FORM OF EXCHANGE CAPITAL SECURITY CERTIFICATE
[IF THIS EXCHANGE CAPITAL SECURITY IS A GLOBAL CAPITAL
SECURITY, INSERT: THIS EXCHANGE CAPITAL SECURITY IS A GLOBAL
CAPITAL SECURITY WITHIN THE MEANING OF THE TRUST AGREEMENT
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "CLEARING AGENCY") OR A NOMINEE OF
THE CLEARING AGENCY. THIS EXCHANGE CAPITAL SECURITY IS
EXCHANGEABLE FOR EXCHANGE CAPITAL SECURITIES REGISTERED IN THE NAME
OF A PERSON OTHER THAN THE CLEARING AGENCY OR ITS NOMINEE ONLY IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE TRUST AGREEMENT AND NO
TRANSFER OF THIS EXCHANGE CAPITAL SECURITY (OTHER THAN A TRANSFER
OF THIS EXCHANGE CAPITAL 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.]
[IF THIS EXCHANGE CAPITAL SECURITY IS A GLOBAL SECURITY,
INSERT: UNLESS THIS EXCHANGE CAPITAL SECURITY IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER
STREET, NEW YORK, NEW YORK) TO THE TRUST OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY EXCHANGE
CAPITAL SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE &
CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THE EXCHANGE CAPITAL SECURITIES ARE ISSUED, AND MAY BE
TRANSFERRED, ONLY IN BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS
THAN $100,000 (100 CAPITAL SECURITIES). ANY SUCH TRANSFER OF
EXCHANGE CAPITAL SECURITIES IN A BLOCK HAVING A LIQUIDATION AMOUNT
OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL
EFFECT WHATSOEVER. ANY SUCH TRANSFEREE SHALL BE DEEMED NOT TO BE
THE HOLDER OF SUCH EXCHANGE CAPITAL SECURITIES FOR ANY PURPOSE,
INCLUDING BUT NOT LIMITED TO THE RECEIPT OF DISTRIBUTIONS ON SUCH
EXCHANGE CAPITAL SECURITIES, AND SUCH TRANSFEREE SHALL BE DEEMED TO
HAVE NO INTEREST WHATSOEVER IN SUCH EXCHANGE CAPITAL SECURITIES.
THE HOLDER OF THIS EXCHANGE CAPITAL SECURITY BY ITS
ACCEPTANCE HEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT EITHER
(i) IT IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR
(ii) THE ACQUISITION AND HOLDING OF THIS EXCHANGE CAPITAL SECURITY
BY IT IS NOT PROHIBITED BY EITHER SECTION 406 OF ERISA OR SECTION
4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR
EXEMPT FROM ANY SUCH PROHIBITION.
Certificate Number Aggregate Liquidation Amount
CUSIP NO. ______
Exchange Capital Securities
of
Sovereign Capital Trust I
9.00% Exchange Capital Securities
(liquidation amount $1,000 per Exchange Capital Security)
Sovereign Capital Trust I, a statutory business trust
created under the laws of the State of Delaware (the "Trust"),
hereby certifies that Cede & Co. (the "Holder") is the registered
owner of [____________________ (__) in aggregate liquidation amount
of Exchange Capital Securities of the Trust](1) [the aggregate
liquidation amount of Exchange Capital Securities of the Trust
specified in Schedule A hereto] (2) representing undivided
beneficial interests in the assets of the Trust designated the
9.00% Series B Capital Securities (liquidation amount $1,000 per
Exchange Capital Security) (the "Exchange Capital Securities").
The Exchange Capital Securities are transferable on the books and
records of the Trust, in person or by a duly authorized attorney,
upon surrender of this certificate duly endorsed and in proper form
for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Exchange Capital
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 March 24, 1997, as
the same may be amended from time to time (the "Trust Agreement"),
including the designation of the terms of the Exchange Capital
Securities as set forth in Annex I to the Trust Agreement.
Capitalized terms used but not defined herein shall have the
meaning given them in the Trust Agreement. The Sponsor will
provide a copy of the Trust Agreement, the Exchange Capital
Securities Guarantee, the Common Securities Guarantee (as may be
appropriate), and the Indenture (including any supplemental
indenture) to a Holder without charge upon written request to the
Trust at its principal place of business.
______________
(1) Insert in Definitive Exchange Capital Securities only.
(2) Insert in Global Exchange Capital Securities only.
Upon receipt of this certificate, the Holder is bound by
the Trust Agreement and is entitled to the benefits thereunder and
to the benefits of the Exchange Capital Securities Guarantee to the
extent provided therein.
By acceptance, the Holder agrees to treat, for United
States federal income tax purposes, the Debentures as indebtedness
and the Exchange Capital Securities as evidence of indirect
beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this
certificate this ________ day of _________________, ____.
SOVEREIGN CAPITAL TRUST I
By________________________________
Name:
Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Exchange Capital Securities referred
to in the within-mentioned Trust Agreement.
Dated: _________________, ____
THE BANK OF NEW YORK, as Property
Trustee
By________________________________
Authorized Signatory
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Exchange Capital Security
will be fixed at a rate per annum of 9.00% (the "Coupon Rate") of
the liquidation amount of $1,000 per Exchange Capital Security,
such rate being the rate of interest payable on the Debentures to
be held by the Property Trustee. Distributions in arrears for more
than one semi-annual period will bear interest thereon compounded
semi-annually at the Coupon Rate (to the extent permitted by
applicable law). The term "Distributions", as used herein,
includes such cash distributions and any such interest payable
unless otherwise stated. A Distribution is payable only to the
extent that payments are made in respect of the Debentures held by
the Property Trustee and to the extent the Property Trustee has
funds on hand legally available therefor.
Distributions on the Exchange Capital Securities will be
cumulative, will accumulate from the most recent date to which
Distributions have been paid or, if no Distributions have been
paid, from March 24, 1997 and will be payable semi-annually in
arrears, on April 1 and October 1 of each year, commencing on
October 1, 1997, except as otherwise described below.
Distributions will be computed on the basis of a 360-day year
consisting of twelve 30-day months and, for any period less than a
full calendar month, the number of days elapsed in such month. As
long as no Event of Default has occurred and is continuing under
the Indenture, the Debenture Issuer has the right under the
Indenture to defer payments of interest by extending the interest
payment period at any time and from time to time on the Debentures
for a period not exceeding 10 consecutive calendar semi-annual
periods, including the first such semi-annual period during such
extension period (each an "Extension Period"), provided that no
Extension Period shall end on a date other than an Interest Payment
Date for the Debentures or extend beyond the Maturity Date of the
Debentures. As a consequence of such deferral, Distributions will
also be deferred. Despite such deferral, semi-annual Distributions
will continue to accumulate with interest thereon (to the extent
permitted by applicable law, but not at a rate exceeding the rate
of interest then accruing on the Debentures) at the Coupon Rate
compounded semi-annually 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 within such
Extension Period, may not exceed 10 consecutive semi-annual
periods, including the first semi-annual period during such
Extension Period, end on a date other than an Interest Payment Date
for the Debentures or extend beyond the Maturity Date of the
Debentures. Payments of accumulated Distributions will be payable
to Holders as they appear on the books and records of the Trust on
the first record date after the end of the Extension Period. 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.
Subject to receipt by the Sponsor of any required
regulatory approval and to certain other conditions set forth in
the Trust Agreement and the Indenture, the Property Trustee may, at
the direction of the Sponsor, at any time liquidate the Trust and
cause the Debentures to be distributed to the holders of the
Securities in liquidation of the Trust or, simultaneous with any
redemption of the Debentures, cause a Like Amount of the Securities
to be redeemed by the Trust.
The Exchange Capital Securities shall be redeemable as
provided in the Trust Agreement.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Exchange Capital 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 Exchange Capital Security Certificate on the
books of the Trust. The agent may substitute another to act for
him or her.
Date:
Signature: ______________________
(Sign exactly as your name appears on the other side of this
Exchange Capital 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.