Exhibit 4.18
AMENDED AND RESTATED DECLARATION
OF TRUST
SOVEREIGN CAPITAL TRUST II
Dated as of _______________
TABLE OF CONTENTS
Page
ARTICLE I
INTERPRETATION AND DEFINITIONS
Section 1.1 Definitions......... 3
ARTICLE II
TRUST INDENTURE ACT
Section 2.1 Trust Indenture Act; Application............... 15
Section 2.2 Lists of Holders of Securities................. 16
Section 2.3 Reports by the Property Trustee................ 17
Section 2.4 Periodic Reports to Property Trustee........... 17
Section 2.5 Evidence of Compliance with Conditions
Precedent...................................... 17
Section 2.6 Events of Default; Waiver...................... 18
Section 2.7 Event of Default; Notice....................... 21
ARTICLE III
ORGANIZATION
Section 3.1 Name........................................... 22
Section 3.2 Office......................................... 23
Section 3.3 Purpose........................................ 23
Section 3.4 Authority...................................... 23
Section 3.5 Title to Property of the Trust................. 24
Section 3.6 Powers and Duties of the Administrative
Trustees....................................... 24
Section 3.7 Prohibition of Actions by the Trust and the
Trustees....................................... 30
Section 3.8 Powers and Duties of the Property Trustee...... 31
Section 3.9 Certain Duties and Responsibilities of the
Property Trustee............................... 36
Section 3.10 Certain Rights of Property Trustee............. 39
Section 3.11 Delaware Trustee............................... 43
Section 3.12 Execution of Documents......................... 44
Section 3.13 Not Responsible for Recitals or Issuance of
Securities..................................... 44
Section 3.14 Duration of Trust.............................. 44
Section 3.15 Mergers........................................ 45
ARTICLE IV
SPONSOR
Section 4.1 Sponsor's Purchase of Common Securities........ 48
Section 4.2 Responsibilities of the Sponsor................ 48
Section 4.3 Right to Proceed............................... 49
ARTICLE V
TRUSTEES
Section 5.1 Number of Trustees: Appointment of Co-
Trustee........................................ 50
Section 5.2 Delaware Trustee............................... 51
Section 5.3 Property Trustee; Eligibility.................. 52
Section 5.4 Certain Qualifications of Administrative Trustees
and Delaware Trustee Generally................. 54
Section 5.5 Administrative Trustees........................ 54
Section 5.6 Delaware Trustee............................... 55
Section 5.7 Appointment, Removal and Resignation of
Trustees....................................... 55
Section 5.8 Vacancies among Trustees....................... 58
Section 5.9 Effect of Vacancies............................ 59
Section 5.10 Meetings....................................... 59
Section 5.11 Delegation of Power............................ 60
Section 5.12 Merger, Conversion, Consolidation or Succession to
Business....................................... 61
ARTICLE VI
DISTRIBUTIONS
Section 6.1 Distributions.................................. 61
ARTICLE VII
ISSUANCE OF SECURITIES
Section 7.1 General Provisions Regarding Securities........ 62
Section 7.2 Execution and Authentication................... 63
Section 7.3 Form and Dating................................ 64
Section 7.4 Registrar, Paying Agent and Exchange
Agent.......................................... 67
Section 7.5 Paying Agent to Hold Money in Trust............ 68
Section 7.6 Replacement Securities......................... 69
Section 7.7 Outstanding Capital Securities................. 69
Section 7.8 Capital Securities in Treasury................. 70
Section 7.9 Temporary Securities........................... 70
Section 7.10 Cancellation................................... 72
ARTICLE VIII
TERMINATION OF TRUST
Section 8.1 Termination of Trust........................... 73
ARTICLE IX
TRANSFER OF INTERESTS
Section 9.1 Transfer of Securities......................... 75
Section 9.2 Transfer Procedures and Restrictions........... 77
Section 9.3 Deemed Security Holders........................ 84
Section 9.4 Book Entry Interests........................... 85
Section 9.5 Notices to Clearing Agency..................... 86
Section 9.6 Appointment of Successor Clearing Agency....... 86
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
Section 10.1 Liability...................................... 87
Section 10.2 Exculpation.................................... 88
Section 10.3 Fiduciary Duty................................. 89
Section 10.4 Indemnification................................ 90
Section 10.5 Outside Businesses............................. 96
ARTICLE XI
ACCOUNTING
Section 11.1 Fiscal Year.................................... 97
Section 11.2 Certain Accounting Matters..................... 97
Section 11.3 Banking........................................ 98
Section 11.4 Withholding.................................... 99
ARTICLE XII
AMENDMENTS AND MEETINGS
Section 12.1 Amendments.....................................100
Section 12.2 Meetings of the Holders; Action by Written
Consent........................................103
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
Section 13.1 Representations and Warranties of Property
Trustee........................................106
Section 13.2 Representations and Warranties of Delaware
Trustee........................................107
ARTICLE XIV
REGISTRATION RIGHTS
Section 14.1 Registration Rights Agreement..................108
ARTICLE XV
MISCELLANEOUS
Section 15.1 Notices........................................109
Section 15.2 Governing Law..................................111
Section 15.3 Intention of the Parties.......................111
Section 15.4 Headings.......................................111
Section 15.5 Successors and Assigns.........................111
Section 15.6 Partial Enforceability.........................112
Section 15.7 Counterparts...................................112
ANNEX I TERMS OF SECURITIES.......................I-1
EXHIBIT A-1 FORM OF CAPITAL SECURITY CERTIFICATE.... A1-1
EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE..... A2-1
CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act Section of
of 1939, as amended Trust Agreement
310(a)........................................... 5.3
310(b)........................................... 5.3(c); 5.3(d)
311(a)........................................... 2.2(b)
311(b)........................................... 2.2(b)
312(a)........................................... 2.2(a)
312(b)........................................... 2.2(b)
313.............................................. 2.3
314(a)........................................... 2.4; 3.6(j)
314(c)........................................... 2.5
315(a)........................................... 3.9
315(b)........................................... 2.7(a)
315(c)........................................... 3.9(a)
315(d)........................................... 3.9(b)
316(a)........................................... 2.6
316(c)........................................... 3.6(e)
317(a)........................................... 3.8(e); 3.8(h)
317(b)........................................... 3.8(i); 7.5
_______________
* This Cross-Reference Table does not constitute part of the
Trust Agreement and shall not affect the interpretation of
any of its terms or provisions.
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
SOVEREIGN CAPITAL TRUST II
_________________, [1999] [2000]
AMENDED AND RESTATED DECLARATION OF TRUST ("Trust
Agreement") dated and effective as of ____________________, by
the Trustees (as defined herein), the Sponsor (as defined
herein) and by the holders, from time to time, of undivided
beneficial interests in the Trust to be issued pursuant to this
Trust Agreement;
WHEREAS, the Trustees and the Sponsor established
Sovereign Capital Trust II (the "Trust"), a trust formed under
the Delaware Business Trust Act pursuant to a Declaration of
Trust dated as of September 8, 1999 (the "Original Declaration"),
and a Certificate of Trust filed with the Secretary of State of
the State of Delaware on September 10, 1999, for the sole purpose
of issuing and selling certain securities representing undivided
beneficial interests in the assets of the Trust and investing the
proceeds thereof in certain Debentures of the Debenture Issuer
(each as hereinafter defined), and engaging in only those other
activities necessary, advisable or incidental thereto;
WHEREAS, as of the date hereof, no interests in the
Trust have been issued;
WHEREAS, all of the Trustees and the Sponsor, by this
Trust Agreement, amend and restate each and every term and
provision of the Original Declaration; and
NOW, THEREFORE, it being the intention of the parties
hereto to continue the Trust as a statutory business trust under
the Business Trust Act and that this Trust Agreement constitute
the governing instrument of such business trust, the Trustees
declare that all assets contributed to the Trust will be held in
trust for the benefit of the holders, from time to time, of the
securities representing undivided beneficial interests in the
assets of the Trust issued hereunder, subject to the provisions
of this Trust Agreement.
<PAGE 1>
ARTICLE I
INTERPRETATION AND DEFINITIONS
Section 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Trust Agreement but
not defined in the preamble above have the respective
meanings assigned to them in this Section 1.1;
(b) a term defined anywhere in this Trust Agreement
has the same meaning throughout;
(c) all references to "the Trust Agreement" or "this
Trust Agreement" are to this Trust Agreement as modified,
supplemented or amended from time to time;
(d) all references in this Trust Agreement to Articles
and Sections and Annexes and Exhibits are to Articles and
Sections of and Annexes and Exhibits to this Trust Agreement
unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the
same meaning when used in this Trust Agreement unless
otherwise defined in this Trust Agreement or unless the
context otherwise requires; and
(f) a reference to the singular includes the plural
and vice versa.
"Administrative Trustee" has the meaning set forth in
Section 5.1.
"Affiliate" has the same meaning as given to that term
in Rule 405 under the Securities Act or any successor rule
thereunder.
"Agent" means any Paying Agent, Registrar or Exchange
Agent.
"Authorized Officer" of a Person means any other Person
that is authorized to legally bind such former Person.
"Book Entry Interest" means a beneficial interest in a
Global Certificate registered in the name of a Clearing Agency or
its nominee, ownership and transfers of which shall be maintained
and made through book entries by a Clearing Agency as described
in Section 9.4.
"Business Day" means any day other than a Saturday or a
Sunday or a day on which banking institutions in the City of New
<PAGE 2> York are authorized or required by law or executive
order to close.
"Business Trust Act" means Chapter 38 of Title 12 of
the Delaware Code, 12 Del. Code Section 3801 et seq., as it may
be amended from time to time, or any successor legislation.
"Capital Security Beneficial Owner" means, with respect
to a Book Entry Interest, a Person who is the beneficial owner of
such Book Entry Interest, as reflected on the books of the
Clearing Agency, or on the books of a Person maintaining an
account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
"Capital Securities" means the Series A Capital
Securities.
"Capital Securities Guarantee" means the Series A
Capital Securities Guarantee.
"Clearing Agency" means an organization registered as a
"Clearing Agency" pursuant to Section 17A of the Exchange Act
that is acting as depositary for the Capital Securities and in
whose name or in the name of a nominee of that organization shall
be registered a Global Certificate and which shall undertake to
effect book entry transfers and pledges of the Capital
Securities.
"Clearing Agency Participant" means a broker, dealer,
bank, other financial institution or other Person for whom from
time to time the Clearing Agency effects book entry transfers and
pledges of securities deposited with the Clearing Agency.
"Closing Time" means the "Closing Time" under the
Purchase Agreement.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time, or any successor legislation.
"Commission" means the United States Securities and
Exchange Commission as from time to time constituted, or if at
any time after the execution of this Trust Agreement such
Commission is not existing and performing the duties now assigned
to it under applicable Federal securities laws, then the body
performing such duties at such time.
"Common Securities" has the meaning specified in
Section 7.1(a).
"Company Indemnified Person" means (a) any
Administrative Trustee; (b) any Affiliate of any Administrative
Trustee; (c) any officers, directors, shareholders, members,
partners, employees, representatives or agents of any <PAGE 3>
Administrative Trustee; or (d) any officer, employee or agent of
the Trust or its Affiliates.
"Corporate Trust Office" means the office of the
Property Trustee at which the corporate trust business of the
Property Trustee shall, at any particular time, be principally
administered, which office at the date of execution of this
Agreement is located at 101 Barclay Street, 21 West, New York,
New York 10286.
"Covered Person" means: (a) any officer, director,
shareholder, partner, member, representative, employee or agent
of (i) the Trust or (ii) the Trust's Affiliates; and (b) any
Holder of Securities.
"Debenture Issuer" means Sovereign Bancorp, Inc., a
Pennsylvania corporation, or any successor entity resulting from
any consolidation, amalgamation, merger or other business
combination, in its capacity as issuer of the Debentures under
the Indenture.
"Debenture Trustee" means Harris Trust and Savings
Bank, an Illinois banking corporation, as trustee under the
Indenture until a successor is appointed thereunder, and
thereafter means such successor trustee.
"Debentures" means the Series A Debentures.
"Default" means an event, act or condition that with
notice or lapse of time, or both, would constitute an Event of
Default.
"Definitive Capital Securities" shall have the meaning
set forth in Section 7.3(c).
"Delaware Trustee" has the meaning set forth in
Section 5.2.
"Direct Action" shall have the meaning set forth in
Section 3.8(e).
"Distribution" means a distribution payable to Holders
in accordance with Section 6.1.
"DTC" means The Depository Trust Company, the initial
Clearing Agency.
"Event of Default" in respect of the Securities means
an Event of Default (as defined in the Indenture) that has
occurred and is continuing in respect of the Debentures.
"Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, or any successor legislation.
<PAGE 4>
"Exchange Agent" has the meaning set forth in
Section 7.4.
"Federal Reserve Board" means the Board of Governors of
the Federal Reserve System.
"Fiduciary Indemnified Person" has the meaning set
forth in Section 10.4(b).
"Fiscal Year" has the meaning set forth in
Section 11.1.
"Global Capital Security" has the meaning set forth in
Section 7.3(a).
"Holder" means a Person in whose name a Security is
registered, such Person being a beneficial owner within the
meaning of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person
or a Fiduciary Indemnified Person.
"Indenture" means the Indenture dated as of
September 1, 1999, among the Debenture Issuer and the Debenture
Trustee, as amended from time to time.
"Investment Company" means an investment company as
defined in the Investment Company Act.
"Investment Company Act" means the Investment Company
Act of 1940, as amended from time to time, or any successor
legislation.
"Legal Action" has the meaning set forth in
Section 3.6(g).
"List of Holders" has the meaning set forth in
Section 2.2(a).
"Majority in liquidation amount" means, with respect to
the Trust Securities, except as provided in the terms of the
Capital Securities or by the Trust Indenture Act, Holder(s) of
outstanding Trust Securities voting together as a single class
or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities voting
separately as a class, who are the record owners of more than 50%
of the aggregate liquidation amount (including the stated amount
that would be paid on redemption, liquidation or otherwise, plus
accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all outstanding Securities
of the relevant class.
"Prospectus" has the meaning set forth in
Section 3.6(b). <PAGE 5>
"Officers' Certificate" means, with respect to any
Person, a certificate signed by any two of the Chairman, a Vice
Chairman, the Chief Executive Officer, the President, a Vice
President, the Chief Financial Officer, the Treasurer, the
Comptroller, the Secretary, or an Assistant Secretary of such
Person. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this
Trust Agreement shall include:
(a) a statement that each officer signing the
Certificate has read the covenant or condition and the
definitions relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in
rendering the Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion,
is necessary to enable such officer to express an informed
opinion as to whether or not such covenant or condition has
been complied with; and
(d) a statement as to whether, in the opinion of each
such officer, such condition or covenant has been complied
with.
"Opinion of Counsel" means a written opinion of
counsel, who may be an employee of the Sponsor, and who shall be
acceptable to the Property Trustee.
"Paying Agent" has the meaning specified in
Section 7.4.
"Payment Amount" has the meaning specified in
Section 6.1.
"Person" means a legal person, including any
individual, corporation, estate, partnership, joint venture,
association, joint stock company, limited liability company,
trust, unincorporated association, or government or any agency or
political subdivision thereof, or any other entity of whatever
nature.
"PORTAL" has the meaning set forth in
Section 3.6(b)(iii).
"Property Trustee" has the meaning set forth in
Section 5.3(a).
"Property Trustee Account" has the meaning set forth in
Section 3.8(c).
<PAGE 6>
"QIBs" shall mean qualified institutional buyers as
defined in Rule 144A.
"Quorum" means a majority of the Administrative
Trustees or, if there are only two Administrative Trustees, both
of them.
"Registrar" has the meaning set forth in Section 7.4.
"Registration Statement" means the Registration
Statement on Form S-3 (333-86961-01) filed with the Commission.
"Related Party" means, with respect to the Sponsor, any
direct or indirect wholly owned subsidiary of the Sponsor or any
other Person that owns, directly or indirectly, 100% of the
outstanding voting securities of the Sponsor.
"Responsible Officer" means any officer within the
Corporate Trust Office of the Property Trustee, including any
vice-president, any assistant vice-president, any assistant
secretary, the treasurer, any assistant treasurer or other
officer of the Corporate Trust Office of the Property Trustee
customarily performing functions similar to those performed by
any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom
such matter is referred because of that officer's knowledge of
and familiarity with the particular subject.
"Rule 3a-5" means Rule 3a-5 under the Investment
Company Act, or any successor rule or regulation.
"Rule 144" means Rule 144 under the Securities Act, as
such rule may be amended from time to time, or any similar rule
or regulation hereafter adopted by the Commission.
"Rule 144A" means Rule 144A under the Securities Act,
as such rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission.
"Securities" or "Trust Securities" means the Common
Securities and the outstanding Capital Securities.
"Securities Act" means the Securities Act of 1933, as
amended from time to time, or any successor legislation.
"Securities Guarantee" means the Capital Securities
Guarantee.
"Series A Capital Securities" has the meaning specified
in Section 7.1(a).
"Series A Capital Securities Guarantee" means the
guarantee agreement dated as of ___________________, by the
Sponsor in respect of the Series A Capital Securities. <PAGE 7>
"Series A Debentures" means the Series A ______% Junior
Subordinated Deferrable Interest Debentures due
_____________________ of the Debenture Issuer issued pursuant to
the Indenture.
"Special Event" has the meaning set forth in Annex I
hereto.
"Sponsor" means Sovereign Bancorp, Inc., a Pennsylvania
corporation, or any successor entity resulting from any merger,
consolidation, amalgamation or other business combination, in its
capacity as sponsor of the Trust.
"Successor Entity" has the meaning set forth in
Section 3.15(b)(i).
"Super Majority" has the meaning set forth in
Section 2.6(a)(ii).
"10% in liquidation amount" means, with respect to the
Trust Securities, except as provided in the terms of the Capital
Securities or by the Trust Indenture Act, Holder(s) of
outstanding Trust Securities voting together as a single class
or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities voting
separately as a class, who are the record owners of 10% or more
of the aggregate liquidation amount (including the stated amount
that would be paid on redemption, liquidation or otherwise, plus
accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all outstanding Securities
of the relevant class.
"Treasury Regulations" means the income tax
regulations, including temporary and proposed regulations,
promulgated under the Code by the United States Treasury, as such
regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has
signed this Trust Agreement as a trustee, so long as such Person
shall continue in office in accordance with the terms hereof, and
all other Persons who may from time to time be duly appointed,
qualified and serving as trustees in accordance with the
provisions hereof, and references herein to a Trustee or the
Trustees shall refer to such Person or Persons solely in their
capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of
1939, as amended from time to time, or any successor legislation.
"Underwriting Agreement" means any underwriting or
placement agreement for the initial offering and sale of Capital
Securities.
<PAGE 8>
"Unrestricted Global Capital Security" has the meaning
set forth in Section 9.2(a).
ARTICLE II
TRUST INDENTURE ACT
Section 2.1 Trust Indenture Act; Application.
(a) This Trust Agreement is subject to the provisions
of the Trust Indenture Act that are required to be part of this
Trust Agreement in order for this Trust Agreement to be qualified
under the Trust Indenture Act and shall, to the extent
applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee
which is a Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this
Trust Agreement limits, qualifies or conflicts with the duties
imposed by Sections 310 to 317, inclusive, of the Trust Indenture
Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this
Trust Agreement shall not affect the nature of the Securities as
equity securities representing undivided beneficial interests in
the assets of the Trust.
Section 2.2 Lists of Holders of Securities.
(a) Each of the Sponsor and the Administrative
Trustees on behalf of the Trust shall provide the Property
Trustee, unless the Property Trustee is Registrar for the
Securities (i) within 14 days after each record date for payment
of Distributions, a list, in such form as the Property Trustee
may reasonably require, of the names and addresses of the Holders
("List of Holders") as of such record date, provided that neither
the Sponsor nor the Administrative Trustees on behalf of the
Trust shall be obligated to provide such List of Holders at any
time the List of Holders does not differ from the most recent
List of Holders given to the Property Trustee by the Sponsor and
the Administrative Trustees on behalf of the Trust, and (ii) at
any other time, within 30 days of receipt by the Trust of a
written request for a List of Holders as of a date no more than
14 days before such List of Holders is given to the Property
Trustee. The Property Trustee shall preserve, in as current a
form as is reasonably practicable, all information contained in
Lists of Holders given to it or which it receives in the capacity
as Paying Agent (if acting in such capacity), provided that the
Property Trustee may destroy any List of Holders previously given
to it on receipt of a new List of Holders.
(b) The Property Trustee shall comply with its
obligations under Sections 311(a), 311(b) and 312(b) of the Trust
Indenture Act. <PAGE 9>
Section 2.3 Reports by the Property Trustee.
Within 60 days after January 15 of each year,
commencing January 15, ____, the Property Trustee shall provide
to the Holders of the Capital Securities such reports as are
required by Section 313 of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust
Indenture Act. The Property Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
Section 2.4 Periodic Reports to Property Trustee.
Each of the Sponsor and the Administrative Trustees on
behalf of the Trust shall provide to the Property Trustee such
documents, reports and information as are required by Section 314
(if any) and the compliance certificate required by Section 314
of the Trust Indenture Act in the form, in the manner and at the
times required by Section 314 of the Trust Indenture Act.
Section 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Administrative Trustees on
behalf of the Trust shall provide to the Property Trustee such
evidence of compliance with any conditions precedent provided for
in this Trust Agreement that relate to any of the matters set
forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer
pursuant to Section 314(c)(1) of the Trust Indenture Act may be
given in the form of an Officers' Certificate.
Section 2.6 Events of Default; Waiver.
(a) The Holders of a Majority in liquidation amount of
Capital Securities may, by vote or written consent, on behalf of
the Holders of all of the Capital Securities, waive any past
Event of Default in respect of the Capital Securities and its
consequences, provided that, if the underlying Event of Default
under the Indenture:
(i) is not waivable under the Indenture, the
Event of Default under the Trust Agreement shall also not be
waivable; or
(ii) requires the consent or vote of greater than
a majority in aggregate principal amount of the holders of
the Debentures (a "Super Majority") to be waived under the
Indenture, the Event of Default under the Trust Agreement
may only be waived by the vote of the Holders of at least
the proportion in aggregate liquidation amount of the
Capital Securities that the relevant Super Majority
represents of the aggregate principal amount of the
Debentures outstanding.
<PAGE 10>
The foregoing provisions of this Section 2.6(a) shall be in lieu
of Section 316(a)(1)(B) of the Trust Indenture Act and such
Section 316(a)(1)(B) of the Trust Indenture Act is hereby
expressly excluded from this Trust Agreement and the Securities,
as permitted by the Trust Indenture Act. Upon such waiver, any
such default shall cease to exist, and any Event of Default with
respect to the Capital Securities arising therefrom shall be
deemed to have been cured, for every purpose of this Trust
Agreement, but no such waiver shall extend to any subsequent or
other default or an Event of Default with respect to the Capital
Securities or impair any right consequent thereon. Any waiver by
the Holders of the Capital Securities of an Event of Default with
respect to the Capital Securities shall also be deemed to
constitute a waiver by the Holders of the Common Securities of
any such Event of Default with respect to the Common Securities
for all purposes of this Trust Agreement without any further act,
vote, or consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of
the Common Securities may, by vote, on behalf of the Holders of
all of the Common Securities, waive any past Event of Default
with respect to the Common Securities and its consequences,
provided that, if the underlying Event of Default under the
Indenture:
(i) is not waivable under the Indenture, except
where the Holders of the Common Securities are deemed to
have waived such Event of Default under the Trust Agreement
as provided below in this Section 2.6(b), the Event of
Default under the Trust Agreement shall also not be
waivable; or
(ii) requires the consent or vote of a Super
Majority to be waived, except where the Holders of the
Common Securities are deemed to have waived such Event of
Default under the Trust Agreement as provided below in this
Section 2.6(b), the Event of Default under the Trust
Agreement may only be waived by the vote of the Holders of
at least the proportion in aggregate liquidation amount of
the Common Securities that the relevant Super Majority
represents of the aggregate principal amount of the
Debentures outstanding;
provided further, the Holders of Common Securities will be deemed
to have waived any such Event of Default and all Events of
Default with respect to the Common Securities and its
consequences if all Events of Default with respect to the Capital
Securities have been cured, waived or otherwise eliminated, and
until such Events of Default have been so cured, waived or
otherwise eliminated, the Property Trustee will be deemed to be
acting solely on behalf of the Holders of the Capital Securities
and only the Holders of the Capital Securities will have the
right to direct the Property Trustee in accordance with the terms
of the Securities. The foregoing provisions of this <PAGE 11>
Section 2.6(b) shall be in lieu of Section 316(a)(1)(A) and
316(a)(1)(B) of the Trust Indenture Act and such
Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act
are hereby expressly excluded from this Trust Agreement and the
Securities, as permitted by the Trust Indenture Act. Subject to
the foregoing provisions of this Section 2.6(b), upon such
waiver, any such default shall cease to exist and any Event of
Default with respect to the Common Securities arising therefrom
shall be deemed to have been cured for every purpose of this
Trust Agreement, but no such waiver shall extend to any
subsequent or other default or Event of Default with respect to
the Common Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the
Indenture by the Property Trustee, at the direction of the
Holders of the Capital Securities, constitutes a waiver of the
corresponding Event of Default under this Trust Agreement. The
foregoing provisions of this Section 2.6(c) shall be in lieu of
Section 316(a)(1)(B) of the Trust Indenture Act and such
Section 316(a)(1)(B) of the Trust Indenture Act is hereby
expressly excluded from this Trust Agreement and the Securities,
as permitted by the Trust Indenture Act.
Section 2.7 Event of Default; Notice.
(a) The Property Trustee shall, within 90 days after
the occurrence of an Event of Default, transmit by mail, first
class postage prepaid, to the Holders, notices of all defaults
with respect to the Securities actually known to a Responsible
Officer, unless such defaults have been cured before the giving
of such notice (the term "defaults" for the purposes of this
Section 2.7(a) being hereby defined to be an Event of Default as
defined in the Indenture, not including any periods of grace
provided for therein and irrespective of the giving of any notice
provided therein); provided that, except for a default in the
payment of principal of (or premium, if any) or interest on any
of the Debentures, the Property Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer
in good faith determines that the withholding of such notice is
in the interests of the Holders.
(b) The Property Trustee shall not be deemed to have
knowledge of any default except:
(i) a default under Sections 5.01(a) and 5.01(b)
of the Indenture; or
(ii) any default as to which the Property Trustee
shall have received written notice or of which a Responsible
Officer charged with the administration of the Trust
Agreement shall have actual knowledge.
(c) Within five Business Days after the occurrence of
any Event of Default actually known to the Property Trustee, the
<PAGE 12> Property Trustee shall transmit notice of such Event of
Default to the Holders of the Capital Securities, the
Administrative Trustees and the Sponsor, unless such Event of
Default shall have been cured or waived. The Sponsor and the
Administrative Trustees shall file annually with the Property
Trustee a certification as to whether or not they are in
compliance with all the conditions and covenants applicable to
them under this Trust Agreement.
ARTICLE III
ORGANIZATION
Section 3.1 Name.
The Trust is named "Sovereign Capital Trust II" as such
name may be modified from time to time by the Administrative
Trustees following written notice to the Holders. The Trust's
activities may be conducted under the name of the Trust or any
other name deemed advisable by the Administrative Trustees.
Section 3.2 Office.
The address of the principal office of the Trust is c/o
Sovereign Bancorp, Inc., 1130 Berkshire Boulevard, Wyomissing,
Pennsylvania 19610. On ten Business Days written notice to the
Holders of Securities, the Administrative Trustees may designate
another principal office.
Section 3.3 Purpose.
The exclusive purposes and functions of the Trust are
(a) to issue and sell Securities, (b) use the proceeds from the
sale of the Securities to acquire the Debentures, and (c) except
as otherwise limited herein, to engage in only those other
activities necessary, advisable or incidental thereto. The Trust
shall not borrow money, issue debt or reinvest proceeds derived
from investments, mortgage or pledge any of its assets, or
otherwise undertake (or permit to be undertaken) any activity
that would cause the Trust not to be classified for United States
federal income tax purposes as a grantor trust.
Section 3.4 Authority.
Subject to the limitations provided in this Trust
Agreement and to the specific duties of the Property Trustee, the
Administrative Trustees shall have exclusive and complete
authority to carry out the purposes of the Trust. An action
taken by the Administrative Trustees in accordance with their
powers shall constitute the act of and serve to bind the Trust
and an action taken by the Property Trustee on behalf of the
Trust in accordance with its powers shall constitute the act of
and serve to bind the Trust. In dealing with the Trustees acting
on behalf of the Trust, no Person shall be required to inquire
into the authority of the Trustees to bind the Trust. Persons
<PAGE 13> dealing with the Trust are entitled to rely
conclusively on the power and authority of the Trustees as set
forth in this Trust Agreement.
Section 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the
Debentures and the Property Trustee Account or as otherwise
provided in this Trust Agreement, legal title to all assets of
the Trust shall be vested in the Trust. The Holders shall not
have legal title to any part of the assets of the Trust, but
shall have an undivided beneficial interest in the assets of the
Trust.
Section 3.6 Powers and Duties of the Administrative Trustees.
The Administrative Trustees shall have the exclusive
power, duty and authority to cause the Trust to engage in the
following activities:
(a) to issue and sell the Securities in accordance
with this Trust Agreement; provided, however, that (i) the Trust
may issue no more than one series of Capital Securities and no
more than one series of Common Securities, (ii) there shall be no
interests in the Trust other than the Securities, and (iii) the
issuance of Securities shall be limited to a simultaneous
issuance of both the Capital Securities and Common Securities at
the Closing Time;
(b) in connection with the issue and sale of the
Capital Securities, at the direction of the Sponsor, to:
(i) prepare and execute, if necessary, a
prospectus and prospectus supplement (the "Prospectus") in
preliminary and final form prepared by the Sponsor, in
relation to the offering and sale of Series A Capital
Securities, and to execute and file with the Commission, at
such time as determined by the Sponsor, any Registration
Statement, including any amendments thereto;
(ii) execute and file any documents prepared by
the Sponsor, or take any acts as determined by the Sponsor
to be necessary in order to qualify or register all or part
of the Capital Securities in any State in which the Sponsor
has determined to qualify or register such Capital
Securities for sale;
(iii) execute and file an application, prepared
by the Sponsor, to permit the Capital Securities to trade or
be quoted or listed in or on the New York Stock Exchange or
any other securities exchange, quotation system or the
Nasdaq Stock Market's National Market;
<PAGE 14>
(iv) execute and deliver letters, documents, or
instruments with DTC and other Clearing Agencies relating to
the Capital Securities;
(v) if required, execute and file with the
Commission a registration statement on Form 8-A, including
any amendments thereto, prepared by the Sponsor, relating to
the registration of the Capital Securities under Section 12
of the Exchange Act; and
(vi) execute and enter into the Underwriting
Agreement providing for, among other things, the sale and
registration of the Capital Securities;
(c) to acquire the Series A Debentures with the
proceeds of the sale of the Series A Capital Securities and the
Common Securities; provided, however, that the Administrative
Trustees shall cause legal title to the Debentures to be held of
record in the name of the Property Trustee for the benefit of the
Holders;
(d) to give the Sponsor and the Property Trustee
prompt written notice of the occurrence of a Special Event;
(e) to establish a record date with respect to all
actions to be taken hereunder that require a record date be
established, including and with respect to, for the purposes of
Section 316(c) of the Trust Indenture Act, Distributions, voting
rights, redemptions and exchanges, and to issue relevant notices
to the Holders of Capital Securities and Holders of Common
Securities as to such actions and applicable record dates;
(f) to take all actions and perform such duties as may
be required of the Administrative Trustees pursuant to the terms
of the Securities;
(g) to bring or defend, pay, collect, compromise,
arbitrate, resort to legal action, or otherwise adjust claims or
demands of or against the Trust ("Legal Action"), unless pursuant
to Section 3.8(e) the Property Trustee has the exclusive power to
bring such Legal Action;
(h) to employ or otherwise engage employees and agents
(who may be designated as officers with titles) and managers,
contractors, advisors, and consultants and pay reasonable
compensation for such services;
(i) to cause the Trust to comply with the Trust's
obligations under the Trust Indenture Act;
(j) to give the certificate required by
Section 314(a)(4) of the Trust Indenture Act to the Property
Trustee, which certificate may be executed by any Administrative
Trustee; <PAGE 15>
(k) to incur expenses that are necessary or incidental
to carry out any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as,
Registrar and Exchange Agent for the Securities or to appoint a
Paying Agent for the Securities as provided in Section 7.4 except
for such time as such power to appoint a Paying Agent is vested
in the Property Trustee;
(m) to give prompt written notice to the Property
Trustee and to Holders of any notice received from the Debenture
Issuer of its election to defer payments of interest on the
Debentures by extending the interest payment period under the
Indenture;
(n) to take all action that may be necessary or
appropriate for the preservation and the continuation of the
Trust's valid existence, rights, franchises and privileges as a
statutory business trust under the laws of the State of Delaware
and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders or to
enable the Trust to effect the purposes for which the Trust was
created;
(o) to take any action, not inconsistent with this
Trust Agreement or with applicable law, that the Administrative
Trustees determine in their discretion to be necessary or
desirable in carrying out the activities of the Trust as set out
in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an
Investment Company required to be registered under the
Investment Company Act;
(ii) causing the Trust to be classified for
United States federal income tax purposes as a grantor
trust; and
(iii) cooperating with the Debenture Issuer to
ensure that the Debentures will be treated as indebtedness
of the Debenture Issuer for United States federal income tax
purposes;
(p) to take all action necessary to cause the Capital
Securities to be registered pursuant to an effective registration
statement under the Securities Act;
(q) to take all action necessary to cause all
applicable tax returns and tax information reports that are
required to be filed with respect to the Trust to be duly
prepared and filed by the Administrative Trustees, on behalf of
the Trust; and
<PAGE 16>
(r) to execute all documents or instruments, perform
all duties and powers, and do all things for and on behalf of the
Trust in all matters necessary or incidental to the foregoing.
The Administrative Trustees must exercise the powers
set forth in this Section 3.6 in a manner that is consistent with
the purposes and functions of the Trust set out in Section 3.3,
and the Administrative Trustees shall not take any action that is
inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.
Subject to this Section 3.6, the Administrative
Trustees shall have none of the powers or the authority of the
Property Trustee set forth in Section 3.8.
Any expenses incurred by the Administrative Trustees
pursuant to this Section 3.6 shall be reimbursed by the Debenture
Issuer.
Section 3.7 Prohibition of Actions by the Trust and the
Trustees.
(a) The Trust shall not, and the Trustees (including
the Property Trustee and the Delaware Trustee) shall not, engage
in any activity other than as required or authorized by this
Trust Agreement. The Trust shall not:
(i) invest any proceeds received by the Trust
from holding the Debentures, but shall distribute all such
proceeds to Holders pursuant to the terms of this Trust
Agreement and of the Securities;
(ii) acquire any assets other than as expressly
provided herein;
(iii) possess Trust property for other than a
Trust purpose;
(iv) make any loans or incur any indebtedness
other than loans represented by the Debentures;
(v) possess any power or otherwise act in such a
way as to vary the Trust assets or the terms of the
Securities in any way whatsoever;
(vi) issue any securities or other evidences of
beneficial ownership of, or beneficial interest in, the
Trust other than the Securities;
(vii) other than as provided in this Trust
Agreement or Annex I, (A) direct the time, method and place
of conducting any proceeding with respect to any remedy
available to the Debenture Trustee, or exercising any trust
or power conferred upon the Debenture Trustee with respect
<PAGE 17> to the Debentures, (B) waive any past default that
is waivable under the Indenture, or (C) exercise any right
to rescind or annul any declaration that the principal of
all the Debentures shall be due and payable; or
(viii) consent to any amendment, modification or
termination of the Indenture or the Debentures where such
consent shall be required unless the Trust shall have
received an opinion of a nationally recognized independent
tax counsel experienced in such matters to the effect that
such amendment, modification or termination will not cause
more than an insubstantial risk that for United States
federal income tax purposes the Trust will not be classified
as a grantor trust.
Section 3.8 Powers and Duties of the Property Trustee.
(a) The legal title to the Debentures shall be owned
by and held of record in the name of the Property Trustee in
trust for the benefit of the Holders. The right, title and
interest of the Property Trustee to the Debentures shall vest
automatically in each Person who may hereafter be appointed as
Property Trustee in accordance with Section 5.7. Such vesting
and cessation of title shall be effective whether or not
conveyancing documents with regard to the Debentures have been
executed and delivered.
(b) The Property Trustee shall not transfer its right,
title and interest in the Debentures to the Administrative
Trustees or to the Delaware Trustee (if the Property Trustee does
not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-
interest bearing trust account (the "Property Trustee
Account") in the name of and under the exclusive control of
the Property Trustee on behalf of the Holders and, upon the
receipt of payments of funds made in respect of the
Debentures held by the Property Trustee, deposit such funds
into the Property Trustee Account and make payments or cause
the Paying Agent to make payments to the Holders from the
Property Trustee Account in accordance with Section 6.1.
Funds in the Property Trustee Account shall be held
uninvested until disbursed in accordance with this Trust
Agreement. The Property Trustee Account shall be an account
that is maintained with a banking institution the rating on
whose long-term unsecured indebtedness by a "nationally
recognized statistical rating organization", as that term is
defined for purposes of Rule 436(g)(2) under the Securities
Act, is at least investment grade;
(ii) engage in such ministerial activities as
shall be necessary or appropriate to effect the redemption
<PAGE 18> of the Trust Securities to the extent the
Debentures are redeemed or mature; and
(iii) upon written notice of distribution issued
by the Administrative Trustees in accordance with the terms
of the Securities, engage in such ministerial activities as
shall be necessary or appropriate to effect the distribution
of the Debentures to Holders upon the occurrence of certain
events.
(d) The Property Trustee shall take all actions and
perform such duties as may be specifically required of the
Property Trustee pursuant to the terms of the Securities.
(e) Subject to Section 3.9(a), the Property Trustee
shall take any Legal Action which arises out of or in connection
with an Event of Default of which a Responsible Officer has
actual knowledge or the Property Trustee's duties and obligations
under this Trust Agreement or the Trust Indenture Act and if such
Property Trustee shall have failed to take such Legal Action, the
Holders of the Capital Securities may take such Legal Action, to
the same extent as if such Holders of Capital Securities held an
aggregate principal amount of Debentures equal to the aggregate
liquidation amount of such Capital Securities, without first
proceeding against the Property Trustee or the Trust; provided
however, that if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the
Debenture Issuer to pay the principal of or premium, if any, or
interest on the Debentures on the date such principal, premium,
if any, or interest is otherwise payable (or in the case of
redemption, on the redemption date), then a Holder of Capital
Securities may directly institute a proceeding for enforcement of
payment to such Holder of the principal of or premium, if any, or
interest on the Debentures having a principal amount equal to the
aggregate liquidation amount of the Capital Securities of such
Holder (a "Direct Action") on or after the respective due date
specified in the Debentures. In connection with such Direct
Action, the rights of the Holders of the Common Securities will
be subrogated to the rights of such Holder of Capital Securities
to the extent of any payment made by the Debenture Issuer to such
Holder of Capital Securities in such Direct Action. Except as
provided in the preceding sentences, the Holders of Capital
Securities will not be able to exercise directly any other remedy
available to the holders of the Debentures.
(f) The Property Trustee shall not resign as a Trustee
unless either:
(i) the Trust has been completely liquidated and
the proceeds of the liquidation distributed to the Holders
pursuant to the terms of the Securities; or
<PAGE 19>
(ii) a successor Property Trustee has been
appointed and has accepted that appointment in accordance
with Section 5.7 (a "Successor Property Trustee").
(g) The Property Trustee shall have the legal power to
exercise all of the rights, powers and privileges of a holder of
Debentures under the Indenture and, if an Event of Default
actually known to a Responsible Officer occurs and is continuing,
the Property Trustee shall, for the benefit of Holders, enforce
its rights as holder of the Debentures subject to the rights of
the Holders pursuant to the terms of such Securities.
(h) The Property Trustee shall be authorized to
undertake any actions set forth in Section 317(a) of the Trust
Indenture Act.
(i) For such time as the Property Trustee is the
Paying Agent, the Property Trustee may authorize one or more
Persons to act as additional Paying Agents and to pay
Distributions, redemption payments or liquidation payments on
behalf of the Trust with respect to all Securities and any such
Paying Agent shall comply with Section 317(b) of the Trust
Indenture Act. Any such additional Paying Agent may be removed
by the Property Trustee at any time the Property Trustee remains
as Paying Agent and a successor Paying Agent or additional Paying
Agents may be (but are not required to be) appointed at any time
by the Property Trustee while the Property Trustee is so acting
as Paying Agent.
(j) Subject to this Section 3.8, the Property Trustee
shall have none of the duties, liabilities, powers or the
authority of the Administrative Trustees set forth in
Section 3.6.
Notwithstanding anything expressed or implied to the
contrary in this Trust Agreement or any Annex or Exhibit hereto,
(i) the Property Trustee must exercise the powers set forth in
this Section 3.8 in a manner that is consistent with the purposes
and functions of the Trust set out in Section 3.3, and (ii) the
Property Trustee shall not take any action that is inconsistent
with the purposes and functions of the Trust set out in
Section 3.3.
Section 3.9 Certain Duties and Responsibilities of the
Property Trustee.
(a) The Property Trustee, before the occurrence of any
Event of Default and after the curing of all Events of Default
that may have occurred, shall undertake to perform only such
duties as are specifically set forth in this Trust Agreement and
in the Securities and no implied covenants shall be read into
this Trust Agreement against the Property Trustee. In case an
Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.6) of which a Responsible Officer has
<PAGE 20> actual knowledge, the Property Trustee shall exercise
such of the rights and powers vested in it by this Trust
Agreement, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(b) No provision of this Trust Agreement shall be
construed to relieve the Property Trustee from liability for its
own negligent action, its own negligent failure to act, or its
own willful misconduct, except that:
(i) prior to the occurrence of an Event of
Default and after the curing or waiving of all such Events
of Default that may have occurred:
(A) the duties and obligations of the
Property Trustee shall be determined solely by the
express provisions of this Trust Agreement and in the
Securities and the Property Trustee shall not be liable
except for the performance of such duties and
obligations as are specifically set forth in this Trust
Agreement and in the Securities, and no implied
covenants or obligations shall be read into this Trust
Agreement against the Property Trustee; and
(B) in the absence of bad faith on the part
of the Property Trustee, the Property Trustee may
conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein,
upon any certificates or opinions furnished to the
Property Trustee and conforming to the requirements of
this Trust Agreement; provided, however, that in the
case of any such certificates or opinions that by any
provision hereof are specifically required to be
furnished to the Property Trustee, the Property Trustee
shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this
Trust Agreement;
(ii) the Property Trustee shall not be liable for
any error of judgment made in good faith by a Responsible
Officer, unless it shall be proved that the Property Trustee
was negligent in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable
with respect to any action taken or omitted to be taken by
it in good faith in accordance with the direction of the
Holders of not less than a Majority in liquidation amount of
the Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the
Property Trustee, or exercising any trust or power conferred
upon the Property Trustee under this Trust Agreement;
<PAGE 21>
(iv) no provision of this Trust Agreement shall
require the Property Trustee to expend or risk its own funds
or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any
of its rights or powers, if it shall have reasonable grounds
for believing that the repayment of such funds or liability
is not reasonably assured to it under the terms of this
Trust Agreement or indemnity reasonably satisfactory to the
Property Trustee against such risk or liability is not
reasonably assured to it;
(v) the Property Trustee's sole duty with respect
to the custody, safe keeping and physical preservation of
the Debentures and the Property Trustee Account shall be to
deal with such property in a similar manner as the Property
Trustee deals with similar property for its own account,
subject to the protections and limitations on liability
afforded to the Property Trustee under this Trust Agreement
and the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or
liability for or with respect to the value, genuineness,
existence or sufficiency of the Debentures or the payment of
any taxes or assessments levied thereon or in connection
therewith;
(vii) the Property Trustee shall not be liable
for any interest on any money received by it except as it
may otherwise agree in writing with the Sponsor. Money held
by the Property Trustee need not be segregated from other
funds held by it except in relation to the Property Trustee
Account maintained by the Property Trustee pursuant to
Section 3.8(c)(i) and except to the extent otherwise
required by law; and
(viii) the Property Trustee shall not be
responsible for monitoring the compliance by the
Administrative Trustees or the Sponsor with their respective
duties under this Trust Agreement, nor shall the Property
Trustee be liable for any default or misconduct of the
Administrative Trustees or the Sponsor.
Section 3.10 Certain Rights of Property Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely
and shall be fully protected in acting or refraining from
acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be
genuine and to have been signed, sent or presented by the
proper party or parties; <PAGE 22>
(ii) any direction or act of the Sponsor or the
Administrative Trustees contemplated by this Trust Agreement
may be sufficiently evidenced by an Officers' Certificate;
(iii) whenever in the administration of this
Trust Agreement, the Property Trustee shall deem it
desirable that a matter be proved or established before
taking, suffering or omitting any action hereunder, the
Property Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on
its part, request and conclusively rely upon an Officers'
Certificate which, upon receipt of such request, shall be
promptly delivered by the Sponsor or the Administrative
Trustees;
(iv) the Property Trustee shall have no duty to
see to any recording, filing or registration of any
instrument (including any financing or continuation
statement or any filing under tax or securities laws) or any
rerecording, refiling or registration thereof;
(v) the Property Trustee may consult with counsel
or other experts of its selection and the advice or opinion
of such counsel and experts with respect to legal matters or
advice within the scope of such experts' area of expertise
shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such advice
or opinion, such counsel may be counsel to the Sponsor or
any of its Affiliates, and may include any of its employees.
The Property Trustee shall have the right at any time to
seek instructions concerning the administration of this
Trust Agreement from any court of competent jurisdiction;
(vi) the Property Trustee shall be under no
obligation to exercise any of the rights or powers vested in
it by this Trust Agreement at the request or direction of
any Holder, unless such Holder shall have provided to the
Property Trustee security and indemnity, reasonably
satisfactory to the Property Trustee, against the costs,
expenses (including reasonable attorneys' fees and expenses
and the expenses of the Property Trustee's agents, nominees
or custodians) and liabilities that might be incurred by it
in complying with such request or direction, including such
reasonable advances as may be requested by the Property
Trustee provided, that, nothing contained in this
Section 3.10(a)(vi) shall be taken to relieve the Property
Trustee, upon the occurrence of an Event of Default, of its
obligation to exercise the rights and powers vested in it by
this Trust Agreement;
:\APP the Property Trustee shall not be bound to
make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion,
<PAGE 23> report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Property Trustee, in its
discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit;
(viii) the Property Trustee may execute any of
the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents,
custodians, nominees or attorneys and the Property Trustee
shall not be responsible for any misconduct or negligence on
the part of any agent or attorney appointed with due care by
it hereunder;
(ix) any action taken by the Property Trustee or
its agents hereunder shall bind the Trust and the Holders,
and the signature of the Property Trustee or its agents
alone shall be sufficient and effective to perform any such
action and no third party shall be required to inquire as to
the authority of the Property Trustee to so act or as to its
compliance with any of the terms and provisions of this
Trust Agreement, both of which shall be conclusively
evidenced by the Property Trustee's or its agent's taking
such action;
(x) whenever in the administration of this Trust
Agreement the Property Trustee shall deem it desirable to
receive instructions with respect to enforcing any remedy or
right or taking any other action hereunder, the Property
Trustee (i) may request instructions from the Holders which
instructions may only be given by the Holders of the same
proportion in liquidation amount of the Securities as would
be entitled to direct the Property Trustee under the terms
of the Securities in respect of such remedy, right or
action, (ii) may refrain from enforcing such remedy or right
or taking such other action until such instructions are
received, and (iii) shall be protected in conclusively
relying on or acting in or accordance with such
instructions;
(xi) except as otherwise expressly provided by
this Trust Agreement, the Property Trustee shall not be
under any obligation to take any action that is
discretionary under the provisions of this Trust Agreement;
and
(xii) the Property Trustee shall not be liable
for any action taken, suffered, or omitted to be taken by it
in good faith, without negligence, and reasonably believed
by it to be authorized or within the discretion or rights or
powers conferred upon it by this Trust Agreement.
(b) No provision of this Trust Agreement shall be
deemed to impose any duty or obligation on the Property Trustee
<PAGE 24> to perform any act or acts or exercise any right,
power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the
Property Trustee shall be unqualified or incompetent in
accordance with applicable law, to perform any such act or acts,
or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Property Trustee
shall be construed to be a duty.
Section 3.11 Delaware Trustee.
Notwithstanding any other provision of this Trust
Agreement other than Section 5.2, the Delaware Trustee shall not
be entitled to exercise any powers, nor shall the Delaware
Trustee have any of the duties and responsibilities of the
Administrative Trustees or the Property Trustee described in this
Trust Agreement. Except as set forth in Section 5.2, the
Delaware Trustee shall be a Trustee for the sole and limited
purpose of fulfilling the requirements of Section 3807 of the
Business Trust Act.
Section 3.12 Execution of Documents.
Unless otherwise determined by the Administrative
Trustees, and except as otherwise required by the Business Trust
Act, a majority of the Administrative Trustees or, if there are
only two, any Administrative Trustee or, if there is only one,
such Administrative Trustee is authorized to execute on behalf of
the Trust any documents that the Administrative Trustees have the
power and authority to execute pursuant to Section 3.6; provided
that, the Registration Statements contemplated by the
Registration Rights Agreement and referred to in
Section 3.6(b)(i), including any amendments thereto, shall be
signed by all of the Administrative Trustees.
Section 3.13 Not Responsible for Recitals or Issuance of
Securities.
The recitals contained in this Trust Agreement and the
Securities shall be taken as the statements of the Sponsor, and
the Trustees do not assume any responsibility for their
correctness. The Trustees make no representations as to the
value or condition of the property of the Trust or any part
thereof. The Trustees make no representations as to the validity
or sufficiency of this Trust Agreement or the Securities.
Section 3.14 Duration of Trust.
The Trust, unless terminated pursuant to the provisions
of Article VIII hereof, shall have existence up to _____________.
Section 3.15 Mergers.
<PAGE 25>
(a) The Trust may not merge with or into, consolidate,
amalgamate, or be replaced by, or convey, transfer or lease its
properties and assets substantially as an entirety to any Person,
except as described in Section 3.15(b) and (c).
(b) The Trust may, at the request of the Sponsor, with
the consent of the Administrative Trustees or, if there are more
than two, a majority of the Administrative Trustees and without
the consent of the Holders, the Delaware Trustee or the Property
Trustee, merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and
assets as an entirety or substantially as an entirety to, a trust
organized as such under the laws of any State; provided that:
(i) such successor entity (the "Successor
Entity") either:
(A) expressly assumes all of the obligations
of the Trust under the Securities; or
(B) substitutes for the Securities other
securities having substantially the same terms as the
Securities (the "Successor Securities") so long as the
Successor Securities rank the same as the Securities
rank with respect to Distributions and payments upon
liquidation, redemption and otherwise;
(ii) the Sponsor expressly appoints a trustee of
the Successor Entity that possesses the same powers and
duties as the Property Trustee as the holder of the
Debentures;
(iii) the Successor Securities are listed, or any
Successor Securities will be listed upon notification of
issuance, on any national securities exchange or with
another organization on which the Capital Securities are
then listed or quoted;
(iv) if the Capital Securities (including any
Successor Securities) are rated by any nationally recognized
statistical rating organization prior to such transaction,
such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the Capital
Securities (including any Successor Securities), or if the
Debentures are so rated, the Debentures, to be downgraded by
any nationally recognized statistical rating organization;
(v) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of
the Holders (including the holders of any Successor
Securities) in any material respect (other than with respect
to any dilution of such Holders' interests in the new
entity); <PAGE 26>
(vi) such Successor Entity has a purpose
identical to that of the Trust;
(vii) prior to such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease,
the Sponsor has received an opinion of an independent
counsel to the Trust experienced in such matters to the
effect that:
(A) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or
lease does not adversely affect the rights, preferences
and privileges of the Holders (including the holders of
any Successor Securities) in any material respect
(other than with respect to any dilution of the
Holders' interest in the new entity); and
(B) following such merger, consolidation,
amalgamation, replacement, conveyance, transfer or
lease, neither the Trust nor the Successor Entity will
be required to register as an Investment Company; and
(viii) the Sponsor or any permitted successor or
assignee owns all of the common securities of such Successor
Entity and guarantees the obligations of such Successor
Entity under the Successor Securities at least to the extent
provided by the Capital Securities Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall
not, except with the consent of Holders of 100% in liquidation
amount of the Securities, consolidate, amalgamate, merge with or
into, or be replaced by, or convey, transfer or lease its
properties and assets as an entirety or substantially as an
entirety to, any other Person or permit any other Person to
consolidate, amalgamate, merge with or into, or replace it if
such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause the Trust or the
Successor Entity not to be classified as a grantor trust for
United States federal income tax purposes.
ARTICLE IV
SPONSOR
Section 4.1 Sponsor's Purchase of Common Securities.
At the Closing Time, the Sponsor will purchase all of
the Common Securities then issued by the Trust, in an amount at
least equal to approximately, but not less than, 3% of the
capital of the Trust, at the same time as the Series A Capital
Securities are issued and sold.
Section 4.2 Responsibilities of the Sponsor.
<PAGE 27>
In connection with the issue and sale of the Capital
Securities, the Sponsor shall have the exclusive right and
responsibility to engage in the following activities:
(a) to prepare the Prospectus and to prepare for
filing by the Trust with the Commission any Registration
Statement, including any amendments thereto;
4-3 to determine the States in which to take
appropriate action to qualify or register for sale all or part of
the Capital Securities and to do any and all such acts, other
than actions which must be taken by the Trust, and advise the
Trust of actions it must take, and prepare for execution and
filing any documents to be executed and filed by the Trust, as
the Sponsor deems necessary or advisable in order to comply with
the applicable laws of any such States;
(c) if deemed necessary or advisable by the Sponsor,
to prepare for filing by the Trust an application to permit the
Capital Securities to trade or be quoted or listed in or on the
Private Offerings, Resales and Trading through Automated Linkages
("PORTAL") market, or any other securities exchange, quotation
system or the Nasdaq Stock Market's National Market for listing
or quotation of the Capital Securities;
(d) to prepare for filing by the Trust with the
Commission a registration statement on Form 8-A, including any
amendments thereto, relating to the registration of the Capital
Securities under Section 12 of the Exchange Act; and
(e) to negotiate the terms of the Underwriting
Agreement providing for the sale of the Capital Securities.
Section 4.3 Right to Proceed.
The Sponsor acknowledges the rights of the Holders of
Capital Securities, in the event that a failure of the Trust to
pay Distributions on the Capital Securities is attributable to
the failure of the Company to pay interest or principal on the
Debentures, to institute a proceeding directly against the
Debenture Issuer for enforcement of its payment obligations on
the Debentures.
ARTICLE V
TRUSTEES
Section 5.1 Number of Trustees: Appointment of Co-Trustee.
The number of Trustees initially shall be four (4),
and:
(a) at any time before the issuance of any Securities,
the Sponsor may, by written instrument, increase or decrease the
number of Trustees; and <PAGE 28>
(b) after the issuance of any Securities, the number
of Trustees may be increased or decreased by vote of the Holders
of a Majority in liquidation amount of the Common Securities
voting as a class at a meeting of the Holders of the Common
Securities;
provided, however, that, the number of Trustees shall in no event
be less than two (2); provided further that (1) one Trustee, in
the case of a natural person, shall be a person who is a resident
of the State of Delaware or that, if not a natural person, is an
entity which has its principal place of business in the State of
Delaware (the "Delaware Trustee"); (2) there shall be at least
one Trustee who is an employee or officer of, or is affiliated
with the Sponsor (an "Administrative Trustee"); and (3) one
Trustee shall be the Property Trustee for so long as this Trust
Agreement is required to qualify as an indenture under the Trust
Indenture Act, and such Trustee may also serve as Delaware
Trustee if it meets the applicable requirements. Notwithstanding
the above, unless an Event of Default shall have occurred and be
continuing, at any time or times, for the purpose of meeting the
legal requirements of the Trust Indenture Act or of any
jurisdiction in which any part of the Trust's property may at the
time be located, the Holders of a Majority in liquidation amount
of the Common Securities acting as a class at a meeting of the
Holders of the Common Securities, and the Administrative Trustees
shall have power to appoint one or more Persons either to act as
a co-trustee, jointly with the Property Trustee, of all or any
part of the Trust's property, or to act as separate trustee of
any such property, in either case with such powers as may be
provided in the instrument of appointment, and to vest in such
Person or Persons in such capacity any property, title, right or
power deemed necessary or desirable, subject to the provisions of
this Trust Agreement. In case an Event of Default has occurred
and is continuing, the Property Trustee alone shall have power to
make any such appointment of a co-trustee.
Section 5.2 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the
"Delaware Trustee") shall be:
(a) a natural person who is a resident of the State of
Delaware; or
(b) if not a natural person, an entity which has its
principal place of business in the State of Delaware, and
otherwise meets the requirements of applicable law,
provided that, if the Property Trustee has its principal place of
business in the State of Delaware and otherwise meets the
requirements of applicable law, then the Property Trustee shall
also be the Delaware Trustee and Section 3.11 shall have no
application.
<PAGE 29>
Section 5.3 Property Trustee; Eligibility.
(a) There shall at all times be one Trustee (the
"Property Trustee") which shall act as Property Trustee which
shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing
business under the laws of the United States of America or
any State or Territory thereof or of the District of
Columbia, or a corporation or Person permitted by the
Commission to act as an institutional trustee under the
Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and
surplus of at least 50 million U.S. dollars ($50,000,000),
and subject to supervision or examination by Federal, State,
Territorial or District of Columbia authority. If such
corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the
supervising or examining authority referred to above, then
for the purposes of this Section 5.3(a)(ii), the combined
capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most
recent report of condition so published.
(b) If at any time the Property Trustee shall cease to
be eligible to so act under Section 5.3(a), the Property Trustee
shall immediately resign in the manner and with the effect set
forth in Section 5.7(c).
(c) If the Property Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of
the Trust Indenture Act, the Property Trustee and the Holder of
the Common Securities (as if it were the obligor referred to in
Section 310(b) of the Trust Indenture Act) shall in all respects
comply with the provisions of Section 310(b) of the Trust
Indenture Act.
(d) The Capital Securities Guarantee shall be deemed
to be specifically described in this Trust Agreement for purposes
of clause (i) of the first provision contained in Section 310(b)
of the Trust Indenture Act.
(e) The initial Property Trustee shall be:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Corporate Trust Trustee
Administration
Section 5.4 Certain Qualifications of Administrative Trustees
and Delaware Trustee Generally. <PAGE 30>
Each Administrative Trustee and the Delaware Trustee
(unless the Property Trustee also acts as Delaware Trustee) shall
be either a natural person who is at least 21 years of age or a
legal entity that shall act through one or more Authorized
Officers.
Section 5.5 Administrative Trustees.
The initial Administrative Trustees shall be:
Mark R. McCollom
Jacquelyn Blue
(a) Except as expressly set forth in this Trust
Agreement and except if a meeting of the Administrative Trustees
is called with respect to any matter over which the
Administrative Trustees have power to act, any power of the
Administrative Trustees may be exercised by, or with the consent
of, any one such Administrative Trustee.
(b) Unless otherwise determined by the Administrative
Trustees, and except as otherwise required by the Business Trust
Act or applicable law, any Administrative Trustee is authorized
to execute on behalf of the Trust any documents which the
Administrative Trustees have the power and authority to cause the
Trust to execute pursuant to Section 3.6, provided, that, the
registration statement referred to in Section 3.6, including any
amendments thereto, shall be signed by all of the Administrative
Trustees; and
(c) An Administrative Trustee may, by power of
attorney consistent with applicable law, delegate to any other
natural person over the age of 21 his or her power for the
purposes of signing any documents which the Administrative
Trustees have power and authority to cause the Trust to execute
pursuant to Section 3.6.
Section 5.6 Delaware Trustee.
The initial Delaware Trustee shall be:
The Bank of New York (Delaware)
23 White Clay Center
Route 273
Newark, Delaware 19711
Section 5.7 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.7(b) and to Section 6(b) of
Annex I hereto, Trustees may be appointed or removed without
cause at any time:
(i) until the issuance of any Securities, by
written instrument executed by the Sponsor; <PAGE 31>
(ii) unless an Event of Default shall have
occurred and be continuing after the issuance of any
Securities, by vote of the Holders of a Majority in
liquidation amount of the Common Securities voting as a
class at a meeting of the Holders of the Common Securities;
and
(iii) if an Event of Default shall have occurred
and be continuing after the issuance of the Securities, with
respect to the Property Trustee or the Delaware Trustee, by
vote of Holders of a Majority in liquidation amount of the
Capital Securities voting as a class at a meeting of Holders
of the Capital Securities.
(b) (i) The Trustee that acts as Property Trustee
shall not be removed in accordance with Section 5.7(a) until a
Successor Property Trustee ("Successor Property Trustee") has
been appointed and has accepted such appointment by written
instrument executed by such Successor Property Trustee and
delivered to the Administrative Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee
shall not be removed in accordance with this Section 5.7(a)
until a successor Trustee possessing the qualifications to
act as Delaware Trustee under Sections 5.2 and 5.4 (a
"Successor Delaware Trustee") has been appointed and has
accepted such appointment by written instrument executed by
such Successor Delaware Trustee and delivered to the
Administrative Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office
until his successor shall have been appointed or until his death,
removal or resignation. Any Trustee may resign from office
(without need for prior or subsequent accounting) by an
instrument in writing signed by the Trustee and delivered to the
Sponsor and the Trust, which resignation shall take effect upon
such delivery or upon such later date as is specified therein;
provided, however, that:
(i) No such resignation of the Trustee that acts
as the Property Trustee shall be effective:
(A) until a Successor Property Trustee has
been appointed and has accepted such appointment by
instrument executed by such Successor Property Trustee
and delivered to the Trust, the Sponsor and the
resigning Property Trustee; or
(B) until the assets of the Trust have been
completely liquidated and the proceeds thereof
distributed to the Holders; and
(ii) no such resignation of the Trustee that acts
as the Delaware Trustee shall be effective until a Successor
<PAGE 32> Delaware Trustee has been appointed and has
accepted such appointment by instrument executed by such
Successor Delaware Trustee and delivered to the Trust, the
Sponsor and the resigning Delaware Trustee.
(d) The Holders of the Common Securities or, if an
Event of Default shall have occurred and be continuing after the
issuance of the Securities, the Holders of the Capital
Securities, shall use their best efforts to promptly appoint a
Successor Delaware Trustee or Successor Property Trustee, as the
case may be, if the Property Trustee or the Delaware Trustee
delivers an instrument of resignation in accordance with this
Section 5.7.
(e) If no Successor Property Trustee or Successor
Delaware Trustee shall have been appointed and accepted
appointment as provided in this Section 5.7 within 60 days after
delivery of an instrument of resignation or removal, the Property
Trustee or Delaware Trustee resigning or being removed, as
applicable, may petition any court of competent jurisdiction for
appointment of a Successor Property Trustee or Successor Delaware
Trustee. Such court may thereupon, after prescribing such
notice, if any, as it may deem proper and prescribe, appoint a
Successor Property Trustee or Successor Delaware Trustee, as the
case may be.
(f) No Property Trustee or Delaware Trustee shall be
liable for the acts or omissions to act of any Successor Property
Trustee or Successor Delaware Trustee, as the case may be.
Section 5.8 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and
the number of Trustees is not reduced pursuant to Section 5.1, or
if the number of Trustees is increased pursuant to Section 5.1, a
vacancy shall occur. A resolution certifying the existence of
such vacancy by the Administrative Trustees or, if there are more
than two, a majority of the Administrative Trustees shall be
conclusive evidence of the existence of such vacancy. The
vacancy shall be filled with a Trustee appointed in accordance
with Section 5.7.
Section 5.9 Effect of Vacancies.
The death, resignation, retirement, removal,
bankruptcy, dissolution, liquidation, incompetence or incapacity
to perform the duties of a Trustee shall not operate to dissolve,
terminate or annul the Trust. Whenever a vacancy in the number
of Administrative Trustees shall occur, until such vacancy is
filled by the appointment of an Administrative Trustee in
accordance with Section 5.7, the Administrative Trustees in
office, regardless of their number, shall have all the powers
granted to the Administrative Trustees and shall discharge all
<PAGE 33> the duties imposed upon the Administrative Trustees by
this Trust Agreement.
Section 5.10 Meetings.
If there is more than one Administrative Trustee,
meetings of the Administrative Trustees shall be held from time
to time upon the call of any Administrative Trustee. Regular
meetings of the Administrative Trustees may be held at a time and
place fixed by resolution of the Administrative Trustees. Notice
of any in-person meetings of the Administrative Trustees shall be
hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than
24 hours before such meeting. Notice of any telephonic meetings
of the Administrative Trustees or any committee thereof shall be
hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than
24 hours before a meeting. Notices shall contain a brief
statement of the time, place and anticipated purposes of the
meeting. The presence (whether in person or by telephone) of an
Administrative Trustee at a meeting shall constitute a waiver of
notice of such meeting except where an Administrative Trustee
attends a meeting for the express purpose of objecting to the
transaction of any activity on the ground that the meeting has
not been lawfully called or convened. Unless provided otherwise
in this Trust Agreement, any action of the Administrative
Trustees may be taken at a meeting by vote of a majority of the
Administrative Trustees present (whether in person or by
telephone) and eligible to vote with respect to such matter,
provided that a Quorum is present, or without a meeting by the
unanimous written consent of the Administrative Trustees. In the
event there is only one Administrative Trustee, any and all
action of such Administrative Trustee shall be evidenced by a
written consent of such Administrative Trustee.
Section 5.11 Delegation of Power.
(a) Any Administrative Trustee may, by power of
attorney consistent with applicable law, delegate to any other
natural person over the age of 21 his or her power for the
purpose of executing any documents contemplated in Section 3.6,
including any registration statement or amendment thereto filed
with the Commission, or making any other governmental filing; and
(b) the Administrative Trustees shall have power to
delegate from time to time to such of their number or to officers
of the Trust the doing of such things and the execution of such
instruments either in the name of the Trust or the names of the
Administrative Trustees or otherwise as the Administrative
Trustees may deem expedient, to the extent such delegation is not
prohibited by applicable law or contrary to the provisions of the
Trust, as set forth herein.
<PAGE 34>
Section 5.12 Merger, Conversion, Consolidation or Succession to
Business.
Any Person into which the Property Trustee or the
Delaware Trustee or any Administrative Trustee that is not a
natural person, as the case may be, may be merged or converted or
with which it may be consolidated, or any Person resulting from
any merger, conversion or consolidation to which the Property
Trustee or the Delaware Trustee, as the case may be, shall be a
party, or any Person succeeding to all or substantially all the
corporate trust business of the Property Trustee or the Delaware
Trustee, as the case may be, shall be the successor of the
Property Trustee or the Delaware Trustee, as the case may be,
hereunder, provided such Person shall be otherwise qualified and
eligible under this Article, without the execution or filing of
any paper or any further act on the part of any of the parties
hereto.
ARTICLE VI
DISTRIBUTIONS
Section 6.1 Distributions.
Holders shall receive Distributions in accordance with
the applicable terms of the relevant Holder's Securities. If and
to the extent that the Debenture Issuer makes a payment of
interest (including Compounded Interest (as defined in the
Indenture) and Additional Sums (as defined in the Indenture)),
premium and/or principal on the Debentures held by the Property
Trustee or any other payments with respect to the Debentures held
by the Property Trustee (the amount of any such payment being a
"Payment Amount"), the Property Trustee shall and is directed, to
the extent funds are available for that purpose, to make a
distribution (a "Distribution") of the Payment Amount to Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
Section 7.1 General Provisions Regarding Securities.
(a) The Administrative Trustees shall on behalf of the
Trust issue one class of capital securities representing
undivided beneficial interests in the assets of the Trust having
such terms as are set forth in Annex I (the "Series A Capital
Securities") and one class of common securities representing
undivided beneficial interests in the assets of the Trust having
such terms as are set forth in Annex I (the "Common Securities").
(b) The consideration received by the Trust for the
issuance of the Securities shall constitute a contribution to the
capital of the Trust and shall not constitute a loan to the
Trust.
<PAGE 35>
(c) Upon issuance of the Securities as provided in
this Trust Agreement, the Securities so issued shall be deemed to
be validly issued, fully paid and non-assessable.
(d) Every Person, by virtue of having become a Holder
or a Capital Security Beneficial Owner in accordance with the
terms of this Trust Agreement, shall be deemed to have expressly
assented and agreed to the terms of, and shall be bound by, this
Trust Agreement.
Section 7.2 Execution and Authentication.
(a) The Securities shall be signed on behalf of the
Trust by an Administrative Trustee by manual or facsimile
signature. In case any Administrative Trustee of the Trust who
shall have signed any of the Securities shall cease to be such
Administrative Trustee before the Securities so signed shall be
delivered by the Trust, such Securities nevertheless may be
delivered as though the person who signed such Securities had not
ceased to be such Administrative Trustee; and any Securities may
be signed on behalf of the Trust by such persons who, at the
actual date of execution of such Security, shall be the
Administrative Trustees of the Trust, although at the date of the
execution and delivery of the Trust Agreement any such person was
not such a Administrative Trustee.
(b) One Administrative Trustee shall sign the
Securities for the Trust by manual or facsimile signature.
A Security shall not be valid until authenticated by
the manual signature of an authorized signatory of the Property
Trustee. The signature shall be conclusive evidence that the
Security has been authenticated under this Trust Agreement.
Upon a written order of the Trust signed by one
Administrative Trustee, the Property Trustee shall authenticate
the Securities for original issue. The aggregate number of
Capital Securities outstanding at any time shall not exceed the
number set forth in the Terms in Annex I hereto except as
provided in Section 7.6.
The Property Trustee may appoint an authenticating
agent acceptable to the Trust to authenticate Securities. An
authenticating agent may authenticate Securities whenever the
Property Trustee may do so. Each reference in this Trust
Agreement to authentication by the Property Trustee includes
authentication by such agent. An authenticating agent has the
same rights as the Property Trustee to deal with the Sponsor or
an Affiliate.
Section 7.3 Form and Dating.
The Capital Securities shall be substantially in the
form of Exhibit A-1 and the Common Securities shall be <PAGE 36>
substantially in the form of Exhibit A-2, each of which is hereby
incorporated in and expressly made a part of this Trust
Agreement. The Property Trustee's certificate of authentication
shall be substantially in the form set forth in Exhibits A-1 and
A-2. Certificates representing the Securities may be printed,
lithographed or engraved or may be produced in any other manner
as is reasonably acceptable to the Administrative Trustees, as
evidenced by their execution thereof. The Securities may have
letters, CUSIP or other numbers, notations or other marks of
identification or designation and such legends or endorsements
required by law, stock exchange rule, agreements to which the
Trust is subject, if any, or usage (provided that any such
notation, legend or endorsement is in a form acceptable to the
Trust). The Trust at the direction of the Sponsor shall furnish
any such legend not contained in Exhibit A-1 to the Property
Trustee in writing. Each Capital Security shall be dated the
date of its authentication. The terms and provisions of the
Securities set forth in Annex I and the forms of Securities set
forth in Exhibits A-1 and A-2 are part of the terms of this Trust
Agreement and to the extent applicable, the Property Trustee and
the Sponsor, by their execution and delivery of this Trust
Agreement, expressly agree to such terms and provisions and to be
bound thereby.
(a) Global Securities. Securities may be issued in
the form of one or more, permanent global Securities in
definitive, fully registered form without distribution coupons
with the appropriate global legends (a "Global Capital
Security"), which shall be deposited on behalf of the purchasers
of the Capital Securities represented thereby with the Property
Trustee, at its New York office, as custodian for the Clearing
Agency, and registered in the name of the Clearing Agency or a
nominee of the Clearing Agency, duly executed by the Trust and
authenticated by the Property Trustee as hereinafter provided.
The number of Capital Securities represented by a Global Capital
Security may from time to time be increased or decreased by
adjustments made on the records of the Property Trustee and the
Clearing Agency or its nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 7.3(b) shall
apply only to the Global Capital Securities and such other
Capital Securities in global form as may be authorized by the
Trust to be deposited with or on behalf of the Clearing Agency.
The Trust shall execute and the Property Trustee shall,
in accordance with this Section 7.3, authenticate and make
available for delivery initially one or more Global Capital
Securities that (i) shall be registered in the name of Cede & Co.
or other nominee of such Clearing Agency and (ii) shall be
delivered by the Trustee to such Clearing Agency or pursuant to
such Clearing Agency's written instructions or held by the
Property Trustee as custodian for the Clearing Agency.
<PAGE 37>
Members of, or participants in, the Clearing Agency
("Participants") shall have no rights under this Trust Agreement
with respect to any Global Capital Security held on their behalf
by the Clearing Agency or by the Property Trustee as the
custodian of the Clearing Agency or under such Global Capital
Security, and the Clearing Agency may be treated by the Trust,
the Property Trustee and any agent of the Trust or the Property
Trustee as the absolute owner of such Global Capital Security for
all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Trust, the Property Trustee or any agent
of the Trust or the Property Trustee from giving effect to any
written certification, proxy or other authorization furnished by
the Clearing Agency or impair, as between the Clearing Agency and
its Participants, the operation of customary practices of such
Clearing Agency governing the exercise of the rights of a holder
of a beneficial interest in any Global Capital Security.
(c) Definitive Capital Securities. Except as provided
in Section 7.9 or 9.2(e)(i), owners of beneficial interests in a
Global Capital Security will not be entitled to receive physical
delivery of certificated Capital Securities ("Definitive Capital
Securities").
(d) Authorized Denominations. The Capital Securities
are issuable only in denominations of $______ and any integral
multiple thereof.
Section 7.4 Registrar, Paying Agent and Exchange Agent.
The Trust shall maintain in the Borough of Manhattan,
The City of New York, (i) an office or agency where Capital
Securities may be presented for registration of transfer
("Registrar"), (ii) an office or agency where Capital Securities
may be presented for payment ("Paying Agent") and (iii) an office
or agency where Securities may be presented for exchange
("Exchange Agent"). The Registrar shall keep a register of the
Capital Securities and of their transfer. The Trust may appoint
the Registrar, the Paying Agent and the Exchange Agent and may
appoint one or more co-registrars, one or more additional paying
agents and one or more additional exchange agents in such other
locations as it shall determine. The term "Registrar" includes
any additional registrar, "Paying Agent" includes any additional
paying agent and the term "Exchange Agent" includes any
additional exchange agent. The Trust may change any Paying
Agent, Registrar, co-registrar or Exchange Agent without prior
notice to any Holder. The Paying Agent shall be permitted to
resign as Paying Agent upon 30 days' written notice to the
Administrative Trustees. The Trust shall notify the Property
Trustee of the name and address of any Agent not a party to this
Trust Agreement. If the Trust fails to appoint or maintain
another entity as Registrar, Paying Agent or Exchange Agent, the
Property Trustee shall act as such. The Trust or any of its
Affiliates may act as Paying Agent, Registrar, or Exchange Agent.
<PAGE 38> The Trust shall act as Paying Agent, Registrar, co-
registrar, and Exchange Agent for the Common Securities.
The Trust initially appoints the Property Trustee as
Registrar, Paying Agent, and Exchange Agent for the Capital
Securities.
Section 7.5 Paying Agent to Hold Money in Trust.
The Trust shall require each Paying Agent other than
the Property Trustee to agree in writing that the Paying Agent
will hold in trust for the benefit of Holders or the Property
Trustee all money held by the Paying Agent for the payment of
liquidation amounts or Distributions, and will notify the
Property Trustee if there are insufficient funds for such
purpose. While any such insufficiency continues, the Property
Trustee may require a Paying Agent to pay all money held by it to
the Property Trustee. The Trust at any time may require a Paying
Agent to pay all money held by it to the Property Trustee and to
account for any money disbursed by it. Upon payment over to the
Property Trustee, the Paying Agent (if other than the Trust or an
Affiliate of the Trust) shall have no further liability for the
money. If the Trust or the Sponsor or an Affiliate of the Trust
or the Sponsor acts as Paying Agent, it shall segregate and hold
in a separate trust fund for the benefit of the Holders all money
held by it as Paying Agent.
Section 7.6 Replacement Securities.
If a Holder claims that a Security owned by it has been
lost, destroyed or wrongfully taken or if such Security is
mutilated and is surrendered to the Trust or in the case of the
Capital Securities to the Property Trustee, the Trust shall issue
and the Property Trustee shall, upon written order of the Trust,
authenticate a replacement Security if the Property Trustee's and
the Trust's requirements, as the case may be, are met. An
indemnity bond must be provided by the Holder which, in the
judgment of the Property Trustee, is sufficient to protect the
Trustees, the Sponsor, the Trust or any authenticating agent from
any loss which any of them may suffer if a Security is replaced.
The Trust may charge such Holder for its expenses in replacing a
Security.
Every replacement Security is an additional beneficial
interest in the Trust.
Section 7.7 Outstanding Capital Securities.
The Capital Securities outstanding at any time are all
the Capital Securities authenticated by the Property Trustee
except for those cancelled by it, those delivered to it for
cancellation, and those described in this Section as not
outstanding.
<PAGE 39>
If a Capital Security is replaced, paid or purchased
pursuant to Section 7.6 hereof, it ceases to be outstanding
unless the Property Trustee receives proof satisfactory to it
that the replaced, paid or purchased Capital Security is held by
a bona fide purchaser.
If Capital Securities are considered paid in accordance
with the terms of this Trust Agreement, they cease to be
outstanding and Distributions on them shall cease to accumulate.
A Capital Security does not cease to be outstanding
because one of the Trust, the Sponsor or an Affiliate of the
Sponsor holds the Security.
Section 7.8 Capital Securities in Treasury.
In determining whether the Holders of the required
amount of Securities have concurred in any direction, waiver or
consent, Capital Securities owned by the Trust, the Sponsor or an
Affiliate of the Sponsor, as the case may be, shall be
disregarded and deemed not to be outstanding, except that for the
purposes of determining whether the Property Trustee shall be
fully protected in relying on any such direction, waiver or
consent, only Securities which the Property Trustee actually
knows are so owned shall be so disregarded.
Section 7.9 Temporary Securities.
(a) Until Definitive Securities are ready for
delivery, the Trust may prepare and, in the case of the Capital
Securities, the Property Trustee shall authenticate temporary
Securities. Temporary Securities shall be substantially in the
form of Definitive Securities but may have variations that the
Trust considers appropriate for temporary Securities. Without
unreasonable delay, the Trust shall prepare and, in the case of
the Capital Securities, the Property Trustee shall authenticate
Definitive Securities in exchange for temporary Securities.
(b) A Global Capital Security deposited with the
Clearing Agency or with the Property Trustee as custodian for the
Clearing Agency pursuant to Section 7.3 shall be transferred to
the beneficial owners thereof in the form of certificated Capital
Securities only if such transfer complies with Section 9.2 and
(i) the Clearing Agency notifies the Sponsor that it is unwilling
or unable to continue as Clearing Agency for such Global Capital
Security or if at any time such Clearing Agency ceases to be a
"clearing agency" registered under the Exchange Act and a
clearing agency is not appointed by the Sponsor within 90 days of
such notice, (ii) a Default or an Event of Default has occurred
and is continuing or (iii) the Trust at its sole discretion
elects to cause the issuance of certificated Capital Securities.
(c) Any Global Capital Security that is transferable
to the beneficial owners thereof in the form of certificated
<PAGE 40> Capital Securities pursuant to this Section 7.9 shall
be surrendered by the Clearing Agency to the Property Trustee
located in the Borough of Manhattan, The City of New York, to be
so transferred, in whole or from time to time in part, without
charge, and the Property Trustee shall authenticate and make
available for delivery, upon such transfer of each portion of
such Global Capital Security, an equal aggregate liquidation
amount of Securities of authorized denominations in the form of
certificated Capital Securities. Any portion of a Global Capital
Security transferred pursuant to this Section shall be registered
in such names as the Clearing Agency shall direct.
(d) Subject to the provisions of Section 7.9(c), the
Holder of a Global Capital Security may grant proxies and
otherwise authorize any Person, including Participants and
Persons that may hold interests through Participants, to take any
action which such Holder is entitled to take under this Trust
Agreement or the Securities.
(e) In the event of the occurrence of any of the
events specified in Section 7.9(b), the Trust will promptly make
available to the Property Trustee a reasonable supply of
certificated Capital Securities in fully registered form without
distribution coupons.
Section 7.10 Cancellation.
The Trust at any time may deliver Capital Securities to
the Property Trustee for cancellation. The Registrar, Paying
Agent and Exchange Agent shall forward to the Property Trustee
any Capital Securities surrendered to them for registration of
transfer, redemption, exchange or payment. The Property Trustee
shall promptly cancel all Capital Securities, surrendered for
registration of transfer, redemption, exchange, payment,
replacement or cancellation and shall dispose of cancelled
Capital Securities as the Trust directs, provided that the
Property Trustee shall not be obligated to destroy Capital
Securities. The Trust may not issue new Capital Securities to
replace Capital Securities that it has paid or that have been
delivered to the Property Trustee for cancellation or that any
Holder has exchanged.
Section 7.11 CUSIP Numbers.
The Trust in issuing the Capital Securities may use
"CUSIP" numbers (if then generally in use), and, if so, the
Property Trustee shall use "CUSIP" numbers in notices of
redemption as a convenience to Holders of Capital Securities;
provided that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on
the Capital Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other
identification numbers printed on the Capital Securities, and any
such redemption shall not be affected by any defect in or
<PAGE 41> omission of such numbers. The Sponsor will promptly
notify the Property Trustee of any change in the CUSIP numbers.
ARTICLE VIII
TERMINATION OF TRUST
Section 8.1 Termination of Trust.
(a) The Trust shall automatically terminate:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of
dissolution or liquidation or its equivalent with respect to
the Sponsor; or the revocation of the Sponsor's charter and
the expiration of 90 days after the date of revocation
without a reinstatement thereof;
(iii) following the distribution of a Like Amount
of the Debentures to the Holders, provided that, the
Property Trustee has received written notice from the
Sponsor directing the Property Trustee to terminate the
Trust (which direction is optional, and except as otherwise
expressly provided below, within the discretion of the
Sponsor) and provided, further, that such direction and such
distribution is conditioned on (i) the receipt by the
Sponsor of any required regulatory approval and (ii) the
Administrative Trustees' receipt of an opinion of an
independent tax counsel experienced in such matters, which
opinion may rely on published rulings of the Internal
Revenue Service, to the effect that the Holders will not
recognize any gain or loss for United States federal income
tax purposes as a result of the dissolution of the Trust and
the distribution of Debentures;
(iv) upon the entry of a decree of judicial
dissolution of the Trust by a court of competent
jurisdiction;
(v) when all of the Securities shall have been
called for redemption and the amounts necessary for
redemption thereof shall have been paid to the Holders in
accordance with the terms of the Securities;
(vi) upon the repayment of the Debentures or at
such time as no Debentures are outstanding; or
(vii) the expiration of the term of the Trust
provided in Section 3.14.
(b) As soon as is practicable after the occurrence of
an event referred to in Section 8.1(a), the Administrative
Trustees shall file a certificate of cancellation with the
Secretary of State of the State of Delaware. <PAGE 42>
(c) The provisions of Section 3.9 and Article X shall
survive the termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
Section 9.1 Transfer of Securities.
(a) Securities may only be transferred, in whole or in
part, in accordance with the terms and conditions set forth in
this Trust Agreement and in the terms of the Securities. Any
transfer or purported transfer of any Security not made in
accordance with this Trust Agreement shall be null and void.
(b) Subject to this Article IX, Capital Securities may
only be transferred, in whole or in part, in accordance with the
terms and conditions set forth in this Trust Agreement. Any
transfer or purported transfer of any Security not made in
accordance with this Trust Agreement shall be null and void.
(c) For so long as the Trust Securities remain
outstanding, the Sponsor will covenant (i) to directly or
indirectly maintain 100% direct or indirect ownership of the
Common Securities of the Trust; provided, however, that any
permitted successor of the Sponsor under the Indenture may
succeed to the Sponsor's ownership of such Common Securities,
(ii) not to cause, as sponsor of the Trust, or to permit, as
Holder of the Common Securities, the dissolution, winding-up or
termination of the Trust, except in connection with a
distribution of the Debentures as provided in the Trust Agreement
and in connection with certain mergers, consolidations or
amalgamations permitted by this Trust Agreement and (iii) to use
its reasonable efforts to cause the Trust (a) to remain a
business trust, except in connection with the distribution of
Debentures to the Holders of Trust Securities in liquidation of
the Trust, the redemption of all of the Trust Securities, or
certain mergers, consolidations or amalgamations, each as
permitted by this Trust Agreement, and (b) to otherwise continue
to be classified as a grantor trust for United States federal
income tax purposes.
(d) The Administrative Trustees shall provide for the
registration of Securities and of the transfer of Securities,
which will be effected without charge but only upon payment (with
such indemnity as the Administrative Trustees may require) in
respect of any tax or other governmental charges that may be
imposed in relation to it. Upon surrender for registration of
transfer of any Securities, the Administrative Trustees shall
cause one or more new Securities to be issued in the name of the
designated transferee or transferees. Every Security surrendered
for registration of transfer shall be accompanied by a written
instrument of transfer in form satisfactory to the Administrative
Trustees duly executed by the Holder or such Holder's attorney
duly authorized in writing. Each Security surrendered for
<PAGE 43> registration of transfer shall be canceled by the
Property Trustee (in the case of Capital Securities) or the Trust
(in the case of Common Securities). A transferee of a Security
shall be entitled to the rights and subject to the obligations of
a Holder hereunder upon the receipt by such transferee of a
Security. By acceptance of a Security, each transferee shall be
deemed to have agreed to be bound by this Trust Agreement.
Section 9.2 Transfer Procedures and Restrictions.
(a) General. No transfer or exchange of a Definitive
Capital Security or of an interest in the Global Capital Security
shall be effective unless the transferor delivers to the Trust a
certificate in a form substantially similar to that attached
hereto as the form of "Assignment" in Exhibit A-1.
(b) Transfer and Exchange of Definitive Capital
Securities. When Definitive Capital Securities are presented to
the Registrar or co-Registrar
(x) to register the transfer of such Definitive
Capital Securities; or
(y) to exchange such Definitive Capital
Securities which became mutilated, destroyed, defaced,
stolen or lost, for an equal number of Definitive Capital
Securities,
the Registrar or co-registrar shall register the transfer or make
the exchange as requested if its reasonable requirements for such
transaction are met; provided, however, that the Definitive
Capital Securities surrendered for transfer or exchange shall be
duly endorsed or accompanied by a written instrument of transfer
in form reasonably satisfactory to the Trust and the Registrar or
co-registrar, duly executed by the Holder thereof or his attorney
duly authorized in writing.
(c) Restrictions on Transfer of a Definitive Capital
Security for a Beneficial Interest in a Global Capital Security.
A Definitive Capital Security may not be exchanged for a
beneficial interest in a Global Capital Security except upon
satisfaction of the requirements set forth below. Upon receipt
by the Property Trustee of a Definitive Capital Security, duly
endorsed or accompanied by appropriate instruments of transfer,
in form satisfactory to the Property Trustee, together with
written instructions directing the Property Trustee to make, or
to direct the Clearing Agency to make, an adjustment on its books
and records with respect to the appropriate Global Capital
Security to reflect an increase in the number of the Capital
Securities represented by such Global Capital Security, then the
Property Trustee shall cancel such Definitive Capital Security
and cause, or direct the Clearing Agency to cause, the aggregate
number of Capital Securities represented by the appropriate
Global Capital Security to be increased accordingly. If no
<PAGE 44> Global Capital Securities are then outstanding, the
Trust shall issue and the Property Trustee shall authenticate,
upon written order of any Administrative Trustee, an appropriate
number of Capital Securities in global form.
(d) Transfer and Exchange of Global Capital
Securities. Subject to Section 9.2(e), the transfer and exchange
of Global Capital Securities or beneficial interests therein
shall be effected through the Clearing Agency, in accordance with
this Trust Agreement (including applicable restrictions on
transfer set forth herein, if any) and the procedures of the
Clearing Agency therefor.
(e) Transfer of a Beneficial Interest in a Global
Capital Security for a Definitive Capital Security.
(i) Any Person having a beneficial interest in a
Global Capital Security may upon request, but only upon 20
days prior notice to the Property Trustee, and if
accompanied by the information specified below, exchange
such beneficial interest for a Definitive Capital Security
representing the same number of Capital Securities. Upon
receipt by the Property Trustee from the Clearing Agency or
its nominee on behalf of any Person having a beneficial
interest in a Global Capital Security of written
instructions or such other form of instructions as is
customary for the Clearing Agency or the Person designated
by the Clearing Agency as having such a beneficial interest
in a Capital Security and a certification from the
transferor (in a form substantially similar to that attached
hereto as the form of "Assignment" in Exhibit A-1), which
may be submitted by facsimile, then the Property Trustee
will cause the aggregate number of Capital Securities
represented by Global Capital Securities to be reduced on
its books and records and, following such reduction, the
Trust will execute and the Property Trustee will
authenticate and make available for delivery to the
transferee a Definitive Capital Security.
(ii) Definitive Capital Securities issued in
exchange for a beneficial interest in a Global Capital
Security pursuant to this Section 9.2(e) shall be registered
in such names and in such authorized denominations as the
Clearing Agency, pursuant to instructions from its Clearing
Agency Participants or otherwise, shall instruct the
Property Trustee in writing. The Property Trustee shall
deliver such Capital Securities to the Persons in whose
names such Capital Securities are so registered in
accordance with such instructions of the Clearing Agency.
(f) Restrictions on Transfer and Exchange of Global
Capital Securities. Notwithstanding any other provisions of this
Trust Agreement (other than the provisions set forth in
subsection (g) of this Section 9.2), a Global Capital Security
<PAGE 45> may not be transferred as a whole except by the
Clearing Agency to a nominee of the Clearing Agency or another
nominee of the Clearing Agency or by the Clearing Agency or any
such nominee to a successor Clearing Agency or a nominee of such
successor Clearing Agency.
(g) Authentication of Definitive Capital Securities.
If at any time:
(i) there occurs a Default or an Event of Default
which is continuing, or
(ii) the Trust, in its sole discretion, notifies
the Property Trustee in writing that it elects to cause the
issuance of Definitive Capital Securities under this Trust
Agreement,
then the Trust will execute, and the Property Trustee, upon
receipt of a written order of the Trust signed by one
Administrative Trustee requesting the authentication and delivery
of Definitive Capital Securities to the Persons designated by the
Trust, will authenticate and make available for delivery
Definitive Capital Securities, equal in number to the number of
Capital Securities represented by the Global Capital Securities,
in exchange for such Global Capital Securities.
(h) Cancellation or Adjustment of Global Capital
Security. At such time as all beneficial interests in a Global
Capital Security have either been exchanged for Definitive
Capital Securities to the extent permitted by this Trust
Agreement or redeemed, repurchased or canceled in accordance with
the terms of this Trust Agreement, such Global Capital Security
shall be returned to the Clearing Agency for cancellation or
retained and canceled by the Property Trustee. At any time prior
to such cancellation, if any beneficial interest in a Global
Capital Security is exchanged for Definitive Capital Securities,
Capital Securities represented by such Global Capital Security
shall be reduced and an adjustment shall be made on the books and
records of the Clearing Agency and the Registrar, to reflect such
reduction.
(i) Obligations with Respect to Transfers and
Exchanges of Capital Securities.
(i) To permit registrations of transfers and
exchanges, the Trust shall execute and the Property Trustee
shall authenticate Definitive Capital Securities and Global
Capital Securities at the Registrar's or co-registrar's
request in accordance with the terms of this Trust
Agreement.
(ii) Registrations of transfers or exchanges will
be effected without charge, but only upon payment (with such
indemnity as the Trust or the Sponsor may require) in
<PAGE 46> respect of any tax or other governmental charge
that may be imposed in relation to it.
(iii) The Registrar or co-registrar shall not be
required to register the transfer of or exchange of
(a) Capital Securities during a period beginning at the
opening of business 15 days before the day of mailing of a
notice of redemption or any notice of selection of Capital
Securities for redemption and ending at the close of
business on the day of such mailing; or (b) any Capital
Security so selected for redemption in whole or in part,
except the unredeemed portion of any Capital Security being
redeemed in part.
(iv) Prior to the due presentation for
registration of transfer of any Capital Security, the Trust,
the Property Trustee, the Paying Agent, the Registrar or any
co-registrar may deem and treat the Person in whose name a
Capital Security is registered as the absolute owner of such
Capital Security for the purpose of receiving Distributions
on such Capital Security and for all other purposes
whatsoever, and none of the Trust, the Property Trustee, the
Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary.
(v) All Capital Securities issued upon any
transfer or exchange pursuant to the terms of this Trust
Agreement shall evidence the same security and shall be
entitled to the same benefits under this Trust Agreement as
the Capital Securities surrendered upon such transfer or
exchange.
(j) No Obligation of the Property Trustee.
(i) The Property Trustee shall have no
responsibility or obligation to any beneficial owner of a
Global Capital Security, a Clearing Agency Participant in
the Clearing Agency or other Person with respect to the
accuracy of the records of the Clearing Agency or its
nominee or of any Clearing Agency Participant thereof, with
respect to any ownership interest in the Capital Securities
or with respect to the delivery to any Clearing Agency
Participant, beneficial owner or other Person (other than
the Clearing Agency) of any notice (including any notice of
redemption) or the payment of any amount, under or with
respect to such Capital Securities. All notices and
communications to be given to the Holders and all payments
to be made to Holders under the Capital Securities shall be
given or made only to or upon the order of the registered
Holders (which shall be the Clearing Agency or its nominee
in the case of a Global Capital Security). The rights of
beneficial owners in any Global Capital Security shall be
exercised only through the Clearing Agency subject to the
applicable rules and procedures of the Clearing Agency. The
<PAGE 47> Property Trustee may conclusively rely and shall
be fully protected in relying upon information furnished by
the Clearing Agency or any agent thereof with respect to its
Clearing Agency Participants and any beneficial owners.
(ii) The Property Trustee and the Registrar shall
have no obligation or duty to monitor, determine or inquire
as to compliance with any restrictions on transfer imposed
under this Trust Agreement or under applicable law with
respect to any transfer of any interest in any Capital
Security (including any transfers between or among Clearing
Agency Participants or beneficial owners in any Global
Capital Security) other than to require delivery of such
certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly
required by, the terms of this Trust Agreement, and to
examine the same to determine substantial compliance as to
form with the express requirements hereof.
PS\ Minimum Transfers. Series A Capital Securities
may only be transferred in minimum blocks of $___________
aggregate liquidation amount. Any transfer of Series A Capital
Securities in a block having an aggregate liquidation amount of
less than $___________ shall be deemed to be void and of no legal
effect whatsoever. Any such transferee shall be deemed not to be
a Holder of such Series A Capital Securities for any purpose,
including, but not limited to, the receipt of Distributions on
such Capital Securities, and such transferee shall be deemed to
have no interest whatsoever in such Capital Securities.
Section 9.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any
Security shall be registered on the books and records of the
Trust as the sole owner of such Security for purposes of
receiving Distributions and for all other purposes whatsoever
and, accordingly, shall not be bound to recognize any equitable
or other claim to or interest in such Security on the part of any
Person, whether or not the Trust shall have actual or other
notice thereof.
Section 9.4 Book Entry Interests.
Global Capital Securities shall initially be registered
on the books and records of the Trust in the name of Cede & Co.,
the nominee of the Clearing Agency, and no Capital Security
Beneficial Owner will receive a definitive Capital Security
Certificate representing such Capital Security Beneficial Owner's
interests in such Global Capital Securities, except as provided
in Section 9.2 and Section 7.9. Unless and until definitive,
fully registered Capital Securities certificates have been issued
to the Capital Security Beneficial Owners pursuant to Section 9.2
and Section 7.9:
<PAGE 48>
(a) the provisions of this Section 9.4 shall be in
full force and effect;
(b) the Trust and the Trustees shall be entitled to
deal with the Clearing Agency for all purposes of this Trust
Agreement (including the payment of Distributions on the
Global Capital Securities and receiving approvals, votes or
consents hereunder) as the Holder of the Capital Securities
and the sole holder of the Global Certificates and shall
have no obligation to the Capital Security Beneficial
Owners;
(c) to the extent that the provisions of this
Section 9.4 conflict with any other provisions of this Trust
Agreement, the provisions of this Section 9.4 shall control;
and
(d) the rights of the Capital Security Beneficial
Owners shall be exercised only through the Clearing Agency
and shall be limited to those established by law and
agreements between such Capital Security Beneficial Owners
and the Clearing Agency and/or the Clearing Agency
Participants and receive and transmit payments of
Distributions on the Global Certificates to such Clearing
Agency Participants. DTC will make book entry transfers
among the Clearing Agency Participants.
Section 9.5 Notices to Clearing Agency.
Whenever a notice or other communication to the Capital
Security Holders is required under this Trust Agreement, the
Trustees shall give all such notices and communications specified
herein to be given to the Holders of Global Capital Securities to
the Clearing Agency, and shall have no notice obligations to the
Capital Security Beneficial Owners.
Section 9.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its
services as securities depositary with respect to the Capital
Securities, the Administrative Trustees may, in their sole
discretion, appoint a successor Clearing Agency with respect to
such Capital Securities.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
Section 10.1 Liability.
(a) Except as expressly set forth in this Trust
Agreement, the Securities Guarantees and the terms of the
Securities, the Sponsor shall not be:
<PAGE 49>
(i) personally liable for the return of any
portion of the capital contributions (or any return
thereon) of the Holders which shall be made solely from
assets of the Trust; and
(ii) required to pay to the Trust or to any
Holder any deficit upon dissolution of the Trust or
otherwise.
(b) The Debenture Issuer shall be liable for all of
the debts and obligations of the Trust (other than in respect of
the Securities) to the extent not satisfied out of the Trust's
assets.
(c) Pursuant to Section 3803(a) of the Business Trust
Act, the Holders shall be entitled to the same limitation of
personal liability extended to stockholders of private
corporations for profit organized under the General Corporation
Law of the State of Delaware.
Section 10.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible
or accountable in damages or otherwise to the Trust or any
Covered Person for any loss, damage or claim incurred by reason
of any act or omission performed or omitted by such Indemnified
Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of
the authority conferred on such Indemnified Person by this Trust
Agreement or by law, except that an Indemnified Person shall be
liable for any such loss, damage or claim incurred by reason of
such Indemnified Person's gross negligence or willful misconduct
with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in
relying in good faith upon the records of the Trust and upon such
information, opinions, reports or statements presented to the
Trust by any Person as to matters the Indemnified Person
reasonably believes are within such other Person's professional
or expert competence and who has been selected with reasonable
care by or on behalf of the Trust, including information,
opinions, reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which
Distributions to Holders might properly be paid.
Section 10.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an
Indemnified Person has duties (including fiduciary duties) and
liabilities relating thereto to the Trust or to any other Covered
Person, an Indemnified Person acting under this Trust Agreement
shall not be liable to the Trust or to any other Covered Person
for its good faith reliance on the provisions of this Trust
<PAGE 50> Agreement. The provisions of this Trust Agreement, to
the extent that they restrict the duties and liabilities of an
Indemnified Person otherwise existing at law or in equity (other
than the duties imposed on the Property Trustee under the Trust
Indenture Act), are agreed by the parties hereto to replace such
other duties and liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or
arises between any Covered Persons; or
(ii) whenever this Trust Agreement or any other
agreement contemplated herein or therein provides that an
Indemnified Person shall act in a manner that is, or
provides terms that are, fair and reasonable to the Trust or
any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest,
take such action or provide such terms, considering in each case
the relative interest of each party (including its own interest)
to such conflict, agreement, transaction or situation and the
benefits and burdens relating to such interests, any customary or
accepted industry practices, and any applicable generally
accepted accounting practices or principles. In the absence of
bad faith by the Indemnified Person, the resolution, action or
term so made, taken or provided by the Indemnified Person shall
not constitute a breach of this Trust Agreement or any other
agreement contemplated herein or of any duty or obligation of the
Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Trust Agreement an Indemnified
Person is permitted or required to make a decision:
(i) in its "discretion" or under a grant of
similar authority, the Indemnified Person shall be entitled
to consider such interests and factors as it desires,
including its own interests, and shall have no duty or
obligation to give any consideration to any interest of or
factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such
express standard and shall not be subject to any other or
different standard imposed by this Trust Agreement.
Section 10.4 Indemnification.
(a) (i) The Debenture Issuer shall indemnify, to the
full extent permitted by law, any Company 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
<PAGE 51> the Trust) by reason of the fact that he is or was
a Company Indemnified Person against expenses (including
attorneys' fees and expenses), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him
in connection with such action, suit or proceeding if he
acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Trust,
and, with respect to any criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself,
create a presumption that the Company Indemnified Person did
not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of
the Trust, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct
was unlawful.
(ii) The Debenture Issuer shall indemnify, to the
full extent permitted by law, any Company 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 Company Indemnified
Person against expenses (including attorneys' fees and
expenses) actually and reasonably incurred by him in
connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of
the Trust and except that no such indemnification shall be
made in respect of any claim, issue or matter as to which
such Company Indemnified Person shall have been adjudged to
be liable to the Trust unless and only to the extent that
the Court of Chancery of Delaware or the court in which such
action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of
all the circumstances of the case, such Person is fairly and
reasonably entitled to indemnity for such expenses which
such Court of Chancery or such other court shall deem
proper.
(iii) To the extent that a Company Indemnified
Person shall be successful on the merits or otherwise
(including dismissal of an action without prejudice or the
settlement of an action without admission of liability) in
defense of any action, suit or proceeding referred to in
paragraphs (i) and (ii) of this Section 10.4(a), or in
defense of any claim, issue or matter therein, he shall be
indemnified, to the full extent permitted by law, against
expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
<PAGE 52>
(iv) Any indemnification under paragraphs (i) and
(ii) of this Section 10.4(a) (unless ordered by a
court) shall be made by the Debenture Issuer only as
authorized in the specific case upon a determination that
indemnification of the Company Indemnified Person is proper
in the circumstances because he has met the applicable
standard of conduct set forth in paragraphs (i) and (ii).
Such determination shall be made (1) by the Administrative
Trustees by a majority vote of a Quorum consisting of such
Administrative Trustees who were not parties to such action,
suit or proceeding, (2) if such a Quorum is not obtainable,
or, even if obtainable, if a Quorum of disinterested
Administrative Trustees so directs, by independent legal
counsel in a written opinion, or (3) by the Common Security
Holder of the Trust.
(v) Expenses (including attorneys' fees and
expenses) incurred by a Company Indemnified Person in
defending a civil, criminal, administrative or investigative
action, suit or proceeding referred to in paragraphs (i) and
(ii) of this Section 10.4(a) shall be paid by the Debenture
Issuer in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on
behalf of such Company Indemnified Person to repay such
amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Debenture Issuer as
authorized in this Section 10.4(a). Notwithstanding the
foregoing, no advance shall be made by the Debenture Issuer
if a determination is reasonably and promptly made (i) by
the Administrative Trustees by a majority vote of a quorum
of disinterested Administrative Trustees, (ii) if such a
quorum is not obtainable, or, even if obtainable, if a
quorum of disinterested Administrative Trustees so directs,
by independent legal counsel in a written opinion or
(iii) the Common Security Holder of the Trust, that, based
upon the facts known to the Administrative Trustees, counsel
or the Common Security Holder at the time such determination
is made, such Company Indemnified Person acted in bad faith
or in a manner that such person did not believe to be in or
not opposed to the best interests of the Trust, or, with
respect to any criminal proceeding, that such Company
Indemnified Person believed or had reasonable cause to
believe his conduct was unlawful. In no event shall any
advance be made in instances where the Administrative
Trustees, independent legal counsel or Common Security
Holder reasonably determine that such person deliberately
breached his duty to the Trust or its Common or Capital
Security Holders.
(vi) The indemnification and advancement of
expenses provided by, or granted pursuant to, the other
paragraphs of this Section 10.4(a) shall not be deemed
exclusive of any other rights to which those seeking
indemnification and advancement of expenses may be entitled
<PAGE 53> under any agreement, vote of stockholders or
disinterested directors of the Debenture Issuer or Capital
Security Holders of the Trust or otherwise, both as to
action in his official capacity and as to action in another
capacity while holding such office. All rights to
indemnification under this Section 10.4(a) shall be deemed
to be provided by a contract between the Debenture Issuer
and each Company Indemnified Person who serves in such
capacity at any time while this Section 10.4(a) is in
effect. Any repeal or modification of this Section 10.4(a)
shall not affect any rights or obligations then existing.
(vii) The Debenture Issuer or the Trust may
purchase and maintain insurance on behalf of any person who
is or was a Company Indemnified Person against any liability
asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or
not the Debenture Issuer would have the power to indemnify
him against such liability under the provisions of this
Section 10.4(a).
(viii) For purposes of this Section 10.4(a),
references to "the Trust" shall include, in addition to the
resulting or surviving entity, any constituent entity
(including any constituent of a constituent) absorbed in a
consolidation or merger, so that any person who is or was a
director, trustee, officer or employee of such constituent
entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee
or agent of another entity, shall stand in the same position
under the provisions of this Section 10.4(a) with respect to
the resulting or surviving entity as he would have with
respect to such constituent entity if its separate existence
had continued.
(ix) The indemnification and advancement of
expenses provided by, or granted pursuant to, this
Section 10.4(a) shall, unless otherwise provided when
authorized or ratified, continue as to a person who has
ceased to be a Company Indemnified Person and shall inure to
the benefit of the heirs, executors and administrators of
such a person.
(b) The Debenture Issuer agrees to indemnify the
(i) Property Trustee, (ii) the Delaware Trustee, (iii) any
Affiliate of the Property Trustee and the Delaware Trustee, and
(iv) any officers, directors, shareholders, members, partners,
employees, representatives, custodians, nominees or agents of the
Property Trustee and the Delaware Trustee (each of the Persons in
(i) through (iv) being referred to as a "Fiduciary Indemnified
Person") for, and to hold each Fiduciary Indemnified Person
harmless against, any and all loss, liability, damage, claim or
expense including taxes (other than taxes based on the income of
such Fiduciary Indemnified Person) incurred without negligence or
<PAGE 54> bad faith on its part, arising out of or in connection
with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable
legal fees and expenses) of defending itself against or
investigating any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
The obligation to indemnify as set forth in this Section 10.4(b)
shall survive the satisfaction and discharge of this Trust
Agreement.
Section 10.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee
and the Property Trustee may engage in or possess an interest in
other business ventures of any nature or description,
independently or with others, similar or dissimilar to the
business of the Trust, and the Trust and the Holders shall have
no rights by virtue of this Trust Agreement in and to such
independent ventures or the income or profits derived therefrom,
and the pursuit of any such venture, even if competitive with the
business of the Trust, shall not be deemed wrongful or improper.
No Covered Person, the Sponsor, the Delaware Trustee, or the
Property Trustee shall be obligated to present any particular
investment or other opportunity to the Trust even if such
opportunity is of a character that, if presented to the Trust,
could be taken by the Trust, and any Covered Person, the Sponsor,
the Delaware Trustee and the Property Trustee shall have the
right to take for its own account (individually or as a partner
or fiduciary) or to recommend to others any such particular
investment or other opportunity. Any Covered Person, the
Delaware Trustee and the Property Trustee may engage or be
interested in any financial or other transaction with the Sponsor
or any Affiliate of the Sponsor, or may act as depositary for,
trustee or agent for, or act on any committee or body of holders
of, securities or other obligations of the Sponsor or its
Affiliates.
ARTICLE XI
ACCOUNTING
Section 11.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be
the calendar year, or such other year as is required by the Code.
Section 11.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust,
the Administrative Trustees shall keep, or cause to be kept, full
books of account, records and supporting documents, which shall
reflect in reasonable detail, each transaction of the Trust. The
books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting
principles, consistently applied. The books of account and the
<PAGE 55> records of the Trust shall be examined by and reported
upon as of the end of each Fiscal Year of the Trust by a firm of
independent certified public accountants selected by the
Administrative Trustees.
(b) The Administrative Trustees shall cause to be duly
prepared and delivered to each of the Holders, any annual United
States federal income tax information statement, required by the
Code, containing such information with regard to the Securities
held by each Holder as is required by the Code and the Treasury
Regulations. Notwithstanding any right under the Code to deliver
any such statement at a later date, the Administrative Trustees
shall endeavor to deliver all such information statements within
30 days after the end of each Fiscal Year of the Trust.
(c) The Administrative Trustees shall cause to be duly
prepared and filed with the appropriate taxing authority, an
annual United States federal income tax return, on a Form 1041 or
such other form required by United States federal income tax law,
and any other annual income tax returns required to be filed by
the Administrative Trustees on behalf of the Trust with any state
or local taxing authority.
Section 11.3 Banking.
The Trust may maintain one or more bank accounts in the
name and for the sole benefit of the Trust; provided, however,
that all payments of funds in respect of the Debentures held by
the Property Trustee shall be made directly to the Property
Trustee Account and no other funds of the Trust shall be
deposited in the Property Trustee Account. The sole signatories
for such accounts shall be designated by the Administrative
Trustees; provided, however, that the Property Trustee shall
designate the signatories for the Property Trustee Account.
Section 11.4 Withholding.
The Trust and the Administrative Trustees shall comply
with all withholding requirements under United States federal,
state and local law. The Trust shall request, and the Holders
shall provide to the Trust, such forms or certificates as are
necessary to establish an exemption from withholding with respect
to each Holder, and any representations and forms as shall
reasonably be requested by the Trust to assist it in determining
the extent of, and in fulfilling, its withholding obligations.
The Administrative Trustees shall file required forms with
applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit
amounts withheld with respect to the Holder to applicable
jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect
to Distributions or allocations to any Holder, the amount
withheld shall be deemed to be a Distribution in the amount of
the withholding to the Holder. In the event of any claimed over
<PAGE 56> withholding, Holders shall be limited to an action
against the applicable jurisdiction. If the amount required to
be withheld was not withheld from actual Distributions made, the
Trust may reduce subsequent Distributions by the amount of such
withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
Section 12.1 Amendments.
(a) Except as otherwise provided in this Trust
Agreement or by any applicable terms of the Securities, this
Trust Agreement may only be amended by a written instrument
approved and executed by:
(i) the Administrative Trustees (or if there are
more than two Administrative Trustees a majority of the
Administrative Trustees);
(ii) if the amendment affects the rights, powers,
duties, obligations or immunities of the Property Trustee,
the Property Trustee; and
(iii) if the amendment affects the rights,
powers, duties, obligations or immunities of the Delaware
Trustee, the Delaware Trustee.
(b) No amendment shall be made, and any such purported
amendment shall be void and ineffective:
(i) unless, in the case of any proposed
amendment, the Property Trustee shall have first received an
Officers' Certificate from each of the Trust and the Sponsor
that such amendment is permitted by, and conforms to, the
terms of this Trust Agreement (including the terms of the
Securities);
(ii) unless, in the case of any proposed
amendment which affects the rights, powers, duties,
obligations or immunities of the Property Trustee, the
Property Trustee shall have first received:
(A) an Officers' Certificate from each of
the Trust and the Sponsor that such amendment is
permitted by, and conforms to, the terms of this Trust
Agreement (including the terms of the Securities); and
(B) an Opinion of Counsel (who may be
counsel to the Sponsor or the Trust) that such
amendment is permitted by, and conforms to, the terms
of this Trust Agreement (including the terms of the
Securities) and that all conditions precedent, if any,
<PAGE 57> in this Trust Agreement to the execution and
delivery of such amendment have been satisfied,
provided, however, that the Property Trustee shall not be
required to sign any such amendment; and
(iii) to the extent the result of such amendment
would be to:
(A) cause the Trust to fail to continue to
be classified for purposes of United States federal
income taxation as a grantor trust;
(B) reduce or otherwise adversely affect the
powers of the Property Trustee in contravention of the
Trust Indenture Act; or
(C) cause the Trust to be deemed to be an
Investment Company required to be registered under the
Investment Company Act;
(c) At such time after the Trust has issued any
Securities that remain outstanding, any amendment that would
adversely affect the rights, privileges or preferences of any
Holder may be effected only with such additional requirements as
may be set forth in the terms of such Securities;
(d) Section 9.1(c) and this Section 12.1 shall not be
amended without the consent of all of the Holders;
X4- Article Four shall not be amended without the
consent of the Holders of a Majority in liquidation amount of the
Common Securities and;
(f) The rights of the holders of the Common Securities
under Article Five to increase or decrease the number of, and
appoint and remove Trustees shall not be amended without the
consent of the Holders of a Majority in liquidation amount of the
Common Securities; and
(g) Notwithstanding Section 12.1(c), this Trust
Agreement may be amended without the consent of the Holders to:
(i) cure any ambiguity, correct or supplement any
provision in this Trust Agreement that may be inconsistent
with any other provision of this Trust Agreement or to make
any other provisions with respect to matters or questions
arising under this Trust Agreement which shall not be
inconsistent with the other provisions of the Trust
Agreement; and
(ii) to modify, eliminate or add to any
provisions of the Trust Agreement to such extent as shall be
necessary to ensure that the Trust will be classified for
<PAGE 58> United States federal income tax purposes as a
grantor trust at all times that any Securities are
outstanding or to ensure that the Trust will not be required
to register as an Investment Company under the Investment
Company Act.
provided, however, that in the case of clause (i), such action
shall not adversely affect in any material respect the interests
of the Holders, and any amendments of this Trust Agreement shall
become effective when notice thereof is given to the Holders.
Section 12.2 Meetings of the Holders; Action by Written
Consent.
EDD Meetings of the Holders of any class of Securities
may be called at any time by the Administrative Trustees (or as
provided in the terms of the Securities) to consider and act on
any matter on which Holders of such class of Securities are
entitled to act under the terms of this Trust Agreement, the
terms of the Securities or the rules of any stock exchange on
which the Capital Securities are listed or admitted for trading.
The Administrative Trustees shall call a meeting of the Holders
of such class if directed to do so by the Holders of at least 10%
in liquidation amount of such class of Securities. Such
direction shall be given by delivering to the Administrative
Trustees one or more notices in writing stating that the signing
Holders wish to call a meeting and indicating the general or
specific purpose for which the meeting is to be called. Any
Holders calling a meeting shall specify in writing the Security
Certificates held by the Holders exercising the right to call a
meeting and only those Securities specified shall be counted for
purposes of determining whether the required percentage set forth
in the second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the
terms of the Securities, the following provisions shall apply to
meetings of Holders:
(i) notice of any such meeting shall be given to
all the Holders having a right to vote thereat at least
seven days and not more than 60 days before the date of such
meeting. Whenever a vote, consent or approval of the
Holders is permitted or required under this Trust Agreement
or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading, such vote,
consent or approval may be given at a meeting of the
Holders. Any action that may be taken at a meeting of the
Holders may be taken without a meeting if a consent in
writing setting forth the action so taken is signed by the
Holders owning not less than the minimum amount of
Securities in liquidation amount that would be necessary to
authorize or take such action at a meeting at which all
Holders having a right to vote thereon were present and
voting. Prompt notice of the taking of action without a
<PAGE 59> meeting shall be given to the Holders entitled to
vote who have not consented in writing. The Administrative
Trustees may specify that any written ballot submitted to
the Security Holder for the purpose of taking any action
without a meeting shall be returned to the Trust within the
time specified by the Administrative Trustees;
(ii) each Holder may authorize any Person to act
for it by proxy on all matters in which a Holder is entitled
to participate, including waiving notice of any meeting, or
voting or participating at a meeting. No proxy shall be
valid after the expiration of 11 months from the date
thereof unless otherwise provided in the proxy. Every proxy
shall be revocable at the pleasure of the Holder executing
it. Except as otherwise provided herein, all matters
relating to the giving, voting or validity of proxies shall
be governed by the General Corporation Law of the State of
Delaware relating to proxies, and judicial interpretations
thereunder, as if the Trust were a Delaware corporation and
the Holders were stockholders of a Delaware corporation;
(iii) each meeting of the Holders shall be
conducted by the Administrative Trustees or by such other
Person that the Administrative Trustees may designate; and
(iv) unless the Business Trust Act, this Trust
Agreement, the terms of the Securities, the Trust Indenture
Act or the listing rules of any stock exchange on which the
Capital Securities are then listed or trading, otherwise
provides, the Administrative Trustees, in their sole
discretion, shall establish all other provisions relating to
meetings of Holders, including notice of the time, place or
purpose of any meeting at which any matter is to be voted on
by any Holders, waiver of any such notice, action by consent
without a meeting, the establishment of a record date,
quorum requirements, voting in person or by proxy or any
other matter with respect to the exercise of any such right
to vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
Section 13.1 Representations and Warranties of Property
Trustee.
The Trustee that acts as initial Property Trustee
represents and warrants to the Trust and to the Sponsor at the
date of this Trust Agreement, and each Successor Property Trustee
represents and warrants to the Trust and the Sponsor at the time
of the Successor Property Trustee's acceptance of its appointment
as Property Trustee that:
<PAGE 60>
(a) The Property Trustee is a New York banking
corporation with trust powers and authority to execute and
deliver, and to carry out and perform its obligations under the
terms of, this Trust Agreement;
(b) The execution, delivery and performance by the
Property Trustee of this Trust Agreement has been duly authorized
by all necessary corporate action on the part of the Property
Trustee. This Trust Agreement has been duly executed and
delivered by the Property Trustee and constitutes a legal, valid
and binding obligation of the Property Trustee, enforceable
against it in accordance with its terms, subject to applicable
bankruptcy, reorganization, moratorium, insolvency, and other
similar laws affecting creditors' rights generally and to general
principles of equity and the discretion of the court (regardless
of whether the enforcement of such remedies is considered in a
proceeding in equity or at law);
(c) The execution, delivery and performance of this
Trust Agreement by the Property Trustee does not conflict with or
constitute a breach of the charter or by-laws of the Property
Trustee; and
(d) No consent, approval or authorization of, or
registration with or notice to, any New York State or federal
banking authority is required for the execution, delivery or
performance by the Property Trustee of this Trust Agreement.
Section 13.2 Representations and Warranties of Delaware
Trustee.
The Trustee that acts as initial Delaware Trustee
represents and warrants to the Trust and to the Sponsor at the
date of this Trust Agreement, and each Successor Delaware Trustee
represents and warrants to the Trust and the Sponsor at the time
of the Successor Delaware Trustee's acceptance of its appointment
as Delaware Trustee that:
(a) The Delaware Trustee is duly organized, validly
existing and in good standing under the laws of the State of
Delaware, with trust power and authority to execute and deliver,
and to carry out and perform its obligations under the terms of,
this Trust Agreement;
(b) The execution, delivery and performance by the
Delaware Trustee of this Trust Agreement has been duly authorized
by all necessary corporate action on the part of the Delaware
Trustee. This Trust Agreement has been duly executed and
delivered by the Delaware Trustee and constitutes a legal, valid
and binding obligation of the Delaware Trustee, enforceable
against it in accordance with its terms, subject to applicable
bankruptcy, reorganization, moratorium, insolvency, and other
similar laws affecting creditors' rights generally and to general
principles of equity and the discretion of the court (regardless
<PAGE 61> of whether the enforcement of such remedies is
considered in a proceeding in equity or at law);
(c) No consent, approval or authorization of, or
registration with or notice to, any federal banking authority is
required for the execution, delivery or performance by the
Delaware Trustee of this Trust Agreement; and
(d) The Delaware Trustee is a natural person who is a
resident of the State of Delaware or, if not a natural person, an
entity which has its principal place of business in the State of
Delaware.
ARTICLE XIV
REGISTRATION RIGHTS
Section 14.1 Registration Rights Agreement. [Intentionally
Omitted]
ARTICLE XV
MISCELLANEOUS
Section 15.1 Notices.
All notices provided for in this Trust Agreement shall
be in writing, duly signed by the party giving such notice, and
shall be delivered, telecopied or mailed by first class mail, as
follows:
(a) if given to the Trust, in care of the
Administrative Trustees at the Trust's mailing address set forth
below (or such other address as the Trust may give notice of to
the Holders):
Sovereign Capital Trust II
1130 Berkshire Boulevard
Wyomissing, PA 19610
Attention: Administrative Trustee
(b) if given to the Delaware Trustee, at the mailing
address set forth below (or such other address as Delaware
Trustee may give notice of to the Holders):
The Bank of New York (Delaware)
23 White Clay Center
Route 273
Newark, Delaware 19711
Attention: Corporate Trust Department
(c) if given to the Property Trustee, at the Property
Trustee's mailing address set forth below (or such other address
as the Property Trustee may give notice of to the Holders):
<PAGE 62>
The Bank of New York
101 Barclay Street, 21 West
New York, New York 10283
Attention: Corporate Trust
Trustee Administration
(d) if given to the Holder of the Common Securities,
at the mailing address of the Sponsor set forth below (or such
other address as the Holder of the Common Securities may give
notice to the Trust):
Sovereign Bancorp, Inc.
1130 Berkshire Boulevard
Wyomissing, PA 19610
Attention: Chief Financial Officer
(e) if given to any other Holder, at the address set
forth on the books and records of the Trust.
All such notices shall be deemed to have been given
when received in person, telecopied with receipt confirmed, or
mailed by first class mail, postage prepaid except that if a
notice or other document is refused delivery or cannot be
delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been
delivered on the date of such refusal or inability to deliver.
Section 15.2 Governing Law.
This Trust Agreement and the rights of the parties
hereunder shall be governed by and interpreted in accordance with
the laws of the State of Delaware and all rights and remedies
shall be governed by such laws without regard to principles of
conflict of laws.
Section 15.3 Intention of the Parties.
It is the intention of the parties hereto that the
Trust be classified for United States federal income tax purposes
as a grantor trust. The provisions of this Trust Agreement shall
be interpreted to further this intention of the parties.
Section 15.4 Headings.
Headings contained in this Trust Agreement are inserted
for convenience of reference only and do not affect the
interpretation of this Trust Agreement or any provision hereof.
Section 15.5 Successors and Assigns.
Whenever in this Trust Agreement any of the parties
hereto is named or referred to, the successors and assigns of
<PAGE 63> such party shall be deemed to be included, and all
covenants and agreements in this Trust Agreement by the Sponsor
and the Trustees shall bind and inure to the benefit of their
respective successors and assigns, whether so expressed.
Section 15.6 Partial Enforceability.
If any provision of this Trust Agreement, or the
application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Trust Agreement, or
the application of such provision to persons or circumstances
other than those to which it is held invalid, shall not be
affected thereby.
Section 15.7 Counterparts.
This Trust Agreement may contain more than one
counterpart of the signature page and this Trust Agreement may be
executed by the affixing of the signature of each of the Trustees
to one of such counterpart signature pages. All of such
counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers
had signed a single signature page.
IN WITNESS WHEREOF, the undersigned has caused these
presents to be executed as of the day and year first above
written.
___________________________________
Mark R. McCollom, as Administrative
Trustee
___________________________________
Jacquelyn Blue, as Administrative
Trustee
THE BANK OF NEW YORK (Delaware) as
Delaware Trustee
By:________________________________
Name:
Title:
THE BANK OF NEW YORK as Property
Trustee
By:________________________________
Name:
Title:
SOVEREIGN BANCORP, INC., as Sponsor
<PAGE 64>
By:________________________________
Name:
Title:
<PAGE 65>
ANNEX I
TERMS OF
_____% Series A CAPITAL SECURITIES
______% COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated
Declaration of Trust, dated as of ___________________ (as amended
from time to time, the "Trust Agreement"), the designation,
rights, privileges, restrictions, preferences and other terms and
provisions of the Securities are set out below (each capitalized
term used but not defined herein has the meaning set forth in the
Trust Agreement or, if not defined in such Trust Agreement, as
defined in the Prospectus referred to below in Section 2(c) of
this Annex I):
1. Designation and Number.
(a) Capital Securities. ______ Series A Capital
Securities of the Trust with an aggregate liquidation amount with
respect to the assets of the Trust of ______________________
Dollars ($____________________), and each with a liquidation
amount with respect to the assets of the Trust of $______ per
security, are hereby designated for the purposes of
identification only as "_______% Series A Capital Securities"
(collectively, the "Capital Securities"). The certificates
evidencing the Capital Securities shall be substantially in the
form of Exhibit A-1 to the Trust Agreement, with such changes and
additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice or to conform to the rules of
any exchange or quotation system on or in which the Capital
Securities are listed, traded or quoted.
(b) Common Securities. ______ Common Securities
of the Trust with an aggregate liquidation amount with respect to
the assets of the Trust of _________________________ Dollars
($_______________) and a liquidation amount with respect to the
assets of the Trust of $______ per security, are hereby
designated for the purposes of identification only as "_______%
Common Securities" (collectively, the "Common Securities"). The
certificates evidencing the Common Securities shall be
substantially in the form of Exhibit A-2 to the Trust Agreement,
with such changes and additions thereto or deletions therefrom as
may be required by ordinary usage, custom or practice.
2. Distributions.
(a) Distributions payable on each Security will
be fixed at a rate per annum of ______% (the "Coupon Rate") of
the liquidation amount of $______ per Security (the "Liquidation
Amount"), such rate being the rate of interest payable on the
<PAGE I-1> Debentures to be held by the Property Trustee.
Distributions in arrears for more than one semi-annual period
will bear additional distributions thereon compounded semi-
annually at the Coupon Rate (to the extent permitted by
applicable law). The term "Distributions", as used herein,
includes distributions of any such interest. A Distribution is
payable only to the extent that payments are made in respect of
the Debentures held by the Property Trustee and to the extent the
Property Trustee has funds on hand legally available therefor.
(b) Distributions on the Securities will be
cumulative, will accumulate from the most recent date to which
Distributions have been paid or, if no Distributions have been
paid, from _______________, and will be payable semi-annually in
arrears on ______________ and __________________ of each year,
commencing on ______________________ (each, a "Distribution
Date"), except as otherwise described below. Distributions will
be computed on the basis of a 360-day year consisting of twelve
30-day months and for any period less than a full calendar month
on the basis of the actual number of days elapsed in such month.
As long as no Event of Default has occurred and is continuing
under the Indenture, the Debenture Issuer has the right under the
Indenture to defer payments of interest by extending the interest
payment period at any time and from time to time on the
Debentures for a period not exceeding 10 consecutive semi-annual
periods, including the first such semi-annual period during such
period (each an "Extension Period"), during which Extension
Period no interest shall be due and payable on the Debentures,
provided that no Extension Period shall end on a date other than
an Interest Payment Date for the Debentures or extend beyond the
Maturity Date of the Debentures. As a consequence of such
deferral, Distributions will also be deferred. Despite such
deferral, Distributions will continue to accumulate with
additional Distributions thereon (to the extent permitted by
applicable law but not at a rate greater than the rate at which
interest is then accruing on the Debentures) at the Coupon Rate
compounded semi-annually during any such Extension Period. Prior
to the termination of any such Extension Period, the Debenture
Issuer may further defer payments of interest by further
extending such Extension Period; provided that such Extension
Period, together with all such previous and further extensions
within such Extension Period, may not exceed 10 consecutive semi-
annual periods, including the first semi-annual period during
such Extension Period, or extend beyond the Maturity Date of the
Debentures. Upon the termination of any Extension Period and the
payment of all amounts then due, the Debenture Issuer may
commence a new Extension Period, subject to the above
requirements.
(c) Distributions on the Securities will be
payable to the Holders thereof as they appear on the books and
records of the Trust on the fifteenth day of the month preceding
the month in which the relevant Distribution Date occurs, which
Distribution Dates correspond to the interest payment dates on
<PAGE I-2> the Debentures. Subject to any applicable laws and
regulations and the provisions of the Trust Agreement, each such
payment in respect of the Capital Securities will be made as
described under the heading "____________________________" in the
Prospectus dated _______________________, of the Debenture Issuer
and the Trust relating to the Securities and the Debentures. The
relevant record dates for the Common Securities shall be the same
as the record dates for the Capital Securities. Distributions
payable on any Securities that are not punctually paid on any
Distribution Date, as a result of the Debenture Issuer having
failed to make a payment under the Debentures, will cease to be
payable to the Holder on the relevant record date, and such
defaulted Distribution will instead be payable to the Person in
whose name such Securities are registered on the special record
date or other specified date determined in accordance with the
Indenture. If any date on which Distributions are payable on the
Securities is not a Business Day, then payment of the
Distribution payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay), except that if
such next succeeding Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately
preceding Business Day with the same force and effect as if made
on such date.
(d) In the event that there is any money or other
property held by or for the Trust that is not accounted for
hereunder, such property shall be distributed Pro Rata (as
defined herein) among the Holders.
3. Liquidation Distribution Upon Dissolution.
In the event of any termination of the Trust or the
Sponsor otherwise gives notice of its election to liquidate the
Trust pursuant to Section 8.1(a)(iii) of the Trust Agreement, the
Trust shall be liquidated by the Administrative Trustees as
expeditiously as the Administrative Trustees determine to be
possible by distributing, after satisfaction of liabilities to
creditors of the Trust as provided by applicable law, to the
Holders a Like Amount (as defined below) of the Debentures,
unless such distribution is determined by the Property Trustee
not to be practicable, in which event such Holders will be
entitled to receive Pro Rata out of the assets of the Trust
legally available for distribution to Holders, after satisfaction
of liabilities to creditors of the Trust as provided by
applicable law, an amount equal to the aggregate of the
liquidation amount of $______ per Security plus accumulated and
unpaid Distributions thereon to the date of payment (such amount
being the "Liquidation Distribution").
"Like Amount" means (i) with respect to a redemption of
the Securities, Securities having a Liquidation Amount equal to
the principal amount of Debentures to be paid in accordance with
their terms and (ii) with respect to a distribution of Debentures
<PAGE I-3> upon the liquidation of the Trust, Debentures having a
principal amount equal to the Liquidation Amount of the
Securities of the Holder to whom such Debentures are distributed.
If, upon any such liquidation, the Liquidation
Distribution can be paid only in part because the Trust has
insufficient assets on hand legally available to pay in full the
aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Securities shall be paid on a Pro
Rata basis.
4. Redemption and Distribution.
(a) Upon the repayment of the Debentures in whole
or in part, at maturity or upon early redemption (either at the
option of the Debenture Issuer or pursuant to a Special Event, as
described below), the proceeds from such repayment shall be
simultaneously applied by the Property Trustee (subject to the
Property Trustee having received notice no later than 45 days
prior to such repayment) to redeem a Like Amount of the
Securities at a redemption price equal to (i) in the case of the
repayment of the Debentures at maturity, the Maturity Redemption
Price (as defined below), (ii) in the case of the optional
redemption of the Debentures upon the occurrence and continuation
of a Special Event, the Special Event Redemption Price (as
defined below) and (iii) in the case of the optional redemption
of the Debentures on or after ______________________, the
Optional Redemption Price (as defined below). The Maturity
Redemption Price, the Special Event Redemption Price and the
Optional Redemption Price are referred to collectively as the
"Redemption Price". Holders will be given not less than 30 nor
more than 60 days notice of such redemption.
(b) (i) The "Maturity Redemption Price", with
respect to a redemption of Securities, shall mean an amount equal
to the principal of and accrued and unpaid interest on the
Debentures as of the maturity date thereof.
(ii) In the case of an optional redemption,
if fewer than all the outstanding Securities are to be so
redeemed, the Securities will be redeemed Pro Rata and the
Capital Securities to be redeemed will be determined as described
in Section 4(f)(ii) below. Upon the entry of an order for the
dissolution of the Trust by a court of competent jurisdiction,
the Debentures thereafter will be subject to optional repayment,
in whole, but not in part, on or after _________________ (the
"Initial Optional Redemption Date").
The Debenture Issuer shall have the right (subject to
the conditions in the Indenture) to elect to redeem the
Debentures in whole or in part at any time on or after the
Initial Optional Redemption Date, upon not less than 30 days and
not more than 60 days notice, at the Optional Redemption Price
and, simultaneous with such redemption, to cause a Like Amount of
<PAGE I-4> the Securities to be redeemed by the Trust at the
Optional Redemption Price on a Pro Rata basis. "Optional
Redemption Price" shall mean a price equal to the percentage of
the liquidation amount of Securities to be redeemed plus
accumulated and unpaid Distributions thereon, if any, to the date
of such redemption if redeemed during the 12-month period
beginning ______________, of the years indicated below:
Year Percentage
(c) If at any time a Tax Event or a Regulatory
Capital Event (each as defined below, and each a "Special
Event") occurs, the Debenture Issuer shall have the right
(subject to the conditions set forth in the Indenture) at any
time prior to the Initial Optional Redemption Date, upon not less
than 30 nor more than 60 days notice, to redeem the Debentures in
whole, but not in part, within the 90 days following the
occurrence of such Special Event (the "90 Day Period"), and,
simultaneous with such redemption, to cause a Like Amount of the
Securities to be redeemed by the Trust at the Special Event
Redemption Price on a Pro Rata basis.
"Tax Event" shall occur upon receipt by the Debenture
Issuer and the Trust of an Opinion of Counsel experienced in such
matters to the effect that, as a result of any amendment to, or
change (including any announced prospective change) in, the laws
or any regulations thereunder of the United States or any
political subdivision or taxing authority thereof or therein, or
as a result of any official administrative pronouncement or
judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or which
pronouncement or decision is announced on or after
_________________, there is more than an insubstantial risk that
(i) the Trust is, or will be within 90 days of the date of such
opinion, subject to United States federal income tax with respect
to income received or accrued on the Debentures, (ii) interest
payable by the Debenture Issuer on the Debentures is not, or
within 90 days of the date of such opinion, will not be,
deductible by the Debenture Issuer, in whole or in part, for
United States federal income tax purposes, or (iii) the Trust is,
or will be within 90 days of the date of such opinion, subject to
more than a de minimis amount of other taxes, duties or other
governmental charges.
"Regulatory Capital Event" shall mean that the Sponsor
shall have become, or pursuant to law or regulation will become
within 180 days, subject to capital requirements under which, in
the written opinion of independent bank regulatory counsel
experienced in such matters, the Capital Securities would not
constitute Tier 1 Capital applied as if the Sponsor (or its
successor) were a bank holding company (as that concept is used
<PAGE I-5> in the guidelines or regulations issued by the Federal
Reserve Board or its then equivalent); provided, however, that
the distribution of the Debentures in connection with the
liquidation of the Trust by the Debenture Issuer shall not in and
of itself constitute a Regulatory Capital Event unless such
liquidation shall have occurred in connection with a Tax Event.
"Special Event Redemption Price" shall mean, with
respect to a redemption of Securities, a price equal to 100% of
the principal of a Like Amount of Debentures to be redeemed plus
accumulated but unpaid Distributions thereon, if any, to the date
of such redemption.
(d) On and from the date fixed by the
Administrative Trustees for any distribution of Debentures and
liquidation of the Trust: (i) the Securities will no longer be
deemed to be outstanding, (ii) the Clearing Agency or its nominee
(or any successor Clearing Agency or its nominee), as the Holder
of the Capital Securities, will receive a registered global
certificate or certificates representing the Debentures to be
delivered upon such distribution and any certificates
representing Securities not held by the Clearing Agency or its
nominee (or any successor Clearing Agency or its nominee) will be
deemed to represent beneficial interests in a Like Amount of
Debentures until such certificates are presented to the Debenture
Issuer or its agent for transfer or reissue.
(e) The Trust may not redeem fewer than all the
outstanding Securities unless all accumulated and unpaid
Distributions have been paid on all Securities for all semi-
annual Distribution periods terminating on or before the date of
redemption.
E\E The procedure with respect to redemptions or
distributions of Securities shall be as follows:
(i) Notice of any redemption of, or notice
of distribution of Debentures in exchange for, the
Securities (a "Redemption/Distribution Notice") will be
given by the Trust by mail to each Holder to be redeemed or
exchanged not fewer than 30 nor more than 60 days before the
date fixed for redemption or exchange thereof which, in the
case of a redemption, will be the date fixed for redemption
of the Debentures. For purposes of the calculation of the
date of redemption or exchange and the dates on which
notices are given pursuant to this Section 4(f)(i), a
Redemption/Distribution Notice shall be deemed to be given
on the day such notice is first mailed by first-class mail,
postage prepaid, to Holders. Each Redemption/Distribution
Notice shall be addressed to the Holders at the address of
each such Holder appearing in the books and records of the
Trust. No defect in the Redemption/Distribution Notice or
in the mailing of either thereof with respect to any Holder
<PAGE I-6> shall affect the validity of the redemption or
exchange proceedings with respect to any other Holder.
(ii) In the event that fewer than all the
outstanding Securities are to be redeemed, the Securities to
be redeemed shall be redeemed Pro Rata from each Holder, it
being understood that, in respect of Capital Securities
registered in the name of and held of record by the Clearing
Agency or its nominee (or any successor Clearing Agency or
its nominee) or any nominee, the distribution of the
proceeds of such redemption will be made to the Clearing
Agency and disbursed by such Clearing Agency in accordance
with the procedures applied by such agency or nominee.
(iii) If Securities are to be redeemed and
the Trust gives a Redemption/Distribution Notice, (which
notice will be irrevocable), then (A) with respect to
Capital Securities issued in book-entry form, by 12:00 noon,
New York City time, on the redemption date, provided that
the Debenture Issuer has paid the Property Trustee a
sufficient amount of cash in connection with the related
redemption or maturity of the Debentures by 10:00 a.m., New
York City time, on the maturity date or the date of
redemption, as the case requires, the Property Trustee will
deposit irrevocably with the Clearing Agency or its nominee
(or successor Clearing Agency or its nominee) funds
sufficient to pay the applicable Redemption Price with
respect to such Capital Securities and will give the
Clearing Agency irrevocable instructions and authority to
pay the Redemption Price to the relevant Clearing Agency
Participants, and (B) with respect to Capital Securities
issued in certificated form and Common Securities, provided
that the Debenture Issuer has paid the Property Trustee a
sufficient amount of cash in connection with the related
redemption or maturity of the Debentures, the Property
Trustee will pay the relevant Redemption Price to the
Holders by check mailed to the address of the relevant
Holder appearing on the books and records of the Trust on
the redemption date. If a Redemption/Distribution Notice
shall have been given and funds deposited as required, if
applicable, then immediately prior to the close of business
on the date of such deposit, or on the redemption date, as
applicable, Distributions will cease to accumulate on the
Securities so called for redemption and all rights of
Holders so called for redemption will cease, except the
right of the Holders of such Securities to receive the
Redemption Price, but without interest on such Redemption
Price, and such Securities shall cease to be outstanding.
(iv) Payment of accumulated and unpaid
Distributions on the Redemption Date of the Securities will
be subject to the rights of Holders on the close of business
on a regular record date in respect of a Distribution Date
occurring on or prior to such Redemption Date. <PAGE I-7>
Neither the Administrative Trustees nor the
Trust shall be required to register or cause to be
registered the transfer of (i) any Securities beginning on
the opening of business 15 days before the day of mailing of
a notice of redemption or any notice of selection of
Securities for redemption or (ii) any Securities selected
for redemption except the unredeemed portion of any Security
being redeemed. If any date fixed for redemption of
Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the
next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay)
except that, if such next succeeding Business Day falls in
the next calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the
same force and effect as if made on such date fixed for
redemption. If payment of the Redemption Price in respect
of any Securities is improperly withheld or refused and not
paid either by the Property Trustee or by the Sponsor as
guarantor pursuant to the relevant Securities Guarantee,
Distributions on such Securities will continue to accumulate
from the original redemption date to the actual date of
payment, in which case the actual payment date will be
considered the date fixed for redemption for purposes of
calculating the Redemption Price.
(v) Redemption/Distribution Notices shall be
sent by the Property Trustee on behalf of the Trust to
(A) in respect of the Capital Securities, the Clearing
Agency or its nominee (or any successor Clearing Agency or
its nominee) if the Global Certificates have been issued or,
if Definitive Capital Security Certificates have been
issued, to the Holder thereof, and (B) in respect of the
Common Securities to the Holder thereof.
(vi) Subject to the foregoing and applicable
law (including, without limitation, United States federal
securities laws and banking laws), provided the acquiror is
not the Holder of the Common Securities or the obligor under
the Indenture, the Sponsor or any of its subsidiaries may at
any time and from time to time purchase outstanding Capital
Securities by tender, in the open market or by private
agreement.
5. Voting Rights - Capital Securities.
(a) Except as provided under Sections 5(b) and 7
and as otherwise required by law and the Trust Agreement, the
Holders of the Capital Securities will have no voting rights.
(b) So long as any Debentures are held by the
Property Trustee, the Trustees shall not (i) direct the time,
method and place of conducting any proceeding for any remedy
available to the Debenture Trustee, or executing any trust or
<PAGE I-8> power conferred on such Debenture Trustee with respect
to the Debentures, (ii) waive any past default that is waivable
under Section 5.07 of the Indenture, (iii) exercise any right to
rescind or annul a declaration of acceleration of the maturity of
the principal of the Debentures or (iv) consent to any amendment,
modification or termination of the Indenture or the Debentures,
where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of a majority in
liquidation amount of all outstanding Capital Securities;
provided, however, that where a consent under the Indenture would
require the consent of each holder of Debentures affected
thereby, no such consent shall be given by the Property Trustee
without the prior approval of each Holder of the Capital
Securities. The Trustees shall not revoke any action previously
authorized or approved by a vote of the Holders of the Capital
Securities except by subsequent vote of such Holders. The
Property Trustee shall notify each Holder of Capital Securities
of any notice of default with respect to the Debentures. In
addition to obtaining the foregoing approvals of such Holders of
the Capital Securities, prior to taking any of the foregoing
actions, the Trustees shall obtain an opinion of counsel
experienced in such matters to the effect that the Trust will not
be classified as an association taxable as a corporation for
United States federal income tax purposes on account of such
action.
If an Event of Default under the Trust Agreement has
occurred and is continuing and such event is attributable to the
failure of the Debenture Issuer to pay principal of or premium,
if any, or interest on the Debentures on the due date (or in the
case of redemption, on the redemption date), then a Holder of
Capital Securities may directly institute a proceeding for
enforcement of payment to such Holder of the principal of or
premium, if any, or interest on a Like Amount of Debentures (a
"Direct Action") on or after the respective due date specified in
the Debentures. In connection with such Direct Action, the
rights of the Common Securities Holder will be subordinated to
the rights of such Holder of Capital Securities to the extent of
any payment made by the Debenture Issuer to such Holder of
Capital Securities in such Direct Action. Except as provided in
the second preceding sentence, the Holders of Capital Securities
will not be able to exercise directly any other remedy available
to the holders of the Debentures.
Any approval or direction of Holders of Capital
Securities may be given at a separate meeting of Holders of
Capital Securities convened for such purpose, at a meeting of all
of the Holders of Securities in the Trust or pursuant to written
consent. The Property Trustees will cause a notice of any
meeting at which Holders of Capital Securities are entitled to
vote, or of any matter upon which action by written consent of
such Holders is to be taken, to be mailed to each Holder of
record of Capital Securities. Each such notice will include a
statement setting forth (i) the date of such meeting or the date
<PAGE I-9> by which such action is to be taken, (ii) a
description of any resolution proposed for adoption at such
meeting on which such Holders are entitled to vote or of such
matter upon which written consent is sought and
(iii) instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the Capital
Securities will be required for the Trust to redeem and cancel
Capital Securities or to distribute the Debentures in accordance
with the Trust Agreement and the terms of the Securities.
Notwithstanding that Holders of Capital Securities are
entitled to vote or consent under any of the circumstances
described above, any of the Capital Securities that are owned by
the Sponsor or any Affiliate of the Sponsor shall not be entitled
to vote or consent and shall, for purposes of such vote or
consent, be treated as if they were not outstanding.
6. Voting Rights - Common Securities.
(a) Except as provided under Sections 6(b), 6(c),
and 7 and as otherwise required by law and the Trust Agreement,
the Holders of the Common Securities will have no voting rights.
(b) Unless an Event of Default shall have
occurred and be continuing, any Trustee may be removed at any
time by the holder of the Common Securities. If an Event of
Default has occurred and is continuing, the Property Trustee and
the Delaware Trustee may be removed at such time by the holders
of a Majority in liquidation amount of the outstanding Capital
Securities. In no event will the holders of the Capital
Securities have the right to vote to appoint, remove or replace
the Administrative Trustees, which voting rights are vested
exclusively in the Sponsor as the holder of the Common
Securities. No resignation or removal of a Trustee and no
appointment of a successor trustee shall be effective until the
acceptance of appointment by the successor trustee in accordance
with the provisions of the Trust Agreement.
(c) So long as any Debentures are held by the
Property Trustee, the Trustees shall not (i) direct the time,
method and place of conducting any proceeding for any remedy
available to the Debenture Trustee, or executing any trust or
power conferred on such Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under
Section 5.07 of the Indenture, (iii) exercise any right to
rescind or annul a declaration of acceleration of the maturity of
the principal of the Debentures or (iv) consent to any amendment,
modification or termination of the Indenture or the Debentures,
where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of a Majority in
liquidation amount of all outstanding Common Securities;
provided, however, that where a consent under the Indenture would
require the consent of each holder of Debentures affected
<PAGE I-10> thereby, no such consent shall be given by the
Property Trustee without the prior approval of each Holder of the
Common Securities. The Trustees shall not revoke any action
previously authorized or approved by a vote of the Holders of the
Common Securities except by subsequent vote of such Holders. The
Property Trustee shall notify each Holder of Common Securities of
any notice of default with respect to the Debentures. In
addition to obtaining the foregoing approvals of such Holders of
the Common Securities, prior to taking any of the foregoing
actions, the Trustees shall obtain an opinion of counsel
experienced in such matters to the effect that the Trust will not
be classified as an association taxable as a corporation for
United States federal income tax purposes on account of such
action.
If an Event of Default under the Trust Agreement has
occurred and is continuing and such event is attributable to the
failure of the Debenture Issuer to pay principal of or premium,
if any, or interest on the Debentures on the due date (or in the
case of redemption, on the redemption date), then a Holder of
Common Securities may institute a Direct Action for enforcement
of payment to such Holder of the principal of or premium, if any,
or interest on a Like Amount of Debentures on or after the
respective due date specified in the Debentures. In connection
with such Direct Action, the rights of the Common Securities
Holder will be subordinated to the rights of such Holder of
Capital Securities to the extent of any payment made by the
Debenture Issuer to such Holder of Common Securities in such
Direct Action. Except as provided in the second preceding
sentence, the Holders of Common Securities will not be able to
exercise directly any other remedy available to the holders of
the Debentures.
Any approval or direction of Holders of Common
Securities may be given at a separate meeting of Holders of
Common Securities convened for such purpose, at a meeting of all
of the Holders of Securities in the Trust or pursuant to written
consent. The Administrative Trustees will cause a notice of any
meeting at which Holders of Common Securities are entitled to
vote, or of any matter upon which action by written consent of
such Holders is to be taken, to be mailed to each Holder of
record of Common Securities. Each such notice will include a
statement setting forth (i) the date of such meeting or the date
by which such action is to be taken, (ii) a description of any
resolution proposed for adoption at such meeting on which such
Holders are entitled to vote or of such matter upon which written
consent is sought and (iii) instructions for the delivery of
proxies or consents.
No vote or consent of the Holders of the Common
Securities will be required for the Trust to redeem and cancel
Common Securities or to distribute the Debentures in accordance
with the Trust Agreement and the terms of the Securities.
<PAGE I-11>
7. Amendments to Trust Agreement and Indenture.
In addition to the requirements set out in Section 12.1
of the Trust Agreement, the Trust Agreement may be amended from
time to time by the Sponsor, the Property Trustee and the
Administrative Trustees, without the consent of the Holders
(i) to cure any ambiguity, correct or supplement any provisions
in the Trust Agreement that may be inconsistent with any other
provisions, or to make any other provisions with respect to
matters or questions arising under the Trust Agreement which
shall not be inconsistent with the other provisions of the Trust
Agreement, or (ii) to modify, eliminate or add to any provisions
of the Trust Agreement to such extent as shall be necessary to
ensure that the Trust will be classified for United States
federal income tax purposes as a grantor trust at all times that
any Securities are outstanding or to ensure that the Trust will
not be required to register as an "Investment Company" under the
Investment Company Act; provided, however, that in the case of
clause (i), such action shall not adversely affect in any
material respect the interests of any Holder, any amendments of
the Trust Agreement shall become effective when notice thereof is
given to the Holders. The Trust Agreement may also be amended by
the Trustees and the Sponsor with (i) the consent of Holders
representing a Majority in liquidation amount of all outstanding
Securities, and (ii) receipt by the Trustees of an Opinion of
Counsel to the effect that such amendment or the exercise of any
power granted to the Trustees in accordance with such amendment
will not affect the Trust's status as a grantor trust for United
States federal income tax purposes or the Trust's exemption from
status as an Investment Company under the Investment Company Act,
provided that, without the consent of each Holder of Trust
Securities, the Trust Agreement may not be amended to (i) change
the amount or timing of any Distribution on the Trust Securities
or otherwise adversely affect the amount of any Distribution
required to be made in respect of the Trust Securities as of a
specified date or (ii) restrict the right of a holder of Trust
Securities to institute suit for the enforcement of any such
payment on or after such date.
8. Pro Rata.
A reference in these terms of the Securities to any
payment, distribution or treatment as being "Pro Rata" shall mean
pro rata to each Holder according to the aggregate liquidation
amount of the Securities held by the relevant Holder in relation
to the aggregate liquidation amount of all Securities outstanding
unless, in relation to a payment, an Event of Default under the
Trust Agreement has occurred and is continuing, in which case any
funds available to make such payment shall be paid first to each
Holder of the Capital Securities pro rata according to the
aggregate liquidation amount of Capital Securities held by the
relevant Holder relative to the aggregate liquidation amount of
all Capital Securities outstanding, and only after satisfaction
of all amounts owed to the Holders of the Capital Securities, to
<PAGE I-12> each Holder of Common Securities pro rata according
to the aggregate liquidation amount of Common Securities held by
the relevant Holder relative to the aggregate liquidation amount
of all Common Securities outstanding.
9. Ranking.
The Capital Securities rank pari passu with the Common
Securities and payment thereon shall be made Pro Rata with the
Common Securities, except that, if an Event of Default under the
Trust Agreement occurs and is continuing, no payments in respect
of Distributions on, or payments upon liquidation, redemption or
otherwise with respect to, the Common Securities shall be made
until the Holders of the Capital Securities shall be paid in full
the Distributions, Redemption Price, Liquidation Distribution and
other payments to which they are entitled at such time.
10. Acceptance of Securities Guarantee and Indenture.
Each Holder of Capital Securities and Common
Securities, by the acceptance thereof, agrees to the provisions
of the Capital Securities Guarantee, including the subordination
provisions therein, and to the provisions of the Indenture.
11. No Preemptive Rights.
The Holders shall have no preemptive rights to
subscribe for any additional securities.
12. Miscellaneous.
These terms constitute a part of the Trust Agreement.
The Sponsor will provide a copy of the Trust Agreement,
the Capital Securities Guarantee, or the Indenture (including any
supplemental indenture) to a Holder without charge upon written
request to the Sponsor at its principal place of business.
<PAGE I-13>
EXHIBIT A-1
FORM OF CAPITAL SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
[IF THIS GLOBAL SECURITY IS A GLOBAL CAPITAL SECURITY,
INSERT: THIS CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITY
WITHIN THE MEANING OF THE TRUST AGREEMENT HEREINAFTER REFERRED TO
AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY
(THE "CLEARING AGENCY") OR A NOMINEE OF THE CLEARING AGENCY.
THIS CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE CLEARING AGENCY
OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
TRUST AGREEMENT AND NO TRANSFER OF THIS CAPITAL SECURITY (OTHER
THAN A TRANSFER OF THIS CAPITAL SECURITY AS A WHOLE BY THE
CLEARING AGENCY TO A NOMINEE OF THE CLEARING AGENCY OR BY A
NOMINEE OF THE CLEARING AGENCY TO THE CLEARING AGENCY OR ANOTHER
NOMINEE OF THE CLEARING AGENCY) MAY BE REGISTERED EXCEPT IN
LIMITED CIRCUMSTANCES.]
THE CAPITAL SECURITIES WILL BE ISSUED AND MAY BE
TRANSFERRED ONLY IN BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT
LESS THAN $_____________ (____ CAPITAL SECURITIES). ANY SUCH
TRANSFER OF CAPITAL SECURITIES IN A BLOCK HAVING A LIQUIDATION
AMOUNT OF LESS THAN $_____________ SHALL BE DEEMED TO BE VOID AND
OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH TRANSFEREE SHALL BE
DEEMED NOT TO BE THE HOLDER OF SUCH CAPITAL SECURITIES FOR ANY
PURPOSE, INCLUDING BUT NOT LIMITED TO THE RECEIPT OF
DISTRIBUTIONS OF SUCH CAPITAL SECURITIES, AND SUCH TRANSFEREE
SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH CAPITAL
SECURITIES.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE
HEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT EITHER (i) IT IS
NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR (ii) THE
ACQUISITION AND HOLDING OF THIS CAPITAL SECURITY BY IT IS NOT
PROHIBITED BY EITHER SECTION 406 OF ERISA OR SECTION 4975 OF THE
U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR EXEMPT FROM
ANY SUCH PROHIBITION.
<PAGE A-1>
Certificate Number Aggregate Liquidation Amount
CUSIP NO. __________
Certificate Evidencing Capital Securities
of
Sovereign Capital Trust II
________% Capital Securities
(liquidation amount $_______ per Capital Security)
Sovereign Capital Trust II, a statutory business trust
created under the laws of the State of Delaware (the "Trust"),
hereby certifies that ______________ (the "Holder") is the
registered owner of [$_________ in aggregate liquidation amount
of Capital Securities of the Trust](1) [the aggregate liquidation
amount of Capital Securities of the Trust specified in Schedule A
hereto](2) representing undivided beneficial interests in the
assets of the Trust designated the ______% Series A Capital
Securities (liquidation amount $______ per Capital Security) (the
"Capital Securities"). The Capital Securities are transferable
on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly
endorsed and in proper form for transfer. The designation,
rights, privileges, restrictions, preferences and other terms and
provisions of the Capital Securities represented hereby are
issued and shall in all respects be subject to the provisions of
the Amended and Restated Declaration of Trust of the Trust dated
as of _________________, as the same may be amended from time to
time (the "Trust Agreement"), including the designation of the
terms of the Capital Securities as set forth in Annex I to the
Trust Agreement. Capitalized terms used but not defined herein
shall have the meaning given them in the Trust Agreement. The
Sponsor will provide a copy of the Trust Agreement, the Capital
Securities Guarantee, and the Indenture (including any
supplemental indenture) to a Holder without charge upon written
request to the Trust at its principal place of business.
________
(1) Insert in Definitive Capital Securities only.
(2) Insert in Global Capital Securities only. <PAGE A-2>
Upon receipt of this certificate, the Holder is bound
by the Trust Agreement and is entitled to the benefits thereunder
and to the benefits of the Capital Securities Guarantee to the
extent provided therein.
By acceptance, the Holder agrees to treat, for United
States federal income tax purposes, the Debentures as
indebtedness and the Capital Securities as evidence of indirect
beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this
certificate this ______ day of _________________, ______.
SOVEREIGN CAPITAL TRUST II
By:________________________________
Name:
Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in
the within-mentioned Trust Agreement.
Dated: _______________
THE BANK OF NEW YORK,
as Property Trustee
By:________________________________
Authorized Signatory
<PAGE A-3>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be
fixed at a rate per annum of ___% (the "Coupon Rate") of the
liquidation amount of $________ per Capital Security, such rate
being the rate of interest payable on the Debentures to be held
by the Property Trustee. Distributions in arrears for more than
one semi-annual period will bear interest thereon compounded
semi-annually at the Coupon Rate (to the extent permitted by
applicable law). The term "Distributions", as used herein,
includes such cash distributions and any such interest unless
otherwise stated. A Distribution is payable only to the extent
that payments are made in respect of the Debentures held by the
Property Trustee and to the extent the Property Trustee has funds
on hand legally available therefor.
Distributions on the Capital Securities will be
cumulative, will accumulate from the most recent date to which
Distributions have been paid or, if no Distributions have been
paid, from ________________ and will be payable semi-annually in
arrears, on _______________ and _________________ of each year,
commencing on ________________, except as otherwise described
below. Distributions will be computed on the basis of a 360-day
year consisting of twelve 30-day months and, for any period less
than a full calendar month, the number of days elapsed in such
month. As long as no Event of Default has occurred and is
continuing under the Indenture, the Debenture Issuer has the
right under the Indenture to defer payments of interest by
extending the interest payment period at any time and from time
to time on the Debentures for a period not exceeding 10
consecutive calendar semi-annual periods, including the first
such semi-annual period during such extension period (each an
"Extension Period"), provided that no Extension Period shall end
on a date other than an Interest Payment Date for the Debentures
or extend beyond the Maturity Date of the Debentures. As a
consequence of such deferral, Distributions will also be
deferred. Despite such deferral, semi-annual Distributions will
continue to accumulate with interest thereon (to the extent
permitted by applicable law, but not at a rate exceeding the rate
of interest then accruing on the Debentures) at the Coupon Rate
compounded semi-annually during any such Extension Period. Prior
to the termination of any such Extension Period, the Debenture
Issuer may further defer payments of interest by further
extending such Extension Period; provided that such Extension
Period, together with all such previous and further extensions
within such Extension Period, may not exceed 10 consecutive semi-
annual periods, including the first semi-annual period during
such Extension Period, end on a date other than an Interest
Payment Date for the Debentures or extend beyond the Maturity
Date of the Debentures. Payments of accumulated Distributions
will be payable to Holders as they appear on the books and
records of the Trust on the first record date after the end of
the Extension Period. Upon the termination of any Extension
<PAGE A-4> Period and the payment of all amounts then due, the
Debenture Issuer may commence a new Extension Period, subject to
the above requirements.
Subject to receipt by the Sponsor of any required
regulatory approval and to certain other conditions set forth in
the Trust Agreement and the Indenture, the Property Trustee may,
at the direction of the Sponsor, at any time liquidate the Trust
and cause the Debentures to be distributed to the holders of the
Securities in liquidation of the Trust or, simultaneous with any
redemption of the Debentures, cause a Like Amount of the
Securities to be redeemed by the Trust.
The Capital Securities shall be redeemable as provided
in the Trust Agreement.
<PAGE A-5>
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Capital Security Certificate to:
(Insert assignee's social security or tax identification number)
(Insert address and zip code of assignee)
and irrevocably appoints
agent
to transfer this Capital Security Certificate on the books of the
Trust. The agent may substitute another to act for him or her.
Date:
Signature:
(Sign exactly as your name appears on the other side of this
Capital Security Certificate)
Signature Guarantee*:
_________
* Signature must be guaranteed by an "eligible guarantor
institution" that is a bank, stockbroker, savings and loan
association or credit union meeting the requirements of the
Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee
program" as may be determined by the Registrar in addition
to, or in substitution for, STAMP, all in accordance with
the Securities and Exchange Act of 1934, as amended.
<PAGE A-6>
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY
STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW.
NEITHER THIS COMMON SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS COMMON SECURITY BY ITS ACCEPTANCE
HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS COMMON
SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION
DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL
ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR
ANY "AFFILIATE" OF THE COMPANY WAS THE OWNER OF THIS CAPITAL
SECURITY (OR ANY PREDECESSOR OF THIS CAPITAL SECURITY) ONLY
(A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT,
(C) SO LONG AS THIS COMMON SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO
A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE
ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S.
PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING
OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1),
(2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS
ACQUIRING THIS COMMON SECURITY FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE
IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT,
SUBJECT TO THE RIGHT OF THE TRUST AND THE COMPANY PRIOR TO ANY
SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D), (E) OR
(F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF
THEM, AND (ii) PURSUANT TO CLAUSE (E), TO REQUIRE THAT A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE REVERSE OF
THIS COMMON SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEREE
TO THE TRUST. SUCH HOLDER FURTHER AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THIS COMMON SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
<PAGE A-7>
Certificate Evidencing Common Securities
of
Sovereign Capital Trust II
______% Common Securities
(liquidation amount $________ per Common Security)
Sovereign Capital Trust II, a statutory business trust
formed under the laws of the State of Delaware (the "Trust"),
hereby certifies that Sovereign Bancorp, Inc. (the "Holder") is
the registered owner of _____ common securities of the Trust
representing undivided beneficial interests in the assets of the
Trust designated the _______% Common Securities (liquidation
amount $_________ per Common Security) (the "Common Securities").
The Common Securities are transferable on the books and records
of the Trust, in person or by a duly authorized attorney, upon
surrender of this certificate duly endorsed and in proper form
for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Common
Securities represented hereby are issued and shall in all
respects be subject to the provisions of the Amended and Restated
Declaration of Trust of the Trust dated as of ________________,
as the same may be amended from time to time (the "Trust
Agreement"), including the designation of the terms of the Common
Securities as set forth in Annex I to the Trust Agreement.
Capitalized terms used but not defined herein shall have the
meaning given them in the Declaration. The Sponsor will provide
a copy of the Trust Agreement, the Capital Securities Guarantee
and the Indenture (including any supplemental indenture) to a
Holder without charge upon written request to the Sponsor at its
principal place of business.
Upon receipt of this certificate, the Holder is bound
by the Trust Agreement and is entitled to the benefits thereunder
to the extent provided therein.
By acceptance, the Holder agrees to treat, for United
States federal income tax purposes, the Debentures as <PAGE A-8>
indebtedness and the Common Securities as evidence of indirect
beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this
certificate this _____ day of ___________, ______.
Sovereign Capital Trust II
By:_______________________________
Name:
Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Common Securities referred to in the
within-mentioned Trust Agreement.
Dated: _____________ THE BANK OF NEW YORK, as Property
Trustee
By:________________________________
Authorized Signatory
<PAGE A-9>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be
fixed at a rate per annum of _______% (the "Coupon Rate") of the
liquidation amount of $_________ per Common Security, such rate
being the rate of interest payable on the Debentures to be held
by the Property Trustee. Distributions in arrears for more than
one semi-annual period will bear interest thereon compounded
semi-annually at the Coupon Rate (to the extent permitted by
applicable law). The term "Distributions", as used herein,
includes such cash distributions and any such interest unless
otherwise stated. A Distribution is payable only to the extent
that payments are made in respect of the Debentures held by the
Property Trustee and to the extent the Property Trustee has funds
available therefor.
Distributions on the Common Securities will be
cumulative, will accumulate from the most recent date to which
Distributions have been paid or, if no Distributions have been
paid, from ___________________ and will be payable semi-annually
in arrears, on ________________ and ______________ of each year,
commencing on _________________, except as otherwise described
below. Distributions will be computed on the basis of a 360-day
year consisting of twelve 30-day months and, for any period less
than a full calendar month, the number of days elapsed in such
month. As long as no Event of Default has occurred and is
continuing under the Indenture, the Debenture Issuer has the
right under the Indenture to defer payments of interest by
extending the interest payment period at any time and from time
to time on the Debentures for a period not exceeding 10
consecutive calendar semi-annual periods, including the first
such semi-annual period during such extension period (each an
"Extension Period"), provided that no Extension Period shall end
on a date other than an Interest Payment Date for the Debentures
or extend beyond the Maturity Date of the Debentures. As a
consequence of such deferral, Distributions will also be
deferred. Despite such deferral, Distributions will continue to
accumulate with interest thereon (to the extent permitted by
applicable law, but not at a rate exceeding the rate of interest
then accruing on the Debentures) at the Coupon Rate compounded
semi-annually during any such Extension Period. Prior to the
termination of any such Extension Period, the Debenture Issuer
may further defer payments of interest by further extending such
Extension Period; provided that such Extension Period, together
with all such previous and further extensions within such
Extension Period, may not exceed 10 consecutive semi-annual
periods, including the first semi-annual period during such
Extension Period, or end on a date other than an Interest Payment
Date for the Debentures or extend beyond the Maturity Date of the
Debentures. Payments of accrued Distributions will be payable to
<PAGE A-10> Holders as they appear on the books and records of
the Trust on the first record date after the end of the Extension
Period. Upon the termination of any Extension Period and the
payment of all amounts then due, the Debenture Issuer may
commence a new Extension Period, subject to the above
requirements.
Subject to receipt by the Sponsor of any required
regulatory approval and to certain other conditions set forth in
the Trust Agreement and the Indenture, the Property Trustee may,
at the direction of the Sponsor, at any time liquidate the Trust
and cause the Debentures to be distributed to the holders of the
Securities in liquidation of the Trust or, simultaneous with any
redemption of the Debentures, cause a Like Amount of the
Securities to be redeemed by the Trust.
Under certain circumstances, the right of the holders
of the Common Securities shall be subordinate to the rights of
the holders of the Capital Securities (as defined in the Trust
Agreement), as provided in the Declaration.
The Common Securities shall be redeemable as provided
in the Trust Agreement.
<PAGE A-11>