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SOVEREIGN BANCORP, INC.
SOVEREIGN CAPITAL TRUST II
and
THE BANK OF NEW YORK,
as Warrant Agent
THE BANK OF NEW YORK,
as Property Trustee
THE BANK OF NEW YORK,
as Agent
UNIT AGREEMENT
Dated as of November 15, 1999
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TABLE OF CONTENTS
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RECITALS ....................................................................1
ARTICLE I
Definitions and Other Provisions of General Applications
Section 1.1. Definitions ....................................................2
Section 1.2. Compliance Certificates and Opinions ...........................9
Section 1.3. Form of Documents Delivered to Agent ...........................9
Section 1.4. Acts of Holders; Record Dates .................................10
Section 1.5. Notices .......................................................11
Section 1.6. Notice to Holders; Waiver .....................................12
Section 1.7. Effect of Headings and Table of Contents ......................13
Section 1.8. Successors and Assigns ........................................13
Section 1.9. Separability Clause ...........................................13
Section 1.10. Benefits of Agreement ........................................13
Section 1.11. Governing Law. ...............................................13
Section 1.12. Legal Holidays ...............................................13
Section 1.13. Counterparts .................................................14
Section 1.14. Inspection of Agreement ......................................14
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ARTICLE II
Certificate Forms
Section 2.1. Forms of Certificates Generally ...............................14
Section 2.2. Form of Agent's Certificate of Authentication .................15
ARTICLE III
The Securities
Section 3.1. Amount; Form and Denominations ................................15
Section 3.2. Rights and Obligations Evidenced by the Certificates ..........16
Section 3.3. Execution, Authentication, Delivery and Dating ................16
Section 3.4. Temporary Certificates ........................................17
Section 3.5. Registration; Registration of Transfer and Exchange ...........18
Section 3.6. Separation and Rejoining of Units .............................19
Section 3.7. Book-Entry Interests ..........................................20
Section 3.8. Notices to Holders ............................................21
Section 3.9. Appointment of Successor Clearing Agency ......................21
Section 3.10. Definitive Certificates ......................................21
Section 3.11. Mutilated, Destroyed, Lost and Stolen Certificates ...........21
Section 3.12. Persons Deemed Owners ........................................22
Section 3.13. Cancellation .................................................23
Section 3.14. CUSIP Numbers ................................................23
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ARTICLE IV
The Preferred Securities
Section 4.1. Payment of Distribution; Rights to Distributions
Preserved; Distribution Rate Reset............................ 23
Section 4.2. Notice and Voting. ............................................24
Section 4.3. Distribution of Debentures ....................................24
ARTICLE V
Remarketing and Redemption; Early Exercise
Section 5.1. Remarketing and Redemption ....................................25
Section 5.2. Early Exercise of Warrants; Exchange of Preferred
Securities and Repurchase of Debentures .......................28
Section 5.3. Change in Control. ............................................28
Section 5.4. Certain Rights Following a Remarketing. .......................29
ARTICLE VI
Remedies
Section 6.1. Unconditional Right of Holders to Receive Payments and
to Purchase Common Stock ......................................29
Section 6.2. Restoration of Rights and Remedies ............................29
Section 6.3. Rights and Remedies Cumulative ................................30
Section 6.4. Delay or Omission Not Waiver ..................................30
Section 6.5. Undertaking for Costs .........................................30
Section 6.6. Waiver of Stay or Extension Laws ..............................30
ARTICLE VII
The Agent
Section 7.1. Certain Duties and Responsibilities ...........................31
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Section 7.2. Notice of Default .............................................32
Section 7.3. Certain Rights of Agent .......................................32
Section 7.4. Not Responsible for Recitals or Issuance of Securities ........33
Section 7.5. May Hold Securities ...........................................33
Section 7.6. Money Held in Custody .........................................33
Section 7.7. Compensation and Reimbursement ................................33
Section 7.8. Corporate Agent Required; Eligibility .........................34
Section 7.9. Resignation and Removal; Appointment of Successor .............34
Section 7.10. Acceptance of Appointment by Successor .......................35
Section 7.11. Merger, Conversion, Consolidation or Succession to Business ..36
Section 7.12. Preservation of Information; Communications to Holders .......36
Section 7.13. No Obligations of Agent ......................................37
Section 7.14. Tax Compliance ...............................................37
ARTICLE VIII
Supplemental Agreements
Section 8.1. Supplemental Agreements Without Consent of Holders ............37
Section 8.2. Supplemental Agreements With Consent of Holders ...............38
Section 8.3. Execution of Supplemental Agreements ..........................39
Section 8.4. Effect of Supplemental Agreements .............................39
Section 8.5. Reference to Supplemental Agreements ..........................39
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ARTICLE IX
Consolidation, Merger, Sale or Conveyance
Section 9.1. Covenant Not to Merge, Consolidate, Sell or Convey
Property Except Under Certain Conditions ......................39
Section 9.2. Rights and Duties of Successor Corporation ....................40
Section 9.3. Opinion of Counsel Given to Agent .............................40
ARTICLE X
Covenants
Section 10.1. Performance Under Agreements .................................40
Section 10.2. Maintenance of Office or Agency ..............................41
Section 10.3. Statements of Officers of Sovereign as to Default ............41
Section 10.4. ERISA ........................................................41
ARTICLE XI
Representations of the Agent
Section 11.1. Representations and Warranties of the Agent ..................42
ARTICLE XII
The Warrant Agent and The Property Trustee
Section 12.1. Certain Duties and Responsibilities ..........................42
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EXHIBIT A Form of Certificate
EXHIBIT B Instruction to Disregard Remarketing
EXHIBIT C Notice of Electing Remarketing Holder
EXHIBIT D Notice of Change of Control Redemption Election
EXHIBIT E Notice of Change of Control Exchange and Repurchase
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UNIT AGREEMENT, dated as of November 15, 1999, among Sovereign Bancorp,
Inc., a Pennsylvania corporation, Sovereign Capital Trust II, a statutory
Delaware business trust, The Bank of New York, as Property Trustee for the
Trust, The Bank of New York, as Warrant Agent, and The Bank of New York, acting
as unit agent for the Holders of the Securities from time to time (the "Agent").
RECITALS:
WHEREAS, the Issuers desire to issue Trust Preferred Income Equity
Redeemable Securities (PIERS) Units consisting of:
(i) Preferred Securities (stated liquidation amount $50 per
preferred security) issued by the Trust pursuant to the Declaration of
Trust and guaranteed (the "Guarantee"; together with the Preferred
Securities, the "Trust Securities") by Sovereign, to the extent set
forth in the Guarantee Agreement; and
(ii) Warrants issued by Sovereign pursuant to the Warrant
Agreement.
WHEREAS, concurrently with the issuance of the Trust Securities, the
Trust will invest the proceeds thereof (together with the proceeds of the
issuance to Sovereign of the common securities of the Trust) in Debentures.
WHEREAS the Issuers have duly authorized the execution and delivery of
this Agreement and the Certificates evidencing the Trust Securities.
WHEREAS, all things necessary to make the Preferred Securities, when
the Certificates are executed by the Trust and authenticated, executed on behalf
of the Holders and delivered by the Agent, as provided in this Agreement, the
valid obligations of the Trust, and to constitute these presents a valid
agreement of the Trust, in accordance with its terms, have been done.
WHEREAS, all things necessary to make the Warrants and the Debentures,
when the Certificates are executed by Sovereign and authenticated, executed on
behalf of the Holders and delivered by the Agent, as provided in this Agreement,
the valid obligations of Sovereign, and to constitute these presents a valid
agreement of Sovereign, in accordance with its terms, have been done.
W I T N E S S E T H :
NOW, THEREFORE, for and in consideration of the premises and the
purchase of the Securities by the Holders thereof, it is mutually agreed as
follows:
ARTICLE I
Definitions and Other Provisions of
General Applications
Section 1.1. Definitions.
For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular, and nouns and pronouns of the masculine gender include the
feminine and neutral genders;
(b) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles in the United States;
(c) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to
any particular Article, Section, Exhibit or other subdivision;
(d) the following terms have the meanings given to them in
this Section 1.1(d):
"Accreted Value" has the meaning given to it in the Declaration.
"Act," when used with respect to any Holder, has the meaning given to
it in Section 1.4.
"Action Expiration Date" has the meaning given to it in Section 1.4(e).
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent" means the Person named as the "Agent" in the first paragraph of
this instrument until a successor Agent shall have become such pursuant to the
applicable provisions of this Agreement, and thereafter "Agent" shall mean such
Person.
"Agreement" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more agreements
supplemental hereto entered into pursuant to the applicable provisions hereof.
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"Applicable Procedures" means, with respect to any transfer or exchange
of or for the beneficial interests in the Global Certificate, the rules and
procedures of the Depositary that apply to such transfer or exchange.
"Bankruptcy Code" means title 11 of the United States Code, or any
other law of the United States that from time to time provides a uniform system
of bankruptcy laws.
"Beneficial Owner" means, with respect to a Global Certificate, a
Person who is the beneficial owner of such Book-Entry Interest as reflected on
the books of the Clearing Agency or on the books of a Person maintaining an
account with such Clearing Agency (directly as a Clearing Agency Participant or
as an indirect participant, in each case in accordance with the rules of such
Clearing Agency).
"Board of Directors" means the board of directors of Sovereign or a
duly authorized committee of that board.
"Board Resolution" means one or more resolutions of the Board of
Directors, a copy of which has been certified by the Secretary or an Assistant
Secretary of Sovereign to have been duly adopted by the Board of Directors and
to be in full force and effect on the date of such certification and delivered
to the Agent.
"Book-Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as described in Section 3.7.
"Business Day" means any day other than a Saturday or Sunday or a day
on which banking institutions in The City of New York or Philadelphia,
Pennsylvania are authorized or required by law or executive order to remain
closed or a day on which the Indenture Trustee, or the principal office of the
Property Trustee under the Declaration, is closed for business.
"Calculation Agent" means The Bank of New York, as initial Calculation
Agent under the Calculation Agreement, and any successor thereto.
"Calculation Agreement" means the Calculation Agency Agreement dated as
of November 15, 1999 between Sovereign and the Calculation Agent, as amended,
supplemented or replaced from time to time.
"Certificate" means a certificate evidencing the rights and obligations
of a Holder in respect of the number of Securities specified on such
Certificate, substantially in the form of Exhibit A hereto.
"Change of Control" has the meaning given to it in the Declaration.
"Change of Control Notice Date" has the meaning given to it in
Section 5.3.
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"Change of Control Redemption Right" has the meaning given to it in
Section 5.3.
"Change of Control Repurchase Right" has the meaning given to it in
Section 5.3.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as a
depositary for the Securities and in whose name, or in the name of a nominee of
that organization, shall be registered a Global Certificate and which shall
undertake to effect book entry transfers and pledges of the Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the common stock, without par value, of Sovereign.
"Corporate Trust Office" means the principal corporate trust office of
the Agent at which, at any particular time, its corporate trust business shall
be administered, which office at the date hereof is located at 101 Barclay
Street, 21 West, New York, New York 10286 Attention: Corporate Trust
Administration.
"Coupon Rate" means the percentage rate per annum at which each
Debenture will bear interest initially which rate, on and after the Remarketing
Date, will be the Reset Rate established in the Remarketing on the Remarketing
Date.
"Debenture Certificates" has the meaning given to it in Section 3.10.
"Debentures" means the 7.50% Junior Subordinated Deferrable Interest
Debentures due January 15, 2030 to be issued by Sovereign pursuant to the
Indenture.
"Declaration" means the Amended and Restated Declaration of Trust of
Sovereign Capital Trust II, dated as of November 15, 1999, among Sovereign, as
the sponsor and the trustees named therein.
"Definitive Certificates" means definitive, physical fully registered
Certificates delivered in accordance with Section 3.10.
"Depositary" means DTC until another Clearing Agency becomes its
successor.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
"Electing Remarketing Holder" has the meaning given to it in
Section 5.1.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934 and any
statute successor thereto, in each case as amended from time to time, and the
rules and regulations promulgated
thereunder.
"Exchange Agent" has the meaning given to it in the Declaration.
"Exercise Price" has the meaning given to it in the Warrant Agreement.
"Expiration Date" has the meaning given to it in the Warrant Agreement.
"Global Certificate" means a Certificate that evidences all or part of
the Securities and is registered in the name of a Clearing Agency or a nominee
thereof.
"Guarantee" has the meaning assigned to it in the Recitals hereto.
"Guarantee Agreement" means the Guarantee Agreement dated as of
November 15, 1999 between Sovereign and the Guarantee Trustee, as amended or
supplemented from time to time.
"Guarantee Trustee" means The Bank of New York, as trustee under the
Guarantee Agreement, or any successor thereto
"Holder," when used with respect to a Security, means the Person in
whose name the Security evidenced by a Certificate is registered in the
Register; provided, however, that in determining whether the Holders of the
requisite number of Securities have voted on any matter, then for the purpose of
such determination only (and not for any other purpose hereunder), if the
Security remains in the form of one or more Global Certificates and if the
Clearing Agency which is the holder of such Global Certificate has sent an
omnibus proxy assigning voting rights to the Clearing Agency Participants to
whose accounts the Securities are credited on the record date, the term "Holder"
shall mean such Clearing Agency Participant acting at the direction of the
Beneficial Owners.
"Indenture" means the Indenture, dated as of September 1, 1999, between
Sovereign and the Indenture Trustee, as amended by the First Supplemental
Indenture dated as of November 15, 1999, as further amended and supplemented
(including any provisions of the TIA that are deemed incorporated therein),
pursuant to which the Debentures are to be issued.
"Indenture Trustee" means Harris Trust and Savings Bank, as trustee
under the Indenture, or any successor thereto.
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"Issuer Order" or "Issuer Request" means a written request or order
signed in the name of Sovereign by its Chairman of the Board, its President or
one of its Vice Presidents, and by its Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary, and delivered to the Agent.
"Issuers" is a collective reference to Sovereign and the Trust.
"Legal Cause Remarketing Event" has the meaning given to it in the
Declaration.
"Maturity Remarketing Date" has the meaning given to it in the
Declaration.
"Notice of Remarketing" means a Notice of Remarketing delivered
pursuant to the Declaration.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, its President or one of its Vice Presidents, and by the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary, of Sovereign, and
delivered to the Agent. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Agreement shall
include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for Sovereign (and who may be an employee of Sovereign), and who shall
be reasonably acceptable to the Agent. An opinion of counsel may rely on
certificates as to matters of fact.
"Outstanding Securities," with respect to any Security means, as of the
date of determination, all Securities evidenced by Certificates theretofore
authenticated, executed and delivered under this Agreement, except:
(i) Securities evidenced by Certificates theretofore cancelled
by the Agent or delivered to the Agent for cancellation or deemed
cancelled pursuant to the provisions of this Agreement; and
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(ii) Securities evidenced by Certificates in exchange for or
in lieu of which other Certificates have been authenticated, executed
on behalf of the Holder and delivered pursuant to this Agreement, other
than any such Certificate in respect of which there shall have been
presented to the Agent proof satisfactory to it that such Certificate
is held by a bona fide purchaser in whose hands the Security evidenced
by such Certificate are valid obligations of Sovereign;
provided, however, that in determining whether the Holders of the requisite
number of the Securities have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Securities owned by Sovereign or
any Affiliate of Sovereign shall be disregarded and deemed not to be Outstanding
Securities, except that, in determining whether the Agent shall be protected in
relying upon any such request, demand, authorization, direction, notice, consent
or waiver, only Securities which a Responsible Officer of the Agent knows to be
so owned shall be so disregarded. Securities so owned which have been pledged in
good faith may be regarded as Outstanding Securities if the pledgee establishes
to the satisfaction of the Agent the pledgee's right so to act with respect to
such Securities and that the pledgee is not Sovereign or any Affiliate of
Sovereign.
"Party" or "Parties" have the respective meanings given to them in
Section 12.1.
"Payment Date" means each February 15, May 15, August 15 and November
15, commencing February 15, 2000.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint-stock company, limited
liability company, trust, unincorporated organization or government or any
agency or political subdivision thereof or any other entity of whatever nature.
"Plan" means an employee benefit plan that is subject to ERISA, a plan
or individual retirement account that is subject to Section 4975 of the Code or
any entity whose assets are considered assets of any such plan.
"Predecessor Certificate" of any particular Certificate means every
previous Certificate evidencing all or a portion of the rights and obligations
of the Issuers and the Holder under the Securities evidenced thereby; and, for
the purposes of this definition, any Certificate authenticated and delivered
under Section 3.11 in exchange for or in lieu of a mutilated, destroyed, lost or
stolen Certificate shall be deemed to evidence the same rights and obligations
of the Issuers and the Holder as the mutilated, destroyed, lost or stolen
Certificate.
"Preferred Securities" means the Preferred Securities of the Trust,
each having a stated liquidation amount of $50, representing preferred undivided
beneficial ownership interests in the assets of the Trust.
"Property Trustee" means The Bank of New York, as property trustee
under the Declaration, or any successor thereto.
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"Record Date" with respect to any Payment Date, means the Business Day
immediately preceding such Payment Date.
"Register" and "Registrar" have the respective meanings given to them
in Section 3.5.
"Remarketing" has the meaning given to it in the Declaration.
"Remarketing Agent" means the remarketing agent under the Remarketing
Agreement.
"Remarketing Agreement" means a Remarketing Agreement to be entered
into among Sovereign, the Trust and the Remarketing Agent.
"Remarketing Date" has the meaning given to it in the Declaration.
"Remarketing Event" has the meaning given to it in the Declaration.
"Remarketing Settlement Date" with respect to any Remarketing, means
the date which is three Business Days following the applicable Remarketing Date.
"Required Repurchase Date" has the meaning given to it in the
Declaration.
"Reset Rate" has the meaning given to it in the Declaration.
"Responsible Officer," when used with respect to the Agent, means any
officer within the corporate trust department of the Agent, including any vice
president, assistant vice president, assistant secretary, assistant treasurer,
trust officer or any other officer of the Agent who customarily performs
functions similar to those performed by the Persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of such person's knowledge of and familiarity with the particular
subject and who shall have direct responsibility for the administration of this
Agreement.
"Security" means the collective rights and obligations of a Holder of a
Certificate in respect of a Preferred Security, a Debenture and a Warrant.
"Sovereign" means Sovereign Bancorp, Inc., a Pennsylvania corporation,
until there shall be a successor thereto pursuant to the applicable provision of
this Agreement, and thereafter "Sovereign" shall mean such successor.
"Trading Remarketing Event" has the meaning given to it in the
Declaration.
"Trust" means Sovereign Capital Trust II, a statutory business trust
formed under the laws of the State of Delaware, or any successor thereto by
merger or consolidation.
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"Trust Securities" has the meaning given to it in the Recitals hereto.
"Vice President" means any vice president, whether or not designated by
a number or a word or words added before or after the title "vice president."
"Warrant" means the Warrants issued by Sovereign pursuant to the
Warrant Agreement representing the right to purchase Common Stock.
"Warrant Agent" means The Bank of New York, as warrant agent under the
Warrant Agreement, or any successor thereto.
"Warrant Agreement" means the Warrant Agreement dated as of November
15, 1999 between Sovereign and the Warrant Agent, as amended and supplemented,
pursuant to which the Warrants are issued.
"Warrant Value" has the meaning given to it in the Warrant Agreement.
1.2.Section Compliance Certificates and Opinions.
Except as otherwise expressly provided by this Agreement, upon any
application or request by Sovereign to the Agent to take any action in
accordance with any provision of this Agreement, Sovereign shall furnish to the
Agent an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Agreement relating to the proposed action have been
complied with and, if requested by the Agent, an Opinion of Counsel stating
that, in the opinion of such counsel, all such conditions precedent, if any,
have been complied with, except that in the case of any such application or
request as to which the furnishing of such documents is specifically required by
any provision of this Agreement relating to such particular application or
request, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Agreement shall include:
(1) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual,
he or she has made such examination or investigation as is necessary to
enable such individual to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
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(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.3. Form of Documents Delivered to Agent.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of Sovereign may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of Sovereign stating that the
information with respect to such factual matters is in the possession of
Sovereign unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 1.4. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Agent and, where it is hereby expressly required, to Sovereign. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Agreement and (subject to Section 7.1) conclusive in favor of the Agent and
Sovereign, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner which the Agent deems
sufficient.
(c) The ownership of Securities shall be proved by the Register.
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(d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Certificate shall bind every future
Holder of the same Certificate and the Holder of every Certificate issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Agent or
Sovereign in reliance thereon, whether or not notation of such action is made
upon such Certificate.
(e) Sovereign may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Agreement to be given, made or taken by
Holders of Securities. If any record date is set pursuant to this paragraph, the
Holders of the Outstanding Securities, on such record date, and no other
Holders, shall be entitled to take the relevant action with respect to the
Securities, whether or not such Holders remain Holders after such record date;
provided that no such action shall be effective hereunder unless taken on or
prior to the applicable Action Expiration Date by Holders of the requisite
number of Outstanding Securities on such record date. Nothing in this paragraph
shall be construed to prevent Sovereign from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and with
no action by any Person be cancelled and be of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite number of Outstanding Securities on the date such action is
taken. Promptly after any record date is set pursuant to this paragraph,
Sovereign, at its own expense, shall cause notice of such record date, the
proposed action by Holders and the applicable Expiration Date to be given to the
Agent in writing and to each Holder of Securities in the manner set forth in
Section 1.6.
With respect to any record date set pursuant to this Section, Sovereign
may designate any date as the "Action Expiration Date" and from time to time may
change the Expiration Date to any earlier or later day; provided that no such
change shall be effective unless notice of the proposed new Action Expiration
Date is given to the Agent in writing, and to each Holder of Securities in the
manner set forth in Section 1.6, on or prior to the existing Action Expiration
Date. If an Action Expiration Date is not designated with respect to any record
date set pursuant to this Section, Sovereign shall be deemed to have initially
designated the 180th day after such record date as the Action Expiration Date
with respect thereto, subject to its right to change the Action Expiration Date
as provided in this paragraph. Notwithstanding the foregoing, no Action
Expiration Date shall be later than the 180th day after the applicable record
date.
Section 1.5. Notices.
Any notice or communication is duly given if in writing and delivered
in Person or mailed by first class mail (registered or certified, return receipt
requested), telecopier (with receipt confirmed) or overnight air courier
guaranteeing next day delivery, to the others' address; provided that notice
shall be deemed given to the Agent only upon receipt thereof:
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If to the Agent:
The Bank of New York
101 Barclay Street
New York, New York 10286
Telecopier No.: 212-815-5915
Attention: Corporate Trust Administration
If to Sovereign:
Sovereign Bancorp, Inc.
1130 Berkshire Boulevard
Wyomissing, Pennsylvania 19610
Telecopier No.: 610-320-8448
Attention: Treasurer
If to the Trust:
c/o Sovereign Bancorp, Inc.
1130 Berkshire Boulevard
Wyomissing, Pennsylvania 19610
Telecopier No.: 610-320-8448
Attention: Treasurer
If to the Warrant Agent:
The Bank of New York
101 Barclay Street
New York, New York 10286
Telecopier No.: 212-815-5915
Attention: Corporate Trust Administration
If to the Property Trustee:
The Bank of New York
101 Barclay Street
New York, New York 10286
Telecopier No.: 212-815-5915
Attention: Corporate Trust Administration
If to the Indenture Trustee:
Harris Trust and Savings Bank
311 West Monroe Street
Chicago, Illinois 60606
Telecopier No.: 312-461-3525
Attention: Daniel G. Donovan
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Section 1.6. Notice to Holders; Waiver.
Where this Agreement provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at its address as it appears in the Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Holders is given by mail, neither
the failure to mail such notice, nor any defect in any notice so mailed to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Where this Agreement provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Agent, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Agent shall
constitute a sufficient notification for every purpose hereunder.
Section 1.7. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 1.8. Successors and Assigns.
All covenants and agreements in this Agreement by Sovereign shall bind
its successors and assigns, whether so expressed or not.
Section 1.9. Separability Clause.
In case any provision in this Agreement or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions hereof and thereof shall not in any way be affected or
impaired thereby.
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Section 1.10. Benefits of Agreement.
Nothing in this Agreement or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder and, to the extent provided hereby, the Holders, any benefits or any
legal or equitable right, remedy or claim under this Agreement. The Holders from
time to time shall be beneficiaries of this Agreement and shall be bound by all
of the terms and conditions hereof and of the Securities evidenced by their
Certificates by their acceptance of delivery of such Certificates.
Section 1.11. Governing Law.
This Agreement and the Securities shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of laws.
Section 1.12. Legal Holidays.
In any case where any Payment Date shall not be a Business Day, then
(notwithstanding any other provision of this Agreement or the Certificates)
payment of any amounts otherwise payable on such date shall not be made on such
date, but such payments shall be made on the next succeeding Business Day with
the same force and effect as if made on such Payment Date, provided that no
interest shall accrue or be payable for the period from and after any such
Payment Date, except that, if such next succeeding Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day with the same force and effect as if made on such Payment
Date.
Section 1.13. Counterparts.
This Agreement may be executed in any number of counterparts by the
parties hereto on separate counterparts, each of which, when so executed and
delivered, shall be deemed an original, but all such counterparts shall together
constitute one and the same instrument.
Section 1.14. Inspection of Agreement.
A copy of this Agreement shall be available at all reasonable times during
normal business hours at the Corporate Trust Office for inspection by any Holder
or Beneficial Owner.
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ARTICLE II
Certificate Forms
Section 2.1. Forms of Certificates Generally.
Each Security will consist of one Preferred Security and one Warrant.
The Certificates shall be in substantially the form set forth in Exhibit A
hereto, with such letters, numbers or other marks of identification or
designation and such legends or endorsements printed, lithographed or engraved
thereon as may be required by the rules of any securities exchange on which the
Securities are listed or any depositary therefor, or as may, consistently
herewith, be determined by the officers of Sovereign executing such
Certificates, as evidenced by their execution of the Certificates.
The Certificates shall be printed, lithographed or engraved on steel
engraved borders or may be produced in any other manner, all as determined by
the officers of Sovereign executing the Securities evidenced by such
Certificates, consistent with the provisions of this Agreement, as evidenced by
their execution thereof.
Every Global Certificate authenticated, executed on behalf of the
Holders and delivered hereunder shall bear a legend in substantially the
following form:
"THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE
UNIT AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE
"DEPOSITARY"), OR A NOMINEE OF THE DEPOSITARY. THIS CERTIFICATE IS
EXCHANGEABLE FOR CERTIFICATES REGISTERED IN THE NAME OF A PERSON OTHER
THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE UNIT AGREEMENT AND NO TRANSFER OF THIS CERTIFICATE
(OTHER THAN A TRANSFER OF THIS CERTIFICATE AS A WHOLE BY THE DEPOSITARY
TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE
DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED
EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH
OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE
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BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE
& CO., HAS AN INTEREST HEREIN.
THE CONSTITUENT COMPONENTS OF THIS UNIT MUST BE SEPARATED PRIOR TO
TRANSFER (EXCEPT AS PART OF A UNIT) AS PROVIDED IN THE UNIT AGREEMENT."
Section 2.2. Form of Agent's Certificate of Authentication.
The form of the Agent's certificate of authentication of the Securities
shall be in substantially the form set forth on the form of the Certificates.
ARTICLE III
The Securities
Section 3.1. Amount; Form and Denominations.
The aggregate number of Securities evidenced by Certificates
authenticated, executed on behalf of the Holders and delivered hereunder is
limited to 5,750,000 except for Certificates authenticated, executed and
delivered upon registration of transfer of, in exchange for, or in lieu of,
other Certificates pursuant to Section 3.4, 3.5, 3.10, 3.13 or 8.5.
The Certificates shall be issuable only in registered form and only in
denominations of a single Security and any integral multiple thereof.
On the date of issuance of the Units, Sovereign shall allocate $32.50
of the purchase price thereof to the Preferred Securities and $17.50 of the
purchase price to the Warrants.
Section 3.2. Rights and Obligations Evidenced by the Certificates.
Each Certificate shall evidence the number of Securities specified
therein, with each such Security representing the ownership by the Holder
thereof of a beneficial interest in a Preferred Security (or Debenture upon a
liquidation of the Trust) and a Warrant and entitled to the benefits of the
Declaration, the Indenture, the Warrant Agreement and all agreements ancillary
thereto.
Section 3.3. Execution, Authentication, Delivery and Dating.
Subject to the provisions of Section 3.6 hereof, upon the execution and
delivery of this Agreement, and at any time and from time to time thereafter,
Sovereign and the Trust may deliver Certificates executed by Sovereign and an
Administrative Trustee on behalf of the Trust to the Agent for authentication,
execution on behalf of the Holders and delivery, together with its Issuer Order
for
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authentication of such Certificates, and the Agent in accordance with such
Issuer Order shall authenticate, execute on behalf of the Holders and deliver
such Certificates. In authenticating such Securities, and accepting the
additional responsibilities under this Indenture in relation to such Securities,
the Agent shall be entitled to receive, and, shall be fully protected in relying
upon:
(a) A copy of the resolution or resolutions of the Board of
Directors in or pursuant to which the terms and form of the Securities
were established, certified by the Secretary or an Assistant Secretary
of the Company to have been duly adopted by the Board of Directors and
to be in full force and effect as of the date of such certificate, and
if the terms and form of such Securities are established by an
Officers' Certificate pursuant to general authorization of the Board of
Directors, such Officers' Certificate;
(b) an Officers' Certificate delivered in accordance with
Section 1.3; and
(c) an Opinion of Counsel which shall state:
(1) that the terms of such Securities have been
established in accordance with Section 2.1 and in
conformity with the other provisions of this Agreement;
(2) that such Securities, when authenticated and delivered
by the Agent and issued by the Company in the manner and
subject to any conditions specified in such Opinion of
Counsel, will constitute valid and legally binding
obligations of the Company, enforceable in accordance with
their terms, subject to bankruptcy, insolvency,
reorganization and other laws of general applicability
relating to or affecting the enforcement of creditors'
rights and to general equity principles; and
(3) that all laws and requirements in respect of the
execution and delivery by the Company of such Securities
have been complied with.
The Agent shall have the right to decline to authenticate and deliver
any Securities under this Section if the Agent, being advised by counsel,
determines that such action may not lawfully be taken or if the Agent in good
faith shall determine that such action would expose the Agent to personal
liability to existing Holders.
The Certificates shall be executed on behalf of Sovereign (in respect
of the Warrants) by its Chairman of the Board, its President or one of its Vice
Presidents, and shall be executed on behalf of the Trust (in respect of the
Preferred Securities) by an Administrative Trustee. The signature of any of
these officers on the Certificates may be manual or facsimile.
Certificates bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of Sovereign shall bind Sovereign,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificates or did not
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hold such offices at the date of such Certificates. Certificates bearing the
manual or facsimile signatures of individuals who were at any time
Administrative Trustees of the Trust shall bind the Trust, notwithstanding that
such individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Certificates or did not hold such offices at
the date of such Certificates.
Each Certificate shall be dated the date of its authentication.
No Certificate shall be entitled to any benefit under this Agreement or
be valid or obligatory for any purpose unless there appears on such Certificate
a certificate of authentication substantially in the form provided for herein
executed by an authorized signatory of the Agent by manual signature, and such
certificate upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder.
Section 3.4. Temporary Certificates.
Pending the preparation of definitive Certificates, Sovereign shall
execute and deliver to the Agent, and the Agent shall authenticate, execute on
behalf of the Holders, and deliver, in lieu of such definitive Certificates,
temporary Certificates which are in substantially the form set forth in Exhibit
A hereto, with such letters, numbers or other marks of identification or
designation and such legends or endorsements printed, lithographed or engraved
thereon as may be required by the rules of any securities exchange on which the
Securities are listed, or as may, consistently herewith, be determined by the
officers of Sovereign executing such Certificates, as evidenced by their
execution of the Certificates.
If temporary Certificates are issued, Sovereign will cause definitive
Certificates to be prepared without unreasonable delay. After the preparation of
definitive Certificates, the temporary Certificates shall be exchangeable for
definitive Certificates upon surrender of the temporary Certificates at the
Corporate Trust Office, at the expense of Sovereign and without charge to the
Holder. Upon surrender for cancellation of any one or more temporary
Certificates, Sovereign shall execute and deliver to the Agent, and the Agent
shall authenticate, execute on behalf of the Holder, and deliver in exchange
therefor, one or more definitive Certificates of like tenor and denominations
and evidencing a like number of Securities as the temporary Certificate or
Certificates so surrendered. Until so exchanged, the temporary Certificates
shall in all respects evidence the same benefits and the same obligations with
respect to the Securities evidenced thereby as definitive Certificates.
Section 3.5. Registration; Registration of Transfer and Exchange.
(a) The Agent shall keep at the Corporate Trust Office a register (the
"Register") in which, subject to such reasonable regulations as it may
prescribe, the Agent shall provide for the registration of Certificates and of
transfers of Certificates (the Agent, in such capacity, the "Registrar").
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No beneficial interest in a Warrant or a Preferred Security that is a
component of a Security represented by a Certificate may be transferred or
exchanged (except by a transfer or exchange of such Security) until such
components have been separated in accordance with Section 3.6 hereof, and each
Certificate shall bear a legend to that effect.
Upon surrender for registration of transfer of any Certificate at the
Corporate Trust Office, Sovereign shall execute and deliver to the Agent, and
the Agent shall authenticate, execute on behalf of the designated transferee or
transferees, and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of any authorized denominations, like
tenor, and evidencing a like number of Securities.
At the option of the Holder, Certificates may be exchanged for other
Certificates, of any authorized denominations and evidencing a like number of
Securities upon surrender of the Certificates to be exchanged at the Corporate
Trust Office. Whenever any Certificates are so surrendered for exchange,
Sovereign and the Trust shall execute and deliver to the Agent, and the Agent
shall authenticate, execute on behalf of the Holder, and deliver the
Certificates which the Holder making the exchange is entitled to receive.
All Certificates issued upon any registration of transfer or exchange
of a Certificate shall evidence the ownership of the same number of Securities,
and be entitled to the same benefits and subject to the same obligations, under
this Agreement as the Securities evidenced by the Certificate surrendered upon
such registration of transfer or exchange.
Every Certificate presented or surrendered for registration of transfer
or for exchange shall (if so required by the Agent) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to
Sovereign, the Trust and the Agent duly executed, by the Holder thereof or its
attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of a Certificate, but Sovereign and the Agent may require payment from
the Holder of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any registration of transfer or exchange
of Certificates, other than any exchanges pursuant to Sections 3.6, 3.7 and 8.5
not involving any transfer and the Trust.
Notwithstanding the foregoing, Sovereign and the Trust shall not be
obligated to execute and deliver to the Agent, and the Agent shall not be
obligated to authenticate, execute on behalf of the Holder and deliver any
Certificate in exchange for any other Certificate presented or surrendered for
registration of transfer or for exchange on or after the Business Day
immediately preceding the Expiration Date. In lieu of delivery of a new
Certificate, upon satisfaction of the applicable conditions specified above in
this Section and receipt of appropriate registration or transfer instructions
from such Holder, the Agent shall deliver the consideration received on such
Expiration Date (which may be shares of Common Stock issuable in respect of the
exercise of Warrants forming a part of the Securities evidenced by such other
Certificate, Warrant Value receivable upon a redemption of such
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Warrants or Remarketing Proceeds receivable upon a contemporaneous remarketing
of the Preferred Securities forming a part of the Securities evidenced by such
other Certificate), subject to the applicable conditions and in accordance with
the applicable provisions of Article Five hereof.
Section 3.6. Separation and Rejoining of Units.
The Global Certificate shall represent such of the outstanding
Securities as shall be specified in the "Schedule of Exchanges of Interests of
Global Certificate" attached thereto or otherwise in accordance with the
Applicable Procedures. At any time after issuance, the Preferred Security and
Warrant components of any Security may be separated by the Holder and thereafter
transferred separately and, (i) in the event of an election to exercise the
Warrant component prior to the Remarketing Settlement Date (as provided in
Section 5.2), (ii) in the event of an election to have Warrants redeemed or
Preferred Securities repurchased upon a Change of Control (in each case,
pursuant to Section 5.3) or (iii) in the event of a Remarketing, the Preferred
Security and Warrant components of any Security shall be separated. In the event
of any separation of the components of a Security, (i) if such Security is
represented by a Definitive Certificate, the Holder shall present such
Definitive Certificate to the Agent for cancellation and the Agent shall so
notify the Registrar and shall return the Preferred Security and Warrant
components of such Security to the Property Trustee and Warrant Agent,
respectively, with an instruction for them to countersign and deliver to, or
upon the instruction of, such Holder a separated Preferred Security and a
separated Warrant, bearing the separate "CUSIP" number assigned to the Preferred
Security and the Warrant, respectively, and (ii) if such Security is represented
by the Global Certificate, the Agent shall make the necessary endorsement to the
"Schedule of Exchanges of Interests of Global Certificate" attached to the
Global Certificate or otherwise comply with the Applicable Procedures to reduce
the amount of Securities represented thereby and shall instruct the Property
Trustee and the Warrant Agent to effect a corresponding increase in the
Preferred Securities and the Warrants, respectively, represented by global
certificates bearing separate "CUSIP" numbers. The Agent shall make such other
necessary endorsements to the Global Certificate consistent with the terms of
this agreement to reflect the appropriate number of Securities represented
thereby.
Following a Remarketing of the Preferred Securities components of a
Security, (i) if such Security is represented by a Definitive Certificate, the
Holder shall present such Definitive Certificate to the Agent for cancellation
and the Agent shall so notify the Registrar and shall return the Preferred
Security and Warrant components of such Security to the Property Trustee with an
instruction for them to countersign and deliver to, or upon the instruction of
the Remarketing Agent a Preferred Security bearing the separate "CUSIP" number
assigned to the Preferred Security and (ii) if such Security is represented by
the Global Certificate, the Agent shall, in accordance with the instructions of
the Remarketing Agent, make the necessary endorsement to the "Schedule of
Exchanges of Interests of Global Certificate" attached to the Global Certificate
or otherwise comply with the Applicable Procedures to reduce the amount of
Securities represented thereby and shall instruct the Property Trustee to effect
a corresponding increase in the Preferred Securities represented by global
certificates bearing the separate "CUSIP" number. The Agent shall make such
other necessary endorsements to
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the Global Certificate consistent with the terms of this agreement to reflect
the appropriate number of Securities represented thereby.
Once separated in accordance with Section 5.2, a Preferred Security and
a Warrant may be rejoined to form a Security, whether or not such securities
were at one time components of the same Security. In the event a holder of a
Preferred Security and a Warrant desires to rejoin a Security, (i) if the
constituent components are represented by Definitive Certificates, the holder
shall present (x) the Preferred Security to the Property Trustee and (y) the
Warrant to the Warrant Agent, in each case for cancellation and the Property
Trustee and the Warrant Agent shall so notify the Agent, who shall in turn so
notify the Registrar with an instruction for the Registrar to countersign and
deliver to, or upon the instruction of, such holder a Security bearing the
separate "CUSIP" number assigned to the Securities, respectively, and (ii) if
the constituent components are represented by global certificates, each of the
Property Trustee and the Warrant Agent shall make the necessary endorsement to
their respective global certificates or otherwise comply with the Applicable
Procedures to reduce the amount of Preferred Securities and Warrants,
respectively, represented thereby and shall instruct Agent to effect a
corresponding increase in the Securities represented by the Global Certificate
bearing separate "CUSIP" number. The Agent, the Property Trustee, and the
Warrant Agent shall make such other necessary endorsements to their respective
global certificates consistent with the terms of this agreement to reflect the
appropriate number of Securities, Preferred Securities and Warrants, as
appropriate, represented thereby.
The Agent is authorized to deliver such further directions to the
Property Trustee, the Warrant Agent, the Exchange Agent and others, and to take
such further actions as shall be necessary to effect the exchanges, separations,
transfer and recreations contemplated by Section 3.5 and 3.6.
Section 3.7. Book-Entry Interests.
The Certificates, on original issuance, will be issued in the form of
one or more fully registered Global Certificates, to be delivered to the
Depositary by, or on behalf of, Sovereign. Such Global Certificate shall
initially be registered on the books and records of Sovereign and the Trust in
the name of Cede & Co., the nominee of the Depositary, and no Beneficial Owner
will receive a Definitive Certificate representing such Beneficial Owner's
interest in such Global Certificate, except as provided in Section 3.10. The
Agent shall enter into an agreement with the Depositary if so requested by
Sovereign. Unless and until Definitive Certificates have been issued to
Beneficial Owners pursuant to Section 3.10:
(a) the provisions of this Section 3.7 shall be in full force and
effect;
(b) Sovereign shall be entitled to deal with the Clearing Agency for
all purposes of this Agreement as the Holder of the Securities and the sole
holder of the Global Certificate(s) and shall have no obligation to the
Beneficial Owners;
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(c) to the extent that the provisions of this Section 3.7 conflict with
any other provisions of this Agreement, the provisions of this Section 3.7 shall
control; and
(d) the rights of the Beneficial Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by law and
agreements between such Beneficial Owners and the Clearing Agency and/or the
Clearing Agency Participants.
Section 3.8. Notices to Holders.
Whenever a notice or other communication to the Holders is required to
be given under this Agreement, Sovereign or Sovereign's agent shall give such
notices and communications to the Holders and, with respect to any Securities
registered in the name of a Clearing Agency or the nominee of a Clearing Agency,
Sovereign or Sovereign's agent shall, except as set forth herein, have no
obligations to the Beneficial Owners.
Section 3.9. Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as securities
depositary with respect to the Securities, Sovereign may, in its sole
discretion, appoint a successor Clearing Agency with respect to the Securities.
Section 3.10. Definitive Certificates.
If (i) a Clearing Agency elects to discontinue its services as
securities depositary with respect to the Securities and a successor Clearing
Agency is not appointed within 90 days after such discontinuance pursuant to
Section 3.9 or (ii) there shall have occurred and be continuing a default by
Sovereign in respect of its obligations under the Warrant Agreement, the
Indenture, the Declaration or this Agreement, upon surrender of the Global
Certificates representing the Securities by the Clearing Agency, accompanied by
registration instructions, Sovereign and the Trust shall cause Definitive
Certificates to be delivered to Beneficial Owners in accordance with the
instructions of the Clearing Agency. Sovereign shall not be liable for any delay
in delivery of such instructions and may conclusively rely on and shall be
protected in relying on, such instructions.
Section 3.11. Mutilated, Destroyed, Lost and Stolen Certificates.
If any mutilated Certificate is surrendered to the Agent, Sovereign
shall execute and deliver to the Agent, and the Agent shall authenticate,
execute on behalf of the Holder, and deliver in exchange therefor, a new
Certificate, evidencing the same number of Securities and bearing a Certificate
number not contemporaneously outstanding.
If there shall be delivered to Sovereign and the Agent (i) evidence to
their satisfaction of the destruction, loss or theft of any Certificate, and
(ii) such security or indemnity as may be required by them to hold each of them
and any agent of any of them harmless, then, in the absence of notice to
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Sovereign and the Trust or the Agent that such Certificate has been acquired by
a bona fide purchaser, Sovereign and the Trust shall execute and deliver to the
Agent, and the Agent shall authenticate, execute on behalf of the Holder, and
deliver to the Holder, in lieu of any such destroyed, lost or stolen
Certificate, a new Certificate, evidencing the same number of Securities and
bearing a Certificate number not contemporaneously outstanding.
Notwithstanding the foregoing, Sovereign shall not be obligated to
execute and deliver to the Agent, and the Agent shall not be obligated to
authenticate, execute on behalf of the Holder, and deliver to the Holder, a
Certificate on or after the Business Day immediately preceding the Expiration
Date. In lieu of delivery of a new Certificate, upon satisfaction of the
applicable conditions specified above in this Section and receipt of appropriate
registration or transfer instructions from such Holder, the Agent shall deliver
the consideration received on such Expiration Date (which may be (i) shares of
Common Stock issuable in respect of the exercise of Warrants pursuant to the
Warrant Agreement, (ii) the Warrant Value receivable upon a redemption of such
Warrants pursuant to the Warrant Agreement or (iii) proceeds of a Remarketing
receivable upon a contemporaneous remarketing of the Preferred Securities
forming a part of the Securities evidenced by such other Certificate as provided
in the Declaration).
Upon the issuance of any new Certificate under this Section, Sovereign,
the Trust, and the Agent may require the payment by the Holder of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Agent) connected therewith.
Every new Certificate issued pursuant to this Section in lieu of any
destroyed, lost or stolen Certificate shall constitute an original additional
contractual obligation of Sovereign and of the Holder in respect of the Security
evidenced thereby, whether or not the destroyed, lost or stolen Certificate (and
the Securities evidenced thereby) shall be at any time enforceable by anyone,
and shall be entitled to all the benefits and be subject to all the obligations
of this Agreement equally and proportionately with any and all other
Certificates delivered hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates.
Section 3.12. Persons Deemed Owners.
Prior to due presentment of a Certificate for registration of transfer,
Sovereign, the Trust and the Agent, and any agent of Sovereign, the Trust or the
Agent, may treat the Person in whose name such Certificate is registered as the
owner of the Security evidenced thereby, for the purpose of receiving payments
on the Preferred Securities, the Debentures or the Warrants and for all other
purposes whatsoever, whether or not any payments on the Preferred Securities,
the Debentures or the Warrants shall be overdue and notwithstanding any notice
to the contrary, and none of Sovereign, the Trust, the Agent, nor any agent of
Sovereign or the Agent, shall be affected by notice to the contrary.
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Notwithstanding the foregoing, with respect to any Global Certificate,
nothing herein shall prevent Sovereign, the Agent or any agent of Sovereign, the
Trust or the Agent, from giving effect to any written certification, proxy or
other authorization furnished by any Clearing Agency (or its nominee), as a
Holder, with respect to such Global Certificate or impair, as between such
Clearing Agency and owners of beneficial interests in such Global Certificate,
the operation of customary practices governing the exercise of rights of such
Clearing Agency (or its nominee) as Holder of such Global Certificate.
Section 3.13. Cancellation.
All Certificates surrendered (i) for separation as provided in Section
3.6 hereof, (ii) in connection with a remarketing and redemption as provided in
the Declaration, the Warrant Agreement and Article V hereof or (iii) upon the
transfer of Preferred Securities, Debentures or Warrants upon the registration
of a transfer or exchange of a Security or any of its components shall, if
surrendered to any Person other than the Agent, be delivered to the Agent and,
if not already cancelled, shall be promptly cancelled by it. Sovereign and the
Trust may at any time deliver to the Agent for cancellation any Certificates
previously authenticated, executed and delivered hereunder which Sovereign and
the Trust may have acquired in any manner whatsoever, and all Certificates so
delivered shall, upon Issuer Order, be promptly cancelled by the Agent. No
Certificates shall be authenticated, executed on behalf of the Holder and
delivered in lieu of or in exchange for any Certificates cancelled as provided
in this Section, except as expressly permitted by this Agreement. All cancelled
Certificates held by the Agent shall be held by the Agent or returned to
Sovereign pursuant to an Issuer Order.
If Sovereign, the Trust or any Affiliate of Sovereign shall acquire any
Certificate, such acquisition shall not operate as a cancellation of such
Certificate unless and until such Certificate is delivered to the Agent
cancelled or for cancellation.
Section 3.14. CUSIP Numbers.
Sovereign, in issuing the Securities, may use "CUSIP" numbers (if then
generally in use), and, if so, the Agent shall use "CUSIP" numbers in notices of
redemption as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness of such numbers either as
printed on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers. Sovereign will promptly notify the Agent of any change
in the "CUSIP" numbers.
ARTICLE IV
The Preferred Securities
Section 4.1. Payment of Distribution; Rights to Distributions Preserved;
Distribution Rate Reset.
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Distributions on the Preferred Securities which are made on any Payment
Date shall, subject to receipt thereof by the Agent, be payable to the Holders
as they appear on the books and records of the Agent at the close of business on
the relevant Record Dates. Distributions on the Preferred Securities which are
made on any Remarketing Settlement Date shall, subject to receipt thereof by the
Agent, be payable to (or, in the case of Section 5.1, for the account of) the
Holders as they appear on the books and records of the Agent at the close of
business on the Remarketing Date. If the Securities are represented by one or
more Global Certificates, the relevant Record Dates shall be the close of
business on the Business Day preceding the corresponding Payment Date, unless a
different Record Date is established or provided for the corresponding
distribution son the Preferred Securities. If the Securities are not represented
by one or more Global Certificates, the relevant Record Dates shall be the
fifteenth Business Day prior to the corresponding Payment Dates, or such other
dates as may be selected by the Agent.
Each Certificate evidencing Preferred Securities (or Debentures)
delivered under this Agreement upon registration of transfer of or in exchange
for or in lieu of any other Certificate shall carry the rights to distributions
accumulated and unpaid, and to accumulate distributions, which were carried by
the Preferred Securities (or Debentures) underlying such other Certificate. The
applicable Coupon Rate on the Debentures on and after the Remarketing Date shall
be equal to the Reset Rate established in the remarketing on such date.
Section 4.2. Notice and Voting.
The Agent will be entitled to exercise the voting and any other
consensual rights pertaining to the Preferred Securities, Debentures and
Warrants, as the case may be, but only to the extent instructed in writing by
the Holders as described below and in Article V. Upon receipt of notice of any
meeting at which holders of Preferred Securities, Debentures or Warrants are
entitled to vote or upon any solicitation of consents, waivers or proxies of
holders of Preferred Securities, Debentures or Warrants, the Agent shall, as
soon as practicable thereafter, mail to the Holders of Securities a notice (a)
containing such information as is contained in the notice or solicitation, (b)
stating that each Holder on the record date set by the Agent therefor (which, to
the extent possible, shall be the same date as the record date for determining
the holders of Preferred Securities, Debentures or Warrants, as the case may be,
entitled to vote) shall be entitled to instruct the Agent as to the exercise of
the voting rights pertaining to such Preferred Securities, Debentures or
Warrants underlying their Security and (c) stating the manner in which such
instructions may be given. Upon the written request of the Holders of Securities
on such record date received by the Agent at least six days prior to such
meeting, the Agent shall endeavor insofar as practicable to vote or cause to be
voted, in accordance with the instructions set forth in such requests, the
maximum number of Preferred Securities, Debentures or Warrants, as the case may
be, as to which any particular voting instructions are received. In the absence
of specific instructions from the Holder of a Security, the Agent shall abstain
from voting the Preferred Securities, Debentures or Warrants underlying such
Security. Sovereign hereby agrees to solicit Holders of Securities to timely
instruct the Agent in order to enable the Agent to vote such Preferred
Securities, Debentures or Warrants and the Trust shall covenant to such effect
in the Declaration.
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Section 4.3. Distribution of Debentures.
Upon the liquidation of the Trust in accordance with the Declaration, a
principal amount at maturity of Debentures constituting the assets of the Trust
and underlying the Preferred Securities equal to the aggregate stated
liquidation amount of the Preferred Securities shall be delivered to the Agent
in exchange for the Preferred Securities. Thereafter, the Debentures will be
substituted for the Preferred Securities as a component of the Securities.
Following the liquidation of the Trust, the Holders shall have such rights and
obligations with respect to the Debentures as the Holders had in respect of the
Preferred Securities. Sovereign may cause to be made in any Certificates
thereafter to be issued such change in phraseology and form (but not in
substance) as may be appropriate to reflect the liquidation of the Trust and the
substitution of Debentures for Preferred Securities.
ARTICLE V
Remarketing and Redemption; Early Exercise
Section 5.1. Remarketing and Redemption
Pursuant to a Remarketing Agreement to be entered into, Sovereign will
engage a Remarketing Agent to sell the Preferred Securities (or, if the
Debentures have been distributed upon liquidation of the Trust, the Debentures)
upon the occurrence of a Remarketing Event. In connection with a Remarketing of
the Preferred Securities:
(i) in connection with a Remarketing upon a Trading
Remarketing Event or a Legal Cause Remarketing Event, the Accreted
Value of the Debentures as of the end of the day on the day next
preceding the Remarketing Date shall become due on the date which is 60
days following the Remarketing Date, and, as a result, the Accreted
Value of the Preferred Securities as of the end of the day on the day
next preceding the Remarketing Date shall be redeemed on the date which
is 60 days following the Remarketing Date;
(ii) on the Remarketing Date, the rate of interest per annum
on the Accreted Value of the Debentures shall become the Reset Rate
established in the Remarketing of the Preferred Securities, and, as a
result, the Distribution rate per annum on the Accreted Value of the
Preferred Securities shall become the Reset Rate established in the
Remarketing;
(iii) on the Remarketing Settlement Date, interest accrued and
unpaid on the Debentures from and including the immediately preceding
Interest Payment Date to, but excluding, the Remarketing Settlement
Date shall be payable to the holders of the Debentures, and, as a
result, Distributions accumulated and unpaid on the Securities from and
including the immediately preceding Distribution Date to, but
excluding, the Remarketing Settlement Date shall be payable to the
Holders of the Securities;
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(iv) in connection with a Remarketing upon a Trading
Remarketing Event or a Legal Cause Remarketing Event, Sovereign shall
be obligated to redeem the Warrants on the Remarketing Settlement Date
at a redemption price per Warrant equal to the Warrant Value as of the
end of the day on the day next preceding the Remarketing Date; and
(v) on and after the Remarketing Date, the Warrants shall be
exercisable at the Exercise Price.
Upon receipt from Sovereign of a Notice of Remarketing as provided in
the Declaration and of a notice of a Redemption as provided in the Warrant
Agreement, the Agent shall, as soon as practicable thereafter, mail to the
Holders of Securities a notice of such receipt, together with a copy of each
such notice.
IN THE ABSENCE OF AN AFFIRMATIVE ELECTION NOT TO PARTICIPATE IN THE
REMARKETING, EACH HOLDER WILL BE DEEMED TO HAVE ELECTED TO PARTICIPATE
IN SUCH REMARKETING AND, IF APPLICABLE, TO HAVE ITS WARRANTS REDEEMED
ON THE RELATED REMARKETING SETTLEMENT DATE AT THE WARRANT VALUE.
Each Holder of a Security who desires NOT to participate in the
Remarketing shall notify the Agent of such intention by use of a notice in
substantially the form of Exhibit B hereto. Such notice shall be given to the
Agent prior to 5:00 p.m., New York City time, on the seventh Business Day
immediately preceding the Remarketing Date specified in the Notice of
Remarketing. A Holder of Security must affirmatively elect NOT to participate in
a Remarketing on or prior to 5:00 p.m. New York City time on the seventh
Business Day immediately preceding the Remarketing Date. Subject to the next
paragraph, an election by a Holder NOT to participate in the Remarketing will
not alter the deemed election by such Holder to have its Warrants redeemed on
the Remarketing Settlement Date. Any such notice shall be irrevocable and may
not be conditioned upon the level at which the Reset Rate is established in the
Remarketing. The Agent, based on such notices, shall notify the Remarketing
Agent, promptly after 11:00 a.m., New York City time, on the fifth Business Day
immediately preceding the Remarketing Date, of the aggregate number of Preferred
Securities (or, if the Debentures have been distributed in connection with a
liquidation of the Trust, the Debentures) that are a component of Securities to
be remarketed. Upon receipt of such notice from the Agent, the Remarketing Agent
shall, on the Remarketing Date, use commercially reasonable efforts to remarket
such Preferred Securities (or Debentures) on such date at a price equal to: (i)
in connection with a Remarketing upon a Trading Remarketing Event or a Legal
Cause Remarketing Event, 100% of the aggregate Accreted Value of such Preferred
Securities (or Debentures) as of the end of the day on the day next preceding
the Remarketing Date; and (ii) on the Maturity Remarketing Date, 100% of the
stated liquidation amount (or principal amount).
Each Holder of a Security who desires to exercise its Warrants on the
Remarketing Settlement Date at the Exercise Price per Warrant described in
clause (v) above in this Section 5.1, instead of having such Warrants redeemed
on such date, shall notify the Agent and the Warrant Agent of such
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intention by use of a notice in substantially the form of Exhibit C hereto. Such
notice shall be given to the Agent and the Warrant Agent prior to 3:00 p.m., New
York City time, on the Business Day immediately preceding the Remarketing
Settlement Date specified in the related Notice of Remarketing. As provided
above, any Holder who does not notify the Agent and the Warrant Agent of an
election to exercise its Warrants on the Warrant Settlement Date shall be deemed
to have elected to have such Warrants redeemed. Upon receipt of the foregoing
notices the Agent shall provide notice to the Warrant Agent, no later than 5:00
p.m., New York City time, on the Business Day immediately preceding the related
Remarketing Settlement Date specified in the related Notice of Remarketing, of
the number of Warrants to be exercised and shall, no later than 5:00 p.m., New
York City time, on the Remarketing Settlement Date, deliver to the Warrant Agent
a duly completed form of election to purchase set forth on the reverse side of
the Warrant Certificate, a form of which is attached to the Global Certificate,
together with the proceeds of the Remarketing referred to in the following
paragraph. Upon receipt of the Common Stock deliverable upon exercise of the
Warrants, the Warrant Agent shall deliver such shares to or upon the order of
the Agent.
Each Holder who elects to participate in the Remarketing and to
exercise its Warrants on the related Remarketing Settlement Date is referred to
as an "Electing Remarketing Holder". The Agent shall instruct the Remarketing
Agent to deliver the proceeds from the Remarketing of Preferred Securities of
each Electing Remarketing Holder to the Warrant Agent, and the Warrant Agent
shall apply such amounts to satisfy in full such Holders' obligation to pay the
Exercise Price for the Common Stock under the related Warrants on the
Remarketing Settlement Date. Any Holder (other than an Electing Remarketing
Holder) of a Security affirmatively electing to exercise Warrants on the
Remarketing Settlement Date may do so by following the procedures set forth in
Section 5.2 and in the Warrant Agreement. The proceeds from a redemption of the
Warrants which form a part of the Securities shall be paid to the Holders of
such Securities.
The Declaration provides that if, by 4:00 p.m. New York City time, on a
Remarketing Date, the Remarketing Agent is unable to remarket all of the
Preferred Securities deemed tendered for purchase, a "Failed Remarketing" shall
be deemed to have occurred and the Remarketing Agent shall so advise by
telephone the Clearing Agency, the Property Trustee, the Warrant Agent, the
Indenture Trustee, the Administrative Trustees on behalf of the Trust and
Sovereign. Sovereign shall then give notice of the Failed Remarketing to the
Agent no later than 12:00 noon, New York City time, on the Business Day
following the Failed Remarketing and the Agent will, in turn, give notice to the
Holders of the Preferred Securities prior to the close of business on the
Business Day following the Failed Remarketing. Sovereign promptly shall cause a
notice of such Failed Remarketing to be published on the second Business Day
immediately preceding the Remarketing Settlement Date in a daily newspaper in
the English language of general circulation in New York City, which is expected
to be The Wall Street Journal. Notice of a Failed Remarketing shall be deemed to
constitute a withdrawal of each previously delivered election to exercise
Warrants on the related Remarketing Settlement Date. Following any such
withdrawal a holder may still elect to exercise its Warrants in accordance with
the procedures specified in Section 3.6 hereof and in the Warrant Agreement.
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Upon the occurrence of a Trading Remarketing Event or a Legal Cause
Remarketing Event and the election by Sovereign to cause a Remarketing of the
Preferred Securities, and on the Maturity Remarketing Date, as long as the
Securities are evidenced by one or more Global Certificates, deposited with the
Clearing Agency, Sovereign shall request, not later than 15 nor more than 30
days prior to the Remarketing Date, that the Clearing Agency notify the Holders
of the Securities of the Remarketing of the Preferred Securities and of the
procedures that must be followed if such Holder of Securities wishes to elect
not to participate in the Remarketing of the Preferred Securities.
Section 5.2. Early Exercise of Warrants; Exchange of Preferred Securities and
Repurchase of Debentures.
A Holder of a Security may elect to exercise the Warrants which form a
part of such Security at any time in accordance with the terms of the Warrant
Agreement. Each Holder, other than an Electing Holder, who desires to exercise
its Warrants shall, prior to any such exercise, separate the Warrant and the
Preferred Security components of the Security in accordance with Section 3.6. In
no event may a Holder satisfy its obligation to pay the Exercise Price by
tendering Preferred Securities.
Following the exercise of a Warrant on a day other than the Remarketing
Settlement Date, the Holder of the Security of which such Warrant formed a part
may require the Trust to exchange the Preferred Securities which formed the
other part of such Security for Debentures having an Accreted Value equal to the
Accreted Value of the Preferred Securities being exchanged and to require
Sovereign to repurchase such Debentures on the applicable Required Repurchase
Date which is no less than 60 days from such exercise date, as specified in the
Declaration.
Section 5.3. Change in Control.
Following a Change in Control, each Holder will have the right to (i)
require the Trust to distribute to such Holder Debentures having an Accreted
Value equal to Accreted Value of the Preferred Securities components of such
Holder's Securities in exchange for its Preferred Securities and (ii) cause
Sovereign to repurchase (a "Change of Control Repurchase Right") such Holder's
Debentures and redeem (a "Change of Control Redemption Right") such Holder's
Warrants at the amounts and on the dates specified in the Warrant Agreement, the
Declaration and the Indenture, as applicable.
Upon receipt from Sovereign of notice of a Change of Control (as
provided in the Declaration and the Warrant Agreement), the Agent shall, as soon
as practicable thereafter, mail to the Holders of Securities a notice of such
receipt, together with a copy of such notice of Change of Control. The date
specified in the notice from Sovereign will be the "Change of Control Notice
Date".
(a) Warrants. To exercise the Change of Control Redemption Right, a
Holder must deliver to the Agent, prior to the 30 day following the Change of
Control Notice Date, irrevocable th written notice in the form of Exhibit D
hereto, of such Holder's election to have Warrants redeemed on the date
specified in the Warrant Agreement. The Agent, based on such notices, shall
notify the
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Warrant Agent no later than the 30 day following the Change in Control Notice
Date of the aggregate th number of Warrants to be redeemed. An election to have
Warrants redeemed shall also constitute an election to separate the related
Securities into their component parts and the Agent and the Warrant Agent shall
follow the procedures specified in Section 3.6.
(b) Preferred Securities. To exercise the Change of Control Repurchase
Right, a Holder who has not separated its Securities pursuant to clause (a)
above must deliver to the Agent, no earlier than the 60 and no later than the 90
day following the Change of Control Notice Date, irrevocable th th written
notice in the form of Exhibit E hereto, of such Holder's election to have
Preferred Securities components of its Securities exchanged for an equivalent
Accreted Amount of Debentures and to have such Debentures repurchased on the
date specified in the Indenture. The Agent, based on such notices, shall notify
the Trust, Sovereign, the Property Trustee and the Exchange Agent, no later than
the 90 th day following the Change of Control Notice Date of the aggregate
number of Preferred Securities to be exchanged for Debentures by the Trust and
to be repurchased by Sovereign. An election to exchange Preferred Securities for
Debentures and to have such Debentures repurchased by Sovereign shall also
constitute an election to separate the related Securities into their component
parts and the Agent, the Exchange Agent and the Property Trustee shall follow
the procedures specified in Section 3.6 hereof (and Section 6.8 of the
Declaration).
Section 5.4. Certain Rights Following a Remarketing.
Following a Remarketing Settlement Date (unless there has been a
"Failed Remarketing" under the Declaration) and a Redemption or exercise of the
Warrants (including the delivery of all shares of Common Stock pursuant to the
exercise of a Warrant or the payment of the Warrant Value payable upon the
related Redemption and the payment of any amounts payable upon the related
Remarketing), a Security shall thereafter represent the right to receive the
Preferred Securities (or if the Debentures have been distributed upon
liquidation of the Trust, the Debentures) forming a part of such Securities.
ARTICLE VI
Remedies
Section 6.1. Unconditional Right of Holders to Receive Payments and to Purchase
Common Stock.
The Holder of any Security shall have all the rights provided to a
holder of Preferred Securities under the Declaration and to a holder of Warrants
under the Warrant Agreement, including the right to institute suit for the
enforcement of any such payments or obligations thereunder, and such rights
shall not be impaired except as provided in the Declaration and the Warrant
Agreement.
Section 6.2. Restoration of Rights and Remedies.
If any Holder has instituted any proceeding to enforce any right or
remedy under this Agreement and such proceeding has been discontinued or
abandoned for any reason, or has been
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determined adversely to such Holder, then and in every such case, subject to any
determination in such proceeding, Sovereign and such Holder shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of such Holder shall continue as though no such
proceeding had been instituted.
Section 6.3. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Certificates in the last paragraph of
Section 3.11, no right or remedy herein conferred upon or reserved to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 6.4. Delay or Omission Not Waiver.
No delay or omission of any Holder to exercise any right or remedy upon
a default shall impair any such right or remedy or constitute a waiver of any
such right. Every right and remedy given by this Article or by law to the
Holders may be exercised from time to time, and as often as may be deemed
expedient, by such Holders.
Section 6.5. Undertaking for Costs.
All parties to this Agreement agree, and each Holder of a Security, by
its acceptance of such Security shall be deemed to have agreed, that any court
may in its discretion require, in any suit for the enforcement of any right or
remedy under this Agreement, or in any suit against the Agent for any action
taken, suffered or omitted by it as Agent, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such court
may in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; provided
that the provisions of this Section shall not apply to any suit instituted by
Sovereign, to any suit instituted by the Agent, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% of the
Outstanding Securities, or to any suit instituted by any Holder for the
enforcement of distributions on any Preferred Securities on or after the
respective Payment Date therefor in respect of any Security held by such Holder,
or for enforcement of the right to purchase shares of Common Stock under the
Warrants constituting part of any Security held by such Holder.
Section 6.6. Waiver of Stay or Extension Laws.
Sovereign covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants
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or the performance of this Agreement; and Sovereign (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Agent or the Holders, but will suffer and permit the
execution of every such power as though no such law had been enacted.
ARTICLE VII
The Agent
Section 7.1. Certain Duties and Responsibilities.
(a) (1) The Agent undertakes to perform, with respect to the
Securities, such duties and only such duties as are specifically set
forth in this Agreement, and no implied covenants or obligations shall
be read into this Agreement against the Agent; and
(2) in the absence of bad faith or negligence on its part, the
Agent may, with respect to the Securities, conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Agent and
conforming to the requirements of this Agreement but in the case of any
certificates or opinions which by any provision hereof are specifically
required to be furnished to the Agent, the Agent shall be under a duty
to examine the same to determine whether or not they conform to the
requirements of this Agreement (but need not confirm or investigate the
accuracy of mathematical calculations or other facts stated therein).
(b) No provision of this Agreement shall be construed to relieve the
Agent from liability for its own negligent action, its own negligent failure to
act, or its own wilful misconduct, except that
(1) this Subsection shall not be construed to limit the effect
of Subsection (a) of this Section;
(2) the Agent shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved
that the Agent was negligent in ascertaining the pertinent facts;
(3) no provision of this Agreement shall require the Agent to
expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if adequate indemnity is not provided
to it; and
(4) no provision of this Agreement shall require the Agent to
expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it.
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(c) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Agent shall be subject to the provisions of this
Section.
Section 7.2. Notice of Default.
Within 30 days after the occurrence of any default by Sovereign
hereunder of which a Responsible Officer of the Agent has actual knowledge, the
Agent shall transmit by mail to Sovereign and the Holders of Securities, as
their names and addresses appear in the Register, notice of such default
hereunder, unless such default shall have been cured or waived.
Section 7.3. Certain Rights of Agent.
Subject to the provisions of Section 7.1:
(a) the Agent may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(b) any request or direction of Sovereign mentioned herein shall be
sufficiently evidenced by an Officers' Certificate, Issuer Order or Issuer
Request, and any resolution of the Board of Directors of Sovereign may be
sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Agreement the Agent shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Agent (unless other evidence be
herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate of Sovereign;
(d) the Agent may consult with counsel of its selection and the advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon;
(e) the Agent shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the Agent,
in its discretion, may make reasonable further inquiry or investigation into
such facts or matters as it may see fit, and, if the Agent shall determine to
make such further inquiry or investigation, it shall be given a reasonable
opportunity to examine the books, records and premises of Sovereign, personally
or by agent or attorney at the sole cost of Sovereign, and shall incur no
liability or additional liability of any kind by reason of such inquiry or
investigation;
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(f) the Agent may execute any of the powers hereunder or perform any
duties hereunder either directly or by or through agents or attorneys or an
Affiliate and the Agent shall not be responsible for any misconduct or
negligence on the part of any agent or attorney or an Affiliate appointed with
due care by it hereunder;
(g) with respect to the calculation of the Accreted Value and the
Warrant Value, the Agent may conclusively rely upon the calculations thereof
determined by the Calculation Agent;
(h) the Agent shall not be liable for any action taken, suffered, or
omitted to be taken by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Agreement;
(i) the Agent shall not be deemed or have notice of any Default or
Event of Default unless a Responsible Officer of the Agent has actual knowledge
thereof or unless written notice of any event which is in fact such a default is
received by the Agent at the Corporate Trust Office of the Agent, and such
notice references the Securities and this Agreement; and
(j) the rights, privileges, protections, immunities and benefits given
to the Agent, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Agent in each of its capacities
hereunder, and to each agent, custodian and other Person employed to act
hereunder.
Section 7.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Certificates shall be taken as
the statements of Sovereign, and the Agent assumes no responsibility for their
accuracy. The Agent makes no representations as to the validity or sufficiency
of either this Agreement or of the Securities. The Agent shall not be
accountable for the use or application by Sovereign of Securities or the
proceeds thereof.
Section 7.5. May Hold Securities.
Any Registrar or any other agent of Sovereign, or the Agent and its
Affiliates, in their individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with Sovereign or any other Person
with the same rights it would have if it were not Registrar or such other agent,
or the Agent.
Section 7.6. Money Held in Custody.
Money held by the Agent in custody hereunder need not be segregated
from the other funds except to the extent required by law or provided herein.
The Agent shall be under no obligation to
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invest or pay interest on any money received by it hereunder except as otherwise
agreed in writing with Sovereign.
Section 7.7. Compensation and Reimbursement.
Sovereign agrees:
(1) to pay to the Agent from time to time such compensation as
shall from time to time be agreed to in writing by Sovereign and the
Agent for all services rendered by it hereunder;
(2) except as otherwise expressly provided for herein, to
reimburse the Agent upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Agent in accordance
with any provision of this Agreement (including the reasonable
compensation and the expenses and disbursements of its agents and
counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
(3) to indemnify the Agent and any predecessor Agent for, and
to hold it harmless against, any loss, liability or expense, including
taxes (other than taxes based upon, measured by or determined by the
income of the Agent) incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or
administration of its duties hereunder, including the costs and
expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or
duties hereunder.
The Agent shall have a lien prior to the Securities as to all property
and funds held by it hereunder for any amount owing it or any predecessor Agent
pursuant to this Section 7.7, except with respect to funds held in trust for the
benefit of the Holders of particular Securities.
The provisions of this Section shall survive the termination of this
Agreement.
Section 7.8. Corporate Agent Required; Eligibility.
There shall at all times be an Agent hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia, authorized under such
laws to exercise corporate trust powers, having (or being a member of a bank
holding company having) a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by Federal or State authority and having a
Corporate Trust Office in the Borough of Manhattan, The City of New York, if
there be such a corporation in the Borough of Manhattan, The City of New York,
qualified and eligible under this Article and willing to act on reasonable
terms. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Agent shall cease to be eligible in
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accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.
Section 7.9. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Agent and no appointment of a
successor Agent pursuant to this Article shall become effective until the
acceptance of appointment by the successor Agent in accordance with the
applicable requirements of Section 7.10.
(b) The Agent may resign at any time by giving written notice thereof
to Sovereign 60 days prior to the effective date of such resignation. If the
instrument of acceptance by a successor Agent required by Section 7.10 shall not
have been delivered to the Agent within 30 days after the giving of such notice
of resignation, the resigning Agent may petition any court of competent
jurisdiction for the appointment of a successor Agent.
(c) The Agent may be removed at any time by Act of the Holders of a
majority in number of the Outstanding Securities delivered to the Agent and
Sovereign.
(d) If at any time
(1) the Agent fails to comply with Section 310(b) of the TIA,
as if the Agent were an indenture trustee under an indenture qualified
under the TIA, after written request therefor by Sovereign or by any
Holder who has been a bona fide Holder of a Security for at least six
months, or
(2) the Agent shall cease to be eligible under Section 7.8 and
shall fail to resign after written request therefor by Sovereign or by
any such Holder, or
(3) the Agent shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Agent or of its
property shall be appointed or any public officer shall take charge or
control of the Agent or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) Sovereign by a Board Resolution may remove the
Agent, or (ii) any Holder who has been a bona fide Holder of a Security for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Agent and
the appointment of a successor Agent.
(e) If the Agent shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Agent for any cause,
Sovereign, by a Board Resolution, shall promptly appoint a successor Agent and
shall comply with the applicable requirements of Section 7.10. If no successor
Agent shall have been so appointed by Sovereign and accepted appointment in the
manner required by Section 7.10, any Holder who has been a bona fide Holder of a
Security for at least six
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months may, on behalf of itself and all others similarly situated, petition any
court of competent jurisdiction for the appointment of a successor Agent.\
(f) Sovereign shall give, or shall cause such successor Agent to give,
notice of each resignation and each removal of the Agent and each appointment of
a successor Agent by mailing written notice of such event by first-class mail,
postage prepaid, to all Holders as their names and addresses appear in the
applicable Register. Each notice shall include the name of the successor Agent
and the address of its Corporate Trust Office.
Section 7.10. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Agent, every
such successor Agent so appointed shall execute, acknowledge and deliver to
Sovereign and to the retiring Agent an instrument accepting such appointment,
and thereupon the resignation or removal of the retiring Agent shall become
effective and such successor Agent, without any further act, deed or conveyance,
shall become vested with all the rights, powers, agencies and duties of the
retiring Agent; but, on the request of Sovereign or the successor Agent, such
retiring Agent shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Agent all the rights, powers and
trusts of the retiring Agent and shall duly assign, transfer and deliver to such
successor Agent all property and money held by such retiring Agent hereunder. If
an instrument of acceptance by a successor Agent shall not have been delivered
to the Agent within 30 days after the giving of such notice of removal, the
Agent being removed may petition, at the expense of Sovereign, any court of
competent jurisdiction for the appointment of a successor Agent with respect to
the Securities of such series.
(b) Upon request of any such successor Agent, Sovereign shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Agent all such rights, powers and agencies referred to in
paragraph (a) of this Section.
(c) No successor Agent shall accept its appointment unless at the time
of such acceptance such successor Agent shall be qualified and eligible under
this Article.
Section 7.11. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Agent may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Agent shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Agent, shall be the successor of the Agent hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article, with
the execution or filing of any paper or any further act on the part of any of
the parties hereto. In case any Certificates shall have been authenticated and
executed on behalf of the Holders, but not delivered, by the Agent then in
office, any successor by merger, conversion or consolidation to such Agent may
adopt such authentication and execution and deliver the Certificates so
authenticated and executed with the same effect as if such successor Agent had
itself authenticated and executed such Securities.
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Section 7.12. Preservation of Information; Communications to Holders.
(a) The Agent shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders received by the Agent in its
capacity as Registrar.
(b) If three or more Holders (herein referred to as "applicants") apply
in writing to the Agent, and furnish to the Agent reasonable proof that each
such applicant has owned a Security for a period of at least six months
preceding the date of such application, and such application states that the
applicants desire to communicate with other Holders with respect to their rights
under this Agreement or under the Securities and is accompanied by a copy of the
form of proxy or other communication which such applicants propose to transmit,
then the Agent shall mail to all the Holders copies of the form of proxy or
other communication which is specified in such request, with reasonable
promptness after a tender to the Agent of the materials to be mailed and of
payment, or provision for the payment, of the reasonable expenses of such
mailing.
Section 7.13. No Obligations of Agent.
Except to the extent otherwise expressly provided in this Agreement,
the Agent assumes no obligations and shall not be subject to any liability under
this Agreement in respect of the obligations of the Holder of any Security
hereunder. Sovereign agrees, and each Holder of a Certificate, by his acceptance
thereof, shall be deemed to have agreed, that the Agent's execution of the
Certificates on behalf of the Holders shall be solely as agent and
attorney-in-fact for the Holders, and that the Agent shall have no obligation
thereunder except to the extent expressly provided in Article Five hereof.
Anything in this Agreement to the contrary notwithstanding, in no event shall
the Agent or its officers, employees or agents be liable under this Agreement to
any third party for indirect, special, punitive, or consequential loss or damage
of any kind whatsoever, including lost profits, whether or not the likelihood of
such loss or damage was known to the Agent, incurred without any act or deed
that is found to be attributable to gross negligence or willful misconduct on
the part of the Agent.
Section 7.14. Tax Compliance.
(a) Sovereign will comply with all applicable certification,
information reporting and withholding (including "backup" withholding)
requirements imposed by applicable tax laws, regulations or administrative
practice with respect to (i) any payments made with respect to the Securities or
(ii) the issuance, delivery, holding, transfer, redemption or exercise of rights
under the Securities. Such compliance shall include, without limitation, the
preparation and timely filing of required returns and the timely payment of all
amounts required to be withheld to the appropriate taxing authority or its
designated agent.
(b) The Agent shall comply in accordance with the terms hereof with any
written direction received from Sovereign with respect to the execution or
certification of any required documentation and the application of such
requirements to particular payments or Holders or in other particular
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circumstances, and may for purposes of this Agreement rely on any such direction
in accordance with the provisions of Section 7.1(a)(2) hereof.
(c) The Agent shall maintain all appropriate records documenting
compliance with such requirements, and shall make such records available, on
written request, to Sovereign or its authorized representative within a
reasonable period of time after receipt of such request.
ARTICLE VIII
Supplemental Agreements
Section 8.1. Supplemental Agreements Without Consent of Holders.
Without the consent of any Holders or any other party hereto, Sovereign
and the Agent, at any time and from time to time, may enter into one or more
agreements supplemental hereto, in form satisfactory to Sovereign and the Agent,
for any of the following purposes:
(1) to evidence the succession of another Person to Sovereign,
and the assumption by any such successor of the covenants of Sovereign
herein and in the Certificates; or
(2) to add to the covenants of Sovereign for the benefit of
the Holders, or to surrender any right or power herein conferred upon
Sovereign; or
(3) to evidence and provide for the acceptance of appointment
hereunder by a successor Agent; or
(4) to cure any ambiguity, to correct or supplement any
provisions herein which may be inconsistent with any other provisions
herein, or to make any other provisions with respect to such matters or
questions arising under this Agreement, provided such action shall not
adversely affect the interests of the Holders.
Section 8.2. Supplemental Agreements With Consent of Holders; Other Fiduciaries.
With the consent of the Holders of not less than a majority in number
of the Outstanding Securities voting together as one class, by Act of said
Holders delivered to Sovereign and the Agent, Sovereign, when authorized by a
Board Resolution, the Trust and the Agent may enter into an agreement or
agreements supplemental hereto for the purpose of modifying in any manner the
provisions of this Agreement or the rights of the Holders in respect of the
Securities; provided, however, that, except as contemplated herein, no such
supplemental agreement shall, without the unanimous consent of the Holders of
each Outstanding Security affected thereby,
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(1) materially and adversely affect such Holder's rights under
a Security; or
(2) reduce the percentage of the Outstanding Securities the
consent of whose Holders is required for any such supplemental
agreement;
provided, that any modification of the Declaration or Warrant Agreement in
accordance with the terms thereof shall be binding on the rights of the Holders
under this Agreement without the need for any further consent.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental agreement, but it shall
be sufficient if such Act shall approve the substance thereof.
No agreement supplemental hereto shall modify in any way any of the
rights or obligations of the Agent, the Property Trustee, the Indenture Trustee,
the Warrant Agent or the Remarketing Agent without such Person's consent.
Sovereign may, but shall not be obligated to, fix a record date for the
purpose of determining the Persons entitled to consent to any indenture
supplemental hereto. If a record date is fixed, the Holders on such record date,
or their duly designated proxies, and only such Persons, shall be entitled to
consent to such supplemental indenture, whether or not such Holders remain
Holders after such record date; provided, that unless such consent shall have
become effective by virtue of the requisite percentage having been obtained
prior to the date which is 90 days after such record date, any such consent
previously given shall automatically and without further action by any Holder be
canceled and of no further effect.
Section 8.3. Execution of Supplemental Agreements.
In executing, or accepting the additional agencies created by, any
supplemental agreement permitted by this Article or the modifications thereby of
the agencies created by this Agreement, the Agent shall be entitled to receive,
and (subject to Section 7.1) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental agreement is
authorized or permitted by this Agreement. The Agent may, but shall not be
obligated to, enter into any such supplemental agreement which affects the
Agent's own rights, duties or immunities under this Agreement or otherwise.
Section 8.4. Effect of Supplemental Agreements.
Upon the execution of any supplemental agreement under this Article,
this Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of this Agreement for all purposes; and every Holder
of Certificates theretofore or thereafter authenticated, executed on behalf of
the Holders and delivered hereunder, shall be bound thereby.
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Section 8.5. Reference to Supplemental Agreements.
Certificates authenticated, executed on behalf of the Holders and
delivered after the execution of any supplemental agreement pursuant to this
Article may, and shall if required by the Agent, bear a notation in form
approved by the Agent as to any matter provided for in such supplemental
agreement. If Sovereign shall so determine, new Certificates so modified as to
conform, in the opinion of the Agent and Sovereign, to any such supplemental
agreement may be prepared and executed by Sovereign and authenticated, executed
on behalf of the Holders and delivered by the Agent in exchange for Certificates
representing Outstanding Securities.
ARTICLE IX
Consolidation, Merger, Sale or Conveyance
Section 9.1. Covenant Not to Merge, Consolidate, Sell or Convey Property Except
Under Certain Conditions.
Sovereign covenants that it will not merge or consolidate with any
other Person or sell, assign, transfer, lease or convey all or substantially all
of its properties and assets to any Person or group of affiliated Persons in one
transaction or a series of related transactions, unless (i) either Sovereign
shall be the continuing corporation, or the successor (if other than Sovereign)
shall be a corporation organized and existing under the laws of the United
States of America or a State thereof or the District of Columbia and such
corporation shall expressly assume all the obligations of Sovereign under this
Agreement by one or more supplemental agreements in form reasonably satisfactory
to the Agent, executed and delivered to the Agent by such corporation, and (ii)
Sovereign or such successor corporation, as the case may be, shall not,
immediately after such merger or consolidation, or such sale, assignment,
transfer, lease or conveyance, be in default in the performance of any covenant
or condition hereunder or under any of the Securities (including the component
parts thereof).
Section 9.2. Rights and Duties of Successor Corporation.
In case of any such consolidation, merger, sale, assignment, transfer,
lease or conveyance and upon any such assumption by a successor corporation in
accordance with Section 9.1, such successor corporation shall succeed to and be
substituted for Sovereign with the same effect as if it had been named herein as
Sovereign. Such successor corporation thereupon may cause to be signed, and may
issue either in its own name or in the name of Sovereign Bancorp, Inc., any or
all of the Certificates evidencing Securities issuable hereunder which
theretofore shall not have been signed by Sovereign and delivered to the Agent;
and, upon the order of such successor corporation, instead of Sovereign, and
subject to all the terms, conditions and limitations in this Agreement
prescribed, the Agent shall authenticate and execute on behalf of the Holders
and deliver any Certificates which previously shall have been signed and
delivered by the officers of Sovereign to the Agent for authentication and
execution, and any Certificate evidencing Securities which such successor
corporation thereafter shall cause to be signed and delivered to the Agent for
that purpose. All the Certificates issued shall in all
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respects have the same legal rank and benefit under this Agreement as the
Certificates theretofore or thereafter issued in accordance with the terms of
this Agreement as though all of such Certificates had been issued at the date of
the execution hereof.
In case of any such consolidation, merger, sale, assignment, transfer,
lease or conveyance such change in phraseology and form (but not in substance)
may be made in the Certificates evidencing Securities thereafter to be issued as
may be appropriate.
Section 9.3. Opinion of Counsel Given to Agent.
The Agent, subject to Sections 7.1 and 7.3, shall receive an Opinion of
Counsel as conclusive evidence that any such consolidation, merger, sale,
assignment, transfer, lease or conveyance, and any such assumption, complies
with the provisions of this Article and that all conditions precedent to the
consummation of any such consolidation, merger, sale, assignment, transfer,
lease or conveyance have been met.
ARTICLE X
Covenants
Section 10.1. Performance Under Agreements.
Sovereign covenants and agrees for the benefit of the Holders from time
to time of the Securities that it will duly and punctually perform its
obligations under the Warrants Agreement and the Declaration in accordance with
the terms thereof and this Agreement.
Section 10.2. Maintenance of Office or Agency.
Sovereign will maintain in the Borough of Manhattan, The City of New
York an office or agency where Certificates may be presented or surrendered for
registration of transfer or exchange, separation or re-establishment of a
Security and where notices and demands to or upon Sovereign in respect of the
Securities and this Agreement may be served. Sovereign will give prompt written
notice to the Agent of the location, and any change in the location, of such
office or agency. If at any time Sovereign shall fail to maintain any such
required office or agency or shall fail to furnish the Agent with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office, and Sovereign hereby appoints the Agent as
its agent to receive all such presentations, surrenders, notices and demands.
Sovereign may also from time to time designate one or more other
offices or agencies where Certificates may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve Sovereign of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York for such purposes. Sovereign will
give prompt written notice to the Agent of any such
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designation or rescission and of any change in the location of any such other
office or agency. Sovereign hereby designates as the place of payment for the
Securities the Corporate Trust Office and appoints the Agent at its Corporate
Trust Office as paying agent in such city.
Section 10.3. Statements of Officers of Sovereign as to Default.
Sovereign will deliver to the Agent, within 120 days after the end of
each fiscal year of Sovereign (which as of the date hereof is December 31)
ending after the date hereof, an Officers' Certificate (one of the signers of
which shall be the principal executive officer, principal financial officer or
principal accounting officer of Sovereign), stating whether or not to the best
knowledge of the signers thereof Sovereign is in default in the performance and
observance of any of the terms, provisions and conditions hereof, and if
Sovereign shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge.
Section 10.4. ERISA.
Each Holder from time to time of the Security which is a Plan hereby
represents that its acquisition of the Security and the holding of the same
satisfies the applicable fiduciary requirements of ERISA and that it is entitled
to exemption relief from the prohibited transaction provisions of ERISA and the
Code in accordance with one or more prohibited transaction exemptions or
otherwise will not result in a nonexempt prohibited transaction.
ARTICLE XI
Representations of the Agent
Section 11.1. Representations and Warranties of the Agent.
The initial Agent represents and warrants to the Trust and to Sovereign
at the date of this Agreement, and each successor Agent represents and warrants
to the Trust and Sovereign at the time of the successor Agent's acceptance of
its appointment as Agent, that:
(a) the Agent is a banking corporation duly organized, validly existing
and in good standing under the laws of the State of New York, with trust powers
and authority to execute and deliver, and to carry out and perform its
obligations under the terms of, this Agreement;
(b) the Agent satisfies the requirements set forth in Section 7.8;
(c) the execution, delivery and performance by the Agent of this
Agreement has been duly authorized by all necessary corporate action on the part
of the Agent; this Agreement has been duly executed and delivered by the Agent
and constitutes a legal, valid and binding obligation of the Agent enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency and other similar laws affecting
creditors' rights generally and to
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general principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in equity
or at law);
(d) the execution, delivery and performance of this Agreement by the
Agent does not conflict with, or constitute a breach of, the charter or by-laws
of the Agent; and
(e) no consent, approval or authorization of, or registration with or
notice to, any New York State or federal banking authority is required for the
execution, delivery or performance by the Agent of this Agreement.
ARTICLE XII
The Warrant Agent and The Property Trustee
Section 12.1. Certain Duties and Responsibilities.
(a) (1) The Warrant Agent and the Property Trustee (each, a "Party",
together, the "Parties") undertake to perform, with respect to this Agreement,
such duties and only such duties as are specifically set forth in this
Agreement, and no implied covenants or obligations shall be read into this
Agreement against any Party. The provisions regarding the appointment, removal,
resignation, vacancies, meetings, delegation of power and merger, conversion,
consolidation or succession to business applicable to such Party in the
Declaration or Warrant Agreement, as to which such Person is a party, shall
apply to the performance of such Persons duties and obligations hereunder.
Without limiting the foregoing,
(a) In the absence of bad faith or negligence on its part, any Party
may, with respect to the Securities, conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to such Party and conforming to the
requirements of this Agreement but in the case of any certificates or opinions
which by any provision hereof are specifically required to be furnished to a
Party, such Party shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Agreement.
(b) No provision of this Agreement shall be construed to relieve any
Party from liability for its own negligent action, its own negligent failure to
act, or its own wilful misconduct, except that
(1) this Subsection shall not be construed to limit the effect
of Subsection (a) of this Section;
(2) no Party shall be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that
such Party was negligent in ascertaining the pertinent facts; and
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(3) no provision of this Agreement shall require any Party to
expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if adequate indemnity is not provided
to it.
(c) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Parties shall be subject to the provisions of this
Section.
(d) Any Party may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(e) Any request or direction of Sovereign mentioned herein shall be
sufficiently evidenced by an Officers' Certificate, Issuer Order or Issuer
Request, and any resolution of the Board of Directors of Sovereign may be
sufficiently evidenced by a Board Resolution;
(f) Whenever in the administration of this Agreement any Party shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, such Party (unless other evidence be
herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate of Sovereign;
(g) Any Party may consult with counsel of its selection and the advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon;
(h) No Party shall be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document, but any Party, in its
discretion, may make reasonable further inquiry or investigation into such facts
or matters as it may see fit, and, if such Party shall determine to make such
further inquiry or investigation, it shall be given a reasonable opportunity to
examine the books, records and premises of Sovereign, personally or by agent or
attorney at the sole cost of Sovereign and shall incur no liability or
additional liability of any kind by reason of such inquiry or investigation; and
(i) Any Party may execute any of the powers hereunder or perform any
duties hereunder either directly or by or through agents or attorneys or an
Affiliate and no Party shall be responsible for any misconduct or negligence on
the part of any agent or attorney or an Affiliate appointed with due care by it
hereunder.
(j) No Party shall be liable for any action taken, suffered, or omitted
to be taken by it in good faith and reasonably believed by it to be authorized
or within the discretion or rights or powers conferred upon it by this
Agreement;
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(k) No Party shall be deemed or have notice of any default or event of
default unless an officer in the corporate trust department of such Party the
Agent has actual knowledge thereof or unless written notice of any event which
is in fact such a default is received by such Party at its address identified in
this Agreement, and such notice references the Securities and this Agreement.
(l) The rights, privileges, protections, immunities and benefits given
to each Party, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the such Party in each of its
capacities hereunder, and to each agent, custodian and other Person employed to
act hereunder.
(m) The recitals contained herein and in the Certificates shall be
taken as the statements of Sovereign, and no Party assumes any responsibility
for their accuracy. No Party makes any representations as to the validity or
sufficiency of either this Agreement or of the Securities.
(n) Any Party in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with Sovereign or any
other Person with the same rights it would have if it were not a Party.
(o) Sovereign agrees to pay each Party such compensation, and to
reimburse each Party for such expenses, as shall be provided from time to time
in the Declaration and the Warrant Agreement to which such Party is a signatory.
(p) The provisions of this Section shall survive the termination of
this Agreement.
(q) No Party shall be accountable for the use or application by Sovereign of
Securities or the proceeds thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
/s/ SOVEREIGN BANCORP, INC.
/s/ THE BANK OF NEW YORK, as
Agent
/s/ THE BANK OF NEW YORK, as Warrant
Agent
/s/ THE BANK OF NEW YORK, as Property
Trustee
/s/ SOVEREIGN CAPITAL TRUST II
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EXHIBIT A
FACE OF CERTIFICATE
"THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE
UNIT AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE "DEPOSITARY"), OR A
NOMINEE OF THE DEPOSITARY. THIS CERTIFICATE IS EXCHANGEABLE FOR CERTIFICATES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY
IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE UNIT AGREEMENT AND NO TRANSFER OF
THIS CERTIFICATE (OTHER THAN A TRANSFER OF THIS CERTIFICATE AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN
LIMITED CIRCUMSTANCES.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE CONSTITUENT COMPONENTS OF THIS UNIT MUST BE SEPARATED PRIOR TO
TRANSFER (EXCEPT AS PART OF A UNIT) AS PROVIDED IN THE UNIT AGREEMENT."
Certificate No.: _____ Cusip No.: 845905306
Number of Securities: ___________
SOVEREIGN BANCORP, INC.
SOVEREIGN CAPITAL TRUST II
Unit Security
This Certificate certifies that Cede & Co. is the registered Holder of
the number of Securities set forth above. Each Security consists of (i)
beneficial ownership by the Holder of one Preferred Security (the "Preferred
Security") of Sovereign Capital Trust II, a Delaware statutory business trust
(the "Trust"), having a stated liquidation amount of $50, the form of which is
attached as Annex A hereto and (ii) the rights and obligations of the Holder
under one Warrant to purchase common shares of Sovereign Bancorp, Inc., a
Pennsylvania corporation (the "Company"), the form of which is attached
as Annex B hereto. All capitalized terms used herein which are defined in the
Unit Agreement (as defined on the reverse hereof) have the meaning set forth
therein.
A-1
Distributions on any Preferred Security forming part of a Security
evidenced hereby, which are payable quarterly in arrears on February 15, May 15,
August 15, and November 15 of each year, commencing on February 15, 2000 (a
"Payment Date"), shall, subject to receipt thereof by the Agent, be paid to the
Person in whose name this Certificate (or a Predecessor Certificate) is
registered at the close of business on the Record Date for such Payment Date,
except that the proceeds of a Remarketing will be paid to the Warrant Agent in
satisfaction of each Electing Remarketing Holder's obligations to pay the
Exercise Price of Warrants constituting a part of this Security.
Distributions on the Preferred Securities will be payable at the office
of the Agent in The City of New York or, at the option of Sovereign, by check
mailed to the address of the Person entitled thereto as such address appears on
the Register.
Reference is hereby made to the further provisions set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Agent by manual signature, this Certificate shall not be entitled to any
benefit under the Unit Agreement, the Warrant Agreement or the Declaration or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the undersigned have caused this instrument to be
duly executed.
SOVEREIGN BANCORP, INC.
By: _______________________________
Name:
Title:
SOVEREIGN CAPITAL TRUST II
By: _______________________________
Name:
Title: Administrative Trustee.
A-2
AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within mentioned
Unit Agreement.
Dated: By: THE BANK OF NEW YORK, as
Agent
By: _______________________________
Authorized Signatory
A-3
(FORM OF REVERSE OF CERTIFICATE)
Each Security evidenced hereby is governed by a Unit Agreement, dated
as of November 15, 1999 (as may be supplemented from time to time, the "Unit
Agreement"), among Sovereign, The Bank of New York, as unit agent (including its
successors hereunder, the "Agent"), The Bank of New York, as Warrant Agent, and
The Bank of New York, as Property Trustee, to which Agreement and supplemental
agreements thereto reference is hereby made for a description of the respective
rights, limitations of rights, obligations, duties and immunities thereunder of
the Agent, Sovereign, and the Holders and of the terms upon which the
Certificates are, and are to be, executed and delivered. Pursuant to the Unit
Agreement, the rights, limitations or rights, obligations, duties and immunities
of the Agent, Sovereign, and the Holders, and the Certificates include the
rights, obligations, duties and immunities set forth in the Warrant Agreement
and the Declaration, to which reference is further made for a description
thereof.
Each Security evidenced hereby consists of (i) beneficial ownership by
the Holder of one Preferred Security of Sovereign Capital Trust II having a
stated liquidation amount of $50, the form of which is attached as Annex A
hereto and (ii) the rights and obligations of the Holder under one Warrant to
purchase shares of common stock of Sovereign, the form of which is attached as
Annex B hereto.
Sovereign may, under the circumstances described in the Declaration,
cause a Remarketing of the outstanding Preferred Securities which form a part of
this Security. In connection therewith, Sovereign will, as described in the
Warrant Agreement, redeem all Warrants which form a part of this Security.
In no event may a Holder pay the Exercise Price of a Warrant by
tendering a Preferred Security. In accordance with the terms of the Declaration
and the Unit Agreement, the Holder of this Certificate may pay the Exercise
Price for the shares of Common Stock purchased pursuant to each Warrant
constituting a part of this Security by applying the proceeds of a remarketing
of the related Preferred Securities.
A Holder of a Security who does not affirmatively elect NOT to
participate in a Remarketing on or prior to 5:00 p.m. New York City time on the
seventh Business Day immediately preceding the Remarketing Date, will be deemed
to have consented to participation in such Remarketing. A Holder of a Security
who does not affirmatively elect on or prior to 5:00 p.m. on the Business Day
preceding a Remarketing Settlement Date to exercise the Warrants related to such
Security will be deemed to have consented to a redemption of such Warrants on
the Remarketing Settlement Date. A Remarketing sale will be made by the
Remarketing Agent pursuant to the terms of the Remarketing Agreement on the
Remarketing Date.
A holder may exercise the Warrants which form a part of the Securities
evidenced by this Certificate at any time upon compliance with the procedures
specified in the Warrant Agreement. A Holder of a Security evidenced by this
Certificate who elects to exercise Warrants prior to the
A-4
Remarketing Settlement Date shall have the right to require the Trust to
exchange the related Preferred Securities for Debentures having an Accreted
Value equal to the Accreted Value of such Preferred Securities and to require
Sovereign to repurchase such Debentures on the next Required Repurchase Date
which is no less than 60 days after the applicable exercise date.
Upon receipt of notice of any meeting at which holders of Preferred
Securities are entitled to vote or upon the solicitation of consents, waivers or
proxies of holders of Preferred Securities, the Agent shall, as soon as
practicable thereafter, mail to the Holders a notice (a) containing such
information as is contained in the notice or solicitation, (b) stating that each
Holder on the record date set by the Agent therefor (which, to the extent
possible, shall be the same date as the record date for determining the holders
of Preferred Securities entitled to vote) shall be entitled to instruct the
Agent as to the exercise of the voting rights pertaining to the Preferred
Securities constituting a part of such Holder's Security and (c) stating the
manner in which such instructions may be given. Upon the written request of the
Holders on such record date, the Agent shall endeavor insofar as practicable to
vote or cause to be voted, in accordance with the instructions set forth in such
requests, the maximum number of Preferred Securities as to which any particular
voting instructions are received. In the absence of specific instructions from
the Holder of a Security, the Agent shall abstain from voting the Preferred
Security evidenced by such Security.
Upon the liquidation of the Trust, a principal amount of the Debentures
constituting the assets of the Trust and underlying the Preferred Securities
equal to the aggregate Accreted Value of the Preferred Securities shall be
delivered to the Agent in exchange for the Preferred Securities. Thereafter, the
Holders shall have such rights and obligations with respect to the Debentures as
the Holders had in respect of the Preferred Securities and any reference herein
to the Preferred Securities shall be deemed to be a reference to the Debentures.
The Certificates are issuable only in registered form and only in
denominations of a single Security and any integral multiple thereof. The
transfer of any Certificate will be registered and Certificates may be exchanged
as provided in the Unit Agreement. The Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents
permitted by the Unit Agreement. No service charge shall be required for any
such registration of transfer or exchange, but Sovereign and the Agent may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. A Security shall be separable into its
components, and Securities may be recreated as provided in the Unit Agreement;
provided, however, this Certificate shall not represent more than 5,750,000
Securities. All such adjustments to the equivalent aggregate principal amount of
this Certificate shall be duly recorded by placing an appropriate notation on
the Schedule attached hereto.
The Holder of this Certificate, by its acceptance hereof, expressly
withholds any consent to the assumption (i.e., affirmance) of the Warrant
Agreement or the Warrants by Sovereign or its trustee in the event that
Sovereign becomes the subject of a case under the Bankruptcy Code.
The Holder of this Certificate, by its acceptance hereof, expressly
agrees to be bound by the terms and provisions of the Unit Agreement, the
Warrant Agreement and the Declaration.
A-5
Subject to certain exceptions, the provisions of the Unit Agreement may
be amended with the consent of the Holders of a majority in number of the
Securities.
Sovereign, the Agent and its Affiliates and any agent of Sovereign or
the Agent may treat the Person in whose name this Certificate is registered as
the owner of the Security evidenced hereby for the purpose of receiving payments
of distributions payable quarterly on the Preferred Securities and for all other
purposes whatsoever, whether or not any payments in respect thereof be overdue
and notwithstanding any notice to the contrary, and neither Sovereign, the Agent
nor any such agent shall be affected by notice to the contrary.
The Warrants shall not, prior to the exercise thereof, entitle the
Holder to any of the rights of a holder of shares of Common Stock.
A copy of the Unit Agreement, the Warrant Agreement, the Declaration
and all exhibits to each such agreement is available for inspection at the
offices of the Agent.
This Security shall be governed by the laws of the State of New York,
without regard to principles of conflicts of law.
A-6
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
UNIF GIFT MIN ACT - ---------------Custodian---------------
(cust) (minor)
Under Uniform Gifts to Minors Act of _______
____________________________________________
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship
and not as tenants in common
Additional abbreviations may also be used though not in the above list.
-------------------------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto_______________________________________________________________
_______________________________________________________________________________
(Please insert Social Security or Taxpayer I.D. or other
Identifying Number of Assignee)
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please Print or Type Name and Address Including Postal Zip Code of Assignee)
the within Certificates and all rights thereunder, hereby irrevocably
constituting and appointing attorney to transfer said Certificates on the books
of [Name of Company] with full power of substitution in the premises.
Dated: ___________________ ______________________________________________
Signature
NOTICE: The signature to this assignment must
correspond with the name as it appears upon the
face of the within Certificates in every
particular, without alteration or enlargement or
any change whatsoever.
Signature Guarantee: ___________________________________
A-7
[TO BE ATTACHED TO GLOBAL CERTIFICATES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE
This Global Certificate shall represent 5,750,000 Securities unless otherwise
indicated below.
The following increases or decreases in this Global Certificate have been made:
===================================================================================================================================
Number of Securities
Amount of decrease in Amount of increase in evidenced by this
Number of Securities Number of Securities Global Certificate Signature of
evidenced by the evidenced by the following such authorized officer of
Date Global Certificate Global Certrificate decrease or increase Agent
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A-8
ANNEX A
[FORM OF PREFERRED SECURITY CERTIFICATE]
This Preferred Security is a Global Preferred Security within the meaning of the
Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company, a New York corporation (the "Clearing Agency"), or a
nominee of the Clearing Agency. This Preferred Security is exchangeable for
Preferred Securities registered in the name of a person other than the Clearing
Agency or its nominee only in the limited circumstances described in the
Declaration, and no transfer of this Preferred Security (other than a transfer
of this Preferred Security as a whole by the Clearing Agency to a nominee of the
Clearing Agency or by a nominee of the Clearing Agency to the Clearing Agency or
another nominee of the Clearing Agency) may be registered except in limited
circumstances. Unless this certificate is presented by an authorized
representative of the Clearing Agency to Sovereign Capital Trust II or its agent
for registration of transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or such other name as requested by an
authorized representative of the Clearing Agency (and any payment hereon is made
to Cede & Co. or to such other entity as is requested by an authorized
representative of the Clearing Agency), and except as otherwise provided in the
Declaration, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has
an interest herein.(1)
CERTIFICATE EVIDENCING PREFERRED SECURITIES
of
SOVEREIGN CAPITAL TRUST II
7.50% Preferred Securities
(stated liquidation amount $50 per Preferred Security)
Certificate No.:____ Number of Preferred Securities ______________
CUSIP No.: US84603L207
Sovereign Capital Trust II, a statutory business trust created under
the laws of the State of Delaware (the "Trust"), hereby certifies that
______________ (the "Holder") is the registered
- ------------
1. Insert in Global Preferred Securities only.
A-9
owner of _________ preferred securities of the Trust representing undivided
beneficial ownership interests in the assets of the Trust designated the
Preferred Securities (stated liquidation amount $50 per Preferred Security) (the
"Preferred Securities"). The Preferred Securities are transferable on the books
and records of the Trust, in person or by a duly authorized attorney, upon
surrender of this certificate duly endorsed and in proper form for transfer as
provided in the Declaration. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities
represented hereby are issued and shall in all respects be subject to the
provisions of the Amended and Restated Declaration of Trust of the Trust, dated
as of November 15, 1999 (as the same may be amended from time to time (the
"Declaration"), among Sovereign Bancorp, Inc., as Sponsor, Mark R. McCollom and
Jacquelyn Blue, as Administrative Trustees, The Bank of New York, as Property
Trustee, and The Bank of New York (Delaware), as Delaware Trustee. Capitalized
terms used but not defined herein shall have the meaning given them in the
Declaration. The Holder is entitled to the benefits of the Guarantee Agreement,
dated as of November 15, 1999, between Sovereign Bancorp, Inc., as Guarantor and
The Bank of New York, as Guarantee Trustee, in respect of the Preferred
Securities. The Sponsor will provide a copy of the Declaration, the Guarantee
Agreement and the Indenture (including any supplemental indenture) to a Holder
without charge upon written request to the Sponsor at its principal place of
business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
A-10
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Preferred Securities
as evidence of undivided indirect beneficial ownership interests in the
Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this _____
day of _________________, 1999.
SOVEREIGN CAPITAL TRUST II
By:________________________________
Name:
Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Preferred Securities referred to in the within-mentioned
Declaration.
Dated: ____________, 1999
THE BANK OF NEW YORK,
as Property Trustee
By:_________________________
Authorized Signatory
A-11
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to:
_______________________________________________________________________________
(Insert assignee's social security or tax identification number)
_______________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints _________________________ agent to transfer this
Preferred Security Certificate on the books and records of the Trust. The agent
may substitute another to act for him.
Date:_____________________
Signature:________________
(Sign exactly as your name appears on the Preferred Security Certificate)
Signature Guarantee*:
- ---------
* Signature must be guaranteed by an "eligible guarantor institution" that is a
bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities and Exchange Act of 1934, as amended.
A-12
SCHEDULE OF INCREASES OR DECREASES IN
GLOBAL PREFERRED SECURITY(2)
This Global Preferred Security shall represent 0 Preferred Securities
unless otherwise indicated below.
The following increases or decreases in this Global Preferred Security
have been made:
===================================================================================================================================
Number of Preferred
Amount of decrease in Amount of increase in Securities evidenced by
Number of Preferred Number of Preferred this
Securities evidenced by Securities evidenced by Global Preferred Signature of
this Global Preferred this Global Preferred Security following such authorized officer of
Date Security Security decrease or increase Agent
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A-13
ANNEX B
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE WERE INITIALLY ISSUED AS PART OF AN
ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF A WARRANT TO PURCHASE 5.3355 SHARES
(SUBJECT TO ANTI-DILUTION ADJUSTMENTS) OF COMMON STOCK OF THE COMPANY AT THE
EXERCISE PRICE SET FORTH IN THE BELOW-REFERENCED WARRANT AGREEMENT AND A
PREFERRED SECURITY OF SOVEREIGN CAPITAL TRUST II (THE "TRUST"). THE WARRANTS AND
THE PREFERRED SECURITIES MAY BE SEPARATED AND TRANSFERRED SEPARATELY, AND
RE-ATTACHED, IN ACCORDANCE WITH THE PROVISIONS OF THE UNIT AGREEMENT.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
[TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE WARRANT
AGREEMENT.]
No. { } Certificate for _____ Warrants
CUSIP No.: 845905116
WARRANTS TO PURCHASE COMMON STOCK OF
SOVEREIGN BANCORP, INC.
THIS CERTIFIES THAT __________, or its registered assigns, is the
registered holder of the number of Warrants set forth above (the "Warrants").
Each Warrant entitles the holder thereof (the "Holder"), at its option and
subject to the provisions contained herein and in the Warrant Agreement referred
to below, to purchase from Sovereign Bancorp, Inc., a Pennsylvania corporation
("the Company"), 5.3355 shares (subject to certain adjustments as set forth in
the Warrant Agreement) of common stock of the Company (the "Common Stock") at
the Exercise Price. This Warrant Certificate
A-14
shall terminate and become void, and the related Warrants shall expire, as of
5:00 p.m., New York time, on the earlier of (i) November 20, 2029 or (ii) the
date the Warrants are redeemed by the Company pursuant to the terms of the
Warrant Agreement, as described below (the "Expiration Date"), or upon the
earlier exercise hereof as to all the shares of Common Stock subject hereto. The
number of shares issuable upon exercise of the Warrants shall be subject to
adjustment from time to time as set forth in the Warrant Agreement.
This Warrant Certificate is issued under and in accordance with a
Warrant Agreement dated as of November 15, 1999 (the "Warrant Agreement"),
between the Company and The Bank of New York, as warrant agent (the "Warrant
Agent", which term includes any successor Warrant Agent under the Warrant
Agreement), and is subject to the terms and provisions contained in the Warrant
Agreement, to all of which terms and provisions the Holder of this Warrant
Certificate consents by acceptance hereof. The Warrant Agreement is hereby
incorporated herein by reference and made a part hereof. Reference is hereby
made to the Warrant Agreement for a full statement of the respective rights,
limitations of rights, duties and obligations of the Company, the Warrant Agent
and the Holders of the Warrants. Capitalized terms used but not defined herein
shall have the meanings ascribed thereto in the Warrant Agreement. A copy of the
Warrant Agreement may be obtained for inspection by the Holder hereof upon
written request to the Warrant Agent at its address for notices specified in the
Warrant Agreement.
Subject to redemption as described below, the Holder of this Warrant
Certificate shall have the right, prior to the Expiration Date, at such Holder's
option, to exercise the related Warrant and purchase the Exercise Amount
(subject to certain adjustments set forth in the Warrant Agreement) of Common
Stock at the Exercise Price, provided that the Exercise Conditions are met as of
such date. If the Warrant evidenced by this Warrant Certificate is not exercised
at or before 5:00 p.m., New York time, on its Expiration Date, such Warrant
shall become void, and all rights of the Holder of this Warrant Certificate
hereunder and under the Warrant Agreement shall cease. The Warrant or Warrants
evidenced by this Warrant Certificate may be exercised by giving notice to the
Warrant Agent no later than 5:00 p.m., New York time, on the Business Day
preceding the proposed date of exercise of such Warrants and completing the form
of election to purchase set forth on the reverse hereof, and delivering the
same, together with this Warrant Certificate (if this Warrant Certificate shall
then be held in definitive form), to the Warrant Agent no later than 5:00 p.m.,
New York time, on the date of such exercise, together with a Cash Payment
(unless, in accordance with the Warrant Agreement, a Remarketing Payment is to
be made). In no event may a Holder satisfy its obligation to pay the Exercise
Price by tendering Preferred Securities.
On the date of exercise of the Warrant or Warrants evidenced by this
Warrant Certificate, the Company shall issue, and the Warrant Agent shall
deliver, to or upon the order of the Holder hereof, the Exercise Amount of
Common Stock to which such Holder is entitled, registered in such name or names
as may be directed by such Holder. The date on which this Warrant Certificate
and payment are received by the Warrant Agent as aforesaid shall be deemed to be
the date on which the related Warrant is exercised and the related Common Stock
is issued.
A-15
Notwithstanding anything to the contrary in this Warrant Certificate or
in the Warrant Agreement, (i) no fractional shares of Common Stock shall be
issued by the Company upon the exercise of any Warrant, (ii) if more than one
Warrant shall be exercised at the same time by the same Holder, the number of
shares of Common Stock issuable in connection with such exercise shall be
computed on the basis of the aggregate Exercise Amount of the Warrants so
exercised, and (iii) on the date a Holder exercises such Holder's Warrant, the
Company shall pay such Holder an amount in cash equal to the then-current Market
Price (multiplied by the related fraction) of Common Stock for such fractional
shares, computed to the nearest whole cent.
If fewer than all of the Warrants evidenced by this Warrant Certificate
are exercised, the Company shall execute, and an authorized officer of the
Warrant Agent shall countersign and deliver, a new Warrant Certificate
evidencing the number of Warrants remaining unexercised.
The "Exercise Conditions" require that, with respect to any Warrant on
any date on which such Warrant is or is proposed to be exercised by the Holder
thereof, that (i) (a) the Company shall have a registration statement in effect
under the Securities Act covering the issuance and sale of the related Exercise
Amount of Common Stock upon exercise of such Warrant, or (b) the sale of such
shares of Common Stock shall be exempt from the registration requirements of the
Securities Act, (ii) such shares of Common Stock shall have been registered,
qualified or are deemed to be exempt under the securities laws of the state of
residence of the exercising Holder, and (iii) a then-current prospectus relating
to the Common Stock shall be delivered to such exercising Holder.
As provided in the Warrant Agreement, the number of shares of Common
Stock issuable upon the exercise of the Warrants is subject to an anti-dilution
adjustment upon the happening of certain events. The Warrant Agreement also
provides for certain adjustments and/or distributions in the event of certain
events relating to a merger or combination of the Company, and similar events.
Subject to satisfaction of the Exercise Conditions and certain other
conditions, the Company may elect to cause a remarketing of the Preferred
Securities and a contemporaneous redemption of the Warrants on the Redemption
Date, for cash, in an amount equal to the Warrant Value as of the Remarketing
Date, in accordance with the Warrant Agreement and related agreements.
A Holder (i) may elect to exercise a Warrant in lieu of Redemption, if
(A) such Warrant is held pursuant to the Unit Agreement, and such Holder has
opted out of participating in the Remarketing, by notice given to the Warrant
Agent and the Unit Agent; or (B) such Warrant is not held pursuant to the Unit
Agreement, by notice given to the Warrant Agent, in each case prior to 5:00
p.m., New York time, on the Business Day prior to the related Redemption Date;
and (ii) as provided in the Unit Agreement, shall be deemed to have elected to
exercise such Warrant in lieu of Redemption, if such Warrant is held pursuant to
the Unit Agreement and such Holder has not opted out of participating in the
Remarketing. In the absence of an election to exercise a Warrant in lieu of a
Redemption, including a deemed election pursuant to clause (ii) of the preceding
sentence, a Holder will be deemed to have elected to have its Warrants redeemed
on the Redemption Date.
A-16
If a Holder elects or is deemed to have elected to exercise a Warrant
pursuant to the preceding paragraph, then such Holder must tender the Exercise
Price for such Warrant as a Cash Payment, and must follow certain procedures set
forth in the Warrant Agreement; provided, however, that if (i) such Warrant is,
on the Remarketing Date, held pursuant to the Unit Agreement, (ii) such Holder
has not opted out of participating in the Remarketing, and (iii) a Successful
Remarketing shall have occurred, then the Exercise Price of such Warrant will be
deemed to have been paid by a Remarketing Payment, and the Remarketing Agent
will, in connection with such Remarketing Payment, apply the proceeds of the
Remarketing of the related Preferred Security in accordance with the terms of
the Remarketing Agreement and the Unit Agreement.
Any Warrant so redeemed or exercised will, upon such redemption or
exercise, cease to be outstanding.
If a Redemption cannot occur because of an inability, following the
Company's best efforts, to satisfy the Redemption Conditions, the Company will
promptly notify the Warrant Agent and each Holder (at its address specified in
the Warrant Register) thereof. Such event will not constitute a default under
the Warrant Agreement so long as the Company is not otherwise in violation
thereof; and the Company may, under such circumstances, subsequently seek to
remarket the Preferred Securities and contemporaneously redeem the Warrants.
The Company will, contemporaneously with the giving of notice of
Remarketing, furnish notice of Redemption to the Warrant Agent, which will,
within two Business Days of receipt of such notice, furnish notice thereof to
the Holders of Definitive Warrants, and the Company will request, not later than
15 nor more than 30 calendar days prior to the Remarketing Date, that DTC notify
its Participants holding Warrants of the Remarketing.
The Company may require payment of a sum sufficient to pay all taxes,
assessments or other governmental charges in connection with the transfer or
exchange of the Warrant Certificates pursuant to the Warrant Agreement, but not
for any exchange or original issuance (not involving a transfer) with respect to
temporary Warrant Certificates, the exercise of the Warrants or the issuance of
the Common Stock.
This Warrant Certificate may be exchanged at the office of the Warrant
Agent by presenting this Warrant Certificate properly endorsed with a request to
exchange this Warrant Certificate for other Warrant Certificates evidencing an
equal number of Warrants, in accordance with the Warrant Agreement.
All shares of Common Stock issuable by the Company upon the exercise of
the Warrants shall, upon such issue, be duly and validly issued and fully paid
and non-assessable.
The holder in whose name this Warrant Certificate is registered may be
deemed and treated by the Company and the Warrant Agent as the absolute owner of
this Warrant Certificate for all purposes whatsoever and neither the Company nor
the Warrant Agent shall be affected by notice to the contrary.
A-17
Neither this Warrant Certificate, nor the Warrant evidenced hereby,
entitles the Holder hereof to any of the rights of a shareholder of the Company.
This Warrant Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Warrant Agent.
SOVEREIGN BANCORP, INC.
By: ___________________________
Name:
Title:
DATED:
Countersigned:
- ------------------------------
THE BANK OF NEW YORK,
as Warrant Agent
By ___________________________
Authorized Signatory
A-18
FORM OF ELECTION TO PURCHASE COMMON STOCK
(to be executed only upon exercise of Warrants)
SOVEREIGN BANCORP, INC.
The undersigned hereby irrevocably elects to exercise ___ Warrants at
an Exercise Price of $______ per Warrant to acquire the Exercise Amount (as
determined pursuant to the Warrant Agreement) per Warrant of Common Stock of
Sovereign Bancorp, Inc. on the terms and conditions specified within this
Warrant Certificate and the Warrant Agreement therein referred to, surrenders
this Warrant Certificate and all right, title and interest therein and directs
that the shares of Common Stock deliverable upon such exercise be registered or
placed in the name and at the address specified below and delivered thereto.
The signature below must correspond with the name as written upon the
face of the within Warrant Certificate in every particular, without alteration
or enlargement or any change whatsoever, and must be guaranteed.
Dated: ____________, ____
-------------------------------------
(Signature of Holder)
-------------------------------------
(Street Address)
-------------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
-------------------------------------
{Signature must be guaranteed by an
eligible guarantor institution (banks,
stock brokers, savings and loan
associations and credit unions) with
membership in an approved guarantee
medallion program pursuant to Securities
and Exchange Commission Rule 17Ad-5).
A-19
Common Stock to be issued to:
Please insert social security or identifying number:
Name:____________________________________________
Street Address:__________________________________
City, State and Zip Code:________________________
Any unexercised Warrants represented by the Warrant Certificate to be issued to:
Please insert social security or identifying number:
Name:____________________________________________
Street Address:__________________________________
City, State and Zip Code:________________________
A-20
[TO BE ATTACHED TO GLOBAL CERTIFICATES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE
This Global Certificate shall represent 0 Warrants unless otherwise
indicated below.
The following increases or decreases in this Global Certificate have been
made:
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Number of Securities
Amount of decrease in Amount of increase in evidenced by the
Number of Warrants Number of Warrants Global Certificate Signature of
evidenced by the evidenced by the following such authorized officer of
Date Global Certificate Global Certrificate decrease or increase Agent
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A-21
EXHIBIT B
INSTRUCTION TO DISREGARD REMARKETING
THE BANK OF NEW YORK
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
Re: ________ Trust Preferred Income Equity Redeemable Securities (PIERS)
Units ("Securities") of Sovereign Bancorp, Inc. and Sovereign Capital
Trust II
The undersigned Holder hereby advises you that it has elected NOT to
participate in the Remarketing set forth below with respect to the corresponding
number of Preferred Securities that are a component of Securities of which the
undersigned is the beneficial owner:
Remarketing Settlement
Date: ______________________
B-1
Number of Preferred
Securities NOT to
Remarket: ______________________
The notification to the Remarketing Agent to be sent by you on the
fifth Business Day immediately preceding the above Remarketing Date shall NOT
include the aggregate number of Preferred Securities set forth above. Unless
otherwise defined herein, terms defined in the Unit Agreement dated November 15,
1999 with Sovereign Bancorp, Inc. and Sovereign Capital Trust II are used herein
as defined therein. This notice is being delivered pursuant to Section 5.1 of
the Unit Agreement relating to the Securities.
Date: _______________________ _______________________________________
Signature
Signature Guarantee:___________________
Please print name and address of Registered Holder:
B-2
______________________________ ______________________________________________
Name Social Security or other Taxpayer Identification
Number, if any
Address
______________________________
______________________________
______________________________
B-3
EXHIBIT C
NOTICE OF ELECTING REMARKETING HOLDER
THE BANK OF NEW YORK
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
LEHMAN BROTHERS INC.
[Address]
Attention:
Re: ________ Trust Preferred Income Equity Redeemable Securities (PIERS)
Units ("Securities") of Sovereign Bancorp, Inc. and Sovereign Capital
Trust II
Reference is made to Sovereign Bancorp, Inc.'s notice of Redemption
dated o, 20__ notifying Holders of the Securities of the redemption of the
Warrants on o, 20__. This notice constitutes an election by the undersigned NOT
to redeem the Warrants identified below. The undersigned hereby
C-1
advises you of its election to exercise the following number of Warrants which
constitute component parts of Securities beneficially owned by the
undersigned:
Number of Warrants to
Be Exercised: _________________.
Unless otherwise defined herein, terms defined in the Unit Agreement
dated __________, 1999 with Sovereign Bancorp, Inc. and Sovereign Capital Trust
II are used herein as defined therein. This notice is being delivered pursuant
to Section 5.1 of the Unit Agreement.
Date: _______________________ ____________________________________
Signature
Signature Guarantee:____________________
Please print name and address of Registered Holder:
C-2
______________________________ ______________________________________________
Name Social Security or other Taxpayer Identification
Number, if any
Address
______________________________
______________________________
______________________________
C-3
EXHIBIT D
NOTICE OF CHANGE OF CONTROL REDEMPTION ELECTION
THE BANK OF NEW YORK
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
Re: ________ Trust Preferred Income Equity Redeemable Securities (PIERS)
Units ("Securities") of Sovereign Bancorp, Inc. and Sovereign Capital
Trust II
Reference is made to Sovereign Bancorp, Inc.'s notice of a Change of
Control dated o, 20__ . The undersigned hereby advises you of its election to
have the following number of Warrants which constitute component parts of
Securities beneficially owned by the undersigned redeemed as aforesaid:
Number of Warrants to
Be Redeemed: _________________.
D-1
Unless otherwise defined herein, terms defined in the Unit Agreement
dated __________, 1999 with Sovereign Bancorp, Inc. and Sovereign Capital Trust
II are used herein as defined therein. This notice is being delivered pursuant
to Section 5.3 of the Unit Agreement.
Date: _______________________ ____________________________________
Signature
Signature Guarantee:____________________
Please print name and address of Registered Holder:
D-2
______________________________ ______________________________________________
Name Social Security or other Taxpayer Identification
Number, if any
Address
______________________________
______________________________
______________________________
D-3
EXHIBIT E
NOTICE OF CHANGE OF CONTROL EXCHANGE AND REPURCHASE
THE BANK OF NEW YORK
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
Re: ________ Trust Preferred Income Equity Redeemable Securities (PIERS)
Units ("Securities") of Sovereign Bancorp, Inc. and Sovereign Capital
Trust II
Reference is made to Sovereign Bancorp, Inc.'s notice of a Change of
Control dated o, 20__ . The undersigned Holder hereby advises you that it has
elected (i) to have the number of Preferred Securities set forth below exchanged
for an equivalent Accreted Value of Debentures and (ii) to have such Debentures
repurchased by Sovereign Bancorp Inc., or its successor, as provided in the Unit
Agreement, the Declaration and the Indenture:
Number of Preferred
Securities to Exchange: ______________________
Number of Debentures
to Repurchase: ______________________
E-1
Unless otherwise defined herein, terms defined in the Unit Agreement
dated November 15, 1999 with Sovereign Bancorp, Inc. and Sovereign Capital Trust
II (the "Unit Agreement") are used herein as defined therein. This notice is
being delivered pursuant to Section 5.3 of the Unit Agreement.
Date: _______________________ ____________________________________
Signature
Signature Guarantee:____________________
Please print name and address of Registered Holder:
E-2
______________________________ ______________________________________________
Name Social Security or other Taxpayer Identification
Number, if any
Address
______________________________
______________________________
______________________________
E-3