on the Debentures for an Extension Period shall be
as follows:
(i) If the Property Trustee shall be the only holder of the
Debentures, the Company shall give notice of its election of such
extension period to the Property Trustee, the Administrative
Trustees and the Trustee at least one Business day prior to the
earlier of:
(A) the next date on which Distributions on the Preferred
Securities are payable; or
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(B) the date the Administrative Trustees are required to
give notice of the record date or the date such Distributions
are payable for the first quarter of such Extension Period to
(x) any national stock exchange or other organization on
which the Preferred Securities are listed or quoted, if any,
or (y) the holders of the Preferred Securities; or
(ii) If the Property Trustee shall not be the holder of the
Debentures, the Company shall give notice of its election of such
extension period to the Holders at least ten Business Days prior
to the earlier of:
(A) the Interest Payment Date for the first quarter of
such Extension Period; or
(B) the date on which the Company is required to give
notice of the record date or the payment date of such related
interest payment for the first quarter of such Extension
Period to (x) any national stock exchange or other
organization on which the Debentures are listed or quoted, if
any, or (y) the Holders.
(c) The Company shall pay all deferred interest and Compounded
Interest on the Debentures prior to the exercise of its right to cause a
Remarketing of the Debentures.
Section 2.6 Redemption.
(a) The Company shall have no right to redeem the Debentures.
(b) The Debentures shall not be subject to a sinking fund
provision.
Section 2.7 Limited Right to Require Exchange of Preferred Securities and
Repurchase of Debentures.
(a) Pursuant to Section 6.7 of the Declaration, in the event a
holder of a Unit exercises a Warrant on a date other than a Remarketing
Settlement Date and elects to exercise its Repurchase Right, the Company shall
be required to repurchase at the Repurchase Price on the applicable Required
Repurchase Date Debentures having an Accreted Value on the date of exchange of
Preferred Securities for Debentures equal to the Accreted Value of the exchanged
Preferred Securities on such exchange date.
(b) No less than three Business Days prior to the applicable
Required Repurchase Date:
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(i) if the Preferred Securities to be exchanged are
represented by a Global Preferred Security, the Trustee shall, in
accordance with the instruction of the Property Trustee provided
for in the Declaration, transfer to the Exchange Agent Debentures
having an Accreted Value equal to the Accreted Value of the
Preferred Securities for which, pursuant to the Declaration, the
necessary endorsement to the "Schedule of Increases or Decreases
in Global Preferred Security" attached to the Global Preferred
Security was made to reduce the amount of Preferred Securities
represented thereby; and
(ii) if the Preferred Securities to be exchanged are
represented by Definitive Preferred Securities, the Trustee
shall, in accordance with the instruction of the Property Trustee
provided for in the Declaration, deliver to such Holder
definitive Debentures having an Accreted Value equal to the
Accreted Value of the Preferred Securities of such Holder which,
pursuant to the Declaration, were presented by such Holder to the
Property Trustee for cancellation.
(c) On the applicable Required Repurchase Date, the Debenture
Issuer shall repurchase the Debentures which were the subject of an exchange
notice received by the Debenture Issuer by paying the Repurchase Price directly
to the selling Holder.
Section 2.8 Change of Control Right to Require Exchange of Preferred
Securities and Repurchase of Debentures.
(a) Pursuant to Section 6.8 of the Declaration, in the event a
Change of Control occurs and the holder of a Unit or the holder of a Trust
Security, as the case may be, elects to exercise its Change of Control
Repurchase Right, the Company shall be required to repurchase at the Change of
Control Repurchase Price on the Change of Control Repurchase Date Debentures
having an Accreted Value on the date of exchange equal to the Accreted Value of
the exchanged Preferred Securities on such exchange date.
(b) No less than three Business Days prior to the Change of
Control Repurchase Date:
(i) if the Preferred Securities to be exchanged are
represented by a Global Preferred Security, the Trustee shall, in
accordance with the instruction of the Property Trustee provided
for in the Declaration, transfer to the Exchange Agent Debentures
having an Accreted Value equal to the Accreted Value of the
Preferred Securities for which, pursuant to the Declaration, the
necessary endorsement to the "Schedule of Increases or Decreases
in Global Preferred Security" attached to the Global Preferred
Security was made to reduce the amount of Preferred Securities
represented thereby; and
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(ii) if the Preferred Securities to be exchanged are
represented by Definitive Preferred Securities, the Trustee
shall, in accordance with the instruction of the Property Trustee
provided for in the Declaration, deliver to such Holder
definitive Debentures having an Accreted Value equal to the
Accreted Value of the Preferred Securities of such Holder which,
pursuant to the Declaration, were presented by such Holder to the
Property Trustee for cancellation.
(c) On the Change of Control Repurchase Date, the Debenture
Issuer shall repurchase the Debentures which were the subject of an exchange
notice received by the Debenture Issuer by paying the Change of Control
Repurchase Price directly to the selling Holder.
Section 2.9 Distribution of Debentures in Exchange for Trust Securities Upon
the Occurrence of a Special Event.
(a) If at any time a Special Event occurs and certain conditions
set forth in Section 2.9(b) are satisfied, the Administrative Trustees may
dissolve the Trust and, after satisfaction of liabilities to creditors of the
Trust as provided by applicable law, cause the Debentures held by the Property
Trustee to be distributed to the holders of Trust Securities in liquidation of
such holders' interests in the Trust on a Pro Rata basis, upon not less than 30
nor more than 60 days notice, within the 90 Day Period, and, simultaneous with
such distribution, to cause a Like Amount of the Securities to be exchanged by
the Trust on a Pro Rata basis.
(b) The dissolution of the Trust and distribution of the
Debentures pursuant to Section 2.9(a) shall be permitted only upon satisfaction
of the following three conditions:
(i) the receipt by the Administrative Trustees of a No
Recognition Opinion;
(ii) neither the Trust nor the Company being able to
eliminate such Special Event by taking some ministerial action
(such as filing a form, making an election or pursuing some other
reasonable measure) that:
(A) has no material adverse effect on the Trust, the
Company or the holders of the Trust Securities; or
(B) does not subject any of them to more than de
minimis regulatory requirements; and
(iii) the receipt by the Administrative Trustees of the prior
written consent of the Company.
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(c) A Debenture Distribution Notice, which notice shall be
irrevocable, shall be given by the Trust by mail to each holder of Trust
Securities not fewer than 30 nor more than 60 days before the date of
distribution of the Debentures. A Debenture Distribution Notice shall be deemed
to be given on the day such notice is first mailed by first-class mail, postage
prepaid, to Holders. No defect in the Debenture Distribution Notice or in the
mailing of the Debenture Distribution Notice with respect to any holder of Trust
Securities shall affect the validity of the exchange proceedings with respect to
any other holder of Trust Securities.
(d) On and from the date fixed by the Property Trustee for any
distribution of Debentures and liquidation of the Trust:
(i) the Trust Securities no longer shall be deemed to be
outstanding;
(ii) the Depositary or its nominee (or any successor
Depositary or its nominee), as the holder of the Preferred
Securities, will receive a registered global certificate or
certificates representing the Debentures to be delivered upon
such distribution; and
(iii) any certificates representing Trust Securities not held
by the Depositary or its nominee (or any successor Depositary or
its nominee) shall be deemed to represent Debentures having an
aggregate principal amount equal to the aggregate liquidation
amount of such Trust Securities and bearing accrued and unpaid
interest in an amount equal to the accumulated and unpaid
Distributions on such Trust Securities, until such certificates
are presented for cancellation, at which time the Company shall
issue, and the Trustee shall authenticate, a certificate
representing such Debentures.
(e) In the event of a dissolution of the Trust and a distribution
of the Debentures, the Company shall have the same right, and shall be subject
to same terms and conditions, to cause a Remarketing of the Debentures as the
Company has and is subject to under Section 6.6 of the Declaration to cause a
Remarketing of the Preferred Securities.
Section 2.10 Events of Default.
In addition to the Events of Default set forth in Section 501 of
the Base Indenture, it shall be an Event of Default with respect to the
Debentures if the following occurs and shall be continuing:
(a) the Company defaults in the payment of the principal of any
of the Debentures when it becomes due and payable at Stated Maturity, upon
exercise of a Repurchase Right, upon exercise of a Change of Control Repurchase
Right or otherwise, whether or not such payment is prohibited by the
subordination provisions of Article 6 of this First Supplemental Indenture;
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(b) the Company defaults in the payment of interest on any of the
Debentures when it becomes due and payable and such default continues for a
period of 30 days, whether or not such payment is prohibited by the
subordination provisions of Article 6 of this First Supplemental Indenture;
provided, however, that a valid extension of the interest payment period does
not constitute a default in the payment of interest;
(c) the Company fails to perform or observe any other term,
covenant or agreement contained in the Debentures or the Indenture (other than a
term, covenant or agreement included in the Indenture solely for the benefit of
any series of Debt Securities other than the Debentures) and such default
continues for a period of 90 days after written notice of such failure shall
have been given to the Company by the Trustee or to the Company and the Trustee
by the Holders of at least 25% in aggregate principal amount of the Outstanding
Debentures; or
(d) the Trust shall have voluntarily or involuntarily dissolved,
wound up its business or otherwise terminated its existence, except in
connection with:
(i) the distribution of the Debentures held by the Trust to
the holders of the Trust Securities in liquidation of their
interests in the Trust;
(ii) the redemption of all of the outstanding Trust
Securities; or
(iii) a merger, consolidation, conversion, amalgamation,
replacement or other transaction involving the Trust that is
permitted under Section 3.15 of the Declaration.
Section 2.11 Amendment; Supplement; Waiver.
(a) Amendment Without Consent of Holders.
Section 901 of the Base Indenture shall be superseded by this
Section 2.11(a).
Without the consent of any Holders, the Company, when authorized
by a Board Resolution, and the Trustee, at any time and from time to time, may
amend the Indenture and the Debentures to:
(i) add to the covenants of the Company for the benefit of
the Holders;
(ii) add to the Events of Default under the Indenture;
(iii) surrender any right or power herein conferred upon the
Company;
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(iv) provide for the assumption of the Company's obligations
to the Holders in the case of a merger, consolidation,
conveyance, transfer or lease pursuant to Article 8 of the Base
Indenture;
(v) comply with the requirements of the Securities Exchange
Commission in order to maintain the qualification of the
Indenture under the Trust Indenture Act; or
(vi) cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other
provision herein or which is otherwise defective, or to make any
other provisions with respect to matters or questions arising
under the Indenture which the Company and the Trustee may deem
necessary or desirable and which shall not be inconsistent with
the provisions of the Indenture, provided, that such action
pursuant to this clause (vi) does not adversely affect the
interests of the Holders in any material respect.
(b) Amendment With Consent of Holders.
Section 902 of the Base Indenture shall be supplemented and
amended by this Section 2.11(b).
With the consent of the Holders of not less than a majority in
aggregate principal amount of the Debentures and all other series of Debt
Securities affected at the time Outstanding, voting as one class, the Company
and the Trustee, at any time and from time to time, may amend the Indenture and
the Debentures; provided, however, no such modification or amendment shall be
effective until the Holder of each Debenture affected at the time Outstanding
shall have consented to such modification or amendment, if such modification or
amendment shall:
(i) change the Stated Maturity of the principal of, or the
time of payment of any installment of interest on, any Debenture;
(ii) reduce the principal amount of, or the rate of interest
on, any Debenture;
(iii) change the place of payment where the Debentures or any
interest thereon is payable;
(iv) impair the right to institute suit for the enforcement
of any such payment on or with respect to the Debentures;
(v) reduce the above-stated percentage of principal amount of
Debentures, the Holders of which are required to modify or amend
the Indenture, to consent to any waiver thereunder or to approve
any supplemental indenture;
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(vi) change any obligation of the Company to maintain an
office or agency in the place and for the purposes required by
the Indenture; or
(vii) modify any of the above provisions;
and provided, further, that no such modification or amendment shall be effective
until the holders of not less than 66 2/3% of the aggregate stated liquidation
amount of the Trust Securities shall have consented to such modification or
amendment; and provided, further, that where the consent of the Holders of not
less than 66 2/3% of the aggregate principal amount of the Debentures is
required pursuant to Section 902 of the Base Indenture, no such modification or
amendment shall be effective until the holders of at least the same proportion
in aggregate stated liquidation amount of the Trust Securities shall have
consented to such modification or amendment.
(c) Waiver of Past Defaults.
Section 513 of the Base Indenture shall be supplemented by this
Section 2.11(c).
The Holders of a majority in aggregate principal amount of the
Debentures then Outstanding may waive any past default with respect to the
Debentures, except for (i) a default in the payment of principal of or interest
on the Debentures and (ii) a default in respect of a covenant or provision of
the Indenture which cannot be modified or amended without the consent of the
Holder of each Debenture then Outstanding, provided, however, that, that no such
waiver shall be effective until the holders of a majority in aggregate stated
liquidation amount of Trust Securities shall have consented to such waiver; and
provided, further, that where a consent would require the Holders of more than a
majority in principal amount of Debentures, no such waiver shall be effective
until the holders of at least the same proportion in aggregate stated
liquidation amount of Trust Securities shall have consented to such waiver.
(d) Meetings and Voting.
Sections 1602 and 1604 of the Base Indenture shall be superceded
by this Section 2.11(d).
(i) The Trustee may at any time call a meeting of Holders of
Debentures for any purpose specified in Section 1601 of the Base
Indenture, to be held at such time and at such place in The City
of New York. Notice of every meeting of Holders of Debentures,
setting forth the time and the place of such meeting and in
general terms the action proposed to be taken at such meeting,
shall be given not less than 21 nor more than 180 days prior to
the date fixed for the meeting.
In case at any time the Company, pursuant to a Board Resolution,
or the Holders of at least 20% in principal amount of the Outstanding Debentures
shall have requested the Trustee to call a meeting of the Holders of Debentures
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for any purpose specified in Section 1601 of the Base Indenture, by written
request setting forth in reasonable detail the action proposed to be taken at
the meeting, and the Trustee shall not have made the first publication of the
notice of such meeting within 21 days after receipt of such request or shall not
thereafter proceed to cause the meeting to be held as provided herein, then the
Company or the Holders of Debentures in the amount specified, as the case may
be, may determine the time and the place in The City of New York for such
meeting and may call such meeting for such purposes by giving notice thereof.
(ii) Except as provided below, the Persons entitled to vote a
majority in principal amount of the Outstanding Debentures shall constitute a
quorum. In the absence of a quorum within 30 minutes of the time appointed for
any such meeting, the meeting shall, if convened at the request of Holders of
Debentures, be dissolved. In any other case, the meeting may be adjourned for a
period of not less than 10 days as determined by the chairman of the meeting
prior to the adjournment of such meeting. In the absence of a quorum at any such
adjourned meeting, such adjourned meeting may be further adjourned for a period
of not less than 10 days as determined by the chairman of the meeting prior to
the adjournment of such adjourned meeting. Notice of the reconvening of any
adjourned meeting shall be given as provided herein, except that such notice
need be given only once and not less than five days prior to the date on which
the meeting is scheduled to be reconvened. Notice of the reconvening of an
adjourned meeting shall state expressly the percentage of the principal amount
of the Outstanding Debentures which shall constitute a quorum.
Subject to the foregoing, at the reconvening of any meeting
adjourned for a lack of a quorum, the Persons entitled to vote 25% in principal
amount of the Outstanding Debentures at the time shall constitute a quorum for
the taking of any action set forth in the notice of the original meeting.
At a meeting or an adjourned meeting duly reconvened and at which
a quorum is present as aforesaid, any resolution and all matters shall be
effectively passed and decided if passed or decided by the Persons entitled to
vote the lesser of:
(i) a majority in principal amount of the Debentures then
Outstanding; or
(ii) 66 2/3% in principal amount of the Debentures
represented and voting at such meeting;
provided, however, that if any consent, waiver or other action must be given,
made or taken by the Holders of a specified percentage in principal amount of
Outstanding Debentures (which is less than a majority of the principal amount to
Debentures then Outstanding, then such consent, waiver or other action may be
given, made or taken by the Persons entitled to vote the lesser of:
(i) the specified percentage in principal amount of the
Debentures then Outstanding; or
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(ii) a majority in principal amount of the Debentures
represented and voting at such meeting.
Any resolution passed or decisions taken at any meeting of
Holders of Debentures duly held in accordance with this Section shall be binding
on all the Holders of Debentures, whether or not present or represented at the
meeting.
Section 2.12 Defeasance.
Section 1701 of the Base Indenture shall be superseded by this
Section 2.12.
The Company shall be deemed to have been discharged from their
obligations with respect to all of the outstanding Debentures on the date of the
deposit referred to in subparagraph (1) hereof, and the provisions of this
Indenture, as it relates to such outstanding Debentures, shall no longer be in
effect (and the Trustee, at the expense of the Company, shall, upon the request
of the Company, execute proper instruments acknowledging the same), except as
to:
(i) the rights of Holders of Debentures to receive, solely
from the trust funds described in subparagraph (a) hereof,
payments of the principal of or interest on the outstanding
Debentures on the date such payments are due; and
(ii) the rights, powers, trust and immunities of the Trustee
hereunder and the duties of the Trustee under Section 402 of the
Base Indenture and the duty of the Trustee to authenticate
Debentures issued on registration of transfer of exchange;
provided that the following conditions shall have been satisfied:
(1) the Company shall have deposited, or caused to be
deposited, irrevocably with the Trustee, under the terms of an
escrow trust agreement satisfactory to the Trustee, as trust
funds in trust for the purpose of making the following payments,
specifically pledged as security for and dedicated solely to the
benefit of the Holders of the Debentures, cash in U.S. dollars
and/or Eligible Instruments (including U.S. Government
Obligations) which through the payment of interest and principal
in respect thereof, in accordance with their terms, will provide
(and without reinvestment and assuming no tax liability will be
imposed on such Trustee), not later than one day before the due
date of any payment of money, an amount in cash, sufficient, in
the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof
delivered to the Trustee, to pay principal of and interest on all
the Debentures on the dates such payments of principal or
interest are due and payable;
(2) no Default or Event of Default with respect to the
Debentures shall have occurred and be continuing on the date of
such deposit;
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(3) such deposit and the related intended consequences will
not result in a breach or violation of, or constitute a default
or event of default under, the Indenture or any other material
indenture, agreement or other instrument binding upon the Company
or its subsidiaries or any of their properties or assets;
(4) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel to the effect
that (A) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling (which ruling
shall be satisfactory to the Trustee), or (B) since the date of
execution of this First Supplemental Indenture, there has been a
change in the applicable federal income tax law, in either case
to the effect that, and based thereon such Opinion of Counsel
shall confirm that, the Holders will not recognize income, gain
or loss for federal income tax purposes as a result of such
deposit, defeasance and discharge and will be subject to federal
income tax on the same amount and in the same manner and at the
same times as would have been the case if such deposit,
defeasance and discharge had not occurred;
(5) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by
the Company with the intent of preferring the Holders over any
other creditors of the Company or with the intent of defeating,
hindering, delaying or defrauding any other creditors of the
Company;
(6) such deposit shall not result in the trust arising from
such deposit constituting an "investment company" (as defined in
the Investment Company Act of 1940, as amended (the "Investment
Company Act")), or such trust shall be qualified under such Act
or exempt from regulation thereunder; and
(7) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating
that all conditions precedent relating to the defeasance
contemplated by this Section 12.12 have been complied with.
Notwithstanding a defeasance of the Debentures, the Company shall
continue to have the right to cause a Remarketing of the Debentures so long as
the amounts described above are expected to be on deposit in the escrow trust
account as of such adjusted date of maturity (i.e., 60 days following the
Remarketing Date).
Section 12.13 Paying Agent; Security Registrar.
Initially, the Trustee shall act as Paying Agent and Security
Registrar. If the Debentures are issued in definitive form, the Corporate Trust
Office shall be the office or agency of the Paying Agent and the Security
Registrar for the Debentures.
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ARTICLE III
FORM OF DEBENTURE
Section 3.1 Form of Debenture.
The Debentures and the Trustee's Certificate of Authentication to
be endorsed thereon are to be substantially in the forms of Exhibit A annexed
hereto.
ARTICLE IV
EXPENSES
Section 4.1 Payment of Expenses.
In connection with the offering, sale and issuance of the
Debentures to the Trust in connection with the sale of the Trust Securities by
the Trust, the Company, as borrower, shall:
(a) pay for all costs and expenses relating to the offering,
sale and issuance of the Debentures, including compensation to
the Underwriters payable pursuant to the Underwriting Agreement
and compensation of the Trustee under the Indenture in accordance
with the provisions of Section 607 of the Indenture; and
(b) pay for all costs and expenses of the Trust, including,
but not limited to, costs and expenses relating to the
organization of the Trust, the offering, sale and issuance of the
Trust Securities (including compensation to the Underwriters
payable pursuant to the Underwriting Agreement in connection
therewith); the fees and expenses of the Property Trustee
(including, without limitation, those incurred in connection with
the enforcement by the Property Trustee of the rights of the
holders of the Preferred Securities), the Delaware Trustee and
the Administrative Trustees; the costs and expenses relating to
the operation of the Trust (including, without limitation, costs
and expenses of accountants, attorneys, statistical or
bookkeeping services, expenses for printing and engraving and
computing or accounting equipment, paying agent(s), registrar(s),
transfer agent(s), duplicating, travel and telephone and other
telecommunications expenses); and costs and expenses incurred in
connection with the acquisition, financing and disposition of
Trust assets;
(c) be primarily liable for any indemnification obligations
arising with respect to the Declaration; and
(d) pay any and all taxes (other than United States
withholding taxes), duties, assessments or governmental charges
of whatever nature imposed on the Trust by the United States or
any other taxing authority and all liabilities, costs and
expenses with respect to such taxes of the Trust.
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ARTICLE V
COVENANTS
Section 5.1 Covenants in the Event of an Event of Default or of a Deferral of
Interest.
If an Event of Default occurs and written notice of such event
has been given to the Company, or if the Company exercises its right to defer
payments of interest on the Debentures pursuant to Section 2.5, the Company may
not:
(a) declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to, any of its
capital stock; or
(b) make any payment of principal or interest on or repay,
repurchase or redeem any debt securities of the Company that rank on a parity
with or junior in interest to the Debentures or make any guarantee payments with
respect to any guarantee by the Company of the debt securities of any subsidiary
of the Company if such guarantee ranks on a parity with or junior in interest to
the Debentures;
in each case, other than:
(i) dividends or distributions in capital stock (or rights to
acquire capital stock) of the Company;
(ii) payments under the Guarantee;
(iii) any declarations of a dividend in connection with the
implementation of a shareholders' rights plan, or the issuances
of stock under any such plan in the future, or redemptions or
repurchases of any rights pursuant to a rights agreement;
(iv) purchases or acquisitions of capital stock of the
Company in connection with the satisfaction by the Company of its
obligations under any employee benefit plans; and
(v) repurchases of capital stock of the Company in connection
with the satisfaction by the Company of its obligations pursuant
to any acquisitions of businesses made by the Company (which
repurchases are made in connection with the satisfaction of
indemnification obligations of the sellers of such businesses).
Section 5.2 Additional Covenants Relating to the Trust.
For as long as the Preferred Securities remain outstanding, the
Company will:
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(a) maintain, directly or indirectly, 100% ownership of the
Common Securities; provided, however, that any permitted successor of the
Company may succeed to the Company's ownership of such Common Securities;
(b) cause the Trust to (a) remain a statutory business trust,
except in connection with the distribution of the Debentures to the Holders, the
redemption of all of the Securities, or certain mergers, consolidations,
conversions or amalgamations, each as permitted by the Declaration, (b) not to
voluntarily dissolve, wind up, liquidate or be terminated, except as permitted
by this Declaration and (c) otherwise continue to be classified as a grantor
trust for United States federal income tax purposes;
(c) use its commercially reasonable efforts to ensure that the
Trust will not be an "investment company" required to be registered under the
Investment Company Act; and
(d) not to take any action that would be reasonably likely to
cause the Trust to be classified as an association or a publicly traded
partnership taxable as a corporation for United States federal income tax
purposes.
Section 5.3 Covenant to List on Exchange.
If the Debentures are distributed to the holders of the Preferred
Securities upon dissolution of the Trust, the Company shall use its best efforts
to list such Debentures on the New York Stock Exchange or on such other exchange
as the Preferred Securities are then listed, if listed.
Section 5.4 Additional Covenant Relating to the Guarantee.
If an event of default under the Guarantee occurs and written
notice of such event has been given to the Company, the Company shall be subject
to the limitations and restrictions set forth in Section 5.1 relating to an
Event of Default.
ARTICLE VI
SUBORDINATION
Article 18 of the Base Indenture shall be superceded by this
Article VI.
Section 6.1 Debentures Subordinated to Senior Indebtedness.
The Company covenants and agrees, and each Holder, by such
Holder's acceptance thereof, likewise covenants and agrees, that the
indebtedness represented by the Debentures and the payment of the principal of
and interest on each and all of the Debentures is hereby expressly subordinated
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and junior, to the extent and in the manner set forth and as set forth in this
Section 6.1, in right of payment to the prior payment in full of all Senior
Indebtedness.
(a) In the event of any distribution of assets of the Company
upon any dissolution, winding up, liquidation or reorganization of the Company,
whether in bankruptcy, insolvency, reorganization or receivership proceedings or
upon an assignment for the benefit of creditors or any other marshalling of the
assets and liabilities of the Company or otherwise, the holders of all Senior
Indebtedness shall be entitled first to receive payment of the full amount due
thereon in respect of all such Senior Indebtedness and all other amounts due or
provision shall be made for such amount in cash, or other payments satisfactory
to the holders of Senior Indebtedness, before the Holders are entitled to
receive any payment or distribution of any character, whether in cash,
securities or other property, on account of the principal of or interest on the
indebtedness evidenced by the Debentures.
(b) In the event of any acceleration of maturity of the
Debentures because of an Event of Default, unless the full amount due in respect
of all Senior Indebtedness is paid in cash or other form of payment satisfactory
to the holders of Senior Indebtedness, no payment shall be made by the Company
with respect to the principal of or interest on the Debentures or to acquire any
of the Debentures, and the Company shall give prompt written notice of such
acceleration to such holders of Senior Indebtedness.
(c) In the event of and during the continuance of any default in
payment of the principal of or interest on any Senior Indebtedness, unless all
such payments due in respect of such Senior Indebtedness have been paid in full
in cash or other payments satisfactory to the holders of Senior Indebtedness, no
payment shall be made by the Company with respect to the principal of or
interest on the Debentures or to acquire any of the Debentures. The Company
shall give prompt written notice to the Trustee of any default under any Senior
Indebtedness or under any agreement pursuant to which Senior Indebtedness may
have been issued.
(d) During the continuance of any event of default with respect
to any Senior Indebtedness, as such event of default is defined under any such
Senior Indebtedness or in any agreement pursuant to which any Senior
Indebtedness has been issued (other than a default in payment of the principal
of or interest on any Senior Indebtedness), permitting the holder or holders of
such Senior Indebtedness to accelerate the maturity thereof, no payment shall be
made by the Company, directly or indirectly, with respect to principal of or
interest on the Debentures for 179 days following notice in writing (a "Payment
Blockage Notice") to the Company, from any holder or holders of such Senior
Indebtedness or their representative or representatives or the trustee or
trustees under any indenture or under which any instrument evidencing any such
Senior Indebtedness may have been issued, that such an event of default has
occurred and is continuing, unless such event of default has been cured or
waived or such Senior Indebtedness has been paid in full; provided, however, if
the maturity of such Senior Indebtedness is accelerated, no payment may be made
on the Debentures until such Senior Indebtedness has been paid in full in cash
or other payment satisfactory to the holders of such Senior Indebtedness or such
acceleration (or termination, in the case of a lease) has been cured or waived.
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For purposes of this Section 6.1(d), such Payment Blockage Notice
shall be deemed to include notice of all other events of default under such
indenture or instrument which are continuing at the time of the event of default
specified in such Payment Blockage Notice. The provisions of this Section 6.1(d)
shall apply only to one such Payment Blockage Notice given in any period of 365
days with respect to any issue of Senior Indebtedness, and no such continuing
event of default that existed or was continuing on the date of delivery of any
Payment Blockage Notice shall be, or shall be made, the basis for a subsequent
Payment Blockage Notice.
(e) In the event that, notwithstanding the foregoing provisions
of Sections 6.1(a), 6.1(b), 6.1(c) and 6.1(d), any payment on account of
principal of or interest on the Debentures shall be made by or on behalf of the
Company and received by the Trustee, by any Holder or by any Paying Agent (or,
if the Company is acting as its own Paying Agent, money for any such payment
shall be segregated and held in trust):
(i) after the occurrence of an event specified in Section
6.1(a) or 6.1(b), then, unless all Senior Indebtedness is paid in
full in cash, or provision shall be made therefor,
(ii) after the happening of an event of default of the type
specified in Section 6.1(c) above, then, unless the amount of
such Senior Indebtedness then due shall have been paid in full,
or provision made therefor or such event of default shall have
been cured or waived, or
(iii) after the happening of an event of default of the type
specified in Section 6.1(d) above and delivery of a Payment
Blockage Notice, then, unless such event of default shall have
been cured or waived or the 179-day period specified in Section
6.1(d) shall have expired,
such payment (subject, in each case, to the provisions of Section 6.7 hereof)
shall be held in trust for the benefit of, and shall be immediately paid over
to, the holders of Senior Indebtedness or their representative or
representatives or the trustee or trustees under any indenture under which any
instruments evidencing any of the Senior Indebtedness may have been issued, as
their interests may appear.
Section 6.2 Subrogation.
Subject to the payment in full of all Senior Indebtedness to
which the indebtedness evidenced by the Debentures is in the circumstances
subordinated as provided in Section 6.1 hereof, the Holders shall be subrogated
to the rights of the holders of such Senior Indebtedness to receive payments or
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distributions of cash, property or securities of the Company applicable to such
Senior Indebtedness until all amounts owing on the Debentures shall be paid in
full, and, as between the Company, its creditors other than holders of such
Senior Indebtedness, and the Holders, no such payment or distribution made to
the holders of Senior Indebtedness by virtue of this Article which otherwise
would have been made to the holders of the Debentures shall be deemed to be a
payment by the Company on account of such Senior Indebtedness, provided that the
provisions of this Article are and are intended solely for the purpose of
defining the relative rights of the Holders, on the one hand, and the holders of
Senior Indebtedness, on the other hand.
Section 6.3 Obligation of the Company is Absolute and Unconditional.
Nothing contained in this Article or elsewhere in this Indenture
or in the Debentures is intended to or shall impair, as between the Company, its
creditors other than the holders of Senior Indebtedness, and the Holders, the
obligation of the Company, which is absolute and unconditional, to pay to the
Holders the principal of and interest on the Debentures as and when the same
shall become due and payable in accordance with their terms, or is intended to
or shall affect the relative rights of the Holders and creditors of the Company
other than the holders of Senior Indebtedness, nor shall anything contained
herein or therein prevent the Trustee or the Holder from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture, subject
to the rights, if any, under this Article of the holders of Senior Indebtedness
in respect of cash, property or securities of the Company received upon the
exercise of any such remedy.
Section 6.4 Maturity of or Default on Senior Indebtedness.
Upon the maturity of any Senior Indebtedness by lapse of time,
acceleration or otherwise, all principal of or premium, if any, or interest on,
rent or other payment obligations in respect of all such matured Senior
Indebtedness shall first be paid in full, or such payment shall have been duly
provided for, before any payment on account of principal or interest is made
upon the Debentures.
Section 6.5 Payments on Debentures Permitted.
Except as expressly provided in this Article, nothing contained
in this Article shall affect the obligation of the Company to make, or prevent
the Company from making, payments of the principal of or interest on the
Debentures in accordance with the provisions hereof and thereof, or shall
prevent the Trustee or any Paying Agent from applying any moneys deposited with
it hereunder to the payment of the principal of or interest on the Debentures.
Section 6.6 Effectuation of Subordination by Trustee.
Each Holder, by such Holder's acceptance thereof, authorizes and
directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article and appoints the Trustee such Holder's attorney-in-fact for any and all
such purposes.
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Upon any payment or distribution of assets of the Company
referred to in this Article, the Trustee and the Holders shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction in
which any such dissolution, winding up, liquidation or reorganization proceeding
affecting the affairs of the Company is pending or upon a certificate of the
trustee in bankruptcy, receiver, assignee for the benefit of creditors,
liquidating trustee or agent or other Person making any payment or distribution,
delivered to the Trustee or to the Holders, for the purpose of ascertaining the
Persons entitled to participate in such payment or distribution, and as to other
facts pertinent to the right of such Persons under this Article, and if such
evidence is not furnished, the Trustee may defer any payment to such Persons
pending judicial determination as to the right of such Persons to receive such
payment.
Section 6.7 Knowledge of Trustee.
Notwithstanding the provision of this Article or any other
provisions of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any Senior Indebtedness, of any default in payment of principal
of or interest on, rent or other payment obligation in respect of any Senior
Indebtedness, or of any facts which would prohibit the making of any payment of
moneys to or by the Trustee, or the taking of any other action by the Trustee,
unless a Responsible Officer of the Trustee having responsibility for the
administration of the trust established by this Indenture shall have received
written notice thereof from the Company, any Holder, any Paying Agent of the
Company or the holder or representative of any class of Senior Indebtedness,
and, prior to the receipt of any such written notice, the Trustee shall be
entitled in all respects to assume that no such default or facts exist;
provided, however, that unless on the third Business Day prior to the date upon
which by the terms hereof any such moneys may become payable for any purpose the
Trustee shall have received the notice provided for in this Section 6.7, then,
anything herein contained to the contrary notwithstanding, the Trustee shall
have full power and authority to receive such moneys and apply the same to the
purpose for which they were received, and shall not be affected by any notice to
the contrary which may be received by it on or after such date.
Section 6.8 Trustee's Relation to Senior Indebtedness.
The Trustee shall be entitled to all the rights set forth in this
Article with respect to any Senior Indebtedness at the time held by it, to the
same extent as any other holder of Senior Indebtedness and nothing contained in
this Indenture shall deprive the Trustee of any of its rights as such holder.
Nothing contained in this Article shall apply to claims of or
payments to the Trustee under or pursuant to Section 607 of the Base Indenture.
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With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness and the Trustee shall
not be liable to any holder of Senior Indebtedness if it shall pay over or
deliver to Holders, the Company or any other Person moneys or assets to which
any holder of Senior Indebtedness shall be entitled by virtue of this Article or
otherwise.
Section 6.9 Rights of Holders of Senior Indebtedness Not Impaired.
No right of any present or future holder of any Senior
Indebtedness to enforce the subordination herein shall at any time or in any way
be prejudiced or impaired by any act or failure to act on the part of the
Company or by any noncompliance by the Company with the terms, provisions and
covenants of this Indenture, regardless of any knowledge thereof any such holder
may have or be otherwise charged with.
Section 6.10 Modification of Terms of Senior Indebtedness.
Any renewal or extension of the time of payment of any Senior
Indebtedness or the exercise by the holders of Senior Indebtedness of any of
their rights under any instrument creating or evidencing Senior Indebtedness,
including without limitation the waiver of default thereunder, may be made or
done all without notice to or assent from the Holders or the Trustee.
No compromise, alteration, amendment, modification, extension,
renewal or other change of, or waiver, consent or other action in respect of,
any liability or obligation under or in respect of, or of any of the terms,
covenants or conditions of any indenture or other instrument under which any
Senior Indebtedness is outstanding or of such Senior Indebtedness, whether or
not such release is in accordance with the provisions or any applicable
document, shall in any way alter or affect any of the provisions of this Article
or of the Debentures relating to the subordination thereof.
ARTICLE VII
RIGHTS OF HOLDERS OF PREFERRED SECURITIES
Section 7.1 Preferred Security Holders Rights.
Notwithstanding Section 507 of the Base Indenture, if the
Property Trustee fails to enforce its rights under the Debentures after a holder
of Preferred Securities has made a written request, the holder of Preferred
Securities may, to the fullest extent permitted by law, institute a legal
proceeding directly against the Company to enforce the Property Trustee's rights
under the Indenture without first instituting any legal proceeding against the
Property Trustee or any other person or entity.
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Section 7.2 Direct Action.
Notwithstanding any other provision of the Indenture, for as long
as any Preferred Securities remain outstanding, to the fullest extent permitted
by law, if an Event of Default has occurred and is continuing and such event is
attributable to the failure of the Company to pay principal of and interest on
the Debentures on the date such principal or interest is otherwise payable, a
holder of Preferred Securities may institute a proceeding directly against the
Company (a "Direct Action") to enforce payment to such holder of the principal
of or interest on Debentures having an aggregate principal amount equal to the
aggregate stated liquidation amount of the Preferred Securities of such holder.
Section 7.3 Payments Pursuant to Direct Actions.
The Company shall have the right to set off against its
obligations to the Trust, as Holder, any payment made to a holder of Preferred
Securities in connection with a Direct Action.
ARTICLE VIII
REMARKETING
Section 8.1 Effectiveness of this Article.
Except for Section 8.2(a) and 8.2(b), this Article VIII shall
become effective only upon a distribution of the Debentures upon dissolution of
the Trust which occurs prior to the Remarketing of the Preferred Securities
pursuant to the Declaration. Until such a distribution, or if such distribution
occurs after the Remarketing of the Preferred Securities pursuant to the
Declaration, this Article VIII (except for Section 8.2(a) and 8.2(b)) shall have
no effect.
Section 8.2 Remarketing.
(a) In connection with a Remarketing of the Preferred Securities:
(i) in connection with a Remarketing of the Preferred
Securities upon a Trading Remarketing Event or a Legal Cause
Remarketing Event, the Accreted Value of the Debentures as of the
end of the day on the day next preceding the Remarketing Date
shall become due on the date which is 60 days following the
Remarketing Date;
(ii) on the Remarketing Date, the rate of interest per annum
on the Accreted Value of the Debentures shall become the Reset
Rate on the Accreted Value of the Securities established in the
Remarketing of the Preferred Securities; and
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(iii) on the Remarketing Settlement Date, interest accrued
and unpaid on the Debentures from and including the immediately
preceding Interest Payment Date to, but excluding, the
Remarketing Settlement Date shall be payable to the Holders of
the Debentures on the Special Record Date.
(b) In connection with a Remarketing of the Preferred Securities
and at any time thereafter, a purchaser may exchange its Trust Securities for
its pro rata share of Debentures. In such event, the Administrative Trustees
shall cause Debentures held by the Property Trustee, having an aggregate
Accreted Value equal to the aggregate Accreted Value of the Trust Securities
purchased by such purchaser and with accrued and unpaid interest equal to the
accumulated and unpaid Distributions on the Trust Securities purchased by such
purchaser, to be distributed to such purchaser in exchange for such Holders' pro
rata interest in the Trust. In such event, the Debentures held by the Trust
shall decrease by the amount of Debentures delivered to the purchaser of Trust
Securities.
(c) The proceeds from the Remarketing of the Debentures shall be
paid to the selling Holders, provided that, upon a Trading Remarketing Event or
a Legal Cause Remarketing Event, the proceeds from the Remarketing of the
Debentures that are held pursuant to the Unit Agreement for which the holders of
such Units have elected to exercise their Warrants shall be paid directly to the
Warrant Agent to satisfy in full the Exercise Price of the Warrants held by such
holders.
(d) Upon the occurrence of a Trading Remarketing Event, the
Company may elect to cause a Remarketing of the Debentures and select a
Remarketing Date, provided that the following conditions precedent are
satisfied:
(i) as of the date of which the Company elects to cause a
Remarketing of the Debentures, the Closing Price of a share of
the Common Stock exceeds and has exceeded for at least 20 Trading
Days within the immediately preceding 30 consecutive Trading
Days, the following related price per share:
if after November 20, 2002: $14.9939
if after November 15, 2003: $13.1197
if after November 15, 2004: $11.2454;
(ii) as of the date of which the Company elects to cause a
Remarketing of the Debentures and on the Remarketing Date, no
Event of Default or deferral of interest payments to Holders of
the Debentures shall have occurred and be continuing;
(iii) as of the date of which the Company elects to cause a
Remarketing of the Debentures and on the Remarketing Date, a
shelf registration statement covering the issuance and sale of
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<PAGE>
Common Stock to the holders of Warrants upon exercise of such
Warrants shall be exempt from the registration requirements of
the Securities Act; and
(iv) on the Remarketing Date, the Legal Requirements shall
have been satisfied.
The settlement of the Remarketing shall occur on the Remarketing Settlement
Date, provided that the following conditions precedent are satisfied on the
Remarketing Settlement Date:
(A) the Warrant Requirements shall be satisfied; and
(B) a redemption of the Warrants of those holders who
have not elected to exercise their Warrants on such date shall
have been consummated pursuant to the Warrant Agreement.
If any of the foregoing conditions precedent are not satisfied, the Remarketing
cannot occur and the contemporaneous redemption of Warrants shall be canceled;
provided, however, that if:
(x) the Remarketing cannot occur because of a failure to
satisfy either the Warrant Requirements or the Legal Requirements as of or on
the relevant date or dates; and
(y) the Company is using its best efforts to satisfy
such Requirements;
the Company shall have the right to cause a Remarketing of the Debentures on a
subsequent date which is no later than November 15, 2029, provided that all
applicable requirements and conditions precedents (including the timely
occurrence of a Trading Remarketing Event) are satisfied.
(e) Upon the occurrence of a Legal Cause Remarketing Event, the
Company may elect to cause a Remarketing of the Debentures and select a
Remarketing Date, provided that the following conditions precedent are
satisfied:
(i) as of the date of which the Company elects to cause a
Remarketing of the Debentures and on the Remarketing Date, no
Event of Default shall have occurred and be continuing;
(ii) as of the date of which the Company elects to cause a
Remarketing of the Debentures and on the Remarketing Date, a
shelf registration statement covering the issuance and sale of
Common Stock to the holders of Warrants upon exercise of such
Warrants shall be effective under the Securities Act, or the
issuance and sale of Common Stock to the holders of Warrants upon
exercise of such Warrants shall be exempt from the registration
requirements of the Securities Act; and
30
<PAGE>
(iii) on the Remarketing Date, the Legal Requirements shall
have been satisfied.
The settlement of the Remarketing shall occur on the Remarketing Settlement
Date, provided that the following conditions precedent are satisfied on the
Remarketing Settlement Date:
(A) the Warrant Requirements shall be satisfied; and
(B) a redemption of the Warrants of those holders who
have not elected to exercise their Warrants on such date
shall have been consummated pursuant to the Warrant
Agreement.
If any of the foregoing conditions precedent are not satisfied, the Remarketing
cannot occur and the contemporaneous redemption of Warrants shall be canceled;
provided, however, that if:
(x) the Remarketing cannot occur because of a failure
to satisfy either the Warrant Requirements or the Legal Requirements as of or on
the relevant date or dates; and
(y) the Company is using its best efforts to satisfy
such Requirements;
the Company shall have the right to cause a Remarketing of the Debentures on a
subsequent date which is no later than November 15, 2029, provided that all
applicable requirements and conditions precedents (including the timely
occurrence of a Legal Cause Remarketing Event) are satisfied.
(f) On the Maturity Remarketing Date, a Remarketing of the
Debentures shall occur, provided that on such date, the Legal Requirements (to
the extent applicable) shall have been satisfied.
If, for any reason, a Remarketing of the Debentures does not
occur on the Maturity Remarketing Date, the Administrative Trustees shall give
notice thereof to all Holders of the Debentures (whether or not held pursuant to
the Unit Agreement) prior to the close of business on the following Business
Day. In such event:
(i) the rate of interest per annum on the Accreted Value of
the Debentures (which, on the Maturity Remarketing Date, shall be
equal to the principal amount of the Debentures) shall become the
Reset Rate; and
(ii) the Company no longer shall have the option to defer
payments of interest on the Debentures.
31
<PAGE>
(g) Upon the occurrence of a Trading Remarketing Event or a Legal
Cause Remarketing Event and the election by the Company to cause a Remarketing
of the Debentures, or upon the Maturity Remarketing Date, as long as the
Debentures are evidenced by Global Debenture, deposited with the Clearing
Agency, the Company shall request, not later than 15 nor more than 30 days prior
to the Remarketing Date, that the Depositary notify the Holders of the
Debentures of the Remarketing of the Debentures and of the procedures that must
be followed if such Holder of Debentures or holder of Units wishes to opt not to
participate in the Remarketing of the Debentures.
(h) Upon the occurrence of a Remarketing Event, all of the
Debentures (excluding the Debentures as to which the Holders thereof have opted
not to participate in the Remarketing (but including Debentures that are not
held pursuant to the Unit Agreement)) shall be remarketed by the Remarketing
Agent. Not later than 5:00 p.m. (New York City time) on the seventh Business Day
preceding the Remarketing Date, each Holder of Debentures may elect not to have
the Debentures held by such Holder remarketed in the Remarketing. Holders of
Debentures that are not held pursuant to the Unit Agreement shall give such
notice to the Trustee and Holders of Debentures that are held pursuant to the
Unit Agreement shall give such notice to the Unit Agent. Holders of Debentures
that are not held pursuant to the Unit Agreement and holders of Debentures that
are held pursuant to the Unit Agreement that do not give notice of their
intention not to participate in the Remarketing shall be deemed to have
consented to the disposition of their Debentures in the Remarketing. Any such
notice shall be irrevocable and may not be conditioned upon the level at which
the Reset Rate is established in the Remarketing.
Not later than 5:00 p.m. (New York City time) on the fifth
Business Day preceding the Remarketing Date, the Trustee and the Unit Agent, as
applicable, based on the notices received by it prior to such time, shall notify
the Trust, the Company and the Remarketing Agent of the aggregate principal
amount of Debentures to be tendered for purchase in the Remarketing.
(i) The right of each Holder to have Debentures tendered for
purchase shall be limited to the extent that:
(i) the Remarketing Agent conducts a Remarketing pursuant
to the terms of the Remarketing Agreement;
(ii) the Remarketing Agent is able to find a purchaser or
purchasers for the Debentures deemed tendered; and
(iii) such purchaser or purchasers deliver the purchase
price therefor to the Remarketing Agent.
(j) On the Remarketing Date, the Remarketing Agent shall use
commercially reasonable efforts to remarket the Debentures deemed tendered for
purchase at a price equal to:
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<PAGE>
(i) in connection with a Remarketing upon a Trading
Remarketing Event or a Legal Cause Remarketing Event, 100% of
the aggregate Accreted Value as of the end of the day on the
day next preceding the Remarketing Date, and
(ii) on the Maturity Remarketing Date, 100% of the
principal amount.
(k) If, as a result of the efforts described in 8.2(j), the
Remarketing Agent determines that it will be able to remarket all of the
Debentures deemed tendered for purchase at the purchase price set forth in
Section 8.2(j) prior to 4:00 p.m. (New York City time) on the Remarketing Date,
the Remarketing Agent shall determine the Reset Rate, which shall be the rate
per annum (rounded to the nearest one-thousandth (0.001) of 1% per annum) that
the Remarketing Agent determines, in its sole judgment, to be the lowest rate
per annum that will enable it to remarket all of the Debentures deemed tendered
for Remarketing.
(l) If none of the Holders of the Debentures or the holders of
the Units elects to have their Debentures remarketed in the Remarketing, the
Reset Rate shall be the rate determined by the Remarketing Agent, in its sole
discretion, as the rate that would have been established had a Remarketing been
held on the Remarketing Date, and the related modifications to the others terms
of the Debentures and the Warrants shall be effective on the Remarketing Date.
(m) If, by 4:00 p.m. (New York City time) on the Remarketing
Date, the Remarketing Agent is unable to remarket all of the Debentures deemed
tendered for purchase, a Failed Remarketing shall be deemed to have occurred and
the Remarketing Agent shall so advise by telephone the Depositary, the Property
Trustee, the Trustee, the Administrative Trustees on behalf of the Trust and the
Company. The Administrative Trustees shall then give notice of the Failed
Remarketing to the Holders of the Debentures prior to the close of business on
the Business Day following the Failed Remarketing Date and shall cause a notice
of such Failed Remarketing to be published on the second Business Day following
the Failed Remarketing Date in a daily newspaper in the English language of
general circulation in The City of New York, which is expected to be the Wall
Street Journal, and on Bloomberg News. In the event of a Failed Remarketing:
(i) the Accreted Value of the Debentures as of the end of the
day on the day next preceding the Remarketing Date shall become
due on the date which is 60 days following the Failed Remarketing
Date;
(ii) the rate of interest per annum on the Accreted Value of
the Debentures shall become the Reset Rate; and
(iii) the Company no longer shall have the option to defer
payments of interest on the Debentures.
33
<PAGE>
Notwithstanding a Failed Remarketing, subject to the satisfaction of the Legal
Requirements, the Warrants shall be redeemed at the Warrant Value and a holders
of Warrants shall have the option to exercise its Warrants in lieu of such
redemption, as provided in the Unit Agreement and the Warrant Agreement.
(n) By approximately 4:30 p.m. (New York City time) on the
Remarketing Date, provided that there has not been a Failed Remarketing, the
Remarketing Agent shall advise, by telephone:
(i) the Depositary, the Property Trustee, the Trustee, the
Trust and the Company of the Reset Rate determined in the
Remarketing and the aggregate principal amount of Debentures sold
in the Remarketing;
(ii) each purchaser (or the Depositary participant thereof)
of the Reset Rate and the aggregate principal amount of
Debentures such purchaser is to purchase; and
(iii) each purchaser to give instructions to its Depositary
participant to pay the purchase price on the Remarketing
Settlement Date in same day funds against delivery of the
Debentures purchased through the facilities of the Depositary.
(o) In accordance with the Depositary's normal procedures, on the
Remarketing Settlement Date, the transactions described above with respect to
each Debenture deemed tendered for purchase and sold in the Remarketing shall be
executed through the Depositary, and the accounts of the respective Depositary
participants shall be debited and credited and such Debentures delivered by
book-entry as necessary to effect purchases and sales of such Debentures. The
Depositary shall make payment in accordance with its normal procedures.
(p) If any Holder of the Debentures selling such Debentures (or
any holder of Units selling the Debentures that are held pursuant to the Unit
Agreement) in the Remarketing fails to deliver such Debentures, the Depositary
participant of such selling holder and of any other Person that was to have
purchased Debentures in the Remarketing may deliver to any such other Person an
aggregate principal amount of Debentures that is less than the aggregate
principal amount of Debentures that otherwise was to be purchased by such
Person. In such event, the aggregate principal amount of Debentures to be so
delivered shall be determined by such Depositary participant, and delivery of
such aggregate principal amount of Debentures shall constitute good delivery.
(q) The Remarketing Agent is not obligated to purchase any
Debentures that otherwise would remain unsold in the Remarketing. Neither the
Trust, any Trustee, the Company nor the Remarketing Agent shall be obligated in
any case to provide funds to make payment upon tender of the Debentures for
Remarketing.
34
<PAGE>
(r) Under the Remarketing Agreement, the Company shall be liable
for, and shall pay, any and all costs and expenses incurred in connection with
the Remarketing, and the Trust shall not have any liabilities for such costs and
expenses.
(s) The tender and settlement procedures set forth in this
Section 8.2, including provisions for payment by purchasers of the Debentures in
the Remarketing, shall be subject to modification to the extent required by the
Depositary or if the book-entry system is no longer available for the Debentures
at the time of the Remarketing, to facilitate the tendering and remarketing of
the Debentures in definitive form. In addition, the Remarketing Agent may modify
the settlement procedures set forth herein in order to facilitate the settlement
process.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Ratification of Indenture.
The Indenture, as supplemented by this First Supplemental
Indenture, is in all respects ratified and confirmed, and this First
Supplemental Indenture shall be deemed part of the Indenture in the manner and
to the extent herein and therein provided.
Section 9.2 Trustee Not Responsible for Recitals.
The recitals contained herein are made by the Company and not by
the Trustee, and the Trustee assumes no responsibility for the correctness
thereof. The Trustee makes no representation as to the validity or sufficiency
of this First Supplemental Indenture.
Section 9.3 Governing Law.
This First Supplemental Indenture and each Debenture shall be
governed by, and construed in accordance with, the laws of the State of New
York.
Section 9.4 Severability.
In case any one or more of the provisions contained in this First
Supplemental Indenture or in the Debentures shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this First
Supplemental Indenture or of the Debentures, but this First Supplemental
Indenture and the Debentures shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein or therein.
35
<PAGE>
Section 9.5 Counterparts.
This First Supplemental Indenture may be executed in any number
of counterparts each of which shall be an original; but such counterparts shall
together constitute but one and the same
instrument.
36
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and attested, on the date or dates indicated in the
acknowledgments and as of the day and year first above written.
/s/ SOVEREIGN BANCORP, INC.
/s/ HARRIS TRUST AND SAVINGS BANK,
as Trustee
<PAGE>
EXHIBIT A
[FORM OF DEBENTURE]
[FACE OF DEBENTURE]
This Debenture is a Global Debenture within the meaning of the Indenture
hereinafter referred to and is registered in the name of The Depository Trust
Company, a New York corporation (the "Depositary"), or a nominee of the
Depositary. This Debenture is exchangeable for Debentures registered in the name
of a person other than the Depositary or its nominee only in the limited
circumstances described in the Indenture, and no transfer of this Debenture
(other than a transfer of this Debenture as a whole by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary or
another nominee of the Depositary) may be registered except in limited
circumstances. Unless this Debenture is presented by an authorized
representative of the Depositary to Sovereign Bancorp, Inc. or its agent for
registration of transfer, exchange or payment, and any Debenture issued is
registered in the name of Cede & Co. or such other name as requested by an
authorized representative of the Depositary, and any payment hereon is made to
Cede & Co., or to such other entity as is requested by an authorized
representative of the Depositary), and, except as otherwise provided in the
Indenture,
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an
interest herein.1
SOVEREIGN BANCORP, INC.
7.50% Junior Subordinated Deferrable Interest Debenture due 2030
Certificate No.: _______ $_____________
CUSIP No.: 845905AM0
This Debenture is one of a duly authorized series of Debt
Securities of Sovereign Bancorp, Inc. (the "Debentures"), all issued under and
pursuant to an Indenture dated as of September 1, 1999, duly executed and
delivered by Sovereign Bancorp, Inc., a Pennsylvania corporation (the "Company",
which term includes any successor corporation under the Indenture hereinafter
referred to) and Harris Trust and Savings Bank, an Illinois corporation, as
Trustee (the "Trustee"), as supplemented by the First Supplemental Indenture
thereto dated as of November 15, 1999, between the Company and the Trustee (such
Indenture as so supplemented, the "Indenture"), to which Indenture and all
- ------------------
(1) Insert in Global Debentures only.
<PAGE>
indentures supplemental thereto reference is hereby made for a description of
the rights, limitations of rights, obligations, duties and immunities thereunder
of the Trustee, the Company and the Holders of the Debentures. By the terms of
the Indenture, the Debt Securities are issuable in series that may vary as to
amount, date of maturity, rate of interest and in other respects as provided in
the Indenture. This series of Debt Securities is limited in aggregate principal
amount to $257,732,000 (or $296,391,800 if the Underwriters' over-allotment
option with respect to the Units is exercised in full).
The Company, for value received, hereby promises to pay to
_____________, or its registered assigns, the principal sum of _____________
U.S. Dollars ($ ) on January 15, 2030 (or such earlier date as determined in
connection with a Remarketing).
Interest Payment Dates: February 15, May 15, August 15 and
November 15, commencing on February 15, 2000.
Reference is hereby made to the further provisions of this
Debenture set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
A-2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Debenture to be
duly executed manually or by facsimile by its duly authorized officers under its
corporate seal.
SOVEREIGN BANCORP, INC.
By:____________________
Name:
Title:
By:____________________
Name:
Title:
[SEAL]
Trustee's Certificate of Authentication
This is one of the 7.50% Subordinated Junior Deferrable
Interest Debentures due 2030 referred to in the
within-mentioned Indenture.
HARRIS TRUST AND SAVINGS BANK,
as Trustee
By:____________________________
Authorized Officer
Dated:__________________, 1999.
A-3
<PAGE>
[REVERSE OF DEBENTURE]
SOVEREIGN BANCORP, INC.
7.50% Subordinated Junior Deferrable Interest Debentures due 2030
Capitalized terms used herein but not defined shall have the
meanings assigned to them in the Indenture referred to below unless otherwise
indicated.
1. Principal and Interest.
Sovereign Bancorp, Inc., a Pennsylvania corporation (the
"Company"), promises to pay interest on the principal amount of this Debenture
at the Coupon Rate from and including November 15, 1999, to, but excluding, the
Remarketing Date, and on the Accreted Value of this Debenture on the Remarketing
Date at the Reset Rate from and including the Remarketing Date to, but
excluding, the Stated Maturity. The Company will pay interest on this Debenture
quarterly in arrears on February 15, May 15, August 15 and November 15 of each
year (each an "Interest Payment Date"), commencing on February 15, 2000.
Interest not paid on the scheduled Interest Payment Date will accrue and
compound quarterly at the Coupon Rate of the principal amount of this Debenture
or the Reset Rate of the Accreted Value of this Debenture, as the case may be.
Interest on the Debentures shall be computed (i) for any full
quarterly 90-day period on the basis of a 360-day year of twelve 30-day months,
(ii) for any period shorter than a full quarterly 90- day period, on the basis
of a 30-day month and (iii) for any period less than a 30-day month, on the
basis of the actual number of days elapsed in the 30-day month. .
2. Optional Deferral of Interest.
As long as no Event of Default has occurred and is continuing,
and as long as a Failed Remarketing has not occurred, the Company has the right,
at any time and from time to time, to defer payments of interest on the
Debentures by extending the interest payment period on the Debentures for a
period (each, an "Extension Period") not exceeding 20 consecutive quarters,
during which Extension Period no interest shall be due and payable on the
Debentures, provided that no Extension Period shall end on a date other than an
Interest Payment Date for the Debentures or extend beyond the Stated Maturity.
Upon the occurrence of a Failed Remarketing, any such Extension Period shall
terminate, and interest shall become payable in cash on the next Interest
Payment Date. Despite such deferral, interest shall continue to accrue with
additional interest thereon (to the extent permitted by applicable law) at the
Coupon Rate of the principal amount of the Debentures or Reset Rate of the
Accreted Value of the Debentures, as applicable, compounded quarterly during any
such Extension Period ("Compounded Interest"). Prior to the termination of any
such Extension Period, the Company may
A-4
<PAGE>
further defer payments of interest by further extending such Extension Period;
provided that such Extension Period, together with all such previous and further
extensions of such Extension Period, may not exceed 20 consecutive quarters or
extend beyond the Stated Maturity. At the termination of any Extension Period,
the Company shall pay all interest then accrued and unpaid, plus Compounded
Interest. Upon the termination of any Extension Period and the payment of all
amounts then due, the Company may commence a new Extension Period, subject to
the above requirements.
The Company shall pay all deferred interest and Compounded
Interest on the Debentures prior to the exercise of its right to cause a
Remarketing of the Debentures.
During an Extension Period, the Company may not:
(a) declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to, any of its
capital stock; or
(b) make any payment of principal of or interest on or repay,
repurchase or redeem any debt securities of the Company that rank on a parity
with or junior in interest to the Debentures or make any guarantee payments with
respect to any guarantee by the Company of the debt securities of any subsidiary
of the Company if such guarantee ranks on a parity with or junior in interest to
the Debentures;
in each case, other than:
(i) dividends or distributions in capital stock (or rights to
acquire capital stock) of the Company;
(ii) payments under the Guarantee;
(iii) any declarations of a dividend in connection with the
implementation of a shareholders' rights plan, or the issuances
of stock under any such plan in the future, or redemptions or
repurchases of any rights pursuant to a rights agreement;
(iv) purchases or acquisitions of capital stock of the
Company in connection with the satisfaction by the Company of its
obligations under any employee benefit plans; and
(v) repurchases of capital stock of the Company in connection
with the satisfaction by the Company of its obligations pursuant
to any acquisitions of businesses made by the Company (which
repurchases are made in connection with the satisfaction of
indemnification obligations of the sellers of such
businesses).
A-5
<PAGE>
3. Method of Payment.
Interest on any Debenture 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 that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest. As long as the Debentures are represented by a Global Debenture, the
Regular Record Dates for the Debentures shall be the Business Day preceding the
corresponding Interest Payment Date. If the Debentures are issued in definitive
form, the Regular Record Dates for the Debentures shall be the fifteenth
Business Day prior to the corresponding Interest Payment Date.
4. Paying Agent and Security Registrar.
Initially, Harris Trust and Savings Bank, the Trustee, will act
as Paying Agent and Security Registrar. The Company may change the Paying Agent
and Security Registrar without notice to any Holder.
5. Indenture.
The Company issued this Debenture under an Indenture, dated as of
September 1, 1999 (the "Base Indenture"), between the Company and Harris Trust
and Savings Bank, as trustee (the "Trustee"), as amended and supplemented by the
First Supplemental Indenture, dated as of November 15, 1999 (the "First
Supplemental Indenture", together with the Base Indenture, the "Indenture"),
between the Company and the Trustee.
6. Redemption.
The Company shall have no right to redeem the Debentures.
7. Sinking Fund.
The Debentures will not be subject to a sinking fund provision.
8. Limited Right to Require Exchange of Preferred Securities and Repurchase of
Debentures.
Pursuant to Section 6.7 of the Declaration, in the event a holder
of a Unit exercises a Warrant on a date other than a Remarketing Settlement Date
and elects to exercise its Repurchase Right, the Company shall be required on
the applicable Required Repurchase Date to repurchase at the Repurchase Price
Debentures which, pursuant to the Declaration, have been received in exchange
for Preferred Securities.
A-6
<PAGE>
9. Change of Control Right to Require Exchange of Preferred Securities and
Repurchase of Debentures.
Pursuant to Section 6.8 of the Declaration, in the event a Change
of Control occurs and the holder of a Unit or the holder of a Preferred
Security, as the case may be, elects to exercise its Change of Control
Repurchase Right, the Company shall be required on the Change of Control
Repurchase Date to repurchase at the Change of Control Repurchase Price
Debentures which, pursuant to the Declaration, have been received in exchange
for Preferred Securities.
10. Distribution of Debentures in Exchange for Trust Securities Upon the
Occurrence of a Special Event.
If at any time a Special Event occurs and certain conditions are
satisfied, the Administrative Trustees may dissolve the Trust and, after
satisfaction of liabilities to creditors of the Trust as provided by applicable
law, cause the Debentures held by the Property Trustee to be distributed to the
holders of Trust Securities in liquidation of such holders' interests in the
Trust on a Pro Rata basis, upon not less than 30 nor more than 60 days notice,
within the 90 Day Period, and, simultaneous with such distribution, to cause a
Like Amount of the Securities to be exchanged by the Trust on a Pro Rata basis.
A Debenture Distribution Notice, which notice shall be
irrevocable, shall be given by the Trust by mail to each holder of Trust
Securities as provided in the Indenture.
In the event of a dissolution of the Trust and a distribution of
the Debentures, the Company shall have the same right, and shall be subject to
same terms and conditions, to cause a Remarketing of the Debentures as the
Company has and is subject to under Section 6.6 of the Declaration to cause a
Remarketing of the Preferred Securities.
11. Remarketing.
Except as set forth herein, these remarketing provisions shall
become effective only upon a distribution of the Debentures upon dissolution of
the Trust which occurs prior to the Remarketing of the Preferred Securities
pursuant to the Declaration. Until such a distribution, or if such distribution
occurs after the Remarketing of the Preferred Securities pursuant to the
Declaration, these remarketing provisions shall have no effect.
In connection with a Remarketing of the Preferred Securities:
(i) in connection with a Remarketing of the Preferred
Securities upon a Trading Remarketing Event or a Legal Cause
Remarketing Event, the Accreted Value of the Debentures as of the
A-7
<PAGE>
end of the day on the day next preceding the Remarketing Date
shall become due on the date which is 60 days following the
Remarketing Date;
(ii) on the Remarketing Date, the rate of interest per annum
on the Accreted Value of the Debentures shall become the Reset
Rate on the Accreted Value of the Securities established in the
Remarketing of the Preferred Securities; and
(iii) on the Remarketing Settlement Date, interest accrued
and unpaid on the Debentures from and including the immediately
preceding Interest Payment Date to, but excluding, the
Remarketing Settlement Date shall be payable to the holders of
the Debentures on the Special Record Date.
In connection with a Remarketing of the Preferred Securities and
at any time thereafter, a purchaser may exchange its Trust Securities for its
pro rata share of Debentures. In such event, the Administrative Trustees shall
cause Debentures held by the Property Trustee, having an aggregate Accreted
Value equal to the aggregate Accreted Value of the Trust Securities purchased by
such purchaser and with accrued and unpaid interest equal to the accumulated and
unpaid Distributions on the Trust Securities purchased by such purchaser, to be
distributed to such purchaser in exchange for such Holders' pro rata interest in
the Trust. In such event, the Debentures held by the Trust shall decrease by the
amount of Debentures delivered to the purchaser of Trust Securities.
The proceeds from the Remarketing of the Debentures shall be paid
to the selling Holders, provided that, upon a Trading Remarketing Event or a
Legal Cause Remarketing Event, the proceeds from the Remarketing of the
Debentures that are held pursuant to the Unit Agreement for which the holders of
such Units have elected to exercise their Warrants shall be paid directly to the
Warrant Agent to satisfy in full the Exercise Price of the Warrants held by such
holders.
Upon the occurrence of a Trading Remarketing Event, the Company
may elect to cause a Remarketing of the Debentures and select a Remarketing
Date, provided that the following conditions precedent are satisfied:
(i) as of the date of which the Company elects to cause a
Remarketing of the Debentures, the Closing Price of a share of
the Common Stock exceeds and has exceeded for at least 20 Trading
Days within the immediately preceding 30 consecutive Trading
Days, the following related price per share:
if after November 20, 2002: $14.9939
if after November 15, 2003: $13.1197
if after November 15, 2004: $11.2454;
A-8
<PAGE>
(ii) as of the date of which the Company elects to cause a
Remarketing of the Debentures and on the Remarketing Date, no
Event of Default or deferral of interest payments to Holders of
the Debentures shall have occurred and be continuing;
(iii) as of the date of which the Company elects to cause a
Remarketing of the Debentures and on the Remarketing Date, a
shelf registration statement covering the issuance and sale of
Common Stock to the holders of Warrants upon exercise of such
Warrants shall be effective under the Securities Act, or the
issuance and sale of Common Stock to the holders of Warrants upon
exercise of such Warrants shall be exempt from the registration
requirements of the Securities Act; and
(iv) on the Remarketing Date, the Legal Requirements shall
have been satisfied.
The settlement of the Remarketing shall occur on the Remarketing Settlement
Date, provided that the following conditions precedent are satisfied on the
Remarketing Settlement Date:
(A) the Warrant Requirements shall be satisfied; and
(B) a redemption of the Warrants of those holders who
have not elected to exercise their Warrants on such date
shall have been consummated pursuant to the Warrant
Agreement.
If any of the foregoing conditions precedent are not satisfied, the Remarketing
cannot occur and the contemporaneous redemption of Warrants shall be canceled;
provided, however, that if:
(x) the Remarketing cannot occur because of a failure to
satisfy either the Warrant Requirements or the Legal Requirements
as of or on the relevant date or dates; and
(y) the Company is using its best efforts to satisfy such
Requirements; the Company shall have the right to cause a
Remarketing of the Debentures on a subsequent date which is no
later than November 15, 2029, provided that all applicable
requirements and conditions precedents (including the timely
occurrence of a Trading Remarketing Event) are satisfied.
Upon the occurrence of a Legal Cause Remarketing Event, the
Company may elect to cause a Remarketing of the Debentures and select a
Remarketing Date, provided that the following conditions precedent are
satisfied:
A-9
<PAGE>
(i) as of the date of which the Company elects to cause a
Remarketing of the Debentures and on the Remarketing Date, no
Event of Default shall have occurred and be continuing;
(ii) as of the date of which the Company elects to cause a
Remarketing of the Debentures and on the Remarketing Date, a
shelf registration statement covering the issuance and sale of
Common Stock to the holders of Warrants upon exercise of such
Warrants shall be effective under the Securities Act, or the
issuance and sale of Common Stock to the holders of Warrants upon
exercise of such Warrants shall be exempt from the registration
requirements of the Securities Act; and
(iii) on the Remarketing Date, the Legal Requirements shall
have been satisfied.
The settlement of the Remarketing shall occur on the Remarketing Settlement
Date, provided that the following conditions precedent are satisfied on the
Remarketing Settlement Date:
(A) the Warrant Requirements shall be satisfied; and
(B) a redemption of the Warrants of those holders who
have not elected to exercise their Warrants on such date
shall have been consummated pursuant to the Warrant
Agreement.
If any of the foregoing conditions precedent are not satisfied, the Remarketing
cannot occur and the contemporaneous redemption of Warrants shall be canceled;
provided, however, that if:
(x) the Remarketing cannot occur because of a failure to satisfy
either the Warrant Requirements or the Legal Requirements as of or on the
relevant date or dates; and
(y) the Company is using its best efforts to satisfy such
Requirements;
the Company shall have the right to cause a Remarketing of the Debentures on a
subsequent date which is no later than November 15, 2029, provided that all
applicable requirements and conditions precedents (including the timely
occurrence of a Legal Cause Remarketing Event) are satisfied.
On the Maturity Remarketing Date, a Remarketing of the Debentures
shall occur, provided that on such date, the Legal Requirements (to the extent
applicable) shall have been satisfied.
If, for any reason, a Remarketing of the Debentures does not
occur on the Maturity Remarketing Date, the Administrative Trustees shall give
notice thereof to all Holders of Debentures.
A-10
<PAGE>
(whether or not held pursuant to the Unit Agreement) prior to the close of
business on the following Business Day. In such event:
(i) the rate of interest per annum on the Accreted Value of
the Debentures (which, on the Maturity Remarketing Date, shall be
equal to the principal amount of the Debentures) shall become the
Reset Rate; and .
(ii) the Company no longer shall have the option to defer
payments of interest on the Debentures.
Upon the occurrence of a Trading Remarketing Event or a Legal
Cause Remarketing Event and the election by the Company to cause a Remarketing
of the Debentures, or upon the Maturity Remarketing Date, as long as the
Debentures are evidenced by Global Debenture, deposited with the Clearing
Agency, the Company shall request, not later than 15 nor more than 30 days prior
to the Remarketing Date, that the Depositary notify the Holders of the
Debentures of the Remarketing of the Debentures and of the procedures that must
be followed if such Holder of Debentures or holder of Units wishes to opt not to
participate in the Remarketing of the Debentures.
Upon the occurrence of a Remarketing Event, all of the Debentures
(excluding the Debentures as to which the Holders thereof have opted not to
participate in the Remarketing (but including Debentures that are not held
pursuant to the Unit Agreement)) shall be remarketed by the Remarketing Agent.
Not later than 5:00 p.m. (New York City time) on the seventh Business Day
preceding the Remarketing Date, each Holder of Debentures may elect not to have
the Debentures held by such Holder remarketed in the Remarketing. Holders of
Debentures that are not held pursuant to the Unit Agreement shall give such
notice to the Trustee and Holders of Debentures that are held pursuant to the
Unit Agreement shall give such notice to the Unit Agent. Holders of Debentures
that are not held pursuant to the Unit Agreement and holders of Debentures that
are held pursuant to the Unit Agreement that do not give notice of their
intention not to participate in the Remarketing shall be deemed to have
consented to the disposition of their Debentures in the Remarketing. Any such
notice shall be irrevocable and may not be conditioned upon the level at which
the Reset Rate is established in the Remarketing.
Not later than 5:00 p.m. (New York City time) on the fifth
Business Day preceding the Remarketing Date, the Trustee and the Unit Agent, as
applicable, based on the notices received by it prior to such time, shall notify
the Trust, the Company and the Remarketing Agent of the aggregate principal
amount of Debentures to be tendered for purchase in the Remarketing.
The right of each Holder to have Debentures tendered for purchase
shall be limited to the extent that:
A-11
<PAGE>
(i) the Remarketing Agent conducts a Remarketing pursuant to
the terms of the Remarketing Agreement;
(ii) the Remarketing Agent is able to find a purchaser or
purchasers for the Debentures deemed tendered; and
(iii) such purchaser or purchasers deliver the purchase price
therefor to the Remarketing Agent.
On the Remarketing Date, the Remarketing Agent shall use commercially reasonable
efforts to remarket the Debentures deemed tendered for purchase at a price equal
to:
(i) in connection with a Remarketing upon a Trading
Remarketing Event or a Legal Cause Remarketing Event, 100% of the
aggregate Accreted Value as of the end of the day on the day next
preceding the Remarketing Date, and
(ii) on the Maturity Remarketing Date, 100% of the principal
amount.
If, as a result of the efforts described herein, the Remarketing
Agent determines that it will be able to remarket all of the Debentures deemed
tendered for purchase at the purchase price set forth above prior to 4:00 p.m.
(New York City time) on the Remarketing Date, the Remarketing Agent shall
determine the Reset Rate, which shall be the rate per annum (rounded to the
nearest one-thousandth (0.001) of 1% per annum) that the Remarketing Agent
determines, in its sole judgment, to be the lowest rate per annum that will
enable it to remarket all of the Debentures deemed tendered for Remarketing.
If none of the Holders of the Debentures or the holders of the
Units elects to have their Debentures remarketed in the Remarketing, the Reset
Rate shall be the rate determined by the Remarketing Agent, in its sole
discretion, as the rate that would have been established had a Remarketing been
held on the Remarketing Date, and the related modifications to the others terms
of the Debentures and the Warrants shall be effective on the Remarketing Date.
If, by 4:00 p.m. (New York City time) on the Remarketing Date,
the Remarketing Agent is unable to remarket all of the Debentures deemed
tendered for purchase, a Failed Remarketing shall be deemed to have occurred and
the Remarketing Agent shall so advise by telephone the Depositary, the Property
Trustee, the Trustee, the Administrative Trustees on behalf of the Trust and the
Company. The Administrative Trustees shall then give notice of the Failed
Remarketing to the Holders of the Debentures prior to the close of business on
the Business Day following the Failed Remarketing Date and shall cause a notice
of such Failed Remarketing to be published on the second Business Day following
the Failed Remarketing Date in a daily newspaper in the English language of
A-12
<PAGE>
general circulation in The City of New York, which is expected to be the Wall
Street Journal, and on Bloomberg News. In the event of a Failed Remarketing:
(i) the Accreted Value of the Debentures as of the end of the
day on the day next preceding the Remarketing Date shall become
due on the date which is 60 days following the Failed Remarketing
Date;
(ii) the rate of interest per annum on the Accreted Value of
the Debentures shall become the Reset Rate; and .
(iii) the Company no longer shall have the option to defer
payments of interest on the Debentures.
Notwithstanding a Failed Remarketing, subject to the satisfaction of the Legal
Requirements, the Warrants shall be redeemed at the Warrant Value and a holders
of Warrants shall have the option to exercise its Warrants in lieu of such
redemption, as provided in the Unit Agreement and the Warrant Agreement.
By approximately 4:30 p.m. (New York City time) on the
Remarketing Date, provided that there has not been a Failed Remarketing, the
Remarketing Agent shall advise, by telephone:
(i) the Depositary, the Property Trustee, the Trustee, the
Trust and the Company of the Reset Rate determined in the
Remarketing and the aggregate principal amount of Debentures sold
in the Remarketing;
(ii) each purchaser (or the Depositary participant thereof)
of the Reset Rate and the aggregate principal amount of
Debentures such purchaser is to purchase; and
(iii) each purchaser to give instructions to its Depositary
participant to pay the purchase price on the Remarketing
Settlement Date in same day funds against delivery of the
Debentures purchased through the facilities of the Depositary.
In accordance with the Depositary's normal procedures, on the
Remarketing Settlement Date, the transactions described above with respect to
each Debenture deemed tendered for purchase and sold in the Remarketing shall be
executed through the Depositary, and the accounts of the respective Depositary
participants shall be debited and credited and such Debentures delivered by
book-entry as necessary to effect purchases and sales of such Debentures. The
Depositary shall make payment in accordance with its normal procedures.
If any Holder of the Debentures selling such Debentures (or any
holder of Units selling the Debentures that are held pursuant to the Unit
Agreement) in the Remarketing fails to deliver such Debentures, the Depositary
A-13
<PAGE>
participant of such selling holder and of any other Person that was to have
purchased Debentures in the Remarketing may deliver to any such other Person an
aggregate principal amount of Debentures that is less than the aggregate
principal amount of Debentures that otherwise was to be purchased by such
Person. In such event, the aggregate principal amount of Debentures to be so
delivered shall be determined by such Depositary participant, and delivery of
such aggregate principal amount of Debentures shall constitute good delivery.
The Remarketing Agent is not obligated to purchase any Debentures
that otherwise would remain unsold in the Remarketing. Neither the Trust, any
Trustee, the Company nor the Remarketing Agent shall be obligated in any case to
provide funds to make payment upon tender of the Debentures for Remarketing.
Under the Remarketing Agreement, the Company shall be liable for,
and shall pay, any and all costs and expenses incurred in connection with the
Remarketing, and the Trust shall not have any liabilities for such costs and
expenses.
The tender and settlement procedures set forth herein, including
provisions for payment by purchasers of the Debentures in the Remarketing, shall
be subject to modification to the extent required by the Depositary or if the
book-entry system is no longer available for the Debentures at the time of the
Remarketing, to facilitate the tendering and remarketing of the Debentures in
definitive form. In addition, the Remarketing Agent may modify the settlement
procedures set forth herein in order to facilitate the settlement process.
12. Subordination.
The payment of principal of and interest on this Debenture is, to
the extent and in the manner provided in the Indenture, subordinated and subject
in right of payment to the prior payment in full of all amounts then due on all
Senior Indebtedness of the Company, and this Debenture is issued subject to such
subordination provisions of the Indenture with respect thereto. Each Holder of
this Debenture, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on such Holder's behalf to
take such action as may be necessary or appropriate to effectuate the
subordination so provided and (c) appoints the Trustee such Holder's
attorney-in-fact for any and all such purposes.
13. Defaults and Remedies.
The Indenture provides that an Event of Default with respect to
the Debentures occurs when any of the following occurs:
(a) the Company defaults in the payment of the principal of any
of the Debentures when it becomes due and payable at Stated Maturity, upon
exercise of a Repurchase Right, upon exercise of a Change of Control Repurchase
A-14
<PAGE>
Right or otherwise, whether or not such payment is prohibited by the
subordination provisions of Article 6 of the First Supplemental Indenture;
(b) the Company defaults in the payment of interest on any of the
Debentures when it becomes due and payable and such default continues for a
period of 30 days, whether or not such payment is prohibited by the
subordination provisions of Article 6 of the First Supplemental Indenture;
provided, however, that a valid extension of the interest payment period does
not constitute a default in the payment of interest;
(c) the Company fails to perform or observe any other term,
covenant or agreement contained in the Debentures or the Indenture (other than a
covenant included in the Indenture solely for the benefit of any series of Debt
Securities other than the Debentures) and such default continues for a period of
90 days after written notice of such failure is given as specified in the
Indenture;
(d) there are certain events of bankruptcy, insolvency or
reorganization of the Company; or
(e) the voluntarily or involuntarily dissolution, winding-up or
termination of the Trust, except in connection with:
(i) the distribution of the Debentures held by the Trust to
the holders of the Trust Securities in liquidation of their
interests in the Trust;
(ii) the redemption of all of the outstanding Trust
Securities; or
(iii) certain mergers, consolidations, conversions,
amalgamations, replacements or other transactions involving the
Trust, each as permitted under the Declaration.
If an Event of Default shall occur and be continuing, the
principal of all of the Debentures may be declared due and payable, in the
manner, with the effect provided in the Indenture.
14. Amendment; Supplement; Waiver.
The Indenture contains provisions permitting the Company and the
Trustee, without the consent of any Holder, to execute supplemental indentures
modifying certain provisions of the Indenture, provided that no such
modification has a material adverse effect on the interests of the Holders.
A-15
<PAGE>
In addition, the Indenture contains provisions permitting the
Company and the Trustee, with the consent of the Holders of not less than a
majority in aggregate principal amount of the Debentures and all other series of
Debt Securities affected at the time Outstanding, to execute supplemental
indentures for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of the Indenture or of any supplemental
indenture or of modifying in any manner the rights of the Holders of the
Debentures; provided, however, that no such supplemental indenture may, without
the consent of the Holder of each outstanding Debenture, among other things:
(i) change the Stated Maturity of the principal of, or the
time of payment of any installment of interest on, any Debenture;
(ii) reduce the principal amount of, or the rate of interest
on any Debenture;
(iii) change the place of payment where the Debentures or any
interest thereon is payable;
(iv) impair the right to institute suit for the enforcement
of any such payment on or with respect to the Debentures;
(v) reduce the above-stated percentage of principal amount of
Debentures, the Holders of which are required to modify or amend
the Indenture, to consent to any waiver thereunder or to approve
any supplemental indenture;
(vi) change any obligation of the Company to maintain an
office or agency in the place and for the purposes required by
the Indenture; or
(vii) modify any of the above provisions;
and provided, further, that no such supplemental indenture shall be effective
until the holders of not less than 66 2/3% of the aggregate stated liquidation
amount of the Trust Securities shall have consented to such supplemental
indenture; and provided, further, that where the consent of the Holders of not
less than 66 2/3% of the aggregate principal amount of the Debentures is
required under the Indenture, no such supplemental indenture shall be effective
until the holders of at least the same proportion in aggregate stated
liquidation amount of the Trust Securities shall have consented to such
supplemental indenture.
The Indenture also contains provisions permitting the Holders of
a majority in aggregate principal amount of the Debentures at the time
Outstanding affected thereby, on behalf of all of the Holders of the Debentures,
to waive any past default in the performance of any of the covenants contained
in the Indenture, or established pursuant to the Indenture with respect to the
Debentures, and its consequences, except a default in the payment of the
principal of or interest on any of the Debentures (unless cured as provided in
A-16
<PAGE>
the Indenture) or in respect of a covenant or provision that cannot be modified
or amended without the consent of the Holders of each Debenture then
Outstanding. Any such consent or waiver by the registered Holder of this
Debenture (unless revoked as provided in the Indenture) shall be conclusive and
binding upon such Holder and upon all future Holders and owners of this
Debenture and of any Debenture issued in exchange herefor or in place hereof
(whether by registration of transfer or otherwise), irrespective of whether or
not any notation of such consent or waiver is made upon this Debenture.
15. Restrictive Covenants.
The Indenture requires the Company, for as long as the Preferred
Securities remain outstanding, to:
(a) maintain, directly or indirectly, 100% ownership of the
Common Securities; provided, however, that any permitted successor of the
Company may succeed to the Company's ownership of such Common Securities;
(b) cause the Trust to (a) remain a statutory business trust,
except in connection with the distribution of the Debentures to the Holders, the
redemption of all of the Securities, or certain mergers, consolidations,
conversions or amalgamations, each as permitted by the Declaration, (b) not to
voluntarily dissolve, wind up, liquidate or be terminated, except as permitted
by this Declaration and (c) otherwise continue to be classified as a grantor
trust for United States federal income tax purposes;
(c) use its commercially reasonable efforts to ensure that the
Trust will not be an "investment company" required to be registered under the
Investment Company Act of 1940, as amended; and
(d) not to take any action that would be reasonably likely to
cause the Trust to be classified as an association or a publicly traded
partnership taxable as a corporation for United States federal income tax
purposes.
The Indenture also imposes certain limitations on the ability of
the Company to, among other things, merge, consolidate or sell, assign, transfer
or lease all or substantially all of its properties or assets. Such covenants
and limitations are subject to a number of important qualifications and
exceptions. The Company must report periodically to the Trustee on compliance
with the covenants in the Indenture.
A-17
<PAGE>
16. Denomination; Transfer; Exchange.
The Debentures of this series are issuable only in registered
form without coupons in denominations of $50 and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations herein and
therein set forth, Debentures of this series so issued are exchangeable for a
like aggregate principal amount of Debentures of this series of a different
authorized denomination, as requested by the Holder surrendering the same.
As provided in the Indenture and subject to certain limitations
therein set forth, this Debenture is transferable by the registered Holder
hereof on the Security Register of the Company, upon surrender of this Debenture
for registration of transfer at the office or agency of the in the City and
State of New York accompanied by a written instrument or instruments of transfer
in form satisfactory to the Company or the Trustee duly executed by the
registered Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Debentures of authorized denominations and for the
same aggregate principal amount will be issued to the designated transferee or
transferees. No service charge will be made for any such transfer, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in relation thereto.
17. Persons Deemed Owners.
The registered Holder of this Debenture shall be treated as its
owner for all purposes.
18. Defeasance.
Subject to certain conditions contained in the Indenture, at any
time some or all of the Debentures and the Indenture may be terminated if the
Company deposits with the Trustee money and/or Eligible Instruments (including
U.S. Government Obligations) sufficient to pay the principal of and interest on
the Debentures to Stated Maturity, including as adjusted to 60 days following
the Remarketing Date, if applicable.
19. No Recourse Against Others.
No recourse shall be had for the payment of the principal of or
the interest on this Debenture, or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Indenture, against any
incorporator, shareholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
A-18
<PAGE>
20. Authentication.
This Debenture shall not be valid until the Trustee (or
authenticating agent) executes the certificate of authentication on the other
side of this Debenture.
21. Governing Law.
The indenture and this debenture shall be governed by, and
construed in accordance with, the laws of the State of New York.
A-19
<PAGE>
SCHEDULE OF INCREASES OR DECREASES IN
GLOBAL DEBENTURE(2)
The following increases or decreases in this Global Debenture have been made:
<TABLE>
<CAPTION>
====================================================================================================================================
Principal Amount of
Amount of decrease in Amount of increase in Debentures evidenced
Debentures evidenced Debentures evidenced by this Global
Principal Amount of Principal Amount of Debentures following Signature of
by this Global by this Global such decrease authorized officer of
Date Debenture Debenture or increase Agent
<S> <C> <C> <C> <C>
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</TABLE>
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(2) Insert in Global Denture only.
<PAGE>
EXECUTION COPY
PLEDGE AND ESCROW AGREEMENT, dated as of November 15, 1999
(this "Agreement"), between SOVEREIGN BANCORP, INC. (the "Company")
and HARRIS TRUST AND SAVINGS BANK, as escrow agent (the "Escrow
Agent") and as trustee under the Indenture described herein (the
"Trustee").
This Agreement is being entered into in connection with the
Underwriting Agreement dated November 9, 1999, between the Company and the
Underwriters named therein, and the Indenture dated as of February 1, 1994 (the
"Existing Indenture"), between the Company and the Trustee, as supplemented by
the First Supplemental Indenture dated as of November 15, 1999 (the
"Supplemental Indenture", and together with the Existing Indenture, the
"Indenture") governing the Company's 10.25% Senior Notes due 2004 (the "2004
Notes") and the Company's 10.50% Senior Notes due 2006 (the "2006 Notes", and
together with the 2004 Notes, the "Notes"). Capitalized terms which are used but
not defined herein have the respective meanings specified in the Indenture.
Concurrently with the execution and delivery of this Agreement, the
Company will cause the delivery to the Escrow Agent, for deposit into the
Account described herein, the net proceeds from the Notes offering, together
with other funds (such proceeds, and all other moneys and investments deposited
therein at any time together with all investments thereof made in accordance
with this Agreement and all earnings thereon, the "Escrowed Funds"), in an
aggregate amount sufficient to pay 102% of the aggregate principal amount of the
Notes plus accrued and unpaid interest, if any, on the Notes assuming the
Special Mandatory Redemption occurs on August 15, 2000 (such date the "Assumed
Redemption Date" and such amount the "Special Redemption Payment Amount") after
giving effect to the expected earnings on the Eligible Investments to be made in
accordance with the Company's irrevocable instructions to the Escrow Agent
(attached hereto as Exhibit C).
The Escrowed Funds will be used in accordance with the terms of this
Agreement either:
(A) to fund, in part, the acquisition contemplated by the Purchase
and Assumption Agreement dated as of September 3, 1999 (the
"Asset Purchase Agreement"), among the Company and Sovereign
Bank, as purchasers, Fleet Financial Group, Inc., Fleet
National Bank, Fleet Bank-NH and BankBoston, N.A., as sellers
(collectively, the "Sellers"), pursuant to which the Company
has agreed to acquire approximately $12 billion of deposits,
approximately $8 billion in loans and 268 bank branches (the
"Acquisition"); or
(B) to pay for the purchase of Notes purchased by the Company
pursuant to a Special Mandatory Redemption required by
paragraph 8 of the Notes and Article III of the Supplemental
Indenture.
<PAGE>
The Escrowed Funds will also be used to pay interest on the Notes, if
applicable, on May 15, 2000; and to pay to the Company, at its election,
pursuant to Section 2 (d), Escrowed Funds in excess of the Special Redemption
Payment Amount.
Accordingly, the parties hereto agree as follows:
1. Delivery, Acceptance and Investment of Escrowed Funds.
(1) The Account. (i) The Company has requested the Escrow Agent to
establish and maintain an account entitled Sovereign Bancorp, Inc. Senior Notes
Escrow Account (the "Account"). The Company hereby agrees to cause the Escrowed
Funds to be deposited into the Account. Any income received with respect to the
balance from time to time standing to the credit of the Account, including any
interest or capital gains on Eligible Investments, shall remain, or be
deposited, in the Account, subject to the provisions of Section 2(d) below. All
right, title, and interest in and to the cash amounts on deposit from time to
time in the Account together with any Eligible Investments from time to time
made pursuant to subsection (c) of this Section shall be vested in the Company,
subject to the security interest granted herein to the Trustee. The Escrow Agent
shall release the amounts at any time on deposit in the Account in accordance
with Section 2 of this Agreement.
(ii) The parties hereby agree that Escrowed Funds shall be held by the
Escrow Agent on behalf of the Company, subject to the security interest granted
herein to the Trustee, and in order to secure the performance of all the
obligations of the Company under this Agreement and under paragraph 8 of the
Notes and pursuant to Article III of the Supplemental Indenture, the Company
hereby grants to the Trustee, for the benefit of the holders, a security
interest in the Escrowed Funds. The Escrow Agent shall act as the agent of the
Trustee for the purpose of perfecting the Trustee's security interest in the
Account and the Escrowed Funds.
(2) Escrow Agent Undertakings. The Account shall be maintained at all
times by the Escrow Agent in a segregated account and, in accordance with its
obligations, the Escrow Agent shall make distributions therefrom pursuant to
this Agreement. The Escrow Agent agrees to act as securities intermediary (as
defined in the New York Uniform Commercial Code ("UCC")) with respect to the
Account. The Company and the Trustee hereby acknowledge that the Escrow Agent
shall act as securities intermediary with respect to the Account and pursuant to
this Agreement.
<PAGE>
(1) The Escrow Agent hereby agrees and confirms that (i) the
Escrow Agent has established the Account as set forth in Section 1(a),
(ii) the Account is and will be maintained as a "securities account"
(within the meaning of Section 8-501 of the UCC), (iii) the Company is
the sole "entitlement holder" (within the meaning of Section
8-102(a)(7) of the UCC) in respect of the "financial assets" (within
the meaning of Section 8-102(a)(9) of the UCC) credited to the Account,
(iv) all property delivered to the Escrow Agent pursuant to this
Agreement or any other operative document will be held by the Escrow
Agent and promptly credited to the Account by an appropriate entry in
its records in accordance with this Agreement, (v) all "financial
assets" (within the meaning of Section 8-102(a)(9) of the UCC) in
registered form or payable to or to the order of and credited to the
Account shall be registered in the name of, payable to or to the order
of, or indorsed to, the Escrow Agent or in blank, or credited to
another securities account maintained in the name of the Escrow Agent,
and in no case will any financial asset credited to the Account be
registered in the name of, payable to or to the order of, or indorsed
to, the Company except to the extent the foregoing have been
subsequently indorsed by the Company to the Escrow Agent or in blank
and (vi) the Escrow Agent shall not change the name or account number
of the Account without the prior written consent of the Trustee and
the Company.
(2) The Escrow Agent agrees that each item of property
credited to the Account shall be treated as a "financial asset" within
the meaning of Section 8-102(a)(9) of the UCC.
(3) If at any time after the Escrow Agent receives the
notice described in paragraph 2(b) hereof, the Escrow Agent shall
receive any "entitlement order" (within the meaning of Section
8-102(a)(8) of the UCC) or any other order from the Trustee acting in
accordance with this Agreement, directing the transfer or redemption of
any financial asset relating to the Account or of any cash or other
property credited to the Account, the Escrow Agent shall comply with
such entitlement order or other order without further consent by the
Company or any other Person. The parties hereto hereby agree that the
Trustee shall have "control" (within the meaning of Section 8-106(d) of
the UCC) of any "security entitlement" (within the meaning of Section
8-102(a)(17) of the UCC) with respect to the financial assets credited
to the Account.
(4) In the event that Escrow Agent has or subsequently
obtains by agreement, operation of law or otherwise a lien or security
interest in the Account or any security entitlement credited thereto,
the Escrow Agent agrees that such lien or security interest shall be
subordinate to the lien and security interest of the Trustee. The
Account and all financial assets, cash and other property standing to
the credit of the Account will not be subject to deduction, set-off,
banker's lien or any other right in favor of any Person other than the
Company and the Trustee and the Escrow Agent for the benefit of the
Trustee (except with respect to the face amount of any checks which
have been credited to the Account but are subsequently returned unpaid
because of uncollected or insufficient funds).
3
<PAGE>
(5) The Escrow Agent has not entered into any agreement with
respect to the Account or any financial assets, cash or other property
credited to the Account other than this Agreement. The Escrow Agent has
not entered into any agreement with any other Person purporting to
limit or condition the obligation of the Escrow Agent to comply with
entitlement orders originated by the Trustee in accordance with Section
1(b)(iii) hereof. In the event of any conflict between this Agreement
or any other document or agreement now existing or hereafter entered
into in connection with the Indenture, the terms of this Agreement
shall prevail.
(6) Except for the claims and interest of the Company and the
Trustee in the Account, the Escrow Agent does not know of any claim to,
or interest in, the Account or in any financial asset, cash or other
property credited thereto. If any person asserts any lien, encumbrance
or adverse claim (including any writ, garnishment, judgment, warrant of
attachment, execution or similar process) against the Account or in any
financial asset credited thereto, the Escrow Agent will promptly notify
the Trustee and the Company thereof.
(7) The rights and powers granted by the Trustee to the
Escrow Agent have been granted in order to perfect the Trustee's lien
and security interests in the Escrowed Funds and the Account, are
powers coupled with an interest and will neither be affected by the
bankruptcy of any person nor the lapse of time.
(8) This Agreement and the Account (including all security
entitlements relating thereto) shall be governed by the laws of the
State of New York. Regardless of any provision in any other agreement,
for purposes of the UCC, the "securities intermediary's jurisdiction"
of the Escrow Agent with respect to the Account is the State of New
York.
(3) Eligible Investments. Amounts on deposit in the Account shall be
invested and re-invested within five Business Days of the last Business Day of
each calendar month through July 31, 2000 in Eligible Investments (as
hereinafter defined), subject to receipt of the certificate provided for in
Section 2(f), at the direction of the Company, which Eligible Investments shall
be held in the name and be under the control of the Escrow Agent; provided,
however, that, if a Default has occurred and is continuing, the Company shall no
longer have the right to determine such investment and re-investment, and such
determination shall be made by the Trustee. Notwithstanding the foregoing, the
Company shall deliver on the date hereof irrevocable instructions to the Escrow
Agent (attached hereto as Exhibit C) to purchase Eligible Investments within two
Business Days following the date hereof such that the Escrowed Funds shall be
sufficient to pay interest on the Notes, when due, and the Special Redemption
4
<PAGE>
Payment Amount on the Assumed Redemption Date. If the Escrow Agent is not
instructed or is unable to purchase the Eligible Investments as directed in the
irrevocable instructions attached hereto, the Escrow Agent shall temporarily
invest the Escrowed Funds in Eligible Investments as directed by the Company
until the earliest such time the Escrow Agent can carry out the instructions
attached hereto.
Escrowed Funds may only be invested in Eligible Investments which shall
mature at such time and in such amounts as is necessary to pay interest on the
Notes, when due, and in any event shall mature on or prior to the Assumed
Redemption Date.
For purposes of this Agreement, the following terms shall have the
meanings set forth below:
"Eligible Investments" means any of the following: (i)
investments in U.S. Government Obligations maturing within 365 days of
the date of acquisition thereof; (ii) investments in time deposit
accounts, certificates of deposit and money market deposits maturing
within 90 days of the date of acquisition thereof issued by a bank or
trust company organized under the laws of the United States of America
or any state thereof having capital, surplus and undivided profits
aggregating in excess of $500 million and whose long-term debt is rated
"A-3" or "A-" or higher according to Moody's or S&P (or such similar
equivalent rating by at least one "nationally recognized statistical
rating organization" (as defined in Rule 436 under the Securities
Act)); (iii) repurchase obligations with a term of not more than 60
days for (x) underlying securities of the types described in clause (i)
above, or (y) underlying agency, asset backed, mortgage backed or
corporate securities maturing within 365 days of the date of deposit
into escrow and rated AAA or the equivalent thereof by at least one of
S&P or Moody's, in either case, entered into with (a) a bank meeting
the qualifications described in clause (ii) above, or (b) any primary
government securities dealer reporting to the Market Reports Division
of the Federal Reserve Bank of New York; (iv) investments in commercial
paper, maturing not more than 90 days after the date of acquisition
thereof, issued by a corporation (other than an Affiliate of the
Company) organized and in existence under the laws of the United States
of America with a rating at the time as of which any Investment
therein is made of "P-1" (or higher) according to Moody's and "A-1" (or
higher) according to S&P; and (v) direct obligations (or certificates
representing an ownership interest in such obligations) of any state of
the United States of America (including any agency or instrumentality
thereof) for the payment of which the full faith and credit of such
state is pledged and which are not callable or redeemable at the
Company's option, provided that: (a) the long-term debt of such state
is rated "A-3" or "A-" or higher according to Moody's or S&P (or such
similar equivalent rating by at least one "nationally recognized
statistical rating organization" (as defined in Rule 436 under the
Securities Act)), and (b) such obligations mature within 180 days of
the date of acquisition thereof.
5
<PAGE>
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of
the United States of America (including any agency or instrumentality
thereof) for the payment of which the full faith and credit of the
United States of America is pledged and which are not callable or
redeemable at the Company's option.
(4) The obligation and liability of the Escrow Agent to make the
payments and transfers required by this Agreement shall be limited to the
Escrowed Funds and any other moneys on deposit with it pursuant to this
Agreement, including any interest accruing thereon. The Escrow Agent shall not
be liable for any loss resulting from any investment made pursuant to this
Agreement, including but not limited to losses resulting from the sale or
depreciation in the market value of such investments, except to the extent such
loss results from the gross negligence or willful misconduct of the Escrow
Agent. The Escrow Agent may use its own bond department to execute, purchase and
consummate sales of Eligible Investments.
2. Release of Escrowed Funds; Termination of this Agreement. Each of
the parties hereto agree that the Escrowed Funds shall be released by the Escrow
Agent from the Account only in accordance with this Section 2 and under no other
circumstance.
(1) If the Escrow Agent receives (i) a written notice from the Company
(which notice shall be concurrently delivered to the Trustee as required by
paragraph 8 of the Notes) that the closing of the Acquisition is scheduled to
occur on or prior to July 31, 2000, and (ii) an officers' certificate
substantially in the form of Exhibit A hereto, signed by any of the Chief
Executive Officer or President and the Chief Financial Officer or Principal
Accounting Officer of the Company certifying to the Escrow Agent as to the
matters specified in Exhibit A hereto, the Escrow Agent shall promptly sell,
transfer, liquidate or otherwise dispose of, or deal with, all cash, proceeds
and investments in the Account, all in accordance with the written instructions
of the Company set forth in such officer's certificate, and the Escrow Agent
shall transfer or release all cash proceeds and investments held in the Account
to the Company, or, upon the direction of the Company, as the Company shall
specify in such officers' certificate. Nothing shall be construed to preclude
the Company from presenting the certifications required by clause (1) or (2) of
the officers' certificate as a result of the Company (i) having engaged in a
series of closings with respect to the Acquisition with the final closing of the
Acquisition occurring on or prior to the date of release of the Escrowed Funds
and/or (ii) being then engaged in or having been engaged in a series of systems
conversions, provided that such certificate states that such multiple closings
or multiple systems conversions do not have a material adverse effect on
Noteholders.
(2) If at any time the Escrow Agent receives a written notice from the
Company specifying (i) that the Company is required to make a Special Mandatory
Redemption pursuant to paragraph 8 of the Notes, (ii) the date fixed for the
Special Mandatory Redemption pursuant to paragraph 8 of the Notes, and (iii) the
6
<PAGE>
amount to be paid in connection with the Special Mandatory Redemption, the
Escrow Agent shall receive cash from the Company in an amount sufficient to pay
the Special Redemption Payment Amount or sell, transfer, liquidate or otherwise
dispose of all investments in the Account, in either event, no later than the
third Business Day prior to the Special Mandatory Redemption, all in accordance
with the written instructions of the Company. On or before the date of the
Special Mandatory Redemption, the Escrow Agent shall release all cash, proceeds
and investments held in the Account as follows: first, Escrowed Funds shall be
released to the Paying Agent on the Business Day prior to the date fixed for the
Special Mandatory Redemption specified in the Company's notice to the Escrow
Agent in an amount equal to the amount to be paid in connection with such
Special Mandatory Redemption, and second, all remaining funds, cash, proceeds
and investments shall be paid to the Company.
The Company shall also provide a certificate of a nationally recognized
firm of independent accountants selected by the Company or such other firm of
independent accountants acceptable to the Underwriters (as defined herein)
within five Business Days of delivery by the Company of the notice regarding a
Special Mandatory Redemption as required by Article III of the Supplemental
Indenture setting forth (i) a calculation of the amount of cash that will be
available to the Escrow Agent following the liquidation of investments set forth
in the preceding paragraph, based on the Escrowed Funds then held with the
Escrow Agent, without any reinvestment thereof or sale prior to maturity, on the
third Business Day prior to the date fixed for such Special Mandatory Redemption
and (ii) a calculation of the amount payable on the date fixed for such Special
Mandatory Redemption. If such certificate reveals that the amount of cash so
available, together with the Fair Market Value (as calculated by such
independent accountants based on quotations received from two or more dealers in
such Eligible Investments who are unaffiliated with the Company) of any Eligible
Investments in the Escrowed Funds that will not mature on or prior to the
Business Day prior to the date fixed for such Special Mandatory Redemption, will
be insufficient to pay the amount of the Special Mandatory Redemption on the
date fixed for such Special Mandatory Redemption, then the Company shall within
one Business Day after receipt by the Escrow Agent of such notice, deposit with
the Escrow Agent an amount of cash that, without reinvestment, equals the amount
of such deficiency.
(3) If the events specified in paragraph (a) or (b) of this Section
have not occurred prior to May 13, 2000, then the Escrow Agent shall to the
extent necessary liquidate investments in the Account and release the proceeds
thereof and cash therein (such liquidation and release of cash to be in a manner
to be directed by the Company in writing unless a Default exists, in which case
to be in a manner to be directed by the Trustee in writing) to the Trustee on
May 14, 2000 to make the interest payment to Noteholders due on May 15, 2000, in
an amount equal to $10,250,000 for the 2004 Notes and in an amount equal to
$26,250,000 for the 2006 Notes. Notwithstanding the foregoing, nothing in this
Section 2 shall preclude the Company from depositing with the Escrow Agent, for
deposit in the Account, cash or investments sufficient to pay the interest on
the notes on May 15, 2000, in which event the Escrow Agent shall not liquidate
any investments or otherwise take any action with respect to the Escrowed Funds
not directed by the Company pursuant to this Agreement.
7
<PAGE>
(4) Unless a Default exists, in the event that on the last Business Day
of any month prior to August 1, 2000, (each such day, a "Release Date"), the
Escrowed Funds exceeds the Special Redemption Payment Amount, upon the
presentation by the Company within five Business Days of such last Business Day
of the month, at its election, of a certificate provided for in Section 2(f) and
an officer's certificate substantially in the form of Exhibit B hereto, signed
by any of the Chief Executive Officer, President, Chief Financial Officer and
Principal Accounting Officer certifying to the Escrow Agent as to matters
specified in Exhibit B hereto, then the Escrow Agent shall release amounts to
the Company in a manner to be directed by the Company, to the extent of such
excess, provided that for purposes of making a calculation of any such excess,
Eligible Investments shall have the Fair Market Value (as calculated by such
independent accountants based on quotations received from two or more dealers in
such Eligible Investments who are unaffiliated with the Company) of such
Investments on the close of business two Business Days prior to such Release
Date.
(5) Upon the occurrence of the events specified in paragraph (a) or (b)
of this Section and the release of all Escrowed Funds in the manner specified in
such paragraph, this Agreement shall automatically terminate.
(6) The Company shall deliver to the Escrow Agent, in conjunction with
but prior to each deposit under Section 1(a) or 2(b), or an investment in any
Eligible Investment pursuant to Section 1(c) or a release of any funds pursuant
to Section 2(d), a written statement, certified as to its mathematical accuracy
by a nationally recognized firm of independent accountants selected by the
Company or such other firm of independent accountants acceptable to the
Underwriters, setting forth a calculation showing that the amount of cash that
would be available to the Escrow Agent based on the Escrowed Funds that would be
held by the Escrow Agent (after giving effect to any such deposit, investment or
release, if applicable) taking into account scheduled maturities of and
scheduled payments of interest on the Eligible Investments included in the
Escrowed Funds and any purchase of Eligible Investments to be made with the
proceeds of such deposit or any other Escrowed Funds held in the Account, would
be a least equal to the Special Mandatory Redemption Amount, at the time
contemplated by the definition thereof (provided that, if a date for the Special
Mandatory Redemption has been established at the time such statement is
delivered, the amount required to pay the Special Mandatory Redemption shall be
based on the date fixed for such Special Mandatory Redemption instead of the
Assumed Redemption Date). At any time such a certificate is delivered, in the
event such certificate indicates any deficiency of Escrowed Funds, then the
Company shall within one Business Day after receipt by the Escrow Agent of such
certificate, deposit with the Escrow Agent an amount of cash that equals the
amount of such deficiency. The Escrow Agent shall be under no obligation to
independently confirm the calculations contained in, or the conclusions reached
by, such statement.
8
<PAGE>
3. Reliance on Information Supplied.
Upon execution of this Agreement, the Company shall provide to the
Escrow Agent a Certificate of Incumbency signed by the Secretary of the Company,
indicating opposite the signature of each the identity of the Chief Executive
Officer, President, the Chief Financial Officer and Principal Accounting Officer
of the Company, certifying that such persons have been duly elected and have
qualified to serve and indicating that such persons are the officers authorized
to present a certificate as described in Section 2 of this Agreement. The
Company shall update its Incumbency Certificate, as necessary, prior to
presenting any certificate pursuant to Section 2.
The Escrow Agent may rely on the contents of any certificate furnished
pursuant to Section 2 hereof without making any independent verification;
provided, however, that in the case of any certificates furnished to the Escrow
Agent, the Escrow Agent shall examine such certificates to determine whether or
not they conform to the requirements of this Agreement.
4. Indemnity.
The Company agrees to indemnify the Escrow Agent, and its officers,
directors, employees and agents for, and to hold it and each of them harmless
against, any loss, liability or expense arising out of or in connection with
this Agreement and carrying out its duties hereunder, including the cost and
expenses of defending itself against any claim of liability; provided, however,
that the Company will not be liable for indemnification or otherwise for any
loss, liability or expense to the extent arising out of the gross negligence,
willful misconduct or bad faith of the Escrow Agent. The costs and expenses of
enforcing this right of indemnification shall also be paid by the Company. The
agreement of the Company set forth in this Section shall survive the termination
of this Agreement and the payment of all amounts hereunder.
5. Modifications, Waivers and Amendments.
The Escrow Agent shall not be bound by any modification, amendment,
termination (except as provided in Section 2 hereof), cancelation, rescission or
supersession of this Agreement unless the same shall be in writing and signed by
the parties hereto and Salomon Smith Barney Inc. and Lehman Brothers Inc. (the
"Underwriters").
9
<PAGE>
6. Concerning the Escrow Agent.
(1) The Escrow Agent shall exercise the same degree of care toward the
Escrowed Funds as it exercises toward its own similar property.
(2) The Escrow Agent may act upon any instrument or other writing
believed by it in good faith to be genuine and to have been signed or presented
by the proper person, and shall not be liable to any party hereto in connection
with the performance of its duties hereunder, except for its own gross
negligence or willful misconduct. The duties of the Escrow Agent shall be
determined only with reference to this Agreement and applicable laws, and the
Escrow Agent is not charged with any knowledge of or any duties or
responsibilities in connection with any other document or agreement. If in doubt
as to its duties and responsibilities hereunder, the Escrow Agent may consult
with counsel of its choice and shall be protected in any action taken or omitted
in good faith in connection with the advice or opinion of such counsel.
(3) The Escrow Agent may execute any of its powers or responsibilities
hereunder and exercise any rights hereunder either directly or by or through its
agents or attorneys.
(4) The Escrow Agent shall have the right at any time to resign
hereunder by giving written notice of its resignation to the Company at the
address set forth herein or at such other address as the Company shall provide,
at least 30 days prior to the date specified for such resignation to take
effect. Upon the effective date of such resignation, all cash and other payments
and all other property then held by the Escrow Agent hereunder shall be
delivered by it to a successor escrow agent appointed by the Company with the
consent of the Underwriters, which consent shall not be unreasonably withheld or
delayed, provided that such successor escrow agent shall not be an Affiliate of
the Company. If no successor escrow agent is appointed, the Escrow Agent may
apply at the expense of the Company to a court of competent jurisdiction for
such appointment. The successor Escrow Agent is not required to be the same
entity as the Trustee under the Indenture.
(5) In the event that the Escrow Agent should at any time be confronted
with inconsistent claims or demands to the Escrowed Funds, the Escrow Agent
shall have the right, but not the duty at the expense of the Company, to
interplead the parties in any court of competent jurisdiction and request that
such court determine the respective rights of the parties with respect to the
Escrowed Funds.
(6) The Escrow Agent shall not be responsible in any manner for the
validity or sufficiency of any property delivered hereunder.
10
<PAGE>
7. Notices.
All notices required to be given hereunder shall be in writing and
shall be deemed given when received at the following addresses until such time
as the parties hereto designate a different or additional address or addresses:
To the Company:
Sovereign Bancorp, Inc.
1130 Berkshire Boulevard
Wyomissing, Pennsylvania 19610
Attn: Treasurer
Telephone: (610) 320-8441
Facsimile: (610) 320-8448
With a copy to:
Stevens & Lee
111 North Sixth Street
Reading, PA 19603
Attention: Joseph M. Harenza
To the Escrow Agent:
Harris Trust and Savings Bank
311 W. Monroe, 12th Floor
Chicago, IL 60606
Attn: Escrow Division/Marianne Tinerella
Telephone: (312) 461-2420
Facsimile: (312) 461-3525
To the Trustee:
Harris Trust and Savings Bank
311 W. Monroe, 12th Floor
Chicago, IL 60606
Attn: Indenture Trust Division
Telephone: (312) 461-2908
Facsimile: (312) 461-3525
11
<PAGE>
8. Fees and Expenses of the Escrow Agent.
The Company hereby agrees to pay the Escrow Agent pursuant to Schedule
I hereto.
9. Miscellaneous.
(1) This Agreement sets forth exclusively the duties of the Escrow
Agent with respect to any and all matters pertinent hereto and no implied duties
or obligations shall be read into this Agreement against the Escrow Agent.
(2) The Underwriters shall be third party beneficiaries of this
Agreement and the provisions of this Agreement shall be for the benefit of, and
enforceable by, the Underwriters.
(3) This Agreement may be executed in any number of counterparts, each
of which shall be an original and all of which when taken together shall
constitute one agreement.
(4) This Agreement shall be governed by the laws of the State of New
York, but without giving effect to applicable principles of conflicts of law to
the extent that the application of the laws of another jurisdiction would be
required thereby.
(5) The Company agrees to pay the Escrow Agent a fee in accordance with
the fee schedule attached hereto as Exhibit D. Fees are payable in advance as
Compensation for the ordinary administrative services to be rendered hereunder
and the Company agrees to pay all expenses of Escrow Agent, including the
indemnity provided in Section 4 hereof.
12
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
this 15th day of November, 1999.
/s/ SOVEREIGN BANCORP, INC.,
/s/ HARRIS TRUST AND SAVINGS BANK, as
Escrow Agent,
/s/ HARRIS TRUST AND SAVINGS BANK, as
Trustee,
13
<PAGE>
EXHIBIT A
Form of Officers' Certificate
of
Sovereign Bancorp, Inc.
This Certificate is being delivered pursuant to Section 2(a) of the
Pledge and Escrow Agreement, dated as of November 15, 1999 (the "Agreement"),
between SOVEREIGN BANCORP, INC. (the "Company") and HARRIS TRUST AND SAVINGS
BANK, as escrow agent (the "Escrow Agent") and as Trustee under the Indenture
described therein. Capitalized terms which are used but not defined herein shall
have the respective meanings specified in the Agreement. The undersigned
officers of the Company hereby certify that:
1. The Company simultaneously with the delivery of this Certificate and
the release of the funds to the Company pursuant to provisions of Section 2(a)
of the Agreement will fully complete the Acquisition in conformity in all
material respects with the terms and with satisfaction of all material
conditions of the Asset Purchase Agreement (after giving effect to any
amendment, waiver or modification to any term or condition, which amendment,
waiver or modification does not have a material adverse effect on Noteholders);
2. The terms of the transactions entered into and the operations and
assets and liabilities acquired and assumed in the Acquisition conform in all
material respects to the descriptions thereof contained in the prospectus
supplement for the 2004 Notes and the 2006 Notes dated as of November 9, 1999,
subject only to any changes provided for, discussed or contemplated in such
prospectus supplement; and
3. If the Company has engaged in a series of closings (the final of
which having occurred on or prior to the date hereof) or in a series of systems
conversions with respect to the Acquisition, such series of closings or series
of systems conversions do not have a material adverse effect on the Noteholders.
The Escrow Agent is hereby directed to release immediately all cash,
proceeds, and investments constituting Escrowed Funds to, or for the account of
the Company, as follows:
[ ___________________ *insert payment instructions]
IN WITNESS WHEREOF, Sovereign Bancorp, Inc., through the undersigned
officer, has signed this Certificate this day of .
SOVEREIGN BANCORP, INC.,
by
------------------------------
Name:
Title: [CEO or President]
SOVEREIGN BANCORP, INC.,
by
------------------------------
Name:
Title: [CFO or Principal Accounting
Officer]
<PAGE>
EXHIBIT B
Form of Officer's Certificate
of
Sovereign Bancorp, Inc.
This Certificate is being delivered pursuant to Section 2(d) of the
Pledge and Escrow Agreement, dated as of November 15, 1999 (the "Agreement"),
between SOVEREIGN BANCORP, INC. (the "Company") and HARRIS TRUST AND SAVINGS
BANK, as escrow agent (the "Escrow Agent") and as Trustee under the Indenture
described therein. Capitalized terms which are used but not defined herein shall
have the respective meanings specified in the Agreement. The undersigned officer
of the Company hereby certifies that:
(1) As of [ ], the amount of Escrowed Funds (including the Fair Market
Value of the Eligible Investments as determined pursuant Section 2(d) of the
Agreement) plus anticipated earnings on the Eligible Investments (as set forth
in the accountants certificate attached hereto and delivered pursuant to Section
2(f) of the Agreement) was $[ ] (the "Accumulated Amount").
(2) The excess of the Accumulated Amount over the Special Mandatory
Redemption Amount is $[ ] (the "Excess Amount").
(3) As of the date of this Certificate, no Default (as defined in the
Indenture) has occurred and is continuing.
The Escrow Agent is hereby directed to release immediately the Excess
Amount to, or for the account of the Company, as follows:
[ ___________________ *insert payment instructions]
IN WITNESS WHEREOF, Sovereign Bancorp, Inc., through the undersigned
officer, has signed this Certificate this day of .
SOVEREIGN BANCORP, INC.,
by
--------------------------------
Name:
Title: [CEO, President, CFO or
Principal Accounting Officer]
<PAGE>
EXHIBIT C
<PAGE>
Exhibit 4.6
--------------
EXECUTION COPY
================================================================================
SOVEREIGN BANCORP, INC.
10.25% Senior Notes due 2004
10.50% Senior Notes due 2006
-----------------------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of November 15, 1999
To Senior Indenture dated as of February 1, 1994
-----------------------------
HARRIS TRUST AND SAVINGS BANK,
Trustee
================================================================================
<PAGE>
FIRST SUPPLEMENTAL INDENTURE dated as of
November 15, 1999, to the original senior indenture
(the "Existing Indenture") dated as of February 1,
1994, between SOVEREIGN BANCORP, INC., a Pennsylvania
corporation (the "Company") and HARRIS TRUST AND
SAVINGS BANK, an Illinois banking corporation, as
Trustee (the "Trustee") (the Existing Indenture as
supplemented by this First Supplemental Indenture,
the "Indenture").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Company's
10.25% Senior Notes due 2004 (the "2004 Securities") and the Company's 10.50%
Senior Notes due 2006 (the "2006 Securities" and collectively with the 2004
Securities, the "Securities"), each to be issued, from time to time, as separate
series as in this Indenture provided.
WHEREAS, the Company and the Trustee have heretofore executed
and delivered the Existing Indenture to provide for the issuance of the
Company's securities in one or more registered series;
WHEREAS, Section 901 of the Existing Indenture provides, among
other things, that the Company and the Trustee may without the consent of
Holders enter into indentures supplemental to the Existing Indenture to, among
other things, change or eliminate any of the provisions of the Existing
Indenture in respect of one or more series of debt securities; provided,
however, that any such change or elimination (a) shall become effective only
when there is no debt security outstanding of any series created prior to the
execution of such supplemental indenture which is entitled to the benefit of
such provision or (b) shall not apply to any debt security outstanding;
WHEREAS, the Company desires to provide for the issuance of
new series of debt securities to be designated as the 10.25% Senior Notes due
2004 and the 10.50% Senior Notes due 2006, and to set forth the terms that will
be applicable thereto;
WHEREAS, all action on the part of the Company necessary to
authorize the issuance of the Securities under the Indenture has been duly
taken; and
WHEREAS, all acts and things necessary to make the Securities,
when executed by the Company and authenticated and delivered by the Trustee as
provided in the Indenture,
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<PAGE>
the legal, valid and binding obligations of the Company, and to constitute these
presents a valid and binding supplemental indenture according to its terms
binding on the Company, have been done and performed, and the execution of this
First Supplemental Indenture and the creation and issuance under the Indenture
of the Securities have in all respects been duly authorized, and the Company in
the exercise of the legal right and power vested in it, executes this First
Supplemental Indenture and proposes to create, execute, issue and deliver the
Securities.
NOW, THEREFORE, in consideration of the agreements and
obligations set forth herein and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
Solely for purposes of this First Supplemental Indenture and
the Securities: (1) Articles One (except as provided in Section 1.01(b) below)
Five, Eight, Nine, Ten, Eleven, Thirteen and Seventeen of the Existing Indenture
are to be superseded by the provisions of this First Supplemental Indenture and
shall have no effect with respect to the Securities, (2) Articles Four, Twelve,
Fourteen, Fifteen, Sixteen and Eighteen of the Existing Indenture shall not have
effect with respect to the Securities, and (3) Articles Two and Three of the
Existing Indenture shall be supplemented by and subject to the provisions of
Article II below.
ARTICLE I
Definitions and Incorporation by Reference
Section 1.01. Definitions. (a) All capitalized
terms used herein and not otherwise defined below shall have
the meanings ascribed thereto in the Existing Indenture.
(b) The following are definitions used in this First
Supplemental Indenture and to the extent that a term is defined both herein and
in the Existing Indenture, the definition in this First Supplemental Indenture
shall govern.
"Adjusted Consolidated Net Worth" means, as of any date of
determination, the Consolidated Net Worth of the Company as of the end of the
most recent fiscal quarter of the Company ending at least 45 days prior to such
date of determination; provided, however, that pro forma effect shall be given
(x) to any of the following that shall have
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occurred since the end of the relevant fiscal quarter or that shall occur
simultaneously with or immediately following the transaction giving rise to the
need to calculate Adjusted Consolidated Net Worth and (y) to the use of any
proceeds of such transaction to effect any of the following (in each case
without duplication and as if the following had occurred on the last day of such
fiscal quarter):
(a) issuances and sales of Capital Stock by the Company or any
Subsidiary,
(b) Investments in (by merger or otherwise) or acquisitions of
any Subsidiary or any Person that becomes a Subsidiary as a result of
such Investment or acquisition or in Property which constitutes all or
substantially all of an operating unit of a business,
(c) Restricted Payments and Permitted Investments,
and
(d) Asset Sales.
"Affiliate" of any specified Person means:
(a) any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with such
specified Person, or
(b) any other Person who is a director or executive officer
of:
(1) such specified Person,
(2) any Subsidiary (or in the case of the Company, any
Subsidiary or Unrestricted Subsidiary) of such specified Person, or
(3) any Person described in clause (a) above.
For the purposes of this definition, "control" when used with respect to any
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing. For purposes of Section 4.07, "Affiliate"
shall also mean any beneficial owner of shares representing 5% or more of the
total voting power of the Voting Stock (on a fully diluted basis)of the Company
or of rights or warrants to purchase such Voting Stock (whether or not
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currently exercisable) and any Person who would be an Affiliate of any such
beneficial owner pursuant to the first sentence hereof.
"Asset Sale" means any sale, lease, transfer, issuance or
other disposition (or series of related sales, leases, transfers, issuances or
dispositions) in excess of $5,000,000 taken individually (or with respect to a
series of related transactions taken as a whole) by the Company or any
Subsidiary, including any disposition by means of a merger, consolidation or
similar transaction, of:
(a) any shares of Capital Stock of a Subsidiary (other than
directors' qualifying shares), or
(b) any other assets of the Company or any Subsidiary outside
of the ordinary course of business of the Company or such Subsidiary.
"Attributable Debt" in respect of a Sale and Leaseback
Transaction means, at any date of determination,
(a) if such Sale and Leaseback Transaction is a Capital Lease
Obligation, the amount of Debt represented thereby according to the
definition of "Capital Lease Obligation", and
(b) in all other instances, the greater of:
(1) the Fair Market Value of the Property subject to such Sale
and Leaseback Transaction, and
(2) the present value (discounted at the interest rate borne
by the Securities, compounded annually) of the total obligations of the
lessee for rental payments during the remaining term of the lease
included in such Sale and Leaseback Transaction (including any period
for which such lease has been extended).
"Average Life" means, as of any date of determination, with
respect to any Debt or Preferred Stock, the quotient obtained by dividing:
(a) the sum of the product of the numbers of years (rounded to
the nearest one-twelfth of one year) from the date of determination to
the dates of each successive scheduled principal payment of such Debt
or redemption or similar payment with respect to such Preferred Stock
multiplied by the amount of such payment by
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(b) the sum of all such payments.
"Banking Business" means (i) owning the Capital Stock of
Sovereign Bank,(ii) engaging in, or owning the Capital Stock of any other
Subsidiaries or Unrestricted Subsidiaries engaged in, activities permissible for
subsidiaries of a bank holding company or a savings and loan holding company
under federal and state law at the time then applicable to the Company, its
Subsidiaries and Unrestricted Subsidiaries and (iii) the holding of Permitted
Investments.
"Board of Directors" means the Board of Directors of the
Company (or, in the case of Section 4.07(a)(2), the applicable Subsidiary) or
any committee thereof duly authorized to act on behalf of such Board.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of such
certification.
"Business Day" means each day that is not a Legal Holiday.
"Capital Lease Obligations" means any obligation under a lease
that is required to be capitalized for financial reporting purposes in
accordance with GAAP; and the amount of Debt represented by such obligation
shall be the capitalized amount of such obligations determined in accordance
with GAAP; and the Stated Maturity thereof shall be the date of the last payment
of rent or any other amount due under such lease prior to the first date upon
which such lease may be terminated by the lessee without payment of a penalty.
For purposes of Section 4.05, a Capital Lease Obligation shall be deemed secured
by a Lien on the Property being leased.
"Capital Stock" means, with respect to any Person, any shares
or other equivalents (however designated) of any class of corporate stock or
partnership interests or any other participations, rights, warrants, options or
other interests in the nature of an equity interest in such Person, including
Preferred Stock, but excluding any debt security convertible or exchangeable
into such equity interest.
"Capital Stock Sale Proceeds" means the aggregate cash
proceeds received by the Company from the issuance or sale (other than to a
Subsidiary or Unrestricted Subsidiary or an employee stock ownership plan or
trust established by
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the Company or any such Subsidiary or any such Unrestricted Subsidiary for the
benefit of their employees) by the Company of its Capital Stock (other than
Disqualified Stock and other than the common stock and trust preferred
securities specifically described under "Summary--New England
Acquisition--Financing", in the prospectus supplement pursuant to this offering
of Securities dated as of November 9, 1999 as the current financing plan for the
New England acquisition, but including consideration received in connection with
the exercise of warrants issued in connection with the New England acquisition)
after the Issue Date, net of attorneys' fees, accountants' fees, underwriters'
or placement agents' fees, discounts or commissions and brokerage, consultant
and other fees actually incurred in connection with such issuance or sale and
net of taxes paid or payable as a result thereof.
"Change of Control" means the occurrence of any of the
following events:
(a) if any "person" or "group" (as such terms are used in
Sections 13(d)and 14(d) of the Exchange Act or any successor provisions
to either of the foregoing), including any group acting for the purpose
of acquiring, holding, voting or disposing of securities within the
meaning of Rule 13d-5(b)(1) under the Exchange Act, becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act,
except that a person will be deemed to have "beneficial ownership" of
all shares that any such person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time),
directly or indirectly, of 50% or more of the total voting power of the
Voting Stock of the Company (for purposes of this clause (a), such
person or group shall be deemed to beneficially own any Voting Stock of
a corporation held by any other corporation (the "parent corporation")
so long as such person or group beneficially owns, directly or
indirectly, in the aggregate a majority of the total voting power of
the Voting Stock of such parent corporation); or
(b) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors
(together with any new directors whose election or appointment by such
Board or whose nomination for election by the shareholders of the
Company was approved by a vote of not less than two-thirds of the
directors then still in office who were either directors at the
beginning of such period or whose election or nomination for
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election was previously so approved) cease for any reason to constitute
a majority of the Board of Directors then in office; or
(c) the shareholders of the Company shall have approved any
plan of liquidation or dissolution of the Company; or
(d) a sale, transfer, assignment, lease, conveyance or other
disposition, directly or indirectly (other than to the Company or any
Wholly Owned Subsidiary) in any one transaction or series of
transactions, in either case occurring outside the ordinary course of
business, of more than 75% of the assets or 75% of the deposit
liabilities of Sovereign Bank shown on the consolidated balance sheet
of Sovereign Bank as of the end of the most recent fiscal quarter
ending at least 45 days prior to such transaction (or the first
transaction in any such series of transactions); provided, however,
that for purposes of this clause (d) if the Company at any time holds
any assets other than (1) the Capital Stock of Sovereign Bank and (2)
Temporary Cash Investments, such other assets shall be deemed to be
assets of Sovereign Bank and to have been reflected on such
consolidated balance sheet; provided, further, that a pledge by the
Company of the shares of Sovereign Bank owned by the Company to secure
Debt Incurred under any Credit Facility or Debt existing on the date
hereof requiring security on a basis pari passu with any Credit
Facility will not, absent any action to realize such pledge, constitute
a Change of Control, provided such pledge and Incurrence is otherwise
in accordance with Section 4.03 and Section 4.05.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commodity Price Protection Agreement" means, in respect of a
Person, any forward contract, commodity swap agreement, commodity option
agreement or other similar agreement or arrangement designed to protect such
Person against fluctuations in commodity prices.
"Company" means the party named as such in this Indenture
until a successor replaces it pursuant to the applicable provisions hereof and,
thereafter, means the successor and, for purposes of any provision contained
herein and required by the TIA, each other obligor on the indenture securities.
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"Consolidated Common Shareholders' Tangible Equity" means, as
of any date of determination, the total amount shown for shareholders' tangible
equity determined pursuant to Office of Thrift Supervision requirements and any
successor requirements thereto on a consolidated balance sheet of Sovereign Bank
and its Subsidiaries as at such date, less any amounts included therein
attributable to, without duplication, Preferred Stock held by Persons other than
the Company and its Subsidiaries.
"Consolidated Interest Coverage Ratio" means, as of any date
of determination, the ratio of:
(a) the aggregate amount of Earnings Available for Fixed
Charges for the most recent four consecutive fiscal quarters ending at
least 45 days prior to such determination date to
(b) Consolidated Interest Expense that is anticipated to
accrue during a period consisting of the fiscal quarter in which such
determination date occurs and the three fiscal quarters immediately
subsequent thereto (based upon the pro forma amount and maturity of,
and interest payments in respect of, Debt of the Company and the
Subsidiaries expected by the Company to be outstanding on such
determination date), assuming for the purposes of this measurement the
continuation of market interest rates prevailing on such determination
date and base interest rates in respect of floating interest rate
obligations equal to the base interest rates on such obligations in
effect as of such determination date, provided that, if the Company or
any of the Subsidiaries is a party to any Interest Rate Agreement that
would have the effect of changing the interest rate on any Debt of the
Company or any of the Subsidiaries for such four-quarter period (or a
portion thereof), the rate resulting therefrom shall be used for such
four-quarter period or portion thereof, provided further that any
Consolidated Interest Expense with respect to Debt so Incurred or
Repaid by the Company or any Subsidiary during the fiscal quarter in
which such determination date occurs shall be calculated on a pro forma
basis as if such Debt was Incurred or Repaid on the first day of such
fiscal quarter.
In addition, pro forma effect shall be given to any of the following that shall
have occurred since the beginning of the four quarter historical period so
preceding such determination date, or that shall occur simultaneously with or
immediately following the determination date, as if the
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following had occurred on the first day of such period: (i) Investments in (by
merger or otherwise) or acquisitions of any Subsidiary or any Person that
becomes a Subsidiary as a result of such Investment or acquisition or in
Property which constitutes all or substantially all of an operating unit of a
business and (ii) Asset Sales.
"Consolidated Interest Expense" means, for any period, the
total interest expense of the Company and its consolidated Subsidiaries, plus,
to the extent not included in such total interest expense, and to the extent
Incurred by the Company or its Subsidiaries,
(a) interest expense attributable to leases constituting part
of a Sale and Leaseback Transaction and to Capital Lease Obligations,
(b) amortization of debt discount and debt issuance cost,
including commitment fees,
(c) capitalized interest,
(d) non-cash interest expense,
(e) commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing,
(f) net costs associated with Hedging Obligations (including
amortization of fees),
(g) Disqualified Stock Dividends,
(h) Preferred Stock Dividends,
(i) interest Incurred in connection with Investments in
discontinued operations,
(j) interest accruing on any Debt of any other Person to the
extent such Debt is Guaranteed by the Company or any Subsidiary, and
(k) the cash contributions to any employee stock ownership
plan or similar trust to the extent such contributions are used by such
plan or trust to pay interest or fees to any Person (other than the
Company) in connection with Debt Incurred by such plan or trust.
Notwithstanding the foregoing, interest expense or other
amounts Incurred in the ordinary course of business by banking institutions or
Financial Services Subsidiaries shall not be included as part of Consolidated
Interest Expense.
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"Consolidated Net Income" means, for any period, the net
income (loss) of the Company and its consolidated Subsidiaries and Unrestricted
Subsidiaries, less, without duplication, the amounts of Preferred Stock
Dividends declared or accrued during such period in respect of any Preferred
Stock of Subsidiaries and Unrestricted Subsidiaries held by Persons other than
the Company and its Wholly Owned Subsidiaries (to the extent not already
deducted from Consolidated Net Income); provided, however, that there shall not
be included in such Consolidated Net Income:
(a) any net income (loss) of any Person (other than the
Company) if such Person is not a Subsidiary, except that:
(1) subject to the exclusion contained in clause (d) below,
the Company's equity in the net income of any such Person for such
period shall be included in such Consolidated Net Income up to the
aggregate amount of cash distributed by such Person during such period
to the Company or a Subsidiary as a dividend or other distribution
(subject, in the case of a dividend or other distribution to a
Subsidiary, to the limitations contained in clause (c) below), and
(2) the Company's equity in a net loss of any such Person
(other than an Unrestricted Subsidiary) for such period shall be
included in determining such Consolidated Net Income,
(b) for purposes of Section 4.04 only, any net income (loss)of
any Person acquired by the Company or any of its consolidated
Subsidiaries and Unrestricted Subsidiaries in a pooling of interests
transaction for any period prior to the date of such acquisition,
(c) any net income of any Subsidiary if such Subsidiary is
subject to restrictions, directly or indirectly, on the payment of
dividends or the making of distributions, directly or indirectly, to
the Company (other than restrictions contained in any Qualified
Preferred Stock) except that:
(1) subject to the exclusion contained in clause (d) below,
the Company's equity in the net income of any such Subsidiary for such
period shall be included in such Consolidated Net Income up to the
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aggregate amount of cash distributed by such Subsidiary during such
period (or, in the case of a Depository Institution, that could as of
such date of determination be distributed with respect to such period,
provided that the Company is not aware of any foreseeable negative
changes to its ability to make such distributions) to the Company or
another Subsidiary as a dividend or other distribution (subject, in the
case of a dividend or other distribution to another Subsidiary, to the
limitation contained in this clause), and
(2) the Company's equity in a net loss of any such Subsidiary
for such period shall be included in determining such Consolidated Net
Income,
(d) any gain (but not loss) realized upon the sale or other
disposition of any Property of the Company or any of its consolidated
Subsidiaries and Unrestricted Subsidiaries (including pursuant to any
Sale and Leaseback Transaction) that is not sold or otherwise disposed
of in the ordinary course of business (excluding, solely for the
purposes of Section 4.04, any gain in connection with a sale of insured
deposits),
(e) any extraordinary gain or loss,
(f) the cumulative effect of a change in accounting
principles,
(g) any non-cash compensation expense realized for grants of
performance shares, stock options or other rights to officers,
directors and employees of the Company or any Subsidiary, provided that
such shares, options or other rights can be redeemed at the option of
the holder only for Capital Stock of the Company (other than
Disqualified Stock), and
(h) for purposes of Section 4.04 only, any interest payments
made by the Company or any Subsidiary to a special purpose trust that
is a Subsidiary (and if such Subsidiary is not a Wholly Owned
Subsidiary such amount shall be on a pro rata basis) on Debt of the
Company or such Subsidiary to the extent such trust uses such proceeds
to make dividends, distributions or other payments which are Restricted
Payments.
Notwithstanding the foregoing, for purposes of Section 4.04 only, there shall be
excluded from Consolidated Net Income any dividends, repayments of loans or
advances or other
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transfers of assets from Unrestricted Subsidiaries to the Company or a
Subsidiary to the extent such dividends, repayments or transfers increase the
amount of Restricted Payments permitted under such section pursuant to clause
(d)(4) thereof.
"Consolidated Net Worth" means, in respect of any Person, the
total of the amounts shown on the consolidated balance sheet of such Person and
its Subsidiaries as:
(a) the par or stated value of all outstanding Capital Stock
of such Person, plus
(b) paid-in capital or capital surplus relating to such
Capital Stock, plus
(c) any retained earnings or earned surplus, less:
(1) any accumulated deficit, and
(2) any amounts attributable to Disqualified Stock.
"Consolidated Total Assets" means, in respect of any Person,
as of any date of determination, the amount that would appear on a consolidated
balance sheet of such Person and its consolidated Subsidiaries as the total
assets of such Person and its Subsidiaries.
"Credit Facilities" means, with respect to the Company or any
Subsidiary, one or more debt or commercial paper facilities with banks or other
institutional lenders (including the proposed senior credit facility described
in the prospectus supplement dated as of November 9, 1999 with respect to the
Securities) providing for revolving credit loans, term loans or trade letters of
credit, in each case together with any extensions, revisions, refinancings or
replacements thereof by a lender or syndicate of lenders.
"Currency Exchange Protection Agreement" means, in respect of
a Person, any foreign exchange contract, currency swap agreement, currency
option or other similar agreement or arrangement designed to protect such Person
against fluctuations in currency exchange rates.
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"Debt" means, with respect to any Person on any date of
determination (without duplication):
(a) the principal of and premium (if any and then only to the
extent then due and payable and without duplication) in respect of:
(1) debt of such Person for money borrowed, and
(2) debt evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such Person is responsible
or liable;
(b) all Capital Lease Obligations of such Person and all
Attributable Debt in respect of Sale and Leaseback Transactions entered
into by such Person;
(c) all obligations of such Person issued or assumed as the
deferred purchase price of Property, all conditional sale obligations
of such Person and all obligations of such Person under any title
retention agreement (but excluding trade accounts payable arising in
the ordinary course of business);
(d) all obligations of such Person for the reimbursement of
any obligor on any letter of credit, banker's acceptance or similar
credit transaction (other than obligations with respect to letters of
credit securing obligations (other than obligations described in (a)
through (c) above) entered into in the ordinary course of business of
such Person to the extent such letters of credit are not drawn upon or,
if and to the extent drawn upon, such drawing is reimbursed no later
than the third Business Day following receipt by such Person of a
demand for reimbursement following payment on the letter of credit);
(e) the amount of all obligations of such Person with respect
to the Repayment of any Disqualified Stock or, with respect to any
Subsidiary of such Person, any Preferred Stock (but excluding, in each
case, any accrued dividends);
(f) all obligations of the type referred to in clauses (a)
through (e) of other Persons and all dividends of other Persons for the
payment of which, in either case, such Person is responsible or liable,
directly or indirectly, as obligor, guarantor or otherwise, including
by means of any Guarantee;
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(g) all obligations of the type referred to in clauses (a)
through (f) of other Persons secured by any Lien on any Property of
such Person (whether or not such obligation is assumed by such Person),
the amount of such obligation being deemed to be the lesser of the
value of such Property or the amount of the obligation so secured; and
(h) to the extent not otherwise included in this definition,
Hedging Obligations of such Person.
The amount of Debt of any Person at any date shall be the outstanding balance at
such date of all unconditional obligations as described above and the maximum
liability, upon the occurrence of the contingency giving rise to the obligation,
of any contingent obligations at such date. The amount of Debt represented by a
Hedging Obligation shall be equal to: (1) zero if such Hedging Obligation has
been Incurred solely for the purpose of managing risk in the ordinary course of
business and not for speculative purposes, including, (i) interest, currency,
commodity, liquidity, credit, prepayment and other risks, (ii) reducing
borrowing costs, or (iii) converting any elements of indebtedness from one form
to another (collectively, "Ordinary Course Hedges"), or (2) the notional amount
of such Hedging Obligation which is not an Ordinary Course Hedge.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Depository Institution" shall have the meaning attributed
thereto in Section 3(c)(1) of the FDIA, 12 U.S.C. Section 1813(c)(1), or a
similar definition under any successor statute.
"Disqualified Stock" means, with respect to any Person, any
Capital Stock that by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable, in either case at the option of
the holder thereof) or otherwise:
(a) matures or is mandatorily redeemable pursuant to a sinking
fund obligation or otherwise,
(b) is or may become redeemable or repurchaseable at the
option of the holder thereof, in whole or in part, or
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(c) is convertible or exchangeable at the option of the holder
thereof for Debt or Disqualified Stock,
on or prior to, in the case of clause (a), (b) or (c), the first anniversary of
the Stated Maturity of the Securities.
"Disqualified Stock Dividends" means all dividends with
respect to Disqualified Stock of the Company held by Persons other than a Wholly
Owned Subsidiary. The amount of any such dividend shall be equal to the quotient
of such dividend divided by the difference between one and the maximum statutory
federal income tax rate (expressed as a decimal number between 1 and 0) then
applicable to the Company.
"Earnings Available for Fixed Charges" means, for any period,
an amount equal to, for the Company and its consolidated Subsidiaries, the sum
of Consolidated Net Income for such period, plus the following to the extent
reducing Consolidated Net Income for such period:
(a) the provision for taxes based on income or profits or
utilized in computing net loss,
(b) Consolidated Interest Expense, and
(c) amortization of intangibles.
Notwithstanding the foregoing, the provision for taxes based on the income or
profits of, and amortization of, a Subsidiary shall be added to Consolidated Net
Income to compute Earnings Available for Fixed Charges only to the extent (and
in the same proportion) that the net income of such Subsidiary was included in
calculating Consolidated Net Income and only, in the case of any Subsidiary, if
a corresponding amount would be permitted at the date of determination to be
dividended or paid to the Company by such Subsidiary without prior approval
(that has not been obtained), pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to such Subsidiary or its shareholders.
"Escrow Agent" means the party named as such in the Escrow
Agreement until a successor replaces it and, thereafter, means the successor.
"Exchange Act" means the Securities Exchange Act of 1934.
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"Fair Market Value" means, with respect to any Property, the
price that could be negotiated in an arm's-length free market transaction, for
cash, between a willing seller and a willing buyer, neither of whom is under
undue pressure or compulsion to complete the transaction. Fair Market Value
shall be determined, except as otherwise provided, if such Property has a Fair
Market Value in excess of $50,000,000, by a majority of the Board of Directors
and evidenced by a Board Resolution, dated within 30 days of the relevant
transaction, delivered to the Trustee.
"FDIA" means the Federal Deposit Insurance Act or any
successor provision to such Act.
"FDIC" means the Federal Deposit Insurance Corporation or any
successor organization.
"Financial Services Subsidiary" means any Subsidiary of the
Company (other than a Depository Institution or a Subsidiary of a Depository
Institution) which conducts any financial asset origination, securitization,
financing or servicing business or any other financial services business.
"Foreign Subsidiary" means any Subsidiary or Unrestricted
Subsidiary which is not organized under the laws of the United States of America
or any State thereof or the District of Columbia.
"GAAP" means United States generally accepted accounting
principles as in effect on the Issue Date, including those set forth:
(a) in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public
Accountants,
(b) in the statements and pronouncements of the Financial
Accounting Standards Board,
(c) in such other statements by such other entity as approved
by a significant segment of the accounting profession, and
(d) the rules and regulations of the Commission governing the
inclusion of financial statements (including pro forma financial
statements) in periodic reports required to be filed pursuant to
Section 13 of the Exchange Act, including opinions and pronouncements
in staff accounting bulletins and similar written statements from the
accounting staff of the Commission.
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"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Debt of any other Person and
any obligation, direct or indirect, contingent or otherwise, of such Person:
(a) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt of such other Person (whether arising
by virtue of partnership arrangements, or by agreements to keep-well,
to purchase assets, goods, securities or services, to take-or-pay or to
maintain financial statement conditions or otherwise), or
(b) entered into for the purpose of assuring in any other
manner the obligee against loss in respect thereof (in whole or in
part);
provided, however, that the term "Guarantee" shall not include:
(1) endorsements for collection or deposit in the ordinary
course of business, or
(2) a contractual commitment by one Person to invest in
another Person for so long as such Investment is reasonably expected to
constitute a Permitted Investment under clause (b) of the definition of
"Permitted Investment".
The term "Guarantee" used as a verb has a corresponding meaning. The term
"Guarantor" shall mean any Person Guaranteeing any obligation.
"Hedging Obligation" of any Person means any obligation of
such Person pursuant to any Interest Rate Agreement, Currency Exchange
Protection Agreement, Commodity Price Protection Agreement or any other similar
agreement or arrangement.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Security register described in Section 2.04.
"Incur" means, with respect to any Debt or other obligation of
any Person, to create, issue, incur (by merger, conversion, exchange or
otherwise), extend, assume, Guarantee or become liable in respect of such Debt
or other obligation or the recording, as required pursuant to GAAP, of any such
Debt or obligation on the balance sheet of such Person (and "Incurrence" and
"Incurred" shall have meanings correlative to the foregoing); provided, however,
that a
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change in GAAP that results in an obligation of such Person that exists at such
time, and is not theretofore classified as Debt, becoming Debt shall not be
deemed an Incurrence of such Debt; provided further, however, that any Debt or
other obligations of a Person existing at the time such Person becomes a
Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be
deemed to be Incurred by such Subsidiary at the time it becomes a Subsidiary;
and provided further, however, that solely for purposes of determining
compliance with Section 4.03, amortization of debt discount shall not be deemed
to be the Incurrence of Debt, provided that in the case of Debt sold at a
discount, the amount of such Debt Incurred shall at all times be the aggregate
principal amount at Stated Maturity.
"Indenture" means this Indenture as amended or supplemented
from time to time.
"Independent Financial Advisor" means an investment banking
firm of national standing or any third party appraiser of national standing,
provided that such firm or appraiser is not an Affiliate of the Company.
"Interest Rate Agreement" means, for any Person, any interest
rate swap agreement, interest rate cap agreement, interest rate collar agreement
or other similar agreement designed to protect against fluctuations in interest
rates.
"Investment" by any Person means any direct or indirect loan
(other than loans or advances to customers or suppliers in the ordinary course
of business that are recorded as accounts receivable or loans receivable on the
balance sheet of such Person), advance or other extension of credit or capital
contribution (by means of transfers of cash or other Property to others or
payments for Property or services for the account or use of others, or
otherwise) to, or Incurrence of a Guarantee of any obligation of, or purchase or
acquisition of Capital Stock, bonds, notes, debentures or other securities or
evidence of Debt issued by, any other Person. For purposes of Section 4.04, 4.08
and the definition of "Restricted Payment", "Investment" shall include the
portion (proportionate to the Company's equity interest in such Subsidiary) of
the Fair Market Value of the net assets of any Subsidiary of the Company at the
time that such Subsidiary is designated an Unrestricted Subsidiary; provided,
however, that upon a redesignation of such Unrestricted Subsidiary as a
Restricted Subsidiary, the Company shall be deemed to continue to have a
permanent "Investment" in an Unrestricted Subsidiary of an amount (if positive)
equal to:
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(a) the Company's "Investment" in such Subsidiary at the time
of such redesignation, less
(b) the portion (proportionate to the Company's equity
interest in such Subsidiary) of the Fair Market Value of the net assets
of such Subsidiary at the time of such redesignation.
In determining the amount of any Investment made by transfer
of any Property other than cash, such Property shall be valued at its Fair
Market Value at the time of such Investment.
"Investment Grade Rating" means a rating equal to or higher
than Baa3 (or the equivalent) by Moody's and BBB- (or the equivalent) by S&P.
"Issue Date" means the date on which the Original Securities
are initially issued, whether or not the proceeds of the Securities are held in
escrow.
"Lien" means, with respect to any Property of any Person, any
mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, security interest, lien, charge, easement (other than any easement
not materially impairing usefulness or marketability), encumbrance, preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such Property (including any Capital
Lease Obligation, conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing or any Sale and
Leaseback Transaction).
"Material Domestic Subsidiary" means any Significant
Subsidiary other than (a) a Foreign Subsidiary, (b) a Subsidiary or Unrestricted
Subsidiary of a Foreign Subsidiary or (c) an Unrestricted Subsidiary.
"Minimum Tangible Common Equity Amount" means, as of the end
of any fiscal quarter, an amount equal to $1.0 billion.
"Moody's" means Moody's Investors Service, Inc. or any
successor to the rating agency business thereof.
"New England acquisition" means the acquisition by Sovereign
Bank and the Company of certain operations and
20
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assets and liabilities as described in the prospectus supplement dated as of
November 9, 1999 for this Securities offering.
"Officer" means the Chief Executive Officer, the President,
the Chief Financial Officer, any Executive Vice President or the Principal
Accounting Officer (so long as such Principal Accounting Officer is at least a
Senior or Executive Vice President) of the Company.
"Officers' Certificate" means a certificate signed by two
Officers of the Company, at least one of whom shall be the principal executive
officer, principal financial officer or principal accounting officer (so long as
such principal accounting officer is at least a Senior or Executive Vice
President of the Company) of the Company, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion from legal
counsel who is reasonably acceptable to the Trustee. The counsel may be an
employee of or counsel to the Company or the Trustee.
"OTS" means the Office of Thrift Supervision and any successor
governmental agency thereto.
"Permitted Investment" means any Investment by the Company or
a Subsidiary in:
(a) any Subsidiary or any Person that will, upon the making of
such Investment, become a Subsidiary, provided that the primary
business of such Subsidiary is the Banking Business;
(b) any Person if as a result of such Investment such Person
is merged or consolidated with or into, or transfers or conveys all or
substantially all its Property to, the Company or a Subsidiary,
provided that such Person's primary business is Banking Business;
(c) Temporary Cash Investments;
(d) receivables owing to the Company or a Subsidiary, if
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; provided,
however, that such trade terms may include such concessionary trade
terms as the Company or such Subsidiary deems reasonable under the
circumstances;
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(e) payroll, travel and similar advances to cover matters that
are expected at the time of such advances ultimately to be treated as
expenses for accounting purposes and that are made in the ordinary
course of business;
(f) loans and advances to officers, directors and employees
made in the ordinary course of business consistent with past practices
of the Company or such Subsidiary, as the case may be, provided that
such loans and advances in the aggregate do not exceed $25,000,000 at
any one time outstanding;
(g) stock, obligations or other securities received in
settlement of debts created in the ordinary course of business and
owing to the Company or a Subsidiary or in satisfaction of judgments;
(h) Investments in the ordinary course of business by any
Subsidiary that is a banking institution or a Financial Services
Subsidiary or a Subsidiary of a banking institution or a Financial
Services Subsidiary (to the extent it would be permitted, under
applicable laws and regulations, to make such Investment) in any Person
other than an Affiliate of the Company (other than an Unrestricted
Affiliate, a Subsidiary of the Company or a Person that would become an
Unrestricted Affiliate or a Subsidiary as a result of such Investment);
and
(i) other Investments made for a price not greater than Fair
Market Value that do not exceed $25,000,000 outstanding at any one time
in the aggregate.
"Permitted Liens" means:
(a) Liens to secure Debt permitted to be Incurred under clause
(e) of Section 4.03, provided that any such Lien is limited to the
Capital Stock of Wholly Owned Subsidiaries, including Sovereign Bank;
(b) Liens created under negative pledge provisions of the
indentures for the Company's senior notes outstanding on the Issue
Date, but only to the extent required by such provisions as in effect
on the Issue Date;
(c) Liens for taxes, assessments or governmental charges or
levies on the Property of the Company or any Subsidiary if the same
shall not at the time be delinquent or thereafter can be paid without
penalty,
22
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or are being contested in good faith and by appropriate proceedings
promptly instituted and diligently concluded, provided that any reserve
or other appropriate provision that shall be required in conformity
with GAAP shall have been made therefor;
(d) Liens imposed by law, such as carriers', warehousemen's
and mechanics' Liens and other similar Liens, on the Property of the
Company or any Subsidiary arising in the ordinary course of business
and securing payment of obligations that are not more than 60 days past
due or are being contested in good faith and by appropriate
proceedings;
(e) Liens on the Property of the Company or any Subsidiary
Incurred in the ordinary course of business to secure performance of
obligations with respect to statutory or regulatory requirements,
performance or return-of-money bonds, surety bonds or other obligations
of a like nature and Incurred in a manner consistent with industry
practice, in each case which are not Incurred in connection with the
borrowing of money, the obtaining of advances or credit or the payment
of the deferred purchase price of Property and which do not in the
aggregate impair in any material respect the use of Property in the
operation of the business of the Company and the Subsidiaries taken as
a whole;
(f) Liens on Property at the time the Company or any
Subsidiary acquired such Property, including any acquisition by means
of a merger or consolidation with or into the Company or any
Subsidiary; provided, however, that any such Lien may not extend to any
other Property of the Company or any Subsidiary; provided further,
however, that such Liens shall not have been Incurred in anticipation
of or in connection with the transaction or series of transactions
pursuant to which such Property was acquired by the Company or any
Subsidiary;
(g) Liens on the Property of a Person at the time such Person
becomes a Subsidiary; provided, however, that any such Lien may not
extend to any other Property of the Company or any other Subsidiary
that is not a direct Subsidiary of such Person; provided further,
however, that any such Lien was not Incurred in anticipation of or in
connection with the transaction or series of transactions pursuant to
which such Person became a Subsidiary;
23
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(h) pledges or deposits by the Company or any Subsidiary under
workmen's compensation laws, unemployment insurance laws or similar
legislation, or good faith deposits in connection with bids, tenders,
contracts (other than for the payment of Debt) or leases to which the
Company or any Subsidiary is party, or deposits to secure public or
statutory obligations of the Company, or deposits for the payment of
rent, in each case Incurred in the ordinary course of business;
(i) utility easements, building restrictions and such other
encumbrances or charges against real Property as are of a nature
generally existing with respect to properties of a similar character;
(j) Liens existing on the Issue Date not otherwise described
in clauses (a) through (i) above or clause (k), (m) or (n) below;
(k) Liens not otherwise described in clauses (a) through (j)
above or clause (m) or (n) below on the Property of any Subsidiary that
is not a Subsidiary Guarantor to secure any Debt permitted to be
Incurred by such Subsidiary pursuant to Section 4.03 (including Liens
to secure Debt permitted to be Incurred under such covenant by a
Depositary Institution) or to secure any other obligation of such
Subsidiary;
(l) Liens on the Property of the Company or any Subsidiary to
secure any Refinancing, in whole or in part, of any Debt secured by
Liens referred to in clause (f), (g), or (j) above; provided, however,
that any such Lien shall be limited to all or part of the same Property
that secured the original Lien (together with improvements and
accessions to such Property) and the aggregate principal amount of Debt
that is secured by such Lien shall not be increased to an amount
greater than the sum of:
(1) the outstanding principal amount, or, if greater, the
committed amount, of the Debt secured by Liens described under clause
(f), (g) or (j) above, as the case may be, at the time the original
Lien became a Permitted Lien under the Indenture, and
(2) an amount necessary to pay any fees and expenses,
including premiums and defeasance costs, incurred by the Company or
such Subsidiary in connection with such Refinancing; and
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(m) Liens not otherwise described in clauses (a) through (l)
above or (n) below on the Property of a Financial Services Subsidiary
to secure any Debt permitted to be Incurred by such Subsidiary pursuant
to Section 4.03; and
(n) Liens securing Ordinary Course Hedges.
"Permitted Refinancing Debt" means any Debt that Refinances
any other Debt, including any successive Refinancings, so long as:
(a) such Debt is in an aggregate principal amount (or if
Incurred with original issue discount, an aggregate issue price) not in
excess of the sum of:
(1) the aggregate principal amount (or if Incurred with
original issue discount, the aggregate accreted value) then outstanding
of the Debt being Refinanced, and
(2) an amount necessary to pay any fees and expenses,
including premiums and defeasance costs, related to such Refinancing,
(b) the Average Life of such Debt is equal to or greater than
the Average Life of the Debt being Refinanced,
(c) the Stated Maturity of such Debt is no earlier than the
Stated Maturity of the Debt being Refinanced, and
(d) the new Debt shall not be senior in right of payment to
the Debt that is being Refinanced;
provided, however, that Permitted Refinancing Debt shall not include (x) Debt of
a Subsidiary or Unrestricted Subsidiary that is not a Subsidiary Guarantor that
Refinances Debt of the Company or a Subsidiary Guarantor or (y) Debt of the
Company or a Subsidiary that Refinances Debt of an Unrestricted Subsidiary.
"Person" means any individual, corporation, company (including
any limited liability company), association, partnership, joint venture, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Pledge and Escrow Agreement" means the Pledge and Escrow
Agreement dated as of November 15, 1999, between the
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Company, the Escrow Agent and the Trustee, as amended, waived or otherwise
waived from time to time.
"Preferred Stock" means any Capital Stock of a Person, however
designated, which entitles the holder thereof to a preference with respect to
the payment of dividends, or as to the distribution of assets upon any voluntary
or involuntary liquidation or dissolution of such Person, over shares of any
other class of Capital Stock issued by such Person. Preferred Stock includes
Disqualified Stock, Qualified Preferred Stock, Trust Preferred Stock and any
other trust preferred securities issued by special purpose trusts.
"Preferred Stock Dividends" means all dividends with respect
to Preferred Stock of Subsidiaries held by Persons other than the Company or a
Wholly Owned Subsidiary. The amount of any such dividend except with respect to
Trust Preferred Stock or any other trust preferred securities issued by special
purpose trusts shall be equal to the quotient of such dividend divided by the
difference between one and the maximum statutory federal income rate (expressed
as a decimal number between 1 and 0) then applicable to the issuer of such
Preferred Stock.
"principal" of any Debt (including the Securities) means the
principal amount of such Debt plus the premium, if any, on such Debt.
"pro forma" means, with respect to any calculation made or
required to be made pursuant to the terms hereof, a calculation performed in
accordance with Article 11 of Regulation S-X promulgated under the Securities
Act, as interpreted in good faith by the Board of Directors after consultation
with the independent certified public accountants of the Company, or otherwise a
calculation made in good faith by the Board of Directors after consultation with
the independent certified public accountants of the Company, as the case may be.
"Property" means, with respect to any Person, any interest of
such Person in any kind of property or asset, whether real, personal or mixed,
or tangible or intangible, including Capital Stock in, and other securities of,
any other Person. For purposes of any calculation required pursuant to the
Indenture, the value of any Property shall be its Fair Market Value.
"Purchase and Assumption Agreement" means the Purchase and
Assumption Agreement dated as of September 3, 1999, among the Company, Sovereign
Bank, Fleet Financial
26
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Group, Inc., Fleet National Bank, Fleet Bank-NH and BankBoston, N.A., as the
same may be amended or supplemented from time to time.
"Qualified Preferred Stock" means any Preferred Stock of any
Subsidiary (other than Trust Preferred Stock and any other trust preferred
securities issued by special purpose trusts) which meets the requirements set
forth below:
(a) such Preferred Stock is not Disqualified Stock;
(b) the terms of such Preferred Stock do not impose any
consensual restriction on the ability of the issuer thereof to pay
dividends, in cash or otherwise, or make any other distributions on or
in respect of its Capital Stock, to the Company or any other
Subsidiary, except for restrictions to the effect that:
(i) dividends and distributions on common stock or
other capital stock of the issuer may not be declared or paid
or set apart for payment at any time when the issuer has not
declared and paid any dividends or distributions on such
Preferred Stock which are required to be declared and paid as
a precondition to dividends or distributions on other capital
stock of the issuer;
(ii) distributions upon the liquidation, dissolution
or winding up of the issuer, whether voluntary or involuntary
("Liquidating Distributions"), may not be made on the common
stock or other capital stock of the issuer at any time when
such Preferred Stock is entitled to receive Liquidating
Distributions which have not been paid; and
(iii) dividends and distributions on common stock or
other capital stock of the issuer may not be declared or paid
or set apart for payment at any time when such Preferred Stock
is required to be, but has not been, redeemed, repurchased,
converted, exchanged or otherwise paid pursuant to provisions
which meet the requirements of clause (a) above; and
(c) the terms of such Preferred Stock do not impose any
consensual restriction on the ability of the issuer thereof to: (i) pay
any Debt or other obligation owed to the Company or any other
Subsidiary, (ii) make
27
<PAGE>
any loans or advances to the Company or any other Subsidiary or (iii)
transfer any of its Property to the Company or any other Subsidiary,
except, in any such case, any restriction permitted under Section 4.06
(other than under clause (2) thereof).
"Refinance" means, in respect of any Debt, to refinance,
extend, renew, refund, repay, prepay, repurchase, redeem, defease or retire, or
to issue other Debt, in exchange or replacement for, such Debt. "Refinanced" and
"Refinancing" shall have correlative meanings.
"Repay" means, in respect of any Debt, to repay, prepay,
repurchase, redeem, legally defease or otherwise retire such Debt. "Repayment"
and "Repaid" shall have correlative meanings.
"Restricted Payment" means:
(a) any dividend or distribution (whether made in cash,
securities or other Property) declared or paid on or with respect to
any shares of Capital Stock of the Company or any Subsidiary (including
any payment in connection with any merger or consolidation with or into
the Company or any Subsidiary), except for any dividend or distribution
that is made solely to the Company or a Subsidiary (and, if such
Subsidiary is not a Wholly Owned Subsidiary, to the other shareholders
of such Subsidiary on a pro rata basis or on a basis that results in
the receipt by the Company or a Subsidiary of dividends or
distributions of greater value than it would receive on a pro rata
basis) or any dividend or distribution or portion thereof payable
solely in shares of Capital Stock (other than Disqualified Stock) of
the Company;
(b) the purchase, repurchase, redemption, acquisition or
retirement for value of any Capital Stock (including Trust Preferred
Stock and any other trust preferred securities issued by special
purpose trusts or warrants issued by the Company in connection
therewith, and including redemptions in connection with a remarketing
of such securities) of the Company or any Subsidiary (other than from
the Company or a Subsidiary) or any securities exchangeable for or
convertible into any such Capital Stock, including the exercise of any
option to exchange any Capital Stock (other than for or into Capital
Stock of the Company that is not Disqualified Stock);
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(c) the purchase, repurchase, redemption, acquisition or
retirement for value, prior to the date for any scheduled maturity,
sinking fund or amortization or other installment payment, of any
Subordinated Obligation (excluding the purchase, repurchase or other
acquisition of any Subordinated Obligation (other than a Subordinated
Obligation covered by clause (e) below) purchased in anticipation of
satisfying a scheduled maturity, sinking fund or amortization or other
installment obligation, in each case due within one year of the date of
acquisition);
(d) any Investment (other than Permitted Investments) in any
Person; or
(e) any payment or purchase, repurchase, redemption,
acquisition or retirement for value by the Company or any Subsidiary of
any Debt issued to any special purpose trust of the Company in
connection with the issuance by such trust of trust preferred
securities (including Trust Preferred Stock); provided however that if
the corresponding dividend, distribution or other payment by the trust
on its trust preferred securities of the proceeds so received from the
Company or such Subsidiary would otherwise constitute a Restricted
Payment, the amount of such proceeds shall only be counted once as a
Restricted Payment.
"S&P" means Standard & Poor's Ratings Service or any successor
to the rating agency business thereof.
"Sale and Leaseback Transaction" means any direct or indirect
arrangement relating to Property now owned or hereafter acquired whereby the
Company or a Subsidiary transfers such Property to another Person and the
Company or a Subsidiary leases it from such Person.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933.
"Significant Subsidiary" means any Subsidiary or Unrestricted
Subsidiary that would be a "Significant Subsidiary" of the Company within the
meaning of Rule 1-02 under Regulation S-X promulgated by the Commission or any
successor provision to such Rule.
"Sovereign Bank" means Sovereign Bank, a federal savings bank,
and any successor thereto.
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"Special Mandatory Redemption" means a redemption pursuant to
the provisions of paragraph 8 of the Securities.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency beyond the control of the issuer unless such
contingency has occurred and excluding, in the case of the Securities, the
Special Mandatory Redemption provision).
"Subordinated Obligation" means any Debt of the Company or any
Subsidiary Guarantor (whether outstanding on the Issue Date or thereafter
Incurred) that is subordinate or junior in right of payment to the Securities or
the applicable Subsidiary Guaranty pursuant to a written agreement to that
effect.
"Subsidiary" means, in respect of any Person, any corporation,
company (including any limited liability company), association, partnership,
joint venture or other business entity of which a majority of the total voting
power of the Voting Stock is at the time owned or controlled, directly or
indirectly, by:
(a) such Person,
(b) such Person and one or more Subsidiaries of such Person,
or
(c) one or more Subsidiaries of such Person.
Unless otherwise specified, or as required by the context in
the definition of the term "Investment", the term "Subsidiary" or "Restricted
Subsidiary" means any Subsidiary of the Company other than an Unrestricted
Subsidiary.
"Subsidiary Guarantor" means any Person that becomes a
Subsidiary Guarantor pursuant to Section 4.11.
"Subsidiary Guaranty" means a Guarantee on the terms set forth
in the Indenture by a Subsidiary Guarantor of the Company's obligations with
respect to the Securities.
"Tax Sharing Agreement" means the Tax Allocation Agreement
dated July 7, 1995, among Sovereign Bancorp, Inc., and Sovereign Bank, FSB,
Sovereign Investment Corporation, First Lancaster Financial Corporation, Land
Asset-303
30
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Fairview Corporation, Land Asset-33 Sampson Corporation, Land Asset-2-4 Gregory
Court Corporation, 201 Associates, Inc., Sovereign Financial Associates,
Sovereign Financial Securities, Inc., Sovereign Financial Insurance Agency,
Inc., C.S. Service Corporation and Jersey Shore Financial Services, Inc., as
amended, waived or otherwise modified from time to time as permitted by Section
4.12.
"Temporary Cash Investments" means any of the following:
(a) Investments in U.S. Government Obligations maturing within
365 days of the date of acquisition thereof;
(b) Investments in time deposit accounts, certificates of
deposit and money market deposits maturing within 180 days of the date
of acquisition thereof issued by a bank or trust company organized
under the laws of the United States of America or any state thereof
having capital, surplus and undivided profits aggregating in excess of
$250,000,000 and whose long-term debt is rated "A-3" or "A-" or higher
according to Moody's or S&P (or such similar equivalent rating by at
least one "nationally recognized statistical rating organization" (as
defined in Rule 436 under the Securities Act));
(c) repurchase obligations with a term of not more than 30
days for underlying securities of the types described in clause (a)
entered into with:
(1) a bank meeting the qualifications described in clause (b)
above, or
(2) any primary government securities dealer reporting to the
Market Reports Division of the Federal Reserve Bank of New York;
(d) Investments in commercial paper, maturing not more than 90
days after the date of acquisition, issued by a corporation (other than
an Affiliate of the Company) organized and in existence under the laws
of the United States of America with a rating at the time as of which
any Investment therein is made of "P-1" (or higher) according to
Moody's or "A-1" (or higher) according to S&P (or such similar
equivalent rating by at least one "nationally recognized statistical
rating organization" (as defined in Rule 436 under the Securities
Act)); and
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(e) direct obligations (or certificates representing an
ownership interest in such obligations) of any state of the United
States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of such state is pledged
and which are not callable or redeemable at the issuer's option,
provided that:
(1) the long-term debt of such state is rated "A-3" or "A-" or
higher according to Moody's or S&P (or such similar equivalent rating
by at least one "nationally recognized statistical rating organization"
(as defined in Rule 436 under the Securities Act)), and
(2) such obligations mature within 180 days of the date of
acquisition thereof.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date of this Indenture; provided, however,
that, in the event the TIA is amended after such date, "Trust Indenture Act"
means, to the extent required by any such amendments, the Trust Indenture Act of
1939 as so amended.
"Trust Preferred Stock" means $100,000,000 of 9% trust
preferred securities of Sovereign Capital Trust I due April 1, 2027 and
$50,000,000 of 9.875% trust preferred securities of ML Capital Trust I due March
1, 2027.
"Trustee" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor.
"Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.
"Unrestricted Affiliate" means a Person (other than a
Subsidiary or Unrestricted Subsidiary of the Company) controlled (as defined in
the definition of "Affiliate") by the Company, in which no Affiliate of the
Company (other than (x) the Company, (y) a Wholly Owned Subsidiary of the
Company and (z) another Unrestricted Affiliate) has an Investment.
"Unrestricted Subsidiary" means:
(a) any corporation, company (including any limited liability
company), association, partnership, joint venture or other business
entity of which a majority of the total voting power of the Voting
Stock is at the time owned or controlled, directly or
32
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indirectly, by the Company or any Subsidiary that is designated after
the Issue Date as an Unrestricted Subsidiary as permitted or required
pursuant to Section 4.08 and not thereafter redesignated as a
Restricted Subsidiary as permitted pursuant thereto; and
(b) any corporation, company (including any limited liability
company), association, partnership, joint venture or other business
entity of which a majority of the total voting power of the Voting
Stock is at the time owned or controlled, directly or indirectly, by an
Unrestricted Subsidiary.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"Voting Stock" of any Person means all classes of Capital
Stock or other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof.
"Wholly Owned Subsidiary" means, at any time, a Subsidiary all
the Voting Stock of which (except directors' qualifying shares) is at such time
owned, directly or indirectly, by the Company and its other Wholly Owned
Subsidiaries.
SECTION 1.02. Other Definitions.
Defined in
Term Section
- ---- ----------
"Affiliate Transaction"...................................... 4.07
"Bankruptcy Law"............................................. 6.01
"Change of Control Notice Date".............................. 4.10
"Change of Control Offer".................................... 4.10
"Change of Control Payment Date"............................. 4.10
"Change of Control Purchase Price"........................... 4.10
"Contributing Party"......................................... 10.02
"covenant defeasance option"................................. 8.01
"Custodian".................................................. 6.01
"Event of Default"........................................... 6.01
"Global Security"............................................ Appendix A
"legal defeasance option".................................... 8.01
"Legal Holiday".............................................. 11.08
"Obligations"................................................ 10.01
"OID"........................................................ 2.01
"Original Securities......................................... 2.01
"Paying Agent"............................................... 2.04
"Registrar".................................................. 2.04
"Surviving Person"........................................... 5.01
"Suspended Covenants"........................................ 4.16
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SECTION 1.03. Incorporation by Reference of Trust Indenture
Act. This Indenture is subject to the mandatory provisions of the TIA, which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities and the Subsidiary
Guarantees.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company, each
Subsidiary Guarantor and any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule have
the meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
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(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
(6) unsecured Debt shall not be deemed to be subordinate or
junior to secured Debt merely by virtue of its nature as unsecured
Debt;
(7) the principal amount of any non-interest bearing or other
discount security at any date shall be the principal amount thereof
that would be shown on a balance sheet of the issuer dated such date
prepared in accordance with GAAP; and
(8) the principal amount of any Preferred Stock shall be the
greater of (i) the maximum liquidation value of such Preferred Stock or
(ii) the maximum mandatory redemption or mandatory repurchase price
with respect to such Preferred Stock.
ARTICLE II
The Securities
SECTION 2.01. Amount of Securities; Issuable in Series. The
aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is $1,200,000,000. All Securities shall be
identical in all respects other than issue prices and issuance dates. The
Original Securities will be issued in separate series and additional Securities
may be issued in one or more series, which may be the same series as or
different series than the Original Securities; provided, however, that any
Securities issued with original issue discount ("OID") for Federal income tax
purposes shall not be issued as part of the same series as any Securities that
are issued with a different amount of OID or are not issued with OID. All
Securities of any one series shall be identical in all respects other than as to
denomination. Each series of Securities will vote as a separate series from
other series of debt securities and from one another on matters under the
Indenture.
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Subject to Section 2.03, the Trustee shall authenticate
Securities for original issue on the Issue Date in the aggregate principal
amount of $700,000,000 (the "Original Securities"). With respect to any
Securities issued after the Issue Date (except for Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in lieu of,
Original Securities pursuant to Section 2.07, 2.08, 2.09 or 3.06 or Appendix A),
there shall be established in or pursuant to a resolution of the Board of
Directors, and subject to Section 2.03, set forth, or determined in the manner
provided in an Officers' Certificate, or established in one or more indentures
supplemental hereto, prior to the issuance of such Securities:
(1) whether such Securities shall be issued as part of a new
or existing series of Securities and the title of such Securities
(which shall distinguish the Securities of the series from Securities
of any other series);
(2) the aggregate principal amount of such Securities that may
be authenticated and delivered under this Indenture, which shall be in
an aggregate principal amount not to exceed $500,000,000 (except for
Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities of the same
series pursuant to Section 2.07, 2.08, 2.09 or 3.06 or Appendix A and
except for Securities which, pursuant to Section 2.03, are deemed never
to have been authenticated and delivered hereunder);
(3) the issue price and issuance date of such Securities,
including the date from which interest on such Securities shall accrue;
(4) if applicable, that such Securities shall be issuable in
whole or in part in the form of one or more Global Securities and, in
such case, the respective depositories for such Global Securities, the
form of any legend or legends that shall be borne by any such Global
Security and any circumstances in addition to or in lieu of those set
forth in Section 2.3 of Appendix A in which any such Global Security
may be exchanged in whole or in part for Securities registered, and any
transfer of such Global Security in whole or in part may be registered,
in the name or names of Persons other than the depository for such
Global Security or a nominee thereof; and
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(5) whether such Securities shall be issued pursuant to Rule
144A, Regulation S or Regulation D, under the Securities Act (or any
successor provisions thereto or other exemptions thereof), whether any
such Securities shall be subject pursuant to a registration agreement
to a subsequent registered exchange offer or registration under a shelf
registration statement and whether such Securities shall be subject to
transfer restrictions and similar or related provisions or other
customary provisions.
If any of the terms of any series are established by action
taken pursuant to a resolution of the Board of Directors, a copy of an
appropriate record of such action shall be certified by the Secretary or any
Assistant Secretary of the Company and delivered to the Trustee at or prior to
the delivery of the Officers' Certificate or the trust indenture supplemental
hereto setting forth the terms of the series.
SECTION 2.02. Form and Dating. Provisions relating to the
Securities of each series are set forth in Appendix A, which is hereby
incorporated in and expressly made part of this Indenture. The Securities of
each series and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit 1 to Appendix A which is hereby
incorporated in and expressly made a part of this Indenture. The Securities of
each series may have notations, legends or endorsements required by law, stock
exchange rule, agreements to which the Company is subject, if any, or usage,
provided that any such notation, legend or endorsement is in a form reasonably
acceptable to the Company. Each Security shall be dated the date of its
authentication. The terms of the Securities of each series set forth in Exhibit
1 to Appendix A are part of the terms of this Indenture.
SECTION 2.03. Execution and Authentication. Two Officers shall
sign the Securities for the Company by manual or facsimile signature. The
Company's seal shall be impressed, affixed, imprinted or reproduced on the
Securities and may be in facsimile form.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities of any series
executed by the Company to
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the Trustee for authentication, together with a written order of the Company in
the form of an Officers' Certificate for the authentication and delivery of such
Securities, and the Trustee in accordance with such written order of the Company
shall authenticate and deliver such Securities.
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Security.
The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Unless limited by the
terms of such appointment, an authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Registrar, Paying Agent or agent
for service of notices and demands.
SECTION 2.04. Registrar and Paying Agent. The Company shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange. The
Company may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall
notify the Trustee of the name and address of any such agent. If the Company
fails to maintain a Registrar or Paying Agent, the Trustee shall act as such
and shall be entitled to appropriate compensation therefor pursuant to Section
607 of the Existing Indenture. The Company or any of its domestically
incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar,
co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and
Paying Agent in connection with the Securities.
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SECTION 2.05. Paying Agent To Hold Money in Trust. Prior to
each due date of the principal and interest on any Security, the Company shall
deposit with the Paying Agent a sum sufficient to pay such principal and
interest when so becoming due. The Company shall require each Paying Agent
(other than the Trustee) to agree in writing that the Paying Agent shall hold in
trust for the benefit of Securityholders or the Trustee all money held by the
Paying Agent for the payment of principal of or interest on the Securities and
shall notify the Trustee of any default by the Company in making any such
payment. If the Company or a Wholly Owned Subsidiary acts as Paying Agent, it
shall segregate the money held by it as Paying Agent and hold it as a separate
trust fund. The Company at any time may require a Paying Agent to pay all money
held by it to the Trustee and to account for any funds disbursed by the Paying
Agent. Upon complying with this Section, the Paying Agent shall have no further
liability for the money delivered to the Trustee.
SECTION 2.06. Securityholder Lists. The Trustee shall preserve
in as current a form as is reasonably practicable the most recent list
available to it of the names and addresses of Securityholders. If the Trustee is
not the Registrar, the Company shall furnish to the Trustee, in writing at least
five Business Days before each interest payment date and at such other times as
the Trustee may request in writing, a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of
Securityholders.
SECTION 2.07. Replacement Securities. If a mutilated Security
is surrendered to the Registrar or if the Holder of a Security claims that such
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies
any other reasonable requirements of the Trustee. If required by the Trustee or
the Company, such Holder shall furnish an indemnity bond sufficient in the
judgment of the Company and the Trustee to protect the Company, the Trustee, the
Paying Agent, the Registrar and any co-registrar from any loss which any of them
may suffer if a Security is replaced. The Company and the Trustee may charge the
Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Company.
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SECTION 2.08. Outstanding Securities. Securities outstanding
at any time are all Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancelation and those described in
this Section as not outstanding. A Security does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases
to be outstanding unless the Trustee and the Company receive proof satisfactory
to them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date money
sufficient to pay all principal and interest payable on that date with respect
to the Securities (or portions thereof) to be redeemed or maturing, as the case
may be, then on and after that date such Securities (or portions thereof) cease
to be outstanding and interest on them ceases to accrue.
SECTION 2.09. Temporary Securities. Until definitive
Securities are ready for delivery, the Company may prepare and the Trustee shall
authenticate temporary Securities. Temporary Securities shall be substantially
in the form of definitive Securities but may have variations that the Company
considers appropriate for temporary Securities. Without unreasonable delay, the
Company shall prepare and the Trustee shall authenticate definitive Securities
and deliver them in exchange for temporary Securities.
SECTION 2.10. Cancelation. The Company at any time may deliver
Securities to the Trustee for cancelation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel and
destroy (subject to the record retention requirements of the Exchange Act) all
Securities surrendered for registration of transfer, exchange, payment or
cancelation and deliver a certificate of such destruction to the Company unless
the Company directs the Trustee to deliver canceled Securities to the Company.
The Company may not issue new Securities to replace Securities it has redeemed,
paid or delivered to the Trustee for cancelation.
SECTION 2.11. Defaulted Interest. If the Company defaults in a
payment of interest on the Securities, the Company shall pay the defaulted
interest (plus interest on such defaulted interest to the extent lawful) in any
lawful
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manner. The Company may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Company shall fix or
cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail to each
Securityholder a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
SECTION 2.12. CUSIP Numbers. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use) and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided, however, that neither the Company nor the Trustee shall have
any responsibility for any defect in the "CUSIP" number that appears on any
Security, check, advice of payment or redemption notice, and any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers.
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee. If the Company elects to
redeem Securities pursuant to paragraph 5 of the Securities or is required to
redeem Securities pursuant to paragraph 8 of the Securities, it shall notify the
Trustee in writing of the redemption date, the principal amount of Securities to
be redeemed (with respect to a redemption pursuant to paragraph 5 only), the
series of Securities to be redeemed (with respect to a redemption pursuant to
paragraph 5 only) and the paragraph of the Securities pursuant to which such
redemption will occur.
Upon receipt of such notice from the Company, the Trustee
shall immediately forward such notice to the escrow agent within one Business
Day pursuant to Section 2(b) of the Pledge and Escrow Agreement and the Trustee
shall irrevocably authorize the escrow agent to release the proceeds of the
escrow account in accordance with the provisions of Section 2(b) of the Pledge
and Escrow Agreement.
Except as described under the second paragraph of Section
3.03, the Company shall give each notice to the
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Trustee provided for in this Section at least 45 days before the redemption date
unless the Trustee consents to a shorter period. Such notice shall be
accompanied by an Officers' Certificate and an Opinion of Counsel from the
Company to the effect that such redemption will comply with the conditions
herein.
SECTION 3.02. Selection of Securities To Be Redeemed. If fewer
than all the Securities are to be redeemed, the Trustee shall select the
Securities to be redeemed pro rata or by lot or by a method that complies with
applicable legal and securities exchange requirements, if any, and that the
Trustee considers fair and appropriate and in accordance with methods generally
used at the time of selection by fiduciaries in similar circumstances. The
Trustee shall make the selection from outstanding Securities not previously
called for redemption. The Trustee may select for redemption portions of the
principal of Securities that have denominations larger than $1,000. Securities
and portions of them the Trustee selects shall be in amounts of $1,000 or a
whole multiple of $1,000. Provisions of this Indenture that apply to Securities
called for redemption also apply to portions of Securities called for
redemption. The Trustee shall notify the Company promptly of the Securities or
portions of Securities to be redeemed.
SECTION 3.03. Notice of Redemption. At least 30 days but not
more than 60 days before a date for redemption of Securities, the Company shall
mail a notice of redemption by first-class mail to each Holder of Securities to
be redeemed.
In the event of the Special Mandatory Redemption pursuant to
paragraph 8 of the Securities, the Company shall prepare and cause to be mailed
a notice (such notice to also be mailed concurrently to the Trustee and Escrow
Agent) of such redemption no later than the fifth Business Day following the
earlier of (i) July 31, 2000, (ii) the date of the abandonment of the New
England acquisition and (iii) the date of termination of the Purchase and
Assumption Agreement.
The notice shall identify the Securities to be redeemed and
shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
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(4) that Securities called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be
redeemed, the identification and principal amounts of the particular
Securities to be redeemed;
(6) that, unless the Company defaults in making such
redemption payment, interest on Securities (or portion thereof) called
for redemption ceases to accrue on and after the redemption date;
(7) the paragraph of the Securities pursuant to which the
Securities called for redemption are being redeemed; and
(8) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
and subject with respect to a Special Mandatory Redemption to the second
paragraph of this section, the Company shall provide the Trustee with the
information required by this Section at least 45 days before the redemption
date.
SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest, if any, to the redemption
date (subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date that is on or prior
to the date of redemption). Failure to give notice or any defect in the notice
to any Holder shall not affect the validity of the notice to any other Holder.
SECTION 3.05. Deposit of Redemption Price. Prior to the
redemption date, the Company shall deposit with the Paying Agent (or, if the
Company or a Wholly Owned Subsidiary is the Paying Agent, shall segregate and
hold in trust) money sufficient to pay the redemption price of and accrued
interest (subject to the right of Holders of record on the relevant record date
to receive interest due on the related interest payment date that is on or prior
to the date of redemption) on all Securities to be redeemed on that
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date other than Securities or portions of Securities called for redemption that
have been delivered by the Company to the Trustee for cancelation.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in principal amount to the unredeemed portion of the Security
surrendered.
ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities. The Company shall
promptly pay the principal of and interest on the Securities on the dates and in
the manner provided in the Securities and in this Indenture. Principal and
interest shall be considered paid on the date due if on such date the Trustee or
the Paying Agent holds in accordance with this Indenture money sufficient to pay
all principal and interest then due.
The Company shall pay interest on overdue principal at the
rate specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the rate borne by the Securities to the extent
lawful.
SECTION 4.02. SEC Reports. Notwithstanding that the Company
may not be subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, the Company shall file with the Commission and provide the Trustee
and Holders of Securities with such annual reports and such information,
documents and other reports as are specified in Sections 13 and 15(d) of the
Exchange Act and applicable to a U.S. corporation subject to such Sections, such
information, documents and reports to be so filed and provided at the times
specified for the filing of such information, documents and reports under such
Sections; provided, however, that the Company shall not be so obligated to file
such information, documents and reports with the Commission if the Commission
does not permit such filings. The Company shall also comply with the other
provisions of TIA ss. 314(a).
SECTION 4.03. Limitation on Debt. The Company shall not, and
shall not permit any Subsidiary to, Incur, directly or indirectly, any Debt;
provided, however, that the foregoing shall not prohibit the Incurrence of the
following Debt:
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(a) Debt of the Company evidenced by the Original Securities
and of any Subsidiary Guarantors evidenced by Subsidiary Guarantees relating to
the Original Securities;
(b) Debt outstanding on the Issue Date not otherwise described
in clause (a), (c), (d), (e), (g), (h), (i) or (j);
(c) Debt of the Company or any Subsidiary Guarantor if,
immediately after giving pro forma effect to the Incurrence of such Debt and the
application of the proceeds thereof, the outstanding aggregate principal amount
of Debt of the Company and its Subsidiaries on a consolidated basis (other than
Debt Incurred pursuant to clause (j)) would not exceed an amount equal to the
Adjusted Consolidated Net Worth of the Company;
(d) Subordinated Obligations of the Company or any Subsidiary
Guarantor if, immediately after giving pro forma effect to the Incurrence of
such Debt and the application of the proceeds thereof, the Consolidated Interest
Coverage Ratio would be greater than 3.00 to 1.00; provided, however, that such
Debt (A) shall have a Stated Maturity that is no earlier than the Stated
Maturity of the Securities and (B) shall have an Average Life equal to or
greater than the remaining Average Life of the Securities;
(e) Debt under any Credit Facilities, provided that the
aggregate principal amount of all such Debt at any one time outstanding shall
not exceed $500,000,000, which amount shall be permanently reduced to the extent
such Credit Facilities are Repaid from time to time;
(f) Permitted Refinancing Debt Incurred in respect of Debt
Incurred pursuant to clause (a), (b), (c), (d), (g), or (h);
(g) Debt of a Subsidiary outstanding on the date on which such
Subsidiary was acquired by the Company or otherwise became a Subsidiary (other
than Debt Incurred as consideration in, or to provide all or any portion of the
funds or credit support utilized to consummate, the transaction or series of
transactions pursuant to which such Subsidiary became a Subsidiary of the
Company or was otherwise acquired by the Company), provided that at the time
such Subsidiary was acquired by the Company or otherwise became a Subsidiary and
after giving pro forma effect to the Incurrence of such Debt, the Company would
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have been able to Incur $1.00 of additional Debt pursuant to clause (c) of this
section;
(h) Subordinated Obligations Incurred by the Company and Debt
Incurred by any special purpose trust pursuant to the issuance by such special
purpose trust of trust preferred securities in connection with the New England
acquisition (including any Subordinated Obligations Incurred or trust preferred
securities issued pursuant to a remarketing of Debt permitted pursuant to this
clause (h), provided such remarketing is in accordance with the original terms
of such Debt);
(i) in the case of a Financial Services Subsidiary, any Debt
issued by such Financial Services Subsidiary in the ordinary course of funding
its assets if, immediately after giving pro forma effect to the Incurrence of
such Debt and the application of the proceeds thereof, (A) the outstanding
aggregate principal amount of Debt Incurred by such Financial Services
Subsidiary would not exceed an amount equal to the Consolidated Total Assets of
such Financial Services Subsidiary, and (B) the amount of the Consolidated Total
Assets and Consolidated Net Worth of all the Financial Services Subsidiaries on
a combined basis would not exceed 2.5% of the Company's Consolidated Total
Assets and Consolidated Net Worth, respectively (all determinations pursuant to
this clause (i) shall be made as of the end of the Company's most recent fiscal
quarter ending at least 45 days prior to the date of such Incurrence); and
(j) Debt of any Subsidiary that is a Depository Institution or
a Subsidiary of a Depository Institution, including Sovereign Bank.
Notwithstanding anything to the contrary contained in this
section,
(1) the Company shall not, and shall not permit any Subsidiary
Guarantor to, Incur any Debt pursuant to this section if the proceeds
thereof are used, directly or indirectly, to Refinance any Subordinated
Obligations unless such Debt shall be subordinated to the Securities or
the applicable Subsidiary Guaranty, as the case may be, to at least the
same extent as such Subordinated Obligations, and
(2) the Company shall not permit any Subsidiary that is not a
Subsidiary Guarantor to Incur any Debt pursuant to this section if the
proceeds thereof are
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used, directly or indirectly, to Refinance any Debt of the Company or
any Subsidiary Guarantor.
SECTION 4.04. Limitation on Restricted Payments. The Company
shall not make, and shall not permit any Subsidiary to make, directly or
indirectly, any Restricted Payment if at the time of, and after giving effect
to, such proposed Restricted Payment,
(a) a Default or Event of Default shall have occurred and be
continuing, or
(b) any Subsidiary that is a Depository Institution does not
qualify as "well capitalized" under Section 28 of the FDIA (or any successor
provision) and the regulations of the OTS thereunder, or
(c) the Consolidated Common Shareholders' Tangible Equity of
Sovereign Bank as of the end of the most recent fiscal quarter ending at least
45 days prior to the date of such Restricted Payment was less than the Minimum
Tangible Common Equity Amount as of the end of such fiscal quarter, or
(d) the aggregate amount of such Restricted Payment and all
other Restricted Payments declared or made since the Issue Date (the amount of
any Restricted Payment, if made other than in cash, to be based upon Fair Market
Value) would exceed an amount equal to the sum of:
(1) 50% of the aggregate amount of Consolidated Net Income
accrued during the period (treated as one accounting period) from the
beginning of the fiscal quarter during which the Issue Date occurs to
the end of the most recent fiscal quarter ending at least 45 days prior
to the date of such Restricted Payment (or if the aggregate amount of
Consolidated Net Income for such period shall be a deficit, minus 100%
of such deficit), plus
(2) Capital Stock Sale Proceeds, plus
(3) the sum of:
(A) the aggregate net cash proceeds received by the Company or
any Subsidiary from the issuance or sale after the Issue Date of
convertible or exchangeable Debt (excluding trust preferred securities
issued in connection with the New England acquisition) that has been
converted into or exchanged for Capital Stock (other than Disqualified
Stock) of the Company, and
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(B) the aggregate amount by which Debt (excluding trust
preferred securities issued in connection with the New England
acquisition) of the Company or any Subsidiary is reduced on the
Company's consolidated balance sheet on or after the Issue Date upon
the conversion or exchange of any Debt issued or sold on or prior to
the Issue Date that is convertible or exchangeable for Capital Stock
(other than Disqualified Stock) of the Company,
excluding, in the case of clause (A) or (B):
(x) any such Debt issued or sold to the Company or a
Subsidiary or an Unrestricted Subsidiary or an employee stock ownership
plan or trust established by the Company or any Subsidiary or an
Unrestricted Subsidiary for the benefit of their employees, and
(y) the aggregate amount of any cash or other Property
distributed by the Company or any Subsidiary upon any such conversion
or exchange,
plus
(4) an amount equal to the sum of:
(A) the net reduction in Investments in any Person
other than the Company or a Subsidiary resulting from
dividends, repayments of loans or advances or cash proceeds
from transfers of Property, in each case to the Company or any
Subsidiary from such Person plus
(B) the portion (proportionate to the Company's
equity interest in such Unrestricted Subsidiary) of the Fair
Market Value of the net assets of an Unrestricted Subsidiary
at the time such Unrestricted Subsidiary is designated a
Restricted Subsidiary; provided, however, that the foregoing
sum shall not exceed, in the case of any Person, the amount of
Investments previously made (and treated as a Restricted
Payment) by the Company or any Restricted Subsidiary in such
Person.
Notwithstanding the foregoing limitation, the Company or any
Subsidiary or any Unrestricted Subsidiary may:
(a) pay dividends on Capital Stock of the Company within 60
days of the declaration thereof if, on said
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declaration date, such dividends could have been paid in compliance with the
Indenture; provided, however, that at the time of such payment, no other Default
or Event of Default shall have occurred and be continuing (or result therefrom);
provided further, however, that such payment shall be included in the
calculation of the amount of Restricted Payments;
(b) purchase, repurchase, redeem, legally defease, acquire or
retire for value (i) Capital Stock of the Company or Subordinated Obligations in
exchange for, or out of the proceeds of the substantially concurrent sale of,
Capital Stock of the Company (other than Disqualified Stock and other than
Capital Stock issued or sold to a Subsidiary or an Unrestricted Subsidiary or an
employee stock ownership plan or trust established by the Company or any such
Subsidiary or Unrestricted Subsidiary for the benefit of their employees) or
(ii) trust preferred securities or related Subordinated Obligations in
connection with a remarketing and issuance of trust preferred securities or
related Subordinated Obligations in an aggregate principal amount not greater
than the original trust preferred securities or related Subordinated
Obligations; provided, however, that, in the case of clause (i) or (ii):
(1) such purchase, repurchase, redemption, legal defeasance,
acquisition or retirement shall be excluded in the calculation of the
amount of Restricted Payments, and
(2) the Capital Stock Sale Proceeds from such exchange or sale
(other than from the exercise of warrants in connection with a
remarketing of trust preferred securities or related Subordinated
Obligations) shall be excluded from the calculation pursuant to clause
(d)(2) above;
(c) purchase, repurchase, redeem, legally defease, acquire or
retire for value any Subordinated Obligations in exchange for, or out of the
proceeds of the substantially concurrent sale of, Permitted Refinancing Debt;
provided, however, that such purchase, repurchase, redemption, legal defeasance,
acquisition or retirement shall be excluded in the calculation of the amount of
Restricted Payments; and
(d) make other Restricted Payments, including Restricted
Payments of the type described in clauses (a), (b) and (c), in an aggregate
annual amount not to exceed $25,000,000; provided, however, that at the time of
such payment, no other Default or Event of Default shall have occurred and be
continuing (or result therefrom);
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provided further, however, that such payment shall be included in the
calculation of the amount of Restricted Payments.
SECTION 4.05. Limitation on Liens. The Company shall not, and
shall not permit any Subsidiary to, directly or indirectly, Incur or suffer to
exist, any Lien (other than Permitted Liens) upon any of its Property (including
Capital Stock of a Subsidiary), whether owned at the Issue Date or thereafter
acquired, or any interest therein or any income or profits therefrom, unless it
has made or will make effective provision whereby the Securities or any
applicable Subsidiary Guaranty will be secured by such Lien equally and ratably
with (or prior to) all other Debt of the Company or any Subsidiary secured by
such Lien.
SECTION 4.06. Limitation on Restrictions on Distributions from
Subsidiaries. The Company shall not, and shall not permit any Subsidiary to,
directly or indirectly, create or otherwise cause or suffer to exist any
consensual restriction on the right of any Subsidiary to:
(a) pay dividends, in cash or otherwise, or make any other
distributions on or in respect of its Capital Stock, or pay any Debt or other
obligation owed, to the Company or any other Subsidiary,
(b) make any loans or advances to the Company or any other
Subsidiary or
(c) transfer any of its Property to the Company or any other
Subsidiary.
The foregoing limitations will not apply:
(1) with respect to clauses (a), (b) and (c), to restrictions:
(A) in effect on the Issue Date,
(B) relating to Debt of a Subsidiary and existing at the time
it became a Subsidiary if such restriction was not created in
connection with or in anticipation of the transaction or series of
transactions pursuant to which such Subsidiary became a Subsidiary or
was acquired by the Company, or
(C) that result from the Refinancing of Debt Incurred pursuant
to an agreement referred to in clause (1)(A) or (B) above or in clause
(3)(A) or (B) below,
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provided such restriction is no less favorable to the Holders of
Securities than those under the agreement evidencing the Debt so
Refinanced, or
(D) imposed or effectively imposed by any governmental agency
having regulatory supervision over Sovereign Bank or any other
Subsidiary, or
(E) relating to Debt of a Financial Services Subsidiary
Incurred pursuant to clause (i) of Section 4.03,
(2) with respect to clause (a) only, to restrictions relating
to any Qualified Preferred Stock issued after the Issue Date, and
(3) with respect to clause (c) only, to restrictions:
(A) relating to Debt that is permitted to be Incurred and
secured without also securing the Securities or any applicable
Subsidiary Guaranty pursuant to Sections 4.03 and 4.05 that limit the
right of the debtor to dispose of the Property securing such
Debt,
(B) encumbering Property at the time such Property was
acquired by the Company or any Subsidiary, so long as such restriction
relates solely to the Property so acquired and was not created in
connection with or in anticipation of such acquisition,
(C) resulting from customary provisions restricting subletting
or assignment of leases or customary provisions in other agreements
that restrict assignment of such agreements or rights thereunder, or
(D) customary restrictions contained in asset sale agreements
limiting the transfer of such Property pending the closing of such
sale.
SECTION 4.07. Limitation on Transactions with Affiliates. The
Company shall not, and shall not permit any Subsidiary to, directly or
indirectly, conduct any business or enter into or suffer to exist any
transaction or series of transactions (including the purchase, sale, transfer,
assignment, lease, conveyance or exchange of any Property or the rendering of
any service) with, or for the benefit of, any Affiliate of the Company (an
"Affiliate Transaction"), unless:
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(a) the terms of such Affiliate Transaction are:
(1) set forth in writing, and
(2) no less favorable to the Company or such Subsidiary, as
the case may be, than those that could be obtained in a comparable
arm's-length transaction with a Person that is not an Affiliate of the
Company,
(b) if such Affiliate Transaction involves aggregate payments
or value in excess of $5,000,000, the Board of Directors (including a majority
of the disinterested members of the Board of Directors) approves such Affiliate
Transaction and, in its good faith judgment, believes that such Affiliate
Transaction complies with clause (a)(2) of this paragraph as evidenced by a
Board Resolution promptly delivered to the Trustee, and
(c) if such Affiliate Transaction involves aggregate payments
or value in excess of $25,000,000, the Company obtains a written opinion from an
Independent Financial Advisor to the effect that the consideration to be paid or
received in connection with such Affiliate Transaction is fair, from a financial
point of view, to the Company and its Subsidiaries, taken as a whole.
Notwithstanding the foregoing limitation, the Company or any
Subsidiary may enter into or suffer to exist the following:
(a) any transaction or series of transactions between the
Company and one or more Subsidiaries or between two or more Subsidiaries in the
ordinary course of business, provided that no more than 5% of the total voting
power of the Voting Stock (on a fully diluted basis) of any such Subsidiary is
owned by an Affiliate of the Company (other than a Subsidiary);
(b) any Restricted Payment permitted to be made pursuant to
Section 4.04 or any Permitted Investment;
(c) the payment of compensation (including amounts paid
pursuant to employee benefit plans) for the personal services of officers,
directors and employees of the Company or any of the Subsidiaries, so long as
the Board of Directors in good faith shall have approved the terms thereof and
deemed the services theretofore or thereafter to be performed for such
compensation to be fair consideration therefor; and
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(d) loans and advances to employees made in the ordinary
course of business and consistent with the past practices of the Company or such
Subsidiary, as the case may be, provided that such loans and advances do not
exceed $25,000,000 in the aggregate at any one time outstanding.
SECTION 4.08. Designation of Restricted and Unrestricted
Subsidiaries. For purposes of this Indenture, the term "Subsidiary" has the same
meaning as "Restricted Subsidiary", except for below and where otherwise
provided for in this Indenture. The Board of Directors may designate any
Subsidiary of the Company to be an Unrestricted Subsidiary if:
(a) the Subsidiary to be so designated does not own any
Capital Stock or Debt of, or own or hold any Lien on any Property of,
the Company or any other Restricted Subsidiary, and
(b) either:
(1) the Subsidiary to be so designated has total
assets of $1,000 or less, or
(2) such designation is effective immediately upon
such entity becoming a Subsidiary of the Company.
Unless so designated as an Unrestricted Subsidiary, any Person that becomes a
Subsidiary of the Company will be classified as a Restricted Subsidiary;
provided, however, that such Subsidiary shall not be designated a Restricted
Subsidiary and shall be automatically classified as an Unrestricted Subsidiary
if either of the requirements set forth in clauses (x) and (y) of the second
immediately following paragraph will not be satisfied after giving pro forma
effect to such classification or if such Person is a Subsidiary of an
Unrestricted Subsidiary.
Except as provided in the first sentence of the preceding
paragraph, no Restricted Subsidiary may be redesignated as an Unrestricted
Subsidiary. In addition, neither the Company nor any Restricted Subsidiary shall
at any time be directly or indirectly liable for any Debt that provides that the
holder thereof may (with the passage of time or notice or both) declare a
default thereon or cause the payment thereof to be accelerated or payable prior
to its Stated Maturity upon the occurrence of a default with respect to any
Debt, Lien or other obligation of any Unrestricted Subsidiary (including any
right to take enforcement action against such Unrestricted Subsidiary).
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Upon designation of a Restricted Subsidiary as an Unrestricted Subsidiary in
compliance with this covenant, such Restricted Subsidiary shall, by execution
and delivery of a supplemental indenture in form satisfactory to the Trustee, be
released from any Subsidiary Guaranty previously made by such Restricted
Subsidiary.
The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary if, immediately after giving pro forma
effect to such designation,
(x) the Company could Incur at least $1.00 of additional Debt
pursuant to both clauses (c) and (d) of Section 4.03, and
(y) no Default or Event of Default shall have occurred and be
continuing or would result therefrom.
Any such designation or redesignation by the Board of
Directors will be evidenced to the Trustee by filing with the Trustee a Board
Resolution giving effect to such designation or redesignation and an Officers'
Certificate that:
(a) certifies that such designation or redesignation complies
with the foregoing provisions, and
(b) gives the effective date of such designation or
redesignation, such filing with the Trustee to occur within 45 days
after the end of the fiscal quarter of the Company in which such
designation or redesignation is made (or, in the case of a designation
or redesignation made during the last fiscal quarter of the Company's
fiscal year, within 90 days after the end of such fiscal year).
SECTION 4.09. Limitation on Company's Business. The Company
shall not, and shall not permit any Subsidiary, to, directly or indirectly,
engage in any business other than the Banking Business.
SECTION 4.10. Change of Control. (a) Upon the occurrence of a
Change of Control, each Holder of Securities shall have the right to require the
Company to repurchase all or any part of such Holder's Securities pursuant to
the offer described below (the "Change of Control Offer") at a purchase price
(the "Change of Control Purchase Price") equal to 101.0% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the purchase date
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(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date). Notwithstanding a
Change of Control, the Company shall not be obligated to purchase the Securities
to the extent that it has exercised its right to redeem all the Securities.
(b) Within 45 days following any Change of Control (the
"Change of Control Notice Date"), the Company shall (i) cause a notice of the
Change of Control Offer to be sent at least once to the Dow Jones News Service
or similar business news service in the United States and (ii) send, by
first-class mail, with a copy to the Trustee, to each Holder of Securities, at
such Holder's address appearing in the Security Register, a notice stating: (A)
that a Change of Control Offer is being made pursuant to this Section 4.10 and
that all Securities timely tendered will be accepted for payment; (B) the Change
of Control Purchase Price and the purchase date, which shall be, subject to any
contrary requirements of applicable law, a Business Day no earlier than 30 days
nor later than 60 days from the date such notice is mailed (the "Change of
Control Payment Date"); (C) that any Security (or portion thereof) accepted for
payment (and duly paid on the Change of Control Payment Date) pursuant to the
Change of Control Offer shall cease to accrue interest after the Change of
Control Payment Date; (D) that any Security (or portions thereof) not properly
tendered will continue to accrue interest; (E) the circumstances and relevant
facts regarding the Change of Control (including information with respect to pro
forma historical income, cash flow and capitalization after giving effect to the
Change of Control); and (F) the procedures that Holders of Securities must
follow in order to tender their Securities (or portions thereof) for payment and
the procedures that Holders of Securities must follow in order to withdraw an
election to tender Securities (or portions thereof) for payment.
(c) Holders electing to have a Security purchased shall be
required to surrender the Security, with an appro priate form duly completed, to
the Company or its agent at the address specified in the notice at least three
Business Days prior to the Change of Control Payment Date. Holders shall be
entitled to withdraw their election if the Trustee or the Company receives not
later than one Business Day prior to the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Security that was delivered for purchase by
the Holder and a statement that such Holder is withdrawing its election to have
such Security purchased.
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(d) On or prior to the Change of Control Payment Date, the
Company shall irrevocably deposit with the Trustee or with the Paying Agent (or,
if the Company or any of its Wholly Owned Subsidiaries is acting as the Paying
Agent, segregate and hold in trust) in cash an amount equal to the Change of
Control Purchase Price payable to the Holders entitled thereto, to be held for
payment in accordance with the provisions of this Section. On the Change of
Control Payment Date, the Company shall deliver to the Trustee the Securities or
portions thereof that have been properly tendered to and are to be accepted by
the Company for payment. The Trustee or the Paying Agent shall, on the Change of
Control Payment Date, mail or deliver payment to each tendering Holder of the
Change of Control Purchase Price. In the event that the aggregate Change of
Control Purchase Price is less than the amount delivered by the Company to the
Trustee or the Paying Agent, the Trustee or the Paying Agent, as the case may
be, shall deliver the excess to the Company immediately after the Change of
Control Payment Date.
(e) The Company will comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the purchase of Securities pursuant to
this Section. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Section, the Company will
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under this Section by virtue thereof.
SECTION 4.11. Subsidiary Guarantors. The Company shall cause
each Material Domestic Subsidiary to execute and deliver to the Trustee a
supplemental indenture in the form of Exhibit A pursuant to which such
Subsidiary shall guarantee payment of the Securities as provided in Section
10.06, unless such Material Domestic Subsidiary is a banking institution, a
subsidiary of a banking institution or a special purpose trust established for
the purpose of issuing trust preferred securities. Notwithstanding the
foregoing, any Subsidiary that enters into a Guarantee or otherwise Incurs Debt
under a Credit Facility, in either case pursuant to clause (e) of Section 4.03,
shall, at such time, execute and deliver to the Trustee a supplemental indenture
in the form of Exhibit A obligating such Subsidiary as a Subsidiary Guarantor
under the Indenture and the Securities; provided, that, if such Subsidiary would
not otherwise have become a Subsidiary Guarantor but for the Credit Facility,
such Subsidiary Guaranty shall be effective
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only to the same extent and for so long as such Subsidiary is so obligated under
such Credit Facility.
SECTION 4.12. Tax Sharing Agreement. The Company shall not,
and shall not permit any Subsidiary to, terminate, amend, modify or waive any
provisions of the Tax Sharing Agreement or enter into any other tax allocation,
sharing or similar agreement; provided, however, that:
(a) any provision of the Tax Sharing Agreement may be
terminated, amended, modified or waived (i) to the extent required by
any governmental agency having regulatory supervision over Sovereign
Bank or any other Subsidiary of the Company or (ii) if such
termination, amendment, modification or waiver does not materially
adversely affect the Company, any Subsidiary Guarantor or their rights,
benefits or obligations under the Tax Sharing Agreement; and
(b) the Company or any Subsidiary may enter into such other
tax agreement with any direct or indirect shareholder of the Company
with respect to consolidated or combined tax returns including the
Company or any of its Subsidiaries or Unrestricted Subsidiaries but
only to the extent that amounts payable from time to time by the
Company or any such Subsidiary under any such agreement do not exceed
the corresponding tax payments that the Company or such Subsidiary
would have been required to make to any relevant taxing authority had
the Company or such Subsidiary not joined in such consolidated or
combined returns, but instead had filed returns including only the
Company and its Subsidiaries, provided that such agreement does not
materially adversely affect the Company, any Subsidiary Guarantor or
their rights, benefits or obligations under the Tax Sharing Agreement
as in effect at such time.
SECTION 4.13. Maintenance of Status of Subsidiaries as Insured
Depository Institutions; Capital Maintenance. (a) The Company shall do or cause
to be done all things necessary to preserve and keep in full force and effect
the status of each of its Subsidiaries that is a Depository Institution as an
insured depository institution and do all things necessary to ensure that
savings accounts of each such Subsidiary are insured by the FDIC or any
successor organization up to the maximum amount permitted by 12 U.S.C. Section
1811 et seq. and the regulations thereunder or any succeeding federal law,
except as to individual accounts or interests in employee benefit plans
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that are not entitled to "pass-through" insurance under 12 U.S.C. Section
1812(a)(1)(D).
(b) The Company shall cause Sovereign Bank to maintain or
exceed the status of a "well capitalized" institution as defined in the FDIA and
OTS regulations.
SECTION 4.14. Compliance Certificate. The Company shall
deliver to the Trustee within 120 days after the end of each fiscal year of the
Company an Officers' Certificate stating that in the course of the performance
by the signers of their duties as Officers of the Company they would normally
have knowledge of any Default and whether or not the signers know of any Default
that occurred during such period. If they do, the certificate shall describe the
Default, its status and what action the Company is taking or proposes to take
with respect thereto. The Company also shall comply with TIA ss. 314(a)(4).
SECTION 4.15. Further Instruments and Acts. Upon request of
the Trustee, the Company shall execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
SECTION 4.16. Covenant Suspension. During any period of time
that:
(a) the Securities have Investment Grade Ratings from both S&P and
Moody's and
(b) no Default or Event of Default has occurred and is continuing under
the Indenture, the Company and the Subsidiaries will not be subject to the
following provisions of the Indenture: Sections 4.03, 4.04, 4.06, 4.07 and 4.09,
clause (x) of the third paragraph (and such clause (x) as referred to in the
first paragraph) of Section 4.08 and clauses (5) and (6) of Sections 5.01(a) and
5.02(a) (collectively, the "Suspended Covenants").
In the event that the Company and the Subsidiaries are not
subject to the Suspended Covenants for any period of time as a result of the
preceding sentence and, subsequently, one or both of S&P and/or Moody's
withdraws its ratings or downgrades the ratings assigned to the Securities below
the required Investment Grade Ratings or a Default or Event of Default occurs
and is continuing, then the Company and the Subsidiaries will thereafter again
be subject to the Suspended Covenants and compliance with the Suspended
Covenants with respect to Restricted Payments made after the time of such
withdrawal, downgrade, Default or
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Event of Default will be calculated in accordance with the terms of Section 4.04
as though, for purposes of determining whether new Restricted Payments can be
made after such time, such covenant had been in effect during the entire period
of time from the Issue Date.
ARTICLE V
Successor Company
SECTION 5.01. (a) When Company May Merge or Transfer Assets.
The Company shall not merge, consolidate or amalgamate with or into any other
Person (other than a merger of a Wholly Owned Subsidiary into the Company) or
sell, transfer, assign, lease, convey or otherwise dispose of all or
substantially all its Property in any one transaction or series of transactions
unless:
(1) the Company shall be the surviving Person (the "Surviving
Person") or the Surviving Person (if other than the Company) formed by
such merger, consolidation or amalgamation or to which such sale,
transfer, assignment, lease, conveyance or disposition is made shall be
a corporation organized and existing under the laws of the United
States of America, any State thereof or the District of Columbia;
(2) the Surviving Person (if other than the Company) expressly
assumes, by supplemental indenture in form satisfactory to the Trustee,
executed and delivered to the Trustee by such Surviving Person, the due
and punctual payment of the principal of, and premium, if any, and
interest on, all the Securities, according to their tenor, and the due
and punctual performance and observance of all the covenants and
conditions of the Indenture to be performed by the Company;
(3) in the case of a sale, transfer, assignment, lease,
conveyance or other disposition of all or substantially all the
Property of the Company, such Property shall have been transferred as
an entirety or virtually as an entirety to one Person;
(4) immediately before and after giving effect to such
transaction or series of transactions on a pro forma basis (and
treating, for purposes of this clause (4) and clauses (5) and (6)
below, any Debt that becomes, or is anticipated to become, an
obligation of the Surviving Person or any Subsidiary as a result of
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such transaction or series of transactions as having been Incurred by
the Surviving Person or such Subsidiary at the time of such transaction
or series of transactions), no Default or Event of Default shall have
occurred and be continuing;
(5) immediately after giving effect to such transaction or
series of transactions on a pro forma basis, the Company or the
Surviving Person, as the case may be, would be able to Incur at least
$1.00 of additional Debt under both clauses (c) and (d) of Section
4.03;
(6) immediately after giving effect to such transaction or
series of transactions on a pro forma basis, the Surviving Person shall
have an Adjusted Consolidated Net Worth in an amount which is not less
than the Adjusted Consolidated Net Worth of the Company immediately
prior to such transaction or series of transactions;
(7) the Company shall deliver, or cause to be delivered, to
the Trustee, in form and substance reasonably satisfactory to the
Trustee, an Officers' Certificate and an Opinion of Counsel, each
stating that such transaction and the supplemental indenture, if any,
in respect thereto comply with this covenant and that all conditions
precedent herein provided for relating to such transaction have been
satisfied; and
(8) the Surviving Person shall have delivered to the Trustee
an Opinion of Counsel to the effect that the Holders will not recognize
income, gain or loss for Federal income tax purposes as a result of
such transaction or series of transactions and will be subject to
Federal income tax on the same amounts and at the same times as would
be the case if the transaction or series of transactions had not
occurred.
(b) The Surviving Person shall succeed to, and be substituted
for, and may exercise every right and power of the Company under the Indenture,
but the predecessor Company in the case of:
(1) a sale, transfer, assignment, conveyance or other
disposition (unless such sale, transfer, assignment, conveyance or
other disposition is of all the assets of the Company as an entirety or
virtually as an entirety), or
(2) a lease,
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shall not be released from any of the obligations or covenants under the
Indenture, including with respect to the payment of the Securities.
SECTION 5.02. (a) When Sovereign Bank or its Subsidiaries or a
Subsidiary Guarantor May Merge or Transfer Assets. The Company shall not permit
Sovereign Bank, or any of its Subsidiaries, or any Subsidiary Guarantor (each a
"Specified Party") to merge, consolidate or amalgamate with or into any other
Person (other than a merger of a Wholly Owned Subsidiary into such Specified
Party) or sell, transfer, assign, lease, convey or otherwise dispose of all or
substantially all its Property in any one transaction or series of transactions
unless:
(1) the Surviving Person (if not such Specified Party) formed
by such merger, consolidation or amalgamation or to which such sale,
transfer, assignment, lease, conveyance or disposition is made shall be
a corporation organized and existing under the laws of the United
States of America, any State thereof or the District of Columbia;
(2) solely in the case of such a transaction involving a
Subsidiary Guarantor, the Surviving Person (if other than such
Subsidiary Guarantor) expressly assumes, by Subsidiary Guaranty in form
satisfactory to the Trustee, executed and delivered to the Trustee by
such Surviving Person, the due and punctual performance and observance
of all the obligations of such Subsidiary Guarantor under its
Subsidiary Guaranty;
(3) in the case of a sale, transfer, assignment, lease,
conveyance or other disposition of all or substantially all the
Property of such Specified Party, such Property shall have been
transferred as an entirety or virtually as an entirety to one Person;
(4) immediately before and after giving effect to such
transaction or series of transactions on a pro forma basis (and
treating, for purposes of this clause (4) and clauses (5) and (6)
below, any Debt that becomes, or is anticipated to become, an
obligation of the Surviving Person, the Company or any Subsidiary as a
result of such transaction or series of transactions as having been
Incurred by the Surviving Person, the Company or such Subsidiary at the
time of such transaction or series of transactions), no Default or
Event of Default shall have occurred and be continuing;
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(5) immediately after giving effect to such transaction or
series of transactions on a pro forma basis, the Company would be able
to Incur at least $1.00 of additional Debt under both clauses (c) and
(d) of Section 4.03;
(6) immediately after giving effect to such transaction or
series of transactions on a pro forma basis, the Company shall have an
Adjusted Consolidated Net Worth in an amount which is not less than the
Adjusted Consolidated Net Worth of the Company immediately prior to
such transaction or series of transactions; and
(7) the Company shall deliver, or cause to be delivered, to
the Trustee, in form and substance reasonably satisfactory to the
Trustee, an Officers' Certificate and an Opinion of Counsel, each
stating that such transaction and such Subsidiary Guaranty, if any, in
respect thereto comply with this covenant and that all conditions
precedent herein provided for relating to such transaction have been
satisfied.
(b) Solely in the case of a transaction involving a Subsidiary
Guarantor, the Surviving Person shall succeed to, and be substituted for, and
may exercise every right and power of the Subsidiary Guarantor under the
Subsidiary Guaranty but the predecessor Subsidiary Guarantor in the case of:
(1) a sale, transfer, assignment, conveyance or other
disposition (unless such sale, transfer, assignment, conveyance or
other disposition is of all the assets of the Subsidiary Guarantor as
an entirety or virtually as an entirety), or
(2) a lease,
shall not be released from any of its obligations or covenants under the
Indenture, including with respect to the payment of the Securities.
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ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default. The following events shall be
"Events of Default":
(1) the Company defaults in any payment of interest on any
Security when the same becomes due and payable, and such default
continues for a period of 30 days;
(2) the Company defaults in the payment of the principal of
any Security when the same becomes due and payable at its Stated
Maturity, upon acceleration, mandatory redemption, optional redemption,
required repurchase or otherwise,
(3) the Company or any Subsidiary Guarantor or Sovereign Bank
or any of its Subsidiaries fails to comply with Article 5 or with any
covenant or agreement in the Pledge and Escrow Agreement;
(4) the Company fails to comply with any covenant or agreement
in the Securities or in this Indenture (other than a failure that is
the subject of the foregoing clause (1), (2) or (3)) and such failure
continues for 30 days after written notice is given to the Company as
specified below;
(5) a default by the Company or any Subsidiary under any Debt
of the Company or any Subsidiary which results in acceleration of the
maturity of such Debt, or the failure to pay any such Debt at maturity,
in an aggregate amount in excess of $25,000,000 or its foreign currency
equivalent at the time;
(6) the Company or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case;
(C) consents to the appointment of a Custodian of it
or for any substantial part of its property; or
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(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws
relating to insolvency;
(7) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any
Significant Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any
Significant Subsidiary or for any substantial part of its
property; or
(C) orders the winding up or liquidation of the
Company or any Significant Subsidiary; or
(D) grants any similar relief under any foreign laws;
and in each such case the order or decree remains unstayed and in
effect for 30 days;
(8) any judgment or judgments for the payment of money in an
unsecured aggregate amount in excess of $50,000,000 or its foreign
currency equivalent at the time is entered against the Company or any
Subsidiary and shall not be waived, satisfied or discharged for any
period of 45 consecutive days during which a stay of enforcement shall
not be in effect;
(9) any Subsidiary Guaranty ceases to be in full force and
effect (other than in accordance with the terms of this Indenture and
such Subsidiary Guaranty) or any Subsidiary Guarantor denies or
disaffirms its obligations under its Subsidiary Guaranty; or
(10) the failure of the Company or its Wholly Owned
Subsidiaries to own 100% of the Voting Stock or common stock (or
Capital Stock convertible into Voting Stock or common stock) of
Sovereign Bank ("the ownership provisions").
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.
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The term "Bankruptcy Law" means Title 11, United States Code,
or any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
A Default under clause (4) is not an Event of Default until
the Trustee or the Holders of at least 25% in aggregate principal amount of the
Securities then outstanding notify the Company (and in the case of such notice
by Holders, the Trustee) of the Default and the Company does not cure such
Default within the time specified after receipt of such notice. Such notice must
specify the Default, demand that it be remedied and state that such notice is a
"Notice of Default".
The Company shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any Event of Default and any event that with the giving of notice or the
lapse of time would become an Event of Default, its status and what action the
Company is taking or proposes to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default (other than
an Event of Default specified in Section 6.01(6) or (7) with respect to the
Company) occurs and is continuing, the Trustee by notice to the Company, or the
Holders of at least 25% in aggregate principal amount of the Securities then
outstanding by notice to the Company and the Trustee, may declare the principal
of and accrued and unpaid interest on all the Securities to be due and payable.
Upon such a declaration, such principal and interest shall be due and payable
immediately. If an Event of Default specified in Section 6.01(6) or (7) with
respect to the Company occurs, the principal of and accrued and unpaid interest
on all the Securities shall, automatically and without any action by the Trustee
or any Holder, become and be immediately due and payable. The Holders of a
majority in aggregate principal amount of the outstanding Securities by notice
to the Trustee and the Company may rescind any declaration of acceleration if
the rescission would not conflict with any judgment or decree and if all
existing Events of Default have been cured or waived except nonpayment of
principal or interest that has become due solely because of the acceleration. No
such rescission shall affect any subsequent Default or impair any right
consequent thereto.
SECTION 6.03. Other Remedies. If an Event of Default occurs
and is continuing, the Trustee may pursue any
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available remedy to collect the payment of principal of or interest on the
Securities or to enforce the performance of any provision of the Securities or
this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a
majority in aggregate principal amount of the Securities then outstanding by
notice to the Trustee may waive an existing Default and its consequences except
(i) a Default in the payment of the principal of or interest on a Security or
(ii) a Default in respect of a provision that under Section 9.02 cannot be
amended without the consent of each Securityholder affected. When a Default is
waived, it is deemed cured, but no such waiver shall extend to any subsequent or
other Default or impair any consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority
in aggregate principal amount of the Securities then outstanding may direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or of exercising any trust or power conferred on the Trustee with
respect to the Securities. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture or, subject to Section 601
of the Existing Indenture, that the Trustee determines is unduly prejudicial to
the rights of other Securityholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to reasonable
indemnification against all losses and expenses caused by taking or not taking
such action.
SECTION 6.06. Limitation on Suits. A Securityholder may not
pursue any remedy with respect to this Indenture or the Securities unless:
(1) such Holder shall have previously given to the Trustee
written notice of a continuing Event of Default;
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(2) the Holders of at least 25% in aggregate principal amount
of the Securities then outstanding shall have made a written request,
and such Holder of or Holders shall have offered reasonable indemnity,
to the Trustee to pursue such proceeding as trustee; and
(3) the Trustee has failed to institute such proceeding and
has not received from the Holders of at least a majority in aggregate
principal amount of the Securities outstanding a direction inconsistent
with such request, within 60 days after such notice, request and offer.
The foregoing limitations on the pursuit of remedies by a
Securityholder shall not apply to a suit instituted by a Holder of Securities
for the enforcement of payment of the principal of or interest on such Security
on or after the applicable due date specified in such Security. A Securityholder
may not use this Indenture to prejudice the rights of another Securityholder or
to obtain a preference or priority over another Securityholder.
SECTION 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of and interest on the Securities held by such
Holder, on or after the respective due dates expressed in the Securities, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of
Default specified in Section 6.01(1) or (2) occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company for the whole amount then due and owing (together with
interest on any unpaid interest to the extent lawful) and the amounts provided
for in Section 607 of the Existing Indenture.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee
may file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, its creditors or
its property and, unless prohibited by law or applicable regulations, may vote
on behalf of the Holders in any election of a trustee in bankruptcy or other
Person performing similar functions, and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make payments to the Trustee
and, in the event that the
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Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and its counsel, and any
other amounts due the Trustee under Section 607 of the Existing Indenture.
SECTION 6.10. Priorities. If the Trustee collects any money
or property pursuant to this Article 6, it shall pay out the money or property
in the following order:
FIRST: to the Trustee for amounts due under Section 607 of
the Existing Indenture;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Company shall mail to each Securityholder and the Trustee
a notice that states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any
party litigant in the suit, having due regard to the merits and good faith of
the claims or defenses made by the party litigant. This Section does not apply
to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit
by Holders of more than 10% in aggregate principal amount of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. The Company
(to the extent it may lawfully do so) shall not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, that may affect the covenants or the performance of this Indenture; and
the Company (to the extent that it may lawfully do so) hereby expressly waives
all benefit or
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advantage of any such law, and shall not hinder, delay or impede the execution
of any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law had been enacted.
ARTICLE VII
Trustee
SECTION 7.01. Trustee Provisions. Articles 6 and 7 of the Existing
Indenture shall (subject to any other provisions herein to the contrary) apply
in their entirety to this Indenture except that:
(1) references therein to Debt Securities shall be
references to the Securities covered by this First
Supplemental Indenture;
(2) the principal amount of Outstanding Debt Securities
shall be the amount of Securities that would be
outstanding pursuant to Section 2.08 herein;
(3) the reference to Article Five in the final paragraph
of Section 607 shall be a reference to Article VI
herein;
(4) the reference to Section 514 in the final paragraph
of Section 610(d) and in Section 610(e) shall be a
reference to Section 6.11 herein;
(5) Registered Securities shall refer to Securities
registered pursuant to Section 2.04 herein;
(6) Section 614 shall be deleted;
(7) the Regular Record Dates for purposes of Section 701
shall mean May 1 and November 1; and
(8) Section 704 shall be deleted.
Notwithstanding anything in the Existing Indenture to the contrary, the Trustee
is also authorized and permitted to take any actions permitted pursuant to the
Pledge and Escrow Agreement, including the delivery of the notice pursuant to
Section 2(b) of the Pledge and Escrow Agreement (and the Trustee shall be
required to take any such action upon
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receipt of notice from Holders of at least 25% in aggregate principal amount of
the Securities then outstanding, provided that, subject to Section 9.02, Holders
of a majority in aggregate principal amount of the Securities may waive such
notice).
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities;
Defeasance. (a) When (i) the Company delivers to the Trustee all outstanding
Securities (other than Securities replaced pursuant to Section 2.07) for
cancelation or (ii) all outstanding Securities have become due and payable,
whether at maturity or as a result of the mailing of a notice of redemption
pursuant to Article III and the Company irrevocably deposits with the Trustee
funds sufficient to pay at maturity or upon redemption all outstanding
Securities, including interest thereon to maturity or such redemption date
(other than Securities replaced pursuant to Section 2.07), and if in either case
the Company pays all other sums payable hereunder by the Company, then this
Indenture shall, subject to Section 8.01(c), cease to be of further effect. The
Trustee shall acknowledge satisfaction and discharge of this Indenture on demand
of the Company accompanied by an Officers' Certificate and an Opinion of Counsel
and at the cost and expense of the Company.
(b) Subject to Sections 8.01(c) and 8.02, the Company at any
time may terminate (i) all of its obligations under the Securities and this
Indenture ("legal defeasance option") or (ii) its obligations under Sections
4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12 and 4.13 and
the operation of Sections 6.01(5), 6.01(6), 6.01(7), 6.01(8), 6.01(9) and
6.01(10) (but, in the case of Sections 6.01(6) and (7), with respect only to
Subsidiaries) and the limitations contained in Section 5.01(a)(5) and (6) and
Section 5.02 ("covenant defeasance option"). The Company may exercise its legal
defeasance option notwithstanding its prior exercise of its covenant defeasance
option.
If the Company exercises its legal defeasance option, payment
of the Securities may not be accelerated because of an Event of Default. If the
Company exercises its covenant defeasance option, payment of the Securities may
not be accelerated because of an Event of Default specified in Sections 6.01(4)
(with respect to the covenants
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of Article IV identified in the immediately preceding paragraph), 6.01(5),
6.01(6), 6.01(7), 6.01(8), 6.01(9) and 6.01(10) (with respect only to
Subsidiaries in the case of Sections 6.01(6) and 6.01(7)) or because of the
failure of the Company to comply with the limitations contained in Section
5.01(a)(5) or (6) or Section 5.02. If the Company exercises its legal defeasance
option or its covenant defeasance option, each Subsidiary Guarantor, if any,
shall be released from all its obligations under its Subsidiary Guarantee.
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.04, 2.05, 2.06, 2.07, 8.05 and 8.06 and Sections 607
and 610 of the Existing Indenture shall survive until the Securities have been
paid in full. Thereafter, the Company's obligations in Section 8.05 and Section
607 of the Existing Indenture shall survive.
SECTION 8.02. Conditions to Defeasance. The Company may exercise its
legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee
money or U.S. Government Obligations for the payment of principal of
and interest on the Securities to maturity or redemption, as the case
may be;
(2) the Company delivers to the Trustee a cer tificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and
without reinvestment on the deposited U.S. Government Obligations plus
any deposited money without investment will provide cash at such times
and in such amounts as will be sufficient to pay principal and interest
when due on all the Securities to maturity or redemption, as the case
may be;
(3) 123 days pass after the deposit is made and during the
123-day period no Default specified in Section 6.01(6) or (7) with
respect to the Company occurs that is continuing at the end of the
period;
(4) the deposit does not constitute a default under any other
agreement binding on the Company;
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(5) the Company delivers to the Trustee an Opinion of Counsel
to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940;
(6) in the case of the legal defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(i) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (ii) since the date of this
Indenture there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that, the Securityholders will not recognize
income, gain or loss for Federal income tax purposes as a result of
such defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such defeasance had not occurred;
(7) in the case of the covenant defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Securityholders will not recognize income, gain or loss for
Federal income tax purposes as a result of such covenant defeasance
and will be subject to Federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such
covenant defeasance had not occurred; and
(8) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance and discharge of the Securities as
contemplated by this Article VIII have been complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article III.
SECTION 8.03. Application of Trust Money. The Trustee shall
hold in trust money or U.S. Government Obliga tions deposited with it pursuant
to this Article VIII. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities.
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SECTION 8.04. Repayment to Company. The Trustee and the Paying
Agent shall promptly turn over to the Company upon request any excess money or
securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Company upon request any money held by
them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, Securityholders entitled to the money must look to the
Company for payment as general creditors.
SECTION 8.05. Indemnity for Government Obligations. The
Company shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S. Government Obligations or
the principal and interest received on such U.S. Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with this
Article VIII by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article VIII until such time as the
Trustee or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article VIII; provided, however, that, if
the Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE IX
Amendments
SECTION 9.01. Without Consent of Holders. The Company, the Subsidiary
Guarantors and the Trustee may amend this Indenture or the Securities without
notice to or consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
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(2) to comply with Article V;
(3) to provide for uncertificated Securities in addition to or
in place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to add Guarantees with respect to the Securities or to
release Subsidiary Guarantors from Subsidiary Guarantees as provided by
the terms herein or to secure the Securities;
(5) to add to the covenants of the Company for the benefit of
the Holders or to surrender any right or power herein conferred upon
the Company;
(6) to comply with any requirements of the SEC in connection
with qualifying, or maintaining the qualification of, this Indenture
under the TIA;
(7) to make any change that does not adversely affect the
rights of any Securityholder; or
(8) to provide for the issuance of additional Securities as
permitted herein.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
SECTION 9.02. With Consent of Holders. The Company, the
Subsidiary Guarantors and the Trustee may amend this Indenture or the Securities
without notice to any Securityholder but with the written consent of the Holders
of at least a majority in aggregate principal amount of the Securities then
outstanding (including consents obtained in connection with a tender offer or
exchange offer for the Securities). However, without the consent of each
Securityholder affected thereby, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent
to an amendment or waiver;
(2) reduce the rate of or extend the time for payment of
interest on any Security;
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(3) reduce the principal of or extend the Stated Maturity of
any Security;
(4) impair the right of any Holder to receive payment of
principal of and interest on such Holder's Securities on or after the
due dates therefor or to institute suit for the enforcement of any
payment on or with respect to such Holder's Securities or any
Subsidiary Guaranty;
(5) subordinate the Securities or any Subsidiary Guaranty to
any other obligation of the Company or the applicable Subsidiary
Guarantor;
(6) reduce the amount payable upon the redemption or
repurchase of any Security under Article III, upon a Change of Control
Offer or upon a Special Mandatory Redemption, change the time at which
any Security may or shall be redeemed in accordance with Article III or
a Special Mandatory Redemption, make any other change in the provisions
relating to Special Mandatory Redemptions or, at any time after a
Change of Control has occurred, change the time at which any Change of
Control Offer must be made or at which the Securities must be
repurchased pursuant to such Change of Control Offer;
(7) make any Security payable in money other than that stated
in the Security;
(8) make any change in any Subsidiary Guaranty that would
adversely affect the Securityholders;
(9) release any security interest that may have been granted
in favor of the Holders other than pursuant to the terms of such
security interest, including the security interest under the Pledge and
Escrow Agreement;
(10) make any change in Section 6.04 or 6.07 or the second
sentence of this Section; or
(11) make any change in the Pledge and Escrow Agreement that
would adversely affect the holders of the Securities.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
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After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
SECTION 9.03. Compliance with Trust Indenture Act. Every amendment to
this Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such
Holder's Security or portion of the Security if the Trustee receives the notice
of revocation before the date the amendment or waiver becomes effective. After
an amendment or waiver becomes effective, it shall bind every Securityholder.
An amendment or waiver becomes effective upon the execution of such amendment or
waiver by the Trustee.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.
SECTION 9.05. Notation on or Exchange of Securities. If an
amendment changes the terms of a Security, the Trustee may require the Holder of
the Security to deliver such Security to the Trustee. The Trustee may place an
appropriate notation on the Security regarding the changed terms and return such
Security to the Holder. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Security shall issue and the Trustee
shall authenticate a new Security that reflects the changed terms. Failure to
make the appropriate notation or to issue a new Security shall not affect the
validity of such amendment.
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SECTION 9.06. Trustee To Sign Amendments. The Trustee shall sign any
amendment authorized pursuant to this Article IX if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Section 601 of the Existing Indenture) shall be
fully protected in relying upon, an Officers' Certificate and an Opinion of
Counsel stating that such amendment is authorized or permitted by this
Indenture.
SECTION 9.07. Payment for Consent. Neither the Company nor any
Affiliate of the Company shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
ARTICLE X
Subsidiary Guarantees
SECTION 10.01. Subsidiary Guarantees. Each Subsidiary
Guarantor hereby unconditionally guarantees, jointly and severally, to each
Holder and to the Trustee and its successors and assigns (a) the full and
punctual payment of principal of and interest on the Securities when due,
whether at maturity, by acceleration, by redemption or otherwise, and all other
monetary obligations of the Company under this Indenture and the Securities and
(b) the full and punctual performance within applicable grace periods of all
other obligations of the Company under this Indenture and the Securities (all
the foregoing being hereinafter collectively called the "Obligations"). Each
Subsidiary Guarantor further agrees that the Obligations may be extended or
renewed, in whole or in part, without notice or further assent from such
Subsidiary Guarantor, and that such Subsidiary Guarantor will remain bound under
this Article X notwithstanding any extension or renewal of any Obligation.
Each Subsidiary Guarantor waives presentation to, demand of, payment
from and protest to the Company of any of
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the Obligations and also waives notice of protest for nonpayment. Each
Subsidiary Guarantor waives notice of any default under the Securities or the
Obligations. The obligations of each Subsidiary Guarantor hereunder shall not be
affected by (a) the failure of any Holder or the Trustee to assert any claim or
demand or to enforce any right or remedy against the Company or any other Person
under this Indenture, the Securities or any other agreement or otherwise; (b)
any extension or renewal of any thereof; (c) any rescission, waiver, amendment
or modification of any of the terms or provisions of this Indenture, the
Securities or any other agreement; (d) the release of any security held by any
Holder or the Trustee for the Obligations or any of them; (e) the failure of any
Holder or the Trustee to exercise any right or remedy against any other
guarantor of the Obligations; or (f) any change in the ownership of such
Subsidiary Guarantor.
Subject to Section 5.02, if the Company sells or otherwise
disposes of either (1) its ownership interest in any Subsidiary Guarantor, or
(2) all or substantially all the assets of any Subsidiary Guarantor, such
Subsidiary Guarantor shall be released from all of its obligations under its
Subsidiary Guaranty.
Each Subsidiary Guarantor further agrees that its Subsidiary
Guaranty herein constitutes a guarantee of payment, performance and compliance
when due (and not a guarantee of collection) and waives any right to require
that any resort be had by any Holder or the Trustee to any security held for
payment of the Obligations.
Except as expressly set forth in Sections 4.08, 4.11, 5.02 and
8.01(b), the obligations of each Subsidiary Guarantor hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason,
including any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to any defense of setoff, counterclaim, recoupment or
termination whatsoever or by reason of the invalidity, illegality or
unenforceability of the Guaranteed Obligations or otherwise. Without limiting
the generality of the foregoing, the obligations of each Subsidiary Guarantor
herein shall not be discharged or impaired or otherwise affected by the failure
of any Holder or the Trustee to assert any claim or demand or to enforce any
remedy under this Indenture, the Securities or any other agreement, by any
waiver or modification of any thereof, by any default, failure or delay, willful
or otherwise, in the performance of the obligations, or by any other act or
thing or omission or delay to do any other act or thing which may or might in
any
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manner or to any extent vary the risk of such Subsidiary Guarantor or would
otherwise operate as a discharge of such Subsidiary Guarantor as a matter of law
or equity.
Each Subsidiary Guarantor further agrees that its Subsidiary
Guaranty herein shall continue to be effective or be reinstated, as the case may
be, if at any time payment, or any part thereof, of principal of or interest on
any Obligation is rescinded or must otherwise be restored by any Holder or the
Trustee upon the bankruptcy or reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any
other right which any Holder or the Trustee has at law or in equity against any
Subsidiary Guarantor by virtue hereof, upon the failure of the Company to pay
the principal of or interest on any Obligation when and as the same shall become
due, whether at maturity, by acceleration, by redemption or otherwise, or to
perform or comply with any other Obligation, each Subsidiary Guarantor hereby
promises to and will, upon receipt of written demand by the Trustee, forthwith
pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal
to the sum of (i) the unpaid amount of such Obligations, (ii) accrued and unpaid
interest on such Obligations (but only to the extent not prohibited by law) and
(iii) all other monetary Obligations of the Company to the Holders and the
Trustee.
Each Subsidiary Guarantor agrees that it shall not be entitled
to any right of subrogation in respect of any Obligations guaranteed hereby
until payment in full in cash of all Obligations. Each Subsidiary Guarantor
further agrees that, as between it, on the one hand, and the Holders and the
Trustee, on the other hand, (x) the maturity of the Obligations guaranteed
hereby may be accelerated as provided in Article VI for the purposes of such
Subsidiary Guarantor's Subsidiary Guaranty herein, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
Obligations guaranteed hereby, and (y) in the event of any declaration of
acceleration of such Obligations as provided in Article VI, such Obligations
(whether or not due and payable) shall forthwith become due and payable by such
Subsidiary Guarantor for the purposes of this Section.
Each Subsidiary Guarantor also agrees to pay any and all costs
and expenses (including reasonable attorneys' fees) incurred by the Trustee or
any Holder in enforcing any rights under this Section 10.01.
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SECTION 10.02. Contribution. Each of the Company and any
Subsidiary Guarantor (a "Contributing Party") agrees that, in the event a
payment shall be made by any other Subsidiary Guarantor under any Subsidiary
Guaranty (the "Claiming Guarantor"), the Contributing Party shall indemnify the
Claiming Guarantor in an amount equal to the amount of such payment multiplied
by a fraction, the numerator of which shall be the net worth of the Contributing
Party on the date hereof and the denominator of which shall be the aggregate net
worth of the Company and all the Subsidiary Guarantors on the date hereof (or,
in the case of any Subsidiary Guarantor becoming a party hereto pursuant to
Section 10.06, the date of the supplemental indenture executed and delivered by
such Subsidiary Guarantor).
SECTION 10.03. Successors and Assigns. This Article X shall be
binding upon each Subsidiary Guarantor and its successors and assigns and shall
inure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges conferred upon that party in this
Indenture and in the Securities shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions of this
Indenture.
SECTION 10.04. No Waiver. Neither a failure nor a delay on the
part of either the Trustee or the Holders in exercising any right, power or
privilege under this Article X shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise of any
right, power or privilege. The rights, remedies and benefits of the Trustee and
the Holders herein expressly specified are cumulative and not exclusive of any
other rights, remedies or benefits which either may have under this Article X at
law, in equity, by statute or otherwise.
SECTION 10.05. Modification. No modification, amendment or
waiver of any provision of this Article X, nor the consent to any departure by
any Subsidiary Guarantor therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Trustee, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. No notice to or demand on any Subsidiary Guarantor in any case
shall entitle such Subsidiary Guarantor to any other or further notice or demand
in the same, similar or other circumstances.
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SECTION 10.06. Execution of Supplemental Indenture for Future
Subsidiary Guarantors. Each Subsidiary which is required to become a Subsidiary
Guarantor pursuant to Section 4.11 shall promptly execute and deliver to the
Trustee a supplemental indenture in the form of Exhibit A hereto pursuant to
which such Subsidiary shall become a Subsidiary Guarantor under this Article X
and shall guarantee the Obligations. Concurrently with the execution and
delivery of such supplemental indenture, the Company shall deliver to the
Trustee an Opinion of Counsel to the effect that such supplemental indenture has
been duly authorized, executed and delivered by such Subsidiary and that,
subject to the application of bankruptcy, insolvency, moratorium, fraudulent
conveyance or transfer and other similar laws relating to creditors' rights
generally and to the principles of equity, whether considered in a proceeding at
law or in equity, the Subsidiary Guaranty of such Subsidiary Guarantor is a
legal, valid and binding obligation of such Subsidiary Guarantor, enforceable
against such Subsidiary Guarantor in accordance with its terms.
ARTICLE XI
Miscellaneous
SECTION 11.01. Trust Indenture Act Controls. If any provision
of this Indenture limits, qualifies or conflicts with another provision that is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 11.02. Notices. Any notice or communication shall be
in writing and delivered in person or mailed by first-class mail or sent by
facsimile (with a hard copy delivered in person or by mail promptly thereafter)
and addressed as follows:
if to the Company:
Sovereign Bancorp, Inc.
1130 Berkshire Boulevard
Wyomissing, Pennsylvania 19610
Attention of: Secretary
with a copy to:
Stevens & Lee
111 North Sixth Street
Reading, PA 19603
Attention: Joseph Harenza
if to the Trustee:
Harris Trust and Savings Bank
311 West Monroe, 12th Floor
Chicago, IL 60606
Attention of: Indenture Trust Department
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The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
SECTION 11.03. [Intentionally Left Blank]
SECTION 11.04. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the Trustee to take
or refrain from taking any action under this Indenture, the Company shall
furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 11.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the
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statements or opinions contained in such certificate or opinion are
based;
(3) a statement that, in the opinion of such individual, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 11.06. When Securities Disregarded. In determining
whether the Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent, Securities owned by the Company,
any Subsidiary Guarantor or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company or any
Subsidiary Guarantor shall be disregarded and deemed not to be outstanding,
except that, for the purpose of determining whether the Trustee shall be
protected in relying on any such direction, waiver or consent, only Securities
that the Trustee knows are so owned shall be so disregarded. Also, subject to
the foregoing, only Securities outstanding at the time shall be considered in
any such determination.
SECTION 11.07. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar and the Paying Agent or co-registrar may make
reasonable rules for their functions.
SECTION 11.08. Legal Holidays. A "Legal Holiday" is a
Saturday, a Sunday or a day on which banking institutions are not required to
be open in the State of New York or Pennsylvania. If a payment date is a Legal
Holiday, payment shall be made on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period. If a regular
record date is a Legal Holiday, the record date shall not be affected.
SECTION 11.09. Governing Law. THIS INDENTURE AND
THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF
CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.
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SECTION 11.10. No Recourse Against Others. A director,
officer, employee or stockholder, as such, of the Company shall not have any
liability for any obligations of the Company under the Securities or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
shall waive and release all such lia bility. The waiver and release shall be
part of the consi deration for the issue of the Securities.
SECTION 11.11. Successors. All agreements of the Company and
each Subsidiary Guarantor in this Indenture and the Securities shall bind its
successors. All agreements of the Trustee in this Indenture shall bind its
successors.
SECTION 11.12. Multiple Originals. The parties may sign any
number of copies of this First Supplemental Indenture. Each signed copy shall be
an original, but all of them together represent the same agreement. One signed
copy is enough to prove this First Supplemental Indenture.
SECTION 11.13. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
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IN WITNESS WHEREOF, the parties have caused this First
Supplemental Indenture to be duly executed as of the date first written above.
/s/ SOVEREIGN BANCORP, INC.,
/s/ HARRIS TRUST AND SAVINGS BANK,
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APPENDIX A
PROVISIONS RELATING TO SECURITIES
1. Definitions
1.1 Definitions
For the purposes of this Appendix A the following terms shall have the
meanings indicated below:
"2004 Securities" means the 10.25% Senior Notes due 2004.
"2006 Securities" means the 10.50% Senior Notes due 2006.
"Cedel" means Cedel Bank, S.A., or any successor securities
clearing agency.
"Definitive Security" means a certificated Security.
"Depository" means The Depository Trust Company, its nominees
and their respective successors.
"Euroclear" means the Euroclear Clearance System or any
successor securities clearing agency.
"Original Securities" means Securities in the aggregate
principal amount of $700,000,000 issued on November 15, 1999.
"Securities" means the 2004 Securities and the 2006
Securities, to be issued from time to time, in one or more series as provided
for in this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to a
Global Security (as appointed by the Depository) or any successor person
thereto, who shall initially be the Trustee.
"Underwriting Agreement" means the Underwriting Agreement
dated November 9, 1999, among the Company and the Underwriters relating to the
Original Securities, or any similar agreement relating to any future sale of
Securities by the Company.
<PAGE>
"Underwriters" means Salomon Smith Barney Inc. and Lehman
Brothers Inc.
1.2 Other Definitions
Defined in
Term Section:
---- -----------
"Agent Members"..........................................................2.1(b)
"Global Security"........................................................2.1(a)
2. The Securities
2.1 Form and Dating
The Securities will be offered and sold by the Company, from
time to time, pursuant to one or more Underwriting Agreements.
(a) Global Securities. Securities shall be issued in the form
of one or more permanent global Securities in definitive, fully registered form
(collectively, the "Global Securities") without interest coupons and with the
global securities legend set forth in Exhibit 1 hereto, which shall be deposited
on behalf of the purchasers of the Securities represented thereby with the
Securities Custodian, and regis tered in the name of the Depository or a nominee
of the Depository, duly executed by the Company and authenticated by the Trustee
as provided in this Indenture. The aggregate principal amount of the Global
Securities may from time to time be increased or decreased by adjustments made
on the records of the Trustee and the Depository or its nominee as hereinafter
provided.
(b) Book-Entry Provisions. This Section 2.1(b) shall apply
only to a Global Security deposited with or on behalf of the Depository.
The Company shall execute and the Trustee shall, in accordance
with this Section 2.1(b) and pursuant to an order of the Company, authenticate
and deliver initially one or more Global Securities that (a) shall be registered
in the name of the Depository for such Global Security or Global Securities or
the nominee of such Depository and (b) shall be delivered by the Trustee to such
Depository or pursuant to such Depository's instructions or held by the Trustee
as Securities Custodian.
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Members of, or participants in, the Depository ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depository or by the Trustee as Securities
Custodian or under such Global Security, and the Depository may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depository
or impair, as between the Depository and its Agent Members, the operation of
customary practices of such Depository governing the exercise of the rights of a
holder of a beneficial interest in any Global Security.
(c) Definitive Securities. Except as provided in Section 2.3
or 2.4, owners of beneficial interests in Global Securities will not be entitled
to receive physical delivery of Definitive Securities.
2.2 Authentication. The Trustee shall authenticate and deliver: (1)
Original Securities for original issue representing in an aggregate principal
amount of $200,000,000 of the 2004 Securities and $500,000,000 in aggregate
principal amount of the 2006 Securities and (2) additional Securities, if and
when issued, in an aggregate principal amount of up to $500,000,000, upon a
written order of the Company signed by two Officers or by an Officer and either
an Assistant Treasurer or an Assistant Secretary of the Company. Such order
shall specify the amount of the Securities to be authenticated and the date on
which the issue of Securities is to be authenticated. The aggregate principal
amount of Securities outstanding at any time may not exceed $1,200,000,000
except as provided in Sections 2.01 and 2.08 of this Indenture.
2.3 Transfer and Exchange. (a) Transfer and Exchange of Definitive
Securities. When Definitive Securities are presented to the Registrar or a
co-registrar with a request:
(x) to register the transfer of such Definitive Securities;
or
(y) to exchange such Definitive Securities for an equal
principal amount of Definitive Securities of other authorized
denominations,
the Registrar or co-registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the
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Definitive Securities surrendered for transfer or exchange shall be duly
endorsed or accompanied by a written instrument of transfer in form reasonably
satisfactory to the Company and the Registrar or co-registrar, duly executed by
the Holder thereof or his attorney duly authorized in writing.
(b) Transfer and Exchange of Global Securities. (i) The
transfer and exchange of Global Securities or beneficial interests therein shall
be effected through the Depository, in accordance with this Indenture (including
applicable restrictions on transfer set forth herein, if any) and the procedures
of the Depository therefor. A transferor of a beneficial interest in a Global
Security shall deliver a written order given in accordance with the Depository's
procedures containing information regarding the participant account of the
Depository to be credited with a beneficial interest in the Global Security and
such account shall be credited in accordance with such instructions with a
beneficial interest in the Global Security and the account of the Person making
the transfer shall be debited by an amount equal to the beneficial interest in
the Global Security being transferred.
(ii) Notwithstanding any other provisions of this Appendix A
(other than the provisions set forth in Section 2.4), a Global Security may not
be transferred as a whole except by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
(c) Cancelation or Adjustment of Global Security. At such time
as all beneficial interests in a Global Security have either been exchanged for
Definitive Securities, redeemed, repurchased or canceled, such Global Security
shall be returned by the Depository to the Trustee for cancelation or retained
and canceled by the Trustee. At any time prior to such cancelation, if any
beneficial interest in a Global Security is exchanged for Definitive Securities,
redeemed, repurchased or canceled, the principal amount of Securities
represented by such Global Security shall be reduced and an adjustment shall be
made on the books and records of the Trustee (if it is then the Securities
Custodian for such Global Security) with respect to such Global Security, by the
Trustee or the Securities Custodian, to reflect such reduction.
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(d) Obligations with Respect to Transfers and Exchanges of
Securities.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Definitive
Securities and Global Securities at the Registrar's or co-registrar's
request.
(ii) No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any transfer tax, assessments, or similar
governmental charge payable in connection therewith (other than any
such transfer taxes, assessments or similar governmental charge payable
upon exchange or transfer pursuant to Sections 3.06, 4.10 and 9.05 of
this Indenture).
(iii) The Registrar or co-registrar shall not be required to
register the transfer of or exchange of any Security for a period
beginning 15 days before the mailing of a notice of redemption or an
offer to repurchase Securities or 15 days before an interest payment
date.
(iv) Prior to the due presentation for registration of
transfer of any Security, the Company, the Trustee, the Paying Agent,
the Registrar or any co-registrar may deem and treat the person in
whose name a Security is registered as the absolute owner of such
Security for the purpose of receiving payment of principal of and
interest on such Security and for all other purposes whatsoever,
whether or not such Security is overdue, and none of the Company, the
Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary.
(v) All Securities issued upon any transfer or exchange
pursuant to the terms of this Indenture shall evidence the same debt
and shall be entitled to the same benefits under this Indenture as the
Securities surrendered upon such transfer or exchange.
(e) No Obligation of the Trustee.
(i) The Trustee shall have no responsibility or obligation to
any beneficial owner of a Global Security, a member of, or a
participant in the Depository or any other Person with respect to the
accuracy of the records of the Depository or its nominee or of any
participant or member thereof, with respect to any ownership interest
in the Securities or with respect to the delivery to any
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participant, member, beneficial owner or other Person (other than the
Depository) of any notice (including any notice of redemption or
repurchase) or the payment of any amount, under or with respect to such
Securities. All notices and communications to be given to the Holders
and all payments to be made to Holders under the Securities shall be
given or made only to the registered Holders (which shall be the
Depository or its nominee in the case of a Global Security). The rights
of beneficial owners in any Global Security shall be exercised only
through the Depository subject to the applicable rules and procedures
of the Depository. The Trustee may rely and shall be fully protected in
relying upon information furnished by the Depository with respect to
its members, participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to
any transfer of any interest in any Security (including any transfers
between or among Depository participants, members or beneficial owners
in any Global Security) other than to require delivery of such
certificates and other documentation or evidence as are expressly
required by, and to do so if and when expressly required by, the terms
of this Indenture, and to examine the same to determine substantial
compliance as to form with the express requirements hereof.
2.4 Definitive Securities
(a) A Global Security deposited with the Depository or with
the Trustee as Securities Custodian pursuant to Section 2.1 shall be transferred
to the beneficial owners thereof in the form of Definitive Securities in an
aggregate principal amount equal to the principal amount of such Global
Security, in exchange for such Global Security, only if such transfer complies
with Section 2.3 and (i) the Depository notifies the Company that it is
unwilling or unable to continue as a Depository for such Global Security or if
at any time the Depository ceases to be a "clearing agency" registered under the
Exchange Act, and a successor Depository is not appointed by the Company within
90 days of such notice, or (ii) a Default or an Event of Default has occurred
and is continuing or (iii) the Company, in its sole discretion, notifies the
Trustee in writing that it elects to cause the issuance of Definitive Securities
under this Indenture.
(b) Any Global Security that is transferable to the
beneficial owners thereof pursuant to this Section 2.4 shall
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be surrendered by the Depository to the Trustee, to be so transferred, in whole
or from time to time in part, without charge, and the Trustee shall authenticate
and deliver, upon such transfer of each portion of such Global Security, an
equal aggregate principal amount of Definitive Securities of authorized
denominations. Definitive Securities issued in exchange for any portion of a
Global Security transferred pursuant to this Section shall be executed,
authenticated and delivered only in denominations of $1,000 and any integral
multiple thereof and registered in such names as the Depository shall direct.
Any Definitive Security delivered in exchange for an interest in the Global
Security shall, except as otherwise provided by Section 2.3(d), bear the
restricted securities legend set forth in Exhibit 1 hereto.
(c) The registered Holder of a Global Security may grant
proxies and otherwise authorize any Person, including Agent Members and Persons
that may hold interests through Agent Members, to take any action that a Holder
is entitled to take under this Indenture or the Securities.
(d) In the event of the occurrence of any of the events
specified in Section 2.4(a)(i), (ii) or (iii), the Company will promptly make
available to the Trustee a reasonable supply of Definitive Securities in
definitive, fully registered form without interest coupons.
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EXHIBIT 1
to APPENDIX A
[FORM OF FACE OF SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE COMPANY 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 IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT 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.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Definitive Securities Legend]
[IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT
MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS.]
<PAGE>
[FORM OF FACE OF SECURITY]
No. [up to]**$__________
10.25% Senior Note due 2004***
10.50% Senior Note due 2006****
[CUSIP No. ______]
Sovereign Bancorp, Inc., a Pennsylvania corporation, promises
to pay to [Cede & Co.]**, or registered assigns, the principal sum [of
Dollars](1) [as set forth on the Schedule of Increases or Decreases annexed
hereto](2) on [ ], [2004](3) [2006](4).
Interest Payment Dates: [ ] and [ ].
Record Dates: [ ] and [ ].
- --------
(1) Insert for Definitive Securities
(2) Insert for Global Securities
(3) Insert for 2004 Security
(4) Insert for 2006 Security
2
<PAGE>
Additional provisions of this Security are set forth on the
other side of this Security.
IN WITNESS WHEREOF, the parties have caused this instrument to
be duly executed.
SOVEREIGN BANCORP, INC.,
by __________________________
Name:
Title:
by __________________________
Name:
Title:
[CORPORATE SEAL]
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
Dated:
HARRIS TRUST AND SAVINGS BANK,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by:___________________________
Authorized Signatory
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[FORM OF REVERSE SIDE OF SECURITY]
10.25% Senior Note due 2004***
10.50% Senior Note due 2006***
1. Interest
SOVEREIGN BANCORP, INC., a Pennsylvania corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown above. The Company
will pay interest semiannually on May 15 and November 15 of each year,
commencing May 15, 2000. Interest on the Securities will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from November 15, 1999. Interest shall be computed on the basis of a 360-day
year of twelve 30-day months. The Company shall pay interest on overdue
principal at the rate borne by the Securities plus 1% per annum, and it shall
pay interest on overdue installments of interest at the rate borne by the
Securities to the extent lawful.
2. Method of Payment
The Company will pay interest on the Securities (except
defaulted interest) to the Persons who are registered holders of Securities at
the close of business on the May 1 or November 1 next preceding the interest
payment date even if Securities are canceled after the record date and on or
before the interest payment date. Holders must surrender Securities to a Paying
Agent to collect principal payments. The Company will pay principal and interest
in money of the United States of America that at the time of payment is legal
tender for payment of public and private debts. Payments in respect of the
Securities represented by a Global Security (including principal, premium and
interest) will be made by wire transfer of immediately available funds to the
accounts specified by The Depository Trust Company. The Company will make all
payments in respect of a Definitive Security (including principal, premium and
interest), by mailing a check to the registered address of each Holder thereof;
provided, however, that payments on the Securities may also be made, in the case
of a Holder of at least $1,000,000 aggregate principal amount of Securities, by
wire transfer to a U.S. dollar account maintained by the payee with a bank in
the United States if such Holder elects payment by wire transfer by giving
written notice to the Trustee or the Paying Agent to such effect designating
such account no later than 30 days immediately
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preceding the relevant due date for payment (or such other date as the Trustee
may accept in its discretion).
3. Paying Agent and Registrar
Initially, HARRIS TRUST AND SAVINGS BANK, an Illinois banking
corporation (the "Trustee"), will act as Paying Agent and Registrar. The Company
may appoint and change any Paying Agent, Registrar or co-registrar without
notice. The Company or any of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Securities under a Senior Indenture
dated as of February 1, 1994 (the "Existing Indenture") as supplemented by the
First Supplemental Indenture dated as of November 9, 1999 (the "First
Supplemental Indenture" and collectively with the Existing Indenture, the
"Indenture"), between the Company and the Trustee. The terms of the Securities
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) as
in effect on the date of the Indenture (the "TIA"). Terms defined in the
Indenture and not defined herein have the meanings ascribed thereto in the
Indenture. The Securities are subject to all such terms, and Securityholders are
referred to the Indenture and the TIA for a statement of those terms.
The Securities are senior unsecured obligations of the Company
limited to $1,200,000,000 aggregate principal amount at any one time outstanding
(subject to Sections 2.01 and 2.08 of the Indenture). This [2004 Security]***
[2006 Security]**** is one of the Original Securities referred to in the
Indenture issued in an aggregate principal amount of $700,000,000. Original
Securities and up to an aggregate principal amount of $500,000,000 additional
Securities of the same series as or different series from the Original Series
may be issued under the Indenture. The Indenture imposes certain limitations on
the ability of the Company and its Subsidiaries to, among other things, make
certain Investments and other Restricted Payments, pay dividends and other
distributions, Incur Debt, enter into consensual restrictions upon the payment
of certain dividends and distributions by such Subsidiaries, enter into or
permit certain transactions with Affiliates and create or incur Liens. The
Indenture also imposes limitations on the ability of the Company to consolidate
or merge with or into any other Person or sell,
5
<PAGE>
transfer, assign, lease, convey or otherwise dispose of all or substantially all
of the Property of the Company.
To guarantee the due and punctual payment of the principal and
interest on the Securities and all other amounts payable by the Company under
the Indenture and the Securities when and as the same shall be due and payable,
whether at maturity, by acceleration or otherwise, according to the terms of the
Securities and the Indenture, certain Subsidiaries of the Company may be
required, pursuant to Section 4.11 of the Indenture, to enter into supplemental
indentures whereby such Subsidiaries will jointly and severally unconditionally
guarantee the Obligations on a senior basis pursuant to the terms of the
Indenture.
5. Optional Redemption
On and after the Issue Date, the Company may redeem all or any
portion of the Securities, at once or over time, after giving the required
notice under the Indenture, at a redemption price equal to the sum of the
principal amount of the Notes of the applicable series to be redeemed, plus
accrued and unpaid interest, if any, to the redemption date (subject to the
right of the holders of record on the relevant record date to receive interest
due on the relevant interest payment date), plus the Applicable Premium.
"Applicable Premium" means, with respect to a Security of any
series at any time of determination, the excess, if any, of (A) the present
value at such time of determination of the remaining required interest and
principal payments (including any past due or accrued and unpaid interest) in
respect of the portion of such Security to be redeemed, computed using a
discount rate equal to the applicable Treasury Rate plus 50 basis points, over
(B) the then outstanding principal amount of the portion of such Security to be
redeemed.
"Treasury Rate" means, with respect to each series of
Securities, the yield to maturity at the time of computation of United States
Treasury securities with a constant maturity (as compiled and published in the
most recent Federal Reserve Statistical Release H.15(519) which has become
publicly available at least two business days prior to the date fixed for
repayment or, in the case of defeasance, prior to the date of deposit or, in the
case of a Change of Control Offer, prior to the Change of Control Notice Date
(or, if such Statistical Release is no longer published, any publicly available
source of similar market data)) most nearly equal to the then remaining Average
Life of such series; provided, however, that, if the Average Life of such series
is
6
<PAGE>
not equal to the constant maturity of a United States Treasury security for
which a weekly average yield is given, the Treasury Rate shall be obtained by
linear interpolation (calculated to the nearest one-twelfth of a year) from the
weekly average yields of United States Treasury securities for which such yields
are given, except that, if the Average Life of such series is less than one
year, the weekly average yield on actually traded United States Treasury
securities adjusted to a constant maturity of one year shall be used.
6. Sinking Fund
The Securities are not subject to any sinking fund.
7. Notice of Redemption
Notice of redemption will be mailed by first-class mail at
least 30 days but not more than 60 days before the redemption date to each
Holder of Securities to be redeemed at his or her registered address. Securities
in denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000. If money sufficient to pay the redemption price of and
accrued interest on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date interest
ceases to accrue on such Securities (or such portions thereof) called for
redemption.
8. Special Mandatory Redemption
In the event that (i) the New England acquisition is not
consummated on or prior to July 31, 2000, (ii) the New England acquisition is
abandoned or (iii) the Purchase and Assumption Agreement is terminated on or
prior to such date, the Company will redeem all the Securities on the earlier of
(a) August 15, 2000, in the event that the New England acquisition is not
consummated on or prior to July 31, 2000, and (b) the 15th day (or if such day
is not a Business Day, the next following Business Day) following the
abandonment of the New England acquisition by the Company or the termination of
the Purchase and Assumption Agreement by the Company (such earlier date, the
"Mandatory Redemption Date"), at a price of 102% of the aggregate principal
amount of the Securities, plus accrued and unpaid interest, if any, thereon to
the Mandatory Redemption Date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date that is on or prior to the Mandatory Redemption Date). The Company will
cause the notice of the Special Mandatory Redemption to be mailed no later than
the fifth Business Day following the earlier of (i) July 31,
7
<PAGE>
2000, (ii) the date of the abandonment of the New England acquisition or (iii)
the date of termination of the Purchase and Assumption Agreement.
9. Repurchase of Securities at the Option of Holders upon Change of Control
Upon a Change of Control, any Holder of Securities will have
the right, subject to certain conditions specified in the Indenture, to cause
the Company to repurchase all or any part of the Securities of such Holder at a
purchase price equal to 101% of the principal amount of the Securities to be
repurchased plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date that is on or prior
to the date of purchase) as provided in, and subject to the terms of, the
Indenture.
10. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Securities in accordance with the Indenture. Upon any transfer or
exchange, the Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements or transfer documents and to pay any
taxes required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or to transfer or exchange any Securities for a
period of 15 days prior to a selection of Securities to be redeemed or 15 days
before an interest payment date.
11. Persons Deemed Owners
The registered Holder of this Security may be treated as the
owner of it for all purposes.
12. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
8
<PAGE>
13. Discharge and Defeasance
Subject to certain conditions, the Company at any time may
terminate some of or all its obligations under the Securities and the Indenture
if the Company deposits with the Trustee money or U.S. Government Obligations
for the payment of principal and interest on the Securities to redemption or
maturity, as the case may be.
14. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended without prior notice to any
Securityholder but with the written consent of the Holders of at least a
majority in aggregate principal amount of the outstanding Securities and (ii)
any default or noncompliance with any provision may be waived with the written
consent of the Holders of at least a majority in aggregate principal amount of
the outstanding Securities. Subject to certain exceptions set forth in the
Indenture, without the consent of any Holder of Securities, the Company and the
Trustee may amend the Indenture or the Securities (i) to cure any ambiguity,
omission, defect or inconsistency; (ii) to comply with Article V of the
Indenture; (iii) to provide for uncertificated Securities in addition to or in
place of certificated Securities; (iv) to add Guarantees with respect to the
Securities, or to release Subsidiary Guarantors from Subsidiary Guarantees as
provided by the terms of the Indenture; (v) to secure the Securities; (vi) to
add additional covenants or to surrender rights and powers conferred on the
Company; (vii) to comply with the requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the TIA;(viii) to make any
change that does not adversely affect the rights of any Securityholder or (ix)
to provide for the issuance of additional Securities as provided in paragraph 4
and in the Indenture.
15. Defaults and Remedies
If an Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25% in aggregate principal amount of the Securities
then outstanding, subject to certain limitations, may declare all the Securities
to be immediately due and payable. Certain events of bankruptcy or insolvency
are Events of Default and shall result in the Securities being immediately due
and payable upon the occurrence of such Events of Default without any further
act of the Trustee or any Holder.
9
<PAGE>
Holders of Securities may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in aggregate
principal amount of the Securities then outstanding may direct the Trustee in
its exercise of any trust or power under the Indenture. The Holders of a
majority in aggregate principal amount of the Securities then outstanding, by
written notice to the Company and the Trustee, may rescind any declaration of
acceleration and its consequences if the rescission would not conflict with any
judgment or decree, and if all existing Events of Default have been cured or
waived except nonpayment of principal or interest that has become due solely
because of the acceleration.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.
17. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company or any Subsidiary Guarantor shall not have any liability for any
obligations of the Company under the Securities or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder waives and releases all
such liability. The waiver and release are part of the consideration for the
issue of the Securities.
18. Authentication
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
19. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to
Minors Act).
10
<PAGE>
20. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
21. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
The Company will furnish to any Holder of Securities upon
written request and without charge to the Holder a copy of the Indenture which
has in it the text of this Security.
11
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to
transfer this Security on the books of the Company. The agent
may substitute another to act for him.
- ------------------------------------------------------------
Date: ________________ Your Signature: _____________________
- ----------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
-------------------------
Your Signature
Signature Guarantee:
Date: ___________________ _________________________
Signature must be guaranteed Signature of Signature
by a participant in a Guarantee
recognized signature guaranty
medallion program or other
signature guarantor acceptable
to the Trustee
- --------------------------------------------------------------------------------
12
<PAGE>
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The initial principal amount of this Global Security is $[ ].
The following increases or decreases in this Global Security have been made:
<TABLE>
<CAPTION>
Date of Amount of decrease Amount of increase Principal amount Signature of
Exchange in Principal in Principal of this Global authorized
Amount of this Amount of this Security following signatory of
Global Security Global Security such decrease or Trustee or
increase Securities
Custodian
<S> <C> <C> <C> <C>
</TABLE>
13
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.10 (Change of Control) of the Indenture, check the
box:
/ /
If you want to elect to have only part of this Security purchased
by the Company pursuant to Section 4.10 of the Indenture, state the amount:
$
Date: __________________ Your Signature: ______________________________
(Sign exactly as your name appears on the other side of the Security)
Signature Guarantee:________________________________________________________
Signature must be guaranteed by a participant in a
recognized signature guaranty medallion program or other
signature guarantor acceptable to the Trustee.
14
<PAGE>
EXHIBIT A
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental
Indenture") dated as of , among [GUARANTOR] (the "New
Subsidiary Guarantor"), a subsidiary of SOVEREIGN
BANCORP, INC. (or its successor), a [Delaware]
corporation (the "Company"), SOVEREIGN BANCORP,
INC.[, on behalf of itself and the Subsidiary
Guarantors (the "Existing Subsidiary Guarantors")
under the indenture referred to below,] and a [ ]
banking association, as trustee under the indenture
referred to below (the "Trustee").
W I T N E S S E T H :
WHEREAS the Company [and the Existing Subsidiary Guarantors]
has heretofore executed and delivered [or become obligated under] an Indenture
(the "Existing Indenture") dated as of February 1, 1994, as supplemented by the
First Supplemental Indenture dated as of November 15, 1999 (the "First
Supplemental Indenture", and collectively with the Existing Indenture and any
other amendments, waivers or other modifications thereto, the "Indenture")
providing for the issuance of an aggregate principal amount of up to
$200,000,000 of 10.25% Senior Notes due 2004 and $500,000,000 of 10.50% Senior
Notes due 2006 (the "Securities");
WHEREAS Section 4.11 of the Indenture provides that under
certain circumstances the Company is required to cause the New Subsidiary
Guarantor to execute and deliver to the Trustee a supplemental indenture
pursuant to which the New Subsidiary Guarantor shall unconditionally guarantee
all the Company's obligations under the Securities pursuant to a Subsidiary
Guaranty on the terms and conditions set forth herein; and
WHEREAS pursuant to Section 10.06 of the Indenture, the
Trustee, the Company and the Existing Subsidiary Guarantors are authorized to
execute and deliver this Supplemental Indenture;
NOW THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the New Subsidiary Guarantor, the Company, the Existing Subsidiary Guarantors
and the
<PAGE>
Trustee mutually covenant and agree for the equal and ratable benefit of the
holders of the Securities as follows:
1. Agreement to Guarantee. The New Subsidiary Guarantor hereby
agrees, jointly and severally with all other Subsidiary Guarantors, to
unconditionally guarantee the Company's obligations under the Securities on the
terms and subject to the conditions set forth in Article 10 of the Indenture and
to be bound by all other applicable provisions of the Indenture.
2. Ratification of Indenture; Supplemental Indentures Part of
Indenture. Except as expressly amended hereby, the Indenture is in all respects
ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect. This Supplemental Indenture shall form a
part of the Indenture for all purposes, and every holder of Securities
heretofore or hereafter authenticated and delivered shall be bound hereby.
3. Governing Law. THIS SUPPLEMENTAL INDENTURE
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW
TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
4. Trustee Makes No Representation. The Trustee makes no
representation as to the validity or sufficiency of this Supplemental Indenture.
5. Counterparts. The parties may sign any number of copies of
this Supplemental Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
2
<PAGE>
6. Effect of Headings. The Section headings herein are for
convenience only and shall not effect the construction thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed as of the date first above written.
[NEW SUBSIDIARY GUARANTOR],
by ___________________________
Name:
Title:
SOVEREIGN BANCORP, INC., [on
behalf of itself and the
Existing Subsidiary Guarantors,]
by ___________________________
Name:
Title:
[[EXISTING SUBSIDIARY
GUARANTORS],
by ___________________________
Name:
Title:]
[TRUSTEE], as Trustee,
by ___________________________
Name:
Title:
3
<PAGE>
-------------------------------------------------------------------
GUARANTEE AGREEMENT
between
Sovereign Bancorp, Inc.,
as Guarantor
and
The Bank of New York,
as Guarantee Trustee
Dated as of November 15, 1999
-------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Interpretation.........................................1
SECTION 1.2 Definitions............................................2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application ......................6
SECTION 2.2 Lists of Holders of Securities.........................6
SECTION 2.3 Reports by the Guarantee Trustee.......................7
SECTION 2.4 Periodic Reports to Guarantee Trustee..................7
SECTION 2.5 Evidence of Compliance with Conditions Precedent.......7
SECTION 2.6 Events of Default; Waiver..............................7
SECTION 2.7 Event of Default; Notice...............................7
SECTION 2.8 Conflicting Interests..................................8
SECTION 2.9 Disclosure of Information..............................8
SECTION 2.10 Guarantee Trustee May File Proofs of Claim.............8
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Guarantee Trustee.............8
SECTION 3.2 Certain Rights of Guarantee Trustee...................10
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee.12
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1 Guarantee Trustee; Eligibility.......................12
SECTION 4.2 Appointment, Removal and Resignation of Guarantee
Trustee..............................................13
i
<PAGE>
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee............................................14
SECTION 5.2 Waiver of Notice and Demand..........................14
SECTION 5.3 Obligations Not Affected.............................14
SECTION 5.4 Rights of Holders....................................15
SECTION 5.5 Guarantee of Payment.................................16
SECTION 5.6 Subrogation..........................................16
SECTION 5.7 Independent Obligations..............................16
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions...........................16
SECTION 6.2 Ranking..............................................17
ARTICLE VII
TERMINATION
SECTION 7.1 Termination..........................................18
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation..........................................18
SECTION 8.2 Indemnification......................................19
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns...............................19
SECTION 9.2 Amendments...........................................19
SECTION 9.3 Notices..............................................19
SECTION 9.4 Benefit..............................................20
SECTION 9.5 Governing Law........................................20
SECTION 9.6 Counterparts.........................................20
ii
<PAGE>
This GUARANTEE AGREEMENT (the "Guarantee"), dated as of
November 15, 1999, is executed and delivered by Sovereign Bancorp, Inc., a
Pennsylvania corporation (the "Guarantor"), and The Bank of New York, a New York
banking corporation, as trustee (the "Guarantee Trustee"), for the benefit of
the Holders (as defined herein) from time to time of the Securities (as defined
herein) of Sovereign Capital Trust II, a Delaware statutory business trust (the
"Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of November 15, 1999, among the Guarantor,
as Sponsor, Mark R. McCollom and Jacquelyn Blue, as the initial Administrative
Trustees, The Bank of New York, as the initial Property Trustee, and The Bank of
New York (Delaware), as the initial Delaware Trustee, the Issuer is issuing on
the date hereof 5,000,000 (or 5,750,000 if the Underwriters's over-allotment
option with respect to the Units (as defined below) is exercised in full)
preferred securities, stated liquidation amount of $50 per preferred security,
having an aggregate stated liquidation amount of $250,000,000 (or $287,500,000
if the Underwriters's over-allotment option with respect to the Units is
exercised in full), such preferred securities being designated the Preferred
Securities (the "Preferred Securities") and 154,640 (or 177,836 if the
Underwriters's over-allotment option with respect to the Units is exercised in
full) common securities, stated liquidation amount of $50 per common security,
having an aggregate stated liquidation amount of $7,732,000 (or $8,891,800 if
the Underwriters's over-allotment option with respect to the Units is exercised
in full), such common securities being designated the Common Securities (the
"Common Securities" and, together with the Preferred Securities, the
"Securities"); and
WHEREAS, as incentive for the Holders to purchase the
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Guarantee, to pay in full to the Holders the
Guarantee Payments (as defined below) and to make certain other payments on the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each
Holder, which purchase the Guarantor hereby acknowledges shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee for the benefit of
the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Interpretation
In this Guarantee, unless the context otherwise requires:
(a) capitalized terms used in this Guarantee but not defined
in the preamble above have the respective meanings assigned to them in Section
1.2;
1
<PAGE>
(b) terms defined in the Declaration as at the date of
execution of this Guarantee have the same meaning when used in this Guarantee
unless otherwise defined in this Guarantee;
(c) a term defined anywhere in this Guarantee has the same
meaning throughout;
(d) all references to "this Guarantee" are to this Guarantee
as modified, supplemented or amended from time to time;
(e) all references in this Guarantee to Articles and Sections
are to Articles and Sections of this Guarantee, unless otherwise specified;
(f) a term defined in the Trust Indenture Act has the same
meaning when used in this Guarantee, unless otherwise defined in this Guarantee
or unless the context otherwise requires; and
(g) a reference to the singular includes the plural and vice
versa.
SECTION 1.2 Definitions
The following terms have the following meanings:
"Accreted Value" has the meaning set forth in the Declaration.
"Affiliate" has the same meaning as given to that term in Rule
405 under the Securities Act of 1933, as amended, or any successor rule
thereunder.
"Business Day" has the meaning set forth in the Declaration.
"Change of Control Repurchase Price" has the meaning set forth
in the Declaration.
"Common Securities" has the meaning set forth in the Recitals
hereto.
"Corporate Trust Office" means the office of the Guarantee
Trustee at which the corporate trust business of the Guarantee Trustee shall, at
any particular time, be principally administered, which office at the date of
execution of this Agreement is located at 101 Barclay Street, 21 West, New York,
New York 10286.
"Covered Person" means any Holder or beneficial owner of
Securities.
"Debenture Issuer" has the meaning set forth in the
Declaration.
"Debenture Trustee" has the meaning set forth in the
Declaration.
2
<PAGE>
"Debentures" means the series of subordinated debt securities
of the Guarantor designated the 7.50% Junior Subordinated Deferrable Interest
Debentures due 2030 to be purchased by the Issuer and held by the Property
Trustee.
"Declaration" has the meaning set forth in the Recitals
hereto.
"Event of Default" means a failure by the Guarantor to perform
any of its payment or other obligations under this Guarantee.
"First Supplemental Indenture" means the First Supplemental
Indenture, dated as of November 15, 1999, between the Debenture Issuer and the
Debenture Trustee,
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Securities, to the
extent not paid or made by the Issuer:
(i) any accumulated and unpaid Distributions (as defined in
the Declaration) that are required to be paid on such Securities to the
extent the Issuer has funds legally available therefor;
(ii) the Redemption Price (as defined in the Declaration),
with respect to the Securities in respect of which the related
Debentures have been repaid at maturity, to the extent the Issuer has
funds legally available therefor;
(iii) the Repurchase Price (as defined in the Declaration),
with respect to the Preferred Securities of Holders which exercised
their right pursuant to Section 6.7 of the Declaration to require the
Trust to exchange their Preferred Securities for Debentures and require
the Debenture Issuer to repurchase the Debentures which they have
received in exchange for their Preferred Securities, to the extent the
Issuer has funds legally available therefor;
(iv) the Change of Control Repurchase Price (as defined in the
Declaration), with respect to the Preferred Securities of Holders which
exercised their right pursuant to Section 6.8 of the Declaration to
require the Trust to exchange their Preferred Securities for Debentures
and require the Debenture Issuer to repurchase the Debentures which
they have received in exchange for their Preferred Securities, to the
extent the Issuer has funds legally available therefor; and
(v) upon a voluntary or involuntary dissolution, termination
and liquidation of the Issuer (other than in connection with the
distribution of Debentures to the Holders in exchange for Securities as
provided in the Declaration), the lesser of:
3
<PAGE>
(a) the aggregate Accreted Value of the Securities
plus all accumulated and unpaid Distributions on the
Securities to the date of payment, to the extent the Issuer
has funds legally available therefor; and
(b) the amount of assets of the Issuer remaining
available for distribution to Holders in liquidation of the
Issuer.
"Guarantee Trustee" means The Bank of New York, a New York
banking corporation, until a Successor Guarantee Trustee has been appointed and
has accepted such appointment pursuant to the terms of this Guarantee and
thereafter means each such Successor Guarantee Trustee.
"Guarantor" has the meaning set forth in the Recitals hereto.
"Holder" has the meaning given such term in the Declaration.
"Indemnified Person" means the Guarantee Trustee, any
Affiliate of the Guarantee Trustee, or any officers, directors, shareholders,
members, partners, employees, representatives, nominees, custodians or agents of
the Guarantee Trustee.
"Indenture" means the Indenture, dated as of September 1,
1999, between the Guarantor, as Debenture Issuer, and the Debenture Trustee, as
trustee, as amended or supplemented from time to time, including the First
Supplemental Indenture, dated as of November 15, 1999, between the Debenture
Issuer and the Debenture Trustee, pursuant to which the Debentures are to be
issued.
"Indenture Event of Default" means any event specified in
Section 2.10 of the First Supplemental Indenture.
"Issuer" has the meaning set forth in the Recitals hereto.
"Majority in Liquidation Amount" means, except as provided by
the Trust Indenture Act, a vote by Holders of outstanding Securities voting
together as a single class or, as the context may require, the Holders of
outstanding Preferred Securities or the Holders of outstanding Common
Securities, voting separately as a class, who are the record owners of more than
50% of the aggregate stated liquidation amount (including the stated amount that
would be paid on redemption, liquidation or otherwise, plus accumulated and
unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities or all outstanding Securities of the
relevant class, as the case may be.
"Officers' Certificate" means, with respect to any person, a
certificate signed by the Chairman, a Vice Chairman, the Chief Executive
Officer, the President, a Vice President, the Chief Accounting Officer, and the
Secretary or an Assistant Secretary of the Guarantor. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Guarantee (other than pursuant to Section 314(a)(4) of the Trust
Indenture Act) shall include:
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(a) a statement that each officer signing the
Officers' Certificate has read the covenant or condition and the
definitions relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each
such officer, such condition or covenant has been complied with.
"Other Debentures" means all junior subordinated debentures
issued by the Guarantor from time to time and sold to any other trust,
partnership or other entity affiliated with the Guarantor that is a financing
vehicle of the Guarantor, if any, in each case similar to the Issuer.
"Other Guarantees" means all guarantees to be issued by the
Guarantor with respect to capital securities, if any, similar to the Securities
issued by any other trust, partnership or other entity affiliated with the
Guarantor that is a financing vehicle of the Guarantor, if any, in each case
similar to the Issuer.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Securities" has the meaning set forth in the
Recitals hereto.
"Property Trustee" has the meaning set forth in the
Declaration.
"Pro Rata" has the meaning set forth in the Declaration.
"Redemption Price" has the meaning set forth in the
Declaration.
"Repurchase Price" has the meaning set forth in the
Declaration.
"Responsible Officer" means any officer within the Corporate
Trust Office of the Guarantee Trustee, including any vice president, any
assistant vice president, any assistant secretary, the treasurer, any assistant
treasurer or other officer of the Corporate Trust Office of the Guarantee
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of that officer's knowledge of and familiarity with the particular
subject.
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"Securities" has the meaning set forth in the Recitals hereto.
"Successor Guarantee Trustee" means a successor Guarantee
Trustee possessing the qualifications to act as Guarantee Trustee under Section
4.1.
"Trust Enforcement Event" has the meaning given such term in
the Declaration.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
or any successor legislation, in each case, as amended.
"Unit" has the meaning set forth in the Declaration.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Guarantee is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee and shall be
governed, to the extent applicable, by such provisions; and
(b) if and to the extent that any provision of this Guarantee
limits, qualifies or conflicts with the duties imposed by Section 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
SECTION 2.2 Lists of Holders of Securities
(a) The Guarantor shall provide the Guarantee Trustee (unless
the Guarantee Trustee is otherwise the registrar of the Securities) with a list,
in such form as the Guarantee Trustee may reasonably require, of the names and
addresses of the Holders ("List of Holders"):
(i) as of the record date relating to the payment of any
Guarantee Payment, at least one Business Day prior to the date for
payment of such Guarantee Payment, except while the Preferred
Securities are represented by one or more Global Preferred Securities;
and
(ii) at any other time, within 30 days of receipt by the
Guarantor of a written request from the Guarantee Trustee for a List of
Holders as of a date no more than fifteen days before such List of
Holders is given to the Guarantee Trustee.
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If at any time the List of Holders does not differ from the most recent List of
Holders provided to the Guarantee Trustee by the Guarantor, the Guarantor shall
not be obligated to provide such List of Holders. The Guarantee Trustee shall
preserve, in as current a form as is reasonably practicable, all information
contained in Lists of Holders given to it, provided that the Guarantee Trustee
may destroy any List of Holders previously given to it on receipt of a new List
of Holders.
(b) The Guarantee Trustee shall comply with its obligations
under, and shall be entitled to the benefits of, Sections 311(a), 311(b) and
Section 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Guarantee Trustee
Within 60 days after January 15 of each year (commencing with
the first anniversary of the issuance of the Preferred Securities), the
Guarantee Trustee shall provide to the Holders of the Preferred Securities such
reports as are required by Section 313 of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust Indenture Act.
The Guarantee Trustee shall also comply with the other requirements of Section
313 of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to the Guarantee Trustee
The Guarantor shall provide to the Guarantee Trustee such
documents, reports and information as required by Section 314, if any, and the
compliance certificate required by Section 314 of the Trust Indenture Act in the
form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Guarantee Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this Guarantee that relate to any of the matters set forth in Section 314(c) of
the Trust Indenture Act. Any certificate or opinion required to be given by an
officer pursuant to Section 314(c)(1) may be given in the form of an Officers'
Certificate.
SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in Liquidation Amount of the
Securities may, by vote, on behalf of all Holders, waive any past Event of
Default and its consequences. Upon such waiver, any such Event of Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured, for every purpose of this Guarantee, but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent thereon.
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SECTION 2.7 Event of Default; Notice
(a) The Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, mail by first class postage prepaid, to all
Holders, notices of all Events of Default actually known to a Responsible
Officer, unless such defaults have been cured before the giving of such notice,
provided, that, except in the case of default in the payment of any Guarantee
Payment, the Guarantee Trustee shall be protected in withholding such notice if
and so long as the board of directors, the executive committee, or a trust
committee of directors and/or a Responsible Officer in good faith determines
that the withholding of such notice is in the interests of the Holders.
(b) The Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Guarantee Trustee shall have
received written notice from the Guarantor, or a Responsible Officer charged
with the administration of the Declaration shall have obtained actual knowledge,
of such Event of Default.
SECTION 2.8 Conflicting Interests
The Declaration and the Indenture shall be deemed to be
specifically described in this Guarantee for the purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.
SECTION 2.9 Disclosure of Information
The disclosure of information as to the names and addresses of
the Holders of the Securities in accordance with Section 312 of the Trust
Indenture Act, regardless of the source from which such information was derived,
shall not be deemed to be a violation of any existing law, or any law hereafter
enacted which does not specifically refer to Section 312 of the Trust Indenture
Act, nor shall the Guarantee Trustee be held accountable by reason of mailing
any material pursuant to a request made under Section 312(b) of the Trust
Indenture Act.
SECTION 2.10 Guarantee Trustee May File Proofs of Claim
Upon the occurrence of an Event of Default, the Guarantee
Trustee is hereby authorized, but shall not be obligated, to:
(a) recover judgment, in its own name and as trustee of an
express trust, against the Guarantor for the whole amount of any
Guarantee Payments remaining unpaid; and
(b) file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have its claims and those of
the Holders allowed in any judicial proceedings relative to the
Guarantor, its creditors or its property.
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ARTICLE III
POWERS, DUTIES AND RIGHTS OF
GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Guarantee Trustee
(a) This Guarantee shall be held by the Guarantee Trustee for
the benefit of the Holders, and the Guarantee Trustee shall not transfer this
Guarantee to any Person except a Holder exercising his or her rights pursuant to
Section 5.4(b) or to a Successor Guarantee Trustee on acceptance by such
Successor Guarantee Trustee of its appointment to act as Successor Guarantee
Trustee pursuant to Section 4.2. The right, title and interest of the Guarantee
Trustee shall automatically vest in any Successor Guarantee Trustee, and such
vesting and succession of title shall be effective whether or not conveyancing
documents have been executed and delivered pursuant to the appointment of such
Successor Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible
Officer has occurred and is continuing, the Guarantee Trustee shall enforce this
Guarantee for the benefit of the Holders.
(c) The Guarantee Trustee, before the occurrence of any Event
of Default and after the cure or waiver of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Guarantee, and no implied covenants shall be read into this
Guarantee against the Guarantee Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.6) and is
actually known to a Responsible Officer, the Guarantee Trustee shall exercise
such of the rights and powers vested in it by this Guarantee, and use the same
degree of care and skill in its exercise thereof, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
(d) No provision of this Guarantee shall be construed to
relieve the Guarantee Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default
and after the curing or waiving of all such Events of Default that may
have occurred:
(A) the duties and obligations of the
Guarantee Trustee shall be determined solely by the express
provisions of this Guarantee, and the Guarantee Trustee shall
not be liable except for the performance of such duties and
obligations as are specifically set forth in this Guarantee,
and no implied covenants or obligations shall be read into
this Guarantee against the Guarantee Trustee; and
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(B) in the absence of bad faith on the part
of the Guarantee Trustee, the Guarantee Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Guarantee Trustee
and conforming to the requirements of this Guarantee; but in
the case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished to
the Guarantee Trustee, the Guarantee Trustee shall be under a
duty to examine the same to determine whether or not they
conform to the requirements of this Guarantee;
(ii) the Guarantee Trustee shall not be liable for
any error of judgment made in good faith by a Responsible Officer,
unless it shall be proved that the Guarantee Trustee was negligent in
ascertaining the pertinent facts upon which such judgment was made;
(iii) the Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith
in accordance with the direction of the Holders of a Majority in
Liquidation Amount of the Securities relating to the time, method and
place of conducting any proceeding for any remedy available to the
Guarantee Trustee in respect of this Guarantee, or exercising any trust
or power conferred upon the Guarantee Trustee under this Guarantee; and
(iv) no provision of this Guarantee shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or
in the exercise of any of its rights or powers, if the Guarantee
Trustee shall have reasonable grounds for believing that the repayment
of such funds or liability is not reasonably assured to it under the
terms of this Guarantee or indemnity, reasonably satisfactory to the
Guarantee Trustee, against such risk or liability is not reasonably
assured to it.
SECTION 3.2 Certain Rights of Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Guarantee Trustee may conclusively rely, and
shall be fully protected in acting or refraining from acting, upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by the
proper party or parties.
(ii) Any direction or act of the Guarantor
contemplated by this Guarantee may be sufficiently evidenced by an
Officers' Certificate.
(iii) Whenever, in the administration of this
Guarantee, the Guarantee Trustee shall deem it desirable that a matter
be proved or established before taking, suffering or omitting any
action hereunder, the Guarantee Trustee (unless other evidence is
herein specifically prescribed) may, in the absence of bad faith on its
part, request and conclusively rely upon an Officers' Certificate
which, upon receipt of such request, shall be promptly delivered by the
Guarantor.
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(iv) The Guarantee Trustee shall have no duty to
record, file or register any instrument (or any rerecord, refile or
reregister such instrument).
(v) The Guarantee Trustee may consult with counsel of
its selection or other experts of its selection, and the advice or
opinion of such counsel with respect to legal matters shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance
with such advice or opinion. Such counsel may be counsel to the
Guarantor or any of its Affiliates and may include any of its
employees. The Guarantee Trustee shall have the right at any time to
seek instructions concerning the administration of this Guarantee from
any court of competent jurisdiction.
(vi) The Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Guarantee at the request or direction of any Holder, unless such Holder
shall have provided to the Guarantee Trustee such security and
indemnity, reasonably satisfactory to the Guarantee Trustee, against
the costs, expenses (including attorneys' fees and expenses and the
expenses of the Guarantee Trustee's agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such request
or direction, including such reasonable advances as may be requested by
the Guarantee Trustee; provided that, nothing contained in this Section
3.2(a)(vi) shall be taken to relieve the Guarantee Trustee, upon the
occurrence of an Event of Default, of its obligation to exercise the
rights and powers vested in it by this Guarantee.
(vii) The Guarantee Trustee shall not be bound to
make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document, but the
Guarantee Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit.
(viii) The Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents, nominees, custodians or attorneys,
and the Guarantee Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed with due
care by it hereunder.
(ix) Any action taken by the Guarantee Trustee or its
agents hereunder shall bind the Holders, and the signature of the
Guarantee Trustee or its agents alone shall be sufficient and effective
to perform any such action. No third party shall be required to inquire
as to the authority of the Guarantee Trustee to so act or as to its
compliance with any of the terms and provisions of this Guarantee, both
of which shall be conclusively evidenced by the Guarantee Trustee's or
its agent's taking such action.
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(x) Whenever in the administration of this Guarantee
the Guarantee Trustee shall deem it desirable to receive instructions
with respect to enforcing any remedy or right or taking any other
action hereunder, the Guarantee Trustee:
(A) may request instructions from the
Holders of a Majority in liquidation amount of the
Preferred Securities;
(B) may refrain from enforcing such remedy
or right or taking such other action until such
instructions are received; and
(C) shall be protected in conclusively
relying on or acting in accordance with such
instructions.
(xi) The Guarantee Trustee shall not be liable for
any action taken, suffered, or omitted to be taken by it in good faith,
without negligence, and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Guarantee.
(b) No provision of this Guarantee shall be deemed to impose
any duty or obligation on the Guarantee Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it in any
jurisdiction in which it shall be illegal, or in which the Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee Trustee
shall be construed to be a duty.
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee
The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Guarantee Trustee does not assume any
responsibility for their correctness. The Guarantee Trustee makes no
representation as to the validity or sufficiency of this Guarantee.
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1 Guarantee Trustee; Eligibility
(a) There shall at all times be a Guarantee Trustee which
shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business
under the laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or a corporation or
Person permitted by the Securities and Exchange Commission to act as an
institutional trustee under the Trust Indenture Act, authorized under
such laws to exercise corporate trust powers, having a combined capital
and surplus of at least 50 million U.S. dollars ($50,000,000), and
subject to supervision or examination by Federal, State, Territorial or
District of Columbia authority. If such corporation publishes reports
of condition at least annually, pursuant to law or to the requirements
of the supervising or examining authority referred to above, then, for
the purposes of this Section 4.1(a)(ii), the combined capital and
surplus of such corporation shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so
published.
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(b) If at any time the Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Guarantee Trustee shall immediately
resign in the manner and with the effect set out in Section 4.2(c).
(c) If the Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Guarantee Trustee and Guarantor shall in all respects comply
with the provisions of Section 310(b) of the Trust Indenture Act.
SECTION 4.2 Appointment, Removal and Resignation of Guarantee Trustee
(a) Subject to Section 4.2(b), the Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor except during an
Event of Default. Subject to the provisions of this Section 4.2, if an Event of
Default shall have occurred and be continuing, the Guarantee Trustee may be
appointed or removed by the Holders of a Majority in Liquidation Amount.
(b) The Guarantee Trustee shall not be removed in accordance
with Section 4.2(a) until a Successor Guarantee Trustee has been appointed and
has accepted such appointment by written instrument executed by such Successor
Guarantee Trustee and delivered to the Guarantor.
(c) The Guarantee Trustee shall hold office until a Successor
Guarantee Trustee shall have been appointed or until its removal or resignation.
The Guarantee Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument in writing executed by the Guarantee
Trustee and delivered to the Guarantor, which resignation shall not take effect
until a Successor Guarantee Trustee has been appointed and has accepted such
appointment by instrument in writing executed by such Successor Guarantee
Trustee and delivered to the Guarantor and the resigning Guarantee Trustee.
(d) If no Successor Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 30
days after delivery of an instrument of removal or resignation, the Guarantee
Trustee resigning or being removed may petition any court of competent
jurisdiction for appointment of a Successor Guarantee Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper, appoint
a Successor Guarantee Trustee.
(e) No Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Guarantee Trustee.
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(f) Upon termination of this Guarantee or removal or
resignation of the Guarantee Trustee pursuant to this Section 4.2, the Guarantor
shall pay to the Guarantee Trustee all amounts due to the Guarantee Trustee
accrued to the date of such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
To the extent set forth in this Guarantee, the Guarantor
irrevocably and unconditionally agrees to pay in full to all Holders the
Guarantee Payments (without duplication of amounts theretofore paid by the
Issuer) on a Pro Rata basis, as and when due, regardless of any defense, right
of set-off or counterclaim that the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders. If a Trust Enforcement Event has occurred and is
continuing, the rights of the Holders of the Common Securities to receive
Guarantee Payments shall be subordinated to the rights of the Holders of
Preferred Securities to receive Guarantee Payments. Notwithstanding anything to
the contrary herein, the Guarantor, in its capacity as Debenture Issuer, retains
all of its rights under the Indenture to:
(i) extend the interest payment period on the Debentures and
the Guarantor shall not be obligated hereunder to make any Guarantee
Payments during any Extension Period (as defined in the Indenture) with
respect to the Distributions on the Securities; and
(ii) change the maturity date of the Debentures to the extent
permitted by the Indenture.
SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this
Guarantee and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Issuer
or any other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the
Guarantor under this Guarantee shall in no way be affected or impaired by reason
of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise,
of the performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Securities to be
performed or observed by the Issuer;
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(b) the extension of time for the payment by the Issuer of all
or any portion of the Distributions, Redemption Price or any other sums payable
under the terms of the Securities or the extension of time for the performance
of any other obligation under, arising out of, or in connection with, the
Securities (other than an extension of time for payment of Distributions,
Redemption Price or other sum payable that results from the extension of any
interest payment period on the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right, privilege, power
or remedy conferred on the Holders pursuant to the terms of the Securities, or
any action on the part of the Issuer granting indulgence or extension of any
kind;
(d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of debt of, or other similar proceedings affecting, the Issuer or any of the
assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the
Securities;
(f) the settlement or compromise of any obligation guaranteed
or incurred in this Guarantee; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of the Guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor with
respect to the Guarantee Payments shall be absolute and unconditional under any
and all circumstances.
There shall be no obligation of the Holders to give notice to,
or obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
No setoff, counterclaim, reduction or diminution of any
obligation, or any defense of any kind or nature that the Guarantor has or may
have against any Holder (except the defense of payment to such Holder) shall be
available hereunder to the Guarantor against such Holder to reduce the payments
to it under this Guarantee.
SECTION 5.4 Rights of Holders
(a) The Holders of a Majority in Liquidation Amount of the
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of this
Guarantee or exercising any trust or power conferred upon the Guarantee Trustee
under this Guarantee.
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(b) If the Guarantee Trustee fails to enforce this Guarantee,
subject to the subordination provisions of Section 6.2, any Holder may institute
a legal proceeding directly against the Guarantor to enforce the Guarantee
Trustee's rights under this Guarantee, without first instituting a legal
proceeding against the Issuer, the Guarantee Trustee or any other person or
entity. In addition, if the Guarantor has failed to make a Guarantee Payment, a
Holder, subject to the subordination provisions of Section 6.2, may institute a
legal proceeding directly against the Guarantor for enforcement of the Guarantee
for payment to such Holder of the principal of or interest on the Debentures
having a principal amount equal to the aggregate liquidation amount of the
Securities of such Holder. The Guarantor waives any right or remedy to require
that any action be brought first against the Issuer or any other Person before
proceeding directly against the Guarantor.
SECTION 5.5 Guarantee of Payment
This Guarantee creates a guarantee of payment and not of
collection.
SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all, if any, rights of
the Holders against the Issuer in respect of any amounts paid to such Holders by
the Guarantor under this Guarantee; provided, however, that the Guarantor shall
not (except to the extent required by mandatory provisions of law) be entitled
to enforce or exercise any right that it may acquire by way of subrogation or
any indemnity, reimbursement or other agreement, in all cases as a result of
payment under this Guarantee, if, at the time of any such payment, any amounts
are due and unpaid under this Guarantee. If any amount shall be paid to the
Guarantor in violation of the preceding sentence, the Guarantor agrees to hold
such amount in trust for the Holders and to pay over such amount to the
Guarantee Trustee for the benefit of the Holders.
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Securities, and
that the Guarantor shall be liable as principal and as debtor hereunder to make
Guarantee Payments pursuant to the terms of this Guarantee notwithstanding the
occurrence of any event referred to in subsections (a) through (g), inclusive,
of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Securities remain outstanding, if an Event of
Default occurs under the Guarantee or a Trust Enforcement Event occurs under the
Declaration and written notice of such event has been given to the Guarantor,
the Guarantor shall not:
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(i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect
to, any of the Guarantor's capital stock (which includes common and
preferred stock);
(ii) make any payment of principal of or premium, if any, or
interest on or repay, repurchase or redeem any debt securities of the
Guarantor (including any Other Debentures) that rank pari passu with or
junior in right of payment to the Debentures or make any guarantee
payments with respect to any guarantee by the Guarantor of the debt
securities of any subsidiary of the Guarantor (including Other
Guarantees) if such guarantee ranks pari passu with or junior in right
of payment to the Debentures (other than:
(a) dividends or distributions in shares of, or
options, warrants, rights to subscribe for or purchase shares
of, common stock of the Guarantor;
(b) any declaration of a dividend in connection with
the implementation of a stockholders' rights plan, or the
issuance of stock under any such plan in the future, or the
redemption or repurchase of any such rights pursuant thereto;
(c) payments under this Guarantee;
(d) as a result of a reclassification of the
Guarantor's capital stock or the exchange or the conversion of
one class or series of the Guarantor's capital stock for
another class or series of the Guarantor's capital stock;
(e) the purchase of fractional interests in shares of
the Guarantor's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security
being converted or exchanged; and
(f) purchases of common stock related to the issuance
of common stock or rights under any of the Guarantor's benefit
plans for its directors, officers or employees or any of the
Guarantor's dividend reinvestment plans.
SECTION 6.2 Ranking
This Guarantee will constitute an unsecured obligation of the
Guarantor and will rank:
(i) subordinate and junior in right of payment to Senior
Indebtedness (as defined in the First Supplemental Indenture), to the
same extent and in the same manner that the Debentures are subordinated
to Senior Indebtedness pursuant to the Indenture (except as indicated
below), it being understood that the terms of Article 6 of the First
Supplemental Indenture shall apply to the obligations of the Guarantor
under this Guarantee as if (x) such Article 6 were set forth herein in
full and (y) such obligations were substituted for the term
"Debentures" appearing in such Article 6, except that with respect to
Section 6 of the First Supplemental Indenture only, the term "Senior
Debt" shall mean all liabilities of the Guarantor, whether or not for
money borrowed (other than obligations in respect of Other Guarantees);
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(ii) pari passu with the most senior preferred or preference
stock now or hereafter issued by the Guarantor, any guarantee now or
hereafter entered into by the Guarantor in respect of any preferred or
preference stock of any Affiliate of the Guarantor, and any Other
Guarantee; and
(iii) senior to the Guarantor's capital stock.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Guarantee shall terminate upon:
(i) full payment of the Redemption Price of all Securities;
(ii) distribution of the Debentures held by the Issuer to the
Holders; or
(iii) liquidation of the Issuer, the full payment of the
amounts payable in accordance with the Declaration or the distribution
of the Debentures to the Holders.
Notwithstanding the foregoing, this Guarantee will continue to be effective or
will be reinstated, as the case may be, if at any time any Holder must restore
payment of any sums paid under the Securities or under this Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this
Guarantee and in a manner that such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Indemnified Person by this
Guarantee or by law, except that an Indemnified Person shall be liable for any
such loss, damage or claim incurred by reason of such Indemnified Person's
negligence or willful misconduct with respect to such acts or omissions.
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(b) An Indemnified Person shall be fully protected in relying
in good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders might properly be paid.
SECTION 8.2 Indemnification
To the fullest extent permitted by law, the Guarantor agrees
to indemnify each Indemnified Person for, and to hold each Indemnified Person
harmless against, any and all loss, liability, damage, claim or expense incurred
without negligence or bad faith on its part, arising out of or in connection
with the acceptance or administration of the trust or trusts hereunder,
including the costs and expenses (including reasonable legal fees and expenses)
of defending itself against, or investigating, any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder. The obligation to indemnify as set forth in this Section 8.2 shall
survive the termination of this Guarantee and shall survive the removal or
resignation of the Guarantee Trustee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Guarantee
shall bind the successors, assigns, receivers, trustees and representatives of
the Guarantor and shall inure to the benefit of the Holders then outstanding.
SECTION 9.2 Amendments
Except with respect to any changes that do not materially
adversely affect the rights of Holders (in which case no consent of Holders will
be required), this Guarantee may only be amended with the prior approval of the
Holders of a Majority in Liquidation Amount of the Securities (including the
stated liquidation amount that would be paid on redemption, liquidation or
otherwise, plus accumulated and unpaid Distributions to the date upon which the
voting percentages are determined). The provisions of the Declaration with
respect to consents to amendments thereof, whether at a meeting or otherwise,
shall apply to the giving of such approval.
SECTION 9.3 Notices
All notices provided for in this Guarantee shall be in
writing, duly signed by the party giving such notice, and shall be delivered by
hand or express courier, telecopied or mailed by first class mail, as follows:
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(a) If given to the Issuer, at the Issuer's mailing address
set forth below (or such other address as the Issuer may give notice of to the
Holders and the Guarantee Trustee):
Sovereign Capital Trust II
c/o Sovereign Bancorp, Inc.
1130 Berkshire Boulevard
Wyomissing, PA 19610
Attention: Administrative Trustee
Telecopy: (610) 320-8448
(b) If given to the Guarantee Trustee, at the Guarantee
Trustee's mailing address set forth below (or such other address as the
Guarantee Trustee may give notice of to the Holders and the Issuer):
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
Telecopy: (212) 815-5915
(c) If given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the Guarantor may give notice
of to the Holders and the Guarantee Trustee):
Sovereign Bancorp, Inc.
1130 Berkshire Boulevard
Wyomissing, PA 19610
Attention: Mark R. McCollom
Telecopy: (610) 320-8448
(d) If given to any Holder, at such Holder's address set forth
on the books and records of the Issuer.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 9.4 Benefit
This Guarantee is solely for the benefit of the Holders and,
subject to Section 3.1(a), is not separately transferable from the Securities.
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SECTION 9.5 Governing Law
THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.6 Counterparts
This Guarantee may contain more than one counterpart of the
signature page, and this Guarantee may be executed by affixing of the signature
of each of the parties to one of such counterpart signature pages. All such
counterpart signature pages shall be read as though one, and they shall have the
same force and effect as though all of the signers had signed a single signature
page.
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IN WITNESS WHEREOF, this Guarantee Agreement has been entered
into as of the day and year first above written.
/s/ SOVEREIGN BANCORP, INC.,
as Guarantor
/s/ THE BANK OF NEW YORK,
as Guarantee Trustee
