SOVEREIGN BANCORP, INC.
______________________________
______________________________
INDENTURE
Dated as of March 1, 1997
______________________________
THE BANK OF NEW YORK
as Trustee
______________________________
▇▇▇▇▇▇ SUBORDINATED DEFERRABLE INTEREST DEBENTURES
TIE-SHEET
Reconciliation and tie of provisions of Trust Indenture Act
of 1939 with Indenture dated as of March 1, 1997 between Sover-
eign Bancorp, Inc. and The Bank of New York, Trustee:
ACT SECTION INDENTURE Section
310(a)(1)............................................6.09
(a)(2)............................................6.09
310(a)(3)............................................N/A
(a)(4)............................................N/A
310(a)(5)............................................6.10, 6.11
310(b)...............................................N/A
310(c)...............................................6.13
311(a) and (b).......................................N/A
311(c)..............................................4.01, 4.02(a)
312(a)..............................................4.02
312(b) and (c)......................................4.04
313(a)..............................................4.04
313(b)(1)...........................................4.04
313(b)(2)...........................................4.04
313(c)..............................................4.04
313(d)..............................................4.04
314(a)..............................................4.03
314(b)..............................................N/A
314(c)(1) and (2)...................................6.07
314(c)(3)...........................................N/A
314(d)..............................................N/A
314(e)..............................................6.07
314(f)..............................................N/A
315(a)(c) and (d)...................................6.01
315(b)..............................................5.08
315(e)..............................................5.09
316(a)(1)...........................................5.07
316(a)(2)...........................................N/A
316(a) last sentence................................2.09
316(b)..............................................9.02
317(a)..............................................5.05
317(b)..............................................6.05
318(a)..............................................13.08
THIS TIE-SHEET IS NOT PART OF THE INDENTURE AS EXECUTED.
TABLE OF CONTENTS*
Page
ARTICLE I
DEFINITIONS................................................. 1
SECTION 1.01. Definitions.................................. 1
Additional Sums........................................ 2
Adjusted Treasury Rate................................. 2
Affiliate.............................................. 2
Allocable Amounts...................................... 3
Authenticating Agent................................... 3
Bankruptcy Law......................................... 3
Board of Directors..................................... 3
Board Resolution....................................... 3
Business Day........................................... 4
Capital Securities..................................... 4
Capital Securities Guarantee........................... 4
Commission............................................. 4
Common Securities...................................... 4
Common Securities Guarantee............................ 5
Common Stock........................................... 5
Company................................................ 5
Company Request........................................ 5
Comparable Treasury Issue.............................. 5
Comparable Treasury Price.............................. 6
Compounded Interest.................................... 6
Custodian.............................................. 6
Default................................................ 6
Deferred Interest...................................... 6
Definitive Securities.................................. 6
Depositary............................................. 7
Dissolution Event...................................... 7
Event of Default....................................... 7
Exchange Act........................................... 7
Exchange Offer......................................... 7
Extended Interest Payment Period....................... 7
Federal Reserve........................................ 7
Global Security........................................ 8
Indebtedness for Money Borrowed........................ 8
Indebtedness Ranking on a Parity with the Securities... 8
Indebtedness Ranking Junior to the Securities.......... 8
Indenture.............................................. 9
Interest Payment Date.................................. 9
Liquidated Damages..................................... 9
Maturity Date.......................................... 9
Mortgage............................................... 9
Non Book-Entry Capital Securities...................... 9
Officers............................................... 9
Officers' Certificate.................................. 9
Opinion of Counsel..................................... 10
Optional Redemption Price.............................. 10
Other Debentures....................................... 10
Other Guarantees....................................... 10
outstanding............................................ 10
Person................................................. 11
Predecessor Security................................... 11
Principal Office of the Trustee........................ 11
Purchase Agreement..................................... 11
Property Trustee....................................... 11
Quotation Agent........................................ 12
Redemption Price....................................... 12
Reference Treasury Dealer.............................. 12
Reference Treasury Dealer Quotations................... 12
Registration Rights Agreement.......................... 12
Regulatory Capital Event............................... 12
Responsible Officer.................................... 13
Restricted Security.................................... 13
Rule 144A.............................................. 13
Securities............................................. 13
Securities Act......................................... 13
Securityholder......................................... 13
holder of Securities................................... 13
Security Register...................................... 14
Senior Indebtedness.................................... 14
Series A Securities.................................... 14
Series B Securities.................................... 14
Sovereign Capital Trust................................ 14
Special Event.......................................... 14
Special Event Redemption Price......................... 14
Subsidiary............................................. 15
Trust Agreement........................................ 15
Tax Event.............................................. 16
Trustee................................................ 16
Trust Indenture Act of 1939............................ 16
Trust Securities....................................... 16
U.S. Government Obligations............................ 17
ARTICLE II
SECURITIES.................................................. 17
SECTION 2.01. Forms Generally......................... 17
SECTION 2.02. Execution and Authentication............ 18
SECTION 2.03. Form and Payment........................ 18
SECTION 2.04. Legends................................. 19
SECTION 2.05. Global Security......................... 20
SECTION 2.06. Interest................................ 22
SECTION 2.07. Transfer and Exchange................... 23
SECTION 2.08. Replacement Securities.................. 26
SECTION 2.09. Temporary Securities.................... 27
SECTION 2.10. Cancellation............................ 28
SECTION 2.11. Defaulted Interest...................... 28
SECTION 2.12. CUSIP Numbers........................... 30
ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY......................... 30
SECTION 3.01. Payment of Principal, Premium and
Interest........................... 30
SECTION 3.02. Offices for Notices and Payments, etc... 31
SECTION 3.03. Appointments to Fill Vacancies in Trustee's
Office.................................. 32
SECTION 3.04. Provision as to Paying Agent............ 32
SECTION 3.05. Certificate to Trustee.................. 33
SECTION 3.06. Compliance with Consolidation
Provisions......................... 34
SECTION 3.07. Limitation on Dividends................. 34
SECTION 3.08. Covenants as to Sovereign Capital Trust. 35
SECTION 3.09. Payment of Expenses..................... 36
SECTION 3.10. Payment Upon Resignation or Removal..... 37
ARTICLE IV
SECURITYHOLDERS' LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE..................................... 39
SECTION 4.01. Securityholders' Lists.................. 39
SECTION 4.02. Preservation and Disclosure of Lists.... 39
SECTION 4.03. Reports by Company...................... 42
SECTION 4.04. Reports by the Trustee.................. 44
ARTICLE V
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT......................................... 45
SECTION 5.01. Events of Default....................... 45
SECTION 5.02. Payment of Securities on Default; Suit
Therefor................................ 48
SECTION 5.03. Application of Moneys Collected by
Trustee................................. 51
SECTION 5.04. Proceedings by Securityholders.......... 52
SECTION 5.05. Proceedings by Trustee.................. 54
SECTION 5.06. Remedies Cumulative and Continuing...... 54
SECTION 5.07. Direction of Proceedings and ▇▇▇▇▇▇ of
Defaults by Majority of Securityholders. 55
SECTION 5.08. Notice of Defaults...................... 56
SECTION 5.09. Undertaking to Pay Costs................ 57
ARTICLE VI
CONCERNING THE TRUSTEE...................................... 58
SECTION 6.01. Duties and Responsibilities of Trustee.. 58
SECTION 6.02. Reliance on Documents, Opinions, etc.... 60
SECTION 6.03. No Responsibility for Recitals, etc..... 62
SECTION 6.04. Trustee, Authenticating Agent, Paying Agents,
Transfer Agents or Registrar May Own
Securities.............................. 62
SECTION 6.05. Moneys to be Held in Trust.............. 63
SECTION 6.06. Compensation and Expenses of Trustee.... 63
SECTION 6.07. Officers' Certificate as Evidence....... 64
SECTION 6.08. Conflicting Interest of Trustee......... 65
SECTION 6.09. Eligibility of Trustee.................. 65
SECTION 6.10. Resignation or Removal of Trustee....... 66
SECTION 6.11. Acceptance by Successor Trustee......... 68
SECTION 6.12. Succession by ▇▇▇▇▇▇, etc............... 69
SECTION 6.13. Limitation on Rights of Trustee as a
Creditor................................ 70
SECTION 6.14. Authenticating Agents................... 70
ARTICLE VII
CONCERNING THE SECURITYHOLDERS.............................. 72
SECTION 7.01. Action by Securityholders............... 72
SECTION 7.02. Proof of Execution by Securityholders... 73
SECTION 7.03. Who Are Deemed Absolute Owners.......... 74
SECTION 7.04. Securities Owned by Company Deemed Not
Outstanding............................. 74
SECTION 7.05. Revocation of Consents; Future Holders
Bound................................... 75
ARTICLE VIII
SECURITYHOLDERS' MEETINGS................................... 76
SECTION 8.01. Purposes of Meetings.................... 76
SECTION 8.02. Call of Meetings by Trustee............. 77
SECTION 8.03. Call of Meetings by Company or
Securityholders......................... 77
SECTION 8.04. Qualifications for Voting............... 77
SECTION 8.05. Regulations............................. 78
SECTION 8.06. Voting.................................. 79
ARTICLE IX
AMENDMENTS.................................................. 80
SECTION 9.01. Without Consent of Securityholders...... 80
SECTION 9.02. With Consent of Securityholders......... 82
SECTION 9.03. Compliance with Trust Indenture Act;
Effect of Supplemental Indentures....... 84
SECTION 9.04. Notation on Securities.................. 84
SECTION 9.05. Evidence of Compliance of Supplemental
Indenture to be Furnished Trustee....... 85
ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE.......... 85
SECTION 10.01. Company May Consolidate, etc., on Certain
Terms................................... 85
SECTION 10.02. Successor Corporation to be Substituted for
Company................................. 86
SECTION 10.03. Opinion of Counsel to be Given Trustee.. 87
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE..................... 87
SECTION 11.01. Discharge of Indenture.................. 87
SECTION 11.02. Deposited Moneys and U.S. Government
Obligations to be Held in Trust by
Trustee................................. 88
SECTION 11.03. Paying Agent to Repay Moneys Held....... 89
SECTION 11.04. Return of Unclaimed Moneys.............. 89
SECTION 11.05. Defeasance Upon Deposit of Moneys or U.S.
Government Obligations.................. 90
ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS...................................... 92
SECTION 12.01. Indenture and Securities Solely Corporate
Obligations............................. 92
ARTICLE XIII
MISCELLANEOUS PROVISIONS.................................... 93
SECTION 13.01. Successors.............................. 93
SECTION 13.02. Official Acts by Successor Corporation.. 93
SECTION 13.03. Surrender of Company Powers............. 94
SECTION 13.04. Addresses for Notices, etc.............. 94
SECTION 13.05. Governing Law........................... 94
SECTION 13.06. Evidence of Compliance with Conditions
Precedent............................... 95
SECTION 13.07. Business Days........................... 95
SECTION 13.08. Trust Indenture Act to Control.......... 96
SECTION 13.09. Table of Contents, Headings, etc........ 96
SECTION 13.10. Execution in Counterparts............... 96
SECTION 13.11. Separability............................ 96
SECTION 13.12. Assignment.............................. 97
SECTION 13.13. Acknowledgement of Rights............... 97
ARTICLE XIV
REDEMPTION OF SECURITIES -- MANDATORY AND
OPTIONAL SINKING FUND....................................... 98
SECTION 14.01. Special Event Redemption................ 98
SECTION 14.02. Optional Redemption by Company.......... 98
SECTION 14.03. No Sinking Fund.........................100
SECTION 14.04. Notice of Redemption; Selection of Secu-
rities..................................100
SECTION 14.05. Payment of Securities Called for Redemp-
tion....................................101
ARTICLE XV
SUBORDINATION OF SECURITIES.................................102
SECTION 15.01. Agreement to Subordinate................102
SECTION 15.02. Default on Senior Indebtedness..........103
SECTION 15.03. Liquidation; Dissolution; Bankruptcy....104
SECTION 15.04. Subrogation.............................106
SECTION 15.05. Trustee to Effectuate Subordination.....108
SECTION 15.06. Notice by the Company...................108
SECTION 15.07. Rights of the Trustee; Holders of Senior
Indebtedness............................110
SECTION 15.08. Subordination May Not Be Impaired.......111
ARTICLE XVI
EXTENSION OF INTEREST PAYMENT PERIOD........................112
SECTION 16.01. Extension of Interest Payment Period....112
SECTION 16.02. Notice of Extension.....................113
EXHIBIT A...................................................A-1
Testimonium
Signatures
Acknowledgements
* THIS TABLE OF CONTENTS SHALL NOT, FOR ANY PURPOSE, BE DEEMED
TO BE A PART OF THE INDENTURE.
THIS INDENTURE, dated as of March 1, 1997, between
Sovereign Bancorp, Inc., a Pennsylvania corporation (hereinafter
sometimes called the "Company"), and The Bank of New York, a New
York banking corporation, as trustee (hereinafter sometimes
called the "Trustee"),
W I T N E S S E T H :
In consideration of the premises, and the purchase of
the Securities by the holders thereof, the Company covenants and
agrees with the Trustee for the equal and proportionate benefit
of the respective holders from time to time of the Securities, as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.
The terms defined in this Section 1.01 (except as
herein otherwise expressly provided or unless the context other-
wise requires) for all purposes of this Indenture shall have the
respective meanings specified in this Section 1.01. All other
terms used in this Indenture which are defined in the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), or
which are by reference therein defined in the Securities Act,
shall (except as herein otherwise expressly provided or unless
the context otherwise requires) have the meanings assigned to
such terms in said Trust Indenture Act and in said Securities Act
as in force at the date of this Indenture as originally executed.
The following terms have the meanings given to them in the Trust
Agreement: (i) Clearing Agency; (ii) Delaware Trustee;
(iii) Capital Security Certificate; (iv) Property Trustee;
(v) Administrative Trustees; (vi) Series A Capital Securities;
(vii) Series B Capital Securities; (viii) Direct Action; and
(ix) Distributions. All accounting terms used herein and not
expressly defined shall have the meanings assigned to such terms
in accordance with generally accepted accounting principles and
the term "generally accepted accounting principles" means such
accounting principles as are generally accepted at the time of
any computation. The words "herein", "hereof" and "hereunder"
and other words of similar import refer to this Indenture as a
whole and not to any particular Article, Section or other subdi-
vision. Headings are used for convenience of reference only and
do not affect interpretation. The singular includes the plural
and vice versa.
"Additional Sums" shall have the meaning set forth in
Section 2.06(c).
"Adjusted Treasury Rate" means, with respect to any
redemption date pursuant to Section 14.01, the rate per annum
equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable
Treasury Issue (expressed as a percentage of its principal
amount) equal to the Comparable Treasury Price for such redemp-
tion date plus (i) 1.85% if such redemption date occurs on or
prior to April 1, 1998 and (ii) 0.50% in all other cases.
"Affiliate" means, with respect to a specified Person,
(a) any Person directly or indirectly owning, controlling or
holding the power to vote 10% or more of the outstanding voting
securities or other ownership interests of the specified Person,
(b) any Person 10% or more of whose outstanding voting securities
or other ownership interests are directly or indirectly owned,
controlled or held with power to vote by the specified Person,
(c) any Person directly or indirectly controlling, controlled by,
or under common control with the specified Person, (d) a partner-
ship in which the specified Person is a general partner, (e) any
officer or director of the specified Person, and (f) if the
specified Person is an individual, any entity of which the
specified Person is an officer, director or general partner.
"Allocable Amounts," when used with respect to any
Senior Indebtedness, means all amounts due or to become due on
such Senior Indebtedness less, if applicable, any amount which
would have been paid to, and retained by, the holders of such
Senior Indebtedness (whether as a result of the receipt of
payments by the holders of such Senior Indebtedness from the
Company or any other obligor thereon or from any holders of, or
trustee in respect of, other indebtedness that is subordinate and
junior in right of payment to such Senior Indebtedness pursuant
to any provision of such indebtedness for the payment over of
amounts received on account of such indebtedness to the holders
of such Senior Indebtedness or otherwise) but for the fact that
such Senior Indebtedness is subordinate or junior in right of
payment to (or subject to a requirement that amounts received on
such Senior Indebtedness be paid over to obligees on) trade
accounts payable or accrued liabilities arising in the ordinary
course of business.
"Authenticating Agent" shall mean any agent or agents
of the Trustee which at the time shall be appointed and acting
pursuant to Section 6.14.
"Bankruptcy Law" shall mean Title 11, U.S. Code, or any
similar federal or state law for the relief of debtors.
"Board of Directors" shall mean either the Board of
Directors of the Company or any duly authorized committee of that
board.
"Board Resolution" shall mean a copy of a resolution
certified by the Secretary or an Assistant Secretary of the
Company to have been duly adopted by the Board of Directors and
to be in full force and effect on the date of such certification,
and delivered to the Trustee.
"Business Day" shall mean, with respect to any series
of Securities, any day other than a Saturday or a Sunday or a day
on which banking institutions in The City of New York are autho-
rized or required by law or executive order to close.
"Capital Securities" shall mean undivided beneficial
interests in the assets of Sovereign Capital Trust which rank
pari passu with the Common Securities issued by Sovereign Capital
Trust; provided, however, that if an Event of Default has oc-
curred and is continuing, no payments in respect of Distributions
on, or payments upon liquidation, redemption or otherwise with
respect to, the Common Securities shall be made until the holders
of the Capital Securities shall be paid in full the Distributions
and the liquidation, redemption and other payments to which they
are entitled. References to "Capital Securities" shall include
collectively any Series A Capital Securities and Series B Capital
Securities.
"Capital Securities Guarantee" shall mean any guarantee
that the Company may enter into with The Bank of New York or
other Persons that operates directly or indirectly for the
benefit of holders of Capital Securities of Sovereign Capital
Trust and shall include a Series A Capital Securities Guarantee
and a Series B Capital Securities Guarantee with respect to the
Series A Capital Securities and the Series B Capital Securities,
respectively.
"Commission" shall mean the Securities and Exchange
Commission, as from time to time constituted, created under the
Exchange Act, or if at any time after the execution of this
Indenture such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Securities" shall mean undivided beneficial
interests in the assets of Sovereign Capital Trust which rank
pari passu with Capital Securities issued by Sovereign Capital
Trust; provided, however, that if an Event of Default has oc-
curred and is continuing, no payments in respect of Distributions
on, or payments upon liquidation, redemption or otherwise with
respect to, the Common Securities shall be made until the holders
of the Capital Securities shall be paid in full the Distributions
and the liquidation, redemption and other payments to which they
are entitled.
"Common Securities Guarantee" shall mean any guarantee
that the Company may enter into with any Person or Persons that
operates directly or indirectly for the benefit of holders of
Common Securities of Sovereign Capital Trust.
"Common Stock" shall mean the Common Stock, no par
value, of the Company or any other class of stock resulting from
changes or reclassifications of such Common Stock consisting
solely of changes in par value, or from par value to no par
value, or from no par value to par value.
"Company" shall mean Sovereign Bancorp, Inc., a Penn-
sylvania corporation, and, subject to the provisions of Article
X, shall include its successors and assigns.
"Company Request" or "Company Order" shall mean a
written request or order signed in the name of the Company by the
Chairman, the Chief Executive Officer, the President, a Vice
Chairman, a Vice President, the Treasurer, the Comptroller, the
Secretary or an Assistant Secretary of the Company, and delivered
to the Trustee.
"Comparable Treasury Issue" means the United States
Treasury security selected by the Quotation Agent as having a
maturity comparable to the remaining term of the Securities to be
redeemed that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the
remaining term of the Securities.
"Comparable Treasury Price" means, with respect to any
redemption date pursuant to Section 14.01, (i) the average of the
bid and asked prices for the Comparable Treasury Issue (expressed
in each case as a percentage of its principal amount) on the
third Business Day preceding such redemption date, as set forth
in the daily statistical release (or any successor re-
lease) published by the Federal Reserve Bank of New York and
designated "Composite 3:30 p.m. Quotations for U.S. Government
Securities" or (ii) if such release (or any successor release) is
not published or does not contain such prices on such Business
Day, (A) the average of the Reference Treasury Dealer Quotations
for such redemption date, after excluding the highest and lowest
such Reference Treasury Dealer Quotations, or (B) if the Trustee
obtains fewer than three such Reference Treasury Dealer Quota-
tions, the average of all such Quotations.
"Compounded Interest" shall have the meaning set forth
in Section 16.01.
"Custodian" shall mean any receiver, trustee, assignee,
liquidator, or similar official under any Bankruptcy Law.
"Default" means any event, act or condition that with
notice or lapse of time, or both, would constitute an Event of
Default.
"Deferred Interest" shall have the meaning set forth in
Section 16.01.
"Definitive Securities" shall mean those securities
issued in fully registered certificated form not otherwise in
global form.
"Depositary" shall mean, with respect to Securities of
any series, for which the Company shall determine that such
Securities will be issued as a Global Security, The Depository
Trust Company, New York, New York, another clearing agency, or
any successor registered as a clearing agency under the Exchange
Act or other applicable statute or regulation, which, in each
case, shall be designated by the Company pursuant to
Section 2.05(d).
"Dissolution Event" means the liquidation of Sovereign
Capital Trust pursuant to the Trust Agreement, and the distribu-
tion of the Securities held by the Property Trustee to the
holders of the Trust Securities issued by Sovereign Capital Trust
pro rata in accordance with the Trust Agreement.
"Event of Default" shall mean any event specified in
Section 5.01, continued for the period of time, if any, and after
the giving of the notice, if any, therein designated.
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
"Exchange Offer" means the offer that may be made
pursuant to the Registration Rights Agreement (i) by the Company
to exchange Series B Securities for Series A Securities and to
exchange a Series B Capital Securities Guarantee for a Series A
Capital Securities Guarantee and (ii) by Sovereign Capital Trust
to exchange Series B Capital Securities for Series A Capital
Securities.
"Extended Interest Payment Period" shall have the
meaning set forth in Section 16.01.
"Federal Reserve" shall mean the Board of Governors of
the Federal Reserve System.
"Global Security" means, with respect to the Securi-
ties, a Security executed by the Company and delivered by the
Trustee to the Depositary or pursuant to the Depositary's in-
struction, all in accordance with the Indenture, which shall be
registered in the name of the Depositary or its nominee.
"Indebtedness for Money Borrowed" shall mean any
obligation of, or any obligation guaranteed by, the Company for
the repayment of borrowed money, whether or not evidenced by
bonds, debentures, notes or other written instruments.
"Indebtedness Ranking on a Parity with the Securities"
shall mean (i) Indebtedness for Money Borrowed, whether outstand-
ing on the date of execution of this Indenture or hereafter
created, assumed or incurred, which specifically by its terms
ranks equally with and not prior to the Securities in the right
of payment upon the happening of any dissolution or winding up or
liquidation or reorganization of the Company, (ii) all other debt
securities, and guarantees in respect of those debt securities,
issued to any trust other than Sovereign Capital Trust, or a
partnership or other entity affiliated with the Company that is a
financing vehicle of the Company (a "financing entity") in
connection with the issuance by such financing entity of equity
securities or other securities guaranteed by the Company pursuant
to an instrument that ranks pari passu with or junior in right of
payment to the Capital Securities Guarantee.
"Indebtedness Ranking Junior to the Securities" shall
mean any Indebtedness for Money Borrowed, whether outstanding on
the date of execution of this Indenture or hereafter created,
assumed or incurred, which specifically by its terms ranks junior
to and not equally with or prior to the Securities (and any other
Indebtedness Ranking on a Parity with the Securities) in right of
payment upon the happening of any dissolution or winding up or
liquidation or reorganization of the Company. The securing of
any Indebtedness for Money Borrowed of the Company, otherwise
constituting Indebtedness Ranking on a Parity with the Securities
or Indebtedness Ranking Junior to the Securities, as the case may
be, shall not be deemed to prevent such Indebtedness for Money
Borrowed from constituting Indebtedness Ranking on a Parity with
the Securities or Indebtedness Ranking Junior to the Securities,
as the case may be.
"Indenture" shall mean this instrument as originally
executed or, if amended as herein provided, as so amended.
"Initial Optional Redemption Date" means April 1, 2007.
"Interest Payment Date" shall have the meaning set
forth in Section 2.06.
"Liquidated Damages" shall have the meaning set forth
in the Registration Rights Agreement.
"Maturity Date" shall mean April 1, 2027.
"Mortgage" shall mean and include any mortgage, pledge,
lien, security interest, conditional sale or other title reten-
tion agreement or other similar encumbrance.
"Non Book-Entry Capital Securities" shall have the
meaning set forth in Section 2.05.
"Officers" shall mean any of the Chairman, a Vice
Chairman, the Chief Executive Officer, the President, a Vice
President, the Treasurer, the Comptroller, the Secretary or an
Assistant Secretary of the Company.
"Officers' Certificate" shall mean a certificate signed
by two Officers and delivered to the Trustee.
"Opinion of Counsel" shall mean a written opinion of
counsel, who may be an employee of the Company, and who shall be
acceptable to the Trustee.
"Optional Redemption Price" shall have the meaning set
forth in Section 14.02.
"Other Debentures" means all junior subordinated
debentures issued by the Company from time to time and sold to
trusts to be established by the Company (if any), in each case
similar to the Trust.
"Other Guarantees" means all guarantees to be issued by
the Company with respect to capital securities (if any) and
issued to other trusts to be established by the Company (if any),
in each case similar to the Trust.
The term "outstanding" when used with reference to
Securities, shall, subject to the provisions of Section 7.04,
mean, as of any particular time, all Securities authenticated and
delivered by the Trustee or the Authenticating Agent under this
Indenture, except
(a) Securities theretofore cancelled by the Trustee or
the Authenticating Agent or delivered to the
Trustee for cancellation;
(b) Securities, or portions thereof, for the payment
or redemption of which moneys in the necessary
amount shall have been deposited in trust with the
Trustee or with any paying agent (other than the
Company) or shall have been set aside and segre-
gated in trust by the Company (if the Company
shall act as its own paying agent); provided that,
if such Securities, or portions thereof, are to be
redeemed prior to maturity thereof, notice of such
redemption shall have been given as in Article XIV
provided or provision satisfactory to the Trustee
shall have been made for giving such notice; and
(c) Securities in lieu of or in substitution for which
other Securities shall have been authenticated and
delivered pursuant to the terms of Section 2.08
unless proof satisfactory to the Company and the
Trustee is presented that any such Securities are
held by bona fide holders in due course.
"Person" shall mean any individual, corporation,
estate, partnership, joint venture, association, joint-stock
company, limited liability company, trust, unincorporated organi-
zation or government or any agency or political subdivision
thereof.
"Predecessor Security" of any particular Security means
every previous Security evidencing all or a portion of the same
debt and as that evidenced by such particular Security; and, for
the purposes of this definition, any Security authenticated and
delivered under Section 2.08 in lieu of a lost, destroyed or
stolen Security shall be deemed to evidence the same debt as the
lost, destroyed or stolen Security.
"Principal Office of the Trustee", or other similar
term, shall mean the office of the Trustee, at which at any
particular time its corporate trust business shall be adminis-
tered.
"Purchase Agreement" shall mean the Purchase Agreement
dated March 19, 1997 among the Company, Sovereign Capital Trust
and the Initial Purchasers named therein.
"Property Trustee" shall have the same meaning as set
forth in the Trust Agreement.
"Quotation Agent" means the Reference Treasury Dealer
appointed by the Company.
"Redemption Price" means the Special Event Redemption
Price or the Optional Redemption Price, as the context requires.
"Reference Treasury Dealer" means a nationally recog-
nized U.S. Government securities dealer in New York City selected
by the Company.
"Reference Treasury Dealer Quotations" means, with
respect to each Reference Treasury Dealer and any redemption date
pursuant to Section 14.01, the average, as determined by the
Trustee, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal
amount) quoted in writing to the Trustee by such Reference
Treasury Dealer at 5:00 p.m. New York City time on the third
Business Day preceding such redemption date.
"Registration Rights Agreement" means the Registration
Rights Agreement, dated as of March 24, 1997, by and among the
Company, the Trust and the Initial Purchasers named therein as
such agreement may be amended, modified or supplemented from time
to time.
"Regulatory Capital Event" means that the Company shall
have become, or pursuant to law or regulation will become within
180 days, subject to capital requirements under which, in the
written opinion of independent bank regulatory counsel experi-
enced in such matters, the Capital Securities would not consti-
tute Tier 1 Capital applied as if the Company (or its succes-
sor) were a bank holding company (as that concept is used in the
guidelines or regulations issued by the Federal Reserve as of
March 1, 1997) or its then equivalent; provided, however, that
the distribution of the Securities in connection with the liqui-
dation of Sovereign Capital Trust by the Company, as sponsor,
shall not in and of itself constitute a Regulatory Capital Event
unless such liquidation shall have occurred in connection with a
Tax Event.
"Responsible Officer" shall mean the chairman or any
vice chairman of the board of directors, the chairman or any vice
chairman of the executive committee of the board of directors,
the chairman of the trust committee, the president, any vice
president, the cashier, any assistant cashier, the secretary, the
treasurer, any assistant treasurer, any trust officer or ▇▇▇▇▇-
▇▇▇▇ trust officer, the controller or any assistant controller or
any other officer or assistant officer of the Trustee customarily
performing functions similar to those performed by any of the
above designated officers and also means, with respect to a
particular corporate trust matter, any other officer to whom such
matter is referred because of his knowledge of and familiarity
with the particular subject.
"Restricted Security" shall mean Securities that bear
or are required to bear the legends relating to transfer restric-
tions under the Securities Act set forth in Exhibit A hereto.
"Rule 144A" means Rule 144A under the Securities Act,
as such Rule may be amended from time to time, or under any
similar rule or regulation hereafter adopted by the Commission.
"Securities" means, collectively, the Series A Securi-
ties and the Series B Securities.
"Securities Act" shall mean the Securities Act of 1933,
as amended.
"Securityholder", "holder of Securities", or other
similar terms, shall mean any Person in whose name at the time a
particular Security is registered on the register kept by the
Company or the Trustee for that purpose in accordance with the
terms hereof.
"Security Register" shall mean (i) prior to a Dissolu-
tion Event, the list of holders provided to the Trustee pursuant
to Section 4.01, and (ii) following a Dissolution Event, any
security register maintained by a security registrar for the
Securities appointed by the Company following the execution of a
supplemental indenture providing for transfer procedures as
provided for in Section 2.07(a).
"Senior Indebtedness" shall mean all Indebtedness for
Money Borrowed, whether outstanding on the date of execution of
this Indenture or hereafter created, assumed or incurred, except
Indebtedness Ranking on a Parity with the Securities or Indebted-
ness Ranking Junior to the Securities, and any deferrals, renew-
als or extensions of such Senior Indebtedness.
"Series A Securities" means the Company's Series A
9.00% Junior Subordinated Deferrable Interest Debentures due
April 1, 2027, as authenticated and issued under this Indenture.
"Series B Securities" means the Company's Series B
9.00% Junior Subordinated Deferrable Interest Debentures due
April 1, 2027, as authenticated and issued under this Indenture.
"Sovereign Capital Trust" or the "Trust" shall mean
Sovereign Capital Trust I, a Delaware business trust created for
the purpose of issuing its undivided beneficial interests in
connection with the issuance of Securities under this Indenture.
"Special Event" means either a Regulatory Capital Event
or a Tax Event.
"Special Event Redemption Price" shall mean, with
respect to any redemption of the Securities pursuant to Sec-
tion 14.01 hereof, an amount in cash equal to the greater of
(i) 100% of the principal amount to be redeemed or (ii) as
determined by a Quotation Agent, the sum of the present values of
the principal amount and premium payable with respect to an
Optional Redemption of the Securities on the Initial Optional
Redemption Date, together with scheduled payments of interest on
the Securities from the prepayment date to and including the
Initial Optional Redemption Date, discounted to the prepayment
date on a semi-annual basis (assuming a 360-day year consisting
of twelve 30-day months) at the Adjusted Treasury Rate, plus, in
the case of each of clauses (i) and (ii), accumulated but unpaid
interest thereon, including Compounded Interest and Additional
Sums, if any, to the date of such redemption.
"Subsidiary" shall mean with respect to any Person,
(i) any corporation at least a majority of the outstanding voting
stock of which is owned, directly or indirectly, by such Person
or by one or more of its Subsidiaries, or by such Person and one
or more of its Subsidiaries, (ii) any general partnership, joint
venture or similar entity, at least a majority of whose outstand-
ing partnership or similar interests shall at the time be owned
by such Person, or by one or more of its Subsidiaries, or by such
Person and one or more of its Subsidiaries and (iii) any limited
partnership of which such Person or any of its Subsidiaries is a
general partner. For the purposes of this definition, "voting
stock" means shares, interests, participations or other equiva-
▇▇▇▇▇ in the equity interest (however designated) in such Person
having ordinary voting power for the election of a majority of
the directors (or the equivalent) of such Person, other than
shares, interests, participations or other equivalents having
such power only by reason of the occurrence of a contingency.
"Trust Agreement" means the Amended and Restated
Declaration of Trust of Sovereign Capital Trust, dated as of
March 24, 1997.
"Tax Event" shall mean the receipt by Sovereign Capital
Trust and the Company of an opinion of counsel experienced in
such matters to the effect that, as a result of any amendment to,
or change (including any announced prospective change) in, the
laws or any regulations thereunder of the United States or any
political subdivision or taxing authority thereof or therein or
as a result of any official administrative pronouncement or
judicial decision interpreting or applying such laws or regula-
tions, which amendment or change is effective or which pronounce-
ment or decision is announced on or after March 24, 1997, there
is more than an insubstantial risk that (i) Sovereign Capital
Trust is, or will be within 90 days of the date of such opinion,
subject to United States Federal income tax with respect to
income received or accrued on the Securities, (ii) interest
payable by the Company on the Securities is not, or within 90
days of the date of such opinion, will not be, deductible by the
Company, in whole or in part, for United States Federal income
tax purposes, or (iii) Sovereign Capital 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.
"Trustee" shall mean the Person identified as "Trustee"
in the first paragraph hereof, and, subject to the provisions of
Article VI hereof, shall also include its successors and assigns
as Trustee hereunder. The term "Trustee" as used with respect to
a particular series of the Securities shall mean the trustee with
respect to that series.
"Trust Indenture Act of 1939" shall mean the Trust
Indenture Act of 1939 as in force at the date of execution of
this Indenture, except as provided in Section 9.03.
"Trust Securities" shall mean the Capital Securities
and the Common Securities, collectively.
"U.S. Government Obligations" shall mean securities
that are (i) direct obligations of the United States of America
for the payment of which its full faith and credit is pledged or
(ii) obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a
full faith and credit obligation by the United States of America,
which, in either case under clauses (i) or (ii) are not callable
or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank or trust company as
custodian with respect to any such U.S. Government Obligation or
a specific payment of interest on or principal of any such U.S.
Government Obligation held by such custodian for the account of
the holder of a depository receipt, provided that (except as
required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such deposito-
ry receipt from any amount received by the custodian in respect
of the U.S. Government Obligation or the specific payment of
interest on or principal of the U.S. Government Obligation
evidenced by such depository receipt.
ARTICLE II
SECURITIES
SECTION 2.01. Forms Generally.
The Securities and the Trustee's certificate of authen-
tication shall be substantially in the form of Exhibit A, the
terms of which are incorporated in and made a part of this
Indenture. The Securities may have notations, legends or en-
dorsements required by law, stock exchange rule, agreements to
which the Company is subject or usage. Each Security shall be
dated the date of its authentication. The Securities shall be
issued in denominations of $1,000 and integral multiples thereof.
SECTION 2.02. Execution and Authentication.
Two Officers shall sign the Securities for the Company
by manual or facsimile signature. If an Officer whose signature
is on a Security no longer holds that office at the time the
Security is authenticated, the Security shall nevertheless be
valid.
A Security shall not be valid until authenticated by
the manual signature of the Trustee. The signature of the
Trustee shall be conclusive evidence that the Security has been
authenticated under this Indenture. The form of Trustee's
certificate of authentication to be borne by the Securities shall
be substantially as set forth in Exhibit A hereto.
The Trustee shall, upon a Company Order, authenticate
for original issue up to, and the aggregate principal amount of
Securities outstanding at any time may not exceed $103,093,000
aggregate principal amount of the Securities, except as provided
in Sections 2.07, 2.08, 2.09 and 14.05. The series of Securities
to be initially issued hereunder shall be the Series A Securi-
ties.
SECTION 2.03. Form and Payment.
Except as provided in Section 2.05, the Securities
shall be issued in fully registered certificated form without
interest coupons. Principal of, premium, if any, and interest on
the Securities issued in certificated form will be payable, the
transfer of such Securities will be registrable and such Securi-
ties will be exchangeable for Securities bearing identical terms
and provisions at the office or agency of the Company maintained
for such purpose under Section 3.02; provided, however, that
payment of interest with respect to Securities (other than a
Global Security) may be made at the option of the Company (i) by
check mailed to the holder at such address as shall appear in the
Security Register or (ii) by transfer to an account maintained by
the Person entitled thereto, provided that proper transfer
instructions have been received in writing by the relevant record
date. Notwithstanding the foregoing, so long as the holder of
any Securities is the Property Trustee, the payment of the
principal of, premium, if any, interest (including Compounded
Interest and Additional Sums, if any) and Liquidated Damages, if
any, on such Securities held by the Property Trustee will be made
at such place and to such account as may be designated by the
Property Trustee.
SECTION 2.04. Legends.
(a) Except as permitted by subsection (b) of this
Section 2.04 or as otherwise determined by the Company in accor-
dance with applicable law, each Security shall bear the applica-
ble legends relating to restrictions on transfer pursuant to the
securities laws in substantially the form set forth on Exhibit A
hereto.
(b) In the event of an Exchange Offer, the Company
shall issue and the Trustee shall, upon Company Order, authenti-
cate Series B Securities in exchange for Series A Securities
accepted for exchange in the Exchange Offer, which Series B
Securities shall not bear the legends required by subsection
(a) above, in each case unless the holder of such Series A
Securities is either (A) a broker dealer who purchased such
Series A Securities directly from the Company for resale pursuant
to Rule 144A or any other available exemption under the Securi-
ties Act, (B) a Person participating in the distribution of the
Series A Securities or (C) a Person who is an affiliate (as
defined in Rule 144 under the Securities Act) of the Company.
SECTION 2.05. Global Security.
(a) In connection with a Dissolution Event,
(i) if any Capital Securities are held in book-
entry form, the related Definitive Securities shall be
presented to the Trustee (if an arrangement with the Deposi-
tary has been maintained) by the Property Trustee in ex-
change for one or more Global Securities (as may be required
pursuant to Section 2.07) in an aggregate principal amount
equal to the aggregate principal amount of all outstanding
Securities, to be registered in the name of the Depositary,
or its nominee, and delivered by the Trustee to the Deposi-
tary for crediting to the accounts of its participants
pursuant to the instructions of the Administrative Trustees;
the Company upon any such presentation shall execute one or
more Global Securities in such aggregate principal amount
and deliver the same to the Trustee for authentication and
delivery in accordance with this Indenture; and payments on
the Securities issued as a Global Security will be made to
the Depositary; and
(ii) if any Capital Securities are held in certif-
icated form, the related Definitive Securities may be pre-
sented to the Trustee by the Property Trustee and any Capi-
tal Security certificate which represents Capital Securities
other than Capital Securities in book-entry form ("Non
Book-Entry Capital Securities") will be deemed to represent
beneficial interests in Securities presented to the Trustee
by the Property Trustee having an aggregate principal amount
equal to the aggregate liquidation amount of the Non
Book-Entry Capital Securities until such Capital Security
certificates are presented to the Security Registrar for
transfer or reissuance, at which time such Capital Security
certificates will be cancelled and a Security, registered in
the name of the holder of the Capital Security certificate
or the transferee of the holder of such Capital Security
certificate, as the case may be, with an aggregate principal
amount equal to the aggregate liquidation amount of the
Capital Security certificate cancelled, will be executed by
the Company and delivered to the Trustee for authentication
and delivery in accordance with this Indenture. Upon the
issuance of such Securities, Securities with an equivalent
aggregate principal amount that were presented by the Prop-
erty Trustee to the Trustee will be deemed to have been
cancelled.
(b) The Global Securities shall represent the aggre-
gate amount of outstanding Securities from time to time endorsed
thereon; provided, that the aggregate amount of outstanding
Securities represented thereby may from time to time be reduced
or increased, as appropriate, to reflect exchanges and redemp-
tions. Any endorsement of a Global Security to reflect the
amount of any increase or decrease in the amount of outstanding
Securities represented thereby shall be made by the Trustee, in
accordance with instructions given by the Company as required by
this Section 2.05.
(c) The Global Securities may be transferred, in whole
but not in part, only to the Depositary, another nominee of the
Depositary, or to a successor Depositary selected or approved by
the Company or to a nominee of such successor Depositary.
(d) If at any time the Depositary notifies the Company
that it is unwilling or unable to continue as Depositary or the
Depositary has ceased to be a clearing agency registered under
the Exchange Act, and a successor Depositary is not appointed by
the Company within 90 days after the Company receives such notice
or becomes aware of such condition, as the case may be, the
Company will execute, and the Trustee, upon receipt of a Company
Order, will authenticate and make available for delivery the
Definitive Securities, in authorized denominations, and in an
aggregate principal amount equal to the principal amount of the
Global Security in exchange for such Global Security. If there
is an Event of Default, the Depositary shall have the right to
exchange the Global Securities for Definitive Securities. In
addition, the Company may at any time determine that the Securi-
ties shall no longer be represented by a Global Security. In the
event of such an Event of Default or such a determination, the
Company shall execute, and subject to Section 2.07, the Trustee,
upon receipt of an Officers' Certificate evidencing such determi-
nation by the Company and a Company Order, will authenticate and
make available for delivery the Definitive Securities, in autho-
rized denominations, and in an aggregate principal amount equal
to the principal amount of the Global Security in exchange for
such Global Security. Upon the exchange of the Global Security
for such Definitive Securities, in authorized denominations, the
Global Security shall be cancelled by the Trustee. Such Defini-
tive Securities issued in exchange for the Global Security shall
be registered in such names and in such authorized denominations
as the Depositary, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee.
The Trustee shall deliver such Definitive Securities to the
Depositary for delivery to the Persons in whose names such
Definitive Securities are so registered.
SECTION 2.06. Interest.
(a) Each outstanding Security will bear interest at
the rate of 9.00% per annum (the "Coupon Rate") from the most
recent date to which interest has been paid or duly provided for
or, if no interest has been paid or duly provided for, from
March 24, 1997, until the principal thereof becomes due and pay-
able, and at the Coupon Rate on any overdue principal (and
premium, if any) and (to the extent that payment of such interest
is enforceable under applicable law) on any overdue installment
of interest, compounded semi-annually, payable (subject to the
provisions of Article XVI) semi-annually in arrears on April 1
and October 1 of each year (each, an "Interest Payment
Date") commencing on October 1, 1997, to the Person in whose name
such Security or any predecessor Security is registered, at the
close of business on the regular record date for such interest
installment, which shall be the 15th day of the month preceding
the month in which the relevant Interest Payment Date falls.
(b) Interest will be computed on the basis of a
360-day year consisting of twelve 30-day months. In the event
that any Interest Payment Date falls on a day that is not a
Business Day, then payment of interest payable on such date will
be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such
delay), except that if such next succeeding Business Day falls in
the next succeeding calendar year, then such payment shall be
made on the immediately preceding Business Day, in each case with
the same force and effect as if made on such date.
(c) During such time as the Property Trustee is the
holder of any Securities, the Company shall pay any additional
amounts on the Securities as may be necessary in order that the
amount of Distributions then due and payable by the Sovereign
Capital Trust on the outstanding Trust Securities shall not be
reduced as a result of any additional taxes, duties and other
governmental charges to which Sovereign Capital Trust has become
subject as a result of a Tax Event ("Additional Sums").
SECTION 2.07. Transfer and Exchange.
(a) Transfer Restrictions. (i) The Series A Securi-
ties, and those Series B Securities with respect to which any
Person described in Section 2.04(b)(A), (B) or (C) is the benefi-
cial owner, may not be transferred except in compliance with the
legend contained in Exhibit A unless otherwise determined by the
Company in accordance with applicable law. Upon any distribution
of the Securities following a Dissolution Event, the Company and
the Trustee shall enter into a supplemental indenture pursuant to
Section 9.01 to provide for the transfer restrictions and proce-
dures with respect to the Securities substantially similar to
those contained in the Trust Agreement to the extent applicable
in the circumstances existing at such time.
(ii) The Securities will be issued and may be
transferred only in blocks having an aggregate principal amount
of not less than $100,000. Any such transfer of the Securities
in a block having an aggregate principal amount of less than
$100,000 shall be deemed to be voided and of no legal effect
whatsoever. Any such transferee shall be deemed not to be a
holder of such Securities for any purpose, including, but not
limited to the receipt of payments on such Securities, and such
transferee shall be deemed to have no interest whatsoever in such
Securities.
(b) General Provisions Relating to Transfers and
Exchanges. To permit registrations of transfers and exchanges,
the Company shall execute and the Trustee shall authenticate
Definitive Securities and Global Securities at the Trustee's
request. All Definitive Securities and Global Securities issued
upon any registration of transfer or exchange of Definitive
Securities or Global Securities shall be the valid obligations of
the Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Definitive Securities or
Global Securities surrendered upon such registration of transfer
or exchange.
No service charge shall be made to a holder for any
registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith.
The Company shall not be required to (i) issue, regis-
ter the transfer of or exchange Securities during a period
beginning at the opening of business 15 days before the day of
mailing of a notice of redemption or any notice of selection of
Securities for redemption under Article XIV hereof and ending at
the close of business on the day of such mailing; or
(ii) register the transfer of or exchange any Security so select-
ed for redemption in whole or in part, except the unredeemed
portion of any Security being redeemed in part.
Prior to due presentment for the registration of a
transfer of any Security, the Trustee, any Agent and the Company
may deem and treat the Person in whose name any Security is
registered as the absolute owner of such Security for the purpose
of receiving payment of principal of and premium, if any, and
interest on such Securities, and neither the Trustee, any Agent
nor the Company shall be affected by notice to the contrary.
(c) Exchange of Series A Securities for Series B
Securities. The Series A Securities may be exchanged for Se-
▇▇▇▇ B Securities pursuant to the terms of the Exchange Offer.
The Trustee shall make the exchange as follows:
The Company shall present the Trustee with an Officers'
Certificate certifying the following:
(A) upon issuance of the Series B Securities, the
transactions contemplated by the Exchange Offer
have been consummated; and
(B) the principal amount of Series A Securities prop-
erly tendered in the Exchange Offer that are rep-
resented by a Global Security and the principal
amount of Series A Securities properly tendered in
the Exchange Offer that are represented by Defini-
tive Securities, the name of each holder of such
Definitive Securities, the principal amount prop-
erly tendered in the Exchange Offer by each such
holder and the name and address to which Defini-
tive Securities for Series B Securities shall be
registered and sent for each such holder.
The Trustee, upon receipt of (i) such Officers' Certif-
icate, (ii) an Opinion of Counsel (x) to the effect that the
Series B Securities have been registered under Section 5 of the
Securities Act and the Indenture has been qualified under the
Trust Indenture Act and (y) with respect to the matters set forth
in Section 3(p) of the Registration Rights Agreement and (iii) a
Company Order, shall authenticate (A) a Global Security repre-
senting Series B Securities in aggregate principal amount equal
to the aggregate principal amount of Series A Securities repre-
sented by a Global Security indicated in such Officers' Certifi-
cate as having been properly tendered and (B) Definitive Securi-
ties representing Series B Securities registered in the names of,
and in the principal amounts indicated in, such Officers' Certif-
icate.
If the principal amount of the Global Security for the
Series B Securities is less than the principal amount of the
Global Security for the Series A Securities, the Trustee shall
make an endorsement on such Global Security for Series A Securi-
ties indicating a reduction in the principal amount represented
thereby.
The Trustee shall deliver such Definitive Securities
representing Series B Securities to the holders thereof as
indicated in such Officers' Certificate.
SECTION 2.08. Replacement Securities.
If any mutilated Security is surrendered to the Trust-
ee, or the Company and the Trustee receive evidence to their
satisfaction of the destruction, loss or theft of any Security,
the Company shall issue and the Trustee shall authenticate a
replacement Security if the Trustee's requirements for replace-
ments of Securities are met. An indemnity bond must be supplied
by the holder that is sufficient in the judgment of the Trustee
and the Company to protect the Company, the Trustee, any agent
thereof or any authenticating agent from any loss that any of
them may suffer if a Security is replaced. The Company or the
Trustee may charge for its expenses in replacing a Security.
Every replacement Security is an obligation of the
Company and shall be entitled to all of the benefits of this
Indenture equally and proportionately with all other Securities
duly issued hereunder.
SECTION 2.09. Temporary Securities.
Pending the preparation of Definitive Securities, the
Company may execute, and upon Company Order the Trustee shall
authenticate and make available for delivery, temporary Securi-
ties that are printed, lithographed, typewritten, mimeographed or
otherwise reproduced, in any authorized denomination, substan-
tially of the tenor of the Definitive Securities in lieu of which
they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such
Securities may determine, as conclusively evidenced by their
execution of such Securities.
If temporary Securities are issued, the Company shall
cause Definitive Securities to be prepared without unreasonable
delay. The Definitive Securities shall be printed, lithographed
or engraved, or provided by any combination thereof, or in any
other manner permitted by the rules and regulations of any
applicable securities exchange, all as determined by the officers
executing such Definitive Securities. After the preparation of
Definitive Securities, the temporary Securities shall be ex-
changeable for Definitive Securities upon surrender of the
temporary Securities at the office or agency maintained by the
Company for such purpose pursuant to Section 3.02 hereof, without
charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities, the Company shall execute, and the
Trustee shall authenticate and make available for delivery, in
exchange therefor the same aggregate principal amount of Defini-
tive Securities of authorized denominations. Until so exchanged,
the temporary Securities shall in all respects be entitled to the
same benefits under this Indenture as Definitive Securities.
SECTION 2.10. Cancellation.
The Company at any time may deliver Securities to the
Trustee for cancellation. The Trustee and no one else shall
cancel all Securities surrendered for registration of transfer,
exchange, payment, replacement or cancellation and shall retain
or destroy cancelled Securities in accordance with its normal
practices (subject to the record retention requirement of the
Exchange Act) unless the Company directs them to be returned to
it. The Company may not issue new Securities to replace Securi-
ties that have been redeemed or paid or that have been delivered
to the Trustee for cancellation.
SECTION 2.11. Defaulted Interest.
Any interest on any Security that is payable, but is
not punctually paid or duly provided for, on any Interest Payment
Date (herein called "Defaulted Interest") shall forthwith cease
to be payable to the holder on the relevant regular record date
by virtue of having been such holder; and such Defaulted Interest
shall be paid by the Company, at its election, as provided in
clause (a) or clause (b) below:
(a) The Company may make payment of any Defaulted
Interest on Securities to the Persons in whose names such
Securities (or their respective Predecessor Securities) are
registered at the close of business on a special record date
for the payment of such Defaulted Interest, which shall be
fixed in the following manner: the Company shall notify the
Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each such Security and the date of
the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory
to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such De-
faulted Interest as in this clause provided. Thereupon the
Trustee shall fix a special record date for the payment of
such Defaulted Interest which shall not be more than 15 nor
less than 10 days prior to the date of the proposed payment
and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such special record date and,
in the name and at the expense of the Company, shall cause
notice of the proposed payment of such Defaulted Interest
and the special record date therefor to be mailed, first
class postage prepaid, to each Securityholder at his or her
address as it appears in the Security Register, not less
than 10 days prior to such special record date. Notice of
the proposed payment of such Defaulted Interest and the
special record date therefor having been mailed as afore-
said, such Defaulted Interest shall be paid to the Persons
in whose names such Securities (or their respective Prede-
cessor Securities) are registered on such special record
date and shall be no longer payable pursuant to the follow-
ing clause (b).
(b) The Company may make payment of any Defaulted
Interest on any Securities in any other lawful manner not
inconsistent with the requirements of any securities ex-
change on which such Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice
given by the Company to the Trustee of the proposed payment
pursuant to this clause, such manner of payment shall be
deemed practicable by the Trustee.
SECTION 2.12. CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP"
numbers (if then generally in use), and, if so, the Trustee shall
use "CUSIP" numbers in notices of redemption as a convenience to
Securityholders; provided that any such notice may state that no
representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice
of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such
redemption shall not be affected by any defect in or omission of
such numbers. The Company will promptly notify the Trustee of
any change in the CUSIP numbers.
ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY
SECTION 3.01. Payment of Principal, Premium and
Interest.
The Company covenants and agrees for the benefit of the
holders of the Securities that it will duly and punctually pay or
cause to be paid the principal of and premium, if any, and
interest on the Securities at the place, at the respective times
and in the manner provided herein. Except as provided in Sec-
tion 2.03, each installment of interest on the Securities may be
paid by mailing checks for such interest payable to the order of
the holder of Security entitled thereto as they appear in the
Security Register. The Company further covenants to pay any and
all amounts, including, without limitation, Additional Sums, as
may be required pursuant to Section 2.06(c), Liquidated Damages,
if any, on the dates and in the manner required under the Regis-
tration Rights Agreement and Compounded Interest, as may be
required pursuant to Section 16.01.
SECTION 3.02. Offices for Notices and Payments, etc.
So long as any of the Securities remain outstanding,
the Company will maintain in the Borough of Manhattan, The City
of New York, an office or agency where the Securities may be
presented for payment, an office or agency where the Securities
may be presented for registration of transfer and for exchange as
in this Indenture provided and an office or agency where notices
and demands to or upon the Company in respect of the Securities
or of this Indenture may be served. The Company will give to the
Trustee written notice of the location of any such office or
agency and of any change of location thereof. Until otherwise
designated from time to time by the Company in a notice to the
Trustee, any such office or agency for all of the above purposes
shall be the Principal Office of the Trustee. In case the
Company shall fail to maintain any such office or agency in the
Borough of Manhattan, The City of New York, or shall fail to give
such notice of the location or of any change in the location
thereof, presentations and demands may be made and notices may be
served at the Principal Office of the Trustee.
In addition to any such office or agency, the Company
may from time to time designate one or more offices or agencies
outside the Borough of Manhattan, The City of New York, where the
Securities may be presented for payment, registration of transfer
and for exchange in the manner provided in this Indenture, and
the Company may from time to time rescind such designation, as
the Company may deem desirable or expedient; provided, however,
that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain any such office
or agency in the Borough of Manhattan, The City of New York, for
the purposes above mentioned. The Company will give to the
Trustee prompt written notice of any such designation or rescis-
sion thereof.
SECTION 3.03. Appointments to Fill Vacancies in
Trustee's Office.
The Company, whenever necessary to avoid or fill a
vacancy in the office of Trustee, will appoint, in the manner
provided in Section 6.10, a Trustee, so that there shall at all
times be a Trustee hereunder.
SECTION 3.04. Provision as to Paying Agent.
(a) If the Company shall appoint a paying agent other
than the Trustee with respect to the Securities,
it will cause such paying agent to execute and
deliver to the Trustee an instrument in which such
agent shall agree with the Trustee, subject to the
provision of this Section 3.04,
(1) that it will hold all sums held by it as such
agent for the payment of the principal of and
premium, if any, or interest on the Securi-
ties (whether such sums have been paid to it
by the Company or by any other obligor on the
Securities) in trust for the benefit of the
holders of the Securities; and
(2) that it will give the Trustee notice of any
failure by the Company (or by any other obli-
gor on the Securities) to make any payment of
the principal of and premium or interest
(including Additional Sums and Compounded
Interest, if any) and Liquidated Damages, if
any, on the Securities when the same shall be
due and payable.
(b) If the Company shall act as its own paying agent,
it will, on or before each due date of the princi-
pal of and premium, if any, or interest on the
Securities, set aside, segregate and hold in trust
for the benefit of the holders of the Securities a
sum sufficient to pay such principal, premium or
interest so becoming due and will notify the
Trustee of any failure to take such action and of
any failure by the Company (or by any other obli-
gor under the Securities) to make any payment of
the principal of and premium, if any, or interest
on the Securities when the same shall become due
and payable.
(c) Anything in this Section 3.04 to the contrary
notwithstanding, the Company may, at any time, for
the purpose of obtaining a satisfaction and dis-
charge with respect to the Securities hereunder,
or for any other reason, pay or cause to be paid
to the Trustee all sums held in trust for such
Securities by the Trustee or any paying agent
hereunder, as required by this Section 3.04, such
sums to be held by the Trustee upon the trusts
herein contained.
(d) Anything in this Section 3.04 to the contrary
notwithstanding, the agreement to hold sums in
trust as provided in this Section 3.04 is subject
to Sections 11.03 and 11.04.
SECTION 3.05. Certificate to Trustee.
The Company will deliver to the Trustee on or before
120 days after the end of each fiscal year in each year, commenc-
ing with the first fiscal year ending after the date hereof, so
long as Securities are outstanding hereunder, an Officers'
Certificate, one of the signers of which shall be the principal
executive, principal financial or principal accounting officer of
the Company stating that in the course of the performance by the
signers of their duties as officers of the Company they would
normally have knowledge of any default by the Company in the
performance of any covenants contained herein, stating whether or
not they have knowledge of any such default and, if so, specify-
ing each such default of which the signers have knowledge and the
nature thereof.
SECTION 3.06. Compliance with Consolidation
Provisions.
The Company will not, while any of the Securities
remain outstanding, consolidate with, or merge into, or merge
into itself, or sell or convey all or substantially all of its
property to any other Person unless the provisions of Article X
hereof are complied with.
SECTION 3.07. Limitation on Dividends.
The Company will not (i) declare or pay any dividends
or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company's capital
stock (which includes common and preferred stock) or (ii) make
any payment of principal, interest or premium, if any, on or
repay or repurchase or redeem any debt securities of the Company
(including any Other Debentures) that rank pari passu with or
junior in right of payment to the Securities or (iii) make any
guarantee payments with respect to any guarantee by the Company
of the debt securities of any Subsidiary of the Company (includ-
ing any Other Guarantees) if such guarantee ranks pari passu or
junior in right of payment to the Securities (other than
(a) dividends or distributions in shares of, or options, warrants
or rights to subscribe for or purchase shares of, Common Stock of
the Company, (b) any declaration of a dividend in connection with
the implementation of a stockholder's rights plan, or the issu-
ance of stock under any such plan in the future, or the redemp-
tion or repurchase of any such rights pursuant thereto,
(c) payments under the Capital Securities Guarantee, (d) as a
result of a reclassification of the Company's capital stock or
the exchange or the conversion of one class or series of the
Company's capital stock for another class or series of the
Company's capital stock; (e) the purchase of fractional interests
in shares of the Company's capital stock pursuant to the conver-
sion or exchange provisions of such capital stock or the security
being converted or exchanged; and (f) purchases of Common Stock
related to the issuance of Common Stock or rights under any of
the Company's benefit plans for its directors, officers or
employees or any of the Company's dividend reinvestment plans) if
at such time (i) there shall have occurred any event of which the
Company has actual knowledge that (a) is or, with the giving of
notice or the lapse of time, or both, would constitute an Event
of Default and (b) in respect of which the Company shall not have
taken reasonable steps to cure, (ii) if such Securities are held
by the Property Trustee, the Company shall be in default with
respect to its payment obligations under the Capital Securities
Guarantee or (iii) the Company shall have given notice of its
election of the exercise of its right to extend the interest
payment period pursuant to Section 16.01 and any such extension
shall be continuing.
SECTION 3.08. Covenants as to Sovereign Capital Trust
In the event Securities are issued to Sovereign Capital
Trust or a trustee of such trust in connection with the issuance
of Trust Securities by Sovereign Capital Trust, for so long as
such Trust Securities remain outstanding, the Company (i) will
maintain 100% direct or indirect ownership of the Common Securi-
ties of Sovereign Capital Trust; provided, however, that any
successor of the Company, permitted pursuant to Article X, may
succeed to the Company's ownership of such Common Securities,
(ii) will not cause, as sponsor of Sovereign Capital Trust, or
permit, as holder of the Common Securities, the dissolution,
winding-up or termination of the Trust, except in connection with
a distribution of the Securities as provided in the Trust Agree-
ment and in connection with certain mergers, consolidations or
amalgamations and (iii) will use its reasonable best efforts to
cause Sovereign Capital Trust (a) to remain a business trust,
except in connection with a distribution of Securities to the
holders of Trust Securities in liquidation of the Trust, the
redemption of all of the Trust Securities of Sovereign Capital
Trust or certain mergers, consolidations or amalgamations, each
as permitted by the Trust Agreement of Sovereign Capital Trust,
and (b) to otherwise continue to be treated as a grantor trust
and not an association taxable as a corporation for United States
federal income tax purposes.
SECTION 3.09. Payment of Expenses.
In connection with the offering, sale and issuance of
the Securities to the Sovereign Capital Trust and in connection
with the sale of the Trust Securities by the Sovereign Capital
Trust, the Company, in its capacity as borrower with respect to
the Securities, shall:
(a) pay all costs and expenses relating to the offer-
ing, sale and issuance of the Securities, including commissions
to the initial purchasers payable pursuant to the Purchase
Agreement, fees and expenses in connection with any exchange
offer, filing of a shelf registration statement or other action
to be taken pursuant to the Registration Rights Agreement and
compensation of the Trustee in accordance with the provisions of
Section 6.06;
(b) pay all costs and expenses of the Trust, includ-
ing, but not limited to, costs and expenses relating to the
organization of the Sovereign Capital Trust, the offering, sale
and issuance of the Trust Securities (including commissions to
the initial purchasers in connection therewith), the fees and
expenses of the Property Trustee and the Delaware Trustee, the
costs and expenses relating to the operation of Sovereign Capital
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 assets of Sovereign
Capital Trust;
(c) be primarily and fully liable for any indemnifica-
tion obligations arising with respect to the Trust Agreement;
(d) pay any and all taxes (other than United States
withholding taxes attributable to Sovereign Capital Trust or its
assets) and all liabilities, costs and expenses with respect to
such taxes of the Trust; and
(e) pay all other fees, expenses, debts and obliga-
tions (other than in respect of the Trust Securities) related to
Sovereign Capital Trust.
SECTION 3.10. Payment Upon Resignation or Removal.
Upon termination of this Indenture or the removal or
resignation of the Trustee, unless otherwise stated, the Company
shall pay to the Trustee all amounts accrued and owing to the
date of such termination, removal or resignation. Upon termina-
tion of the Trust Agreement or the removal or resignation of the
Delaware Trustee or the Property Trustee, as the case may be,
pursuant to Section 5.7 of the Trust Agreement, the Company shall
pay to the Delaware Trustee or the Property Trustee, as the case
may be, all amounts accrued and owing to the date of such termi-
nation, removal or resignation.
ARTICLE IV
SECURITYHOLDERS' LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE
SECTION 4.01. Securityholders' Lists.
The Company covenants and agrees that it will furnish
or cause to be furnished to the Trustee:
(a) on a semi-annual basis on each regular record date
for the Securities, a list, in such form as the
Trustee may reasonably require, of the names and
addresses of the Securityholders as of such record
date; and
(b) at such other times as the Trustee may request in
writing, within 30 days after the receipt by the
Company of any such request, a list of similar
form and content as of a date not more than 15
days prior to the time such list is furnished,
except that, no such lists need be furnished so long as
the Trustee is in possession thereof by reason of its
acting as Security registrar.
SECTION 4.02. Preservation and Disclosure of Lists.
(a) The Trustee shall preserve, in as current a form
as is reasonably practicable, all information as
to the names and addresses of the holders of the
Securities (1) contained in the most recent list
furnished to it as provided in Section 4.01 or
(2) received by it in the capacity of Securities
registrar (if so acting) hereunder. The Trustee
may destroy any list furnished to it as provided
in Section 4.01 upon receipt of a new list so
furnished.
(b) In case three or more holders of Securities (here-
inafter referred to as "applicants") apply in
writing to the Trustee and furnish to the Trustee
reasonable proof that each such applicant has
owned a Security for a period of at least six
months preceding the date of such application, and
such application states that the applicants desire
to communicate with other holders of Securities or
with holders of all Securities with respect to
their rights under this Indenture and is accompa-
▇▇▇▇ by a copy of the form of proxy or other com-
munication which such applicants propose to trans-
mit, then the Trustee shall within 5 Business Days
after the receipt of such application, at its
election, either:
(1) afford such applicants access to the informa-
tion preserved at the time by the Trustee in
accordance with the provisions of subsection
(a) of this Section 4.02, or
(2) inform such applicants as to the approximate
number of holders of all Securities, whose
names and addresses appear in the information
preserved at the time by the Trustee in ac-
cordance with the provisions of subsection
(a) of this Section 4.02, and as to the ap-
proximate cost of mailing to such
Securityholders the form of proxy or other
communication, if any, specified in such
application.
If the Trustee shall elect not to afford such
applicants access to such information, the Trustee
shall, upon the written request of such appli-
cants, mail to each Securityholder whose name and
address appear in the information preserved at the
time by the Trustee in accordance with the provi-
sions of subsection (a) of this Section 4.02 a
copy of the form of proxy or other communication
which is specified in such request with reasonable
promptness after a tender to the Trustee of the
material to be mailed and of payment, or provision
for the payment, of the reasonable expenses of
mailing, unless within five days after such ten-
der, the Trustee shall mail to such applicants and
file with the Commission, together with a copy of
the material to be mailed, a written statement to
the effect that, in the opinion of the Trustee,
such mailing would be contrary to the best inter-
ests of the holders of Securities of such series
or all Securities, as the case may be, or would be
in violation of applicable law. Such written
statement shall specify the basis of such opinion.
If the Commission, after opportunity for a hearing
upon the objections specified in the written
statement so filed, shall enter an order refusing
to sustain any of such objections or if, after the
entry of an order sustaining one or more of such
objections, the Commission shall find, after no-
▇▇▇▇ and opportunity for hearing, that all the
objections so sustained have been met and shall
enter an order so declaring, the Trustee shall
mail copies of such material to all such
Securityholders with reasonable promptness after
the entry of such order and the renewal of such
tender; otherwise the Trustee shall be relieved of
any obligation or duty to such applicants respect-
ing their application.
(c) Each and every holder of Securities, by receiving
and holding the same, agrees with the Company and
the Trustee that neither the Company nor the
Trustee nor any paying agent shall be held ac-
countable by reason of the disclosure of any such
information as to the names and addresses of the
holders of Securities in accordance with the pro-
visions of subsection (b) of this Section 4.02,
regardless of the source from which such informa-
tion was derived, and that the Trustee shall not
be held accountable by reason of mailing any mate-
rial pursuant to a request made under said subsec-
tion (b).
SECTION 4.03. Reports by Company.
(a) The Company covenants and agrees to file with the
Trustee, within 15 days after the date on which
the Company is required to file the same with the
Commission, copies of the annual reports and of
the information, documents and other reports (or
copies of such portions of any of the foregoing as
said Commission may from time to time by rules and
regulations prescribe) which the Company may be
required to file with the Commission pursuant to
Section 13 or Section 15(d) of the Exchange Act;
or, if the Company is not required to file infor-
mation, documents or reports pursuant to either of
such sections, then to file with the Trustee and
the Commission, in accordance with rules and regu-
lations prescribed from time to time by the Com-
mission, such of the supplementary and periodic
information, documents and reports which may be
required pursuant to Section 13 of the Exchange
Act in respect of a security listed and registered
on a national securities exchange as may be pre-
scribed from time to time in such rules and regu-
lations.
(b) The Company covenants and agrees to file with the
Trustee and the Commission, in accordance with the
rules and regulations prescribed from time to time
by said Commission, such additional information,
documents and reports with respect to compliance
by the Company with the conditions and covenants
provided for in this Indenture as may be required
from time to time by such rules and regulations.
(c) The Company covenants and agrees to transmit by
mail to all holders of Securities, as the names
and addresses of such holders appear upon the
Security Register, within 30 days after the filing
thereof with the Trustee, such summaries of any
information, documents and reports required to be
filed by the Company pursuant to subsections
(a) and (b) of this Section 4.03 as may be re-
quired by rules and regulations prescribed from
time to time by the Commission.
(d) Delivery of such reports, information and docu-
ments to the Trustee is for informational purposes
only and the Trustee's receipt of such shall not
constitute constructive notice of any information
contained therein or determinable from information
contained therein, including the Company's compli-
ance with any of its covenants hereunder (as to
which the Trustee is entitled to rely exclusively
on Officers' Certificates).
(e) So long as is required for an offer or sale of the
Securities to qualify for an exemption under Rule
144A under the Securities Act, the Company shall,
upon request, provide the information required by
clause (d)(4) thereunder to each Securityholder
and to each beneficial owner and prospective pur-
chaser of Securities identified by each
Securityholder of Restricted Securities, unless
such information is furnished to the Commission
pursuant to Section 13 or 15(d) of the Exchange
Act.
SECTION 4.04. Reports by the Trustee.
(a) The Trustee shall transmit to Securityholders such
reports concerning the Trustee and its actions
under this Indenture as may be required pursuant
to the Trust Indenture Act at the times and in the
manner provided pursuant thereto. If required by
Section 313(a) of the Trust Indenture Act, the
Trustee shall, within sixty days after each De-
cember 15 following the date of this Indenture,
commencing December 15, 1997, deliver to
Securityholders a brief report, dated as of such
December 15, which complies with the provisions of
such Section 313(a).
(b) A copy of each such report shall, at the time of
such transmission to Securityholders, be filed by
the Trustee with each stock exchange, if any, upon
which the Securities are listed, with the Commis-
sion and with the Company. The Company will
promptly notify the Trustee when the Securities
are listed on any stock exchange.
ARTICLE V
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 5.01. Events of Default.
One or more of the following events of default shall
constitute an Event of Default hereunder:
(a) default in the payment of any interest (including
Additional Sums and Compounded Interest, if
any) and Liquidated Damages, if any, upon any
Security or any Other Debentures when it becomes
due and payable, and continuance of such default
for a period of 30 days; provided, however, that a
valid extension of an interest payment period by
the Company in accordance with the terms hereof
shall not constitute a default in the payment of
interest for this purpose; or
(b) default in the payment of all or any part of the
principal of (or premium, if any, on) any Security
or any Other Debentures as and when the same shall
become due and payable either at maturity, upon
redemption, by declaration of acceleration of
maturity or otherwise; or
(c) default in the performance, or breach, of any
covenant or warranty of the Company in this Inden-
ture in any material respect (other than a cove-
nant or warranty a default in whose performance or
whose breach is elsewhere in this Sec-
tion specifically dealt with), and continuance of
such default or breach for a period of 90 days
after there has been given, by registered or cer-
tified mail, 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 Securities a written notice specifying
such default or breach and requiring it to be
remedied and stating that such notice is a "Notice
of Default" hereunder; or
(d) a court having jurisdiction in the premises shall
enter a decree or order for relief in respect of
the Company in an involuntary case under any ap-
plicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trust-
ee, sequestrator (or similar official) of the
Company or for any substantial part of its proper-
ty, or ordering the winding-up or liquidation of
its affairs and such decree or order shall remain
unstayed and in effect for a period of 90 consecu-
tive days; or
(e) the Company shall commence a voluntary case under
any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, shall
consent to the entry of an order for relief in an
involuntary case under any such law, or shall
consent to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee,
custodian, sequestrator (or other similar offi-
cial) of the Company or of any substantial part of
its property, or shall make any general assignment
for the benefit of creditors, or shall fail gener-
ally to pay its debts as they become due.
If an Event of Default with respect to Securities at
the time outstanding occurs and is continuing, then in every such
case the Trustee or the holders of not less than 25% in aggregate
principal amount of the Securities then outstanding may declare
the principal amount of all Securities to be due and payable
immediately, by a notice in writing to the Company (and to the
Trustee if given by the holders of the outstanding Securities),
and upon any such declaration the same shall become immediately
due and payable.
The foregoing provisions, however, are subject to the
condition that if, at any time after the principal of the Securi-
ties shall have been so declared due and payable, and before any
judgment or decree for the payment of the moneys due shall have
been obtained or entered as hereinafter provided, (i) the Company
shall pay or shall deposit with the Trustee a sum sufficient to
pay (A) all matured installments of interest (including Addition-
al Sums and Compounded Interest, if any) and Liquidated Damages,
if any, upon all the Securities and the principal of and premium,
if any, on any and all Securities which shall have become due
otherwise than by acceleration (with interest upon such principal
and premium, if any, and, to the extent that payment of such
interest is enforceable under applicable law, on overdue install-
ments of interest, at the same rate as the rate of interest
specified in the Securities to the date of such payment or
deposit) and (B) such amount as shall be sufficient to cover
reasonable compensation to the Trustee and each predecessor
Trustee, their respective agents, attorneys and counsel, and all
other expenses and liabilities incurred, and all advances made,
by the Trustee and each predecessor Trustee except as a result of
negligence or bad faith, and (ii) any and all Events of Default
under the Indenture, other than the non-payment of the principal
of the Securities which shall have become due solely by such
declaration of acceleration, shall have been cured, waived or
otherwise remedied as provided herein, then, in every such case,
the holders of a majority in aggregate principal amount of the
Securities then outstanding, by written notice to the Company and
to the Trustee, may rescind and annul such declaration and its
consequences, but no such waiver or rescission and annulment
shall extend to or shall affect any subsequent default or shall
impair any right consequent thereon.
In case the Trustee shall have proceeded to enforce any
right under this Indenture and such proceedings shall have been
discontinued or abandoned because of such rescission or annulment
or for any other reason or shall have been determined adversely
to the Trustee, then and in every such case the Company, the
Trustee and the holders of the Securities shall be restored
respectively to their several positions and rights hereunder, and
all rights, remedies and powers of the Company, the Trustee and
the holders of the Securities shall continue as though no such
proceeding had been taken.
SECTION 5.02. Payment of Securities on Default; Suit
Therefor.
The Company covenants that (a) in case default shall be
made in the payment of any installment of interest (including
Additional Sums and Compounded Interest, if any) and Liquidated
Damages, if any, upon any of the Securities as and when the same
shall become due and payable, and such default shall have contin-
ued for a period of 30 days, or (b) in case default shall be made
in the payment of the principal of or premium, if any, on any of
the Securities as and when the same shall have become due and
payable, whether at maturity of the Securities or upon redemption
or by declaration or otherwise, then, upon demand of the Trustee,
the Company will pay to the Trustee, for the benefit of the
holders of the Securities, the whole amount that then shall have
become due and payable on all such Securities for principal and
premium, if any, or interest (including Additional Sums and
Compounded Interest, if any) and Liquidated Damages, if any, or
both, as the case may be, with interest upon the overdue princi-
pal and premium, if any, and (to the extent that payment of such
interest is enforceable under applicable law and, if the Securi-
ties are held by Sovereign Capital Trust or a trustee of such
trust, without duplication of any other amounts paid by Sovereign
Capital Trust or trustee in respect thereof) upon the overdue
installments of interest (including Additional Sums and Compound-
ed Interest, if any) and Liquidated Damages, if any, at the rate
borne by the Securities; and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of
collection, including a reasonable compensation to the Trustee,
its agents, attorneys and counsel, and any expenses or liabili-
ties incurred by the Trustee hereunder other than through its
negligence or bad faith.
In case the Company shall fail forthwith to pay such
amounts upon such demand, the Trustee, in its own name and as
trustee of an express trust, shall be entitled and empowered to
institute any actions or proceedings at law or in equity for the
collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may
enforce any such judgment or final decree against the Company or
any other obligor on the Securities and collect in the manner
provided by law out of the property of the Company or any other
obligor on the Securities wherever situated the moneys adjudged
or decreed to be payable.
In case there shall be pending proceedings for the
bankruptcy or for the reorganization of the Company or any other
obligor on the Securities under Title 11, United States Code, or
any other applicable law, or in case a receiver or trustee shall
have been appointed for the property of the Company or such other
obligor, or in the case of any other similar judicial proceedings
relative to the Company or other obligor upon the Securities, or
to the creditors or property of the Company or such other obli-
gor, the Trustee, irrespective of whether the principal of the
Securities shall then be due and payable as therein expressed or
by declaration or otherwise and irrespective of whether the
Trustee shall have made any demand pursuant to the provisions of
this Section 5.02, shall be entitled and empowered, by interven-
tion in such proceedings or otherwise, to file and prove a claim
or claims for the whole amount of principal and interest owing
and unpaid in respect of the Securities and, in case of any
judicial proceedings, to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for reason-
able compensation to the Trustee and each predecessor Trustee,
and their respective agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and all
advances made, by the Trustee and each predecessor Trustee,
except as a result of negligence or bad faith) and of the
Securityholders allowed in such judicial proceedings relative to
the Company or any other obligor on the Securities, or to the
creditors or property of the Company or such other obligor,
unless prohibited by applicable law and regulations, to vote on
behalf of the holders of the Securities in any election of a
trustee or a standby trustee in arrangement, reorganization,
liquidation or other bankruptcy or insolvency proceedings or
person performing similar functions in comparable proceedings,
and to collect and receive any moneys or other property payable
or deliverable on any such claims, and to distribute the same
after the deduction of its charges and expenses; and any receiv-
er, assignee or trustee in bankruptcy or reorganization is hereby
authorized by each of the Securityholders to make such payments
to the Trustee, and, in the event that the Trustee shall consent
to the making of such payments directly to the Securityholders,
to pay to the Trustee such amounts as shall be sufficient to
cover reasonable compensation to the Trustee, each predecessor
Trustee and their respective agents, attorneys and counsel, and
all other expenses and liabilities incurred, and all advances
made, by the Trustee and each predecessor Trustee except as a
result of negligence or bad faith.
Nothing herein contained shall be construed to autho-
rize the Trustee to authorize or consent to or accept or adopt on
behalf of any Securityholder any plan of reorganization, arrange-
ment, adjustment or composition affecting the Securities or the
rights of any holder thereof or to authorize the Trustee to vote
in respect of the claim of any Securityholder in any such pro-
ceeding.
All rights of action and of asserting claims under this
Indenture, or under any of the Securities, may be enforced by the
Trustee without the possession of any of the Securities, or the
production thereof on any trial or other proceeding relative
thereto, and any such suit or proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment shall be for the ratable
benefit of the holders of the Securities.
In any proceedings brought by the Trustee (and also any
proceedings involving the interpretation of any provision of this
Indenture to which the Trustee shall be a party) the Trustee
shall be held to represent all the holders of the Securities, and
it shall not be necessary to make any holders of the Securities
parties to any such proceedings.
SECTION 5.03. Application of Moneys Collected by
Trustee.
Any moneys collected by the Trustee shall be applied in
the order following, at the date or dates fixed by the Trustee
for the distribution of such moneys, upon presentation of the
Securities in respect of which moneys have been collected, and
stamping thereon the payment, if only partially paid, and upon
surrender thereof if fully paid:
First: To the payment of costs and expenses of collec-
tion applicable to the Securities and reasonable compensation to
the Trustee, its agents, attorneys and counsel, and of all other
expenses and liabilities incurred, and all advances made, by the
Trustee except as a result of its negligence or bad faith;
Second: To the payment of all Senior Indebtedness of
the Company if and to the extent required by Article XV;
Third: In case the principal of the outstanding
Securities in respect of which moneys have been collected shall
not have become due and be unpaid, to the payment of the amounts
then due and unpaid upon Securities for principal of (and premi-
um, if any) and interest (including Additional Sums and Compound-
ed Interest, if any) and Liquidated Damages, if any, on the
Securities, in respect of which or for the benefit of which money
has been collected, ratably, without preference of priority of
any kind, according to the amounts due on such Securities for
principal (and premium, if any) and interest, respectively; and
Fourth: To the Company.
SECTION 5.04. Proceedings by Securityholders.
No holder of any Security shall have any right by
virtue of or by availing of any provision of this Indenture to
institute any suit, action or proceeding in equity or at law upon
or under or with respect to this Indenture or for the appointment
of a receiver or trustee, or for any other remedy hereunder,
unless such holder previously shall have given to the Trustee
written notice of an Event of Default and of the continuance
thereof with respect to the Securities specifying such Event of
Default, as hereinbefore provided, and unless also the holders of
not less than 25% in aggregate principal amount of the Securities
then outstanding shall have made written request upon the Trustee
to institute such action, suit or proceeding in its own name as
Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expens-
es and liabilities to be incurred therein or thereby, and the
Trustee for 60 days after its receipt of such notice, request and
offer of indemnity shall have failed to institute any such
action, suit or proceeding, it being understood and intended, and
being expressly covenanted by the taker and holder of every
Security with every other taker and holder and the Trustee, that
no one or more holders of Securities shall have any right in any
manner whatever by virtue of or by availing of any provision of
this Indenture to affect, disturb or prejudice the rights of any
other holder of Securities, or to obtain or seek to obtain
priority over or preference to any other such holder, or to
enforce any right under this Indenture, except in the manner
herein provided and for the equal, ratable and common benefit of
all holders of Securities.
Notwithstanding any other provisions in this Indenture,
however, the right of any holder of any Security to receive
payment of the principal of (premium, if any) and interest
(including Additional Sums and Compounded Interest, if any) and
Liquidated Damages, if any, on such Security, on or after the
same shall have become due and payable, or to institute suit for
the enforcement of any such payment, shall not be impaired or
affected without the consent of such holder and by accepting a
Security hereunder it is expressly understood, intended and
covenanted by the taker and holder of every Security with every
other such taker and holder and the Trustee, that no one or more
holders of Securities shall have any right in any manner whatso-
ever by virtue or by availing of any provision of this Indenture
to affect, disturb or prejudice the rights of the holders of any
other Securities, or to obtain or seek to obtain priority over or
preference to any other such holder, or to enforce any right
under this Indenture, except in the manner herein provided and
for the equal, ratable and common benefit of all holders of
Securities. For the protection and enforcement of the provisions
of this Section, each and every Securityholder and the Trustee
shall be entitled to such relief as can be given either at law or
in equity.
The Company and the Trustee acknowledge that pursuant
to the Trust Agreement, the holders of Capital Securities are
entitled, in the circumstances and subject to the limitations set
forth therein, to commence a Direct Action with respect to any
Event of Default under this Indenture and the Securities.
SECTION 5.05. Proceedings by Trustee.
In case an Event of Default occurs with respect to
Securities and is continuing, the Trustee may in its discretion
proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any of such
rights, either by suit in equity or by action at law or by
proceeding in bankruptcy or otherwise, whether for the specific
enforcement of any covenant or agreement contained in this
Indenture or in aid of the exercise of any power granted in this
Indenture, or to enforce any other legal or equitable right
vested in the Trustee by this Indenture or by law.
SECTION 5.06. Remedies Cumulative and Continuing.
All powers and remedies given by this Article V to the
Trustee or to the Securityholders shall, to the extent permitted
by law, be deemed cumulative and not exclusive of any other
powers and remedies available to the Trustee or the holders of
the Securities, by judicial proceedings or otherwise, to enforce
the performance or observance of the covenants and agreements
contained in this Indenture or otherwise established with respect
to the Securities, and no delay or omission of the Trustee or of
any holder of any of the Securities to exercise any right or
power accruing upon any Event of Default occurring and continuing
as aforesaid shall impair any such right or power, or shall be
construed to be a waiver of any such default or an acquiescence
therein; and, subject to the provisions of Section 5.04, every
power and remedy given by this Article V or by law to the Trustee
or to the Securityholders may be exercised from time to time, and
as often as shall be deemed expedient, by the Trustee or by the
Securityholders.
SECTION 5.07. Direction of Proceedings and ▇▇▇▇▇▇ of
Defaults by Majority of Securityholders.
The holders of a majority in aggregate principal amount
of the Securities at the time outstanding shall have the right to
direct the time, method, and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust
or power conferred on the Trustee; provided, however, that (sub-
ject to the provisions of Section 6.01) the Trustee shall have
the right to decline to follow any such direction if the Trustee
shall determine that the action so directed would be unjustly
prejudicial to the holders not taking part in such direction or
if the Trustee being advised by counsel determines that the
action or proceeding so directed may not lawfully be taken or if
the Trustee in good faith by its board of directors or trustees,
executive committee, or a trust committee of directors or trust-
ees and/or Responsible Officers shall determine that the action
or proceedings so directed would involve the Trustee in personal
liability. Prior to any declaration accelerating the maturity of
the Securities, the holders of a majority in aggregate principal
amount of the Securities at the time outstanding may on behalf of
the holders of all of the Securities waive any past default or
Event of Default and its consequences except a default (a) in the
payment of principal of or premium, if any, or interest (includ-
ing Additional Sums and Compounded Interest, if any) and Liqui-
dated Damages, if any, on any of the Securities or (b) in respect
of covenants or provisions hereof which cannot be modified or
amended without the consent of the holder of each Security af-
fected; provided, however, that if the Securities are held by the
Property Trustee, such waiver or modification to such waiver
shall not be effective until the holders of a majority in aggre-
gate liquidation amount of Trust Securities shall have consented
to such waiver or modification to such waiver; provided further,
that if the consent of the holder of each outstanding Security is
required, such waiver shall not be effective until each holder of
the Trust Securities shall have consented to such waiver. Upon
any such waiver, the default covered thereby shall be deemed to
be cured for all purposes of this Indenture and the Company, the
Trustee and the holders of the Securities shall be restored to
their former positions and rights hereunder, respectively; but no
such waiver shall extend to any subsequent or other default or
impair any right consequent thereon. Whenever any default or
Event of Default hereunder shall have been waived as permitted by
this Section 5.07, said default or Event of Default shall for all
purposes of the Securities and this Indenture be deemed to have
been cured and to be not continuing.
SECTION 5.08. Notice of Defaults.
(a) The Trustee shall, within 90 days after the
occurrence of a default with respect to the Securities mail to
all Securityholders, as the names and addresses of such holders
appear upon the Security Register, notice of all defaults known
to the Trustee, unless such defaults shall have been cured before
the giving of such notice (the term "defaults" for the purpose of
this Section 5.08 being hereby defined to be the events specified
in clauses (a), (b), (c), (d) and (e) of Section 5.01, not
including periods of grace, if any, provided for therein, and
irrespective of the giving of written notice specified in clause
(c) of Section 5.01); and provided that, except in the case of
default in the payment of the principal of or premium, if any, or
interest (including Additional Sums and Compounded Interest, if
any) and Liquidated Damages, if any, on any of the Securities,
the Trustee shall be protected in withholding such notice if and
so long as the board of directors, the executive committee, or a
trust committee of directors and/or Responsible Officers of the
Trustee in good faith determines that the withholding of such
notice is in the interests of the Securityholders; and provided
further, that in the case of any default of the character speci-
fied in Section 5.01(c) no such notice to Securityholders shall
be given until at least 60 days after the occurrence thereof but
shall be given within 90 days after such occurrence.
(b) Within five Business Days after the occurrence of
any Event of Default actually known to the Trustee, the Trustee
shall transmit notice of such Event of Default to all
Securityholders, unless such Event of Default shall have been
cured or waived.
SECTION 5.09. Undertaking to Pay Costs.
All parties to this Indenture agree, and each holder of
any Security by his acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture,
or in any suit against the Trustee for any action taken or
omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and
that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees and expenses, against any
party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant;
but the provisions of this Section 5.09 shall not apply to any
suit instituted by the Trustee, to any suit instituted by any
Securityholder, or group of Securityholders, holding in the
aggregate more than 10% in aggregate principal amount of the
Securities outstanding, or to any suit instituted by any
Securityholder for the enforcement of the payment of the princi-
pal of (or premium, if any) or interest (including Additional
Sums and Compounded Interest, if any) and Liquidated Damages, if
any, on any Security against the Company on or after the same
shall have become due and payable.
ARTICLE VI
CONCERNING THE TRUSTEE
SECTION 6.01. Duties and Responsibilities of Trustee.
With respect to the holders of the Securities issued
hereunder, the Trustee, prior to the occurrence of an Event of
Default and after the curing or waiving of all Events of Default
which may have occurred, undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture.
In case an Event of Default has occurred (which has not been
cured or waived) the Trustee shall exercise such of the rights
and powers vested in it by this Indenture, and use the same
degree of care and skill in their exercise, as a prudent man
would exercise or use under the circumstances in the conduct of
his own affairs.
No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action,
its own negligent failure to act or its own willful misconduct,
except that
(a) prior to the occurrence of an Event of Default and
after the curing or waiving of all Events of De-
fault which may have occurred
(1) the duties and obligations of the Trustee
shall be determined solely by the express
provisions of this Indenture, and the Trustee
shall not be liable except for the perfor-
▇▇▇▇▇ of such duties and obligations as are
specifically set forth in this Indenture, and
no implied covenants or obligations shall be
read into this Indenture against the Trustee;
and
(2) in the absence of bad faith on the part of
the Trustee, the Trustee may conclusively
rely, as to the truth of the statements and
the correctness of the opinions expressed
therein, upon any certificates or opinions
furnished to the Trustee and conforming to
the requirements of this Indenture; but, in
the case of any such certificates or opinions
which by any provision hereof are specifical-
ly required to be furnished to the Trustee,
the Trustee shall be under a duty to examine
the same to determine whether or not they
conform to the requirements of this Inden-
ture;
(b) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Offi-
cer or Officers, unless it shall be proved that
the Trustee was negligent in ascertaining the
pertinent facts; and
(c) the Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in
good faith, in accordance with the direction of
the Securityholders pursuant to Section 5.07,
relating to the time, method and place of conduct-
ing any proceeding for any remedy available to the
Trustee, or exercising any trust or power con-
ferred upon the Trustee, under this Indenture.
None of the provisions contained in this Indenture
shall require the Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the performance
of any of its duties or in the exercise of any of its rights or
powers, if there is reasonable ground for believing that the
repayment of such funds or liability is not reasonably assured to
it under the terms of this Indenture or adequate indemnity
against such risk is not reasonably assured to it.
SECTION 6.02. Reliance on Documents, Opinions, etc.
Except as otherwise provided in Section 6.01:
(a) the Trustee may rely and shall be protected in
acting or refraining from acting upon any resolu-
tion, certificate, statement, instrument, opinion,
report, notice, request, consent, order, bond,
note, debenture or other paper or document be-
lieved by it to be genuine and to have been signed
or presented by the proper party or parties;
(b) any request, direction, order or demand of the
Company mentioned herein may be sufficiently evi-
denced by an Officers' Certificate (unless other
evidence in respect thereof be herein specifically
prescribed); and any Board Resolution may be evi-
denced to the Trustee by a copy thereof certified
by the Secretary or an Assistant Secretary of the
Company;
(c) the Trustee may consult with counsel of its selec-
tion and any advice or Opinion of Counsel shall be
full and complete authorization and protection in
respect of any action taken or suffered omitted by
it hereunder in good faith and in accordance with
such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exer-
cise any of the rights or powers vested in it by
this Indenture at the request, order or direction
of any of the Securityholders, pursuant to the
provisions of this Indenture, unless such
Securityholders shall have offered to the Trustee
reasonable security or indemnity against the
costs, expenses and liabilities which may be in-
curred therein or thereby;
(e) the Trustee shall not be liable for any action
taken or omitted by it in good faith and believed
by it to be authorized or within the discretion or
rights or powers conferred upon it by this Inden-
ture; nothing contained herein shall, however,
relieve the Trustee of the obligation, upon the
occurrence of an Event of Default (that has not
been cured or waived), to exercise such of the
rights and powers vested in it by this Indenture,
and to use the same degree of care and skill in
their exercise, as a prudent man would exercise or
use under the circumstances in the conduct of his
own affairs;
(f) the Trustee shall not be bound to make any inves-
tigation into the facts or matters stated in any
resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order,
approval, bond, debenture, coupon or other paper
or document, unless requested in writing to do so
by the holders of a majority in aggregate princi-
pal amount of the outstanding Securities; provid-
ed, however, that if the payment within a reason-
able time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the
making of such investigation is, in the opinion of
the Trustee, not reasonably assured to the Trustee
by the security afforded to it by the terms of
this Indenture, the Trustee may require reasonable
indemnity against such expense or liability as a
condition to so proceeding; and
(g) the Trustee may execute any of the trusts or pow-
ers hereunder or perform any duties hereunder
either directly or by or through agents (including
any Authenticating Agent) or attorneys, and the
Trustee shall not be responsible for any miscon-
duct or negligence on the part of any such agent
or attorney appointed by it with due care.
SECTION 6.03. No Responsibility for Recitals, etc.
The recitals contained herein and in the Securities
(except in the certificate of authentication of the Trustee or
the Authenticating Agent) shall be taken as the statements of the
Company and the Trustee and the Authenticating Agent assume no
responsibility for the correctness of the same. The Trustee and
the Authenticating Agent make no representations as to the
validity or sufficiency of this Indenture or of the Securities.
The Trustee and the Authenticating Agent shall not be accountable
for the use or application by the Company of any Securities or
the proceeds of any Securities authenticated and delivered by the
Trustee or the Authenticating Agent in conformity with the
provisions of this Indenture.
SECTION 6.04. Trustee, Authenticating Agent, Paying
Agents, Transfer Agents or Registrar May
Own Securities.
The Trustee or any Authenticating Agent or any paying
agent or any transfer agent or any Security registrar, in its
individual or any other capacity, may become the owner or pledgee
of Securities with the same rights it would have if it were not
Trustee, Authenticating Agent, paying agent, transfer agent or
Security registrar.
SECTION 6.05. Moneys to be Held in Trust.
Subject to the provisions of Section 11.04, all moneys
received by the Trustee or any paying agent shall, until used or
applied as herein provided, be held in trust for the purpose for
which they were received, but need not be segregated from other
funds except to the extent required by law. The Trustee and any
paying agent shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed in
writing with the Company. So long as no Event of Default shall
have occurred and be continuing, all interest allowed on any such
moneys shall be paid from time to time upon the written order of
the Company, signed by the Chairman of the Board of Directors,
the President or a Vice President or the Treasurer or an ▇▇▇▇▇-
▇▇▇▇ Treasurer of the Company.
SECTION 6.06. Compensation and Expenses of Trustee.
The Company, as issuer of Securities under this Inden-
ture, covenants and agrees to pay to the Trustee from time to
time, and the Trustee shall be entitled to, such compensation as
shall be agreed to in writing between the Company and the Trustee
(which shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust), and the
Company will pay or reimburse the Trustee upon its request for
all reasonable expenses, disbursements and advances incurred or
made by the Trustee in accordance with any of the provisions of
this Indenture (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not
regularly in its employ) except any such expense, disbursement or
advance as may arise from its negligence or bad faith. The
Company also covenants to indemnify each of the Trustee or any
predecessor Trustee (and its officers, agents, directors and
employees) for, and to hold it harmless against, any and all
loss, damage, claim, liability or expense including taxes (other
than taxes based on the income of the Trustee) incurred without
negligence or bad faith on the part of the Trustee and arising
out of or in connection with the acceptance or administration of
this trust, including the costs and expenses of defending itself
against any claim of liability in the premises. The obligations
of the Company under this Section 6.06 to compensate and indemni-
fy the Trustee and to pay or reimburse the Trustee for expenses,
disbursements and advances shall constitute additional indebted-
ness hereunder. Such additional indebtedness shall be secured by
a lien prior to that of the Securities upon all property and
funds held or collected by the Trustee as such, except funds held
in trust for the benefit of the holders of particular Securities.
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Sec-
tion 5.01(d) or Section 5.01(e), the expenses (including the
reasonable charges and expenses of its counsel) and the compensa-
tion for the services are intended to constitute expenses of
administration under any applicable federal or state bankruptcy,
insolvency or other similar law.
The provisions of this Section shall survive the
termination of this Indenture.
SECTION 6.07. Officers' Certificate as Evidence.
Except as otherwise provided in Sections 6.01 and 6.02,
whenever in the administration of the provisions of this Inden-
ture the Trustee shall deem it necessary or desirable that a
matter be proved or established prior to taking or omitting any
action hereunder, such matter (unless other evidence in respect
thereof is herein specifically prescribed) may, in the absence of
negligence or bad faith on the part of the Trustee, be deemed to
be conclusively proved and established by an Officers' Certifi-
cate delivered to the Trustee, and such certificate, in the
absence of negligence or bad faith on the part of the Trustee,
shall be full warrant to the Trustee for any action taken or
omitted by it under the provisions of this Indenture upon the
faith thereof.
SECTION 6.08. Conflicting Interest of Trustee.
If the Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Trustee and the Company shall in all respects
comply with the provisions of Section 310(b) of the Trust Inden-
ture Act.
SECTION 6.09. Eligibility of Trustee.
The Trustee hereunder shall at all times be a corpora-
tion organized and doing business under the laws of the United
States of America or any state or territory thereof or of the
District of Columbia or a corporation or other Person permitted
to act as trustee by the Commission authorized under such laws to
exercise corporate trust powers, having a combined capital and
surplus of at least 50 million U.S. dollars ($50,000,000) and
subject to supervision or examination by federal, state, ▇▇▇▇▇▇▇-
▇▇▇▇, or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section 6.09 the com-
bined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most
recent report of condition so published.
The Company may not, nor may any Person directly or
indirectly controlling, controlled by, or under common control
with the Company, serve as Trustee.
In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 6.09,
the Trustee shall resign immediately in the manner and with the
effect specified in Section 6.10.
SECTION 6.10. Resignation or Removal of Trustee.
(a) The Trustee, or any trustee or trustees hereafter
appointed, may at any time resign by giving writ-
ten notice of such resignation to the Company and
by mailing notice thereof to the holders of the
Securities at their addresses as they shall appear
on the Security register. Upon receiving such
notice of resignation, the Company shall promptly
appoint a successor trustee or trustees by written
instrument, in duplicate, one copy of which in-
strument shall be delivered to the resigning
Trustee and one copy to the successor trustee. If
no successor trustee shall have been so appointed
and have accepted appointment within 60 days after
the mailing of such notice of resignation to the
affected Securityholders, the resigning Trustee
may petition any court of competent jurisdiction
for the appointment of a successor trustee, or any
Securityholder who has been a bona fide holder of
a Security for at least six months may, subject to
the provisions of Section 5.09, on behalf of him-
self and all others similarly situated, petition
any such court for the appointment of a successor
trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and pre-
scribe, appoint a successor trustee.
(b) In case at any time any of the following shall
occur:
(1) the Trustee shall fail to comply with the
provisions of Section 6.08 after written
request therefor by the Company or by any
Securityholder who has been a bona fide hold-
er of a Security or Securities for at least
six months, or
(2) the Trustee shall cease to be eligible in
accordance with the provisions of Sec-
tion 6.09 and shall fail to resign after
written request therefor by the Company or by
any such Securityholder, or
(3 or shall be adjudged a bankrupt or insolvent,
or a receiver of the Trustee or of its prop-
erty shall be appointed, or any public offi-
cer shall take charge or control of the
Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or
liquidation,
then, in any such case, the Company may remove the
Trustee and appoint a successor trustee by written
instrument, in duplicate, one copy of which in-
strument shall be delivered to the Trustee so
removed and one copy to the successor trustee, or,
subject to the provisions of Section 5.09, any
Securityholder who has been a bona fide holder of
a Security for at least six months may, on behalf
of himself and all others similarly situated,
petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of
a successor trustee. Such court may thereupon,
after such notice, if any, as it may deem proper
and prescribe, remove the Trustee and appoint a
successor trustee.
(c) The holders of a majority in aggregate principal
amount of the Securities at the time outstanding
may at any time remove the Trustee and nominate a
successor trustee, which shall be deemed appointed
as successor trustee unless within 10 days after
such nomination the Company objects thereto or if
no successor trustee shall have been so appointed
and shall have accepted appointment within 30 days
after such removal, in which case the Trustee so
removed or any Securityholder, upon the terms and
conditions and otherwise as in subsection (a) of
this Section 6.10 provided, may petition any court
of competent jurisdiction for an appointment of a
successor trustee.
(d) Any resignation or removal of the Trustee and
appointment of a successor trustee pursuant to any
of the provisions of this Section 6.10 shall be-
come effective upon acceptance of appointment by
the successor trustee as provided in Section 6.11.
SECTION 6.11. Acceptance by Successor Trustee.
Any successor trustee appointed as provided in Sec-
tion 6.10 shall execute, acknowledge and deliver to the Company
and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal
of the retiring trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, duties and obligations
of its predecessor hereunder, with like effect as if originally
named as trustee herein; but, nevertheless, on the written
request of the Company or of the successor trustee, the trustee
ceasing to act shall, upon payment of any amounts then due it
pursuant to the provisions of Section 6.06, execute and deliver
an instrument transferring to such successor trustee all the
rights and powers of the trustee so ceasing to act and shall duly
assign, transfer and deliver to such successor trustee all prop-
erty and money held by such retiring trustee thereunder. Upon
request of any such successor trustee, the Company shall execute
any and all instruments in writing for more fully and certainly
vesting in and confirming to such successor trustee all such
rights and powers. Any trustee ceasing to act shall, neverthe-
less, retain a lien upon all property or funds held or collected
by such trustee to secure any amounts then due it pursuant to the
provisions of Section 6.06.
No successor trustee shall accept appointment as
provided in this Section 6.11 unless at the time of such accep-
tance such successor trustee shall be qualified under the provi-
sions of Section 6.08 and eligible under the provisions of
Section 6.09.
Upon acceptance of appointment by a successor trustee
as provided in this Section 6.11, the Company shall mail notice
of the succession of such trustee hereunder to the holders of
Securities at their addresses as they shall appear on the Securi-
ty register. If the Company fails to mail such notice within 10
days after the acceptance of appointment by the successor trust-
ee, the successor trustee shall cause such notice to be mailed at
the expense of the Company.
SECTION 6.12. Succession by ▇▇▇▇▇▇, etc.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corpora-
tion resulting from any merger, conversion or consolidation to
which the Trustee shall be a party, or any corporation succeeding
to all or substantially all of the corporate trust business of
the Trustee, shall be the successor of the Trustee hereunder
without the execution or filing of any paper or any further act
on the part of any of the parties hereto.
In case at the time such successor to the Trustee shall
succeed to the trusts created by this Indenture any Securities
shall have been authenticated but not delivered, any such succes-
sor to the Trustee may adopt the certificate of authentication of
any predecessor trustee, and deliver such Securities so authenti-
cated; and in case at that time any of the Securities shall not
have been authenticated, any successor to the Trustee may authen-
ticate such Securities either in the name of any predecessor
hereunder or in the name of the successor trustee; and in all
such cases such certificates shall have the full force which the
Securities or this Indenture elsewhere provides that the certifi-
cate of the Trustee shall have; provided, however, that the right
to adopt the certificate of authentication of any predecessor
Trustee or authenticate Securities in the name of any predecessor
Trustee shall apply only to its successor or successors by
merger, conversion or consolidation.
SECTION 6.13. Limitation on Rights of Trustee as a
Creditor.
The Trustee shall comply with Section 311(a) of the
Trust Indenture Act, excluding any creditor relationship de-
scribed in Section 311(b) of the Trust Indenture Act. A Trustee
who has resigned or been removed shall be subject to Sec-
tion 311(a) of the Trust Indenture Act to the extent included
therein.
SECTION 6.14. Authenticating Agents.
There may be one or more Authenticating Agents appoint-
ed by the Trustee upon the request of the Company with power to
act on its behalf and subject to its direction in the authentica-
tion and delivery of Securities issued upon exchange or transfer
thereof as fully to all intents and purposes as though any such
Authenticating Agent had been expressly authorized to authenti-
cate and deliver Securities; provided, that the Trustee shall
have no liability to the Company for any acts or omissions of the
Authenticating Agent with respect to the authentication and
delivery of Securities. Any such Authenticating Agent shall at
all times be a corporation organized and doing business under the
laws of the United States or of any state or territory thereof or
of the District of Columbia authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of at
least $5,000,000 and being subject to supervision or examination
by federal, state, territorial or District of Columbia authority.
If such corporation publishes reports of condition at least
annually pursuant to law or the requirements of such authority,
then for the purposes of this Section 6.14 the combined capital
and surplus of such corporation shall be deemed to be its com-
bined capital and surplus as set forth in its most recent report
of condition so published. If at any time an Authenticating
Agent shall cease to be eligible in accordance with the provi-
sions of this Section, it shall resign immediately in the manner
and with the effect herein specified in this Section.
Any corporation into which any Authenticating Agent may
be merged or converted or with which it may be consolidated, or
any corporation resulting from any merger, consolidation or
conversion to which any Authenticating Agent shall be a party, or
any corporation succeeding to the corporate trust business of any
Authenticating Agent, shall be the successor of such Authenti-
cating Agent hereunder, if such successor corporation is other-
wise eligible under this Section 6.14 without the execution or
filing of any paper or any further act on the part of the parties
hereto or such Authenticating Agent.
Any Authenticating Agent may at any time resign by
giving written notice of resignation to the Trustee and to the
Company. The Trustee may at any time terminate the agency of any
Authenticating Agent by giving written notice of termination to
such Authenticating Agent and to the Company. Upon receiving
such a notice of resignation or upon such a termination, or in
case at any time any Authenticating Agent shall cease to be
eligible under this Section 6.14, the Trustee may, and upon the
request of the Company shall, promptly appoint a successor
Authenticating Agent eligible under this Section 6.14, shall give
written notice of such appointment to the Company and shall mail
notice of such appointment to all Securityholders as the names
and addresses of such holders appear on the Security Register.
Any successor Authenticating Agent upon acceptance of its ap-
pointment hereunder shall become vested with all rights, powers,
duties and responsibilities of its predecessor hereunder, with
like effect as if originally named as Authenticating Agent
herein.
The Company, as borrower, agrees to pay to any Authen-
ticating Agent from time to time reasonable compensation for its
services. Any Authenticating Agent shall have no responsibility
or liability for any action taken by it as such in accordance
with the directions of the Trustee.
ARTICLE VII
CONCERNING THE SECURITYHOLDERS
SECTION 7.01. Action by Securityholders.
Whenever in this Indenture it is provided that the
holders of a specified percentage in aggregate principal amount
of the Securities may take any action (including the making of
any demand or request, the giving of any notice, consent or
waiver or the taking of any other action) the fact that at the
time of taking any such action the holders of such specified
percentage have joined therein may be evidenced (a) by any
instrument or any number of instruments of similar tenor executed
by such Securityholders in person or by agent or proxy appointed
in writing, or (b) by the record of such holders of Securities
voting in favor thereof at any meeting of such Securityholders
duly called and held in accordance with the provisions of Article
VIII, or (c) by a combination of such instrument or instruments
and any such record of such a meeting of such Securityholders.
If the Company shall solicit from the Securityholders
any request, demand, authorization, direction, notice, consent,
waiver or other action, the Company may, at its option, as
evidenced by an Officers' Certificate, fix in advance a record
date for the determination of Securityholders entitled to give
such request, demand, authorization, direction, notice, consent,
waiver or other action, but the Company shall have no obligation
to do so. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other action
may be given before or after the record date, but only the
Securityholders of record at the close of business on the record
date shall be deemed to be Securityholders for the purposes of
determining whether Securityholders of the requisite proportion
of outstanding Securities have authorized or agreed or consented
to such request, demand, authorization, direction, notice,
consent, waiver or other action, and for that purpose the out-
standing Securities shall be computed as of the record date;
provided, however, that no such authorization, agreement or
consent by such Securityholders on the record date shall be
deemed effective unless it shall become effective pursuant to the
provisions of this Indenture not later than six months after the
record date.
SECTION 7.02. Proof of Execution by Securityholders.
Subject to the provisions of Section 6.01, 6.02 and
8.05, proof of the execution of any instrument by a
Securityholder or his agent or proxy shall be sufficient if made
in accordance with such reasonable rules and regulations as may
be prescribed by the Trustee or in such manner as shall be
satisfactory to the Trustee. The ownership of Securities shall
be proved by the Security Register or by a certificate of the
Security registrar. The Trustee may require such additional
proof of any matter referred to in this Section as it shall deem
necessary.
The record of any Securityholders' meeting shall be
proved in the manner provided in Section 8.06.
SECTION 7.03. Who Are Deemed Absolute Owners.
Prior to due presentment for registration of transfer
of any Security, the Company, the Trustee, any Authenticating
Agent, any paying agent, any transfer agent and any Security
registrar may deem the person in whose name such Security shall
be registered upon the Security Register to be, and may treat him
as, the absolute owner of such Security (whether or not such
Security shall be overdue) for the purpose of receiving payment
of or on account of the principal of and premium, if any, and
(subject to Section 2.06) interest on such Security and for all
other purposes; and neither the Company nor the Trustee nor any
Authenticating Agent nor any paying agent nor any transfer agent
nor any Security registrar shall be affected by any notice to the
contrary. All such payments so made to any holder for the time
being or upon his order shall be valid, and, to the extent of the
sum or sums so paid, effectual to satisfy and discharge the
liability for moneys payable upon any such Security.
SECTION 7.04. Securities Owned by Company Deemed Not
Outstanding.
In determining whether the holders of the requisite
aggregate principal amount of Securities have concurred in any
direction, consent or waiver under this Indenture, Securities
which are owned by the Company or any other obligor on the
Securities or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the
Company or any other obligor on the Securities shall be disre-
garded and deemed not to be outstanding for the purpose of any
such determination; provided that for the purposes of determining
whether the Trustee shall be protected in relying on any such
direction, consent or waiver, only Securities which the Trustee
actually knows are so owned shall be so disregarded. Securities
so owned which have been pledged in good faith may be regarded as
outstanding for the purposes of this Section 7.04 if the pledgee
shall establish to the satisfaction of the Trustee the pledgee's
right to vote such Securities and that the pledgee is not the
Company or any such other obligor or Person directly or indirect-
ly controlling or controlled by or under direct or indirect
common control with the Company or any such other obligor. In
the case of a dispute as to such right, any decision by the
Trustee taken upon the advice of counsel shall be full protection
to the Trustee.
SECTION 7.05. Revocation of Consents; Future Holders
Bound.
At any time prior to (but not after) the evidencing to
the Trustee, as provided in Section 7.01, of the taking of any
action by the holders of the percentage in aggregate principal
amount of the Securities specified in this Indenture in connec-
tion with such action, any holder of a Security (or any Security
issued in whole or in part in exchange or substitution therefor),
subject to Section 7.01, the serial number of which is shown by
the evidence to be included in the Securities the holders of
which have consented to such action may, by filing written notice
with the Trustee at its principal office and upon proof of
holding as provided in Section 7.02, revoke such action so far as
concerns such Security (or so far as concerns the principal
amount represented by any exchanged or substituted Security).
Except as aforesaid any such action taken by the holder of any
Security shall be conclusive and binding upon such holder and
upon all future holders and owners of such Security, and of any
Security issued in exchange or substitution therefor, irrespec-
tive of whether or not any notation in regard thereto is made
upon such Security or any Security issued in exchange or substi-
tution therefor.
ARTICLE VIII
SECURITYHOLDERS' MEETINGS
SECTION 8.01. Purposes of Meetings.
A meeting of Securityholders may be called at any time
and from time to time pursuant to the provisions of this Article
VIII for any of the following purposes:
(a) to give any notice to the Company or to the Trust-
ee, or to give any directions to the Trustee, or
to consent to the waiving of any default hereunder
and its consequences, or to take any other action
authorized to be taken by Securityholders pursuant
to any of the provisions of Article V;
(b) to remove the Trustee and nominate a successor
trustee pursuant to the provisions of Article VI;
(c) to consent to the execution of an indenture or
indentures supplemental hereto pursuant to the
provisions of Section 9.02; or
(d) to take any other action authorized to be taken by
or on behalf of the holders of any specified ag-
gregate principal amount of such Securities under
any other provision of this Indenture or under
applicable law.
SECTION 8.02. Call of Meetings by Trustee.
The Trustee may at any time call a meeting of
Securityholders to take any action specified in Section 8.01, to
be held at such time and at such place in the Borough of Manhat-
tan, The City of New York, as the Trustee shall determine.
Notice of every meeting of the Securityholders, setting forth the
time and the place of such meeting and in general terms the
action proposed to be taken at such meeting, shall be mailed to
holders of Securities at their addresses as they shall appear on
the Securities Register. Such notice shall be mailed not less
than 20 nor more than 180 days prior to the date fixed for the
meeting.
SECTION 8.03. Call of Meetings by Company or
Securityholders.
In case at any time the Company pursuant to a resolu-
tion of the Board of Directors, or the holders of at least 10% in
aggregate principal amount of the Securities then outstanding,
shall have requested the Trustee to call a meeting of
Securityholders, by written request setting forth in reasonable
detail the action proposed to be taken at the meeting, and the
Trustee shall not have mailed the notice of such meeting within
20 days after receipt of such request, then the Company or such
Securityholders may determine the time and the place in said
Borough of Manhattan for such meeting and may call such meeting
to take any action authorized in Section 8.01, by mailing notice
thereof as provided in Section 8.02.
SECTION 8.04. Qualifications for Voting.
To be entitled to vote at any meeting of
Securityholders a Person shall (a) be a holder of one or more
Securities or (b) a Person appointed by an instrument in writing
as proxy by a holder of one or more Securities. The only Persons
who shall be entitled to be present or to speak at any meeting of
Securityholders shall be the Persons entitled to vote at such
meeting and their counsel and any representatives of the Trustee
and its counsel and any representatives of the Company and its
counsel.
SECTION 8.05. Regulations.
Notwithstanding any other provisions of this Indenture,
the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Securityholders, in regard to proof
of the holding of Securities and of the appointment of proxies,
and in regard to the appointment and duties of inspectors of
votes, the submission and examination of proxies, certificates
and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint
a temporary chairman of the meeting, unless the meeting shall
have been called by the Company or by Securityholders as provided
in Section 8.03, in which case the Company or the Securityholders
calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a perma-
nent secretary of the meeting shall be elected by majority vote
of the meeting.
Subject to the provisions of Section 8.04, at any
meeting each holder of Securities or proxy therefor shall be
entitled to one vote for each $1,000 principal amount of Securi-
ties held or represented by him; provided, however, that no vote
shall be cast or counted at any meeting in respect of any Securi-
ty challenged as not outstanding and ruled by the chairman of the
meeting to be not outstanding. The chairman of the meeting shall
have no right to vote other than by virtue of Securities held by
him or instruments in writing as aforesaid duly designating him
as the person to vote on behalf of other Securityholders. Any
meeting of Securityholders duly called pursuant to the provisions
of Section 8.02 or 8.03 may be adjourned from time to time by a
majority of those present, and the meeting may be held as so
adjourned without further notice.
SECTION 8.06. Voting.
The vote upon any resolution submitted to any meeting
of holders of Securities shall be by written ballots on which
shall be subscribed the signatures of such holders or of their
representatives by proxy and the serial number or numbers of the
Securities held or represented by them. The permanent chairman
of the meeting shall appoint two inspectors of votes who shall
count all votes cast at the meeting for or against any resolution
and who shall make and file with the secretary of the meeting
their verified written reports in triplicate of all votes cast at
the meeting. A record in duplicate of the proceedings of each
meeting of Securityholders shall be prepared by the secretary of
the meeting and there shall be attached to said record the
original reports of the inspectors of votes on any vote by ballot
taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the
meeting and showing that said notice was mailed as provided in
Section 8.02. The record shall show the serial numbers of the
Securities voting in favor of or against any resolution. The
record shall be signed and verified by the affidavits of the
permanent chairman and secretary of the meeting and one of the
duplicates shall be delivered to the Company and the other to the
Trustee to be preserved by the Trustee, the latter to have at-
tached thereto the ballots voted at the meeting. The holders of
the Series A Capital Securities and the Series B Capital Securi-
ties shall vote for all purposes as a single class.
Any record so signed and verified shall be conclusive
evidence of the matters therein stated.
ARTICLE IX
AMENDMENTS
SECTION 9.01. Without Consent of Securityholders.
The Company and the Trustee may from time to time and
at any time amend the Indenture, without the consent of the
Securityholders, for one or more of the following purposes:
(a) to evidence the succession of another Person to
the Company, or successive successions, and the
assumption by the successor Person of the cove-
nants, agreements and obligations of the Company
pursuant to Article X hereof;
\AP to add to the covenants of the Company such fur-
ther covenants, restrictions or conditions for the
protection of the Securityholders as the Board of
Directors and the Trustee shall consider to be for
the protection of the Securityholders, and to make
the occurrence, or the occurrence and continuance,
of a default in any of such additional covenants,
restrictions or conditions a default or an Event
of Default permitting the enforcement of all or
any of the remedies provided in this Indenture as
herein set forth; provided, however, that in re-
spect of any such additional covenant, restriction
or condition such amendment may provide for a
particular period of grace after default (which
period may be shorter or longer than that allowed
in the case of other defaults) or may provide for
an immediate enforcement upon such default or may
limit the remedies available to the Trustee upon
such default;
(c) to provide for the issuance under this Indenture
of Securities in coupon form (including Securities
registrable as to principal only) and to provide
for exchangeability of such Securities with the
Securities issued hereunder in fully registered
form and to make all appropriate changes for such
purpose;
(d) to cure any ambiguity or to correct or supplement
any provision contained herein or in any supple-
mental indenture which may be defective or incon-
sistent with any other provision contained herein
or in any supplemental indenture, or to make such
other provisions in regard to matters or questions
arising under this Indenture; provided that any
such action shall not materially adversely affect
the interests of the holders of the Securities;
(e) to evidence and provide for the acceptance of
appointment hereunder by a successor trustee with
respect to the Securities;
(f) to make provision for transfer procedures, certif-
ication, book-entry provisions, the form of re-
stricted securities legends, if any, to be placed
on Securities, and all other matters required
pursuant to Section 2.07 or otherwise necessary,
desirable or appropriate in connection with the
issuance of Securities to holders of Capital Secu-
rities in the event of a distribution of Securi-
ties by Sovereign Capital Trust following a Disso-
lution Event;
(g) to qualify or maintain qualification of this In-
denture under the Trust Indenture Act; or
(h) to make any change that does not adversely affect
the rights of any Securityholder in any material
respect.
The Trustee is hereby authorized to join with the
Company in the execution of any supplemental indenture to effect
such amendment, to make any further appropriate agreements and
stipulations which may be therein contained and to accept the
conveyance, transfer and assignment of any property thereunder,
but the Trustee shall not be obligated to, but may in its discre-
tion, enter into any such supplemental indenture which affects
the Trustee's own rights, duties or immunities under this Inden-
ture or otherwise.
Any amendment to the Indenture authorized by the
provisions of this Section 9.01 may be executed by the Company
and the Trustee without the consent of the holders of any of the
Securities at the time outstanding, notwithstanding any of the
provisions of Section 9.02.
SECTION 9.02. With Consent of Securityholders.
With the consent (evidenced as provided in Sec-
tion 7.01) of the holders of a majority in aggregate principal
amount of the Securities at the time outstanding, the Company,
when authorized by a Board Resolution, and the Trustee may from
time to time and at any time amend the Indenture for the purpose
of adding any provisions to or changing in any manner or elimi-
nating any of the provisions of this Indenture or of modifying in
any manner the rights of the holders of the Securities; provided,
however, that no such amendment shall without the consent of the
holders of each Security then outstanding and affected thereby
(i) change the Maturity Date of any Security, or reduce the rate
or extend the time of payment of interest thereon (except as
contemplated by Article XVI), or reduce the principal amount
thereof, or reduce any amount payable on redemption thereof, or
make the principal thereof or any interest or premium thereon
payable in any coin or currency other than that provided in the
Securities, or impair or affect the right of any Securityholder
to institute suit for payment thereof, or (ii) reduce the afore-
said percentage of Securities the holders of which are required
to consent to any such amendment to the Indenture, provided,
however, that if the Securities are held by Sovereign Capital
Trust, such amendment shall not be effective until the holders of
a majority in liquidation amount of Trust Securities shall have
consented to such amendment; provided, further, that if the
consent of the holder of each outstanding Security is required,
such amendment shall not be effective until each holder of the
Trust Securities shall have consented to such amendment.
Upon the request of the Company accompanied by a copy
of a resolution of the Board of Directors certified by its
Secretary or Assistant Secretary authorizing the execution of any
supplemental indenture affecting such amendment, and upon the
filing with the Trustee of evidence of the consent of
Securityholders as aforesaid, the Trustee shall join with the
Company in the execution of such supplemental indenture unless
such supplemental indenture affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligat-
ed to, enter into such supplemental indenture.
Promptly after the execution by the Company and the
Trustee of any supplemental indenture pursuant to the provisions
of this Section, the Trustee shall transmit by mail, first class
postage prepaid, a notice, prepared by the Company, setting forth
in general terms the substance of such supplemental indenture, to
the Securityholders as their names and addresses appear upon the
Security Register. Any failure of the Trustee to mail such
notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture.
It shall not be necessary for the consent of the
Securityholders under this Section 9.02 to approve the particular
form of any proposed supplemental indenture, but it shall be
sufficient if such consent shall approve the substance thereof.
SECTION 9.03. Compliance with Trust Indenture Act;
Effect of Supplemental Indentures.
Any supplemental indenture executed pursuant to the
provisions of this Article IX shall comply with the Trust Inden-
ture Act. Upon the execution of any supplemental indenture
pursuant to the provisions of this Article IX, this Indenture
shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights,
obligations, duties and immunities under this Indenture of the
Trustee, the Company and the holders of Securities shall thereaf-
ter be determined, exercised and enforced hereunder subject in
all respects to such modifications and amendments and all the
terms and conditions of any such supplemental indenture shall be
and be deemed to be part of the terms and conditions of this
Indenture for any and all purposes.
SECTION 9.04. Notation on Securities.
Securities authenticated and delivered after the
execution of any supplemental indenture affecting such series
pursuant to the provisions of this Article IX may bear a notation
in form approved by the Trustee as to any matter provided for in
such supplemental indenture. If the Company or the Trustee shall
so determine, new Securities so modified as to conform, in the
opinion of the Trustee and the Board of Directors, to any modifi-
cation of this Indenture contained in any such supplemental
indenture may be prepared and executed by the Company, authenti-
cated by the Trustee or the Authenticating Agent and delivered in
exchange for the Securities then outstanding.
SECTION 9.05. Evidence of Compliance of Supplemental
Indenture to be Furnished Trustee.
The Trustee, subject to the provisions of Sections 6.01
and 6.02, may receive an Officers' Certificate and an Opinion of
Counsel as conclusive evidence that any supplemental indenture
executed pursuant hereto complies with the requirements of this
Article IX.
ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 10.01. Company May Consolidate, etc., on Cer-
tain Terms.
Nothing contained in this Indenture or in any of the
Securities shall prevent any consolidation or merger of the
Company with or into any other Person (whether or not affiliated
with the Company, as the case may be), or successive consolida-
tions or mergers in which the Company or its successor or succes-
sors, as the case may be, shall be a party or parties, or shall
prevent any sale, conveyance, transfer or lease of the property
of the Company, or its successor or successors as the case may
be, as an entirety, or substantially as an entirety, to any other
Person (whether or not affiliated with the Company, or its
successor or successors, as the case may be authorized to acquire
and operate the same; provided, that (a) the Company is the
surviving Person, or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which
such sale, conveyance, transfer or lease of property is made is a
Person organized and existing under the laws of the United States
or any State thereof or the District of Columbia, and (b) upon
any such consolidation, merger, sale, conveyance, transfer or
lease, the due and punctual payment of the principal of (and
premium, if any) and interest on the Securities according to
their tenor and the due and punctual performance and observance
of all the covenants and conditions of this Indenture to be kept
or performed by the Company shall be expressly assumed, by
supplemental indenture (which shall conform to the provisions of
the Trust Indenture Act, as then in effect) satisfactory in form
to the Trustee executed and delivered to the Trustee by the
Person formed by such consolidation, or into which the Company
shall have been merged, or by the Person which shall have ac-
quired such property, as the case may be, and (c) after giving
effect to such consolidation, merger, sale, conveyance, transfer
or lease, no Default or Event of Default shall have occurred and
be continuing.
SECTION 10.02. Successor Corporation to be Substituted
for Company.
In case of any such consolidation, merger, conveyance
or transfer and upon the assumption by the successor corporation,
by supplemental indenture, executed and delivered to the Trustee
and satisfactory in form to the Trustee, of the due and punctual
payment of the principal of and premium, if any, and interest on
all of the Securities and the due and punctual performance and
observance of all of the covenants and conditions of this Inden-
ture to be performed or observed by the Company, such successor
Person shall succeed to and be substituted for the Company, with
the same effect as if it had been named herein as the party of
the first part, and the Company thereupon shall be relieved of
any further liability or obligation hereunder or upon the Securi-
ties. Such successor Person thereupon may cause to be signed,
and may issue either in its own name or in the name of Sovereign
Bancorp, Inc., any or all of the Securities issuable hereunder
which theretofore shall not have been signed by the Company and
delivered to the Trustee or the Authenticating Agent; and, upon
the order of such successor Person instead of the Company and
subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee or the Authenticating Agent
shall authenticate and deliver any Securities which previously
shall have been signed and delivered by the officers of the
Company to the Trustee or the Authenticating Agent for authenti-
cation, and any Securities which such successor Person thereafter
shall cause to be signed and delivered to the Trustee or the
Authenticating Agent for that purpose. All the Securities so
issued shall in all respects have the same legal rank and benefit
under this Indenture as the Securities theretofore or thereafter
issued in accordance with the terms of this Indenture as though
all of such Indentures had been issued at the date of the execu-
tion hereof.
SECTION 10.03. Opinion of Counsel to be Given Trustee.
The Trustee, subject to the provisions of Sections 6.01
and 6.02, may receive an Opinion of Counsel as conclusive evi-
dence that any consolidation, merger, sale, conveyance, transfer
or lease, and any assumption, permitted or required by the terms
of this Article X complies with the provisions of this Article X.
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 11.01. Discharge of Indenture.
When (a) the Company shall deliver to the Trustee for
cancellation all Securities theretofore authenticated (other than
any Securities which shall have been destroyed, lost or stolen
and which shall have been replaced as provided in Sec-
tion 2.08) and not theretofore cancelled, or (b) all the Securi-
ties not theretofore cancelled or delivered to the Trustee for
cancellation shall have become due and payable, or are by their
terms to become due and payable within one year or are to be
called for redemption within one year under arrangements satis-
factory to the Trustee for the giving of notice of redemption,
and the Company shall deposit with the Trustee, in trust, funds
sufficient to pay on the Maturity Date or upon redemption all of
the Securities (other than any Securities which shall have been
destroyed, lost or stolen and which shall have been replaced as
provided in Section 2.08) not theretofore cancelled or delivered
to the Trustee for cancellation, including principal and premium,
if any, and interest (including Additional Sums and Compounded
Interest, if any) and Liquidated Damages, if any, due or to
become due to the Maturity Date or redemption date, as the case
may be, but excluding, however, the amount of any moneys for the
payment of principal of or premium, if any, or interest (includ-
ing Additional Sums and Compounded Interest, if any) and Liqui-
dated Damages, if any, on the Securities (1) theretofore repaid
to the Company in accordance with the provisions of Sec-
tion 11.04, or (2) paid to any State or to the District of
Columbia pursuant to its unclaimed property or similar laws, and
if in either case the Company shall also pay or cause to be paid
all other sums payable hereunder by the Company, then this
Indenture shall cease to be of further effect except for the
provisions of Sections 2.02, 2.07, 2.08, 3.01, 3.02, 3.04, 6.06,
6.10 and 11.04 hereof, which shall survive until such Securities
shall mature and be paid. Thereafter, Sections 6.06, 6.10 and
11.04 shall survive, and the Trustee, on demand of the Company
accompanied by any Officers' Certificate and an Opinion of
Counsel and at the cost and expense of the Company, shall execute
proper instruments acknowledging satisfaction of and discharging
this Indenture, the Company, however, hereby agreeing to ▇▇▇▇-
▇▇▇▇▇ the Trustee for any costs or expenses thereafter reasonably
and properly incurred by the Trustee in connection with this
Indenture or the Securities.
SECTION 11.02. Deposited Moneys and U.S. Government
Obligations to be Held in Trust by
Trustee.
Subject to the provisions of Section 11.04, all moneys
and U.S. Government Obligations deposited with the Trustee
pursuant to Sections 11.01 or 11.05 shall be held in trust and
applied by it to the payment, either directly or through any
paying agent (including the Company if acting as its own paying
agent), to the holders of the particular Securities for the
payment of which such moneys or U.S. Government Obligations have
been deposited with the Trustee, of all sums due and to become
due thereon for principal, premium, if any, and interest.
The Company shall pay and indemnify the Trustee against
any tax, fee or other charge imposed on or assessed against the
U.S. Government Obligations deposited pursuant to Section 11.05
or the principal and interest received in respect thereof other
than any such tax, fee or other charge which by law is for the
account of the holders of outstanding Securities.
SECTION 11.03. Paying Agent to Repay Moneys Held.
Upon the satisfaction and discharge of this Indenture
all moneys then held by any paying agent of the Securities (other
than the Trustee) shall, upon written demand of the Company, be
repaid to it or paid to the Trustee, and thereupon such paying
agent shall be released from all further liability with respect
to such moneys.
SECTION 11.04. Return of Unclaimed Moneys.
Any moneys deposited with or paid to the Trustee or any
paying agent for payment of the principal of or premium, if any,
or interest on Securities and not applied but remaining unclaimed
by the holders of Securities for two years after the date upon
which the principal of or premium, if any, or interest (including
Additional Sums and Compounded Interest, if any) and Liquidated
Damages, if any, on such Securities, as the case may be, shall
have become due and payable, shall be repaid to the Company by
the Trustee or such paying agent on written demand; and the
holder of any of the Securities shall thereafter look only to the
Company for any payment which such holder may be entitled to
collect and all liability of the Trustee or such paying agent
with respect to such moneys shall thereupon cease.
SECTION 11.05. Defeasance Upon Deposit of Moneys or
U.S. Government Obligations.
The Company shall be deemed to have been Discharged (as
defined below) from its obligations with respect to the Securi-
ties on the 91st day after the applicable conditions set forth
below have been satisfied:
(1) the Company shall have deposited or caused to be
deposited irrevocably with the Trustee or the
Defeasance Agent (as defined below) as trust funds
in trust, specifically pledged as security for,
and dedicated solely to, the benefit of the hold-
ers of the Securities (i) money in an amount, or
(ii) U.S. Government Obligations which through the
payment of interest and principal in respect
thereof in accordance with their terms will pro-
vide, not later than one day before the due date
of any payment, money in an amount, or (iii) a
combination of (i) and (ii), sufficient, in the
opinion (with respect to (ii) and (iii)) of a
nationally recognized firm of independent public
accountants expressed in a written certification
thereof delivered to the Trustee and the ▇▇▇▇▇-
▇▇▇▇▇ Agent, if any, to pay and discharge each
installment of principal of and interest and pre-
mium, if any, on the outstanding Securities on the
dates such installments of principal, interest or
premium are due;
(2) if the Securities are then listed on any national
securities exchange, the Company shall have deliv-
ered to the Trustee and the Defeasance Agent, if
any, an Opinion of Counsel to the effect that the
exercise of the option under this Section 11.05
would not cause such Securities to be delisted
from such exchange;
(3) no Default or Event of Default with respect to the
Securities shall have occurred and be continuing
on the date of such deposit; and
(4) the Company shall have delivered to the Trustee
and the Defeasance Agent, if any, an Opinion of
Counsel to the effect that holders of the Securi-
ties will not recognize income, gain or loss for
United States federal income tax purposes as a
result of the exercise of the option under this
Section 11.05 and will be subject to United States
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 option had not been exer-
cised, and such opinion shall be based on a stat-
ute so providing or be accompanied by a private
letter ruling to that effect received from the
United States Internal Revenue Service or a reve-
nue ruling pertaining to a comparable form of
transaction to that effect published by the United
States Internal Revenue Service.
"Discharged" means that the Company shall be deemed to
have paid and discharged the entire indebtedness represented by,
and obligations under, the Securities and to have satisfied all
the obligations under this Indenture relating to the Securities
(and the Trustee, at the expense of the Company, shall execute
proper instruments acknowledging the same), except (A) the rights
of holders of Securities to receive, from the trust fund de-
scribed in clause (1) above, payment of the principal of and the
interest and premium, if any, on the Securities when such pay-
ments are due; (B) the Company's obligations with respect to the
Securities under Sections 2.07, 2.08, 5.02 and 11.04; and (C) the
rights, powers, trusts, duties and immunities of the Trustee
hereunder.
"Defeasance Agent" means another financial institution
which is eligible to act as Trustee hereunder and which assumes
all of the obligations of the Trustee necessary to enable the
Trustee to act hereunder. In the event such a Defeasance Agent
is appointed pursuant to this Section, the following conditions
shall apply:
(1) The Trustee shall have approval rights over the
document appointing such Defeasance Agent and the
document setting forth such Defeasance Agent's
rights and responsibilities;
(2) The Defeasance Agent shall provide verification to
the Trustee acknowledging receipt of sufficient
money and/or U. S. Government Obligations to meet
the applicable conditions set forth in this Sec-
tion 11.05.
ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 12.01. Indenture and Securities Solely Corpo-
rate Obligations.
No recourse for the payment of the principal of or
premium, if any, or interest on any Security, or for any claim
based thereon or otherwise in respect thereof, and no recourse
under or upon any obligation, covenant or agreement of the
Company in this Indenture, or in any Security, or because of the
creation of any indebtedness represented thereby, shall be had
against any incorporator, stockholder, officer or director, as
such, past, present or future, of the Company or of any successor
Person to the Company, either directly or through the Company or
any successor Person to the Company, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of
any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby expressly waived and
released as a condition of, and as a consideration for, the
execution of this Indenture and the issue of the Securities.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01. Successors.
All the covenants, stipulations, promises and agree-
ments in this Indenture contained by the Company shall bind its
successors and assigns whether so expressed or not.
SECTION 13.02. Official Acts by Successor Corporation.
Any act or proceeding by any provision of this Inden-
ture authorized or required to be done or performed by any board,
committee or officer of the Company shall and may be done and
performed with like force and effect by the like board, committee
or officer of any corporation that shall at the time be the
lawful sole successor of the Company.
SECTION 13.03. Surrender of Company Powers.
The Company by instrument in writing executed by
authority of 2/3 (two-thirds) of its Board of Directors and
delivered to the Trustee may surrender any of the powers reserved
to the Company, and thereupon such power so surrendered shall
terminate both as to the Company, as the case may be, and as to
any successor Person.
SECTION 13.04. Addresses for Notices, etc.
Any notice or demand which by any provision of this
Indenture is required or permitted to be given or served by the
Trustee or by the holders of Securities on the Company may be
given or served by being deposited postage prepaid by registered
or certified mail in a post office letter box addressed (until
another address is filed by the Company with the Trustee for the
purpose) to the Company at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief Financial Officer. Any
notice, direction, request or demand by any Securityholder to or
upon the Trustee shall be deemed to have been sufficiently given
or made, for all purposes, if given or made in writing at the
office of the Trustee, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust Administration Department
(unless another address is provided by the Trustee to the Company
for such purpose). Any notice or communication to a
Securityholder shall be mailed by first class mail to his or her
address shown on the register kept by the Security Registrar.
SECTION 13.05. Governing Law.
This Indenture and each Security shall be deemed to be
a contract made under the laws of the State of New York, and for
all purposes shall be governed by and construed in accordance
with the laws of said State, without regard to conflicts of laws
principles thereof.
SECTION 13.06. Evidence of Compliance with Conditions
Precedent.
Upon any application or demand by the Company to the
Trustee to take any action under any of the provisions of this
Indenture, the Company shall furnish to the Trustee an Officers'
Certificate stating that in the opinion of the signers all
conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with and an
Opinion of Counsel stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
Each certificate or opinion provided for in this
Indenture and delivered to the Trustee with respect to compliance
with a condition or covenant provided for in this Indenture
(except certificates delivered pursuant to Section 3.05) shall
include (1) a statement that the Person making such certificate
or opinion has read such covenant or condition; (2) a brief
statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in
such certificate or opinion are based; (3) a statement that, in
the opinion of such Person, he has made such examination or
investigation as is necessary to enable him to express an in-
formed opinion as to whether or not such covenant or condition
has been complied with; and (4) a statement as to whether or not,
in the opinion of such person, such condition or covenant has
been complied with.
SECTION 13.07. Business Days.
In any case where the date of payment of principal of
or premium, if any, or interest on the Securities will not be a
Business Day, the payment of such principal of or premium, if
any, or interest on the Securities need not be made on such date
but may be made on the next succeeding Business Day (and without
any interest or other payment in respect of such delay) except
that if such next succeeding Business Day falls in the next
succeeding calendar year, then such payment shall be made on the
immediately preceding Business Day, in each case with the same
force and effect as if made on the date of payment.
SECTION 13.08. Trust Indenture Act to Control.
If and to the extent that any provision of this Inden-
ture limits, qualifies or conflicts with the duties imposed by
Sections 310 to 317, inclusive, of the Trust Indenture Act of
1939, such imposed duties shall control.
SECTION 13.09. Table of Contents, Headings, etc.
The table of contents and the titles and headings of
the articles and sections of this Indenture have been inserted
for convenience of reference only, are not to be considered a
part hereof, and shall in no way modify or restrict any of the
terms or provisions hereof.
SECTION 13.10. Execution in Counterparts.
This Indenture may be executed in any number of coun-
terparts, each of which shall be an original, but such counter-
parts shall together constitute but one and the same instrument.
SECTION 13.11. Separability.
In case any one or more of the provisions contained in
this Indenture or in the Securities 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 Indenture or of the Securities, but this
Indenture and the Securities shall be construed as if such
invalid or illegal or unenforceable provision had never been
contained herein or therein.
SECTION 13.12. Assignment.
The Company will have the right at all times to assign
any of its respective rights or obligations under this Indenture
to a direct or indirect wholly owned Subsidiary of the Company,
provided that, in the event of any such assignment, the Company
will remain liable for all such obligations. Subject to the
foregoing, the Indenture is binding upon and inures to the
benefit of the parties thereto and their respective successors
and assigns. This Indenture may not otherwise be assigned by the
parties thereto.
SECTION 13.13. Acknowledgement of Rights.
The Company acknowledges that, with respect to any
Securities held by Sovereign Capital Trust or a trustee of such
trust, if the Property Trustee of such Trust fails to enforce its
rights under this Indenture as the holder of the Securities held
as the assets of Sovereign Capital Trust any holder of Capital
Securities may institute legal proceedings directly against the
Company to enforce such Property Trustee's rights under this
Indenture without first instituting any legal proceedings against
such Property Trustee or any other person or entity. Notwith-
standing the foregoing, 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 or premium, if any, or interest
on the Securities when due, the Company acknowledges that a
holder of Capital Securities may directly institute a proceeding
for enforcement of payment to such holder of the principal of or
premium, if any, or interest on the Securities having a principal
amount equal to the aggregate liquidation amount of the Capital
Securities of such holder on or after the respective due date
specified in the Securities.
ARTICLE XIV
REDEMPTION OF SECURITIES -- MANDATORY AND
OPTIONAL SINKING FUND
SECTION 14.01. Special Event Redemption.
If, prior to the Initial Optional Redemption Date, a
Special Event has occurred and is continuing then, notwithstand-
ing Section 14.02(a) but subject to Section 14.02(c), the Company
shall have the right, at any time within 90 days following the
occurrence of such Special Event, upon (i) not less than 45 days
written notice to the Trustee and (ii) not less than 30 days nor
more than 60 days written notice to the Securityholders, to
redeem the Securities, in whole (but not in part), at the Special
Event Redemption Price. Following a Special Event, the Company
shall take such action as is necessary to promptly determine the
Special Event Redemption Price, including without limitation with
respect to the appointment of a Quotation Agent. The Special
Event Redemption Price shall be paid prior to 12:00 noon, New
York time, on the date of such redemption or such earlier time as
the Company determines, provided that the Company shall deposit
with the Trustee an amount sufficient to pay the Special Event
Redemption Price by 10:00 a.m., New York time, on the date such
Special Event Redemption Price is to be paid.
SECTION 14.02. Optional Redemption by Company.
(a) Subject to the provisions of this Article XIV, the
Company shall have the right to redeem the Securities, in whole
or in part, from time to time, on or after the Initial Optional
Redemption Date, at the redemption prices set forth below (ex-
pressed as percentages of principal) plus, in each case, accrued
and unpaid interest thereon (including Additional Sums and
Compounded Interest, if any) and Liquidated Damages, if any, to
the applicable date of redemption (the "Optional Redemption
Price") if redeemed during the 12-month period beginning April 1
of the years indicated below.
Year Percentage
2007 103.8750%
2008 103.4875%
2009 103.1000%
2010 102.7125%
2011 102.3250%
2012 101.9375%
2013 101.5500%
2014 101.1625%
2015 100.7750%
2016 100.3875%
2017 and thereafter 100.0000%
If the Securities are only partially redeemed pursuant
to this Section 14.02, the Securities will be redeemed pro rata
or by lot or by any other method utilized by the Trustee; provid-
ed, that if at the time of redemption the Securities are regis-
tered as a Global Security, the Depositary shall determine, in
accordance with its procedures, the principal amount of such
Securities held by each holder of a Security to be redeemed. The
Optional Redemption Price shall be paid prior to 12:00 noon, New
York time, on the date of such redemption or at such earlier time
as the Company determines, provided that the Company shall
deposit with the Trustee an amount sufficient to pay the Optional
Redemption Price by 10:00 a.m., New York time, on the date such
Optional Redemption Price is to be paid.
(b) Notwithstanding the first sentence of Sec-
tion 14.02, upon the entry of an order for dissolution of the
Sovereign Capital Trust by a court of competent jurisdiction, the
Securities thereafter will be subject to optional redemption, in
whole only, but not in part, on or after April 1, 2007, at the
optional redemption prices set forth in Section 14.02 and other-
wise in accordance with this Article XIV.
(c) Any redemption of Securities pursuant to Sec-
tion 14.01 or Section 14.02 shall be subject to the Company
obtaining any required regulatory approval.
SECTION 14.03. No Sinking Fund.
The Securities are not entitled to the benefit of any
sinking fund.
SECTION 14.04. Notice of Redemption; Selection of Secu-
rities.
In case the Company shall desire to exercise the right
to redeem all, or, as the case may be, any part of the Securities
in accordance with their terms, it shall fix a date for redemp-
tion and shall mail a notice of such redemption at least 30 and
not more than 60 days prior to the date fixed for redemption to
the holders of Securities so to be redeemed as a whole or in part
at their last addresses as the same appear on the Security
Register. Such mailing shall be by first class mail. The notice
if mailed in the manner herein provided shall be conclusively
presumed to have been duly given, whether or not the holder
receives such notice. In any case, failure to give such notice
by mail or any defect in the notice to the holder of any Security
designated for redemption as a whole or in part shall not affect
the validity of the proceedings for the redemption of any other
Security.
Each such notice of redemption shall specify the CUSIP
number of the Securities to be redeemed, the date fixed for
redemption, the redemption price at which the Securities are to
be redeemed (or the method by which such redemption price is to
be calculated), the place or places of payment that payment will
be made upon presentation and surrender of the Securities, that
interest accrued to the date fixed for redemption will be paid as
specified in said notice, and that on and after said date inter-
est thereon or on the portions thereof to be redeemed will cease
to accrue. If less than all the Securities are to be redeemed
the notice of redemption shall specify the numbers of the Securi-
ties to be redeemed. In case any Security is to be redeemed in
part only, the notice of redemption shall state the portion of
the principal amount thereof to be redeemed and shall state that
on and after the date fixed for redemption, upon surrender of
such Security, a new Security or Securities in principal amount
equal to the unredeemed portion thereof will be issued.
By 10:00 a.m. New York time on the redemption date
specified in the notice of redemption given as provided in this
Section, the Company will deposit with the Trustee or with one or
more paying agents an amount of money sufficient to redeem on the
redemption date all the Securities so called for redemption at
the appropriate Redemption Price, together with accrued interest
to the date fixed for redemption.
The Company will give the Trustee notice not less than
45 days prior to the redemption date as to the aggregate princi-
pal amount of Securities to be redeemed and the Trustee shall
select, in such manner as in its sole discretion it shall deem
appropriate and fair, the Securities or portions thereof (in
integral multiples of $1,000, except as otherwise set forth in
the applicable form of Security) to be redeemed.
SECTION 14.05. Payment of Securities Called for Redemp-
tion.
If notice of redemption has been given as provided in
Section 14.04, the Securities or portions of Securities with
respect to which such notice has been given shall become due and
payable on the date and at the place or places stated in such
notice at the applicable Redemption Price, together with interest
accrued to the date fixed for redemption (subject to the rights
of holders of Securities on the close of business on a regular
record date in respect of an Interest Payment Date occurring on
or prior to the redemption date), and on and after said date
(unless the Company shall default in the payment of such Securi-
ties at the Redemption Price, together with interest accrued to
said date) interest (including Additional Sums and Compounded
Interest, if any) and Liquidated Damages, if any, on the Securi-
ties or portions of Securities so called for redemption shall
cease to accrue. On presentation and surrender of such Securi-
ties at a place of payment specified in said notice, the said
Securities or the specified portions thereof shall be paid and
redeemed by the Company at the applicable Redemption Price,
together with interest (including Additional Sums and Compounded
Interest, if any) and Liquidated Damages, if any, accrued thereon
to the date fixed for redemption (subject to the rights of
holders of Securities on the close of business on a regular
record date in respect of an Interest Payment Date occurring on
or prior to the redemption date).
Upon presentation of any Security redeemed in part
only, the Company shall execute and the Trustee shall authenti-
cate and make available for delivery to the holder thereof, at
the expense of the Company, a new Security or Securities of
authorized denominations, in principal amount equal to the
unredeemed portion of the Security so presented.
ARTICLE XV
SUBORDINATION OF SECURITIES
SECTION 15.01. Agreement to Subordinate.
The Company covenants and agrees, and each holder of
Securities issued hereunder likewise covenants and agrees, that
the Securities shall be issued subject to the provisions of this
Article XV; and each holder of a Security, whether upon original
issue or upon transfer or assignment thereof, accepts and agrees
to be bound by such provisions.
The payment by the Company of the principal of, premi-
um, if any, and interest (including Additional Sums and Compound-
ed Interest, if any) and Liquidated Damages, if any, on all
Securities issued hereunder shall, to the extent and in the
manner hereinafter set forth, be subordinated and junior in right
of payment to the prior payment in full of all Allocable Amounts
with respect to Senior Indebtedness, whether outstanding at the
date of this Indenture or thereafter incurred.
No provision of this Article XV shall prevent the
occurrence of any Default or Event of Default hereunder.
SECTION 15.02. Default on Senior Indebtedness.
In the event and during the continuation of any default
by the Company in the payment of principal, premium, interest or
any other payment due on any Senior Indebtedness, or in the event
that the maturity of any Senior Indebtedness has been accelerated
because of a default, then, in either case, no payment shall be
made by the Company with respect to the principal (including
redemption payments) of or premium, if any, or interest on the
Securities.
In the event of the acceleration of the maturity of the
Securities, then no payment shall be made by the Company with
respect to the principal (including redemption payments) of or
premium, if any, or interest on the Securities until the holders
of all Senior Indebtedness outstanding at the time of such
acceleration shall receive payment in full of all Allocable
Amounts due in respect of such Senior Indebtedness (including any
amounts due upon acceleration).
In the event that, notwithstanding the foregoing, any
payment shall be received by the Trustee when such payment is
prohibited by the preceding paragraphs of this Section 15.02,
such payment shall be held in trust for the benefit of, and shall
be paid over or delivered to, the holders of Senior Indebtedness
or their respective representatives, or to the trustee or trust-
ees under any indenture pursuant to which any of such Senior In-
debtedness may have been issued, as their respective interests
may appear, but only to the extent of the Allocable Amounts in
respect of such Senior Indebtedness and only to the extent that
the holders of the Senior Indebtedness (or their representative
or representatives or a trustee) notify the Trustee in writing,
within 90 days of such payment of the Allocable Amounts then due
and owing on such Senior Indebtedness and only the Allocable
Amounts specified in such notice to the Trustee shall be paid to
the holders of such Senior Indebtedness.
SECTION 15.03. Liquidation; Dissolution; Bankruptcy.
Upon any payment by the Company or distribution of
assets of the Company of any kind or character, whether in cash,
property or securities, to creditors upon any dissolution or
winding-up or liquidation or reorganization of the Company,
whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all Allocable Amounts due upon
all Senior Indebtedness of the Company shall first be paid in
full, or payment thereof provided for in money in accordance with
its terms, before any payment is made by the Company on account
of the principal (and premium, if any) or interest (including
Additional Sums and Compounded Interest, if any) and Liquidated
Damages, if any, on the Securities; and upon any such dissolution
or winding-up or liquidation or reorganization, any payment by
the Company, or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, to which
the Securityholders or the Trustee would be entitled to receive
from the Company, except for the provisions of this Article XV,
shall be paid by the Company or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other Person making
such payment or distribution, or by the Securityholders or by the
Trustee under the Indenture if received by them or it, directly
to the holders of Senior Indebtedness of the Company (pro rata to
such holders on the basis of the respective Allocable Amounts of
Senior Indebtedness held by such holders, as calculated by the
Company) or their representative or representatives, or to the
trustee or trustees under any indenture pursuant to which any
instruments evidencing such Senior Indebtedness may have been
issued, as their respective interests may appear, to the extent
necessary to pay all Allocable Amounts in respect of such Senior
Indebtedness in full, in money or money's worth, after giving
effect to any concurrent payment or distribution to or for the
holders of such Senior Indebtedness, before any payment or
distribution is made to the Securityholders or to the Trustee.
In the event that, notwithstanding the foregoing, any
payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, prohibited by
the foregoing, shall be received by the Trustee before all
Allocable Amounts in respect of Senior Indebtedness is paid in
full, or provision is made for such payment in money in accor-
dance with its terms, such payment or distribution shall be held
in trust for the benefit of and shall be paid over or delivered
to the holders of such Senior Indebtedness or their representa-
tive or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such
Senior Indebtedness may have been issued, as their respective
interests may appear, as calculated by the Company, for applica-
tion to the payment of all Senior Indebtedness remaining unpaid
to the extent necessary to pay all Allocable Amounts in respect
of such Senior Indebtedness in full in money in accordance with
its terms, after giving effect to any concurrent payment or
distribution to or for the benefit of the holders of such Senior
Indebtedness.
For purposes of this Article XV, the words "cash,
property or securities" shall not be deemed to include shares of
stock of the Company as reorganized or readjusted, or securities
of the Company or any other corporation provided for by a plan of
reorganization or readjustment, the payment of which is subordi-
nated at least to the extent provided in this Article XV with
respect to the Securities to the payment of Senior Indebtedness
that may at the time be outstanding, provided that (i) such
Senior Indebtedness is assumed by the new corporation, if any,
resulting from any such reorganization or readjustment, and
(ii) the rights of the holders of such Senior Indebtedness are
not, without the consent of such holders, altered by such reorga-
nization or readjustment. The consolidation of the Company with,
or the merger of the Company into, another Person or the liqui-
dation or dissolution of the Company following the sale, convey-
ance, transfer or lease of its property as an entirety, or
substantially as an entirety, to another Person upon the terms
and conditions provided for in Article X of this Indenture shall
not be deemed a dissolution, winding-up, liquidation or reorgani-
zation for the purposes of this Section 15.03 if such other
Person shall, as a part of such consolidation, merger, sale,
conveyance, transfer or lease, comply with the conditions stated
in Article X of this Indenture. Nothing in Section 15.02 or in
this Section 15.03 shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 6.06 of this Indenture.
SECTION 15.04. Subrogation.
Subject to the payment in full of all Allocable Amounts
in respect of Senior Indebtedness, the rights of the
Securityholders 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, as the case may
be, applicable to such Senior Indebtedness until the principal of
(and premium, if any) and interest on the Securities shall be
paid in full; and, for the purposes of such subrogation, no
payments or distributions to the holders of such Senior Indebted-
ness of any cash, property or securities to which the
Securityholders or the Trustee would be entitled except for the
provisions of this Article XV, and no payment over pursuant to
the provisions of this Article XV to or for the benefit of the
holders of such Senior Indebtedness by Securityholders or the
Trustee, shall, as between the Company, its creditors other than
holders of Senior Indebtedness of the Company, and the holders of
the Securities, be deemed to be a payment by the Company to or on
account of such Senior Indebtedness. It is understood that the
provisions of this Article XV are and are intended solely for the
purposes of defining the relative rights of the holders of the
Securities, on the one hand, and the holders of such Senior
Indebtedness on the other hand.
Nothing contained in this Article XV or elsewhere in
this Indenture or in the Securities is intended to or shall
impair, as between the Company, its creditors other than the
holders of Senior Indebtedness of the Company, and the holders of
the Securities, the obligation of the Company, which is absolute
and unconditional, to pay to the holders of the Securities the
principal of (and premium, if any) and interest (including
Additional Sums and Compounded Interest, if any) and Liquidated
Damages, if any, on the Securities 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 of
the Securities and creditors of the Company, as the case may be,
other than the holders of Senior Indebtedness of the Company, as
the case may be, nor shall anything herein or therein prevent the
Trustee or the holder of any Security from exercising all reme-
dies otherwise permitted by applicable law upon default under the
Indenture, subject to the rights, if any, under this Article XV
of the holders of such Senior Indebtedness in respect of cash,
property or securities of the Company, as the case may be,
received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the
Company referred to in this Article XV, the Trustee, subject to
the provisions of Article VI of this Indenture, and the
Securityholders shall be entitled to conclusively rely upon any
order or decree made by any court of competent jurisdiction in
which such dissolution, winding-up, liquidation or reorganization
proceedings are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidation trustee, agent or other Person
making such payment or distribution, delivered to the Trustee or
to the Securityholders, for the purposes of ascertaining the
Persons entitled to participate in such distribution, the holders
of Senior Indebtedness and other indebtedness of the Company, as
the case may be, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article XV.
SECTION 15.05. Trustee to Effectuate Subordination.
Each Securityholder by such Securityholder's acceptance
thereof authorizes and directs the Trustee on such
Securityholder's behalf to take such action as may be necessary
or appropriate to effectuate the subordination provided in this
Article XV and appoints the Trustee such Securityholder's
attorney-in-fact for any and all such purposes.
SECTION 15.06. Notice by the Company.
The Company shall give prompt written notice to a
Responsible Officer of the Trustee of any fact known to the
Company that would prohibit the making of any payment of monies
to or by the Trustee in respect of the Securities pursuant to the
provisions of this Article XV. Notwithstanding the provisions of
this Article XV or any other provision of this Indenture, the
Trustee shall not be charged with knowledge of the existence of
any facts that would prohibit the making of any payment of monies
to or by the Trustee in respect of the Securities pursuant to the
provisions of this Article XV, unless and until a Responsible
Officer of the Trustee shall have received written notice thereof
from the Company or a holder or holders of Senior Indebtedness or
from any trustee therefor; and before the receipt of any such
written notice, the Trustee, subject to the provisions of Article
VI of this Indenture, shall be entitled in all respects to assume
that no such facts exist; provided, however, that if the Trustee
shall not have received the notice provided for in this Sec-
tion 15.06 at least two Business Days prior to the date upon
which by the terms hereof any money may become payable for any
purpose (including, without limitation, the payment of the prin-
cipal of (or premium, if any) or interest (including Additional
Sums and Compounded Interest, if any) and Liquidated Damages, if
any, on any Security), then, anything herein contained to the
contrary notwithstanding, the Trustee shall have full power and
authority to receive such money and to apply the same to the
purposes for which they were received, and shall not be affected
by any notice to the contrary that may be received by it within
two Business Days prior to such date.
The Trustee, subject to the provisions of Article VI of
this Indenture, shall be entitled to conclusively rely on the
delivery to it of a written notice by a Person representing
himself to be a holder of Senior Indebtedness of the Company (or
a trustee on behalf of such holder), as the case may be, to
establish that such notice has been given by a holder of such
Senior Indebtedness or a trustee on behalf of any such holder or
holders. In the event that the Trustee determines in good faith
that further evidence is required with respect to the right of
any Person as a holder of such Senior Indebtedness to participate
in any payment or distribution pursuant to this Article XV, the
Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of such
Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution
and any other facts pertinent to the rights of such Person under
this Article XV, and, if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such
payment.
Upon any payment or distribution of assets of the
Company referred to in this Article XV, the Trustee and the
Securityholders shall be entitled to rely upon any order or
decree entered by any court of competent jurisdiction in which
such insolvency, bankruptcy, receivership, liquidation, reorgani-
zation, dissolution, winding up or similar case or proceeding is
pending, or a certificate of the trustee in bankruptcy, liquidat-
ing trustee, custodian, receiver, assignee for the benefit of
creditors, agent or other person making such payment or distribu-
tion, delivered to the Trustee or to the Securityholders, for the
purpose of ascertaining the persons entitled to participate in
such payment or distribution, the holders of Senior Indebtedness
and other indebtedness of the Company, the amount thereof or pay-
able thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article XV.
SECTION 15.07. Rights of the Trustee; Holders of Senior
Indebtedness.
The Trustee in its individual capacity shall be enti-
tled to all the rights set forth in this Article XV in respect of
any Senior Indebtedness at any time held by it, to the same
extent as any other holder of Senior Indebtedness, and nothing in
this Indenture shall deprive the Trustee of any of its rights as
such holder.
With respect to the holders of Senior Indebtedness of
the Company, the Trustee undertakes to perform or to observe only
such of its covenants and obligations as are specifically set
forth in this Article XV, and no implied covenants or obligations
with respect to the holders of such 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 such
Senior Indebtedness and, subject to the provisions of Article VI
of this Indenture, the Trustee shall not be liable to any holder
of such Senior Indebtedness if it shall pay over or deliver to
Securityholders, the Company or any other Person money or assets
to which any holder of such Senior Indebtedness shall be entitled
by virtue of this Article XV or otherwise.
Nothing in this Article XV shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 6.06.
SECTION 15.08. Subordination May Not Be Impaired.
No right of any present or future holder of any Senior
Indebtedness of the Company to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired
by any act or failure to act on the part of the Company, as the
case may be, or by any act or failure to act, in good faith, by
any such holder, or by any noncompliance by the Company, as the
case may be, with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof that any such
holder may have or otherwise be charged with.
Without in any way limiting the generality of the
foregoing paragraph, the holders of Senior Indebtedness of the
Company may, at any time and from time to time, without the
consent of or notice to the Trustee or the Securityholders,
without incurring responsibility to the Securityholders and
without impairing or releasing the subordination provided in this
Article XV or the obligations hereunder of the holders of the
Securities to the holders of such Senior Indebtedness, do any one
or more of the following: (i) change the manner, place or terms
of payment or extend the time of payment of, or renew or alter,
such Senior Indebtedness, or otherwise amend or supplement in any
manner such Senior Indebtedness or any instrument evidencing the
same or any agreement under which such Senior Indebtedness is
outstanding; (ii) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing such Senior
Indebtedness; (iii) release any Person liable in any manner for
the collection of such Senior Indebtedness; and (iv) exercise or
refrain from exercising any rights against the Company, as the
case may be, and any other Person.
ARTICLE XVI
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 16.01. Extension of Interest Payment Period.
So long as no Event of Default has occurred and is
continuing, the Company shall have the right, at any time and
from time to time during the term of the Securities, to defer
payments of interest by extending the interest payment period of
such Securities for a period not exceeding 10 consecutive semi-
annual periods, including the first such semi-annual period
during such extension period (the "Extended Interest Payment
Period"), during which Extended Interest Payment Period no
interest shall be due and payable; provided that no Extended
Interest Payment Period shall end on a date other than an Inter-
est Payment Date or extend beyond the Maturity Date. To the
extent permitted by applicable law, interest, the payment of
which has been deferred because of the extension of the interest
payment period pursuant to this Section 16.01, will bear interest
thereon at the Coupon Rate compounded semi-annually for each
semi-annual period of the Extended Interest Payment Period
("Compounded Interest"). At the end of the Extended Interest
Payment Period, the Company shall pay all interest accrued and
unpaid on the Securities, including any Additional Sums and
Compounded Interest (together, "Deferred Interest") that shall be
payable to the holders of the Securities in whose names the
Securities are registered in the Security Register on the first
record date preceding the end of the Extended Interest Payment
Period. Before the termination of any Extended Interest Payment
Period, the Company may further defer payments of interest by
further extending such period, provided that such period, togeth-
er with all such previous and further extensions within such
Extended Interest Payment Period, shall not exceed 10 consecutive
semi-annual periods, including the first such semi-annual period
during such Extended Interest Payment Period, end on a date other
than an Interest Payment Date or extend beyond the Maturity Date
of the Securities. Upon the termination of any Extended Interest
Payment Period and the payment of all Deferred Interest then due,
the Company may commence a new Extended Interest Payment Period,
subject to the foregoing requirements. No interest shall be due
and payable during an Extended Interest Payment Period, except at
the end thereof, but the Company may prepay at any time all or
any portion of the interest accrued during an Extended Interest
Payment Period.
SECTION 16.02. Notice of Extension.
(a) If the Property Trustee is the only registered
holder of the Securities at the time the Company selects an
Extended Interest Payment Period, the Company shall give written
notice to the Administrative Trustees, the Property Trustee and
the Trustee of its selection of such Extended Interest Payment
Period five Business Days before the earlier of (i) the next
succeeding date on which Distributions on the Trust Securities
issued by Sovereign Capital Trust are payable, or (ii) the date
the Trust is required to give notice of the record date, or the
date such Distributions are payable, to any national securities
exchange or to holders of the Capital Securities issued by the
Trust, but in any event at least five Business Days before such
record date.
(b) If the Property Trustee is not the only holder of
the Securities at the time the Company selects an Extended
Interest Payment Period, the Company shall give the holders of
the Securities and the Trustee written notice of its selection of
such Extended Interest Payment Period at least 10 Business Days
before the earlier of (i) the next succeeding Interest Payment
Date, or (ii) the date the Company is required to give notice of
the record or payment date of such interest payment to any
national securities exchange.
(c) The semi-annual period in which any notice is
given pursuant to paragraphs (a) or (b) of this Section 16.02
shall be counted as one of the 10 semi-annual periods permitted
in the maximum Extended Interest Payment Period permitted under
Section 16.01.
The Bank of New York hereby accepts the trusts in this
Indenture declared and provided, upon the terms and conditions
hereinabove set forth.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed by their respective officers
thereunto duly authorized, as of the day and year first above
written.
SOVEREIGN BANCORP, INC.,
By _________________________
Name:
Title:
THE BANK OF NEW YORK,
as Trustee
By _________________________
Name:
Title:
EXHIBIT A
(FORM OF FACE OF SECURITY)
[IF THE SECURITY IS A GLOBAL SECURITY, INSERT: - THIS
SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITARY OR A NOMINEE OF A DEPOSITARY. THIS SECURITY IS
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON
OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS
SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY 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 SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC") TO THE ISSUER OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL IN AS MUCH AS SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURI-
TIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY, PRIOR
TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS
THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE DATE HEREOF
AND THE LAST DATE ON WHICH THE COMPANY OR ANY "AFFILIATE" OF THE
COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
THIS SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGIS-
TRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) SO LONG AS THIS SECURITY IS ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-
U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUB-
PARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURI-
TIES ACT THAT IS ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT, OR
FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE
IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURI-
TIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT, SUBJECT
TO THE RIGHT OF THE COMPANY PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER (i) PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER
INFORMATION SATISFACTORY TO THE COMPANY, AND (ii) PURSUANT TO
CLAUSE (E), TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE REVERSE OF THIS SECURITY IS COMPLETED AND
DELIVERED BY THE TRANSFEREE TO THE COMPANY. SUCH ▇▇▇▇▇▇ FURTHER
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY
IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND.
No. CUSIP No. ______________
SOVEREIGN BANCORP, INC.
Series A 9.00% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE
DUE April 1, 2027
Sovereign Bancorp, Inc., a Pennsylvania corporation
(the "Company", which term includes any successor Person under
the Indenture hereinafter referred to), for value received,
hereby promises to pay to ______________ or registered assigns,
the principal sum of _____________ Dollars on April 1, 2027 (the
"Maturity Date"), unless previously redeemed, and to pay interest
on the outstanding principal amount hereof from March 24, 1997,
or from the most recent interest payment date (each such date, an
"Interest Payment Date") to which interest has been paid or duly
provided for, semi-annually (subject to deferral as set forth
herein) in arrears on April 1 and October 1 of each year, com-
mencing October 1, 1997, at the rate of 9.00% per annum until the
principal hereof shall have become due and payable, and on any
overdue principal and premium, if any, and (without duplication
and to the extent that payment of such interest is enforceable
under applicable law) on any overdue installment of interest at
the same rate per annum compounded semi-annually. The amount of
interest payable on any Interest Payment Date shall be computed
on the basis of a 360-day year of twelve 30-day months and, for
any period less than a full calendar month, the number of days
elapsed in such month. In the event that any date on which the
principal of (or premium, if any) or interest on this Security is
payable is not a Business Day, then the payment payable on such
date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any
such delay) except that if such next succeeding Business Day
falls in the next succeeding calendar year, then such payment
shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on such date.
Pursuant to the Indenture, in certain circumstances the Company
will be required to pay Additional Sums and Compound Interest
(each as defined in the Indenture) with respect to this Security.
Pursuant to the Registration Rights Agreement, in certain limited
circumstances the Company will be required to pay Liquidated
Damages (as defined in the Registration Rights Agreement) with
respect to this Security.
The interest installment so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as
provided in the Indenture, be paid to the Person in whose name
this Security (or one or more Predecessor Securities, as defined
in said Indenture) is registered at the close of business on the
regular record date for such interest installment, which shall be
the 15th day of the month preceding the month in which the rele-
vant interest payment date falls. Any such interest installment
not punctually paid or duly provided for shall forthwith cease to
be payable to the holders on such regular record date and may be
paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on
a special record date to be fixed by the Trustee for the payment
of such defaulted interest, notice whereof shall be given to the
holders of Securities not less than 10 days prior to such special
record date, or may be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, all as more fully
provided in the Indenture.
The principal of (and premium, if any) and interest
(including Additional Sums and Compounded Interest, if any) and
Liquidated Damages, if any, on this Security shall be payable at
the office or agency of the Trustee maintained for that purpose
in any coin or currency of the United States of America that at
the time of payment is legal tender for payment of public and
private debts; provided, however, that, payment of interest may
be made at the option of the Company by (i) check mailed to the
holder at such address as shall appear in the Security Register
or (ii) by transfer to an account maintained by the Person
entitled thereto, provided that proper written transfer instruc-
tions have been received by the relevant record date. Notwith-
standing the foregoing, so long as the Holder of this Security is
the Property Trustee, the payment of the principal of (and premi-
um, if any) and interest (including Additional Sums and Compound-
ed Interest, if any) and Liquidated Damages, if any, on this
Security will be made at such place and to such account as may be
designated by the Property Trustee.
The indebtedness evidenced by this Security is, to the
extent provided in the Indenture, subordinate and junior in right
of payment to the prior payment in full of all Senior Indebted-
ness, and this Security is issued subject to the provisions of
the Indenture with respect thereto. Each holder of this Securi-
ty, by accepting the same, (a) agrees to and shall be bound by
such provisions, (b) authorizes and directs the Trustee on his or
her behalf to take such action as may be necessary or appropriate
to acknowledge or effectuate the subordination so provided and
(c) appoints the Trustee his or her attorney-in-fact for any and
all such purposes. Each holder hereof, by his or her acceptance
hereof, hereby waives all notice of the acceptance of the subor-
dination provisions contained herein and in the Indenture by each
holder of Senior Indebtedness, whether now outstanding or hereaf-
ter incurred, and waives reliance by each such holder upon said
provisions.
This Security shall not be entitled to any benefit
under the Indenture hereinafter referred to, be valid or become
obligatory for any purpose until the Certificate of Authentica-
tion hereon shall have been signed by or on behalf of the Trust-
ee.
By acceptance of this Security, the holder agrees to
treat, for United States federal income tax purposes, this
Security as indebtedness.
The provisions of this Security are continued on the
reverse side hereof and such provisions shall for all purposes
have the same effect as though fully set forth at this place.
IN WITNESS WHEREOF, the Company has executed this
certificate this 24th day of March, 1997.
SOVEREIGN BANCORP, INC.
By: ____________________________
Name:
Title:
Attest:
By: _______________________
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the
within-mentioned Indenture.
Dated: March 24, 1997
THE BANK OF NEW YORK,
as Trustee
By____________________
Authorized Signatory
(FORM OF REVERSE OF SECURITY)
This Security is one of the Securities of the Company
(herein sometimes referred to as the "Securities"), specified in
the Indenture, all issued or to be issued under and pursuant to
an Indenture, dated as of March 1, 1997 (the "Indenture"), duly
executed and delivered between the Company and The Bank of New
York, as Trustee (the "Trustee"), to which Indenture 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 Securities.
Upon the occurrence and continuation of a Special Event
prior to April 1, 2007 (the "Initial Optional Redemption Date"),
the Company shall have the right, at any time within 90 days
following the occurrence of such Special Event, to redeem this
Security in whole (but not in part) at the Special Event Redemp-
tion Price. "Special Event Redemption Price" shall mean, with
respect to any redemption of the Securities following a Special
Event, an amount in cash equal to the greater of (i) 100% of the
principal amount to be redeemed or (ii) the sum, as determined by
a Quotation Agent, of the present values of the principal amount
and premium payable with respect to an Optional Redemption (as
defined below) of this Security on the Initial Optional Redemp-
tion Date, together with scheduled payments of interest on this
Security from the prepayment date to and including the Initial
Optional Redemption Date, discounted to the prepayment date on a
semi-annual basis (assuming a 360-day year consisting of twelve
30-day months) at the Adjusted Treasury Rate, plus, in the case
of each of clauses (i) and (ii), any accrued but unpaid interest
thereon (including Compounded Interest and Additional Sums, if
any) and Liquidated Damages, if any, to the date of such redemp-
tion.
In addition, the Company shall have the right to redeem
this Security, in whole or in part, at any time on or after the
Initial Optional Redemption Date (an "Optional Redemption"), at
the redemption prices set forth below (expressed as percentages
of principal to be redeemed) plus, in each case, accrued and
unpaid interest thereon (including Additional Sums and Compounded
Interest, if any) and Liquidated Damages, if any, to the applica-
ble date of redemption (the "Optional Redemption Price") if
redeemed during the 12-month period beginning April 1 of the
years indicated below.
Year Percentage
2007 103.8750%
2008 103.4875%
2009 103.1000%
2010 102.7125%
2011 102.3250%
2012 101.9375%
2013 101.5500%
2014 101.1625%
2015 100.7750%
2016 100.3875%
2017 and thereafter 100.0000%
The Optional Redemption Price or the Special Event
Redemption Price, as the case requires, shall be paid prior to
12:00 noon, New York time, on the date of such redemption or at
such earlier time as the Company determines, provided, that the
Company shall deposit with the Trustee an amount sufficient to
pay the applicable Redemption Price by 10:00 a.m., New York City
time, on the date such Redemption Price is to be paid. Any re-
demption pursuant to this paragraph will be made upon not less
than 30 days nor more than 60 days notice. If the Securities are
only partially redeemed by the Company pursuant to an Optional
Redemption, the Securities will be redeemed pro rata or by lot or
by any other method utilized by the Trustee; provided that if, at
the time of redemption, the Securities are registered as a Global
Security, the Depositary shall determine the particular Securi-
ties to be redeemed in accordance with its procedures.
In the event of redemption of this Security in part
only, a new Security or Securities for the unredeemed portion
hereof will be issued in the name of the holder hereof upon the
cancellation hereof.
Notwithstanding the foregoing, any redemption of
Securities by the Company shall be subject to the Company having
received any required regulatory approval.
In case an Event of Default, as defined in the Inden-
ture, shall have occurred and be continuing, the principal of all
of the Securities may be declared, and upon such declaration
shall become, due and payable, in the manner, with the effect and
subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the
Company and the Trustee, with the consent of the holders of a
majority in aggregate principal amount of the Securities at the
time outstanding, as defined in the Indenture, to execute supple-
mental 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 modifying in any manner the rights of the
holders of the Securities; provided, however, that no such
supplemental indenture shall, without the consent of each holder
of Securities then outstanding and affected thereby, (i) change
the Maturity Date of any Securities, or reduce the principal
amount thereof, or reduce any amount payable on redemption
thereof, or reduce the rate or extend the time of payment of
interest thereon (subject to Article XVI of the Indenture), or
make the principal of, or interest or premium on, the Securities
payable in any coin or currency other than U.S. dollars, or
impair or affect the right of any holder of Securities to insti-
tute suit for the payment thereof, or (ii) reduce the aforesaid
percentage of Securities, the holders of which are required to
consent to any such supplemental indenture. The Indenture also
contains provisions permitting the holders of a majority in
aggregate principal amount of the Securities at the time out-
standing affected thereby, on behalf of all of the holders of the
Securities, to waive any past default in the performance of any
of the covenants contained in the Indenture, or established
pursuant to the Indenture, and its consequences, except a default
in the payment of the principal of or premium, if any, or inter-
est on any of the Securities or a default in respect of any
covenant or provision under which the Indenture cannot be modi-
fied or amended without the consent of each holder of Securities
then outstanding. Any such consent or waiver by the holder of
this Security (unless revoked as provided in the Indenture) shall
be conclusive and binding upon such Holder and upon all future
holders and owners of this Security and of any Security 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 Security.
No reference herein to the Indenture and no provision
of this Security or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional,
to pay the principal of and premium, if any, and interest (in-
cluding Compounded Interest and Additional Sums, if any) and
Liquidated Damages, if any, on this Security at the time and
place and at the rate and in the money herein prescribed.
So long as no Event of Default shall have occurred and
be continuing, the Company shall have the right, at any time and
from time to time during the term of the Securities, to defer
payments of interest by extending the interest payment period of
such Securities for a period not exceeding 10 consecutive semi-
annual periods, including the first such semi-annual period
during such extension period, and not extending beyond the
Maturity Date of the Securities (an "Extended Interest Payment
Period") or ending on a date other than an Interest Payment Date,
at the end of which period the Company shall pay all interest
then accrued and unpaid (together with interest thereon at the
rate specified for the Securities to the extent that payment of
such interest is enforceable under applicable law). Before the
termination of any such Extended Interest Payment Period, the
Company may further defer payments of interest by further extend-
ing such Extended Interest Payment Period, provided that such
Extended Interest Payment Period, together with all such previous
and further extensions within such Extended Interest Payment
Period, (i) shall not exceed 10 consecutive semi-annual periods,
including the first semi-annual period during such Extended
Interest Payment Period, (ii) shall not end on any date other
than an Interest Payment Date, and (iii) shall not extend beyond
the Maturity Date of the Securities. Upon the termination of any
such Extended Interest Payment Period and the payment of all
accrued and unpaid interest and any additional amounts then due,
the Company may commence a new Extended Interest Payment Period,
subject to the foregoing requirements.
The Company has agreed that it will not (i) declare or
pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of
the Company's capital stock (which includes common and preferred
stock) or (ii) make any payment of principal, interest or premi-
um, if any, on or repay or repurchase or redeem any debt securi-
ties of the Company that rank pari passu with or junior in right
of payment to the Securities or (iii) make any guarantee payments
with respect to any guarantee by the Company of the debt securi-
ties or any Subsidiary of the Company (including any Other
Guarantees) if such guarantee ranks pari passu or junior in right
of payment to the Securities (other than (a) dividends or distri-
butions in shares of, or options, warrants or rights to subscribe
for or purchase shares of, Common Stock of the Company, (b) any
declaration of a dividend in connection with the implementation
of a stockholder's rights plan, or the issuance of stock under
any such plan in the future, or the redemption or repurchase of
any such rights pursuant thereto, (c) payments under the Capital
Securities Guarantee, (d) as a result of a reclassification of
the Company's capital stock or the exchange or the conversion of
one class or series of the Company's capital stock, for another
class or series of the Company's capital stock, (e) the purchase
of fractional interests in shares of the Company's capital stock
pursuant to the exchange or conversion of such capital stock or
the security being exchanged or converted, and (f) purchases of
Common Stock related to the issuance of Common Stock or rights
under any of the Company's benefit plans for its directors,
officers or employees or any of the Company's dividend reinvest-
ment plans) if at such time (i) there shall have occurred any
event of which the Company has actual knowledge that (a) is or,
with the giving of notice or the lapse of time, or both, would
be, an Event of Default and (b) in respect of which the Company
shall not have taken reasonable steps to cure, (ii) if the
Securities are held by Sovereign Capital Trust, the Company shall
be in default with respect to its payment obligations under the
Capital Securities Guarantee or (iii) the Company shall have
given notice of its election of the exercise of its right to
extend the interest payment period and any such extension shall
be continuing.
Subject to (i) the receipt by the Company of any
required regulatory approval and (ii) the receipt by the Company
of an opinion of counsel to the effect that such distribution
will not be a taxable event to holders of Capital Securities, the
Company will have the right at any time to liquidate the Sover-
eign Capital Trust and cause the Securities to be distributed to
the holders of the Trust Securities in liquidation of the Trust.
The Securities are issuable only in registered form
without coupons in denominations of $1,000.00 and any integral
multiple thereof. As provided in the Indenture and subject to
the transfer restrictions limitations as may be contained herein
and therein from time to time, this Security is transferable by
the holder hereof on the Security Register of the Company, upon
surrender of this Security 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 holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities of authorized denominations
and for the same aggregate principal amount and series 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.
Prior to due presentment for registration of transfer
of this Security, the Company, the Trustee, any authenticating
agent, any paying agent, any transfer agent and the registrar may
deem and treat the holder hereof as the absolute owner hereof
(whether or not this Security shall be overdue and notwithstand-
ing any notice of ownership or writing hereon made by anyone
other than the Security Registrar) for the purpose of receiving
payment of or on account of the principal hereof and premium, if
any, and (subject to the Indenture) interest due hereon and for
all other purposes, and neither the Company nor the Trustee nor
any authenticating agent nor any paying agent nor any transfer
agent nor any registrar shall be affected by any notice to the
contrary.
No recourse shall be had for the payment of the princi-
pal of or premium, if any, or interest on this Security, or for
any claim based hereon, or otherwise in respect hereof, or based
on or in respect of the Indenture, against any incorporator,
stockholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor Person,
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.
All terms used in this Security that are defined in the
Indenture shall have the meanings assigned to them in the Inden-
ture.
THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS THEREOF.