--------------------------------------------------------------------------------
SOVEREIGN BANCORP, INC.
to
BNY MIDWEST TRUST COMPANY
(as successor to ▇▇▇▇▇▇ Trust and Savings Bank)
as Trustee
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THIRD SUPPLEMENTAL INDENTURE
Dated as of February 26, 2004
-----------------
4.375% Junior Subordinated Deferrable Interest Debentures due March 1, 2034
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ARTICLE I
DEFINITIONS
Section 1.01. Definition of Terms............................................................ 2
ARTICLE II
TERMS AND CONDITIONS OF THE DEBENTURES
Section 2.01. Designation and Principal Amount............................................... 10
Section 2.02. Maturity....................................................................... 10
Section 2.03. Global Debentures.............................................................. 10
Section 2.04. Interest and Contingent Interest............................................... 11
Section 2.05. Optional Deferral of Interest.................................................. 13
Section 2.06. Redemption..................................................................... 14
Section 2.07. Third-Party Change of Control Right to Require Redemption of Debentures........ 16
Section 2.08. Distribution of Debentures in Exchange for Trust Securities Upon the Occurrence
of a Special Event............................................................. 16
Section 2.09. Restrictions on Transfer....................................................... 18
Section 2.10. Short-Term Debentures.......................................................... 18
Section 2.11. Events of Default.............................................................. 19
Section 2.12. Amendment; Supplement; Waiver.................................................. 20
Section 2.13. Defeasance..................................................................... 24
Section 2.14. Paying Agent; Security Registrar............................................... 25
Section 2.15. Tax Treatment of Debentures.................................................... 25
ARTICLE III
FORM OF DEBENTURE
Section 3.01. Form of Debenture.............................................................. 26
ARTICLE IV
EXPENSES
Section 4.01. Payment of Expenses............................................................ 26
ARTICLE V
COVENANTS
Section 5.01. Covenants upon an Event of Default or of a Deferral of Interest................ 27
Section 5.02. Additional Covenants Relating to the Trust..................................... 28
Section 5.03. Covenant to List on Exchange................................................... 28
Section 5.04. Additional Covenant Relating to the Trust PIERS Guarantee...................... 28
Section 5.05. Claims of Holders.............................................................. 29
i
ARTICLE VI
SUBORDINATION
Section 6.01. Debentures Subordinated to Senior Indebtedness................................. 29
Section 6.02. Subrogation.................................................................... 31
Section 6.03. Obligation of the Company is Absolute and Unconditional........................ 31
Section 6.04. Maturity of or Default on Senior Indebtedness.................................. 31
Section 6.05. Payments on Debentures Permitted............................................... 31
Section 6.06. Effectuation of Subordination by Trustee....................................... 32
Section 6.07. Knowledge of Trustee........................................................... 32
Section 6.08. Trustee's Relation to Senior Indebtedness...................................... 32
Section 6.09. Rights of Holders of Senior Indebtedness Not Impaired.......................... 33
Section 6.10. Modification of Terms of Senior Indebtedness................................... 33
ARTICLE VII
RIGHTS OF HOLDERS OF TRUST PIERS
Section 7.01. Trust PIERS Holders' Rights.................................................... 33
Section 7.02. Direct Action.................................................................. 34
Section 7.03. Payments Pursuant to Direct Actions............................................ 34
ARTICLE VIII
[INTENTIONALLY OMITTED]
ARTICLE IX
MISCELLANEOUS
Section 9.01. Ratification of Indenture...................................................... 34
Section 9.02. Scope of Supplemental Indenture................................................ 34
Section 9.03. Trustee Not Responsible for Recitals........................................... 34
Section 9.04. Governing Law.................................................................. 35
Section 9.05. Severability................................................................... 35
Section 9.06. Counterparts................................................................... 35
EXHIBIT A-1 FORM OF DEBENTURE.............................................................. ▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇ FORM OF SHORT-TERM DEBENTURE................................................... A-2-1
EXHIBIT B PROJECTED PAYMENT SCHEDULE..................................................... B-1
ii
THIRD SUPPLEMENTAL INDENTURE, dated as of February 26, 2004
(this "Third Supplemental Indenture"), between SOVEREIGN BANCORP, INC., a
Pennsylvania corporation (the "Company"), having its principal place of business
at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and BNY MIDWEST
TRUST COMPANY (as successor to ▇▇▇▇▇▇ Trust And Savings Bank), an Illinois trust
company, as trustee (the "Trustee"), having its corporate trust office at ▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, under the Indenture,
dated as of September 1, 1999, between the Company and the Trustee (the "Base
Indenture", together with this Third Supplemental Indenture, the "Indenture").
WHEREAS, the Company executed and delivered the Base Indenture
to the Trustee to provide for the issuance from time to time of the Company's
unsecured debentures, notes or other evidences of indebtedness (collectively the
"Debt Securities," and individually, a "Debt Security") to be issued in one or
more series as might be determined by the Company under the Base Indenture, in
an unlimited aggregate principal amount which may be authenticated and delivered
as provided in the Base Indenture;
WHEREAS, the Company and the Trustee entered into a First
Supplemental Indenture dated as of November 15, 1999, pursuant to which the
Company issued its 7.50% Junior Subordinated Deferrable Interest Debentures due
2030;
WHEREAS, the Company and the Trustee entered into a Second
Supplemental Indenture dated as of December 13, 2001, pursuant to which the
Company issued its 8.75% Junior Subordinated Deferrable Interest Debentures due
2031;
WHEREAS, pursuant to the terms of this Third Supplemental
Indenture, the Company desires to provide for the establishment of a new series
of Debt Securities to be known as the 4.375% Junior Subordinated Deferrable
Interest Debentures due March 1, 2034 (the "Debentures"), the form and substance
of such Debentures and the terms, provisions and conditions thereof to be as set
forth in the Indenture;
WHEREAS, the Company and The Bank of New York, as warrant
agent, are simultaneously entering into a Warrant Agreement (the "Warrant
Agreement"), dated as of the date hereof, for the purpose of issuing and selling
certain warrants (the "Warrants");
WHEREAS, Sovereign Capital Trust IV, a Delaware statutory
business trust (the "Trust"), has offered to the public $700,000,000, or up to
$800,000,000 in the event the Underwriters (as defined below) exercise their
option to purchase additional capital securities, in aggregate stated
liquidation amount of its 4.375% Contingent Convertible Trust Preferred Income
Equity Redeemable Securities (the "Trust PIERS") and, in connection therewith,
the Company has agreed to purchase $21,649,500 in aggregate stated liquidation
amount of the Trust's common securities (the "Common Securities" and, together
with the Trust PIERS, the "Trust Securities"), each representing an undivided
beneficial ownership interest in the assets of the Trust, and proposes to invest
the proceeds from such offerings in $721,649,500 aggregate principal amount at
maturity of the Debentures and the Warrants;
WHEREAS, the Trust intends to invest the proceeds of the sale
of the Trust Securities in the purchase of the Debentures and the Warrants; and
WHEREAS, the Company has requested that the Trustee execute
and deliver this Third Supplemental Indenture, all requirements necessary to
make this Third Supplemental Indenture a valid instrument in accordance with its
terms (and to make the Debentures, when executed by the Company and
authenticated and delivered by the Trustee, the valid obligations of the
Company) have been performed, and the execution and delivery of this Third
Supplemental Indenture has been duly authorized in all respects.
NOW, THEREFORE, in consideration of the purchase and
acceptance of the Debentures by the Holders (as defined below) thereof, and for
the purpose of setting forth, as provided in the Indenture, the form and
substance of the Debentures and the terms, provisions and conditions thereof,
the Company covenants and agrees with the Trustee as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Definition of Terms.
Unless the context otherwise requires:
(a) a term not defined herein that is defined in the Base
Indenture has the same meaning when used in this Third Supplemental
Indenture;
(b) a term defined anywhere in this Third Supplemental
Indenture has the same meaning throughout;
(c) the singular includes the plural and vice versa;
(d) a reference to a Section or Article is to a Section
or Article of this First Supplemental Indenture;
(e) headings are for convenience of reference only and do
not affect interpretation;
(f) the following terms have the following meanings:
"Administrative Trustees" has the meaning set forth in the
Declaration.
"Base Indenture" has the meaning set forth in the Recitals.
"Business Day" has the meaning set forth in the Declaration.
"Cash Exercise" shall mean cash exercise of a Trust PIERS
conversion right pursuant to Section 5(c) of Annex I to the Declaration or cash
exercise of a Warrant pursuant to Section 3.02(b) of the Warrant Agreement.
2
"Change of Control" means the occurrence of one of the
following events:
(x) Any Person acquires a beneficial ownership, directly
or indirectly, through a purchase, merger or other
acquisition transaction or series of purchase, merger or
other acquisition transactions of shares of the Company's
capital stock entitling that Person to exercise 50% or
more of the total voting power of all shares of the
Company's capital stock entitled to vote generally in
elections of directors, other than any acquisition by the
Company , any of the Company's subsidiaries or any of the
Company's employee benefit plans;
(y) During any period of two consecutive years,
individuals who at the beginning of such period
constituted the Board of Directors of the Company,
together with any new directors whose election by the
Board of Directors of the Company or whose nomination for
election by the shareholders of the Company, as the case
may be, was approved by the vote of at least a majority of
the directors of the Company then still in office who were
either directors at the beginning of such period or whose
election or nomination for election was previously so
approved, cease for any reason to constitute a majority of
the Board of Directors of the Company then in office; or
(z) The consolidation or merger of the Company with or
into any other Person, any merger of another Person into
the Company, or any conveyance, transfer, sale, lease or
other disposition of all or substantially all of the
Company's properties and assets to another Person, other
than:
(a) Any transaction (i) that does not result in any
reclassification, conversion, exchange or cancellation of
outstanding shares of the Company's capital stock, and
(ii) notwithstanding such transaction, the holders of the
Company's capital stock immediately prior to that
transaction continue to hold at least a majority of the
Company's capital stock or the capital stock of the
surviving company, whichever is applicable, immediately
after the completion of that transaction or
(b) Any merger solely for the purpose of changing the
Company's jurisdiction of incorporation and resulting in a
reclassification, conversion or exchange of outstanding
shares of common stock solely into shares of common stock
of the surviving entity.
provided, however, a Change of Control shall not be deemed
to have occurred if:
(1) The closing sale price per share of common stock of
the Company for any five Trading Days within the period of
ten consecutive Trading Days ending immediately after the
later of the event otherwise constituting a Change of
Control or the public announcement of the event otherwise
constituting a Change of Control, in the case of a Change
of Control under clause (x) above,
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or the period of ten consecutive Trading Days ending
immediately before the Change of Control, in the case of a
Change of Control under clause (z) above, equals or
exceeds 110% of the Conversion Price per share of the
Trust PIERS; or
(2) At least 90% of the consideration in the transaction
or transactions otherwise constituting a Change of Control
consists of shares of common stock traded or to be traded
immediately following such event on a national securities
exchange or the Nasdaq National Market and, as a result of
such transaction or transactions, the Trust PIERS become
convertible solely into such common stock and any rights
attached thereto.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor legislation.
"Common Securities" has the meaning set forth in the Recitals.
"Company" has the meaning set forth in the Recitals.
"Compounded Interest" has the meaning set forth in Section
2.05(a).
"Contingent Debt Regulations" has the meaning set forth in
Section 2.14.
"Contingent Interest" has the meaning set forth in Section
2.04(e).
"Contingent Interest Period" has the meaning set forth in
Section 2.04(e).
"Conversion Price" has the meaning given such term in the
Declaration.
"Coupon Rate" has the meaning set forth in Section 2.04(a).
"Debenture Distribution Notice" has the meaning set forth in
Section 6.02(b) of the Declaration.
"Debenture Issuer" has the meaning set forth in the
Declaration.
"Debentures" has the meaning set forth in the Recitals.
"Debt Securities" or "Debt Security" has the meaning set forth
in the Recitals.
"Declaration" means the Amended and Restated Declaration of
Trust of the Trust, dated as of February 26, 2004, among the Debenture Issuer,
in its capacity as Sponsor, the initial Administrative Trustees, The Bank of New
York, as Property Trustee, and The Bank of New York (Delaware), as Delaware
Trustee, as amended and restated from time to time.
"Delaware Trustee" has the meaning set forth in the
Declaration.
"Direct Action" has the meaning set forth in Section 7.02.
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"Distribution Date" has the meaning set forth in the
Declaration.
"Distributions" have the meaning set forth in the Declaration.
"Event of Default" has the meaning set forth in Section 2.10.
"Exchange Agent" has the meaning set forth in the Declaration.
"Extension Period" has the meaning set forth in Section
2.05(a).
"Global Debenture" has the meaning set forth in Section
2.03(a).
"Holder" means a Person in whose name a Debenture is
registered.
"Indenture" has the meaning set forth in the Recitals.
"Investment Company Event" means the receipt by the Trust of
an opinion of counsel, rendered by an independent law firm having a recognized
national securities practice, to the effect that, as a result of the occurrence
of a change in law or regulation or a change in interpretation or application of
law or regulation by any legislative body, court, governmental agency or
regulatory authority, there is more than an insubstantial risk that the Trust is
or will be considered an "investment company" that is required to be registered
under the Investment Company Act of 1940, which change becomes effective on or
after the date on which the Trust PIERS were initially issued and sold.
"Issue Date" of any Debenture means February 26, 2004.
"Like Amount" has the meaning set forth in the Declaration.
"Market Value" means, with respect to a share of the Company's
common stock on the date of a redemption of Trust PIERS following a Change of
Control, 95% of the average of the reported closing sale price per share of such
stock for the five full Trading Days (not including after hours trading) ending
immediately prior to such date of redemption.
"93-Day Period" has the meaning set forth in the Declaration.
"Nominal Accreted Value" means, at any date of determination,
(1) prior to such time as the principal amount of the Debentures becomes $50 in
accordance with Section 2.06(d), the sum of (x) the Stated Issue Price of each
Debenture and (y) accrued Stated Discount to the date of determination minus (z)
accrual of interest on the principal amount at Stated Maturity of the Debenture
at the rate of 4.375%, in each case on a quarterly bond basis using a 360-day
year of twelve 30-day months until that sum equals $50.00 on March 1, 2034; and
(2) at or after such time as the principal amount of the Debentures becomes $50
in accordance with Section 2.06(d), $50 per Debenture.
"Non Book-Entry Trust PIERS" has the meaning set forth in
Section 2.03(b).
5
"No Recognition Opinion" has the meaning set forth in Section
6.02(b) of the Declaration.
"Officers' Certificate" has the meaning set forth in the
Declaration.
"Opinion of Counsel" means the written opinion of counsel
rendered by an independent law firm.
"Payment Blockage Notice" has the meaning set forth in Section
6.01(d).
"Property Trustee" has the meaning set forth in the
Declaration.
"Pro Rata" has the meaning set forth in the Declaration.
"Reset Rate" has the meaning set forth in Section 2.04(g).
"Senior Indebtedness" means the principal of, premium, if any,
interest (including all interest accruing subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding) on and all fees, costs,
expenses and other amounts accrued or due on or in connection with:
1) all indebtedness, obligations and other liabilities
(contingent or otherwise) of the Company for borrowed money (including
obligations of the Company in respect of overdrafts and any loans or
advances from banks, whether or not evidenced by notes or similar
instruments) or evidenced by bonds, debentures, notes or other
instruments for the payment of money, or incurred in connection with
the acquisition of any properties or assets (whether or not the
recourse of the lender is to the whole of the assets of the Company or
to only a portion thereof), other than any account payable or other
accrued current liability or obligation to trade creditors incurred in
the ordinary course of business in connection with the obtaining of
materials or services;
2) all obligations and liabilities (contingent or
otherwise) in respect of leases of the Company required or permitted,
in conformity with generally accepted accounting principles, to be
accounted for as capitalized lease obligations on the balance sheet of
the Company;
3) all obligations for the reimbursement of any letter
of credit, bankers acceptance, security purchase facility or similar
credit transaction;
4) all direct or indirect guaranties or similar
agreements by the Company in respect of, and obligations or liabilities
(contingent or otherwise) of the Company to purchase or otherwise
acquire or otherwise assure a creditor against loss in respect of,
indebtedness, obligations or liabilities of another Person of the kind
described in clauses (1) and (2);
5) all obligations and liabilities of the type referred
to above of other persons secured by a lien on any property of the
Company;
6
6) all obligations with respect to securities contracts,
foreign currency exchange contracts, derivative instruments such as
swap agreements (including interest rate and foreign exchange rate swap
agreements), cap agreements, floor agreements, collar agreements,
interest rate agreements, foreign exchange rate agreements, options,
commodity futures contracts, and commodity option contracts;
7) all of the Company's obligations issued or assumed as
the deferred purchase price of property, all of the Company's
conditional sale obligations and all of the Company's obligations under
any title retention agreement;
8) any and all amendments, renewals, extensions and
refundings of any indebtedness, obligation or liability of the kind
described in clauses (1) through (7),
unless in the case of any particular indebtedness the instrument creating or
evidencing the same or the assumption or guarantee thereof expressly provides
that such indebtedness shall not be senior in right of payment to the Debentures
or expressly provides that such Indebtedness is pari passu or junior to the
Debentures. "Senior Indebtedness" shall not include any indebtedness between and
among the Company or its affiliates, including all other debt securities and
guarantees in respect of those debt securities issued to any Company capital
trust or other trust or entity affiliated with the Company that is a financing
vehicle of the Company in connection with the issuance of preferred securities
or other securities that rank on a parity with or junior to the Debentures.
"Short-Term Debentures" has the meaning set forth in Section
2.10.
"Special Event" means a Tax Event or an Investment Company
Event.
"Stated Discount" of any Debenture means the difference
between the Stated Issue Price and $50, which shall accrue at an all-in yield of
7.410% per annum from the Issue Date to the earlier of the Stated Maturity of
the Debentures or the date on which the principal amount of the Debentures
becomes $50 pursuant to Section 2.06(d).
"Stated Issue Price" of any Debenture means $31.78.
"Tax Event" means the receipt by the Trust of an opinion of
counsel, rendered by an independent law firm experienced in such matters, to the
effect that, as a result of (a) any amendment to, change in or announced
proposed change in the laws (or any regulations thereunder) of the United States
or any political subdivision or taxing authority thereof or therein, or (ii) any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
proposed change, pronouncement or decision is announced on or after the date on
which Trust PIERS were initially issued and sold, there is more than an
insubstantial risk that (1) the Trust is, or will be within 90 days of the date
of such opinion, subject to United States federal income tax with respect to
interest received or accrued on the Debentures, or (2) the Trust is, or will be
within 90 days of the date of such opinion, subject to more than a de minimis
amount of other taxes, duties or other governmental charges.
7
"Third Supplemental Indenture" has the meaning set forth in
the Recitals.
"Third-Party Change of Control" means a Change of Control that
results from:
(x) A tender offer by a person other than the Company or
any of the Company's subsidiaries or Affiliates to buy
shares of common stock of the Company, concerning which
the Board of Directors of the Company is recommending
rejection as of the closing date of the offer, and
pursuant to which the Company is the surviving entity;
(y) The acquisition of 50% or more of the common stock of
the Company by a Person other than the Company or any of
the Company's subsidiaries or Affiliates in the open
market, with the Company remaining as the surviving
entity; or
(z) A change in the majority of the members of the Board
of Directors of the Company pursuant to clause (y) in the
definition of Change of Control.
"Trading Day" with respect to any security means a day during
which trading in securities generally occurs on the New York Stock Exchange or,
if the applicable security is not listed on the New York Stock Exchange, on the
principal other national or regional securities exchange on which it is then
listed or, if the applicable security is not listed on a national or regional
securities exchange, on the National Association of Securities Dealers Automated
Quotation System or, if the applicable security is not quoted on the National
Association of Securities Dealers Automated Quotation System, on the principal
other market on which the applicable security is then traded; provided that the
applicable security has traded at least once on the national securities
association or exchange or over-the-counter market that is the primary market
for the trading of such security; and provided, further, that extended hours and
days that are not full trading days shall not count as Trading Days, nor shall
any day on which the applicable security experiences any of the following count
as a Trading Day:
(x) any suspension of or limitation imposed on
trading of the applicable security on the principal
national or regional securities exchange or
association or over-the-counter market on or in which
the applicable security is listed or traded;
(y) any event (other than an event listed in clause
(z) below) that disrupts or impairs the ability of
market participants in general to (a) effect
transactions in or obtain market values for the
applicable security on any relevant national or
regional securities exchange or association or
over-the-counter market, or (b) effect transactions
in or obtain market values for, futures or options
contracts relating to such security on any relevant
national or regional securities exchange or
association or over-the-counter market; or
(z) any relevant national or regional securities
exchange or association or over-the-counter market on
which the applicable security trades closes on
8
any exchange business day prior to its scheduled
closing time unless such earlier closing time is
announced by the exchange at least one hour prior to
the earlier of (i) the actual closing time for the
regular trading session on such exchange and (ii) the
submission deadline for orders to be entered into the
exchange for execution on the next business day.
"Trading Price" means, as of any date, the closing sale price
per Trust PIERS (or if no closing sale price is reported, the average of the bid
and ask prices or, if more than one in either case, the average of the average
bid and the average ask prices) on that date as reported in composite
transactions by the principal U.S. securities exchange on which the Trust PIERS
are traded or, if the Trust PIERS are not listed on a U.S. national or regional
securities exchange, as reported by the Nasdaq National Market, provided that
(v) if the Trust PIERS are not listed for trading on
a U.S. national or regional securities exchange and
are not reported by the Nasdaq National Market on the
relevant date, the Trading Price will be the last
quoted bid price for Trust PIERS in the
over-the-counter market on the relevant date as
reported by the National Quotation Bureau or similar
organization;
(w) if the Trust PIERS are not so quoted, the Trading
Price will be the average of the mid-points of the
last bid and ask prices of $5.0 million aggregate
issue price of the Trust PIERS on the relevant date
from each of three nationally recognized independent
investment banking firms selected by the Company for
this purpose;
(x) if such bid and ask prices cannot reasonably be
obtained from at least three nationally recognized
independent investment banking firms, but such bid
and ask prices are obtained from two nationally
recognized independent investment banking firms, then
the Trading Price will be the average of the
mid-points of such bid and ask prices from the two
nationally recognized independent investment banking
firms;
(y) if such bid and ask prices can reasonably be
obtained from only one nationally recognized
independent investment banking firm, then the Trading
Price will be the mid-point of such bid and ask
prices from this one nationally recognized
independent investment banking firm; and
(z) if the Company cannot reasonably obtain such bid
and ask prices from at least one nationally
recognized independent investment banking firm, then
the Trading Price will equal (a) the then-applicable
Conversion Rate of the Trust PIERS multiplied by (b)
the market price of the Company's common stock on the
determination date.
"Treasury Regulations" means the income tax regulations,
including temporary and proposed regulations, promulgated under the Code by the
United States Treasury Department, as such regulations may be amended from time
to time (including corresponding provisions of succeeding regulations).
9
"Trust" has the meaning set forth in the Recitals.
"Trust PIERS" has the meaning set forth in the Recitals.
"Trust PIERS Certificate" means a certificate in fully
registered form representing Trust PIERS, substantially in the form of Exhibit
A-1 to the Declaration.
"Trust PIERS Guaranty" has the meaning set forth in the
Declaration.
"Trust Securities" has the meaning set forth in the Recitals.
"Trustee" has the meaning set forth in the Recitals.
"Underwriters" means the entities acting as underwriters of
the Trust PIERS.
"Underwriting Agreement" has the meaning set forth in the
Declaration.
"Warrants" has the meaning set forth in the Declaration.
"Warrant Agreement" has the meaning set forth in the
Declaration.
ARTICLE II
TERMS AND CONDITIONS OF THE DEBENTURES
SECTION 2.01. Designation and Principal Amount.
(a) There is hereby authorized a series of Debt
Securities designated the "4.375% Junior Subordinated Deferrable
Interest Debentures due March 1, 2034," limited in aggregate principal
amount at Stated Maturity to $721,649,500 or up to $824,742,300 if the
Underwriters exercise in full their option to purchase additional Trust
PIERS pursuant to the Underwriting Agreement.
(b) The Debentures shall be issued at an issue price of
$31.78 per $50 principal amount at Stated Maturity of Debentures.
SECTION 2.02. Maturity.
The stated maturity shall be March 1, 2034 (the "Stated
Maturity"). The aggregate principal amount at Stated Maturity of the Debentures
shall be payable on the Stated Maturity date unless the Debentures have been
earlier redeemed in accordance with this Third Supplemental Indenture.
SECTION 2.03. Global Debentures.
If distributed to holders of Trust Securities in connection
with the involuntary or voluntary dissolution of the Trust:
10
(a) The Debentures in definitive form may be presented to
the Trustee by the Property Trustee in exchange for a global security
in an aggregate principal amount equal to all Outstanding Debentures (a
"Global Debenture"). The Company upon any such presentation shall
execute a Global Debenture in such aggregate principal amount and
deliver the same to the Trustee for authentication and delivery in
accordance with the Base Indenture and this Third Supplemental
Indenture. The Depositary for the Debentures will be The Depository
Trust Company. The Global Debentures will be registered in the name of
the Depositary or its nominee, Cede & Co., and delivered by the Trustee
to the Depositary or a custodian appointed by the Depositary for
crediting to the accounts of its participants pursuant to the
instructions of the Administrative Trustees. Payments on the Debentures
issued as a Global Debenture will be made to the Depositary or its
nominee.
(b) If any Trust PIERS are held in definitive form, the
Debentures in definitive form may be presented to the Trustee by the
Property Trustee, and any Trust PIERS Certificate which represents
Trust PIERS other than Trust PIERS held by the depositary for the Trust
PIERS or its nominee ("Non Book-Entry Trust PIERS") will be deemed to
represent beneficial ownership interests in Debentures presented to the
Trustee by the Property Trustee having an aggregate principal amount at
maturity equal to the aggregate stated liquidation amount at maturity
of the Non Book-Entry Trust PIERS until such Trust PIERS Certificates
are presented to the Security Registrar for transfer or reissuance, at
which time such Trust PIERS Certificates will be canceled and a
Debenture registered in the name of the holder of the Trust PIERS
Certificate or the transferee of the holder of such Trust PIERS
Certificate, as the case may be, with an aggregate principal amount at
maturity equal to the aggregate stated liquidation amount at maturity
of the Trust PIERS Certificate canceled will be executed by the Company
and delivered to the Trustee for authentication and delivery in
accordance with the Base Indenture and this Third Supplemental
Indenture. On issue of such Debentures, Debentures with an equivalent
aggregate principal amount at maturity that were presented by the
Property Trustee to the Trustee will be deemed to have been canceled.
At any time following such distribution, the Company shall execute, and the
Trustee, upon receipt of written instructions from the Company, shall
countersign and deliver, Debentures in definitive registered form in any
authorized denominations, in an aggregate amount equal to the amount of the
Global Debenture or Debentures if (i) the Depository notifies the Company that
it is unwilling or unable to continue as depositary therefor or if at any time
the Depository shall no longer be eligible to serve as depositary and a
successor depositary for the Debentures is not appointed by the Company within
60 days after the Company receives such notice or becomes aware of such
ineligibility, (ii) the Company, in its discretion, notifies the Trustee in
writing that it is electing to cause the issuance of certificated Securities or
(iii) if there shall have occurred and be continuing a default by the Company in
respect of its obligations under the Indenture.
SECTION 2.04. Interest and Contingent Interest.
(a) Each Debenture will bear interest at a rate per annum
of 4.375% (the "Coupon Rate") of the principal amount at maturity of
$50 per Debenture from and
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including February 26, 2004 to, but excluding, the Stated Maturity,
payable quarterly in arrears on March 1, June 1, September 1, and
December 1 of each year (each, an "Interest Payment Date"), commencing
on June 1, 2004.
(b) Interest not paid on the scheduled Interest Payment
Date will accrue and compound quarterly at the Coupon Rate.
(c) The regular record dates for the Debentures (the
"Regular Record Dates") shall be:
(i) as long as the Debentures are represented by a Global
Debenture, the Business Day preceding the corresponding Interest
Payment Date; or
(ii) if the Debentures are issued in definitive form, the
fifteenth day of the month preceding the Interest Payment Date to which
it applies.
(d) The amount of interest payable on the Debentures for
any period will be computed:
(i) for any full 90-day quarterly period, on the basis of
a 360-day year of twelve 30-day months;
(ii) for any period shorter than a full 90- day quarterly
period, on the basis of a 30-day month; and
(iii) for any period shorter than a 30-day month, on the
basis of the actual number of days elapsed in the 30-day month.
In the event that any date on which interest is payable on the
Debentures is not a Business Day, payment of the interest payable on such date
will be made on the next day that is a Business Day (and without any additional
interest or other payment in respect of any such delay), except that, if such
Business Day is in the next calendar year, such payment will be made on the
preceding Business Day with the same force and effect as if made on the date
such payment was originally payable.
(e) Subject to the accrual and record date provisions
specified herein and in the Debenture, the Company shall pay contingent
interest ("Contingent Interest") to the Holders during any quarterly
period (a "Contingent Interest Period") from March 1 to May 31, June 1
to August 31, September 1 to November 31 or December 1 to February 28
(or February 29 in a leap year), other than the Contingent Interest
Period beginning on December 1, 2033, commencing with the Contingent
Interest Period beginning March 1, 2007, if the average of the Trading
Prices of the Trust PIERS for the five consecutive Trading Days
immediately preceding the first Trading Day of such Contingent Interest
Period equals $65 or more.
(f) Subject to the accrual and record date provisions
specified herein and in the Debenture, if the Debentures have been
distributed to the Holders of the Trust PIERS,
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then the Company will pay Contingent Interest during any Contingent
Interest Period, other than the Contingent Interest Period beginning on
December 1, 2033, commencing with the Contingent Interest Period
beginning on March 1, 2007, if the average of the aggregate Trading
Prices of the Debentures and Warrants for the five consecutive Trading
Days immediately preceding the first Trading Day of such Contingent
Interest Period equals $65 or more.
(g) The amount of Contingent Interest payable in respect
of any Contingent Interest Period will equal $0.08 per $50 principal
amount at maturity of Debentures (the "Contingent Interest"), and such
Contingent Interest will accrue and be payable to Holders in the same
manner as regular cash interest as provided above. Regular cash
interest will continue to accrue at the rate of 4.375% per year on the
principal amount of the Debentures whether or not Contingent Interest
is paid.
(h) In the event of a Change of Control, the Coupon Rate
will be reset to be equal to the "Reset Rate" on the Trust PIERS, which
will be the greater of (i) 7.410% per annum and (ii) the rate
determined by a reference agent selected by the Company as the market
yield at that time for a non-convertible trust preferred security
representing subordinated debt of the surviving entity with
substantially the same terms and conditions as the Trust PIERS will
have after the Change of Control, other than (x) the terms and
condition set out in Section 4(e)(i) of Annex I to the Declaration
allowing for immediate redemption on a Third-Party Change of Control
and (y) the terms and conditions set out in Section 2(c) of Annex I to
the Declaration with respect to the payment of Contingent
Distributions.
SECTION 2.05. Optional Deferral of Interest.
(a) As long as no Event of Default has occurred and is
continuing, the Company has the right, at any time and from time to
time, to defer payments of interest on the Debentures, other than
Contingent Interest, by extending the interest payment period on the
Debentures for a period (each, an "Extension Period") not exceeding 20
consecutive quarters, during which Extension Period no interest, other
than Contingent Interest, shall be due and payable on the Debentures,
provided that no Extension Period shall end on a date other than an
Interest Payment Date for the Debentures or extend beyond the Stated
Maturity. Despite such deferral, interest shall continue to accrue with
additional interest thereon (to the extent permitted by applicable law)
at the Coupon Rate, compounded quarterly during any such Extension
Period ("Compounded Interest"). Prior to the termination of any such
Extension Period, the Company may further defer payments of interest by
further extending such Extension Period; provided that such Extension
Period, together with all such previous and further extensions of such
Extension Period, may not exceed 20 consecutive quarters or extend
beyond the Stated Maturity. At the termination of any Extension Period,
the Company shall pay all interest then accrued and unpaid, plus
Compounded Interest and Contingent Interest, if any. Upon the
termination of any Extension Period and the payment of all amounts then
due, the Company may commence a new Extension Period, subject to the
above requirements.
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(b) The procedure the Company must follow to exercise its
option to defer payments of interest on the Debentures for an Extension
Period shall be as follows:
(i) If the Property Trustee shall be the only holder of
the Debentures, the Company shall give notice of its election of such
extension period to the Property Trustee, the Administrative Trustees
and the Trustee at least one Business Day prior to the earlier of:
(A) the next date on which Distributions on the Trust
PIERS are payable; or
(B) the date the Administrative Trustees are required to
give notice of the record date or the date such Distributions are
payable for the first quarter of such Extension Period to (x) any
national stock exchange or other organization on which the Trust PIERS
are listed or quoted, if any, or (y) the holders of the Trust PIERS; or
(ii) If the Property Trustee shall not be the holder of
the Debentures, the Company shall give notice of its election of such
extension period to the Holders at least ten Business Days prior to the
earlier of:
(A) the Interest Payment Date for the first quarter of
such Extension Period; or
(B) the date on which the Company is required to give
notice of the record date or the payment date of such related interest
payment for the first quarter of such Extension Period to (x) any
national stock exchange or other organization on which the Debentures
are listed or quoted, if any, or (y) the Holders.
SECTION 2.06. Redemption.
(a) The Company may redeem the Debentures, in whole but
not in part, at any time on or after March 5, 2007, by giving written
notice to the Holders not less than 6 Business Days and not more than
20 Business Days (subject to extension, to comply with applicable law)
prior to the date of redemption provided that the following conditions
are satisfied:
(i) The Trading Price per share of common stock of the
Company exceeds and has exceeded 130% of the Conversion Price in
effect, giving effect to all adjustments to such Conversion Price
pursuant to Article IV of the Declaration, for at least 20 Trading Days
within the immediately preceding 30 consecutive Trading Days and on the
date the Company elects to redeem the Debentures;
(ii) The Company elects to cause the redemption of the
Trust PIERS;
(iii) As of the date on which the Company elects to cause
the redemption of the Trust PIERS and on the redemption date of the
Trust PIERS, a registration statement covering the issuance and sale of
common stock of the Company to holders of Trust PIERS upon exercise of
a Trust PIERS Conversion Right shall be effective under the
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Securities Act of 1933 or such issuance and sale shall be exempt from
the registration requirements of the Securities Act of 1933;
(iv) As of the date on which the Company elects to cause
the redemption of the Trust PIERS and on the redemption date of the
Trust PIERS the shares of the Company's common stock to be issued to
the holders of Trust PIERS shall have been registered , qualified or
deemed to be exempt under applicable state securities laws;
(v) As of the date of redemption of the Trust PIERS, to
the extent required by applicable law, a then-current prospectus shall
be available to be delivered to exercising holders of the Trust PIERS;
(vi) As of the date on which the Company elects to cause
the redemption of the Trust PIERS, the Company shall have complied or
be able to comply, with all other applicable laws and regulations, if
any, including, without limitation, the Securities Act of 1933,
necessary to permit the redemption of the Trust PIERS; and
(vii) As of the date on which the Company elects to cause
the redemption of the Trust PIERS, the Company will have received the
express approval of the Board of Governors of the Federal Reserve, if
it is the principal regulator of the Company at that time, to redeem
the Trust PIERS.
(b) If at any time a Special Event occurs and the
Administrative Trustees have been informed by an independent law firm
experienced in such matters that such firm, for substantive reasons,
cannot deliver a No Recognition Opinion to the Trust, then the Company
may redeem the Debentures in whole but not in part upon satisfaction of
the conditions set forth in Section 2.06(a)(ii) through (vii) within 93
days following the occurrence of such Special Event by giving written
notice thereof to the Holders not less than 30 days and not more than
60 days prior to the date of redemption.
(c) Upon the occurrence of a Change of Control, the
Company may redeem the Debentures in whole, but not in part, (i) at any
time during the 30 days beginning on the 90th day after the occurrence
of such Change of Control, and (ii) at any time during the period
beginning on the fifth anniversary of the occurrence of such Change of
Control and ending on the Stated Maturity of the Debentures.
(d) Upon the occurrence of a Change of Control or if the
Debentures are called for redemption pursuant to Section 2.06(a) or (b)
above, the principal amount of the Debentures will immediately accrete
to $50 per Debenture. The redemption price in the case of any
redemption pursuant to this Section 2.06 shall be equal to 100% of the
principal amount at maturity of the Debentures together with accrued
and unpaid interest, including Compound Interest and Contingent
Interest, to the Redemption Date.
(e) Each notice of redemption (each, a "Redemption
Notice") in connection with a redemption pursuant to Section 2.06(a),
(b) or (c) or Section 2.07 shall contain the following information:
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(i) the intended Redemption Date;
(ii) the Exercise Amount per Warrant as the date
of the Redemption Notice;
(iii) that following redemption the Debentures and
the Warrants will no longer be deemed to be outstanding for any
purposes, including payment of Distributions, including Contingent
Distributions, or conversion;
(iv) upon a Change of Control, including a
Third-Party Change of Control, information sufficient to describe
briefly the transaction that constituted the Change of Control or
Third-Party Change of Control;
(v) in the case of a redemption upon a Third
Party Change of Control, whether the redemption price will be paid in
cash, Common Stock or a combination thereof, and, if any shares of
Common Stock are to be used to pay such amount, the number of such
shares (which shall not in any event exceed the number of Warrants
corresponding to the aggregate principal amount at maturity of
Debentures being redeemed multiplied by the Exercise Amount then in
effect) and the method of calculating the number of such shares that
represent the applicable portion of the redemption price to be paid in
such shares;
(vi) the place or places where Debentures are to
be surrendered for payment of the redemption price; and
(vii) the CUSIP number of the Debentures and the
Warrants.
No defect in the Redemption Notice or in the mailing thereof
with respect to any Holder shall affect the validity of the redemption
or exchange proceedings with respect to any other Holder.
(f) The Debentures shall not be subject to a sinking fund
provision.
SECTION 2.07. Third-Party Change of Control Right to Require
Redemption of Debentures.
(a) If the Change of Control is a Third-Party Change of
Control, the Company will have the right to immediately cause the
redemption of the Debentures, in whole or in part, upon satisfaction of
the conditions set forth in Section 2.06(a)(ii) through (vii) by
delivering, at its option, a combination of cash and common stock of
the Company that, in the case of partial redemption, together with the
Debentures that remain outstanding has a Market Value equal to the
Market Value at that time of a non-convertible trust preferred security
representing subordinated debt of the surviving entity with the same
terms and conditions as the Trust PIERS will have after the Change of
Control, but in no event less than $50 per Trust PIERS. In no event,
however, may the number of shares of Common Stock of the Company
delivered per Trust PIERS in satisfaction of the redemption price
exceed the Conversion Rate then in effect.
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SECTION 2.08. Distribution of Debentures in Exchange for Trust
Securities Upon the Occurrence of a Special Event.
(a) If at any time a Special Event occurs and certain
conditions set forth in Section 2.09(b) are satisfied, the
Administrative Trustees may dissolve the Trust and, after satisfaction
of liabilities to creditors of the Trust as provided by applicable law,
cause the Debentures held by the Property Trustee to be distributed to
the holders of Trust Securities in liquidation of such holders'
interests in the Trust on a Pro Rata basis, upon not less than 30 nor
more than 60 days' notice, within the 93-Day Period, and, simultaneous
with such distribution, to cause a Like Amount of the Trust Securities
to be exchanged by the Trust on a Pro Rata basis.
(b) The dissolution of the Trust and distribution of the
Debentures pursuant to Section 2.09(a) shall be permitted only upon
satisfaction of the following three conditions:
(i) the receipt by the Administrative Trustees of a No
Recognition Opinion;
(ii) neither the Trust nor the Company being able to
eliminate such Special Event by taking some ministerial action (such as
filing a form, making an election or pursuing some other reasonable
measure) that:
(A) has no material adverse effect on the Trust, the
Company or the holders of the Trust Securities; or
(B) does not subject any of them to more than de minimis
regulatory requirements; and
(iii) the receipt by the Administrative Trustees of the
prior written consent of the Company.
(c) A Debenture Distribution Notice, which notice shall
be irrevocable, shall be given by the Trust by mail to each holder of
Trust Securities not fewer than 30 nor more than 60 days before the
date of distribution of the Debentures. A Debenture Distribution Notice
shall be deemed to be given on the day such notice is first mailed by
first-class mail, postage prepaid, to holders of Trust Securities. No
defect in the Debenture Distribution Notice or in the mailing of the
Debenture Distribution Notice with respect to any holder of Trust
Securities shall affect the validity of the exchange proceedings with
respect to any other holder of Trust Securities.
(d) On and from the date fixed by the Property Trustee
for any distribution of Debentures and liquidation of the Trust:
(i) the Trust Securities no longer shall be deemed to be
outstanding;
17
(ii) the Depositary or its nominee (or any successor
Depositary or its nominee), as the holder of the Trust PIERS, will
receive a registered global certificate or certificates representing
the Debentures to be delivered upon such distribution; and
(iii) any certificates representing Trust Securities not
held by the Depositary or its nominee (or any successor Depositary or
its nominee) shall be deemed to represent Debentures having an
aggregate principal amount at maturity equal to the aggregate
liquidation amount at maturity of such Trust Securities and bearing
accrued and unpaid interest in an amount equal to the accumulated and
unpaid Distributions on such Trust Securities, until such certificates
are presented for cancellation, at which time the Company shall issue,
and the Trustee shall authenticate, a certificate representing such
Debentures.
SECTION 2.09. Restrictions on Transfer.
Notwithstanding any other provision herein, a Debenture may
not be transferred without a simultaneous transfer of one Warrant issued under
the Warrant Agreement per each $50 principal amount at maturity of Debentures.
Any transfer of a Debenture without a corresponding Warrant or transfer of a
Warrant without a corresponding Debenture shall be deemed to be void ab initio
and of no legal effect whatsoever. Any transferee of a Debenture or Warrant not
accompanied by the corresponding Warrant or Debenture shall be deemed not to be
a Holder of such Debentures or Warrants for any purpose, such transferee shall
be deemed to have no interest whatsoever in such Debentures or Warrants and the
transferor (or any successor owner of the Warrants or Debentures not
transferred) shall be treated as the owner of such Debentures or Warrants
purported to be transferred. Following any distribution of Debentures and
Warrants to Holders of the Trust Securities, each Holder agrees by its
acceptance of a Debenture not to transfer such Debenture separately from a
corresponding Warrant. This Third Supplemental Indenture and the Warrant
Agreement shall be construed in a manner consistent with this Section 2.09.
SECTION 2.10. Short-Term Debentures
(a) In connection with any Cash Exercise of a Trust PIERS
conversion right or Cash Exercise of a Warrant and delivery of a Like
Amount of corresponding Debentures pursuant to Section 5(b) of Annex I
to the Declaration or Section 3.02(c) of the Warrant Agreement, the
Company shall deliver to the exercising holder Debentures with modified
terms and conditions (as so modified, the "Short-Term Debentures").
(b) The Short-Term Debentures shall be issued in
definitive registered form only.
(c) Each Short-Term Debenture will mature on the date
that is 94 calendar days from its date of delivery with a principal
amount at maturity equal to the Nominal Accreted Value of a Debenture
on such accelerated maturity date. The date on which the Warrant
Certificate, Debentures and Cash Amount in respect of the Exercise
Price were received by the Warrant Agent shall be deemed to be the date
of delivery of the Short-Term Debentures. Short-Term Debentures will
continue to bear the stated interest
18
coupon of 4.375% until the date of their maturity. Short-Term
Debentures shall not bear Contingent Interest.
(d) The provisions of Sections 2.04(h), 2.06(c), 2.06(d)
and 2.07 of this Third Supplemental Indenture shall not apply to
Short-Term Debentures.
(e) Interests in any such Short-term Debentures shall be
registered only in the name of the exercising holder of Trust PIERS or
Warrants. Interests in Short-Term Debentures may not be held though the
Depositary, its nominee or any other Clearing Agency, as defined in the
Warrant Agreement.
(f) Interests in the Short-Term Debentures are not
transferable. Any purported transfer of a Short-Term Debenture shall be
deemed to be void ab initio and of no legal effect whatsoever. Any
transferee of a Short-Term Debenture shall be deemed not to be a Holder
of such Short-Term Debenture for any purpose, such transferee shall be
deemed to have no interest whatsoever in such Short-Term Debentures and
the transferor shall be treated as the owner of such Short-Term
Debentures purported to have been transferred.
SECTION 2.11. Events of Default.
In addition to the events of default set forth in Section 501
of the Base Indenture, it shall be an event of default with respect to the
Debentures if the following occurs and shall be continuing (collectively,
"Events of Default"):
(a) the Company defaults in the payment of the principal
of any of the Debentures when it becomes due and payable at Stated
Maturity, whether or not such payment is prohibited by the
subordination provisions of Article 6 of this Third Supplemental
Indenture;
(b) the Company defaults in the payment of interest on
any of the Debentures when it becomes due and payable and such default
continues for a period of 30 days after written notice thereof is given
to the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in aggregate principal amount of the
Outstanding Debentures, whether or not such payment is prohibited by
the subordination provisions of Article 6 of this Third Supplemental
Indenture; provided, however, that a valid extension of the interest
payment period pursuant to Section 2.05 does not constitute a default
in the payment of interest;
(c) the Company fails to perform or observe any other
term, covenant or agreement contained in the Debentures or the
Indenture (other than a term, covenant or agreement included in the
Indenture solely for the benefit of any series of Debt Securities other
than the Debentures) and such default continues for a period of 90 days
after written notice of such failure shall have been given to the
Company by the Trustee or to the Company and the Trustee by the Holders
of at least 25% in aggregate principal amount of the Outstanding
Debentures; or
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(d) the Trust shall have voluntarily or involuntarily
dissolved, wound up its business or otherwise terminated its existence,
except in connection with:
(i) the distribution of the Debentures held by the Trust
to the holders of the Trust Securities in liquidation of their
interests in the Trust;
(ii) the redemption of all of the outstanding Trust
Securities; or
(iii) a merger, consolidation, conversion, amalgamation,
replacement or other transaction involving the Trust that is permitted
under Section 3.15 of the Declaration.
SECTION 2.12. Amendment; Supplement; Waiver.
(a) Amendment Without Consent of Holders.
SECTION 901 of the Base Indenture shall be superseded by this
Section 2.11(a).
Without the consent of any Holders, the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from time to
time, may amend the Indenture and the Debentures to:
(i) provide for uncertificated Debentures in addition to
or in place of certificated Debentures;
(ii) make any change that would provide any additional
rights or benefits to the Holders or that does not adversely affect
such Holders' legal rights under the Indenture;
(iii) add a guarantor under the Indenture;
(iv) evidence and provide for the acceptance of the
appointment of a successor Trustee under the Indenture;
(v) add to the covenants of the Company for the benefit
of the Holders;
(vi) add to the Events of Default under the Indenture;
(vii) surrender any right or power herein conferred upon
the Company;
(viii) mortgage, pledge, hypothecate or grant a security
interest in favor of the Trustee for the benefit of the Holders as
additional security for the payment and performance of the Company's
obligations under the Indenture, in any property or assets;
(ix) add to, change or eliminate any provisions of the
Indenture, provided that, any such addition, change or elimination (a)
shall neither (x) apply to any Debentures issued prior to the execution
of this Third Supplemental Indenture and entitled to the benefit of
such provision nor (y) modify the rights of Holders with respect to
such
20
provisions, or (b) shall become effective only when there is no such
outstanding Debentures;
(x) provide for the assumption of the Company's
obligations to the Holders in the case of a merger, consolidation,
conveyance, transfer or lease pursuant to Article 8 of the Base
Indenture;
(xi) comply with the requirements of the Securities
Exchange Commission in order to maintain the qualification of the
Indenture under the Trust Indenture Act;
(xii) establish the form and terms of Debentures as
permitted under the Indenture; or
(xiii) cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision
herein or which is otherwise defective, or to make any other provisions
with respect to matters or questions arising under the Indenture which
the Company and the Trustee may deem necessary or desirable and which
shall not be inconsistent with the provisions of the Indenture,
provided, that such action pursuant to this clause (vi) does not
adversely affect the interests of the Holders in any material respect.
(b) Amendment With Consent of Holders.
Section 902 of the Base Indenture shall be supplemented and
amended by this Section 2.11(b).
With the consent of the Holders of not less than a majority in
aggregate principal amount of the Debentures and all other series of Debt
Securities affected at the time Outstanding, voting as one class, the Company
and the Trustee, at any time and from time to time, may amend the Indenture and
the Debentures; provided, however, no such modification or amendment shall be
effective until the Holder of each Debenture affected at the time Outstanding
shall have consented to such modification or amendment, if such modification or
amendment shall:
(i) change the Stated Maturity of the principal of, or
the time of payment of any installment of interest on, any Debenture;
(ii) reduce the principal amount of, or the rate of
interest on, any Debenture;
(iii) change the place of payment where the Debentures or
any interest thereon is payable or the currency in which it is payable;
(iv) change the transfer restrictions on the Debentures to
allow the Warrants to be transferred separately;
(v) impair the right to institute suit for the
enforcement of any such payment on or with respect to the Debentures;
21
(vi) reduce the above-stated percentage of principal
amount of Debentures, the Holders of which are required to modify or
amend the Indenture, to consent to any waiver thereunder or to approve
any supplemental indenture;
(vii) release the Company from any of its obligations under
the Guarantee or the Indenture, except in accordance with the
Indenture;
(viii) change any obligation of the Company to maintain an
office or agency in the place and for the purposes required by the
Indenture; or
(ix) modify any of the above provisions except (a) to
increase the percentage in principal amount of outstanding Debentures
necessary for such actions or (b) to provide that certain other
provisions of the Indenture cannot be modified or waived without the
consent of the Holders;
and provided, further, that no such modification or amendment shall be effective
until the holders of not less than 66-2/3% of the aggregate stated liquidation
amount of the Trust Securities shall have consented to such modification or
amendment; and provided, further, that where the consent of the Holders of not
less than 66-2/3% of the aggregate principal amount of the Debentures is
required pursuant to Section 902 of the Base Indenture, no such modification or
amendment shall be effective until the holders of at least the same proportion
in aggregate stated liquidation amount of the Trust Securities shall have
consented to such modification or amendment.
(c) Waiver of Past Defaults.
Section 513 of the Base Indenture shall be supplemented by
this Section 2.11(c).
The Holders of a majority in aggregate principal amount of the
Debentures then Outstanding may waive any past default with respect to the
Debentures, except for (i) a default in the payment of principal of or interest
on the Debentures and (ii) a default in respect of a covenant or provision of
the Indenture which cannot be modified or amended without the consent of the
Holder of each Debenture then Outstanding, provided, however, that no such
waiver shall be effective until the holders of a majority in aggregate stated
liquidation amount of Trust Securities shall have consented to such waiver; and
provided, further, that where a consent would require the Holders of more than
66-2/3% of the aggregate principal amount of Debentures, no such waiver shall be
effective until the holders of at least the same proportion in aggregate stated
liquidation amount of Trust Securities shall have consented to such waiver.
(d) Meetings and Voting.
Sections 1602 and 1604 of the Base Indenture shall be
superseded by this Section 2.11(d).
(i) The Trustee may at any time call a meeting of Holders
for any purpose specified in Section 1601 of the Base Indenture, to be
held at such time and at such place in The City of New York. Notice of
every meeting of Holders, setting forth the time and
22
the place of such meeting and in general terms the action proposed to
be taken at such meeting, shall be given not less than 21 nor more than
180 days prior to the date fixed for the meeting. In case at any time
the Company, pursuant to a Board Resolution, or the Holders of at least
20% in principal amount of the Outstanding Debentures shall have
requested the Trustee to call a meeting of the Holders for any purpose
specified in Section 1601 of the Base Indenture, by written request
setting forth in reasonable detail the action proposed to be taken at
the meeting, and the Trustee shall not have made the first publication
of the notice of such meeting within 21 days after receipt of such
request or shall not thereafter proceed to cause the meeting to be held
as provided herein, then the Company or the Holders in the amount
specified, as the case may be, may determine the time and the place in
The City of New York for such meeting and may call such meeting for
such purposes by giving notice thereof.
(ii) Except as provided below, the Persons entitled to
vote a majority in principal amount of the Outstanding Debentures shall
constitute a quorum. In the absence of a quorum within 30 minutes of
the time appointed for any such meeting, the meeting shall, if convened
at the request of Holders, be dissolved. In any other case, the meeting
may be adjourned for a period of not less than 10 days as determined by
the chairman of the meeting prior to the adjournment of such meeting.
In the absence of a quorum at any such adjourned meeting, such
adjourned meeting may be further adjourned for a period of not less
than 10 days as determined by the chairman of the meeting prior to the
adjournment of such adjourned meeting. Notice of the reconvening of any
adjourned meeting shall be given as provided herein, except that such
notice need be given only once and not less than five days prior to the
date on which the meeting is scheduled to be reconvened. Notice of the
reconvening of an adjourned meeting shall state expressly the
percentage of the principal amount of the Outstanding Debentures which
shall constitute a quorum. Subject to the foregoing, at the reconvening
of any meeting adjourned for a lack of a quorum, the Persons entitled
to vote 25% in principal amount of the Outstanding Debentures at the
time shall constitute a quorum for the taking of any action set forth
in the notice of the original meeting.
At a meeting or an adjourned meeting duly reconvened and at
which a quorum is present as aforesaid, any resolution and all matters shall be
effectively passed and decided if passed or decided by the Persons entitled to
vote the lesser of:
(i) a majority in principal amount of the Debentures then
Outstanding; or
(ii) 66 2/3% in principal amount of the Debentures
represented and voting at such meeting;
provided, however, that if any consent, waiver or other action must be given,
made or taken by the Holders of a specified percentage in principal amount of
Outstanding Debentures (which is less than a majority of the principal amount of
Debentures then Outstanding) then such consent, waiver or other action may be
given, made or taken by the Persons entitled to vote the lesser of:
(i) the specified percentage in principal amount of the
Debentures then Outstanding; or
23
(ii) a majority in principal amount of the Debentures
represented and voting at such meeting.
Any resolution passed or decisions taken at any meeting of
Holders of Debentures duly held in accordance with this Section shall be binding
on all the Holders of Debentures, whether or not present or represented at the
meeting.
SECTION 2.13. Defeasance.
Section 1701 of the Base Indenture shall be superseded by this
Section 2.12.
The Company shall be deemed to have been discharged from their
obligations with respect to all of the outstanding Debentures on the date of the
deposit referred to in subparagraph (1) hereof, and the provisions of this
Indenture, as it relates to such outstanding Debentures, shall no longer be in
effect (and the Trustee, at the expense of the Company, shall, upon the request
of the Company, execute proper instruments acknowledging the same), except as
to:
(i) the rights of Holders to receive, solely from the
trust funds described in subparagraph (a) hereof, payments of the
principal of or interest on the Outstanding Debentures on the date such
payments are due; and
(ii) the rights, powers, trust and immunities of the
Trustee hereunder and the duties of the Trustee under Section 402 of
the Base Indenture and the duty of the Trustee to authenticate
Debentures issued on registration of transfer of exchange;
provided that the following conditions shall have been satisfied:
1) the Company shall have deposited, or caused to be
deposited, irrevocably with the Trustee, under the terms of an escrow
trust agreement satisfactory to the Trustee, as trust funds in trust
for the purpose of making the following payments, specifically pledged
as security for and dedicated solely to the benefit of the Holders,
cash in U.S. dollars and/or Eligible Instruments (including U.S.
Government Obligations) which through the payment of interest and
principal in respect thereof, in accordance with their terms, will
provide (and without reinvestment and assuming no tax liability will be
imposed on such Trustee), not later than one day before the due date of
any payment of money, an amount in cash, sufficient, in the opinion of
a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee,
to pay principal of and interest on all the Debentures on the dates
such payments of principal or interest are due and payable;
2) no Event of Default with respect to the Debentures
shall have occurred and be continuing on the date of such deposit;
3) such deposit and the related intended consequences
will not result in a breach or violation of, or constitute a default or
event of default under, the Indenture or
24
any other material indenture, agreement or other instrument binding
upon the Company or its subsidiaries or any of their properties or
assets;
4) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel to the effect that (A)
the Company has received from, or there has been published by, the
Internal Revenue Service a ruling (which ruling shall be satisfactory
to the Trustee), or (B) since the date of execution of this Third
Supplemental Indenture, there has been a change in the applicable
federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders will
not recognize income, gain or loss for federal income tax purposes as a
result of such deposit, defeasance and discharge and will be subject to
federal income tax on the same amount and in the same manner and at the
same times as would have been the case if such deposit, defeasance and
discharge had not occurred;
5) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the
Company with the intent of preferring the Holders over any other
creditors of the Company or with the intent of defeating, hindering,
delaying or defrauding any other creditors of the Company;
6) such deposit shall not result in the trust arising
from such deposit constituting an "investment company" (as defined in
the Investment Company Act of 1940, as amended (the "Investment Company
Act")), or such trust shall be qualified under such Act or exempt from
regulation thereunder; and
7) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent relating to the defeasance contemplated by this
Section 2.12 have been complied with.
SECTION 2.14. Paying Agent; Security Registrar.
Initially, the Trustee shall act as Paying Agent and Security
Registrar. If the Debentures are issued in definitive form, the Corporate Trust
Office shall be the office or agency of the Paying Agent and the Security
Registrar for the Debentures.
SECTION 2.15. Tax Treatment of Debentures.
The Company agrees, and by acceptance of a beneficial
ownership interest in the Debentures each beneficial holder of Debentures
agrees, for United States federal income tax purposes, (i) to treat each
Debenture and the corresponding Warrant in which such holder has a beneficial
interest as a single unitary instrument, (ii) to treat such unitary instrument
as indebtedness of the Company, (iii) to treat such indebtedness as subject to
Section 1.1275-4(b) of the Treasury Regulations (the "Contingent Debt
Regulations"), (iv) to be bound by the Company's determination of the
"comparable yield" and "projected payment schedule," within the meaning of the
Contingent Debt Regulations, with respect to such holder's Debentures and
corresponding Warrants, and (v) to use such "comparable yield" and "projected
payment schedule" in determining its interest accruals with respect to such
holder's Debentures and corresponding Warrants and in determining adjustments
thereto. For purposes of the foregoing,
25
the Company's determination of the "comparable yield" is 7.410% per annum,
compounded quarterly. The projected payment schedule, determined by the Company,
is attached hereto as Exhibit B. A Holder of Debentures may obtain the Issue
Date, yield to maturity, comparable yield and a copy of the projected payment
schedule attached hereto as Exhibit B for the Debentures by telephoning the
Company's Investor Relations Department at (▇▇▇) ▇▇▇-▇▇▇▇ or submitting a
written request for such information to Investor Relations Department, Sovereign
Bank, Mail Code 11-900-IR5, ▇.▇. ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇.
ARTICLE III
FORM OF DEBENTURE
SECTION 3.01. Form of Debenture.
The Debentures and the Trustee's Certificate of Authentication
to be endorsed thereon are to be substantially in the forms of Exhibit A-1
annexed hereto. The Short-Form Debentures and the Trustee's Certificate of
Authentication to be endorsed thereon are to be substantially in the forms of
Exhibit A-2 annexed hereto.
ARTICLE IV
EXPENSES
SECTION 4.01. Payment of Expenses.
In connection with the offering, sale and issuance of the
Debentures to the Trust in connection with the sale of the Trust Securities by
the Trust, the Company, as borrower, shall:
(a) pay for all costs and expenses relating to the
offering, sale and issuance of the Debentures, including compensation
to the Underwriters payable pursuant to the Underwriting Agreement and
compensation of the Trustee under the Indenture in accordance with the
provisions of Section 607 of the Indenture;
(b) pay for all costs and expenses of the Trust,
including, but not limited to, costs and expenses relating to the
organization of the Trust, the offering, sale and issuance of the Trust
Securities (including compensation to the Underwriters payable pursuant
to the Underwriting Agreement in connection therewith); the fees and
expenses of the Property Trustee (including, without limitation, those
incurred in connection with the enforcement by the Property Trustee of
the rights of the holders of the Trust PIERS), the Delaware Trustee and
the Administrative Trustees; the costs and expenses relating to the
operation of the Trust (including, without limitation, costs and
expenses of accountants, attorneys, statistical or bookkeeping
services, expenses for printing and engraving and computing or
accounting equipment, paying agent(s), registrar(s), transfer agent(s),
duplicating, travel and telephone and other telecommunications
expenses); and costs and expenses incurred in connection with the
acquisition, financing and disposition of Trust assets;
26
(c) be primarily liable for any indemnification
obligations arising with respect to the Declaration;
(d) pay any and all taxes (other than United States
withholding taxes), duties, assessments or governmental charges of
whatever nature imposed on the Trust by the United States or any other
taxing authority and all liabilities, costs and expenses with respect
to such taxes of the Trust; and
(e) any tax, duty, assessment or government charge in the
nature of a withholding tax imposed by any taxing authority outside the
United States on any payment by the Trust to holders of Trust
Securities.
ARTICLE V
COVENANTS
SECTION 5.01. Covenants upon an Event of Default or of a
Deferral of Interest.
If an Event of Default occurs and written notice of such event
has been given to the Company, or if the Company exercises its right to defer
payments of interest on the Debentures pursuant to Section 2.05, the Company may
not:
(a) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect
to, any of its capital stock; or
(b) make any payment of principal or interest on or
repay, repurchase or redeem any debt securities of the Company that
rank on a parity with or junior in interest to the Debentures or make
any guarantee payments with respect to any guarantee by the Company of
the debt securities of any subsidiary of the Company if such guarantee
ranks on a parity with or junior in interest to the Debentures;
in each case, other than:
(i) dividends or distributions payable in the Company's
capital stock, or options, warrants or rights to acquire capital stock
of the Company, or repurchases or redemptions of capital stock of the
Company solely from the issuance or exchange of capital stock of the
Company;
(ii) payments under the Trust PIERS Guarantee;
(iii) the payment of any dividend within 60 days after the
date of declaration of the dividend if, at the date of declaration, (x)
if paid on that date, the payment of the dividend would not have been
prohibited by an election to defer interest payments and (y) the
declaration was in accordance with the Company's dividend policy in
effect immediately prior to its declaration of the dividend;
27
(iv) any declarations of a dividend in connection with the
implementation of a shareholders' rights plan, or the issuances of
stock under any such plan in the future, or redemptions or repurchases
of any rights pursuant to a rights agreement;
(v) purchases or acquisitions of capital stock of the
Company in connection with the satisfaction by the Company of its
obligations under any employee, director or agent benefit plans or any
dividend reinvestment or stock purchase plan;
(vi) in connection with the reclassification of any class
or series of the Company's capital stock, or the exchange or conversion
of one class or series of the Company's capital stock for or into
another class or series of its capital stock;
(vii) the purchase of fractional interests in shares of the
Company's capital stock in connection with the conversion or exchange
provisions of that capital stock or the security being converted or
exchanged; and
(viii) repurchases of capital stock of the Company in
connection with the satisfaction by the Company of its obligations
pursuant to any acquisitions of businesses made by the Company (which
repurchases are made in connection with the satisfaction of
indemnification obligations of the sellers of such businesses).
SECTION 5.02. Additional Covenants Relating to the Trust.
For as long as the Trust PIERS remain outstanding, the Company
will:
(a) maintain, directly or indirectly, 100% ownership of
the Common Securities; provided, however, that any permitted successor
of the Company may succeed to the Company's ownership of such Common
Securities;
(b) cause the Trust to (i) remain a Delaware statutory
trust, except in connection with the distribution of the Debentures to
the Holders, the redemption of all of the Securities, or certain
mergers, consolidations, conversions or amalgamations, each as
permitted by the Declaration, (ii) not voluntarily dissolve, wind up,
liquidate or be terminated, except as permitted by the Declaration and
(iii) otherwise continue to be classified as a grantor trust for United
States federal income tax purposes;
(c) use its commercially reasonable efforts to ensure
that the Trust will not be an "investment company" required to be
registered under the Investment Company Act; and
(d) not take any action that would be reasonably likely
to cause the Trust to be classified as an association or a publicly
traded partnership taxable as a corporation for United States federal
income tax purposes.
SECTION 5.03. Covenant to List on Exchange.
28
If the Debentures are distributed to the holders of the Trust
PIERS upon dissolution of the Trust, the Company shall use its best efforts to
list such Debentures on the New York Stock Exchange or on such other exchange as
the Trust PIERS are then listed, if listed.
SECTION 5.04. Additional Covenant Relating to the Trust PIERS
Guarantee.
If an event of default under the Trust PIERS Guarantee occurs
and written notice of such event has been given to the Company, the Company
shall be subject to the limitations and restrictions set forth in Section 5.01
relating to an Event of Default.
SECTION 5.05. Claims of Holders.
Each beneficial owner of Debentures shall be deemed to agree,
by its acceptance of any Debenture, not to assert upon the occurrence of any of
the events indicated in clauses (i), (ii) or (iv) of Section 8.01(a) of the
Trust Agreement, or any similar event, any claim in respect of the Debentures
and the Warrants as a whole before any court having jurisdiction in the premises
under the Federal bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal or state bankruptcy, insolvency or other similar law, in
excess of the Nominal Accreted Value of a Like Amount of Debentures on the date
of commencement of any such proceedings before such court.
ARTICLE VI
SUBORDINATION
Article 18 of the Base Indenture shall be superseded by this
Article VI.
SECTION 6.01. Debentures Subordinated to Senior Indebtedness.
The Company covenants and agrees, and each Holder, by such
Holder's acceptance thereof, likewise covenants and agrees, that the
indebtedness represented by the Debentures and the payment of the principal of
and interest on each and all of the Debentures is hereby expressly subordinated
and junior, to the extent and in the manner set forth and as set forth in this
Section 6.01, in right of payment to the prior payment in full of all Senior
Indebtedness.
(a) In the event of any distribution of assets of the
Company upon any dissolution, winding up, liquidation or reorganization
of the Company, whether in bankruptcy, insolvency, reorganization or
receivership proceedings or upon an assignment for the benefit of
creditors or any other marshaling of the assets and liabilities of the
Company or otherwise, the holders of all Senior Indebtedness shall be
entitled first to receive payment of the full amount due thereon in
respect of all such Senior Indebtedness and all other amounts due or
provision shall be made for such amount in cash, or other payments
satisfactory to the holders of Senior Indebtedness, before the Holders
are entitled to receive any payment or distribution of any character,
whether in
29
cash, securities or other property, on account of the principal of or
interest on the indebtedness evidenced by the Debentures.
(b) In the event of any acceleration of maturity of the
Debentures because of an Event of Default, unless the full amount due
in respect of all Senior Indebtedness is paid in cash or other form of
payment satisfactory to the holders of Senior Indebtedness, no payment
shall be made by the Company with respect to the principal of or
interest on the Debentures or to acquire any of the Debentures, and the
Company shall give prompt written notice of such acceleration to such
holders of Senior Indebtedness.
(c) In the event of and during the continuance of any
default in payment of the principal of or interest on any Senior
Indebtedness, unless all such payments due in respect of such Senior
Indebtedness have been paid in full in cash or other payments
satisfactory to the holders of Senior Indebtedness, no payment shall be
made by the Company with respect to the principal of or interest on the
Debentures or to acquire any of the Debentures. The Company shall give
prompt written notice to the Trustee of any default under any Senior
Indebtedness or under any agreement pursuant to which Senior
Indebtedness may have been issued.
(d) During the continuance of any event of default with
respect to any Senior Indebtedness, as such event of default is defined
under any such Senior Indebtedness or in any agreement pursuant to
which any Senior Indebtedness has been issued (other than a default in
payment of the principal of or interest on any Senior Indebtedness),
permitting the holder or holders of such Senior Indebtedness to
accelerate the maturity thereof, no payment shall be made by the
Company, directly or indirectly, with respect to principal of or
interest on the Debentures for 179 days following notice in writing (a
"Payment Blockage Notice") to the Company, from any holder or holders
of such Senior Indebtedness or their representative or representatives
or the trustee or trustees under any indenture or under which any
instrument evidencing any such Senior Indebtedness may have been
issued, that such an event of default has occurred and is continuing,
unless such event of default has been cured or waived or such Senior
Indebtedness has been paid in full; provided, however, if the maturity
of such Senior Indebtedness is accelerated, no payment may be made on
the Debentures until such Senior Indebtedness has been paid in full in
cash or other payment satisfactory to the holders of such Senior
Indebtedness or such acceleration (or termination, in the case of a
lease) has been cured or waived.
For purposes of this Section 6.01(d), such Payment Blockage
Notice shall be deemed to include notice of all other events of default under
such indenture or instrument which are continuing at the time of the event of
default specified in such Payment Blockage Notice. The provisions of this
Section 6.01(d) shall apply only to one such Payment Blockage Notice given in
any period of 365 days with respect to any issue of Senior Indebtedness, and no
such continuing event of default that existed or was continuing on the date of
delivery of any Payment Blockage Notice shall be, or shall be made, the basis
for a subsequent Payment Blockage Notice.
(e) In the event that, notwithstanding the foregoing
provisions of Sections 6.01(a), 6.01(b), 6.01(c) and 6.01(d), any
payment on account of principal of or interest on the Debentures shall
be made by or on behalf of the Company and received by the
30
Trustee, by any Holder or by any Paying Agent (or, if the Company is
acting as its own Paying Agent, money for any such payment shall be
segregated and held in trust):
(i) after the occurrence of an event specified in Section
6.01(a) or 6.01(b), then, unless all Senior Indebtedness is paid in
full in cash, or provision shall be made therefor,
(ii) after the happening of an event of default of the
type specified in Section 6.01(c) above, then, unless the amount of
such Senior Indebtedness then due shall have been paid in full, or
provision made therefor or such event of default shall have been cured
or waived, or
(iii) after the happening of an event of default of the
type specified in Section 6.01(d) above and delivery of a Payment
Blockage Notice, then, unless such event of default shall have been
cured or waived or the 179-day period specified in Section 6.01(d)
shall have expired, such payment (subject, in each case, to the
provisions of Section 6.07 hereof) shall be held in trust for the
benefit of, and shall be immediately paid over to, the holders of
Senior Indebtedness or their representative or representatives or the
trustee or trustees under any indenture under which any instruments
evidencing any of the Senior Indebtedness may have been issued, as
their interests may appear.
SECTION 6.02. Subrogation.
Subject to the payment in full of all Senior Indebtedness to
which the indebtedness evidenced by the Debentures is in the circumstances
subordinated as provided in Section 6.01 hereof, the Holders shall be subrogated
to the rights of the holders of such Senior Indebtedness to receive payments or
distributions of cash, property or securities of the Company applicable to such
Senior Indebtedness until all amounts owing on the Debentures shall be paid in
full, and, as between the Company, its creditors other than holders of such
Senior Indebtedness, and the Holders, no such payment or distribution made to
the holders of Senior Indebtedness by virtue of this Article which otherwise
would have been made to the holders of the Debentures shall be deemed to be a
payment by the Company on account of such Senior Indebtedness, provided that the
provisions of this Article are and are intended solely for the purpose of
defining the relative rights of the Holders, on the one hand, and the holders of
Senior Indebtedness, on the other hand.
SECTION 6.03. Obligation of the Company is Absolute and
Unconditional.
Nothing contained in this Article or elsewhere in this
Indenture or in the Debentures is intended to or shall impair, as between the
Company, its creditors other than the holders of Senior Indebtedness, and the
Holders, the obligation of the Company, which is absolute and unconditional, to
pay to the Holders the principal of and interest on the Debentures as and when
the same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the Holders and creditors of
the Company other than the holders of Senior Indebtedness, nor shall anything
contained herein or therein prevent the Trustee or the Holders from exercising
all remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article of the holders of
31
Senior Indebtedness in respect of cash, property or securities of the Company
received upon the exercise of any such remedy.
SECTION 6.04. Maturity of or Default on Senior Indebtedness.
Upon the maturity of any Senior Indebtedness by lapse of time,
acceleration or otherwise, all principal of or premium, if any, or interest on,
rent or other payment obligations in respect of all such matured Senior
Indebtedness shall first be paid in full, or such payment shall have been duly
provided for, before any payment on account of principal or interest is made
upon the Debentures.
SECTION 6.05. Payments on Debentures Permitted.
Except as expressly provided in this Article, nothing
contained in this Article shall affect the obligation of the Company to make, or
prevent the Company from making, payments of the principal of or interest on the
Debentures in accordance with the provisions hereof and thereof, or shall
prevent the Trustee or any Paying Agent from applying any moneys deposited with
it hereunder to the payment of the principal of or interest on the Debentures.
SECTION 6.06. Effectuation of Subordination by Trustee.
Each Holder, by such Holder's acceptance thereof, authorizes
and directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article and appoints the Trustee such Holder's attorney-in-fact for any and all
such purposes.
Upon any payment or distribution of assets of the Company
referred to in this Article, the Trustee and the Holders shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction in
which any such dissolution, winding up, liquidation or reorganization
proceedings affecting the affairs of the Company is pending or upon a
certificate of the trustee in bankruptcy, receiver, assignee for the benefit of
creditors, liquidating trustee or agent or other Person making any payment or
distribution, delivered to the Trustee or to the Holders, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, and as to other facts pertinent to the right of such Persons under
this Article, and if such evidence is not furnished, the Trustee may defer any
payment to such Persons pending judicial determination as to the right of such
Persons to receive such payment.
SECTION 6.07. Knowledge of Trustee.
Notwithstanding the provision of this Article or any other
provisions of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any Senior Indebtedness, of any default in payment of principal
of or interest on, rent or other payment obligation in respect of any Senior
Indebtedness, or of any facts which would prohibit the making of any payment of
moneys to or by the Trustee, or the taking of any other action by the Trustee,
unless a Responsible Officer of the Trustee having responsibility for the
administration of the trust established by this Indenture shall have received
written notice thereof from the Company, any Holder, any Paying Agent of the
Company or the holder or representative of any
32
class of Senior Indebtedness, and, prior to the receipt of any such written
notice, the Trustee shall be entitled in all respects to assume that no such
default or facts exist; provided, however, that unless on the third Business Day
prior to the date upon which by the terms hereof any such moneys may become
payable for any purpose the Trustee shall have received the notice provided for
in this Section 6.07, then, anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and authority to receive such
moneys and apply the same to the purpose for which they were received, and shall
not be affected by any notice to the contrary which may be received by it on or
after such date.
SECTION 6.08. Trustee's Relation to Senior Indebtedness.
The Trustee shall be entitled to all the rights set forth in
this Article with respect to any Senior Indebtedness at the time held by it, to
the same extent as any other holder of Senior Indebtedness and nothing contained
in this Indenture shall deprive the Trustee of any of its rights as such holder.
Nothing contained in this Article shall apply to claims of or payments to the
Trustee under or pursuant to Section 607 of the Base Indenture.
With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article, and no implied
covenants or obligations with respect to the holders of Senior Indebtedness
shall be read into this Indenture against the Trustee. The Trustee shall not be
deemed to owe any fiduciary duty to the holders of Senior Indebtedness and the
Trustee shall not be liable to any holder of Senior Indebtedness if it shall pay
over or deliver to Holders, the Company or any other Person moneys or assets to
which any holder of Senior Indebtedness shall be entitled by virtue of this
Article or otherwise.
SECTION 6.09. Rights of Holders of Senior Indebtedness Not
Impaired.
No right of any present or future holder of any Senior
Indebtedness to enforce the subordination herein shall at any time or in any way
be prejudiced or impaired by any act or failure to act on the part of the
Company or by any noncompliance by the Company with the terms, provisions and
covenants of this Indenture, regardless of any knowledge thereof any such holder
may have or be otherwise charged with.
SECTION 6.10. Modification of Terms of Senior Indebtedness.
Any renewal or extension of the time of payment of any Senior
Indebtedness or the exercise by the holders of Senior Indebtedness of any of
their rights under any instrument creating or evidencing Senior Indebtedness,
including without limitation the waiver of default thereunder, may be made or
done all without notice to or assent from the Holders or the Trustee.
No compromise, alteration, amendment, modification, extension,
renewal or other change of, or waiver, consent or other action in respect of,
any liability or obligation under or in respect of, or of any of the terms,
covenants or conditions of any indenture or other instrument under which any
Senior Indebtedness is outstanding or of such Senior Indebtedness, whether or
not such release is in accordance with the provisions or any applicable
document, shall in any
33
way alter or affect any of the provisions of this Article or of the Debentures
relating to the subordination thereof.
ARTICLE VII
RIGHTS OF HOLDERS OF TRUST PIERS
SECTION 7.01. Trust PIERS Holders' Rights.
Notwithstanding Section 507 of the Base Indenture, if the
Property Trustee fails to enforce its rights under the Debentures after a holder
of Trust PIERS has made a written request, the holder of Trust PIERS may, to the
fullest extent permitted by law, institute a legal proceeding directly against
the Company to enforce the Property Trustee's rights under the Indenture without
first instituting any legal proceeding against the Property Trustee or any other
person or entity.
SECTION 7.02. Direct Action.
Notwithstanding any other provision of the Indenture, for as
long as any Trust PIERS remain outstanding, to the fullest extent permitted by
law, if an Event of Default has occurred and is continuing and such event is
attributable to the failure of the Company to pay principal of and interest on
the Debentures on the date such principal or interest is otherwise payable, a
holder of Trust PIERS may institute a proceeding directly against the Company (a
"Direct Action") to enforce payment to such holder of the principal of or
interest on Debentures having an aggregate principal amount equal to the
aggregate stated liquidation amount of the Trust PIERS of such holder.
SECTION 7.03. Payments Pursuant to Direct Actions.
The Company shall have the right to set off against its
obligations to the Trust, as Holder, any payment made to a holder of Trust PIERS
in connection with a Direct Action.
ARTICLE VIII
[Intentionally Omitted]
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Ratification of Indenture.
The Indenture, as supplemented by this Third Supplemental
Indenture, is in all respects ratified and confirmed, and this Third
Supplemental Indenture shall be deemed part of the Indenture in the manner and
to the extent herein and therein provided.
34
SECTION 9.02. Scope of Supplemental Indenture.
The changes, modifications and supplements to the Base
Indenture effected by this Supplemental Indenture shall only be applicable with
respect to, and govern the terms of, the Debentures and shall not apply to any
other Debt Securities that may be issued by the Issuer under the Base Indenture.
SECTION 9.03. Trustee Not Responsible for Recitals.
The recitals contained herein are made by the Company and not
by the Trustee, and the Trustee assumes no responsibility for the correctness
thereof. The Trustee makes no representation as to the validity or sufficiency
of this Third Supplemental Indenture.
SECTION 9.04. Governing Law.
This Third Supplemental Indenture and each Debenture shall be
governed by, and construed in accordance with, the laws of Commonwealth of
Pennsylvania.
SECTION 9.05. Severability.
In case any one or more of the provisions contained in this
Third Supplemental Indenture or in the Debentures shall for any reason be held
to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions of this
Third Supplemental Indenture or of the Debentures, but this Third Supplemental
Indenture and the Debentures shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein or therein.
SECTION 9.06. Counterparts.
This Third Supplemental Indenture may be executed in any
number of counterparts each of which shall be an original; but such counterparts
shall together constitute but one and the same instrument.
[SIGNATURES ON FOLLOWING PAGE]
35
IN WITNESS WHEREOF, the parties hereto have caused this Third
Supplemental Indenture to be duly executed on the date or dates indicated in the
acknowledgments and as of the day and year first above written.
SOVEREIGN BANCORP, INC.
By:________________________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior Vice President
BNY MIDWEST TRUST COMPANY (as successor to ▇▇▇▇▇▇
TRUST AND SAVINGS BANK), as Trustee
By:________________________________________________
Name:
Title:
EXHIBIT A-1
[FORM OF DEBENTURE]
[FACE OF DEBENTURE]
This Debenture is a Global Debenture within the meaning of the
Indenture hereinafter referred to and is registered in the name of The
Depository Trust Company, a New York corporation (the "Depositary"), or a
nominee of the Depositary. This Debenture is exchangeable for Debentures
registered in the name of a person other than the Depositary or its nominee only
in the limited circumstances described in the Indenture (as defined below), and
no transfer of this Debenture (other than a transfer of this Debenture as a
whole by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary) may be
registered except in limited circumstances. Unless this Debenture is presented
by an authorized representative of the Depositary to Sovereign Bancorp, Inc. or
its agent for registration of transfer, exchange or payment, and any Debenture
issued is registered in the name of Cede & Co. or such other name as requested
by an authorized representative of the Depositary, and any payment hereon is
made to Cede & Co., or to such other entity as is requested by an authorized
representative of the Depositary, and, except as otherwise provided in the
Indenture, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an
interest herein.
THE SECURITY EVIDENCED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED WITHOUT A SIMULTANEOUS TRANSFER OF ONE WARRANT ISSUED UNDER THE
WARRANT AGREEMENT (AS DEFINED BELOW) PER EACH $50 PRINCIPAL AMOUNT AT MATURITY
OF DEBENTURES. BY ITS ACCEPTANCE HEREOF THE HOLDER HEREOF ACKNOWLEDGES AND
AGREES THAT ANY TRANSFER OF A DEBENTURE WITHOUT A TRANSFER OF A CORRESPONDING
WARRANT SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH
TRANSFEREE SHALL BE DEEMED NOT TO BE A HOLDER OF SUCH DEBENTURES OR WARRANTS FOR
ANY PURPOSE, AND SUCH TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER
IN SUCH DEBENTURES OR WARRANTS.
FOR PURPOSES OF SECTIONS 1273 AND 1275 OF THE INTERNAL REVENUE CODE, THIS
INSTRUMENT (AS DEFINED BELOW) IS A CONTINGENT PAYMENT DEBT INSTRUMENT AND WILL
ACCRUE ORIGINAL ISSUE DISCOUNT AT THE ISSUER'S "COMPARABLE YIELD" FOR UNITED
STATES FEDERAL INCOME TAX PURPOSES. PURSUANT TO SECTION 2.15 OF THE THIRD
SUPPLEMENTAL INDENTURE, THE COMPANY AGREES, AND BY ACCEPTANCE OF A BENEFICIAL
OWNERSHIP INTEREST IN THE DEBENTURES EACH BENEFICIAL HOLDER OF DEBENTURES
AGREES, FOR UNITED STATES FEDERAL INCOME TAX PURPOSES, (I) TO TREAT EACH
DEBENTURE AND THE CORRESPONDING WARRANT IN WHICH SUCH HOLDER HAS A BENEFICIAL
INTEREST AS A SINGLE UNITARY INSTRUMENT, (II) TO TREAT SUCH UNITARY INSTRUMENT
AS INDEBTEDNESS OF THE COMPANY,
A-1-1
(III) TO TREAT SUCH INDEBTEDNESS AS SUBJECT TO SECTION 1.1275-4(b) OF THE
TREASURY REGULATIONS (THE "CONTINGENT DEBT REGULATIONS"), (IV) TO BE BOUND BY
THE COMPANY'S DETERMINATION OF THE "COMPARABLE YIELD" AND "PROJECTED PAYMENT
SCHEDULE," WITHIN THE MEANING OF THE CONTINGENT DEBT REGULATIONS, WITH RESPECT
TO SUCH HOLDER'S DEBENTURES AND CORRESPONDING WARRANTS, AND (V) TO USE SUCH
"COMPARABLE YIELD" AND "PROJECTED PAYMENT SCHEDULE" IN DETERMINING ITS INTEREST
ACCRUALS WITH RESPECT TO SUCH HOLDER'S DEBENTURES AND CORRESPONDING WARRANTS AND
IN DETERMINING ADJUSTMENTS THERETO. FOR PURPOSES OF THE FOREGOING, THE COMPANY'S
DETERMINATION OF THE "COMPARABLE YIELD" IS 7.410% PER ANNUM, COMPOUNDED
QUARTERLY. THE PROJECTED PAYMENT SCHEDULE, DETERMINED BY THE COMPANY, IS
ATTACHED HERETO AS EXHIBIT B. A HOLDER OF DEBENTURES MAY OBTAIN THE ISSUE DATE,
YIELD TO MATURITY, COMPARABLE YIELD AND A COPY OF THE PROJECTED PAYMENT SCHEDULE
ATTACHED HERETO AS EXHIBIT B BY TELEPHONING THE COMPANY'S INVESTOR RELATIONS
DEPARTMENT AT (▇▇▇) ▇▇▇-▇▇▇▇ OR SUBMITTING A WRITTEN REQUEST FOR SUCH
INFORMATION TO INVESTOR RELATIONS DEPARTMENT, SOVEREIGN BANK, MAIL CODE
11-900-IR5, ▇.▇. ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ATTN: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
SOVEREIGN BANCORP, INC.
4.375% Junior Subordinated Deferrable Interest Debenture due
March 1, 2034
Certificate No.:
CUSIP No.:____________.
This Debenture is one of a duly authorized series of Debt
Securities of Sovereign Bancorp, Inc. (the "Debentures"), all issued under and
pursuant to an Indenture dated as of September 1, 1999, duly executed and
delivered by Sovereign Bancorp, Inc., a Pennsylvania corporation (the "Company",
which term includes any successor corporation under the Indenture hereinafter
referred to) and BNY Midwest Trust Company (as successor to ▇▇▇▇▇▇ Trust and
Savings Bank), an Illinois trust company, as Trustee (the "Trustee"), as
supplemented by the Third Supplemental Indenture thereto dated as of February
26, 2004, between the Company and the Trustee (such Indenture as so
supplemented, the "Indenture"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the Holders of the Debentures. By the terms of the
Indenture, the Debt Securities are issuable in series that may vary as to
amount, date of maturity, rate of interest and in other respects as provided in
the Indenture. This series of Debt Securities is limited in aggregate principal
amount to $721,649,500 or up to $824,742,300 if the Underwriters exercise in
full their option to purchase additional Trust PIERS pursuant to the
Underwriting Agreement.
A-1-2
The Company, for value received, hereby promises to pay to
Cede & Co., or its registered assigns, the principal sum of
__________________________ U.S. Dollars ($______________) on March 1, 2034.
Interest Payment Dates: March 1, June 1, September 1 and
December 1, commencing on June 1, 2004.
Reference is hereby made to the further provisions of this
Debenture set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Debenture to
be duly executed manually or by facsimile by its duly authorized officers.
[SIGNATURES ON FOLLOWING PAGE]
A-1-3
[SIGNATURES FROM PRECEDING PAGE]
SOVEREIGN BANCORP, INC.
By:_______________________________
Name:
Title:
By:_______________________________
Name:
Title:
Trustee's Certificate of Authentication
This is one of the 4.375% Subordinated Junior
Deferrable Interest Debentures due
March 1, 2034 referred to in the
within-mentioned Indenture.
BNY Midwest Trust Company
(as successor to ▇▇▇▇▇▇
TRUST AND SAVINGS BANK),
as Trustee
By:________________________
Authorized Officer
Dated: February 26, 2004
A-1-4
[REVERSE OF DEBENTURE]
SOVEREIGN BANCORP, INC.
4.375% Subordinated Junior Deferrable Interest Debentures due
March 1, 2034
Capitalized terms used herein but not defined shall have the
meanings assigned to them in the Indenture referred to below unless otherwise
indicated.
1. Principal and Interest.
Sovereign Bancorp, Inc., a Pennsylvania corporation (the
"Company"), promises to pay interest on the principal amount of this Debenture
at the Coupon Rate from and including February 26, 2004, to, but excluding,
March 1, 2034 (the "Maturity Date"). The Company will pay interest on this
Debenture quarterly in arrears on March 1, June 1, September 1 and December 1 of
each year (each an "Interest Payment Date"), commencing on June 1, 2004.
Interest not paid on the scheduled Interest Payment Date will accrue and
compound quarterly at the Coupon Rate.
Interest on the Debentures shall be computed (i) for any full
quarterly 90-day period on the basis of a 360-day year of twelve 30-day months,
(ii) for any period shorter than a full quarterly 90-day period, on the basis of
a 30-day month and (iii) for any period less than a 30-day month, on the basis
of the actual number of days elapsed in the 30-day month.
The Company shall pay contingent interest ("Contingent
Interest") to the Holders during any quarterly period (a "Contingent Interest
Period") from March 1 to May 31, June 1 to August 31, September 1 to November 31
or December 1 to February 28 (or February 29 in a leap year), other than the
Contingent Interest Period beginning on December 1, 2033, commencing with the
Contingent Interest Period beginning March 1, 2007, if the average of the
Trading Prices of the Trust PIERS for the five consecutive Trading Days
immediately preceding the first Trading Day of such Contingent Interest Period
equals $65 or more.
If the Debentures have been distributed to the Holders of the
Trust PIERS, then the Company will pay Contingent Interest during any Contingent
Interest Period, other than the Contingent Interest Period beginning on December
1, 2033, commencing with the Contingent Interest Period beginning on March 1,
2007, if the average of the aggregate of the Trading Prices of the Debentures
and the Warrants for the five consecutive Trading Days immediately preceding the
first Trading Day of such Contingent Interest Period equals $65 or more.
The amount of Contingent Interest payable in respect of any
Contingent Interest Period will equal $0.08 per $50 principal amount at maturity
of Debentures, and such Contingent Interest will accrue and be payable to
Holders in the same manner as regular cash interest as provided above. Regular
cash interest at the rate of 4.375% per year on the principal amount at the
Maturity Date of the Debentures will continue to accrue whether or not
Contingent Interest is paid.
A-1-5
In the event of a Change of Control (as defined in the Third
Supplemental Indenture), the Coupon Rate will be reset to be equal to the reset
Distribution Rate on the Trust PIERS, which will be the greater of (i) 7.410%
per annum and (ii) the rate determined by a reference agent selected by the
Company as the market yield at that time for a non-convertible trust preferred
security representing subordinated debt of the surviving entity with
substantially the same terms and conditions as the Trust PIERS will have after
the Change of Control, other than (x) the terms and condition set out in Section
4(e)(i)(A) of Annex I to the Trust Agreement allowing for immediate redemption
on a Third-Party Change of Control (as defined in the Third Supplemental
Indenture) and (y) the terms and conditions set out in Section 2(c) of Annex I
to the Trust Agreement with respect to the payment of Contingent Distributions.
Upon the occurrence of a Change of Control, or if the
Debentures are called for redemption pursuant to Section 2.06(a) or (b) of the
Third Supplemental Indenture, the principal amount of the Debentures will
immediately accrete to $50 per Debenture.
2. Optional Deferral of Interest.
As long as no Event of Default has occurred and is continuing,
the Company has the right, at any time and from time to time to defer payments
of interest other than Contingent Interest on the Debentures by extending the
interest payment period on the Debentures for a period (each, an "Extension
Period") not exceeding 20 consecutive quarterly periods, during which Extension
Period no interest shall be due and payable on the Debentures, provided that no
Extension Period shall end on a date other than an Interest Payment Date for the
Debentures or extend beyond the Maturity Date. Despite such deferral, interest
shall continue to accrue with additional interest thereon (to the extent
permitted by applicable law) at the Coupon Rate compounded quarterly during any
such Extension Period ("Compounded Interest"). Prior to the termination of any
such Extension Period, the Company may further defer payments of interest by
further extending such Extension Period; provided that such Extension Period,
together with all such previous and further extensions of such Extension Period,
may not exceed 20 consecutive quarterly periods or extend beyond the Maturity
Date. At the termination of any Extension Period, the Company shall pay all
interest then accrued and unpaid, plus Compounded Interest. Upon the termination
of any Extension Period and the payment of all amounts then due, the Company may
commence a new Extension Period, subject to the above requirements.
During an Extension Period, the Company may not, and will not
permit any subsidiary to:
(a) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect
to, any of its capital stock; or
(b) make any payment of principal or premium (if any) of,
or interest on, or repay, repurchase or redeem any debt securities of
the Company that rank on a parity with or junior in interest to the
Debentures or make any guarantee payments with respect to any guarantee
by the Company of the debt securities of any subsidiary of the Company
if such guarantee ranks on a parity with or junior in interest to the
Debentures; in each case, other than:
A-1-6
(i) dividends or distributions payable in the Company's
capital stock, or options, warrants or rights to acquire capital stock
of the Company, or repurchases or redemptions of capital stock of the
Company solely from the issuance or exchange of capital stock of the
Company;
(ii) payments under the Trust PIERS Guarantee;
(iii) the payment of any dividend within 60 days after the
date of declaration of the dividend if, at the date of declaration, (x)
if paid on that date, the payment of the dividend would not have been
prohibited by an election to defer interest payments and (y) the
declaration was in accordance with the Company's dividend policy in
effect immediately prior to its declaration of the dividend;
(iv) any declarations of a dividend in connection with the
implementation of a shareholders' rights plan, or the issuances of
stock under any such plan in the future, or redemptions or repurchases
of any rights pursuant to a rights agreement;
(v) purchases or acquisitions of capital stock of the
Company in connection with the satisfaction by the Company of its
obligations under any employee, director or agent benefit plans or any
dividend reinvestment or stock purchase plan;
(vi) in connection with the reclassification of any class
or series of the Company's capital stock, or the exchange or conversion
of one class or series of the Company's capital stock for or into
another class or series of its capital stock;
(vii) the purchase of fractional interests in shares of the
Company's capital stock in connection with the conversion or exchange
provisions of that capital stock or the security being converted or
exchanged; and
(viii) repurchases of capital stock of the Company in
connection with the satisfaction by the Company of its obligations
pursuant to any acquisitions of businesses made by the Company (which
repurchases are made in connection with the satisfaction of
indemnification obligations of the sellers of such businesses).
3. Method of Payment.
Interest on any Debenture which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to the
person in whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest. As long as the Debentures are represented by a Global Debenture, the
Regular Record Dates for the Debentures shall be the Business Day preceding the
corresponding Interest Payment Date. If the Debentures are issued in definitive
form, the Regular Record Dates for the Debentures shall be the fifteenth day of
the month preceding the month in which the corresponding Interest Payment Date
occurs.
A-1-7
4. Paying Agent and Security Registrar.
Initially, BNY Midwest Trust Company, the Trustee, will act as
Paying Agent and Security Registrar. The Company may change the Paying Agent and
Security Registrar without notice to any Holder.
5. Indenture.
The Company issued this Debenture under an Indenture, dated as
of September 1, 1999 (the "Base Indenture"), between the Company and BNY Midwest
Trust Company (as successor to ▇▇▇▇▇▇ Trust and Savings Bank), as trustee (the
"Trustee"), as amended and supplemented by the Third Supplemental Indenture,
dated as of February 26, 2004 (the "Third Supplemental Indenture", together with
the Base Indenture, the "Indenture"), between the Company and the Trustee. The
provisions of this Debenture are subject to the more detailed provisions of the
Indenture.
6. Redemption.
The Company may redeem the Debentures, in whole but not in
part at any time on or after March 5, 2007, provided that the Company elects to
cause the redemption of the Trust PIERS and provided certain other conditions
pertaining to legal and regulatory authority for such redemption are satisfied.
The Company may also redeem the Debentures in whole, but not
in part, upon the occurrence and during the continuance of a Special Event (as
defined in the Third Supplemental Indenture) within 93 days of such Special
Event, provided the Special Event cannot be rectified and certain other
conditions are satisfied, including receipt of a favorable tax opinion and
consent by the Company.
In each case, the redemption price will be equal to 100% of
the principal amount to be redeemed, plus accrued interest thereon to the date
of redemption.
In addition, upon the occurrence of a Change of Control, the
Company may redeem the Debentures (i) in whole, but not in part, at any time
during the thirty days beginning on the ninetieth day after the occurrence of
such Change of Control, (ii) in whole, but not in part, at any time during the
period beginning on the fifth anniversary of the occurrence of such Change of
Control and ending on the Stated Maturity of the Debentures, and (iii) in whole
or in part, immediately upon the occurrence of such Change of Control if it is a
Third-Party Change of Control.
7. Sinking Fund.
The Debentures will not be subject to a sinking fund
provision.
8. Distribution of Debentures in Exchange for Trust
Securities.
A-1-8
At any time following a Special Event, provided certain
conditions are satisfied, the Administrative Trustees may dissolve the Trust
and, after satisfaction of liabilities to creditors of the Trust as provided by
applicable law, cause the Debentures held by the Property Trustee to be
distributed to the holders of Trust Securities in liquidation of such holders'
interests in the Trust on a Pro Rata basis, upon not less than 30 nor more than
60 days notice, and, simultaneous with such distribution, to cause a Like Amount
of the Trust Securities to be exchanged by the Trust on a Pro Rata basis. A
Debenture may not be transferred without a simultaneous transfer of one Warrant
issued under the Warrant Agreement per each $50 principal amount at maturity of
Debentures.
A Debenture Distribution Notice, which notice shall be
irrevocable, shall be given by the Trust by mail to each holder of Trust
Securities as provided in the Indenture.
9. Subordination.
The payment of principal of and interest on this Debenture is,
to the extent and in the manner provided in the Indenture, subordinated and
subject in right of payment to the prior payment in full of all amounts then due
on all Senior Indebtedness of the Company, and this Debenture is issued subject
to such subordination provisions of the Indenture with respect thereto. Each
Holder of this Debenture, by accepting the same, (a) agrees to and shall be
bound by such provisions, (b) authorizes and directs the Trustee on such
Holder's behalf to take such action as may be necessary or appropriate to
effectuate the subordination so provided and (c) appoints the Trustee such
Holder's attorney-in-fact for any and all such purposes.
10. Defaults and Remedies.
The Indenture provides that an Event of Default with respect
to the Debentures occurs when any of the following occurs:
(a) the Company defaults in the payment of the principal
of any of the Debentures when it becomes due and payable at the
Maturity Date or otherwise, whether or not such payment is prohibited
by the subordination provisions of Article 6 of the Third Supplemental
Indenture;
(b) the Company defaults in the payment of interest on
any of the Debentures when it becomes due and payable and such default
continues for a period of 30 days after written notice has been given
as provided in the Indenture, whether or not such payment is prohibited
by the subordination provisions of Article 6 of the Third Supplemental
Indenture; provided, however, that a valid extension of the interest
payment period does not constitute a default in the payment of
interest;
(c) the Company fails to perform or observe any other
term, covenant or agreement contained in the Debentures or the
Indenture (other than a covenant included in the Indenture solely for
the benefit of any series of Debt Securities other than the Debentures)
and such default continues for a period of 90 days after written notice
of such failure is given as specified in the Indenture;
A-1-9
(d) there are certain events of bankruptcy, insolvency or
reorganization of the Company; or
(e) the voluntarily or involuntarily dissolution,
winding-up or termination of the Trust, except in connection with:
(i) the distribution of the Debentures held by
the Trust to the holders of the Trust Securities in
liquidation of their interests in the Trust;
(ii) the redemption of all of the outstanding
Trust Securities; or
(iii) certain mergers, consolidations,
conversions, amalgamations, replacements or other transactions
involving the Trust, each as permitted under the Declaration.
If an Event of Default shall occur and be continuing, the
principal of all of the Debentures may be declared due and payable, in the
manner and with the effect provided in the Indenture.
11. Amendment; Supplement; Waiver.
The Indenture contains provisions permitting the Company and
the Trustee, without the consent of any Holder, to execute supplemental
indentures modifying certain provisions of the Indenture, provided that no such
modification has a material adverse effect on the interests of the Holders.
In addition, the Indenture contains provisions permitting the
Company and the Trustee, with the consent of the Holders of not less than a
majority in aggregate principal amount of the Debentures and all other series of
Debt Securities affected at the time Outstanding, to execute supplemental
indentures for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of the Indenture or of any supplemental
indenture or of modifying in any manner the rights of the Holders of the
Debentures; provided, however, that no such supplemental indenture may, without
the consent of the Holder of each outstanding Debenture, among other things:
(i) change the Stated Maturity of the principal of, or
the time of payment of any installment of interest on, any Debenture;
(ii) reduce the principal amount of, or the rate of
interest on, any Debenture;
(iii) change the place of payment where the Debentures or
any interest thereon is payable or the currency in which it is payable;
(iv) change the transfer restrictions on the Debentures to
allow the Warrants to be transferred separately;
(v) impair the right to institute suit for the
enforcement of any such payment on or with respect to the Debentures;
A-1-10
(vi) reduce the above-stated percentage of principal
amount of Debentures, the Holders of which are required to modify or
amend the Indenture, to consent to any waiver thereunder or to approve
any supplemental indenture;
(vii) release the Company from any of its obligations under
the Guarantee or the Indenture, except in accordance with the
Indenture;
(viii) change any obligation of the Company to maintain an
office or agency in the place and for the purposes required by the
Indenture; or
(ix) modify any of the above provisions except (a) to
increase the percentage in principal amount of outstanding Debentures
necessary for such actions or (b) to provide that certain other
provisions of the Indenture cannot be modified or waived without the
consent of the Holders;
and provided, further, that no such supplemental indenture shall be effective
until the holders of not less than 66 2/3% of the aggregate stated liquidation
amount of the Trust Securities shall have consented to such supplemental
indenture; and provided, further, that where the consent of the Holders of not
less than 66 2/3% of the aggregate principal amount of the Debentures is
required under the Indenture, no such supplemental indenture shall be effective
until the holders of at least the same proportion in aggregate stated
liquidation amount of the Trust Securities shall have consented to such
supplemental indenture.
The Indenture also contains provisions permitting the Holders
of a majority in aggregate principal amount of the Debentures at the time
Outstanding affected thereby, on behalf of all of the Holders of the Debentures,
to waive any past default in the performance of any of the covenants contained
in the Indenture, or established pursuant to the Indenture with respect to the
Debentures, and its consequences, except a default in the payment of the
principal of or interest on any of the Debentures (unless cured as provided in
the Indenture) or in respect of a covenant or provision that cannot be modified
or amended without the consent of the Holders of each Debenture then
Outstanding. Any such consent or waiver by the registered Holder of this
Debenture (unless revoked as provided in the Indenture) shall be conclusive and
binding upon such Holder and upon all future Holders and owners of this
Debenture and of any Debenture issued in exchange herefor or in place hereof
(whether by registration of transfer or otherwise), irrespective of whether or
not any notation of such consent or waiver is made upon this Debenture.
12. Restrictive Covenants.
The Indenture requires the Company, for as long as the Trust
PIERS remain outstanding, to:
(a) maintain, directly or indirectly, 100% ownership of
the Common Securities; provided, however, that any permitted successor
of the Company may succeed to the Company's ownership of such Common
Securities;
A-1-11
(b) cause the Trust to (i) remain a Delaware statutory
trust, except in connection with the distribution of the Debentures to
the Holders, the redemption of all of the Securities, or certain
mergers, consolidations, conversions or amalgamations, each as
permitted by the Declaration, (ii) not voluntarily dissolve, wind up,
liquidate or be terminated, except as permitted by the Declaration and
(iii) otherwise continue to be classified as a grantor trust for United
States federal income tax purposes;
(c) use its commercially reasonable efforts to ensure
that the Trust will not be an "investment company" required to be
registered under the Investment Company Act of 1940, as amended; and
(d) not take any action that would be reasonably likely
to cause the Trust to be classified as an association or a publicly
traded partnership taxable as a corporation for United States federal
income tax purposes.
The Indenture also imposes certain limitations on the ability
of the Company to, among other things, merge, consolidate or sell, assign,
transfer or lease all or substantially all of its properties or assets. Such
covenants and limitations are subject to a number of important qualifications
and exceptions. The Company must report periodically to the Trustee on
compliance with the covenants in the Indenture.
13. Denomination; Transfer; Exchange.
The Debentures of this series are issuable only in registered
form without coupons in denominations of $50 and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations herein and
therein set forth, Debentures of this series so issued are exchangeable for a
like aggregate principal amount of Debentures of this series of a different
authorized denomination, as requested by the Holder surrendering the same.
As provided in the Indenture and subject to certain
limitations therein set forth, this Debenture is transferable by the registered
Holder hereof on the Security Register of the Company, upon surrender of this
Debenture for registration of transfer at the office or agency of the Company in
the City and State of New York accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company or the Trustee duly
executed by the registered Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Debentures of authorized denominations
and for the same aggregate principal amount will be issued to the designated
transferee or transferees. No service charge will be made for any such transfer,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge payable in relation thereto.
14. Persons Deemed Owners.
The registered Holder of this Debenture shall be treated as
its owner for all purposes.
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15. Defeasance.
Subject to certain conditions contained in the Indenture, at
any time some or all of the Debentures and the Indenture may be terminated if
the Company deposits with the Trustee money and/or Eligible Instruments
(including U.S. Government Obligations) sufficient to pay the principal of and
interest on the Debentures to the Maturity Date.
16. No Recourse Against Others.
No recourse shall be had for the payment of the principal of
or the interest on this Debenture, or for any claim based hereon, or otherwise
in respect hereof, or based on or in respect of the Indenture, against any
incorporator, shareholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
17. Authentication.
This Debenture shall not be valid until the Trustee (or
authenticating agent) executes the certificate of authentication on the other
side of this Debenture.
18 Governing Law.
The Indenture and this Debenture shall be governed by, and
construed in accordance with, the laws of the Commonwealth of Pennsylvania.
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SCHEDULE OF INCREASES OR DECREASES IN
GLOBAL DEBENTURE
The following increases or decreases in this Global Debenture
have been made:
Principal Amount of
Amount of decrease Amount of increase Debentures
in Principal Amount in Principal Amount evidenced by this
of Debentures of Debentures Global Debenture Signature of
evidenced by this evidenced by this following such authorized officer of
Date Global Debenture Global Debenture decrease or increase agent
---- ------------------- ------------------- -------------------- ---------------------
▇-▇-▇▇
▇▇▇▇▇▇▇ ▇-▇
[FORM OF SHORT-TERM DEBENTURE]
[FACE OF SHORT-TERM DEBENTURE]
THIS CERTIFICATE IS NOT TRANSFERABLE. ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL. ANY
TRANSFEREE OF THIS CERTIFICATE SHALL BE DEEMED NOT TO BE A HOLDER OF SUCH
SHORT-TERM DEBENTURES FOR ANY PURPOSE, AND SUCH TRANSFEREE SHALL BE DEEMED TO
HAVE NO INTEREST WHATSOEVER IN SUCH SHORT-TERM DEBENTURES.
SOVEREIGN BANCORP, INC.
4.375% Junior Subordinated Deferrable Interest Debenture due
_____________
Certificate No.:
Maturity Date: CUSIP No.:____________.
This Debenture is one of a duly authorized series of Debt
Securities of Sovereign Bancorp, Inc. (the "Debentures"), all issued under and
pursuant to an Indenture dated as of September 1, 1999, duly executed and
delivered by Sovereign Bancorp, Inc., a Pennsylvania corporation (the "Company",
which term includes any successor corporation under the Indenture hereinafter
referred to) and BNY Midwest Trust Company (as successor to ▇▇▇▇▇▇ Trust and
Savings Bank), an Illinois trust company, as Trustee (the "Trustee"), as
supplemented by the Third Supplemental Indenture thereto dated as of February
26, 2004, between the Company and the Trustee (such Indenture as so
supplemented, the "Indenture"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the Holders of the Debentures. By the terms of the
Indenture, the Debt Securities are issuable in series that may vary as to
amount, date of maturity, rate of interest and in other respects as provided in
the Indenture.
The Company, for value received, hereby promises to pay
_______________, or its registered assigns, the principal sum of
__________________________ U.S. Dollars ($______________) on ___________ (the
"Accelerated Maturity Date").
Interest Payment Date: Next to occur of March 1, June 1,
September 1 and December 1.
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Reference is hereby made to the further provisions of this
Debenture set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Debenture to
be duly executed manually or by facsimile by its duly authorized officers.
SOVEREIGN BANCORP, INC.
By:_______________________________
Name:
Title:
By:_______________________________
Name:
Title:
Trustee's Certificate of Authentication
This is one of the 4.375% Subordinated Junior
Deferrable Interest Debentures due
____________ referred to in the
within-mentioned Indenture.
BNY Midwest Trust Company
(as successor to ▇▇▇▇▇▇
TRUST AND SAVINGS BANK),
as Trustee
By:________________________
Authorized Officer
Dated:
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[REVERSE OF DEBENTURE]
SOVEREIGN BANCORP, INC.
4.375% Subordinated Junior Deferrable Interest Debentures due
_____________.
Capitalized terms used herein but not defined shall have the
meanings assigned to them in the Indenture referred to below unless otherwise
indicated.
1. Principal and Interest.
Sovereign Bancorp, Inc., a Pennsylvania corporation (the
"Company"), promises to pay interest on the principal amount of this Debenture
at the Coupon Rate from and including ____________, to, but excluding,
_____________ (the "Accelerated Maturity Date"). The Company will pay interest
on this Debenture in arrears on the next to occur of March 1, June 1, September
1 and December 1 (the "Interest Payment Date"). Interest not paid on the
scheduled Interest Payment Date will accrue and compound quarterly at the Coupon
Rate.
Interest on the Debentures shall be computed (i) for any full
quarterly 90-day period on the basis of a 360-day year of twelve 30-day months,
(ii) for any period shorter than a full quarterly 90-day period, on the basis of
a 30-day month and (iii) for any period less than a 30-day month, on the basis
of the actual number of days elapsed in the 30-day month.
2. Optional Deferral of Interest.
As long as no Event of Default has occurred and is continuing,
the Company has the right, at any time and from time to time to defer payments
of interest on the Debentures by extending the interest payment period on the
Debentures for a period (each, an "Extension Period") not exceeding 20
consecutive quarterly periods, during which Extension Period no interest shall
be due and payable on the Debentures, provided that no Extension Period shall
end on a date other than an Interest Payment Date for the Debentures or extend
beyond the Accelerated Maturity Date. Despite such deferral, interest shall
continue to accrue with additional interest thereon (to the extent permitted by
applicable law) at the Coupon Rate compounded quarterly during any such
Extension Period ("Compounded Interest"). Prior to the termination of any such
Extension Period, the Company may further defer payments of interest by further
extending such Extension Period; provided that such Extension Period, together
with all such previous and further extensions of such Extension Period, may not
exceed 20 consecutive quarterly periods or extend beyond the Accelerated
Maturity Date. At the termination of any Extension Period, the Company shall pay
all interest then accrued and unpaid, plus Compounded Interest. Upon the
termination of any Extension Period and the payment of all amounts then due, the
Company may commence a new Extension Period, subject to the above requirements.
During an Extension Period, the Company may not, and will not
permit any subsidiary to:
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(a) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect
to, any of its capital stock; or
(b) make any payment of principal or premium (if any) of,
or interest on, or repay, repurchase or redeem any debt securities of
the Company that rank on a parity with or junior in interest to the
Debentures or make any guarantee payments with respect to any guarantee
by the Company of the debt securities of any subsidiary of the Company
if such guarantee ranks on a parity with or junior in interest to the
Debentures; in each case, other than:
(i) dividends or distributions payable in the Company's
capital stock, or options, warrants or rights to acquire capital stock
of the Company, or repurchases or redemptions of capital stock of the
Company solely from the issuance or exchange of capital stock of the
Company;
(ii) payments under the Trust PIERS Guarantee;
(iii) the payment of any dividend within 60 days after the
date of declaration of the dividend if, at the date of declaration, (x)
if paid on that date, the payment of the dividend would not have been
prohibited by an election to defer interest payments and (y) the
declaration was in accordance with the Company's dividend policy in
effect immediately prior to its declaration of the dividend;
(iv) any declarations of a dividend in connection with the
implementation of a shareholders' rights plan, or the issuances of
stock under any such plan in the future, or redemptions or repurchases
of any rights pursuant to a rights agreement;
(v) purchases or acquisitions of capital stock of the
Company in connection with the satisfaction by the Company of its
obligations under any employee, director or agent benefit plans or any
dividend reinvestment or stock purchase plan;
(vi) in connection with the reclassification of any class
or series of the Company's capital stock, or the exchange or conversion
of one class or series of the Company's capital stock for or into
another class or series of its capital stock;
(vii) the purchase of fractional interests in shares of the
Company's capital stock in connection with the conversion or exchange
provisions of that capital stock or the security being converted or
exchanged; and
(viii) repurchases of capital stock of the Company in
connection with the satisfaction by the Company of its obligations
pursuant to any acquisitions of businesses made by the Company (which
repurchases are made in connection with the satisfaction of
indemnification obligations of the sellers of such businesses).
3. Method of Payment.
A-2-4
Interest on any Debenture which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to the
person in whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest.
4. Paying Agent and Security Registrar.
Initially, BNY Midwest Trust Company, the Trustee, will act as
Paying Agent and Security Registrar. The Company may change the Paying Agent and
Security Registrar without notice to any Holder.
5. Indenture.
The Company issued this Debenture under an Indenture, dated as
of September 1, 1999 (the "Base Indenture"), between the Company and BNY Midwest
Trust Company (as successor to ▇▇▇▇▇▇ Trust and Savings Bank), as trustee (the
"Trustee"), as amended and supplemented by the Third Supplemental Indenture,
dated as of February 26, 2004 (the "Third Supplemental Indenture", together with
the Base Indenture, the "Indenture"), between the Company and the Trustee. The
provisions of this Debenture are subject to the more detailed provisions of the
Indenture.
6. Redemption.
The Company may redeem the Debentures, in whole but not in
part, at any time on or after March 5, 2007, provided that the Company elects to
cause the redemption of the Trust PIERS and provided certain other conditions
pertaining to legal and regulatory authority for such redemption are satisfied.
The Company may also redeem the Debentures in whole, but not
in part, upon the occurrence and during the continuance of a Special Event (as
defined in the Third Supplemental Indenture) within 93 days of such Special
Event, provided the Special Event cannot be rectified and certain other
conditions are satisfied, including receipt of a favorable tax opinion and
consent by the Company.
In each case, the redemption price will be equal to 100% of
the principal amount to be redeemed, plus accrued interest thereon to the date
of redemption.
7. Sinking Fund.
The Debentures will not be subject to a sinking fund
provision.
8. Subordination.
The payment of principal of and interest on this Debenture is,
to the extent and in the manner provided in the Indenture, subordinated and
subject in right of payment to the prior payment in full of all amounts then due
on all Senior Indebtedness of the Company, and this Debenture is issued subject
to such subordination provisions of the Indenture with respect
A-2-5
thereto. Each Holder of this Debenture, by accepting the same, (a) agrees to and
shall be bound by such provisions, (b) authorizes and directs the Trustee on
such Holder's behalf to take such action as may be necessary or appropriate to
effectuate the subordination so provided and (c) appoints the Trustee such
Holder's attorney-in-fact for any and all such purposes.
9. Defaults and Remedies.
The Indenture provides that an Event of Default with respect
to the Debentures occurs when any of the following occurs:
(a) the Company defaults in the payment of the principal
of any of the Debentures when it becomes due and payable at the
Maturity Date or otherwise, whether or not such payment is prohibited
by the subordination provisions of Article 6 of the Third Supplemental
Indenture;
(b) the Company defaults in the payment of interest on
any of the Debentures when it becomes due and payable and such default
continues for a period of 30 days after written notice has been given
as provided in the Indenture, whether or not such payment is prohibited
by the subordination provisions of Article 6 of the Third Supplemental
Indenture; provided, however, that a valid extension of the interest
payment period does not constitute a default in the payment of
interest;
(c) the Company fails to perform or observe any other
term, covenant or agreement contained in the Debentures or the
Indenture (other than a covenant included in the Indenture solely for
the benefit of any series of Debt Securities other than the Debentures)
and such default continues for a period of 90 days after written notice
of such failure is given as specified in the Indenture;
(d) there are certain events of bankruptcy, insolvency or
reorganization of the Company; or
(e) the voluntarily or involuntarily dissolution,
winding-up or termination of the Trust, except in connection with:
(i) the distribution of the Debentures held by the Trust
to the holders of the Trust Securities in liquidation of their
interests in the Trust;
(ii) the redemption of all of the outstanding Trust
Securities; or
(iii) certain mergers, consolidations, conversions,
amalgamations, replacements or other transactions involving the Trust,
each as permitted under the Declaration.
If an Event of Default shall occur and be continuing, the
principal of all of the Debentures may be declared due and payable, in the
manner and with the effect provided in the Indenture.
A-2-6
10. Amendment; Supplement; Waiver.
The Indenture contains provisions permitting the Company and
the Trustee, without the consent of any Holder, to execute supplemental
indentures modifying certain provisions of the Indenture, provided that no such
modification has a material adverse effect on the interests of the Holders.
In addition, the Indenture contains provisions permitting the
Company and the Trustee, with the consent of the Holders of not less than a
majority in aggregate principal amount of the Debentures and all other series of
Debt Securities affected at the time Outstanding, to execute supplemental
indentures for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of the Indenture or of any supplemental
indenture or of modifying in any manner the rights of the Holders of the
Debentures; provided, however, that no such supplemental indenture may, without
the consent of the Holder of each outstanding Debenture, among other things:
(i) change the Stated Maturity of the principal of, or
the time of payment of any installment of interest on, any Debenture;
(ii) reduce the principal amount of, or the rate of
interest on, any Debenture;
(iii) change the place of payment where the Debentures or
any interest thereon is payable or the currency in which it is payable;
(iv) change the transfer restrictions on the Debentures to
allow the Warrants to be transferred separately;
(v) impair the right to institute suit for the
enforcement of any such payment on or with respect to the Debentures;
(vi) reduce the above-stated percentage of principal
amount of Debentures, the Holders of which are required to modify or
amend the Indenture, to consent to any waiver thereunder or to approve
any supplemental indenture;
(vii) release the Company from any of its obligations under
the Guarantee or the Indenture, except in accordance with the
Indenture;
(viii) change any obligation of the Company to maintain an
office or agency in the place and for the purposes required by the
Indenture; or
(ix) modify any of the above provisions except (a) to
increase the percentage in principal amount of outstanding Debentures
necessary for such actions or (b) to provide that certain other
provisions of the Indenture cannot be modified or waived without the
consent of the Holders;
and provided, further, that no such supplemental indenture shall be effective
until the holders of not less than 66 2/3% of the aggregate stated liquidation
amount of the Trust Securities shall
A-2-7
have consented to such supplemental indenture; and provided, further, that where
the consent of the Holders of not less than 66 2/3% of the aggregate principal
amount of the Debentures is required under the Indenture, no such supplemental
indenture shall be effective until the holders of at least the same proportion
in aggregate stated liquidation amount of the Trust Securities shall have
consented to such supplemental indenture.
The Indenture also contains provisions permitting the Holders
of a majority in aggregate principal amount of the Debentures at the time
Outstanding affected thereby, on behalf of all of the Holders of the Debentures,
to waive any past default in the performance of any of the covenants contained
in the Indenture, or established pursuant to the Indenture with respect to the
Debentures, and its consequences, except a default in the payment of the
principal of or interest on any of the Debentures (unless cured as provided in
the Indenture) or in respect of a covenant or provision that cannot be modified
or amended without the consent of the Holders of each Debenture then
Outstanding. Any such consent or waiver by the registered Holder of this
Debenture (unless revoked as provided in the Indenture) shall be conclusive and
binding upon such Holder and upon all future Holders and owners of this
Debenture and of any Debenture issued in exchange herefor or in place hereof
(whether by registration of transfer or otherwise), irrespective of whether or
not any notation of such consent or waiver is made upon this Debenture.
11. Restrictive Covenants.
The Indenture requires the Company, for as long as the Trust
PIERS remain outstanding, to:
(f) maintain, directly or indirectly, 100% ownership of
the Common Securities; provided, however, that any permitted successor
of the Company may succeed to the Company's ownership of such Common
Securities;
(g) cause the Trust to (i) remain a Delaware statutory
trust, except in connection with the distribution of the Debentures to
the Holders, the redemption of all of the Securities, or certain
mergers, consolidations, conversions or amalgamations, each as
permitted by the Declaration, (ii) not voluntarily dissolve, wind up,
liquidate or be terminated, except as permitted by the Declaration and
(iii) otherwise continue to be classified as a grantor trust for United
States federal income tax purposes;
(h) use its commercially reasonable efforts to ensure
that the Trust will not be an "investment company" required to be
registered under the Investment Company Act of 1940, as amended; and
(i) not take any action that would be reasonably likely
to cause the Trust to be classified as an association or a publicly
traded partnership taxable as a corporation for United States federal
income tax purposes.
The Indenture also imposes certain limitations on the ability
of the Company to, among other things, merge, consolidate or sell, assign,
transfer or lease all or substantially all of its properties or assets. Such
covenants and limitations are subject to a number of important
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qualifications and exceptions. The Company must report periodically to the
Trustee on compliance with the covenants in the Indenture.
12. Denomination; Transfer; Exchange.
The Debentures of this series are issuable only in registered
form without coupons in denominations of $50 and any integral multiple thereof.
This Debenture is not transferable by the registered Holder
hereof.
13. Persons Deemed Owners.
The registered Holder of this Debenture shall be treated as
its owner for all purposes.
14. Defeasance.
Subject to certain conditions contained in the Indenture, at
any time some or all of the Debentures and the Indenture may be terminated if
the Company deposits with the Trustee money and/or Eligible Instruments
(including U.S. Government Obligations) sufficient to pay the principal of and
interest on the Debentures to the Maturity Date.
15. No Recourse Against Others.
No recourse shall be had for the payment of the principal of
or the interest on this Debenture, or for any claim based hereon, or otherwise
in respect hereof, or based on or in respect of the Indenture, against any
incorporator, shareholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
16. Authentication.
This Debenture shall not be valid until the Trustee (or
authenticating agent) executes the certificate of authentication on the other
side of this Debenture.
17 Governing Law.
The Indenture and this Debenture shall be governed by, and
construed in accordance with, the laws of the Commonwealth of Pennsylvania.
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EXHIBIT "B"
Projected Payment Schedule
B-1