As Filed With the Securities and Exchange Commission on
September 27, 1999
Registration No. 333-86961
333-86961-01
333-86961-02
333-86961-03
_________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________
PRE-EFFECTIVE AMENDMENT NO. I
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Sovereign Bancorp, Inc. Pennsylvania 23-2453088
Sovereign Capital Trust II Delaware To Be Applied For
Sovereign Capital Trust III Delaware To Be Applied For
Sovereign Capital Trust IV Delaware To Be Applied For
(Exact Name of Registrant as State or Other (I.R.S. Employer
Specified in its Charter) Jurisdiction of Identification
Incorporation or Number)
Organization)
___________
2000 Market Street
Philadelphia, Pennsylvania 19103
(215) 557-4630
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
___________
Jay S. Sidhu
Sovereign Bancorp, Inc.
2000 Market Street
Philadelphia, Pennsylvania 19103
(215) 557-4630
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
___________
Copies To:
Joseph M. Harenza, Esq. William J. Reynolds, Esq.
Stevens & Lee Stevens & Lee
111 North Sixth Street 111 North Sixth Street
Reading, PA 19601 Reading, PA 19601
(610) 478-2160 (610) 478-2099
___________
Approximate Date of Commencement of Proposed Sale of the
Securities to the Public: From time to time after the effective
date of this Registration Statement, as determined by market
conditions.
If the only securities being registered on this form are
being offered pursuant to dividend or interest reinvestment
plans, please check the following box. [ ]
If any of the securities being registered on this form are
to be offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, other than securities
offered only in connection with dividend or interest reinvestment
plans, check the following box. [ X ]
If this form is filed to register additional securities
for
an offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant
to
Rule 462(c) under the Securities Act, check the following box and
list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.
[ ]
If delivery of the prospectus is expected to be made
pursuant to Rule 434 under the Securities Act, please check the
following box. [ X ]
___________
The Registrants hereby amend this Registration Statement
on
such date or dates as may be necessary to delay its effective
date until the Registrants shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
_________________________________________________________________
__
INTRODUCTORY NOTE
This Registration Statement contains a form of base
prospectus relating to common stock and common stock warrants,
preferred stock and preferred stock warrants, depositary shares,
debt securities and debt warrants, stock purchase contracts and
stock purchase units of Sovereign Bancorp, Inc., and the
preferred securities of Sovereign Capital Trust II, Sovereign
Capital Trust III and Sovereign Capital Trust IV (each a "Trust"
and collectively the "Trusts").
To the extent required, the information in the prospectus,
including financial information, will be updated at the time of
each offering. Upon each such offering, a prospectus supplement
to the base prospectus will be filed.
PROSPECTUS
$2,000,000,000
Sovereign Bancorp, Inc.
May Offer --
Common Stock
Common Stock Warrants
Preferred Stock
Preferred Stock Warrants
Depositary Shares
Debt Securities
Debt Warrants
Stock Purchase Contracts
Stock Purchase Units
___________
The Trusts
May Offer --
Trust Preferred Securities
___________
Sovereign Bancorp and, in the case of the trust preferred
securities, the applicable Trust, will provide the specific terms
of these securities in supplements to this prospectus. You
should read this prospectus and the accompanying prospectus
supplement carefully before you invest.
Sovereign Bancorp or the Trusts may use this prospectus to
offer up to $2,000,000,000 of securities.
Sovereign Bancorp common stock is traded on the NASDAQ
National Market under the symbol "SVRN."
___________
Neither the Securities and Exchange Commission nor any
state
securities commission has approved or disapproved of these
securities or determined if this prospectus or any accompanying
prospectus supplement is truthful or complete. Any
representation to the contrary is a criminal offense.
___________
September 28, 1999
TABLE OF CONTENTS
Page
Prospectus Summary..............................................
1
Where You Can Find More Information.............................
3
Use of Proceeds.................................................
7
Our Ratio of Earnings to Fixed Charges..........................
8
Description of Common Stock.....................................
8
Description of Preferred Stock..................................
8
Description of Depositary Shares................................
12
Description of Debt Securities..................................
15
Description of Warrants.........................................
35
Stock Purchase Contracts and Stock Purchase Units...............
40
Description of Capital Securities...............................
41
Description of Trust Preferred Securities and Trust Guarantees..
47
Certain Tax Considerations......................................
53
Plan of Distribution............................................
53
ERISA Considerations............................................
56
Legal Matters...................................................
56
Experts.........................................................
56
PROSPECTUS SUMMARY
This summary provides a brief overview of the key aspects
of
Sovereign Bancorp and the Trusts (collectively, the
"Registrants") and all material terms of the offered securities
that are known as of the date of this prospectus. For more
complete information on Sovereign Bancorp, Sovereign Bank and the
Trusts and a more complete understanding of the terms of the
offered securities, before making your investment decision, you
should carefully read:
- this prospectus, which explains the general terms
of
the securities that Sovereign Bancorp and the
Trusts
may offer;
- the accompanying prospectus supplement, which
(1) explains the specific terms of the securities
being
offered and (2) updates and changes information in
this
prospectus; and
- the documents referred to in "Where You Can Find
More
Information" for information about Sovereign
Bancorp,
including its financial statements.
SOVEREIGN BANCORP, INC.
Sovereign Bancorp is a Pennsylvania business corporation
and
the holding company for Sovereign Bank, a federal savings bank.
As of June 30, 1999, Sovereign Bancorp had total consolidated
assets, deposits and shareholders' equity of approximately
$24.6 billion, $12.2 billion and $1.4 billion, respectively.
Sovereign Bancorp conducts its operations principally
through its subsidiary, Sovereign Bank. Sovereign Bank's primary
business consists of attracting deposits from its network of
approximately 305 community banking offices, and originating
commercial and asset-based loans, consumer and residential
mortgage loans and home equity lines of credit in the communities
served by those offices. Sovereign Bank's mortgage banking
division also originates loans through, provides financing to,
and acquires loans from, mortgage companies and other originators
of loans across the nation. Sovereign Bank's vehicle finance
division provides direct and indirect automobile loans and
commercial loans (primarily dealer floor planning) in New
England, as well as in New York, Pennsylvania, New Jersey and
Delaware. Most of Sovereign Bank's community banking offices are
located in north central and eastern Pennsylvania, New Jersey and
northern Delaware. In terms of assets, Sovereign Bancorp is the
third largest bank or thrift holding company headquartered in
Pennsylvania, and one of the 50 largest in the United States.
<PAGE 1>
Sovereign Bancorp's principal executive offices are
located
at 2000 Market Street, Philadelphia, Pennsylvania 19103, and its
telephone number is (215) 557-4630.
<PAGE 2>
THE SECURITIES SOVEREIGN BANCORP MAY
OFFER
Sovereign Bancorp may use this prospectus to offer up to
$2,000,000,000 of:
- common stock;
- common stock warrants;
- preferred stock;
- preferred stock warrants;
- depositary shares;
- debt securities;
- debt warrants;
- stock purchase contracts; and
- stock purchase units.
A prospectus supplement will describe the specific types,
amounts, prices, and detailed terms of any of these offered
securities.
THE TRUSTS
Each Trust is a statutory business trust formed under
Delaware law pursuant to a separate Declaration of Trust (a
"Declaration") executed by Sovereign Bancorp, as sponsor for such
Trust, and the trustees of such Trust and the filing of a
Certificate of Trust with the Delaware Secretary of State.
Unless an accompanying prospectus supplement provides
otherwise, each Trust exists for the sole purposes of:
- issuing the trust preferred securities;
- investing the gross proceeds of the sale of the
trust
preferred securities in a specific series of
subordinated debt securities; and
- engaging in only those other activities necessary
or
incidental thereto.
All of the trust common securities will be owned by
Sovereign Bancorp. The trust common securities will rank on a
parity, and payments will be made thereon pro rata, with the
trust preferred securities, except that upon the occurrence and
continuance of an event of default under the applicable
Declaration, the rights of the holders of the applicable trust
<PAGE 3> common securities to payment in respect of distributions
and payments upon liquidation, redemption and otherwise will be
subordinated to the rights of the holders of the applicable trust
preferred securities.
Sovereign Bancorp will acquire trust common securities
having an aggregate liquidation amount equal to a minimum of 3%
of the total capital of each Trust. Each Trust will have a term
of at least 20 but not more than 50 years, but may terminate
earlier as provided in the applicable Declaration. Each Trust's
business and affairs will be conducted by the trustees. The
holder of the trust common securities will be entitled to
appoint, remove or replace any of, or increase or reduce the
number of, the Trustees of each Trust. The duties and
obligations of the Trustees shall be governed by the Declaration
of such Trust. At least one of the trustees of each Trust will
be a person who is an employee or officer of or who is affiliated
with Sovereign Bancorp (a "Regular Trustee"). One trustee of
each Trust will be a financial institution that is not affiliated
with Sovereign Bancorp, which shall act as property trustee and
as indenture trustee for the purposes of the Trust Indenture Act
of 1939 (the "Trust Indenture Act"), as amended, pursuant to the
terms set forth in a prospectus supplement (the "Property
Trustee"). In addition, unless the Property Trustee maintains a
principal place of business in the State of Delaware and
otherwise meets the requirements of applicable law, one trustee
of each Trust will be a legal entity having a principal place of
business in, or an individual resident of, the State of Delaware.
Sovereign Bancorp will pay all fees and expenses related to each
Trust and the offering of the trust preferred securities. Unless
otherwise set forth in the prospectus supplement, the Property
Trustee will be The Bank of New York, and the Delaware trustee
will be The Bank of New York, Delaware. The office of the
Delaware trustee in the State of Delaware is White Clay Center,
Newark, Delaware 19711. The principal place of business of each
Trust is 34 Reads Way, New Castle, Delaware 19720.
THE SECURITIES THE TRUSTS MAY OFFER
Each Trust may use this prospectus to offer up to
$2,000,000,000 of trust preferred securities.
A prospectus supplement will describe the specific types,
amounts, prices, and detailed terms of any of the trust preferred
securities.
WHERE YOU CAN FIND MORE INFORMATION
As required by the Securities Act of 1933, the
Registrants have filed a joint registration statement
(No. 333-86961) relating to the securities offered by this
prospectus with the Securities and Exchange Commission. This
prospectus is a part of that registration statement, which
includes additional information. <PAGE 4>
Sovereign Bancorp files annual, quarterly and current
reports, proxy statements and other information with the SEC.
You may read and copy any document Sovereign Bancorp files at the
SEC's public reference rooms in Washington, D.C., New York, New
York and Chicago, Illinois. You can also request copies of the
documents, upon payment of a duplicating fee, by writing the
Public Reference Section of the SEC. Please call the SEC at
1-800-SEC-0330 for further information on the public reference
rooms. These SEC filings are also available to the public from
the SEC's web site at http://www.sec.gov.
The SEC allows Sovereign Bancorp to "incorporate by
reference" the information it files with the SEC, which means
that it can disclose important information to you by referring
you to those documents. The information incorporated by
reference is an important part of this prospectus. Information
that Sovereign Bancorp files later with the SEC will
automatically update and supersede, as relevant, information in
this prospectus. In all cases, you should rely on the later
information over different information included in this
prospectus or the prospectus supplement. Sovereign Bancorp
incorporates by reference the documents listed below and any
future filings made with the SEC under Section 13(a), 13(c), 14,
or 15(d) of the Securities Exchange Act of 1934 before the later
of (1) the completion of the offering of the securities described
in this prospectus and (2) the date Sovereign Bancorp stops
offering securities pursuant to this prospectus shall be
incorporated by reference in this prospectus from the date of
filing of such documents:
- Amended Annual Report on Form 10-K for the year
ended
December 31, 1998, filed with the SEC on June 1,
1999;
- Amended Quarterly Report on Form 10-Q for the
quarter
ended March 31, 1999, filed with the SEC on June 1,
1999;
- Quarterly Report on Form 10-Q for the quarter ended
June 30, 1999, filed with the SEC on August 16,
1999;
and
- Current Reports on Form 8-K, filed with the SEC on
March 19, 1999, April 16, 1999 and September 10,
1999
(as amended by Form 8-K/A filed September 23,
1999).
- Registration Statement on Form 8-A, filed with the
SEC
August 14, 1989, pursuant to which Sovereign
Bancorp
registered certain stock purchase rights under the
Exchange Act, and any amendments or reports filed
for
the purpose of updating such Registration
Statement.
<PAGE 5>
You may request a copy of these filings, in most cases
without exhibits, at no cost, by writing or telephoning Sovereign
Bancorp at the following address:
Investor Relations Office
Sovereign Bancorp, Inc.
1130 Berkshire Boulevard
Wyomissing, Pennsylvania 19610
(610) 320-8498
___________
No separate financial statements of the Trusts have been
included or incorporated by reference herein. Neither the Trusts
nor Sovereign Bancorp considers such financial statements
material to holders of trust preferred securities because:
- all of the voting securities of each Trust will be
owned, directly or indirectly, by Sovereign
Bancorp, a
reporting company under the Exchange Act;
- no Trust has independent operations, but rather
each
exists for the sole purpose of issuing securities
representing undivided beneficial interests in the
assets of such Trust and investing the proceeds
thereof
in debt securities; and
- the obligations of the Trusts under the trust
preferred
securities are fully and unconditionally guaranteed
by
Sovereign Bancorp to the extent set forth herein.
See "The Trusts" and "Description of Trust Preferred Securities
and Trust Guarantees -- Trust Guarantees."
You should rely only on the information provided in this
prospectus and the prospectus supplement, as well as the
information incorporated by reference. Neither Sovereign Bancorp
nor the Trusts have authorized anyone to provide you with
different information. Sovereign Bancorp and the Trusts are not
making an offer of these securities in any jurisdiction where the
offer is not permitted. You should not assume that the
information in this prospectus, the prospectus supplement or any
documents incorporated by reference is accurate as of any date
other than the date of the applicable document.
FORWARD-LOOKING STATEMENTS
Some of the statements in this prospectus, the attached
prospectus supplement and the documents incorporated by reference
are forward-looking statements.
These forward-looking statements include statements with
respect to the Registrants' beliefs, plans, objectives, goals,
expectations, anticipations, estimates, intentions, financial
<PAGE 6> condition, results of operations, future performance and
business, including:
- statements relating to Sovereign Bancorp's goals
with
respect to growth in earnings per share, return on
equity, return on assets, overhead efficiency
ratio,
tier 1 leverage ratio, annualized net charge-offs,
dividend pay-out ratio, and fee income as a
percentage
of total revenue; and
- statements that include the words "may," "could,"
"should," "would," "believe," "expect,"
"anticipate,"
"estimate," "intend," "plan," or similar
expressions.
These forward-looking statements involve risks and
uncertainties that are subject to change based on various
important factors (some of which are beyond the Registrants'
control). The following factors, among others, could cause
Sovereign Bancorp's financial performance to differ materially
from the goals, plans, objectives, intentions and expectations
expressed in such forward-looking statements:
- the strength of the United States economy in
general
and the strength of the local economies in which
Sovereign Bancorp conducts operations;
- the effects of trade, monetary and fiscal policies
and
laws, including interest rate policies of the Board
of
Governors of the Federal Reserve System;
- inflation, interest rate, market and monetary
fluctuations;
- the timely development of competitive new products
and
services by Sovereign Bancorp and the acceptance of
those products and services by customers;
- the willingness of customers to substitute
competitors'
products and services for Sovereign Bancorp's
products
and services and vice versa;
- Sovereign Bancorp's success in gaining regulatory
approval of products and services, when required;
- the impact of changes in financial services laws
and
regulations (including laws concerning taxes,
banking,
securities and insurance);
- technological changes;
- changes in consumer spending and savings habits;
- the impact of Sovereign Bancorp's pending and
completed
acquisitions, including Sovereign Bancorp's success
in
<PAGE 7> fully realizing or realizing within the
expected time frame expected cost savings and/or
revenue enhancements from such pending or completed
acquisitions;
- unanticipated regulatory or judicial proceedings;
- unanticipated results of Sovereign Bancorp's
efforts to
be Year 2000 compliant; and
- our success at managing the risks involved in the
foregoing.
If one or more of these risks or uncertainties occurs or if the
underlying assumptions prove incorrect, then Sovereign Bancorp's
actual results, performance or achievements in 1999 and beyond
could differ materially from those expressed in, or implied by,
the forward-looking statements.
The Registrants caution that the foregoing list of
important
factors is not exclusive, and neither such list nor any such
forward-looking statement takes into account the impact that any
future acquisition may have on us and any such forward-looking
statement. The Registrants do not undertake to update any
forward-looking statement, whether written or oral, that may be
made from time to time by or on behalf of the Registrants.
USE OF PROCEEDS
Except as otherwise described in any prospectus
supplement,
Sovereign Bancorp will use the net proceeds from the sale of the
offered securities for general corporate purposes, which may
include working capital, capital expenditures, repayment of
existing indebtedness, financing possible future acquisitions and
providing advances to or investments in Sovereign Bank. The
amounts and timing of our application of the proceeds will depend
upon many factors, including the funding requirements of
Sovereign Bank, the availability of other funds, and the
existence of acquisition opportunities. Pending these uses,
Sovereign Bancorp expects to invest the net proceeds in
short-term, interest-bearing securities.
<PAGE 8>
OUR RATIO OF EARNINGS TO FIXED CHARGES
We computed our ratio of earnings to fixed charges by
dividing earnings by fixed charges on a consolidated basis. We
computed our ratio of earnings to combined fixed charges and
preferred stock dividends by dividing earnings by the sum of
fixed charges and preferred stock dividend requirements.
Earnings consist primarily of income before income taxes adjusted
for fixed charges. Fixed charges consist primarily of interest
expense on short-term and long-term borrowings.
Six Months
Ended Year
Ended December 31,
June 30, 1999 1998 1997
1996 1995 1994
Ratio of Earnings to Fixed Charges
Excluding interest on deposits... 1.57x 1.48x
1.44x 1.49x 1.89x 2.16x
Including interest on deposits... 1.31x 1.24x
1.22x 1.22x 1.29x 1.40x
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock
Dividends (1)
Excluding interest on deposits... 1.57x 1.47x
1.41x 1.44x 1.81x 2.16x
Including interest on deposits... 1.31x 1.24x
1.21x 1.20x 1.27x 1.40x
_______________
(1) On May 15, 1998, we redeemed all outstanding shares of our
6-1/4% Cumulative Convertible Preferred Stock, Series B at
a
redemption price of $52.188 per share. Substantially all
holders of the Series B Preferred Stock converted their
shares of preferred stock to shares of our common stock.
DESCRIPTION OF COMMON STOCK
Sovereign Bancorp may issue, either separately or together
with other securities, shares of common stock. Under its
articles of incorporation, Sovereign Bancorp is authorized to
issue up to 400,000,000 shares of common stock. Upon receipt by
Sovereign Bancorp of the full specified purchase price therefor,
the common stock will be fully paid and nonassessable. A
prospectus supplement relating to an offering of common stock, or
other securities convertible or exchangeable for, or exercisable
into, common stock, will describe the relevant terms, including
the number of shares offered, any initial offering price, and
market price and dividend information, as well as, if applicable,
information on other related securities. See "Description of
Capital Securities" below.
DESCRIPTION OF PREFERRED STOCK
The following briefly summarizes the material terms of
Sovereign Bancorp's preferred stock, other than pricing and
related terms disclosed in the accompanying prospectus
supplement. You should read the particular terms of any series
<PAGE 9> of preferred stock offered by Sovereign Bancorp which
will be described in more detail in any prospectus supplement
relating to such series, together with the more detailed
provisions of Sovereign Bancorp's articles of incorporation and
the statement with respect to shares relating to each particular
series of preferred stock for provisions that may be important to
you. The statement with respect to shares relating to each
particular series of preferred stock offered by the accompanying
prospectus supplement and this prospectus will be filed as an
exhibit to a document incorporated by reference in the
registration statement. The prospectus supplement will also
state whether any of the terms summarized below do not apply to
the series of preferred stock being offered.
General
Under Sovereign Bancorp's articles of incorporation, the
board of directors of Sovereign Bancorp is authorized to issue
shares of preferred stock in one or more series, and to establish
from time to time a series of preferred stock with the following
terms specified:
- the number of shares to be included in the series;
- the designation, powers, preferences and rights of
the
shares of the series; and
- the qualifications, limitations or restrictions of
such
series, except as otherwise stated in the articles
of
incorporation.
Prior to the issuance of any series of preferred stock,
the
board of directors of Sovereign Bancorp will adopt resolutions
creating and designating the series as a series of preferred
stock and the resolutions will be filed in a statement with
respect to shares as an amendment to the articles of
incorporation. The term "board of directors of Sovereign
Bancorp" includes any duly authorized committee.
The rights of holders of the preferred stock offered may
be
adversely affected by the rights of holders of any shares of
preferred stock that may be issued in the future. The board of
directors may cause shares of preferred stock to be issued in
public or private transactions for any proper corporate purpose.
Examples of proper corporate purposes include issuances to obtain
additional financing in connection with acquisitions or
otherwise, and issuances to officers, directors and employees of
Sovereign Bancorp and its subsidiaries pursuant to benefit plans
or otherwise. Shares of preferred stock issued by Sovereign
Bancorp may have the effect of rendering more difficult or
discouraging an acquisition of Sovereign Bancorp deemed
undesirable by the board of directors of Sovereign Bancorp.
<PAGE 10>
The preferred stock will be, when issued, fully paid and
nonassessable. Unless the particular prospectus supplement
states otherwise, holders of each series of preferred stock will
not have any preemptive or subscription rights to acquire more
stock of Sovereign Bancorp.
The transfer agent, registrar, dividend disbursing agent
and
redemption agent for shares of each series of preferred stock
will be named in the prospectus supplement relating to such
series.
Rank
Unless otherwise specified in the prospectus supplement
relating to the shares of any series of preferred stock, such
shares will rank on an equal basis with each other series of
preferred stock and prior to the common stock as to dividends and
distributions of assets.
Dividends
Unless the particular prospectus supplement states
otherwise, holders of each series of preferred stock will be
entitled to receive cash dividends, when, as and if declared by
the board of directors of Sovereign Bancorp out of funds legally
available for dividends. The rates and dates of payment of
dividends will be set forth in the prospectus supplement relating
to each series of preferred stock. Dividends will be payable to
holders of record of preferred stock as they appear on the books
of Sovereign Bancorp or, if applicable, the records of the
depositary referred to below under "Description of Depositary
Shares," on the record dates fixed by the board of directors.
Dividends on any series of preferred stock may be cumulative or
noncumulative.
Sovereign Bancorp may not declare, pay or set apart for
payment dividends on the preferred stock unless full dividends on
any other series of preferred stock that ranks on an equal or
senior basis have been paid or sufficient funds have been set
apart for payment for:
- all prior dividend periods of the other series of
preferred stock that pay dividends on a cumulative
basis; or
- the immediately preceding dividend period of the
other
series of preferred stock that pay dividends on a
noncumulative basis.
Partial dividends declared on shares of preferred stock
and
any other series of preferred stock ranking on an equal basis as
to dividends will be declared pro rata. A pro rata declaration
means that the ratio of dividends declared per share to accrued
<PAGE 11> dividends per share will be the same for all such
series of preferred stock.
Similarly, Sovereign Bancorp may not declare, pay or set
apart for payment non-stock dividends or make other payments on
the common stock or any other stock of Sovereign Bancorp ranking
junior to the preferred stock unless full dividends on all series
of preferred stock have been paid or set apart for payment for:
- all prior dividend periods if the preferred stock
pays
dividends on a cumulative basis; or
- the immediately preceding dividend period if the
preferred stock pays dividends on a noncumulative
basis.
Conversion and Exchange
The prospectus supplement for any series of preferred
stock
will state the terms, if any, on which shares of that series are
convertible into or exchangeable for shares of Sovereign
Bancorp's common stock.
Redemption
If so specified in the applicable prospectus supplement, a
series of preferred stock may be redeemable at any time, in whole
or in part, at the option of Sovereign Bancorp or the holder
thereof, or may be mandatorily redeemed.
Any partial redemptions of preferred stock will be made in
a
way that the board of directors decides is equitable.
Unless Sovereign Bancorp defaults in the payment of the
redemption price, dividends will cease to accrue after the
redemption date on shares of preferred stock called for
redemption and all rights of holders of such shares will
terminate except for the right to receive the redemption price.
Liquidation Preference
Upon any voluntary or involuntary liquidation, dissolution
or winding up of Sovereign Bancorp, holders of each series of
preferred stock will be entitled to receive distributions upon
liquidation in the amount set forth in the prospectus supplement
relating to such series of preferred stock, plus an amount equal
to any accrued and unpaid dividends. Such distributions will be
made before any distribution is made on any securities ranking
junior to the preferred stock with respect to liquidation,
including common stock.
If the liquidation amounts payable relating to the
preferred
stock of any series and any other securities ranking on a parity
regarding liquidation rights are not paid in full, the holders of
<PAGE 12> the preferred stock of such series and such other
securities will share in any such distribution of available
assets of Sovereign Bancorp on a ratable basis in proportion to
the full liquidation preferences. Holders of such series of
preferred stock will not be entitled to any other amounts from
Sovereign Bancorp after they have received their full liquidation
preference.
Voting Rights
The holders of shares of preferred stock will have no
voting
rights, except:
- as otherwise stated in the prospectus supplement;
- as otherwise stated in the statement with respect
to
shares establishing such series; or
- as required by applicable law.
DESCRIPTION OF DEPOSITARY SHARES
The following briefly summarizes the material provisions
of
the deposit agreement and of the depositary shares and depositary
receipts, other than pricing and related terms disclosed in the
accompanying prospectus supplement. This description is not
complete and is subject to, and qualified in its entirety by
reference to, all provisions of the deposit agreement, depositary
shares and depositary receipts. You should read the particular
terms of any depositary shares and any depositary receipts that
are offered by Sovereign Bancorp and any deposit agreement
relating to a particular series of preferred stock which will be
described in more detail in a prospectus supplement. The
prospectus supplement will also state whether any of the
generalized provisions summarized below do not apply to the
depositary shares or depositary receipts being offered. A copy
of the form of deposit agreement, including the form of
depositary receipt, will be filed as an exhibit to a document
incorporated by reference in the registration statement of which
this prospectus forms a part. You should read the more detailed
provisions of the deposit agreement and the form of depositary
receipt for provisions that may be important to you.
General
Sovereign Bancorp may, at its option, elect to offer
fractional shares of preferred stock, rather than full shares of
preferred stock. In such event, Sovereign Bancorp will issue
receipts for depositary shares, each of which will represent a
fraction of a share of a particular series of preferred stock.
The shares of any series of preferred stock represented by
depositary shares will be deposited under a deposit agreement
between Sovereign Bancorp and a bank or trust company selected by
<PAGE 13> Sovereign Bancorp having its principal office in the
United States and having a combined capital and surplus of at
least $50,000,000, as preferred stock depositary. Each owner of
a depositary share will be entitled to all the rights and
preferences of the underlying preferred stock, including any
dividend, voting, redemption, conversion and liquidation rights
described in the particular prospectus supplement, in proportion
to the applicable fraction of a share of preferred stock
represented by such depositary share.
The depositary shares will be evidenced by depositary
receipts issued pursuant to the deposit agreement. Depositary
receipts will be distributed to those persons purchasing the
fractional shares of preferred stock in accordance with the terms
of the applicable prospectus supplement.
Dividends and Other Distributions
The preferred stock depositary will distribute all cash
dividends or other cash distributions received in respect of the
deposited preferred stock to the record holders of depositary
shares relating to such preferred stock in proportion to the
number of such depositary shares owned by such holders.
The preferred stock depositary will distribute any
property
received by it other than cash to the record holders of
depositary shares entitled thereto. If the preferred stock
depositary determines that it is not feasible to make such
distribution, it may, with the approval of Sovereign Bancorp,
sell such property and distribute the net proceeds from such sale
to such holders.
Redemption of Preferred Stock
If a series of preferred stock represented by depositary
shares is to be redeemed, the depositary shares will be redeemed
from the proceeds received by the preferred stock depositary
resulting from the redemption, in whole or in part, of such
series of preferred stock. The depositary shares will be
redeemed by the preferred stock depositary at a price per
depositary share equal to the applicable fraction of the
redemption price per share payable in respect of the shares of
preferred stock so redeemed.
Whenever Sovereign Bancorp redeems shares of preferred
stock
held by the preferred stock depositary, the preferred stock
depositary will redeem as of the same date the number of
depositary shares representing shares of preferred stock so
redeemed. If fewer than all the depositary shares are to be
redeemed, the depositary shares to be redeemed will be selected
by the preferred stock depositary by lot or ratably or by any
other equitable method as the preferred stock depositary may
decide.
<PAGE 14>
Voting Deposited Preferred Stock
Upon receipt of notice of any meeting at which the holders
of any series of deposited preferred stock are entitled to vote,
the preferred stock depositary will mail the information
contained in such notice of meeting to the record holders of the
depositary shares relating to such series of preferred stock.
Each record holder of such depositary shares on the record date
will be entitled to instruct the preferred stock depositary to
vote the amount of the preferred stock represented by such
holder's depositary shares. The preferred stock depositary will
try to vote the amount of such series of preferred stock
represented by such depositary shares in accordance with such
instructions.
Sovereign Bancorp will agree to take all actions that the
preferred stock depositary determines are necessary to enable the
preferred stock depositary to vote as instructed. The preferred
stock depositary will abstain from voting shares of any series of
preferred stock held by it for which it does not receive specific
instructions from the holders of depositary shares representing
such preferred stock.
Amendment and Termination of the Deposit Agreement
The form of depositary receipt evidencing the depositary
shares and any provision of the deposit agreement may at any time
be amended by agreement between Sovereign Bancorp and the
preferred stock depositary. However, any amendment that
materially and adversely alters any existing right of the holders
of depositary shares will not be effective unless such amendment
has been approved by the holders of at least a majority of the
depositary shares then outstanding. Every holder of an
outstanding depositary receipt at the time any such amendment
becomes effective shall be deemed, by continuing to hold such
depositary receipt, to consent and agree to such amendment and to
be bound by the deposit agreement, which has been amended
thereby. The deposit agreement may be terminated only if:
- all outstanding depositary shares have been
redeemed;
or
- a final distribution in respect of the preferred
stock
has been made to the holders of depositary shares
in
connection with any liquidation, dissolution or
winding
up of Sovereign Bancorp.
Charges of Preferred Stock Depositary; Taxes and Other
Governmental Charges
Sovereign Bancorp will pay all transfer and other taxes
and
governmental charges arising solely from the existence of the
depositary arrangements. Sovereign Bancorp also will pay charges
of the depositary in connection with the initial deposit of
<PAGE 15> preferred stock and any redemption of preferred stock.
Holders of depositary receipts will pay other transfer and other
taxes and governmental charges and such other charges, including
a fee for the withdrawal of shares of preferred stock upon
surrender of depositary receipts, as are expressly provided in
the deposit agreement to be for their accounts.
Prospective purchasers of depositary shares should be
aware
that special tax, accounting and other issues may be applicable
to instruments such as depositary shares.
Resignation and Removal of Depositary
The preferred stock depositary may resign at any time by
delivering to Sovereign Bancorp notice of its intent to do so,
and Sovereign Bancorp may at any time remove the preferred stock
depositary, any such resignation or removal to take effect upon
the appointment of a successor preferred stock depositary and its
acceptance of such appointment. Such successor preferred stock
depositary must be appointed within 60 days after delivery of the
notice of resignation or removal and must be a bank or trust
company having its principal office in the United States and
having a combined capital and surplus of at least $50,000,000.
Miscellaneous
The preferred stock depositary will forward all reports
and
communications from Sovereign Bancorp which are delivered to the
preferred stock depositary and which Sovereign Bancorp is
required to furnish to the holders of the deposited preferred
stock.
Neither the preferred stock depositary nor Sovereign
Bancorp
will be liable if it is prevented or delayed by law or any
circumstances beyond its control in performing its obligations
under the deposit agreement. The obligations of Sovereign
Bancorp and the preferred stock depositary under the deposit
agreement will be limited to performance in good faith of their
duties thereunder and they will not be obligated to prosecute or
defend any legal proceeding in respect of any depositary shares,
depositary receipts or shares of preferred stock unless
satisfactory indemnity is furnished. Sovereign Bancorp and the
preferred stock depositary may rely upon written advice of
counsel or accountants, or upon information provided by holders
of depositary receipts or other persons believed to be competent
and on documents believed to be genuine.
DESCRIPTION OF DEBT SECURITIES
The following briefly summarizes the material provisions
of
the indentures and the debt securities, other than pricing and
related terms disclosed in the accompanying prospectus
supplement. You should read the more detailed provisions of the
applicable indenture and supplemental indentures, if any,
<PAGE 16> including the defined terms, for the provisions that
may be important to you. You should also read the particular
terms of a series of debt securities, which will be described in
more detail in the applicable prospectus supplement. Copies of
the indentures may be obtained from Sovereign Bancorp or the
applicable trustee. So that you may easily locate the more
detailed provisions, the numbers in parentheses below refer to
sections in the applicable indenture or, if no indenture is
specified, to sections in each of the indentures. Whenever
particular sections or defined terms of the applicable indenture
are referred to, such sections or defined terms are incorporated
into this prospectus by reference, and the statement in this
prospectus is qualified by that reference.
General
The debt securities offered by this prospectus will be
secured or unsecured obligations of Sovereign Bancorp, and will
be either senior debt, subordinated debt, or junior subordinated
debt. Senior debt will be issued under a senior indenture.
Subordinated debt will be issued under a subordinated indenture.
Junior subordinated debt will be issued under a junior
subordinated indenture. The senior indenture, the subordinated
indenture, and the junior subordinated indenture are sometimes
referred to in this prospectus individually as an "indenture" and
collectively as the "indentures." Except as specified in "Senior
Debt," "Subordination," the fifth following paragraph or
otherwise below and in any applicable prospectus supplement, any
junior subordinated debt will be subject to the same terms and
conditions as subordinated debt and will be issued under a junior
subordinated indenture filed as an exhibit to this Registration
Statement. Unless the context provides otherwise, references to
the subordinated indenture shall also be deemed to be references
to the junior subordinated indenture. The indentures have been
filed with the Securities and Exchange Commission and are
incorporated by reference in, or have been filed with, the
Registration Statement of which this prospectus forms a part.
Unless otherwise provided in the applicable prospectus
supplement, the trustee under the indentures will be Harris Trust
and Savings Bank.
None of the indentures limits the total principal amount
of
debt securities that may be issued and the indentures provide
that debt securities of any series may be issued up to the total
principal amount which may be authorized from time to time by
Sovereign Bancorp. Except as may be set forth in a prospectus
supplement, neither the indentures nor the debt securities will
limit or otherwise restrict the amount of other indebtedness
which may be incurred or the other securities which may be issued
by Sovereign Bancorp or any of its affiliates.
Because Sovereign Bancorp is a holding company, the claims
of creditors of Sovereign Bancorp's subsidiaries, including
<PAGE 17> Sovereign Bank, will have a priority over Sovereign
Bancorp's rights as a shareholder of Sovereign Bank, and also
over the rights of Sovereign Bancorp's creditors, including the
holders of Sovereign Bancorp's debt securities, to participate in
the assets of the subsidiary upon the subsidiary's liquidation or
recapitalization, except to the extent that Sovereign Bancorp may
itself be a creditor with recognized claims against the
subsidiary. In addition, there are certain regulatory
limitations on the payment of dividends and on loans and other
transfers to Sovereign Bancorp by its banking subsidiaries.
The amount of debt securities offered by this prospectus
will be limited to the amounts described on the cover of this
prospectus. The indentures provide that senior, subordinated or
junior subordinated debt securities of Sovereign Bancorp may be
issued in one or more series with different terms, in each case
as authorized from time to time by Sovereign Bancorp.
(Section 301)
The senior securities may be unsecured or secured by
assets
of Sovereign Bancorp, including the stock of Sovereign Bank owned
by Sovereign Bancorp, and, except as may be set forth in a
prospectus supplement, will rank on an equal basis with other
unsecured senior debt of Sovereign. The subordinated securities
and junior subordinated securities will be unsecured and, except
as may be set forth in a prospectus supplement, will rank on an
equal basis with other subordinated debt or junior subordinated
debt, respectively, of Sovereign Bancorp and, together with such
other subordinated debt or junior subordinated debt, will be
subordinate and junior in right of payment to the prior payment
in full of the senior debt (which in the case of the junior
subordinated debt will also include subordinated debt) of
Sovereign Bancorp as described below under "Subordination."
The applicable prospectus supplement relating to any
series
of debt securities will describe the following terms, where
applicable:
- the designation and any limit on the total
principal
amount of such debt securities;
- the price (expressed as a percentage of the total
principal amount) at which such debt securities
will be
issued;
- the date or dates on which such debt securities
will
mature or method by which such dates can be
determined;
- the currency or currencies in which such debt
securities are being sold and are denominated and
the
circumstances, if any, under which any debt
securities
may be payable in a currency other than the
currency in
which such debt securities are denominated, and if
so,
the exchange rate, the exchange rate agent and, if
the
<PAGE 18> holder of any such debt securities may
elect
the currency in which payments are to be made, the
manner of such election;
- the denomination in which any debt securities which
are
registered securities will be issuable, if other
than
denominations of $1,000 and any integral multiple
thereof, and the denomination or denominations in
which
any debt securities which are bearer securities
will be
issuable, if other than the denomination of $5,000;
- the rate or rates (which may be fixed or variable)
at
which such debt securities will bear interest,
which
rate may be zero in the case of certain debt
securities
issued at an issue price representing a discount
from
the principal amount payable at maturity;
- the date from which interest on such debt
securities
will accrue, the dates on which such interest will
be
payable or method by which such dates can be
determined, the date on which payment of such
interest
will commence and the circumstances, if any, in
which
Sovereign Bancorp may defer interest payments;
- the dates on which, and the price or prices at
which,
such debt securities will, pursuant to any
mandatory
sinking fund provision, or may, pursuant to any
optional redemption or mandatory repayment
provisions,
be redeemed or repaid and the other terms and
provisions of any such optional redemption or
mandatory
repayment;
- any terms by which such debt securities may be
convertible into common stock (see "Description of
Common Stock"), preferred stock (see "Description
of
Preferred Stock"), or any other capital securities
(see
"Description of Capital Securities") of Sovereign
Bancorp and, in case of debt securities convertible
into preferred stock, the terms of such preferred
stock;
- any terms by which the principal of such debt
securities will be exchangeable for capital
securities
and any terms creating a fund (the "securities
fund")
pursuant to which the proceeds of sales of capital
securities may be designated on the books of
Sovereign
Bancorp for the payment of any of the principal of
such
debt securities;
- whether such debt securities are to be issuable as
bearer securities and/or registered securities and,
if
issuable as bearer securities, the terms upon which
any
bearer securities may be exchanged for registered
securities; <PAGE 19>
- whether such debt securities are to be issued in
the
form of one or more temporary or permanent global
securities and, if so, the identity of the
depositary
for such global security or securities;
- if a temporary global debt security is to be issued
with respect to such series, the extent to which,
and
the manner in which, any interest payable on an
interest payment date prior to the issuance of a
permanent global security or definitive bearer
securities will be credited to the accounts of the
persons entitled to interest on the interest
payment
date;
- if a temporary global security is to be issued with
respect to such series, the terms upon which
interests
in such temporary global security may be exchanged
for
interests in a permanent global security or for
definitive debt securities of the series and the
terms
upon which interests in a permanent global
security, if
any, may be exchanged for definitive debt
securities of
the series;
- any additional restrictive covenants included for
the
benefit of holders of such debt securities;
- any additional events of default provided with
respect
to such debt securities;
- information with respect to book-entry procedures,
if
any;
- whether the debt securities will be repayable at
the
option of the holder in the event of a change in
control of Sovereign Bancorp;
- any other terms of the debt securities not
inconsistent
with the provisions of the applicable indenture;
- the terms of any securities being offered together
with
or separately from the debt securities;
- if such debt securities are original issue discount
securities, the accreted or notational value
thereof
(or method of determining such amount) upon
acceleration of maturity;
- any guarantees issued with respect to such debt
securities; and
- any security interests or other liens granted to
secure
such debt securities.
<PAGE 20>
Such prospectus supplement will also describe any special
provisions for the payment of additional amounts with respect to
the debt securities and certain United States federal income tax
consequences and other special considerations applicable to such
series of debt securities. If a debt security is denominated in
a foreign currency, such debt security may not trade on a U.S.
national securities exchange unless and until the SEC has
approved appropriate rule changes pursuant to the Act to
accommodate the trading of such debt security.
Form, Exchange, Registration and Transfer
Debt securities of a series may be issuable in definitive
form solely as registered securities, solely as bearer securities
or as both registered securities and bearer securities. Unless
otherwise indicated in the prospectus supplement, bearer
securities other than bearer securities in temporary or permanent
global form will have interest coupons attached. (Section 201)
Each indenture also provides that bearer securities or registered
securities of a series may be issuable in permanent global form.
(Section 203) See "Permanent Global Securities."
Registered securities of any series will be exchangeable
for
other registered securities of the same series of authorized
denominations and of a like total principal amount, tenor and
terms. In addition, if debt securities of any series are
issuable as both registered securities and bearer securities, at
the option of the holder upon request confirmed in writing, and
subject to the terms of the applicable indenture, bearer securi-
ties (with all unmatured coupons, except as provided below, and
all matured coupons in default) of such series will be
exchangeable into registered securities of the same series of any
authorized denominations and of a like aggregate principal
amount, tenor and terms. Bearer securities surrendered in
exchange for registered securities between the close of business
on a regular record date or a special record date and the
relevant date for payment of interest shall be surrendered
without the coupon relating to such date for payment of interest,
and interest will not be payable in respect of the registered
security issued in exchange for such bearer security, but will be
payable only to the holder of such coupon when due in accordance
with the terms of the applicable indenture. Bearer securities
will not be issued in exchange for registered securities.
(Section 305) Each bearer security, other than a temporary global
bearer security, and each interest coupon will bear an
appropriate legend as will be specified in an applicable
prospectus supplement.
Debt securities may be presented for exchange as provided
above, and registered securities may be presented for
registration of transfer (duly endorsed or accompanied by a
satisfactory written instrument of transfer), at the office of
the security registrar or at the office of any transfer agent
designated by Sovereign Bancorp for such purpose with respect to
<PAGE 21> such series of debt securities, without service charge
and upon payment of any taxes and other governmental charges.
(Section 305) If the applicable prospectus supplement refers to
any transfer agent (in addition to the security registrar)
initially designated by Sovereign Bancorp with respect to any
series of debt securities, Sovereign Bancorp may at any time
rescind the designation of any such transfer agent or approve a
change in the location through which any such transfer agent (or
security registrar) acts, except that, if debt securities of a
series are issuable solely as registered securities, Sovereign
Bancorp will be required to maintain a transfer agent in each
place of payment for such series and, if debt securities of a
series are issuable as bearer securities, Sovereign Bancorp must
maintain (in addition to the security registrar) a transfer agent
in a place of payment for such series located outside the United
States. Sovereign Bancorp may at any time designate additional
transfer agents with respect to any series of debt securities.
(Section 1002)
Sovereign Bancorp shall not be required:
- to issue, register the transfer of or exchange debt
securities of any particular series to be redeemed
or
exchanged for capital securities for a period of
fifteen days preceding the first publication of the
relevant notice of redemption or, if registered
securities are outstanding and there is no
publication,
the mailing of the relevant notice of redemption;
- to register the transfer of or exchange any
registered
security so selected for redemption or exchange in
whole or in part, except the unredeemed or
unexchanged
portion of any registered security being redeemed
or
exchanged in part; or
- to exchange any bearer security so selected for
redemption or exchange except that such a bearer
security may be exchanged for a registered security
of
like tenor and terms of that series, provided that
such
registered security shall be surrendered for
redemption
or exchange. (Section 305)
Additional information regarding restrictions on the issu-
ance, exchange and transfer of, and special United States federal
income tax considerations relating to bearer securities will be
set forth in the applicable prospectus supplement.
Temporary Global Securities
If so specified in the applicable prospectus supplement,
all
or any portion of the debt securities of a series which are
issuable as bearer securities will initially be represented by
one or more temporary global securities, without interest
coupons, to be deposited with a common depositary in London for
<PAGE 22> Morgan Guaranty Trust Corporation of New York, Brussels
Office, as operator of the Euroclear System ("Euroclear") and
Cedel S.A. ("Cedel") for credit to designated accounts. On and
after the date determined as provided in any such temporary
global security and described in the applicable prospectus
supplement, but within a reasonable time, each such temporary
global security will be exchangeable for definitive bearer
securities, definitive registered securities or all or a portion
of a permanent global bearer security, or any combination
thereof, as specified in the prospectus supplement. No
definitive bearer security or permanent global bearer security
delivered in exchange for a portion of a temporary global
security shall be mailed or otherwise delivered to any location
in the United States in connection with such exchange.
Additional information regarding restrictions on and
special
United States federal income tax consequences relating to
temporary global securities will be set forth in the applicable
prospectus supplement.
Permanent Global Securities
If any debt securities of a series are issuable in
permanent
global form, the applicable prospectus supplement will describe
the circumstances, if any, under which beneficial owners of
interests in any such permanent global security may exchange
their interests for debt securities of such series and of like
tenor and principal amount of any authorized form and
denomination. Principal of and any premium and interest on a
permanent global security will be payable in the manner described
in the applicable prospectus supplement.
Payments and Paying Agents
Unless otherwise indicated in the applicable prospectus
supplement:
- payments of principal of and premium, if any, and
interest, if any, on bearer securities will be
payable
in the currency designated in the prospectus
supplement, subject to any applicable laws and
regulations, at such paying agencies outside the
United
States as Sovereign Bancorp may appoint from time
to
time;
- such payments may be made, at the option of the
holder,
by a check in the designated currency or by
transfer to
an account in the designated currency maintained by
the
payee with a bank located outside the United
States;
and
- payment of interest on bearer securities on any
interest payment date will be made only against
surrender of the coupon relating to such interest
<PAGE 23> payment date to a paying agent outside
the
United States. (Section 1001)
No payment with respect to any bearer security will be
made
at any office or paying agency maintained by Sovereign Bancorp in
the United States nor will any such payment be made by transfer
to an account, or by mail to an address, in the United States.
Notwithstanding the foregoing, payments of principal of and
premium, if any, and interest, if any, on bearer securities
denominated and payable in U.S. dollars will be made in U.S.
dollars at an office or agency of, and designated by, Sovereign
Bancorp located in the United States, if payment of the full
amount thereof in U.S. dollars at all paying agencies outside the
United States is illegal or effectively precluded by exchange
controls or other similar restrictions, and the trustee receives
an opinion of counsel that such payment within the United States
is legal. (Section 1002)
Unless otherwise indicated in the applicable prospectus
supplement, payment of principal of and premium, if any, and
interest, if any, on a registered security will be payable in the
currency designated in the prospectus supplement, and interest
will be payable at the office of such paying agent or paying
agents as Sovereign Bancorp may appoint from time to time, except
that, at the option of Sovereign Bancorp, payment of any interest
may be made by a check in such currency mailed to the holder at
the holder's registered address or by wire transfer to an account
in such currency designated by the holder in writing not less
than ten days prior to the date of payment. Unless otherwise
indicated in the applicable prospectus supplement, payment of any
installment of interest on a registered security will be made to
the person in whose name such registered security is registered
at the close of business on the regular record date for such
payments. (Section 307) Unless otherwise indicated in the
applicable prospectus supplement, principal payable at maturity
will be paid to the registered holder upon surrender of the
registered security at the office of a duly appointed paying
agent.
The paying agents outside the United States initially
appointed by Sovereign Bancorp for a series of debt securities
will be named in the applicable prospectus supplement. Sovereign
Bancorp may terminate the appointment of any of the paying agents
from time to time, except that Sovereign Bancorp will maintain at
least one paying agent outside the United States so long as any
bearer securities are outstanding where bearer securities may be
presented for payment and may be surrendered for exchange,
provided that so long as any series of debt securities is listed
on the stock exchange of the United Kingdom and the Republic of
Ireland or the Luxembourg Stock Exchange or any other stock
exchange located outside the United States and such stock
exchange shall so require, Sovereign Bancorp will maintain a
paying agent in London or Luxembourg or any other required city
<PAGE 24> located outside the United States, as the case may be,
for such series of debt securities. (Section 1002)
All moneys paid by Sovereign Bancorp to a paying agent for
the payment of principal of or premium, if any, or interest, if
any, on any debt security that remains unclaimed at the end of
two years after such principal, premium or interest shall have
become due and payable will, at request of Sovereign Bancorp, be
repaid to Sovereign Bancorp, and the holder of such debt security
or any coupon will thereafter look only to Sovereign Bancorp for
payment. (Section 1003)
Covenants Contained in Indentures
The indentures provide that Sovereign Bancorp will not:
- sell, transfer, or otherwise dispose of any shares
of
voting stock of Sovereign Bank or permit Sovereign
Bank
to issue, sell, or otherwise dispose of any shares
of
its voting stock unless Sovereign Bancorp retains
direct ownership of at least 80% of the voting
stock;
- permit Sovereign Bank to merge or consolidate
unless
Sovereign Bancorp directly owns at least 80% of the
voting stock of the surviving entity; or
- convey or transfer its properties and assets
substantially as an entirety to any other entity
unless
Sovereign Bancorp directly owns at least 80% of the
voting stock of the entity. (Section 1005)
With the consent of the Holders of a majority in aggregate
principal amount of the outstanding debt securities of each
series issued under the indentures, these requirements may be
modified so as to reduce the required percentage of ownership
from 80% to a majority. (Section 902)
The senior indenture provides that Sovereign Bancorp will
not create, assume, incur, or suffer to exist, as security for
indebtedness for borrowed money, any mortgage, pledge,
encumbrance or lien or charge of any kind upon more than 20% of
the voting stock of Sovereign Bank (other than directors'
qualifying shares) without effectively providing that each series
of senior securities be secured equally and ratably with (or
prior to) such indebtedness. (Section 1004 of the senior
indenture) The subordinated indenture and junior subordinated
indenture do not contain a similar covenant.
Sovereign Bancorp is not restricted by the indentures from
incurring, assuming or becoming liable for any type of debt or
other obligations, from creating liens on its property (other
than, in the case of the senior indentures, on the voting stock
of Sovereign Bank as described above) for any purposes or from
paying dividends or making distributions on its capital stock or
<PAGE 25> purchasing or redeeming its capital stock. The
indentures do not require the maintenance of any financial ratios
or specific levels of net worth or liquidity. In addition, the
indentures do not contain any provision which would require
Sovereign Bancorp to repurchase, redeem or otherwise modify the
terms of any of its debt securities upon a change in control or
other events involving Sovereign Bancorp which may adversely
affect the creditworthiness of the debt securities.
The above covenants may be modified by, or additional
covenants may be provided for in, a supplemental indenture, as
will be further described in an applicable prospectus supplement.
Modification and Waiver
Except as to the above, and certain other modifications
and
amendments not adverse to holders of debt securities,
modifications and amendments of and waivers of compliance with
certain restrictive provisions under each indenture may be made
only with the consent of the holders of not less than 66 2/3% in
principal amount of the outstanding debt securities of each
series affected by such modification, amendment or waiver.
No such modification or amendment may, without the consent
of the holder of each security so affected:
- change the stated maturity of the principal or any
installment of principal or any installment of
interest, if any;
- reduce the amount of principal or interest payable
on
the debt security, or any premium payable upon its
redemption or repayment or, in the case of an
original
issue discount security the amount of principal
payable
upon the acceleration of its maturity;
- change the place of payment or the currency in
which
principal or interest is payable, if any;
- impair the right of any holders to sue for the
enforcement of any payment of the principal,
premium,
if any, and interest, if any, or adversely affect
the
holder's right of repayment, if any, at the option
of
the holder;
- reduce the percentage in principal amount of
outstanding debt securities of any series, whose
holders must consent for modification or amendment
of
the applicable indenture, or for waiver of
compliance
with certain provisions of the applicable
indenture, or
for waiver of certain defaults;
- reduce the requirements contained in the applicable
indenture for quorum or voting; <PAGE 26>
- in the case of debt securities exchangeable for
capital
securities, impair any right to the delivery of
capital
securities in exchange for such debt securities or
the
right to sue for the enforcement of any such
delivery
or, in the case of debt securities convertible into
common stock or preferred shares, impair any right
to
convert such debt securities; or
- modify any of the above provisions. (Section 902)
Each indenture contains provisions for convening meetings
of
the holders of debt securities of a series issued thereunder if
debt securities of that series are issuable in whole or in part
as bearer securities. (Section 1601) A meeting may be called at
any time by the trustee for such debt securities, or upon the
request of Sovereign Bancorp or the holders of at least 10% in
principal amount of the outstanding debt securities of such
series, upon notice given in accordance with the applicable
indenture. (Section 1602)
Except as limited by the preceding paragraph:
- any resolution presented at a meeting or adjourned
meeting at which a quorum is present may be adopted
by
the affirmative vote of the holders of a majority
in
principal amount of the outstanding debt securities
of
that series;
- any resolution with respect to any consent or
waiver
which may be given only by the holders of not less
than
66 2/3% in principal amount of the outstanding debt
securities of a series issued under an indenture
may be
adopted at a meeting or an adjourned meeting at
which a
quorum is present only by the affirmative vote of
the
holders of 66 2/3% in principal amount of such
outstanding debt securities of that series; and
- any resolution with respect to any demand, consent,
waiver or other action which may be made, given or
taken by the holders of a specified percentage,
which
is less than a majority, in principal amount of the
outstanding debt securities of a series issued
under an
indenture may be adopted at a meeting or adjourned
meeting at which a quorum is present by the
affirmative
vote of the holders of the specified percentage in
principal amount of the outstanding debt securities
of
that series. (Section 1604)
Any resolution passed or decision taken at any meeting of
holders of debt securities of any series duly held in accordance
with the applicable indenture will be binding on all holders of
debt securities of that series and the related coupons issued
under that indenture. The quorum at any meeting of holders of a
series of debt securities called to adopt a resolution, and at
<PAGE 27> any reconvened meeting, will be persons holding or
representing a majority in principal amount of the outstanding
debt securities of such series.
If any action is to be taken at such meeting with respect
to
a consent or waiver which may be given by the holders of not less
than 66 2/3% in principal amount of the outstanding debt
securities of a series, the persons holding or representing
66 2/3% in principal amount of the outstanding debt securities of
such series issued under that indenture will constitute a quorum.
(Section 1604)
Events of Default
Unless otherwise provided in the applicable prospectus
supplement, any series of senior securities issued under the
senior indenture will provide that the following shall constitute
events of default with respect to such series:
- default in payment of principal of or premium, if
any,
on any senior security of such series when due;
- default for 30 days in payment of interest, if any,
on
any senior security of such series or related
coupon,
if any, when due;
- default in the deposit of any sinking fund payment
on
any senior security of such series when due;
- default in the performance of any other covenant in
such indenture, continued for 90 days after written
notice of the default by the trustee thereunder or
by
the holders of at least 25% in principal amount of
the
outstanding senior securities of such series issued
under that indenture; and
- certain events of bankruptcy, insolvency or
reorganization of Sovereign Bancorp or Sovereign
Bank.
(Section 501 of the senior indenture)
Unless otherwise provided in the applicable prospectus
supplement, any series of subordinated securities issued under
the subordinated indenture will provide that the only event of
default will be certain events of bankruptcy of Sovereign
Bancorp. (Section 501 of the subordinated indenture) Unless
specifically stated in the applicable prospectus supplement for a
particular series of subordinated securities, there is no right
of acceleration of the payment of principal of the subordinated
securities upon a default in the payment of principal, premium,
if any, or interest, if any, or in the performance of any
covenant or agreement in the subordinated securities or
subordinated indenture. In the event of a default in the payment
of principal, premium, if any, or interest, if any, or in the
performance of any covenant (including, if applicable, any
<PAGE 28> covenant to deliver any capital securities required to
be delivered or any covenant to sell capital securities in a
secondary offering) or agreement in the subordinated securities
or subordinated indenture, the trustee, subject to certain
limitations and conditions, may institute judicial proceedings to
enforce payment of such principal, premium, if any, or interest,
if any, or to obtain the performance of such covenant or
agreement or any other proper remedy, including, in the case of
the failure to deliver capital securities, a proceeding to
collect money equal to the principal amount of any subordinated
securities for which capital securities were to be exchanged.
(Section 503 of the subordinated indenture)
Sovereign Bancorp is required to file with each trustee
annually an officers' certificate as to the absence of certain
defaults under the terms of the indentures. (Section 1007 of the
senior indenture, Section 1004 of the subordinated indenture)
Each indenture provides that if an event of default shall occur
and be continuing, either the trustee or the holders of not less
than 25% in principal amount of the outstanding debt securities
of such series issued under that indenture may declare the
principal of all such debt securities (or in the case of original
issue discount series, such portion of the principal amount
thereof as may be specified in the terms thereof) to be due and
payable. (Section 502) In certain cases, the holders of a major-
ity in principal amount of the outstanding debt securities of any
series may, on behalf of the holders of all debt securities of
any such series and any related coupons, waive any past default
or event of default except a default in payment of the principal
of or premium, if any, on any of the debt securities of such
series and in respect of a covenant or provision of the indenture
which cannot be modified or amended without the consent of the
holder of each outstanding debt security of such series or
coupons affected. (Section 513)
Each indenture contains a provision entitling the trustee,
subject to the duty during default to act with the required
standard of care, to be indemnified by the holders of the debt
securities of any series or any related coupons before proceeding
to exercise any right or power under such indenture at the
request of such holders. (Section 603) Each indenture provides
that no holder of any debt securities of any series or any
related coupons may institute any proceeding, judicial or
otherwise, to enforce such indenture except in the case of
failure of the trustee, for 60 days, to act after it is given
notice of default, a request to enforce such indenture by the
holders of not less than 25% in aggregate principal amount of the
outstanding debt securities of such series, and an offer of
indemnity reasonable to the trustee. (Section 507) This provision
will not prevent any holder of debt securities or any related
coupons from enforcing payment of the principal, premium, if any,
and interest, if any, at their respective due dates. (Section
508) The holders of a majority in aggregate principal amount of
the outstanding debt securities of any series issued under an
<PAGE 29> indenture may direct the time, method and place of
conducting any proceedings for any remedy available to the
trustee for such debt securities or exercising any trust or power
conferred on it with respect to the debt securities of such
series. However, such trustee may refuse to follow any direction
that conflicts with law or the indenture under which it serves or
which would be unjustly prejudicial to holders not joining the
proceeding. (Section 512)
Each indenture provides that the trustee will, within 90
days after the occurrence of a default with respect to any series
of debt securities known to it, give to the holders of debt
securities of such series notice of such default if not cured or
waived. Except in the case of a default in the payment of
principal of or premium, if any, or interest, if any, on any debt
securities of such series or any related coupons or in the
payment of any sinking fund installment with respect to debt
securities of such series or in the exchange of capital
securities for debt securities of such series, the trustee for
such debt securities shall be protected in withholding such
notice if it determines in good faith that the withholding of
such notice is in the interest of the holders of such debt
securities. (Section 602)
Defeasance
Sovereign Bancorp may terminate certain of its obligations
under each indenture with respect to the debt securities of any
series, including its obligations to comply with the covenants
described under the heading "Covenants Contained in Indentures"
above, on the terms and subject to the conditions contained in
the indentures, by depositing in trust with the trustee money
and/or, to the extent such debt securities are denominated and
payable in U.S. dollars only, eligible instruments which, through
the payment of principal and interest in accordance with their
terms, will provide money in an amount sufficient to pay the
principal and premium, if any, and interest, if any, on such debt
securities, and any mandatory sinking fund, repayment or
analogous payments on the securities, on the scheduled due dates
for payment. Such deposit and termination is conditioned upon
Sovereign Bancorp's delivery of an opinion of counsel that the
holders of such debt securities will have no federal income tax
consequences as a result of such deposit and termination. Such
termination will not relieve Sovereign Bancorp of its obligation
to pay when due the principal of or interest on such debt
securities if such debt securities of such series are not paid
from the money or eligible instruments held by the trustee for
the payment thereof. (Section 401) This is called "covenant
defeasance." The applicable prospectus supplement may further
describe the provisions, if any, permitting or restricting such
defeasance with respect to the debt securities of a particular
series.
<PAGE 30>
Senior Debt
Except as may be described in an applicable prospectus
supplement, senior debt is any obligation of Sovereign Bancorp to
its creditors, now outstanding or subsequently incurred, other
than:
- any obligation as to which the instrument creating
or
evidencing it or pursuant to which it is
outstanding
provides that such obligation is not senior debt;
- obligations evidenced by debt securities issued
under
the subordinated indenture (Section 101 of the
subordinated indenture) (except in the case of the
junior subordinated indenture (section 101 of the
junior subordinated indenture)); and
- obligations evidenced by debt securities issued
under
the junior subordinated indenture.
Subordination
The subordinated securities or the junior subordinated
securities, as applicable, shall be subordinate and junior in
right of payment, to the extent set forth in the subordinated
indenture or the junior subordinated indenture, as applicable, to
all senior debt (as such term is defined above) of Sovereign
Bancorp. In the event that Sovereign Bancorp shall default in
the payment of any principal, premium, if any, or interest, if
any, on any senior debt when it becomes due and payable, whether
at maturity, or at a date fixed for prepayment, or by declaration
of acceleration or otherwise, then, unless and until such default
shall have been cured or waived or shall have ceased to exist, no
direct or indirect payment (in cash, property, securities, by
set-off or otherwise) shall be made or agreed to be made for
principal, premium, if any, or interest, if any, on the
subordinated securities or the junior subordinated securities, as
applicable, or in respect of any redemption, repayment,
retirement, purchase or other acquisition of any of the
subordinated securities or the junior subordinated indenture, as
applicable. (Section 1801 of the subordinated indenture or the
junior subordinated securities, as applicable) A series of
subordinated debt securities may be issued that is subordinate to
the senior debt, but is senior as to right of payment to some or
all other series of subordinated or junior subordinated debt
securities.
In the event of any insolvency, bankruptcy, receivership,
liquidation, reorganization, readjustment, composition or other
similar proceeding relating to Sovereign Bancorp, its creditors
or its property, any proceeding for the liquidation, dissolution
or other winding up of Sovereign Bancorp, voluntary or
involuntary, whether or not involving insolvency or bankruptcy
proceedings, any assignment by Sovereign Bancorp for the benefit
<PAGE 31> of creditors, or any other marshalling of the assets of
Sovereign Bancorp, all senior debt (including any interest
accruing after the commencement of any such proceedings) shall
first be paid in full before any payment or distribution, whether
in cash, securities or other property, shall be made on account
of the principal or interest on the subordinated securities or
the junior subordinated securities, as applicable. In such
event, any payment or distribution on account of the principal of
or interest on the subordinated securities or the junior
subordinated securities, as applicable, whether in cash,
securities or other property (other than securities of Sovereign
Bancorp or any other corporation provided for by a plan of
reorganization or readjustment, the payment of which is
subordinate, at least to the extent provided in the subordination
provisions with respect to the subordinated securities or the
junior subordinated securities, as applicable, to the payment of
all senior debt at the time outstanding, and to any securities
issued under any such plan of reorganization or adjustment),
which would otherwise (but for the subordination provisions) be
payable or deliverable in respect of the subordinated securities
shall be paid or delivered directly to the holders of senior debt
in accordance with the priorities then existing among such
holders until all senior debt (including any interest accruing
after the commencement of any such proceedings) shall have been
paid in full. (Section 1801 of the subordinated indenture or the
junior subordinated indenture, as applicable).
In the event of any such proceeding, after payment in full
of all sums owing with respect to senior debt, the holders of
subordinated securities or junior subordinated securities, as
applicable, together with the holders of any obligations of
Sovereign Bancorp ranking on an equal basis with the subordinated
securities or junior subordinated securities, as applicable,
shall be entitled to be repaid from the remaining assets of
Sovereign Bancorp the amounts at the time due and owing on
account of unpaid principal, premium, if any, and interest, if
any, on the subordinated securities or junior subordinated
securities, as applicable and such other obligations before any
payment or other distribution, whether in cash, property or
otherwise, shall be made on account of any capital stock or
obligations of Sovereign Bancorp ranking junior to the
subordinated securities or junior subordinated securities, as
applicable, and such other obligations. If any payment or
distribution on account of the principal of or interest on the
subordinated securities or junior subordinated securities, as
applicable, of any character or any security, whether in cash,
securities or other property (other than securities of Sovereign
Bancorp or any other corporation provided for by a plan of
reorganization or readjustment, the payment of which is
subordinate, at least to the extent provided in the subordination
provisions with respect to the subordinated securities or junior
subordinated securities, as applicable, to the payment of all
senior debt at the time outstanding and to any securities issued
under any such plan of reorganization or readjustment) shall be
<PAGE 32> received by any holder of any subordinated securities
or junior subordinated securities, as applicable in contravention
of any of these terms and before all the senior debt shall have
been paid in full, such payment or distribution or security shall
be received in trust for the benefit of, and shall be paid over
or delivered and transferred to, the holders of the senior debt
at the time outstanding in accordance with the priorities then
existing among such holders for application to the payment of all
senior debt remaining unpaid to the extent necessary to pay all
such senior debt in full. (Section 1801 of the subordinated
indenture or junior subordinated indenture, as applicable) By
reason of such subordination, in the event of the insolvency of
Sovereign Bancorp, holders of senior debt may receive more,
ratably, and holders of the subordinated securities having a
claim pursuant to such securities may receive less, ratably, than
the other creditors of Sovereign Bancorp. Such subordination
will not prevent the occurrence of any event of default in
respect of the subordinated securities.
The subordinated indenture or junior subordinated
indenture,
as applicable, may be modified or amended as provided under
"Modification and Waiver" above, provided that no such
modification or amendment may, without the consent of the holders
of all senior debt outstanding, modify any of the provisions of
the subordinated indenture or junior subordinated indenture, as
applicable, relating to the subordination of the subordinated
securities or the junior subordinated securities and any related
coupons in a manner adverse to such holders. (Section 902 of the
subordinated indenture or junior subordinated indenture, as
applicable)
Conversion of Convertible Debt Securities
The holders of debt securities of a specified series that
are convertible into common stock or preferred stock of Sovereign
Bancorp ("convertible debt securities") will be entitled at
certain times specified in the applicable prospectus supplement,
subject to prior redemption, repayment or repurchase, to convert
any convertible debt securities of such series (in denominations
set forth in the applicable prospectus supplement) into common
stock or preferred stock, as the case may be, at the conversion
price set forth in the applicable prospectus supplement, subject
to adjustment as described below and in the applicable prospectus
supplement. Except as described below and as may be described in
the applicable prospectus supplement, no adjustment will be made
on conversion of any convertible debt securities for interest
accrued thereon or for dividends on any common stock or preferred
stock issued. (Section 1803 of the senior indenture, Section
1903 of the subordinated indenture) If any convertible debt
securities not called for redemption are convened between a
regular record date for the payment of interest and the next
succeeding interest payment date, such convertible debt
securities must be accompanied by funds equal to the interest
payable on such succeeding interest payment date on the principal
<PAGE 33> amount so converted. (Section 1803 of the senior
indenture, Section 1903 of the subordinated indenture) Sovereign
Bancorp is not required to issue fractional shares of common
stock upon conversion of convertible debt securities that are
convertible into common stock and, in lieu thereof, will pay a
cash adjustment based upon the closing price (as defined in the
indenture) of the common stock on the last business day prior to
the date of conversion. (Section 1804 of the senior indenture,
Section 1904 of the subordinated indenture) In the case of
convertible debt securities called for redemption, conversion
rights will expire at the close of business on the redemption
date. (Section 1802 of the senior indenture, Section 1902 of the
subordinated indenture)
Unless otherwise indicated in the applicable prospectus
supplement, the conversion price for convertible debt securities
that are convertible into common stock is subject to adjustment
under formulas set forth in the applicable indenture in certain
events, including:
- the issuance of Sovereign Bancorp's capital stock
as a
dividend or distribution on the common stock;
- subdivisions and combinations of the common stock;
- the issuance to all holders of common stock of
certain
rights or warrants entitling them to subscribe for
or
purchase common stock within 45 days after the date
fixed for the determination of the stockholders
entitled to receive such rights or warrants, at
less
than the current market price (as defined in the
indenture); and
- the distribution to all holders of common stock of
evidences of indebtedness or assets of Sovereign
Bancorp (excluding certain cash dividends and
distributions described in the next paragraph) or
rights or warrants (excluding those referred to
above).
(Section 1806 of the senior indenture, Section 1906
of
the subordinated indenture)
In the event that Sovereign Bancorp shall distribute any
rights or warrants to acquire capital stock ("capital stock
rights") pursuant to which separate certificates representing
such capital stock rights will be distributed subsequent to the
initial distribution of such capital stock rights (whether or not
such distribution shall have occurred prior to the date of the
issuance of a series of convertible debt securities), such
subsequent distribution shall be deemed to be the distribution of
such capital stock rights. Sovereign Bancorp may, in lieu of
making any adjustment in the conversion price upon a distribution
of separate certificates representing such capital stock rights,
make proper provision so that each holder of such a convertible
debt security who converts it (or any portion of it) before the
<PAGE 34> record date for such distribution of separate
certificates shall be entitled to receive upon such conversion
shares of common stock issued with capital stock rights. If
converted after such record date and prior to the expiration,
redemption or termination of such capital stock rights the holder
shall be entitled to receive upon such conversion, in addition to
the shares of common stock issuable upon such conversion, the
same number of such capital stock rights as would a holder of the
number of shares of common stock that such convertible debt
security so converted would have entitled its holder to acquire
in accordance with the terms and provisions applicable to the
capital stock rights if such convertible debt security were
converted immediately prior to the record date for such
distribution. Common stock owned by or held for the account of
Sovereign Bancorp or any majority owned subsidiary shall not be
deemed outstanding for the purpose of any adjustment.
No adjustment in the conversion price of convertible debt
securities that are convertible into common stock will be made
for regular quarterly or other periodic or recurring cash
dividends or distributions or for cash dividends or distributions
to the extent paid from retained earnings. No adjustment in the
conversion price of convertible debt securities that are
convertible into common stock will be required unless such
adjustment would require a change of at least 1% in the
conversion price then in effect, provided, that any such
adjustment not so made will be carried forward and taken into
account in any subsequent adjustment. Any such adjustment not so
made shall be made no later than three years after the occurrence
of the event requiring such adjustment to be made or carried
forward. Sovereign Bancorp reserves the right to make such
reductions in the conversion price in addition to those required
in the foregoing provisions as Sovereign Bancorp in its
discretion shall determine to be advisable in order that certain
stock-related distributions hereafter made by Sovereign Bancorp
to its stockholders shall not be taxable. (Section 1806 of the
senior indenture, Section 1906 of the subordinated indenture)
Except as stated above, the conversion price will not be adjusted
for the issuance of common stock or any securities convertible
into or exchangeable for common stock or securities carrying the
right to purchase any of the foregoing.
In the case of a reclassification or change of the common
stock, a consolidation or merger involving Sovereign Bancorp, or
a sale or conveyance to another corporation of the property and
assets of Sovereign Bancorp as an entirety or substantially as an
entirety, in each case as a result of which holders of common
stock shall be entitled to receive stock, securities, other
property or assets (including cash) with respect to or in
exchange for such common stock, the holders of the convertible
debt securities then outstanding that are convertible into common
stock will be entitled thereafter to convert such convertible
debt securities into the kind and amount of shares of stock and
other securities or property which they would have received upon
<PAGE 35> such reclassification, change, consolidation, merger,
sale or conveyance had such convertible debt securities been
converted into common stock immediately prior to such
reclassification, change, consolidation, merger, sale or
conveyance. (Section 1807 of the senior indenture, Section 1907
of the subordinated indenture)
In the event of a taxable distribution to holders of
common
stock (or other transaction) which results in any adjustment of
the conversion price of convertible debt securities that are
convertible into common stock, the holders of such convertible
debt securities may, in certain circumstances, be deemed to have
received a distribution subject to United States income tax as a
dividend; in certain other circumstances, the absence of such an
adjustment may result in a taxable dividend to the holders of
common stock or such convertible debt securities.
Exchange for Capital Securities
To the extent set forth in a prospectus supplement, a
specified series of debt securities may be mandatorily
exchangeable for capital securities as described under
"Description of Capital Securities" below.
Information Concerning the Trustees
The trustee serves as trustee under indentures for other
debt of Sovereign Bancorp and as rights agent under Sovereign
Bancorp's rights agreement, described in "Description of Capital
Securities - Shareholder Rights Plan," below.
The trustee may, from time to time make loans to Sovereign
Bancorp and perform other services for Sovereign Bancorp in the
normal course of business. Under the provisions of the Trust
Indenture Act of 1939, upon the occurrence of a default under an
indenture, if a trustee has a conflicting interest (as defined in
the Trust Indenture Act) the trustee must, within 90 days, either
eliminate such conflicting interest or resign. Under the
provisions of the Trust Indenture Act, an indenture trustee shall
be deemed to have a conflicting interest if the trustee is a
creditor of the obligor. If the trustee fails either to
eliminate the conflicting interest or to resign within 10 days
after the expiration of such 90-day period, the trustee is
required to notify debt holders to this effect and any debt
holder who has been a bona fide holder for at least six months
may petition a court to remove the trustee and to appoint a
successor trustee.
DESCRIPTION OF WARRANTS
Sovereign Bancorp may issue warrants for the purchase of
common stock, preferred stock and debt securities. Warrants may
be issued separately or together with common stock, preferred
stock or debt securities offered by any prospectus supplement and
<PAGE 36> may be attached to or separate from such common stock,
preferred stock or debt securities. Each series of warrants will
be issued under a separate warrant agreement to be entered into
between Sovereign Bancorp and a bank or trust corporation, as
warrant agent, all as set forth in the prospectus supplement
relating to the particular issue of offered warrants. The
warrant agent will act solely as an agent of Sovereign Bancorp in
connection with the warrants and will not assume any obligation
or relationship of agency or trust for or with any holders of
warrants or beneficial owners of warrants. Copies of the forms
of warrant agreements, including the forms of warrant
certificates representing the warrants, are or will be filed as
exhibits to the Registration Statement. The following summaries
of certain provisions of the forms of warrant agreements and
warrant certificates do not purport to be complete and are
subject to, and are qualified in their entirety by reference to,
all the provisions of the warrant agreements and the warrant
certificates.
General
If warrants are offered, the applicable prospectus
supplement will describe the terms of such warrants, including,
in the case of warrants for the purchase of debt securities, the
following where applicable:
- the offering price;
- the currencies in which the price for such warrants
may
be payable;
- the designation, aggregate principal amount,
currencies, denominations and terms of the series
of
debt securities purchasable upon exercise of such
warrants;
- the designation and terms of any series of debt
securities or preferred stock with which the
warrants
are being offered and the number of warrants being
offered with each such share of common stock or
preferred stock, or debt security;
- if applicable, the date on and after which such
warrants and the related common stock or series of
debt
securities or preferred stock will be transferable
separately;
- the principal amount and series of debt securities
purchasable upon exercise of each such warrant and
the
price at which and currencies in which such
principal
amount of debt securities of such series may be
purchased upon such exercise;
<PAGE 37>
- the date on which the right to exercise such
warrants
shall commence and the date on which such right
shall
expire;
- whether the warrants will be issued in registered
or
bearer form;
- if applicable, a discussion of certain United
States
federal income tax, accounting and other special
considerations, procedures and limitations; and
- any other terms of such warrants, including terms,
procedures and limitations relating to the exchange
and
exercise of such warrants.
In the case of warrants for the purchase of common stock
or
preferred stock, the applicable prospectus supplement will
describe the terms of such warrants, including the following
where applicable:
- the offering price;
- the aggregate number of shares purchasable upon
exercise of such warrants and, in the case of
warrants
for preferred stock, the designation, aggregate
number
and terms of the series of preferred stock
purchasable
upon exercise of such warrants;
- if applicable, the designation and terms of the
series
of common stock, debt securities or preferred stock
with which such warrants are being offered and the
number of such warrants being offered with each
share
of common stock or preferred stock or debt
security;
- if applicable, the date on and after which such
warrants and the related common stock or preferred
stock or series of debt securities will be
transferable
separately;
- the number of shares of common stock or preferred
stock
purchasable upon exercise of each such warrant and
the
price at which such number of shares of common
stock or
preferred stock may be purchased upon such
exercise;
- the date on which the right to exercise such
warrants
shall commence and the date on which such right
shall
expire;
- United States federal income tax consequences; and
- any other terms of such warrants. Warrants for the
purchase of preferred stock or common stock will be
offered and exercisable for U.S. dollars only and
will
be in registered form only. <PAGE 38>
Warrant certificates may be exchanged for new warrant
certificates of different denominations, may be presented for
registration of transfer, and may be exercised at the corporate
trust office of the warrant agent or any other office indicated
in the applicable prospectus supplement. Prior to the exercise
of any warrant to purchase debt securities, holders of such
warrants will not have any of the rights of holders of the debt
securities purchasable upon such exercise, including the right to
receive payments of principal of, premium, if any, or interest,
if any, on the debt securities purchasable upon such exercise or
to enforce covenants in the applicable indenture. Prior to the
exercise of any warrants to purchase preferred stock or common
stock, holders of such warrants will not have any rights of
holders of the preferred stock or common stock purchasable upon
such exercise, including the right to receive payments of
dividends, if any, on the preferred stock or common stock
purchasable upon such exercise or to exercise any applicable
right to vote.
Exercise of Warrants
Each warrant will entitle the holder thereof to purchase
such principal amount of debt securities or shares of common
stock or preferred stock, as the case may be, at such exercise
price as shall in each case be set forth in, or calculable from
the prospectus supplement relating to the offered warrants.
After the close of business on the expiration date of the
warrants (or such later date to which such expiration date may be
extended by Sovereign Bancorp), unexercised warrants will become
void.
Warrants may be exercised by delivering to the warrant
agent
payment as provided in the applicable prospectus supplement of
the amount required to purchase the debt securities, preferred
stock or common stock, as the case may be, purchasable upon such
exercise together with certain information set forth on the
reverse side of the warrant certificate. Warrants will be deemed
to have been exercised upon receipt of payment of the exercise
price, subject to the receipt, within five business days, of the
warrant certificate evidencing such warrants. Upon receipt of
such payment and the warrant certificate properly completed and
duly executed at the corporate trust office of the warrant agent
or any other office indicated in the applicable prospectus
supplement, Sovereign Bancorp will, as soon as practicable, issue
and deliver the debt securities, preferred stock or common stock,
as the case may be, purchasable upon such exercise. If fewer
than all of the warrants represented by the warrant certificate
are exercised, a new warrant certificate will be issued for the
remaining amount of warrants.
<PAGE 39>
Amendments and Supplements to Warrant Agreements
The warrant agreements may be amended or supplemented
without the consent of the holders of the warrants issued
thereunder to effect changes that are not inconsistent with the
provisions of the warrants and that do not adversely affect the
interests of the holders of the warrants.
Common Stock Warrant Adjustments
Unless otherwise indicated in the applicable prospectus
supplement, the exercise price of, and the number of shares of
common stock covered by, a common stock warrant are subject to
adjustment in certain events, including:
- the issuance of common stock as a dividend or
distribution on the common stock;
- subdivisions and combinations of the common stock;
- the issuance to all holders of common stock of
certain
rights or warrants entitling them to subscribe for
or
purchase common stock within 45 days after the date
fixed for the determination of the shareholders
entitled to receive such rights or warrants, at
less
than the current market price ("Capital Stock
Rights");
- the distribution to all holders of common stock of
evidences of indebtedness or assets of Sovereign
Bancorp (excluding certain cash dividends and
distributions described below) or rights or
warrants
(excluding those referred to above).
Sovereign Bancorp may, in lieu of making any adjustment in
the exercise price of, and the number of shares of common stock
covered by, a common stock warrant, make proper provision so that
each holder of such common stock warrant who exercises such
common stock warrant (or any portion thereof):
- before the record date for such distribution of
separate certificates, shall be entitled to receive
upon such exercise shares of common stock issued
with
Capital Stock Rights; and
- after such record date and prior to the expiration,
redemption or termination of such Capital Stock
Rights,
shall be entitled to receive upon such exercise in
addition to the shares of common stock issuable
upon
such exercise, the same number of such Capital
Stock
Rights as would a holder of the number of shares of
common stock that such common stock warrants so
exercised would have entitled the holder thereof to
acquire in accordance with the terms and provisions
applicable to the Capital Stock Rights if such
common
<PAGE 40> stock warrant was exercised immediately
prior
to the record date for such distribution.
Common stock owned by or held for the account of Sovereign
Bancorp or any majority owned subsidiary shall not be deemed
outstanding for the purpose of any adjustment.
No adjustment in the exercise price of, and the number of
shares of common stock covered by, a common stock warrant will be
made for regular quarterly or other periodic or recurring cash
dividends or distributions of cash dividends or distributions to
the extent paid from retained earnings. No adjustment will be
required unless such adjustment would require a change of at
least 1% in the exercise price then in effect; provided that any
such adjustment not so made will be carried forward and taken
into account in any subsequent adjustment; and provided further
that any such adjustment not so made shall be made no later than
three years after the occurrence of the event requiring such
adjustment to be made or carried forward. Except as stated
above, the exercise price of, and the number of shares of common
stock covered by, a common stock warrant will not be adjusted for
the issuance of common stock or any securities convertible into
or exchangeable for common stock, or securities carrying the
right to purchase any of the foregoing.
In the case of a reclassification or change of the common
stock, a consolidation or merger involving Sovereign Bancorp or
sale or conveyance to another corporation of the property and
assets of Sovereign Bancorp as an entirety or substantially as an
entirety, in each case as a result of which holders of Sovereign
Bancorp's common stock shall be entitled to receive stock,
securities, other property or assets (including cash) with
respect to or in exchange for such common stock, the holders of
the common stock warrants then outstanding will be entitled
thereafter to convert such common stock warrants into the kind
and amount of shares of stock and other securities or property
which they would have received upon such reclassification,
change, consolidation, merger, sale or conveyance had such common
stock warrants been exercised immediately prior to such
reclassification, change, consolidation, merger, sale or
conveyance.
STOCK PURCHASE CONTRACTS AND STOCK PURCHASE
UNITS
Sovereign Bancorp may issue stock purchase contracts,
including contracts obligating holders to purchase from Sovereign
Bancorp, and Sovereign Bancorp to sell to the holders, a
specified number of shares of common stock at a future date or
dates. The consideration per share of common stock may be fixed
at the time the stock purchase contracts are issued or may be
determined by reference to a specific formula described in the
stock purchase contracts. Sovereign Bancorp may issue the stock
purchase contracts separately or as a part of stock purchase
units consisting of a stock purchase contract and one or more
<PAGE 41> shares of Sovereign Bancorp common stock, preferred
stock or fractions thereof or a debt security or a debt
obligation of Sovereign Bancorp or a third party, including a
U.S. Treasury security. Sovereign Bancorp's common stock,
preferred stock or debt securities or the debt obligation of a
third party may serve as collateral to secure the holders'
obligations to purchase the shares of common stock under the
stock purchase contracts. The stock purchase contracts may
require Sovereign Bancorp to make periodic payments to the
holders of stock purchase contracts. These payments may be
unsecured or prefunded on some basis. The stock purchase
contracts may require holders to secure their obligations in a
specified manner. The applicable prospectus supplement will
describe the specific terms of any stock purchase contracts or
stock purchase units.
DESCRIPTION OF CAPITAL SECURITIES
The authorized capital stock of Sovereign Bancorp consists
of 400,000,000 shares of common stock, no par value, and
7,500,000 shares of authorized preferred stock. As of August 31,
1999, there were 180,864,626 shares of Sovereign Bancorp common
stock issued and outstanding and no shares of preferred stock
issued and outstanding. There are no other shares of capital
stock of Sovereign Bancorp authorized, issued or outstanding.
Sovereign Bancorp has no options, warrants, or other rights
authorized, issued or outstanding, other than as described herein
under "Shareholder Rights Plan" and options granted under
Sovereign Bancorp's stock option plans or in connection with
pending acquisitions by Sovereign Bancorp.
Common Stock
The holders of Sovereign Bancorp common stock share
ratably
in dividends when and if declared by the Sovereign Bancorp Board
of Directors from legally available funds. Declaration and
payment of cash dividends by Sovereign Bancorp depends upon
dividend payments by Sovereign Bank, which are Sovereign
Bancorp's primary source of revenue and cash flow. Sovereign
Bancorp is a legal entity separate and distinct from its
subsidiaries. Accordingly, the right of Sovereign Bancorp, and
consequently the right of creditors and shareholders of Sovereign
Bancorp, to participate in any distribution of the assets or
earnings of any subsidiary is necessarily subject to the prior
claims of creditors of the subsidiary, except to the extent that
claims of Sovereign Bancorp in its capacity as a creditor may be
recognized.
Prior to the issuance of any Sovereign Bancorp preferred
stock which possesses voting rights (see "Preferred Stock"
below), the holders of shares of Sovereign Bancorp common stock
will possess exclusive voting rights in Sovereign Bancorp. Each
holder of shares of Sovereign Bancorp common stock has one vote
for each share held on matters upon which shareholders have the
<PAGE 42> right to vote. Sovereign Bancorp shareholders cannot
cumulate votes in the election of directors.
The holders of Sovereign Bancorp common stock have no
preemptive rights to acquire any additional shares of Sovereign
Bancorp. In addition, Sovereign Bancorp common stock is not
subject to redemption.
Sovereign Bancorp's articles of incorporation authorize
the
Sovereign Bancorp Board of Directors to issue authorized shares
of Sovereign Bancorp common stock without shareholder approval.
Sovereign Bancorp common stock is included for quotation on the
Nasdaq National Market. As a result, in order to maintain such
inclusion, approval of Sovereign Bancorp's shareholders is
required for the issuance of additional shares of Sovereign
Bancorp common stock or securities convertible into Sovereign
Bancorp common stock if the issuance of such securities:
- relates to acquisition of a company and the
securities
to be issued will have 20% or more of the voting
power
outstanding before the issuance;
- relates to acquisition of a company in which a
director, officer or substantial shareholder of
Sovereign Bancorp has a 5% or greater interest and
the
issuance of the securities could result in an
increase
in outstanding common stock or voting power of 5%
or
more;
- relates to a transaction, other than a public
offering,
at a price less than the greater of book or market
value in which the shares issued will equal 20% or
more
of the shares of Sovereign Bancorp common stock or
20%
or more of the voting power outstanding before
issuance; or
- would result in a change in control of Sovereign
Bancorp.
Under Nasdaq National Market rules, shareholders must also
approve a stock option or purchase plan applicable to officers
and directors other than a broadly-based plan in which other
security holders of Sovereign Bancorp or employees of Sovereign
Bancorp participate.
In the event of liquidation, dissolution or winding-up of
Sovereign Bancorp, whether voluntary or involuntary, holders of
Sovereign Bancorp common stock share ratably in any of its assets
or funds that are available for distribution to its shareholders
after the satisfaction of its liabilities (or after adequate
provision is made therefor) and after payment of any liquidation
preferences of any outstanding Sovereign Bancorp preferred stock.
<PAGE 43>
Preferred Stock
Sovereign Bancorp's Board of Directors is authorized to
approve the issuance of Sovereign Bancorp preferred stock,
without any required approval of shareholders. Sovereign
Bancorp's Board determines the rights, qualifications,
restrictions, and limitations on each series of Sovereign Bancorp
preferred stock at the time of issuance. These rights may
include rights to participating dividends, voting and
convertibility into shares of Sovereign Bancorp common stock.
Shares of Sovereign Bancorp preferred stock may have dividend,
redemption, voting, and liquidation rights taking priority over
Sovereign Bancorp common stock, and may be convertible into
Sovereign Bancorp common stock.
Shareholder Rights Plan
Sovereign Bancorp maintains a shareholder rights plan
designed to protect shareholders from attempts to acquire control
of Sovereign Bancorp at an inadequate price. Under the
shareholder rights plan, each outstanding share of Sovereign
Bancorp common stock has attached to it one right to purchase
one-hundredth of a share of junior participating preferred stock
at an initial exercise price of $40. The rights are not
currently exercisable or transferable, and no separate
certificates evidencing such rights will be distributed, unless
certain events occur.
A holder can exercise the rights to purchase shares of the
junior participating preferred stock if a person, group, or other
entity acquires or commences a tender offer or an exchange offer
for 9.9% or more of total voting power. A holder can also
exercise if Sovereign Bancorp's board of directors declares a
person or group who has become a beneficial owner of at least
4.9% of Sovereign Bancorp common stock or total voting power an
"adverse person," as defined in the rights plan.
After the rights become exercisable the rights (other than
rights held by a 9.9% beneficial owner or an "adverse person")
generally will entitle the holders to purchase either Sovereign
Bancorp common stock or the common stock of the potential
acquiror, in lieu of the junior participating preferred stock, at
a substantially reduced price.
Sovereign Bancorp can generally redeem the rights at $.001
per right at any time until the tenth business day following
public announcement that a 9.9% position has been acquired. At
any time prior to the date the rights become nonredeemable, the
Sovereign Bancorp board of directors can extend the redemption
period. Rights are not redeemable following an "adverse person"
determination.
<PAGE 44>
Special Charter and Pennsylvania Corporate Law Provisions
Sovereign Bancorp's articles of incorporation and bylaws
contain certain provisions which may have the effect of deterring
or discouraging, among other things, a nonnegotiated tender or
exchange offer for Sovereign Bancorp stock, a proxy contest for
control of Sovereign Bancorp, the assumption of control of
Sovereign Bancorp by a holder of a large block of Sovereign
Bancorp stock and the removal of Sovereign Bancorp's management.
These provisions:
- empower the Sovereign Bancorp board of directors,
without shareholder approval, to issue Sovereign
Bancorp preferred stock the terms of which,
including
voting power, are set by the Sovereign Bancorp
board of
directors;
- divide the Sovereign Bancorp board of directors
into
three classes serving staggered three-year terms;
- restrict the ability of shareholders to remove
directors;
- require that shares with at least 80% of total
voting
power approve mergers and other similar
transactions
with a person or entity holding stock with more
than 5%
of Sovereign Bancorp's voting power, if the
transaction
is not approved, in advance, by the Sovereign
Bancorp
board of directors;
-- prohibit shareholders' actions without a meeting;
-- require that shares with at least 80%, or in
certain
instances a majority, of total voting power approve
the
repeal or amendment of Sovereign Bancorp's articles
of
incorporation;
-- require any person who acquires stock of Sovereign
Bancorp with voting power of 25% or more to offer
to
purchase for cash all remaining shares of Sovereign
Bancorp voting stock at the highest price paid by
such
person for shares of Sovereign Bancorp voting stock
during the preceding year;
- eliminate cumulative voting in elections of
directors;
- require an affirmative vote of at least two-thirds
of
Sovereign Bancorp's total voting power in order for
shareholders to repeal or amend Sovereign Bancorp's
bylaws;
- require advance notice of nominations for the
election
of directors and the presentation of shareholder
proposals at meetings of shareholders; and <PAGE
45>
- provide that officers, directors, employees, agents
and
persons who own 5% or more of the voting securities
of
any other corporation or other entity that owns 66
2/3%
or more of Sovereign Bancorp's outstanding voting
stock
cannot constitute a majority of the members of
Sovereign Bancorp's board of directors.
The Pennsylvania Business Corporation Law of 1988 also
contains certain provisions applicable to Sovereign Bancorp which
may have the effect of impeding a change in control of Sovereign
Bancorp. These provisions, among other things:
- require that, following any acquisition of 20% of a
public corporation's voting power, the remaining
shareholders have the right to receive payment for
their shares, in cash, from the acquiring person or
group in an amount equal to the "fair value" of the
shares, including an increment representing a
proportion of any value payable for control of the
corporation; and
- prohibit for five years, subject to certain
exceptions,
a "business combination," which includes a merger
or
consolidation of the corporation or a sale, lease
or
exchange of assets, with a shareholder or group of
shareholders beneficially owning 20% or more of a
public corporation's voting power.
In 1990, Pennsylvania adopted legislation further amending
the Pennsylvania Business Corporation Law of 1988. To the extent
applicable to Sovereign Bancorp at the present time, this
legislation generally:
- expands the factors and groups (including
shareholders)
which the Sovereign Bancorp board of directors can
consider in determining whether a certain action is
in
the best interests of the corporation;
- provides that the Sovereign Bancorp board of
directors
need not consider the interests of any particular
group
as dominant or controlling;
- provides that Sovereign Bancorp's directors, in
order
to satisfy the presumption that they have acted in
the
best interests of the corporation, need not satisfy
any
greater obligation or higher burden of proof for
actions relating to an acquisition or potential
acquisition of control;
-- provides that actions relating to acquisitions of
control that are approved by a majority of
"disinterested directors" are presumed to satisfy
the
directors' standard, unless it is proven by clear
and
convincing evidence that the directors did not
assent
<PAGE 46> to such action in good faith after
reasonable
investigation; and
- provides that the fiduciary duty of Sovereign
Bancorp's
directors is solely to the corporation and may be
enforced by the corporation or by a shareholder in
a
derivative action, but not by a shareholder
directly.
The 1990 amendments to the Pennsylvania Business
Corporation
Law of 1988 explicitly provide that the fiduciary duty of
directors does not require directors to:
- redeem any rights under, or to modify or render
inapplicable, any shareholder rights plan;
- render inapplicable, or make determinations under,
provisions of the Pennsylvania Business Corporation
Law
of 1988, relating to control transactions, business
combinations, control share acquisitions or
disgorgement by certain controlling shareholders
following attempts to acquire control; or
- act as the board of directors, a committee of the
board
or an individual director solely because of the
effect
such action might have on an acquisition or
potential
or proposed acquisition of control of the
corporation
or the consideration that might be offered or paid
to
shareholders in such an acquisition.
One of the effects of the 1990 fiduciary duty statutory
provisions may be to make it more difficult for a shareholder to
successfully challenge the actions of the Sovereign Bancorp board
of directors in a potential change in control context.
Pennsylvania case law appears to provide that the fiduciary duty
standard under the 1990 amendments to the Pennsylvania Business
Corporation Law of 1988 grants directors the statutory authority
to reject or refuse to consider any potential or proposed
acquisition of the corporation.
Sovereign Bancorp opted out of coverage by the
"disgorgement" and "control-share acquisition" statutes included
in the 1990 legislation, pursuant to a bylaw amendment as
permitted by the legislation. To the extent applicable to a
Pennsylvania corporation, the "disgorgement" statute generally
requires disgorgement by any person or group who or which has
acquired or publicly disclosed an intent to acquire 20% or more
of a corporation's voting power of any profit realized from the
sale of any shares acquired within specified time periods of such
acquisition or disclosure if the shares are sold within eighteen
months thereafter. The "control share acquisition" statute
generally prohibits a person or group who or which exceeds
certain stock ownership thresholds (20%, 33 1/3% and 50%) for the
first time from voting the "control shares" (i.e., the shares
owned in excess of the applicable threshold) unless voting rights
<PAGE 47> are restored by a vote of disinterested shareholders.
As a result of Sovereign Bancorp's optout from coverage by these
statutes, neither the "disgorgement" nor the "control share
acquisition" statute would apply to a nonnegotiated attempt to
acquire control of Sovereign Bancorp, although such an attempt
would still be subject to the special charter and other
provisions described in the preceding paragraphs. Sovereign
Bancorp can reverse this action, and thereby cause the
"disgorgement" and "control share acquisition" statutes to apply
to an attempt to acquire control of Sovereign Bancorp, by means
of an amendment to Sovereign Bancorp's bylaws, which could be
adopted by the Board of Directors, without shareholder approval.
DESCRIPTION OF TRUST PREFERRED SECURITIES AND
TRUST GUARANTEES
Trust Preferred Securities
The Declaration pursuant to which each Trust is organized
will be replaced by an Amended and Restated Declaration of Trust
(the "Amended Declaration") which will authorize the trustees
(the "Trustees") of such trust to issue on behalf of such Trust
one series of trust preferred securities and one series of trust
common securities (together, the "Trust Securities"). The trust
preferred securities will be issued to the public pursuant to the
Registration Statement of which this prospectus forms a part, and
the trust common securities will be issued directly or indirectly
to Sovereign Bancorp.
The trust preferred securities will have such terms,
including dividends, redemption, voting, conversion, liquidation
rights and such other preferred, deferred or other special rights
or such restrictions as shall be set forth in the applicable
Declaration or made part of such Declaration by the Trust
Indenture Act. Reference is made to the applicable prospectus
supplement relating to the trust preferred securities of such
Trust for specific terms, including:
- the distinctive designation of trust preferred
securities;
- the number of trust preferred securities issued by
such
Trust;
- the annual dividend rate (or method of determining
such
rate) for trust preferred securities issued by such
Trust and the date or dates upon which such
dividends
shall be payable;
- whether dividends on trust preferred securities
issued
by such Trust shall be cumulative, and, in the case
of
trust preferred securities having such cumulative
dividend rights, the date or dates or method of
determining the date or dates from which dividends
on
<PAGE 48> trust preferred securities issued by such
Trust shall be cumulative;
- the amount or amounts which shall be paid out of
the
assets of such Trust to the holder of trust
preferred
securities of such Trust upon voluntary or
involuntary
dissolution, winding-up or termination of such
Trust;
- the terms and conditions, if any, under which trust
preferred securities of such Trust may be converted
into shares of capital stock of Sovereign Bancorp,
including the conversion price per share and the
circumstances, if any, under which any such
conversion
right shall expire;
- the terms and conditions, if any, upon which the
related series of the applicable debt securities
may be
distributed to holders of trust preferred
securities of
such Trust;
- the obligation, if any, of such Trust to purchase
or
redeem trust preferred securities issued by such
Trust
and the price or prices at which, the period or
periods
within which, and the terms and conditions upon
which
trust preferred securities issued by such Trust
shall
be purchased or redeemed, in whole or in part,
pursuant
to such obligation;
- the voting rights, if any, of trust preferred
securities issued by such Trust in addition to
those
required by law, including the number of votes per
trust preferred security and any requirement for
the
approval by the holders of trust preferred
securities,
or of trust preferred securities issued by such
Trust,
as a condition to specified action or amendments to
the
Declaration of such Trust; and
- any other relevant rights, preferences, privileges,
limitations or restrictions of trust preferred
securities issued by such Trust consistent with the
Declaration of such Trust or with applicable law.
Pursuant to each Declaration, the Property Trustee will
own
the debt securities purchased by the applicable Trust for the
benefit of the holders of the trust preferred securities. The
payment of dividends out of money held by the Trusts, and
payments upon redemption of trust preferred securities or
liquidation of any Trust, will be guaranteed by Sovereign Bancorp
to the extent described under "-- Trust Guarantees."
Certain federal income tax considerations applicable to an
investment in trust preferred securities will be described in the
prospectus supplement relating thereto.
<PAGE 49>
In connection with the issuance of trust preferred
securities, each Trust will also issue one series of trust common
securities. Each Amended Declaration will authorize the Regular
Trustee of a Trust to issue on behalf of such Trust one series of
trust common securities having such terms, including dividends,
conversion, redemption, voting, liquidation rights or such
restrictions as shall be set forth therein. Except as otherwise
provided in the prospectus supplement relating to the trust
preferred securities, the terms of the trust common securities
issued by such Trust will be substantially identical to the terms
of the trust preferred securities issued by such Trust, and the
trust common securities will rank on a parity, and payments will
be made thereon pro rata, with the trust preferred securities
except that, upon an event of default under the applicable
Declaration, the rights of the holders of the trust common
securities to payment in respect of dividends and payments upon
liquidation, redemption and otherwise will be subordinated to the
rights of the holders of the trust preferred securities. Except
in certain limited circumstances, the trust common securities
will also carry the right to vote and appoint, remove or replace
any of the Trustees of the related Trust which issued such trust
common securities. All of the trust Common Securities of each
Trust will be directly or indirectly owned by Sovereign Bancorp.
The Property Trustee and its affiliates may provide
customary commercial banking services to Sovereign Bancorp and
certain of its subsidiaries and may participate in various
financing agreements of Sovereign Bancorp in the ordinary course
of their business.
Trust Guarantees
Set forth below is a summary of information concerning the
trust guarantees which will be executed and delivered by
Sovereign Bancorp, from time to time, for the benefit of the
holders of trust preferred securities. The accompanying
prospectus supplement will describe any significant differences
between the actual terms of the trust guarantees and the summary
below. The following summary does not purport to be complete and
is subject in all respects to the provisions of, and is qualified
in its entirety by reference to, the trust guarantee, which will
be filed with the Commission and incorporated by reference as an
exhibit to the Registration Statement of which this prospectus
forms a part.
General. Sovereign Bancorp will irrevocably and
unconditionally agree, to the extent set forth in the trust
guarantees, to pay in full, to the holders of trust preferred
securities of each series, the Trust Guarantee Payments (as
defined below) (except to the extent paid by such Trust), as and
when due, regardless of any defense, right of set-off, or
counterclaim which such Trust may have or assert. The following
payments with respect to any series of trust preferred securities
to the extent not paid by the applicable Trust (the "Trust
<PAGE 50> Guarantee Payments") will be subject to the trust
guarantees (without duplication):
- any accrued and unpaid dividends which are required
to
be paid on the trust preferred securities of such
series, to the extent such Trust shall have funds
legally available therefor;
- the redemption price, including all accrued and
unpaid
dividends (the "Redemption Price"), payable out of
funds legally available therefor, with respect to
any
trust preferred securities called for redemption by
such Trust; and
- upon a liquidation of such Trust (other than in
connection with the distribution of debt securities
to
the holders of trust preferred securities or the
redemption of all of the trust preferred securities
issued by such Trust), the lesser of (a) the
aggregate
of the liquidation preference and all accrued and
unpaid dividends on the trust preferred securities
of
such series to the date of payment and (b) the
amount
of assets of such Trust remaining available for
distribution to holders of trust preferred
securities
of such series in liquidation of such Trust.
Sovereign Bancorp's obligation to make a Trust Guarantee
Payment may be satisfied by direct payment of the required
amounts by Sovereign Bancorp to the holders of trust preferred
securities or by causing the applicable Trust to pay such amounts
to such holders.
Covenants of Sovereign Bancorp. In each trust guarantee,
except as may be provided in an applicable prospectus supplement,
Sovereign Bancorp will covenant that, so long as any trust
preferred securities issued by the applicable Trust remain
outstanding, if there shall have occurred any event that would
constitute an event of default under such trust guarantee or the
Declaration of such Trust, then:
- Sovereign Bancorp shall not declare or pay any
dividend
on, make any distributions with respect to, or
redeem,
purchase or make a liquidation payment with respect
to,
any of its common stock other than:
- purchases or acquisitions of shares of
common
stock in connection with the satisfaction by
Sovereign Bancorp of its obligations under
any
employee benefit plan;
- as a result of a reclassification of
Sovereign
Bancorp common stock or the exchange or
conversion
of one class or series of Sovereign
Bancorp's
<PAGE 51> common stock for another class or
series
of Sovereign Bancorp's common stock;
- the purchase of fractional interests in
shares of
Sovereign Bancorp's common stock pursuant to
the
conversion or exchange provisions of such
common
stock of Sovereign Bancorp or the security
being
converted or exchanged; or
- purchases or acquisitions of shares of
common
stock to be used in connection with
acquisitions
of common stock by shareholders pursuant to
Sovereign Bancorp's dividend reinvestment
plan, or
make any guarantee payments with respect to
the
foregoing; and
- Sovereign Bancorp shall not make any payment of
principal or premium, if any, on or repurchase any
debt
securities (including guarantees), other than at
stated
maturity issued by Sovereign Bancorp which rank on
a
parity with or junior to such debt securities.
Amendment and Assignment. Except with respect to any
changes which do not adversely affect the rights of holders of
trust preferred securities of any series (in which case no vote
will be required), each trust guarantee with respect to any
series of trust preferred securities may be changed only with the
prior approval of the holders of not less than a majority in
liquidation preference of the outstanding trust preferred
securities of such series. The manner of obtaining any such
approval of holders of the trust preferred securities of each
series will be set forth in an accompanying prospectus
supplement. All guarantees and agreements contained in each
trust guarantee shall bind the successors, assigns, receivers,
trustees and representatives of Sovereign Bancorp and shall inure
to the benefit of the holders of the applicable series of trust
preferred securities then outstanding.
Termination of the Trust Guarantees. Each trust guarantee
will terminate as to the trust preferred securities issued by the
applicable Trust:
- upon full payment of the Redemption Price of all
trust
preferred securities of such Trust;
- upon distribution of the applicable debt securities
held by such Trust to the holders of the trust
preferred securities of such Trust; or
- upon full payment of the amounts payable in
accordance
with the Declaration upon liquidation of such
Trust.
Each trust guarantee will continue to be effective
or
will be reinstated, as the case may be, if at any
time
any holder of trust preferred securities issued by
the
<PAGE 52> applicable Trust must return payment of
any
sums paid under such trust preferred securities or
such
trust guarantee.
The subordination provisions of the applicable debt
securities and the trust guarantees, respectively, may provide
that in the event payment is made on debt securities or the trust
guarantees in contravention of such provisions, such payments
will be paid over to the holders of senior debt.
Ranking of the Trust Guarantees. Unless otherwise
specified
in a prospectus supplement, each trust guarantee will constitute
an unsecured obligation of Sovereign Bancorp and will rank:
- subordinate and junior in right of payment to all
other
liabilities of Sovereign Bancorp;
- on a parity with the most senior preferred or
preference stock, if any, hereafter issued by
Sovereign
Bancorp and with any guarantee hereafter entered
into
by Sovereign Bancorp in respect of any preferred or
preference stock or interests of any affiliate of
Sovereign Bancorp; and
- senior to Sovereign Bancorp's common stock.
Each Declaration will provide that each holder of trust
preferred securities by acceptance thereof agrees to the
subordination provisions and other terms of the applicable trust
guarantee.
Each trust guarantee will constitute a guarantee of
payment
and not of collection. The trust guarantees will be deposited
with the Property Trustee to be held for the benefit of any
series of trust preferred securities. The Property Trustee will
have the right to enforce the trust guarantees on behalf of the
holders of any series of trust preferred securities. The holders
of not less than 10% in aggregate liquidation preference of a
series of trust preferred securities will have the right to
direct the time, method and place of conducting any proceeding
for any remedy available in respect of the trust guarantee
applicable to such series of trust preferred securities,
including the giving of directions to the Property Trustee. If
the Property Trustee fails to enforce a trust guarantee as above
provided, any holder of trust preferred securities of a series to
which such trust guarantee pertains may institute a legal
proceeding directly against Sovereign to enforce its rights under
such trust guarantee, without first instituting a legal
proceeding against the applicable Trust, or any other person or
entity. Each trust guarantee will not be discharged except by
payment of the trust guarantee Payments in full to the extent not
paid by the applicable Trust, and by complete performance of all
obligations under such trust guarantee.
<PAGE 53>
Governing Law. Each trust guarantee will be governed by
and
construed in accordance with the laws of the State of New York.
CERTAIN TAX CONSIDERATIONS
The applicable prospectus supplement with respect to each
type of security issued under this registration statement may
contain a discussion of certain tax consequences of an investment
in the securities offered thereby.
PLAN OF DISTRIBUTION
Sovereign Bancorp or the Trusts may offer the offered
securities in one or more of the following ways from time to
time:
- to or through underwriters or dealers;
- by itself directly;
- through agents; or
- through a combination of any of these methods of
sale.
The prospectus supplement relating to an offering of
offered
securities will set forth the terms of such offering, including:
- the name or names of any underwriters, dealers or
agents;
- the purchase price of the offered securities and
the
proceeds to Sovereign Bancorp or the Trusts from
such
sale;
- any underwriting discounts and commissions or
agency
fees and other items constituting underwriters' or
agents' compensation;
- the initial public offering price;
- any discounts or concessions to be allowed or
reallowed
or paid to dealers; and
- any securities exchanges on which such offered
securities may be listed.
Any initial public offering prices, discounts or
concessions
allowed or reallowed or paid to dealers may be changed from time
to time.
If underwriters are used in an offering of offered
securities, such offered securities will be acquired by the
underwriters for their own account and may be resold from time to
time in one or more transactions, including negotiated <PAGE 54>
transactions, at a fixed public offering price or at varying
prices determined at the time of sale. The securities may be
either offered to the public through underwriting syndicates
represented by one or more managing underwriters or by one or
more underwriters without a syndicate. Unless otherwise set
forth in the prospectus supplement, the underwriters will not be
obligated to purchase offered securities unless specified
conditions are satisfied, and if the underwriters do purchase any
offered securities, they will purchase all offered securities.
In connection with underwritten offerings of the offered
securities and in accordance with applicable law and industry
practice, underwriters may over-allot or effect transactions that
stabilize, maintain or otherwise affect the market price of the
offered securities at levels above those that might otherwise
prevail in the open market, including by entering stabilizing
bids, effecting syndicate covering transactions or imposing
penalty bids, each of which is described below.
- A stabilizing bid means the placing of any bid, or
the
effecting of any purchase, for the purpose of
pegging,
fixing or maintaining the price of a security.
- A syndicate covering transaction means the placing
of
any bid on behalf of the underwriting syndicate or
the
effecting of any purchase to reduce a short
position
created in connection with the offering.
- A penalty bid means an arrangement that permits the
managing underwriter to reclaim a selling
concession
from a syndicate member in connection with the
offering
when offered securities originally sold by the
syndicate member are purchased in syndicate
covering
transactions.
These transactions may be effected through the Nasdaq
National Market system, or otherwise. Underwriters are not
required to engage in any of these activities, or to continue
such activities if commenced.
If dealers are utilized in the sale of offered securities,
Sovereign Bancorp or the Trusts will sell such offered securities
to the dealers as principals. The dealers may then resell such
offered securities to the public at varying prices to be
determined by such dealers at the time of resale. The names of
the dealers and the terms of the transaction will be set forth in
the prospectus supplement relating to that transaction.
Offered securities may be sold directly by Sovereign
Bancorp
or the Trusts to one or more institutional purchasers, or through
agents designated by Sovereign Bancorp or the Trusts from time to
time, at a fixed price or prices, which may be changed, or at
varying prices determined at the time of sale. Any agent
involved in the offer or sale of the offered securities in
<PAGE 55> respect of which this prospectus is delivered will be
named, and any commissions payable by Sovereign Bancorp to such
agent will be set forth, in the prospectus supplement relating to
that offering. Unless otherwise indicated in such prospectus
supplement, any such agent will be acting on a best efforts basis
for the period of its appointment.
If so indicated in the applicable prospectus supplement,
Sovereign Bancorp or the Trusts will authorize agents,
underwriters or dealers to solicit offers from certain types of
institutions to purchase offered securities from Sovereign
Bancorp or the Trusts at the public offering price set forth in
such prospectus supplement pursuant to delayed delivery contracts
providing for payment and delivery on a specified date in the
future. Such contracts will be subject only to those conditions
set forth in the prospectus supplement and the prospectus
supplement will set forth the commission payable for solicitation
of such contracts.
Underwriters, dealers and agents may be entitled, under
agreements with Sovereign Bancorp, to indemnification by
Sovereign Bancorp relating to material misstatements and
omissions. Underwriters, dealers and agents may be customers of,
engage in transactions with, or perform services for, Sovereign
Bancorp and affiliates of Sovereign Bancorp in the ordinary
course of business.
Each series of offered securities will be a new issue of
securities and will have no established trading market. Any
underwriters to whom offered securities are sold for public
offering and sale may make a market in such offered securities,
but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. The
offered securities may or may not be listed on a national
securities exchange. No assurance can be given that there will
be a market for the offered securities.
<PAGE 56>
ERISA CONSIDERATIONS
Sovereign Bancorp has a subsidiary, Manchester Trust Bank,
that provides services to several employee benefit plans.
Although the majority of these plans are employee-directed 401(k)
plans, Sovereign Bancorp and any direct or indirect subsidiary of
Sovereign Bancorp may each be considered a "party in interest"
within the meaning of the Employee Retirement Income Security Act
of 1974, and a "disqualified person" under corresponding
provisions of the Internal Revenue Code of 1986, relating to some
of these employee benefit plans. "Prohibited transactions"
within the meaning of ERISA and the Code may result if any
offered securities are acquired by an employee benefit plan to
which Sovereign Bancorp or any direct or indirect subsidiary of
Sovereign Bancorp is a party in interest, unless such offered
securities are acquired pursuant to an applicable exemption
issued by the U.S. Department of Labor. Any employee benefit
plan or other entity to which such provisions of ERISA or the
Code apply proposing to acquire the offered securities should
consult with its legal counsel.
LEGAL MATTERS
Stevens & Lee, P.C., Philadelphia, Pennsylvania, will act
as
legal counsel to Sovereign Bancorp and will pass upon the
validity of any securities offered by this prospectus and any
applicable prospectus supplement. Joseph E. Lewis, a director of
Sovereign Bank, is a principal of the firm of Stevens & Lee.
Stevens & Lee and its attorneys own an aggregate of approximately
300,000 shares of Sovereign Bancorp common stock, including
shares issuable upon the exercise of options issued to Mr. Lewis
in his capacity as director of Sovereign Bank. Counsel
identified in the applicable prospectus supplement will act as
legal counsel to the underwriters.
EXPERTS
The consolidated financial statements of Sovereign
Bancorp,
at December 31, 1998 and 1997 and for each of the three years in
the period ended December 31, 1998, included in Sovereign
Bancorp's Annual Report on Form 10-K for the year ended
December 31, 1998, as amended, have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference which, as
to the years 1997 and 1996, is based in part on the reports of
KPMG LLP with respect to ML Bancorp, Inc., First State Financial
Services, Inc. and Bankers Corp., Arthur Andersen LLP with
respect to First Home Bancorp Inc. and PriceWaterhouseCoopers LLP
with respect to Carnegie Bancorp, Inc., independent auditors.
The consolidated financial statements referred to above are in
reliance upon such reports given on the authority of such firms
as experts in accounting and auditing.
<PAGE 57>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
SEC registration fee $ 556,000
NASD Fees 30,500*
Printing fees 100,000*
Trustees' fees and expenses 50,000*
Accountant's fees and expenses 250,000*
Rating agencies' fees 500,000*
Attorneys' fees and expenses 250,000*
Transfer agent fees 25,000*
Miscellaneous fees and expenses $ 238,000
Total $2,000,000
____________
* Estimated except for the registration fee.
Item 15. Indemnification of Directors and Officers.
Pennsylvania law provides that a Pennsylvania corporation
may indemnify directors, officers, employees, and agents of the
corporation against liabilities they may incur in such capacities
for any action taken or any failure to act, whether or not the
corporation would have the power to indemnify the person under
any provision of law, unless such action or failure to act is
determined by a court to have constituted recklessness or willful
misconduct. Pennsylvania law also permits the adoption of a
bylaw amendment, approved by shareholders, providing for the
elimination of a director's liability for monetary damages for
any action taken or any failure to take any action unless (1) the
director has breached or failed to perform the duties of his
office and (2) the breach or failure to perform constitutes self-
dealing, willful misconduct or recklessness.
The Bylaws of Sovereign Bancorp provide for
(1) indemnification of directors, officers, employees, and agents
of Sovereign Bancorp and its subsidiaries and (2) the elimination
of a director's liability for monetary damages to the fullest
extent permitted by Pennsylvania law.
Directors and officers are also insured against certain
liabilities for their actions, as such, by an insurance policy
obtained by Sovereign Bancorp.
The Declaration of each Trust provides that Sovereign
Bancorp shall indemnify the Property Trustee or any of its
affiliates, the Delaware Trustee or any of its affiliates, or any
officers, directors, shareholders, members, partners, employees,
<PAGE 1> representatives, custodians, nominees or agents of the
Property Trustee and the Delaware Trustee (each, a "Fiduciary
Indemnified Person") for, and hold each Fiduciary Indemnified
Person harmless against, any loss, liability 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 under such
Declaration.
The Declaration of each Trust also provides that Sovereign
Bancorp will indemnify, to the full extent permitted by law, any
Regular Trustee, affiliate of any Regular Trustee or any
officers, directors, shareholders, members, partners, employees,
representatives or agents of any Regular Trustee or any affiliate
thereof; or any officer, employee or agent of such Trust or its
affiliates (each, a "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 such Trust) by reason of the
fact that he is or was a Debenture Issuer Indemnified Person
against expenses (including attorney fees), 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 such 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 such Trust, and, with respect to any
criminal action or proceeding, had reasonable cause to believe
that his conduct was unlawful. The Declaration of each Trust
also provides that Sovereign Bancorp shall indemnify, to the full
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) 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
<PAGE 2> 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. The Declaration of each Trust further provides that
expenses (including attorneys' fees) incurred by a Debenture
Issuer Indemnified Person in defending a civil, criminal,
administrative or investigative action, suit or proceeding
referred to in the immediately preceding two sentences shall be
paid by Sovereign Bancorp in advance of the final disposition of
such action, suit or proceeding upon 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 Sovereign Bancorp as authorized in
the Declaration.
Any underwriting agreement or agency agreement with
respect
to an offering of securities registered hereunder will provide
for indemnification of Sovereign Bancorp and its officers and
directors and the Trustees who signed this Registration Statement
by the underwriters or agents, as the case may be, against
certain liabilities including liabilities under the Securities
Act of 1933 (the "Act").
Item 16. Exhibits.
The Exhibit Index beginning on page E-1 is hereby
incorporated by reference.
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers
or
sales are being made, a post-effective amendment to this
Registration Statement: (i) to include any prospectus
required by Section 10(a)(3) of the Securities Act of
1933;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate,
represent
a fundamental change in the information set forth in the
Registration Statement; and (iii) to include any material
information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any
material change to such information in the Registration
Statement; provided, however, that the undertakings in
clauses (i) and (ii) shall not apply if the information
required to be included in a post-effective amendment by
those clauses is contained in periodic reports filed by
the
registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by
reference in this Registration Statement. <PAGE 3>
(2) That, for the purpose of determining any
liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration
statement
relating to the securities offered therein, and the
offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a
post-
effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(4) That, for purposes of determining any
liability
under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 that
is
incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement
relating
to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
(5) For purposes of determining any liability
under
the Securities Act of 1933, the information omitted from
the
form of prospectus filed as part of this registration
statement in reliance upon Rule 430A and contained in a
form
of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of this registration statement
as
of the time it was declared effective.
(6) For the purpose of determining any liability
under
the Securities Act of 1933, each post-effective amendment
that contains a form of prospectus shall be deemed to be a
new registration statement relating to the securities
offered therein, and the offering of such securities at
that
time shall be deemed to be the initial bona fide offering
thereof.
(7) To file an application for the purpose of
determining the eligibility of the trustee to act under
Subsection (a) of Section 310 of the Trust Indenture Act
of
1939 in accordance with the rules and regulations
prescribed
by the Commission under Section 305(b)(2) of the Trust
Indenture Act of 1939.
Insofar as indemnification for liabilities arising under
the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
provisions described under Item 15 above or otherwise, the
registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
<PAGE 4> by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted
against the registrant by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
<PAGE 5>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on
Form S-3 and that it has duly caused this Pre-Effective Amendment
No. 1 to Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Borough of
Wyomissing, Commonwealth of Pennsylvania, on September 17,
1999.
SOVEREIGN BANCORP,
INC.
By/s/ Jay S. Sidhu
Jay S. Sidhu,
President and
Chief Executive
Officer
Pursuant to the requirements of the Securities Act of
1933, this Pre-Effective Amendment No. I to Registration
Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title
/s/ Richard E. Mohn* Chairman of the September 17, 1999
Richard E. Mohn Board and Director
/s/ Jay S. Sidhu President, Chief September 17, 1999
Jay S. Sidhu Executive Officer
and Director
/s/ Rhoda S. Oberholtzer* Director September 17, 1999
Rhoda S. Oberholtzer
/s/ Patrick J. Petrone* Director September 17, 1999
Patrick J. Petrone
Director September 17, 1999
Daniel K. Rothermel
/s/ Cameron C. Troilo* Director September 17, 1999
Cameron C. Troilo
/s/ G. Arthur Weaver* Director September 17, 1999
G. Arthur Weaver
/s/ Dennis S. Marlo Chief Financial September 17, 1999
Dennis S. Marlo Officer
/s/ Mark R. McCollom Chief Accounting September 17, 1999
Mark R. McCollom Officer
<PAGE 6>
*By /s/ Jay S. Sidhu
Attorney-in-Fact
<PAGE 7>
Pursuant to the requirements of the Securities Act of
1933, Sovereign Capital Trust II certifies that it has reasonable
grounds to believe that it meets all the requirements for filing
on Form S-3 and has duly caused this Pre-Effective Amendment
No. 1 to Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Borough of
Wyomissing, and Commonwealth of Pennsylvania, on September 17,
1999.
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Mark R.
McCollom, Jacquelyn Blue or Joseph M. Harenza, and each of them,
his true and lawful attorney-in-fact, as agent with full power of
substitution and resubstitution of him and in his name, place and
stead, in any and all capacity, to sign any or all amendments to
this Registration Statement and to file the same, with all
exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto such
attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to
be done in and about the premises, as fully and to all intents
and purposes as they might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and
agents, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
SOVEREIGN CAPITAL
TRUST II
By:/s/ Jacquelyn Blue
Jacquelyn Blue
as Trustee
By:/s/ Mark R.
McCollom
Mark R.
McCollom
as Trustee
<PAGE 8>
Pursuant to the requirements of the Securities Act of
1933, Sovereign Capital Trust III certifies that it has
reasonable grounds to believe that it meets all the requirements
for filing on Form S-3 and has duly caused this Pre-Effective
Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the
Borough of Wyomissing, and Commonwealth of Pennsylvania, on
September 17, 1999.
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Mark R.
McCollom, Jacquelyn Blue or Joseph M. Harenza, and each of them,
his true and lawful attorney-in-fact, as agent with full power of
substitution and resubstitution of him and in his name, place and
stead, in any and all capacity, to sign any or all amendments to
this Registration Statement and to file the same, with all
exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto such
attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to
be done in and about the premises, as fully and to all intents
and purposes as they might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and
agents, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
SOVEREIGN CAPITAL
TRUST III
By:/s/ Jacquelyn Blue
Jacquelyn Blue
as Trustee
By:/s/ Mark R.
McCollom
Mark R.
McCollom
as Trustee
<PAGE 9>
Pursuant to the requirements of the Securities Act of
1933, Sovereign Capital Trust IV certifies that it has reasonable
grounds to believe that it meets all the requirements for filing
on Form S-3 and has duly caused this Pre-Effective Amendment
No. 1 to Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Borough of
Wyomissing, and Commonwealth of Pennsylvania, on September 17,
1999.
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Mark R.
McCollom, Jacquelyn Blue or Joseph M. Harenza, and each of them,
his true and lawful attorney-in-fact, as agent with full power of
substitution and resubstitution of him and in his name, place and
stead, in any and all capacity, to sign any or all amendments to
this Registration Statement and to file the same, with all
exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto such
attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to
be done in and about the premises, as fully and to all intents
and purposes as they might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and
agents, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
SOVEREIGN CAPITAL
TRUST IV
By:/s/ Jacquelyn Blue
Jacquelyn Blue
as Trustee
By:/s/ Mark R.
McCollom
Mark R.
McCollom
as Trustee
<PAGE 10>
EXHIBIT INDEX
Number Description
1.1 Form of underwriting agreement (including delayed
delivery contract) for debt securities**
1.2 Form of underwriting agreement for preferred
stock**
1.3 Form of underwriting agreement for depositary
shares**
1.4 Form of underwriting agreement for trust preferred
securities**
1.5 Form of underwriting agreement for common stock**
1.6 Form of underwriting agreement for warrants**
1.7 Form of underwriting agreement for stock purchase
contracts**
1.8 Form of underwriting agreement for stock purchase
units**
2.1 Purchase and Assumption Agreement dated September
3,
1999 by and among Fleet Financial Group, Inc.,
Fleet
National Bank, Fleet Bank-NH, BankBoston, N.A.,
Sovereign Bank and Sovereign Bancorp, Inc.
(Incorporated by reference to Exhibit 2.1 to
Sovereign
Bancorp's Current Report on Form 8-K, filed with
the
SEC on September 10, 1999)
2.2 Letter Agreement, dated September 3, 1999, by and
among
Fleet Financial Group, Inc., Fleet National Bank,
Fleet
Bank-NH, BankBoston, N.A., Sovereign Bank and
Sovereign
Bancorp, Inc. (Incorporated by reference to Exhibit
2.2
of Sovereign Bancorp's Current Report on Form 8-K
filed
with the SEC on September 10, 1999)
3.1 Amended and Restated provisions of Articles of
Incorporation of Sovereign Bancorp, Inc.***
3.2 Bylaws of Sovereign Bancorp, Inc. (Incorporated by
reference to Exhibit 3.2 to Sovereign Bancorp's
Annual
Report on Form 10-K for the year ended December 31,
1998)
4.1 Subordinated Trust Indenture dated as of February
1,
1994, between Sovereign Bancorp, Inc. and Harris
Trust
and Savings Bank, as Trustee. (Incorporated by
reference to Exhibit 4.1 to Sovereign Bancorp's
Registration Statement No. 33-75472 on Form S-3.)
<PAGE E-1>
4.2 Senior Trust Indenture dated as of February 1,
1994,
between Sovereign Bancorp, Inc. and Harris Trust
and
Savings Bank, as Trustee. (Incorporated by
reference
to Exhibit 4.2 to Sovereign Bancorp's Registration
Statement No. 33-75472 on Form S-3.)
4.3 Form of Junior Subordinated Indenture between
Sovereign
Bancorp, Inc. and Harris Trust and Savings Bank
relating to junior subordinated securities.
4.8 Rights Agreement, dated September 19, 1989, between
Sovereign Bancorp, Inc. and Harris Trust
Corporation of
New York. (Incorporated by reference to Exhibit 4
to
Sovereign Bancorp's Current Report on Form 8-K
dated
October 12, 1989).
4.9 Form of Debt Warrant Agreement (including form of
Debt
Warrant certificate).**
4.10 Form of Preferred Stock Warrant Agreement
(including
form of Preferred Stock Warrant certificate).**
4.11 Form of Common Stock Warrant Agreement (including
form
of Common Stock Warrant certificate).**
4.12 Sovereign Bancorp, Inc. has outstanding certain
long-
term debt. None of such debt exceeds 10% of the
total
assets of Sovereign Bancorp, Inc. and its
consolidated
subsidiaries; therefore, copies of the constituent
instruments defining the rights of the holders of
such
debt are not included as exhibits to this
Registration
Statement. Sovereign Bancorp, Inc. agrees to
furnish
copies of such instruments to the Commission upon
request.
4.13 Amendment to Rights Agreement dated as of September
27,
1995, between Sovereign Bancorp, Inc. and Chemical
Bank, as successor to Harris Trust Company of New
York,
as Rights Agent (Incorporated by reference to
Exhibit 4.1 to Sovereign Bancorp's Current Report
on
Form 8-K/A No. 1 dated January 8, 1996).
4.14 Statement with Respect to Shares for the offered
preferred stock
- Upon issuance of any such stock, will be filed as
an
Exhibit to a Current Report on Form 8-K and thereby
incorporated by reference**
4.15 Form of deposit agreement with respect to the
depositary shares (including the form of depositary
receipt to be issued thereunder)**
<PAGE E-2>
4.16 Certificate of Trust for Sovereign Capital Trust II
4.17 Declaration of Trust for Sovereign Capital Trust II
4.18 Form of Amended and Restated Declaration of Trust
for
Sovereign Capital Trust II (including the forms of
preferred security and common security to be issued
thereunder)
4.19 Form of Guarantee with respect to the preferred
securities of Sovereign Capital Trust II
4.20 Certificate of Trust for Sovereign Capital Trust
III
4.21 Declaration of Trust for Sovereign Capital Trust
III
4.22 Form of Amended and Restated Declaration of Trust
for
Sovereign Capital Trust III (including the forms of
preferred security and common security to be issued
thereunder).
4.23 Form of Guarantee with respect to the preferred
securities of Sovereign Capital Trust III.
4.24 Certificate of Trust for Sovereign Capital Trust IV
4.25 Declaration of Trust for Sovereign Capital Trust IV
4.26 Form of Amended and Restated Declaration of Trust
for
Sovereign Capital Trust IV (including the forms of
preferred security and common security to be issued
thereunder).
4.27 Form of Guarantee with respect to the preferred
securities of Sovereign Capital Trust IV.
5.1 Opinion and Consent of Stevens & Lee as to the
legality
of the common stock, preferred stock, debt
securities,
depositary shares, warrants, stock purchase
contracts
and stock purchase units being registered.
5.2 Opinion and consent of Richards, Layton & Finger as
to
the validity of the trust preferred securities
being
registered*
12.1 Computation of Ratios of Earnings to Fixed Charges
and
Combined Fixed Charges and Preferred Stock
Dividends.***
23.1 Consent of Ernst & Young LLP.***
23.2 Consent of KPMG LLP.***
23.3 Consent of KPMG LLP.*** <PAGE E-3>
23.4 Consent of KPMG LLP.***
23.5 Consent of PricewaterhouseCoopers LLP.***
23.6 Consent of Arthur Andersen LLP.***
23.7 Consent of Stevens & Lee (included in Exhibit 5.1).
23.8 Consent of Richards, Layton & Finger (included in
Exhibit 5.2 above)*
24.1 Powers of Attorney of Directors and Officers
(included
on signature page).***
25.1 Form T-1 of Harris Trust and Savings Bank as
trustee
under the Subordinated Trust Indenture***
25.2 Form T-1 of Harris Trust and Savings Bank as
trustee
under the Senior Trust Indenture***
25.3 Form T-1 of The Bank of New York as trustee under
the
amended and restated declaration of trust of
Sovereign
Capital Trust II
25.4 Form T-1 of The Bank of New York as trustee under
the
amended and restated declaration of trust of
Sovereign
Capital Trust III
25.5 Form T-1 of The Bank of New York as trustee under
the
amended and restated declaration of trust of
Sovereign
Capital Trust IV
25.6 Form T-1 of The Bank of New York as trustee under
the
guarantee for the benefit of holders of trust
preferred
securities of Sovereign Capital Trust II
25.7 Form T-1 of The Bank of New York as trustee under
the
guarantee for the benefit of holders of trust
preferred
securities of Sovereign Capital Trust III
25.8 Form T-1 of The Bank of New York as trustee under
the
guarantee for the benefit of holders of trust
preferred
securities of Sovereign Capital Trust IV
25.9 Form T-1 of Harris Trust and Savings Bank as
trustee
under Junior Subordinated Indenture
- ---------------------------
* To be filed by amendment
** To be incorporated by reference herein in connection with the
offering of each applicable class of securities.
***Previously Filed. <PAGE E-4>