FORM OF UNDERWRITING AGREEMENT
May 12, 2008
Xxxxxx Brothers Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Sovereign Bancorp, Inc., a Pennsylvania corporation (the “Company”), proposes to sell
156,250,000 shares (the “Firm Stock”) of the Company’s common stock, no par value per share (the
“Common Stock”). In addition, the Company proposes to grant to Xxxxxx Brothers Inc. (the
“Underwriter”) an option to purchase up to 23,437,500 additional shares of the Common Stock (the
“Option Stock”) on the terms set forth in Section 2. The Firm Stock and the Option Stock, if
purchased, are hereinafter collectively called the “Stock.” This is to confirm the agreement
concerning the purchase of the Stock from the Company by the Underwriter.
1. Representations, Warranties and Agreements of the Company. The Company represents,
warrants and agrees that:
(a) A registration statement on Form S-3 relating to the Stock (i) has been prepared by
the Company in conformity with the requirements of the Securities Act of 1933, as amended
(the “Securities Act”), and the rules and regulations (the “Rules and Regulations”) of the
Securities and Exchange Commission (the “Commission”) thereunder; (ii) has been filed with
the Commission under the Securities Act; and (iii) is effective under the Securities Act.
Copies of such registration statement and any amendment thereto have been delivered by the
Company to you as the Underwriter. As used in this Agreement:
(i) “Applicable Time” means 4:00 p.m. (New York City time) on May 12, 2008.
(ii) “Effective Date” means any date as of which any part of such registration
statement relating to the Stock became, or is deemed to have become, effective under
the Securities Act in accordance with the Rules and Regulations (including pursuant
to Rule 430B of the Rules and Regulations);
(iii) “Issuer Free Writing Prospectus” means each “free writing prospectus” (as
defined in Rule 405 of the Rules and Regulations) prepared by or
on behalf of the Company or used or referred to by the Company in connection
with the offering of the Stock;
(iv) “Preliminary Prospectus” means any preliminary prospectus relating to the
Stock filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations, including any preliminary prospectus supplement thereto relating to the
Stock;
(v) “Pricing Disclosure Package” means, as of the Applicable Time, the most
recent Preliminary Prospectus, together with the information included in
Schedule 2 hereto and each Issuer Free Writing Prospectus filed or used by
the Company on or before the Applicable Time, other than a road show that is an
Issuer Free Writing Prospectus under Rule 433 of the Rules and Regulations;
(vi) “Prospectus” means the final prospectus relating to the Stock, including
any prospectus supplement thereto relating to the Stock, as filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations; and
(vii) “Registration Statement” means, collectively, the various parts of such
registration statement, each as amended as of the Effective Date for such part,
including any Preliminary Prospectus or the Prospectus and all exhibits to such
registration statement.
Any reference to any Preliminary Prospectus or the Prospectus shall be deemed to refer to
and include any documents incorporated by reference therein pursuant to Form S-3 under the
Securities Act as of the date of such Preliminary Prospectus or the Prospectus, as the case
may be. Any reference to the “most recent Preliminary Prospectus” shall be deemed to refer
to the latest Preliminary Prospectus included in the Registration Statement or filed
pursuant to Rule 424(b) prior to or on the date hereof (including, for purposes hereof, any
documents incorporated by reference therein prior to or on the date hereof). Any reference
to any amendment or supplement to any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include any document filed under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), after the date of such Preliminary Prospectus or the
Prospectus, as the case may be, and incorporated by reference in such Preliminary Prospectus
or the Prospectus, as the case may be; and any reference to any amendment to the
Registration Statement shall be deemed to include any annual report of the Company on Form
10-K filed with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act after
the Effective Date that is incorporated by reference in the Registration Statement.
The Commission has not issued any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus or suspending the effectiveness of the Registration Statement,
and no proceeding or examination for such purpose has been instituted or threatened by the
Commission. The Commission has not notified the Company of any objection to the use of the
form of the Registration Statement.
(b) The Company has been since the time of initial filing of the Registration Statement
and continues to be a “well-known seasoned issuer” (as defined in Rule 405) eligible to use
Form S-3 for the offering of the Stock, including not having been an “ineligible
issuer” (as defined in Rule 405) at any such time or date. The Registration Statement is an
“automatic shelf registration statement” (as defined in Rule 405) and was filed not earlier
than the date that is three years prior to the applicable Delivery Date (as defined in
Section 5).
(c) The Registration Statement conformed and will conform in all material respects on
the Effective Date and on the applicable Delivery Date, and any amendment to the
Registration Statement filed after the date hereof will conform in all material respects
when filed, to the requirements of the Securities Act and the Rules and Regulations. The
most recent Preliminary Prospectus conformed, and the Prospectus will conform, in all
material respects when filed with the Commission pursuant to Rule 424(b) and on the
applicable Delivery Date to the requirements of the Securities Act and the Rules and
Regulations. The documents incorporated by reference in any Preliminary Prospectus or the
Prospectus conformed, and any further documents so incorporated will conform, when filed
with the Commission, in all material respects to the requirements of the Exchange Act or the
Securities Act, as applicable, and the rules and regulations of the Commission thereunder.
(d) The Registration Statement did not, as of the Effective Date, contain an untrue
statement of a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; provided that no representation
or warranty is made as to information contained in or omitted from the Registration
Statement in reliance upon and in conformity with written information furnished to the
Company by the Underwriter specifically for inclusion therein, which information is
specified in Section 8(e).
(e) The Prospectus will not, as of its date and on the applicable Delivery Date,
contain an untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that no representation or
warranty is made as to information contained in or omitted from the Prospectus in reliance
upon and in conformity with written information furnished to the Company through the
Underwriter specifically for inclusion therein, which information is specified in Section
8(e).
(f) The documents incorporated by reference in any Preliminary Prospectus or the
Prospectus did not, and any further documents filed and incorporated by reference therein
will not, when filed with the Commission, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were made, not
misleading.
(g) The Pricing Disclosure Package did not, as of the Applicable Time, contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that no representation or
warranty is made as to information contained in or omitted from the Pricing Disclosure
Package in reliance upon and in conformity with written information furnished to the Company
through the Underwriter specifically for inclusion therein, which information is specified
in Section 8(e).
(h) Each Issuer Free Writing Prospectus (including, without limitation, any road show
that is a free writing prospectus under Rule 433), when considered together with the Pricing
Disclosure Package as of the Applicable Time, did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they were made,
not misleading.
(i) Each Issuer Free Writing Prospectus conformed or will conform in all material
respects to the requirements of the Securities Act and the Rules and Regulations on the date
of first use, and the Company has complied with any filing requirements applicable to such
Issuer Free Writing Prospectus pursuant to the Rules and Regulations. The Company has not
made any offer relating to the Stock that would constitute an Issuer Free Writing Prospectus
without the prior written consent of the Underwriter. The Company has retained in
accordance with the Rules and Regulations all Issuer Free Writing Prospectuses that were not
required to be filed pursuant to the Rules and Regulations.
(j) Each of the Company and its subsidiaries (as defined in Section 16) has been duly
incorporated or organized, as the case may be, and is validly existing and in good standing
as a corporation or other business entity under the laws of its jurisdiction of
incorporation or organization, with all power and authority necessary to conduct the
business in which it is engaged or to own or lease its properties; and each of the Company
and its subsidiaries is duly qualified to do business and in good standing as a foreign
corporation or other business entity in each jurisdiction in which its ownership or lease of
property or the conduct of its businesses requires such qualification, except where the
failure to be so qualified or in good standing could not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the condition (financial or
otherwise), results of operations, stockholders’ equity, properties or business of the
Company and its subsidiaries taken as a whole (a “Material Adverse Effect”). The Company
does not own or control, directly or indirectly, any corporation, association, or other
entity other than the subsidiaries listed in Exhibit 21 to the Company’s Annual Report on
Form 10-K for the most recent fiscal year. Sovereign Bank (the “Bank”) is the only
Significant Subsidiary (as such term is defined in Rule 405) of the Company.
(k) The Company has been duly registered as a savings and loan holding company under
the Home Owners Loan Act of 1933, as amended (the “HOLA”). The Bank is duly organized as a
federal chartered savings bank under the HOLA and its deposits are insured by the Federal
Deposit Insurance Corporation (the “FDIC”) to the fullest extent permitted by law and all
premiums and assessments required to be paid in
connection therewith have been paid when due. The Company and each of its subsidiaries
(as such term is defined in Section 16 below) are in compliance in all material respects
with all applicable laws administered by and regulations of the Office of Thrift Supervision
(the “OTS”), the FDIC, the Office of the Comptroller of the Currency (the “OCC”) and any
other federal or state bank regulatory authority (collectively, the “Bank Regulatory
Authorities”) with jurisdiction over the Company or any of its Subsidiaries, other than
where such failures to comply would not, individually or in the aggregate, reasonably be
likely to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is
a party to any written agreement or memorandum of understanding with, or a party to, any
commitment letter or similar undertaking to, or is subject to any order or directive by, or
is a recipient of an extraordinary supervisory letter from, or has adopted any board
resolutions at the request of, any Bank Regulatory Authority which restricts in any material
respect the conduct of its business, or in any manner relates to its capital adequacy, its
liquidity and funding policies and practices, its ability to pay dividends, its credit, risk
management or compliance policies or its management, nor have any of them been advised by
any Bank Regulatory Authority that it is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, extraordinary supervisory letter, commitment letter or similar
submission, or any such board resolutions.
(l) The Company has an authorized capitalization as set forth in each of the most
recent Preliminary Prospectus and the Prospectus, and all of the issued shares of capital
stock of the Company have been duly authorized and validly issued, are fully paid and
non-assessable, conform to the description thereof contained in the most recent Preliminary
Prospectus and were issued in compliance with federal and state securities laws and not in
violation of any preemptive right, resale right, right of first refusal or similar right.
All of the Company’s options, warrants and other rights to purchase or exchange any
securities for shares of the Company’s capital stock have been duly authorized and validly
issued, conform to the description thereof contained in the most recent Preliminary
Prospectus and were issued in compliance with federal and state securities laws. All of the
issued shares of capital stock of each subsidiary of the Company have been duly authorized
and validly issued, are fully paid and non-assessable and are owned directly or indirectly
by the Company, free and clear of any claim, lien, encumbrance, security interest,
restriction on voting or transfer, preemptive rights or any other claim of any third party,
except as would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(m) The shares of the Stock to be issued and sold by the Company to the Underwriter
hereunder have been duly authorized and, upon payment and delivery in accordance with this
Agreement, will be validly issued, fully paid and non-assessable, will conform to the
description thereof contained in the most recent Preliminary Prospectus, will be issued in
compliance with federal and state securities laws and will be free of statutory and
contractual preemptive rights, rights of first refusal and similar rights.
(n) The Company has all requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement. This Agreement has been duly and validly
authorized, executed and delivered by the Company.
(o) The execution, delivery and performance of this Agreement by the Company, the
consummation of the transactions contemplated hereby and the application of the proceeds
from the sale of the Stock as described under “Use of Proceeds” in the most recent
Preliminary Prospectus will not (i) conflict with or result in a breach or violation of any
of the terms or provisions of, impose any lien, charge or encumbrance upon any property or
assets of the Company and the Bank, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement, license or other agreement or instrument to which the Company
or any of its subsidiaries is a party or by which the Company or the Bank is bound or to
which any of the property or assets of the Company or the Bank is subject; (ii) result in
any violation of the provisions of the charter or by-laws (or similar organizational
documents) of the Company or any of its subsidiaries; or (iii) result in any violation of
any statute or any order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or the Bank or any of their properties or assets.
(p) No consent, approval, authorization or order of, or filing or registration with,
any court or governmental agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties or assets is required for the execution, delivery
and performance of this Agreement by the Company, the consummation of the transactions
contemplated hereby, or the application of the proceeds from the sale of the Stock as
described under “Use of Proceeds” in the most recent Preliminary Prospectus, except for the
registration of the Stock under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under the Exchange Act
and applicable state securities laws in connection with the purchase and sale of the Stock
by the Underwriter.
(q) There is no contract or document required to be described in the Registration
Statement, any Preliminary Prospectus or the Prospectus or to be filed as an exhibit to the
Registration Statement or to a document incorporated by reference into the Registration
Statement, any Preliminary Prospectus or the Prospectus which is not described or filed as
required.
(r) There are no contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a registration
statement under the Securities Act with respect to any securities of the Company owned or to
be owned by such person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any securities being
registered pursuant to any other registration statement filed by the Company under the
Securities Act.
(s) The Company has not sold or issued any securities that would be integrated with the
offering of the Stock contemplated by this Agreement pursuant to the
Securities Act, the Rules and Regulations or the interpretations thereof by the
Commission.
(t) Except as described in the most recent Preliminary Prospectus, since the date of
the latest audited financial statements included or incorporated by reference in the most
recent Preliminary Prospectus, there has not been any change in the capital stock or
long-term debt of the Company or any of its subsidiaries or any adverse change, or any
development involving a prospective adverse change, in or affecting the condition (financial
or otherwise), results of operations, stockholders’ equity, properties, management or
business of the Company and its subsidiaries taken as a whole, in each case except as could
not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect.
(u) Since the respective dates as of which information is given in the most recent
Preliminary Prospectus and the Prospectus, the Company has not (i) incurred any material
liability or obligation, direct or contingent, other than liabilities and obligations that
were incurred in the ordinary course of business (ii) entered into any material transaction
not in the ordinary course of business or (iii) declared or paid any dividend on its capital
stock, other than in the case of (i) and (ii) herein, those material liabilities or
obligations or material transactions that would not, individually or in the aggregate,
reasonably be expect to (a) have a Material Adverse Effect, (b) materially affect the
transactions contemplated hereby or (c) impair the Company’s ability to perform its
obligations hereunder on a timely basis.
(v) The financial statements and the notes thereto included or incorporated by
reference in the most recent Preliminary Prospectus and the Prospectus present fairly the
financial condition, results of operations and cash flows of the entities purported to be
shown thereby at the dates and for the periods indicated and have been prepared in
accordance with generally accepted accounting principles applied on a consistent basis
throughout the periods indicated and comply as to form in all material respects with the
Rules and Regulations.
(w) Ernst & Young LLP, which have certified certain financial statements of the Company
and its consolidated subsidiaries, and which have audited the Company’s internal control
over financial reporting and management’s assessment thereof, are an independent public
accounting firm as required by the Securities Act and the Rules and Regulations and the
rules and regulations of the Public Company Accounting Oversight Board.
(x) The statistical and market-related data included in the most recent Preliminary
Prospectus are based on or derived from sources that the Company believes to be reliable and
accurate in all material respects.
(y) Neither the Company nor any subsidiary is, and as of the applicable Delivery Date
and, after giving effect to the offer and sale of the Stock and the application of the
proceeds therefrom as described under “Use of Proceeds” in each of the most recent
Preliminary Prospectus and the Prospectus, none of them will be, (i) an
“investment company” within the meaning of such term under the Investment Company Act
of 1940, as amended (the “Investment Company Act”), and the rules and regulations of the
Commission thereunder or (ii) a “business development company” (as defined in Section
2(a)(48) of the Investment Company Act).
(z) There is no litigation or legal or governmental proceeding to which the Company or
any of its subsidiaries is a party or to which any property or assets of the Company or any
of its subsidiaries is subject which is pending or, to the knowledge of the Company,
threatened or contemplated against the Company or any of its subsidiaries which (i) if
adversely determined, would, individually or in the aggregate, result in a Material Adverse
Effect, except as disclosed in the most recent Preliminary Prospectus and the Prospectus or
(ii) would, individually or in the aggregate, reasonably be expected to have a material
adverse effect on the performance by the Company or on the consummation of the transactions
contemplated hereby. Except as would, individually or in the aggregate, not reasonably be
expected to have a Material Adverse Effect, there is no unresolved criticism or exception by
any governmental authority with respect to any report or relating to any examination or
inspection of the Company or any of its subsidiaries.
(aa) Except as described in the most recent Preliminary Prospectus, no relationship,
direct or indirect, exists between or among the Company, on the one hand, and the directors,
officers, stockholders, customers or suppliers of the Company, on the other hand, that is
required to be described in the most recent Preliminary Prospectus or the Prospectus which
is not so described.
(bb) No labor disturbance by the employees of the Company or its subsidiaries exists
or, to the knowledge of the Company, is imminent that could reasonably be expected to have a
Material Adverse Effect.
(cc) (i) Each “employee benefit plan” (within the meaning of Section 3(3) of the
Employee Retirement Security Act of 1974, as amended (“ERISA”)) for which the Company or any
member of its “Controlled Group” (defined as any organization which is a member of a
controlled group of corporations within the meaning of Section 414 of the Internal Revenue
Code of 1986, as amended (the “Code”)) would have any liability (each a “Plan”) has been
maintained in compliance with its terms and with the requirements of all applicable
statutes, rules and regulations including ERISA and the Code; (ii) with respect to each Plan
subject to Title IV of ERISA (a) no “reportable event” (within the meaning of Section
4043(c) of ERISA) has occurred or is reasonably expected to occur, (b) no “accumulated
funding deficiency” (within the meaning of Section 302 of ERISA or Section 412 of the Code),
whether or not waived, has occurred or is reasonably expected to occur, (c) the fair market
value of the assets under each Plan exceeds the present value of all benefits accrued under
such Plan (determined based on those assumptions used to fund such Plan) and (d) neither the
Company or any member of its Controlled Group has incurred, or reasonably expects to incur,
any liability under Title IV of ERISA (other than contributions to the Plan or premiums to
the PBGC in the ordinary course and without default) in respect of a Plan (including a
“multiemployer plan”, within the meaning of Section 4001(c)(3) of ERISA); and (iii) each
Plan that is
intended to be qualified under Section 401(a) of the Code is so qualified and nothing
has occurred, whether by action or by failure to act, which would cause the loss of such
qualification, except in each such case as could not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.
(dd) The Company and each of its subsidiaries have filed all federal, state, local and
foreign income and franchise tax returns required to be filed through the date hereof,
subject to permitted extensions, and have paid all taxes due thereon, and no tax deficiency
has been determined adversely to the Company or any of its subsidiaries, nor does the
Company have any knowledge of any tax deficiencies that could, in the aggregate, reasonably
be expected to have a Material Adverse Effect.
(ee) There are no transfer taxes or other similar fees or charges under Federal law or
the laws of any state, or any political subdivision thereof, required to be paid in
connection with the execution and delivery of this Agreement or the issuance by the Company
or sale by the Company of the Stock.
(ff) Neither the Company nor any of its subsidiaries (i) is in violation or breach of
its certificate of incorporation, by-laws, partnership agreement or other constitutive
documents, (ii) is in default, and no event has occurred that, with notice or lapse of time
or both, would constitute such a default, in the due performance or observance of any loan
agreement, indenture, mortgage, deed of trust, license or other agreement or instrument to
which it is a party or by which it is bound or to which any of its properties or assets is
subject, (iii) is in violation of any law or any rule, regulation, order or decree of any
governmental agency or body or court having jurisdiction over the Company or any of its
subsidiaries or its respective property or assets or (iv) has failed to obtain any license,
permit, certificate, franchise or other governmental authorization or permit necessary for
the conduct of its business or the ownership or holding of its property, except in the case
of clauses (ii), (iii) and (iv), to the extent any such violation, breach, default or
failure would not, individually or in the aggregate, have a Material Adverse Effect.
(gg) There is and has been no failure on the part of the Company and any of the
Company’s directors or officers, in their capacities as such, to comply with the provisions
of the Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations promulgated in connection
therewith.
(hh) The Company and each of its subsidiaries have such permits, licenses, patents,
franchises, certificates of need and other approvals or authorizations of governmental or
regulatory authorities (“Permits”) as are necessary under applicable law to own their
properties and conduct their businesses in the manner described in the most recent
Preliminary Prospectus, except for any of the foregoing that could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect; each of the Company and its
subsidiaries has fulfilled and performed all of its obligations with respect to the Permits,
and no event has occurred that allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other impairment of
the rights of the holder or any such Permits, except for any of the foregoing that
could not reasonably be expected to have a Material Adverse Effect.
(ii) The Company maintains a system of internal control over financial reporting (as
such term is defined in Rule 13a-15(f) under the Exchange Act) sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with management’s
general or specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets, (iii) access to assets is permitted
only in accordance with U.S. management’s general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect thereto. As of December 31, 2007, the
Company’s internal control over financial reporting was effective, and the Company is not
aware of any material weaknesses in its internal control over financial reporting.
(jj) The Company maintains disclosure controls and procedures (as such term is defined
in Rule 13a-15(e) under the Exchange Act) that comply with the requirements of the Exchange
Act.
(kk) Neither the Company nor any of its subsidiaries, nor, to the knowledge of the
Company, any director, officer, agent, employee or other person associated with or acting on
behalf of the Company or any of its subsidiaries, has (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense relating to political
activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) violated or is in violation of
any provision of the U.S. Foreign Corrupt Practices Act of 1977; or (iv) made any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment.
(ll) The operations of the Company and its subsidiaries are and have been conducted at
all times in compliance with applicable financial recordkeeping and reporting requirements
of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money
laundering statutes of all jurisdictions, the rules and regulations thereunder and any
related or similar rules, regulations or guidelines, issued, administered or enforced by any
governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or
proceeding by or before any court or governmental agency, authority or body or any
arbitrator involving the Company or any of its subsidiaries with respect to the Money
Laundering Laws is pending or, to the knowledge of the Company, threatened, except, in each
case, as would not reasonably be expected to have a Material Adverse Effect.
(mm) Neither the Company nor any of its subsidiaries nor, to the knowledge of the
Company, any director, officer, agent, employee or affiliate of the Company or any of its
subsidiaries is currently subject to any U.S. sanctions administered by the Office of
Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will not
directly or indirectly use the proceeds of the offering, or lend, contribute or
otherwise make available such proceeds to any subsidiary, joint venture partner or
other person or entity, for the purpose of financing the activities of any person currently
subject to any U.S. sanctions administered by OFAC.
(nn) The Company has not distributed and, prior to the later to occur of any Delivery
Date and completion of the distribution of the Stock, will not distribute any offering
material in connection with the offering and sale of the Stock other than any Preliminary
Prospectus, the Prospectus and any Issuer Free Writing Prospectus to which the Underwriter
has consented in accordance with Section 1(i) or 5(a)(vii).
(oo) The Company has not taken and will not take, directly or indirectly, any action
designed to or that has constituted or that could reasonably be expected to cause or result
in the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the shares of the Stock.
Any certificate signed by any officer of the Company and delivered to the Underwriter in
connection with the closing of the offering of the Stock shall be deemed a representation and
warranty by the Company, as to matters covered thereby, to each Underwriter.
2. Purchase of the Stock by the Underwriter. On the basis of the representations and
warranties contained in, and subject to the terms and conditions of, this Agreement, the Company
agrees to sell 156,250,000 shares of the Firm Stock to the Underwriter, and the Underwriter agrees
to purchase 156,250,000 shares of the Firm Stock.
In addition, the Company grants to the Underwriter an option to purchase up to
23,437,500 additional shares of Option Stock. Such option is exercisable to the extent that the
Underwriter sells more shares of Common Stock than the number of Firm Stock in the offering and as
set forth in Section 4 hereof.
The price of both the Firm Stock and any Option Stock purchased by the Underwriter shall be
$7.76 per share.
The Company shall not be obligated to deliver any of the Firm Stock or Option Stock to be
delivered on the applicable Delivery Date, except upon payment for all such Stock to be purchased
on such Delivery Date as provided herein.
3. Offering of Stock by the Underwriter. The Underwriter proposes to offer the Firm
Stock for sale upon the terms and conditions to be set forth in the Prospectus.
4. Delivery of and Payment for the Stock. Delivery of and payment for the Firm Stock
shall be made at 10:00 A.M., New York City time, on the fourth full business day following the date
of this Agreement or at such other date or place as shall be determined by agreement between the
Underwriter and the Company. This date and time are sometimes referred to as the “Initial Delivery
Date.” Delivery of the Firm Stock shall be made to the Underwriter against payment by the
Underwriter of the aggregate purchase price of the Firm Stock being sold by the Company to or upon
the order of the Company by wire transfer in immediately available funds to the accounts specified
by the Company. Time shall be of the essence, and delivery at the time and place specified pursuant
to this Agreement is a further
condition of the obligation of the Underwriter hereunder. The Company shall deliver the Firm
Stock through the facilities of DTC unless the Underwriter shall otherwise instruct.
The option granted in Section 2 will expire 30 days after the date of this Agreement and may
be exercised in whole or from time to time in part by written notice being given to the Company by
the Underwriter; provided that if such date falls on a day that is not a business day, the option
granted in Section 2 will expire on the next succeeding business day. Such notice shall set forth
the aggregate number of shares of Option Stock as to which the option is being exercised, the names
in which the shares of Option Stock are to be registered, the denominations in which the shares of
Option Stock are to be issued and the date and time, as determined by the Underwriter, when the
shares of Option Stock are to be delivered; provided, however, that this date and time shall not be
earlier than the Initial Delivery Date nor earlier than the second business day after the date on
which the option shall have been exercised nor later than the fifth business day after the date on
which the option shall have been exercised. Each date and time the shares of Option Stock are
delivered is sometimes referred to as an “Option Stock Delivery Date,” and the Initial Delivery
Date and any Option Stock Delivery Date are sometimes each referred to as a “Delivery Date.”
Delivery of the Option Stock by the Company and payment for the Option Stock by the
Underwriter shall be made at 10:00 A.M., New York City time, on the date specified in the
corresponding notice described in the preceding paragraph or at such other date or place as shall
be determined by agreement between the Underwriter and the Company. On the Option Stock Delivery
Date, the Company shall deliver or cause to be delivered the Option Stock to the Underwriter
against payment by the Underwriter of the aggregate purchase price of the Option Stock being sold
by the Company to or upon the order of the Company by wire transfer in immediately available funds
to the accounts specified by the Company. Time shall be of the essence, and delivery at the time
and place specified pursuant to this Agreement is a further condition of the obligation of the
Underwriter hereunder. The Company shall deliver the Option Stock through the facilities of DTC
unless the Underwriter shall otherwise instruct.
5. Further Agreements of the Company and the Underwriter. (a) The Company agrees:
(i) To prepare the Prospectus in a form approved by the Underwriter and to file such
Prospectus pursuant to Rule 424(b) under the Securities Act not later than the Commission’s
close of business on the second business day following the execution and delivery of this
Agreement; to make no further amendment or any supplement to the Registration Statement or
the Prospectus prior to the last Delivery Date except as provided herein; to advise the
Underwriter, promptly after it receives notice thereof, of the time when any amendment or
supplement to the Registration Statement or the Prospectus has been filed and to furnish the
Underwriter with copies thereof; to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the
Prospectus and for so long as the delivery of a prospectus is required in connection with
the offering or sale of the Stock; to advise the Underwriter, promptly after it receives
notice thereof, of the issuance by the Commission of any stop order or of any order
preventing or suspending the use of the
Prospectus or any Issuer Free Writing Prospectus, of the suspension of the
qualification of the Stock for offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding or examination for any such purpose, of any notice from the
Commission objecting to the use of the form of the Registration Statement or any
post-effective amendment thereto or of any request by the Commission for the amending or
supplementing of the Registration Statement, the Prospectus or any Issuer Free Writing
Prospectus or for additional information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of the Prospectus or any Issuer Free
Writing Prospectus or suspending any such qualification, to use promptly its best efforts to
obtain its withdrawal;
(ii) To pay the applicable Commission filing fees relating to the Stock within the time
required by Rule 456(b)(1) without regard to the proviso therein;
(iii) To furnish promptly to the Underwriter and to counsel for the Underwriter a
signed copy of the Registration Statement as originally filed with the Commission, and each
amendment thereto filed with the Commission, including all consents and exhibits filed
therewith;
(iv) To deliver promptly to the Underwriter such number of the following documents as
the Underwriter shall reasonably request: (A) conformed copies of the Registration
Statement as originally filed with the Commission and each amendment thereto (in each case
excluding exhibits other than this Agreement and the computation of per share earnings), (B)
each Preliminary Prospectus, the Prospectus and any amended or supplemented Prospectus, (C)
each Issuer Free Writing Prospectus and (D) any document incorporated by reference in any
Preliminary Prospectus or the Prospectus; and, if the delivery of a prospectus is required
at any time after the date hereof in connection with the offering or sale of the Stock or
any other securities relating thereto and if at such time any events shall have occurred as
a result of which the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were made when
such Prospectus is delivered, not misleading, or, if for any other reason it shall be
necessary to amend or supplement the Prospectus or to file under the Exchange Act any
document incorporated by reference in the Prospectus in order to comply with the Securities
Act or the Exchange Act, to notify the Underwriter and, upon its request, to file such
document and to prepare and furnish without charge to the Underwriter and to any dealer in
securities as many copies as the Underwriter may from time to time reasonably request of an
amended or supplemented Prospectus that will correct such statement or omission or effect
such compliance;
(v) To file promptly with the Commission any amendment or supplement to the
Registration Statement or the Prospectus that may, in the judgment of the Company or the
Underwriter, be required by the Securities Act or requested by the Commission;
(vi) Prior to filing with the Commission any amendment or supplement to the
Registration Statement or the Prospectus, any document incorporated by reference in the
Prospectus or any amendment to any document incorporated by reference in the
Prospectus, to furnish a copy thereof to the Underwriter and counsel for the
Underwriter and obtain the consent of the Underwriter to the filing;
(vii) Not to make any offer relating to the Stock that would constitute an Issuer Free
Writing Prospectus without the prior written consent of the Underwriter;
(viii) To comply with all applicable requirements of Rule 433 with respect to any
Issuer Free Writing Prospectus; and if at any time after the date hereof any events shall
have occurred as a result of which any Issuer Free Writing Prospectus, as then amended or
supplemented, would conflict with the information in the Registration Statement, the most
recent Preliminary Prospectus or the Prospectus or would include an untrue statement of a
material fact or omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading, or,
if for any other reason it shall be necessary to amend or supplement any Issuer Free Writing
Prospectus, to notify the Underwriter and, upon its request, to file such document and to
prepare and furnish without charge to each Underwriter as many copies as the Underwriter may
from time to time reasonably request of an amended or supplemented Issuer Free Writing
Prospectus that will correct such conflict, statement or omission or effect such compliance;
(ix) As soon as practicable after the Effective Date and in any event not later than 16
months after the date hereof, to make generally available to the Company’s security holders
and to deliver to the Underwriter an earnings statement of the Company and its subsidiaries
(which need not be audited) complying with Section 11(a) of the Securities Act and the Rules
and Regulations;
(x) Promptly from time to time to take such action as the Underwriter may reasonably
request to qualify the Stock for offering and sale under the securities laws of Canada and
such other jurisdictions as the Underwriter may request and to comply with such laws so as
to permit the continuance of sales and dealings therein in such jurisdictions for as long as
may be necessary to complete the distribution of the Stock; provided that in connection
therewith the Company shall not be required to (i) qualify as a foreign corporation in any
jurisdiction in which it would not otherwise be required to so qualify, (ii) file a general
consent to service of process in any such jurisdiction or (iii) subject itself to taxation
in any jurisdiction in which it would not otherwise be subject;
(xi) For a period commencing on the date hereof and ending on the 90th day after the
date of the Prospectus (the “Lock-Up Period”), not to, directly or indirectly, (1) offer for
sale, sell, pledge or otherwise dispose of (or enter into any transaction or device that is
designed to, or could be expected to, result in the disposition by any person at any time in
the future of) any shares of Common Stock or securities convertible into or exchangeable for
Common Stock (other than the Stock and shares issued pursuant to employee benefit plans,
qualified stock option plans or other employee compensation plans existing on the date
hereof or pursuant to currently outstanding options, warrants or rights not issued under one
of those plans), or sell or grant options, rights or warrants with respect to any shares of
Common Stock or securities convertible into or exchangeable for Common Stock (other than the
grant of options pursuant to option plans
existing on the date hereof), (2) enter into any swap or other derivatives transaction
that transfers to another, in whole or in part, any of the economic benefits or risks of
ownership of such shares of Common Stock, whether any such transaction described in clause
(1) or (2) above is to be settled by delivery of Common Stock or other securities, in cash
or otherwise, (3) file or cause to be filed a registration statement, including any
amendments, with respect to the registration of any shares of Common Stock or securities
convertible, exercisable or exchangeable into Common Stock or any other securities of the
Company or (4) publicly disclose the intention to do any of the foregoing, in each case
without the prior written consent of the Underwriter and to cause each officer, director and
stockholder of the Company set forth on Schedule 1 hereto to furnish to the
Underwriter, prior to the Initial Delivery Date, a letter or letters, substantially in the
form of Exhibit A hereto (the “Lock-Up Agreements”); notwithstanding the foregoing,
if (1) during the last 17 days of the Lock-Up Period, the Company issues an earnings release
or material news or a material event relating to the Company occurs or (2) prior to the
expiration of the Lock-Up Period, the Company announces that it will release earnings
results during the 16-day period beginning on the last day of the Lock-Up Period, then the
restrictions imposed in this paragraph shall continue to apply until the expiration of the
18-day period beginning on the issuance of the earnings release or the announcement of the
material news or the occurrence of the material event, unless the Underwriter, waives such
extension in writing;
(xii) To apply the net proceeds from the sale of the Stock being sold by the Company as
set forth in the Prospectus.
(b) The Underwriter shall not include any “issuer information” (as defined in Rule 433) in any
“free writing prospectus” (as defined in Rule 405) used or referred to by the Underwriter without
the prior consent of the Company (any such issuer information with respect to whose use the Company
has given its consent, “Permitted Issuer Information”); provided that (i) no such consent shall be
required with respect to any such issuer information contained in any document filed by the Company
with the Commission prior to the use of such free writing prospectus and (ii) “issuer information,”
as used in this Section 5(b), shall not be deemed to include information prepared by the
Underwriter on the basis of or derived from issuer information.
6. Expenses. The Company agrees, whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, to pay all costs, expenses, fees and
taxes incident to and in connection with (a) the authorization, issuance, sale and delivery of the
Stock and any stamp duties or other taxes payable in that connection, and the preparation and
printing of certificates for the Stock; (b) the preparation, printing and filing under the
Securities Act of the Registration Statement (including any exhibits thereto), any Preliminary
Prospectus, the Prospectus, any Issuer Free Writing Prospectus and any amendment or supplement
thereto; (c) the distribution of the Registration Statement (including any exhibits thereto), any
Preliminary Prospectus, the Prospectus, any Issuer Free Writing Prospectus and any amendment or
supplement thereto, or any document incorporated by reference therein, all as provided in this
Agreement; (d) the production and distribution of this Agreement, and any other related documents
in connection with the offering, purchase, sale and delivery of the Stock; (e) any required review
by the Financial Industry Regulatory Authority (“FINRA”) of the terms of
sale of the Stock (including related fees and expenses of counsel to the Underwriter); (g) the
listing of the Stock on the New York Stock Exchange; (h) the qualification of the Stock under the
securities laws of the several jurisdictions as provided in Section 5(a)(x) and the preparation,
printing and distribution of a Blue Sky Memorandum (including related fees and expenses of counsel
to the Underwriter); (i) the preparation, printing and distribution of one or more versions of the
Preliminary Prospectus and the Prospectus for distribution in Canada, often in the form of a
Canadian “wrapper” (including related fees and expenses of Canadian counsel to the Underwriter);
(k) the investor presentations on any “road show” undertaken in connection with the marketing of
the Stock, including, without limitation, expenses associated with any electronic roadshow, travel
and lodging expenses of the representatives and officers of the Company and the cost of any
aircraft chartered in connection with the road show; and (l) all other costs and expenses incident
to the performance of the obligations of the Company under this Agreement; provided that, except as
provided in this Section 6 and in Section 10, the Underwriter shall pay their own costs and
expenses, including the costs and expenses of their counsel, any transfer taxes on the Stock which
they may sell and the expenses of advertising any offering of the Stock made by the Underwriter.
7. Conditions of Underwriter’s Obligations. The obligations of the Underwriter hereunder are
subject to the accuracy, when made and on each Delivery Date, of the representations and warranties
of the Company contained herein, to the performance by the Company of its obligations hereunder,
and to each of the following additional terms and conditions:
(a) The Prospectus shall have been timely filed with the Commission in accordance with
Section 5(a)(i); the Company shall have complied with all filing requirements applicable to
any Issuer Free Writing Prospectus used or referred to after the date hereof; no stop order
suspending the effectiveness of the Registration Statement or preventing or suspending the
use of the Prospectus or any Issuer Free Writing Prospectus shall have been issued and no
proceeding or examination for such purpose shall have been initiated or threatened by the
Commission; any request of the Commission for inclusion of additional information in the
Registration Statement or the Prospectus or otherwise shall have been complied with; and the
Commission shall not have notified the Company of any objection to the use of the form of
the Registration Statement.
(b) No Underwriter shall have discovered and disclosed to the Company on or prior to
such Delivery Date that the Registration Statement, the Prospectus or the Pricing Disclosure
Package, or any amendment or supplement thereto, contains an untrue statement of a fact
which, in the opinion of Xxxxxxx Xxxxxxx & Xxxxxxxx LLP, counsel for the Underwriter, is
material or omits to state a fact which, in the opinion of such counsel, is material and is
required to be stated therein or is necessary to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to the authorization,
form and validity of this Agreement, the Stock, the Registration Statement, the Prospectus
and any Issuer Free Writing Prospectus, and all other legal matters relating to this
Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for the Underwriter, and the Company
shall have furnished to such counsel all documents and information that they may reasonably
request to enable them to pass upon such matters.
(d) Xxxxxxx Xxxxxx, General Counsel of the Company, shall have furnished to the
Underwriter his written opinion, addressed to the Underwriter and dated such Delivery Date,
in form and substance reasonably satisfactory to the Underwriter, substantially in the form
attached hereto as Exhibit B-1.
(e) Milbank, Tweed, Xxxxxx & XxXxxx LLP shall have furnished to the Underwriter its
written opinion, as special New York counsel to the Company, addressed to the Underwriter
and dated such Delivery Date, in form and substance reasonably satisfactory to the
Underwriter, substantially in the form attached hereto as Exhibit B-2.
(f) Xxxx Xxxxx LLP shall have furnished to the Underwriter its written opinion, as
special Pennsylvania counsel to the Company, addressed to the Underwriter and dated such
Delivery Date, in form and substance reasonably satisfactory to the Underwriter,
substantially in the form attached hereto as Exhibit B-3.
(g) The Underwriter shall have received from Xxxxxxx Xxxxxxx & Xxxxxxxx LLP, counsel
for the Underwriter, such opinion or opinions, dated such Delivery Date, with respect to the
issuance and sale of the Stock, the Registration Statement, the Prospectus and the Pricing
Disclosure Package and other related matters as the Underwriter may reasonably require, and
the Company shall have furnished to such counsel such documents as they reasonably request
for the purpose of enabling them to pass upon such matters.
(h) At the time of execution of this Agreement, the Underwriter shall have received
from Ernst & Young LLP a letter, in form and substance satisfactory to the Underwriter,
addressed to the Underwriter and dated the date hereof (i) confirming that they are
independent public accountants within the meaning of the Securities Act and are in
compliance with the applicable requirements relating to the qualification of accountants
under Rule 2-01 of Regulation S-X of the Commission, and (ii) stating, as of the date hereof
(or, with respect to matters involving changes or developments since the respective dates as
of which specified financial information is given in the most recent Preliminary Prospectus,
as of a date not more than three days prior to the date hereof), the conclusions and
findings of such firm with respect to the financial information and other matters ordinarily
covered by accountants’ “comfort letters” to underwriters in connection with registered
public offerings.
(i) With respect to the letter of Ernst & Young LLP referred to in the preceding
paragraph and delivered to the Underwriter concurrently with the execution of this Agreement
(the “initial letter”), the Company shall have furnished to the Underwriter a letter (the
“bring-down letter”) of such accountants, addressed to the Underwriter and dated such
Delivery Date (i) confirming that they are independent public accountants within the meaning
of the Securities Act and are in compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission, (ii) stating, as of the date of the bring-down letter
(or, with respect to matters involving changes or developments since the respective dates as
of which specified financial information is given in the Prospectus, as of a date not more
than three days prior to the date of the bring-down letter), the conclusions and findings of
such firm with respect to the financial information and other matters covered by the initial
letter and (iii) confirming in all material respects the conclusions and findings set forth
in the initial letter.
(j) The Company shall have furnished to the Underwriter a certificate, dated such
Delivery Date, of its Chief Executive Officer and its Chief Financial Officer stating that:
(i) The representations, warranties and agreements of the Company in Section 1
are true and correct on and as of such Delivery Date, and the Company has complied
with all its agreements contained herein and satisfied all the conditions on its
part to be performed or satisfied hereunder at or prior to such Delivery Date;
(ii) No stop order suspending the effectiveness of the Registration Statement
has been issued; no proceedings or examination for that purpose have been instituted
or, to the knowledge of such officers, threatened; and the Commission has not
notified the Company of any objection to the use of the form of the Registration
Statement or any post-effective amendment thereto; and
(iii) They have carefully examined the Registration Statement, the Prospectus
and the Pricing Disclosure Package, and, in their opinion, (A) (1) the Registration
Statement, as of the Effective Date, (2) the Prospectus, as of its date or (3) the
Pricing Disclosure Package, as of the Applicable Time, did not and do not contain
any untrue statement of a material fact and did not and do not omit to state a
material fact required to be stated therein or necessary to make the statements
therein (except in the case of the Registration Statement, in the light of the
circumstances under which they were made) not misleading, and (B) since the
Effective Date, no event has occurred that should have been set forth in a
supplement or amendment to the Registration Statement, the Prospectus or any Issuer
Free Writing Prospectus that has not been so set forth.
(k) (i) Neither the Company nor any of its subsidiaries shall have sustained, since the
date of the latest audited financial statements included or incorporated by reference in the
most recent Preliminary Prospectus, any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree or (ii) since such date there shall
not have been any change in the capital stock or long-term debt of the Company or any of its
subsidiaries or any change, or any development involving a prospective change, in or
affecting the condition (financial or otherwise), results of operations, stockholders’
equity, properties, management, business or prospects of the Company and its subsidiaries
taken as a whole, the effect of which, in any such case described in clause (i) or (ii), is,
in the judgment of the Underwriter, so material and
adverse as to make it impracticable or inadvisable to proceed with the public offering
or the delivery of the Stock being delivered on such Delivery Date on the terms and in the
manner contemplated in the Prospectus.
(l) Subsequent to the execution and delivery of this Agreement (i) no downgrading shall
have occurred in the rating accorded the Company’s debt securities or preferred stock by any
“nationally recognized statistical rating organization” (as that term is defined by the
Commission for purposes of Rule 436(g)(2) of the Rules and Regulations), and (ii) no such
organization shall have publicly announced that it has under surveillance or review, with
possible negative implications, its rating of any of the Company’s debt securities or
preferred stock.
(m) Subsequent to the execution and delivery of this Agreement there shall not have
occurred any of the following: (i) trading in securities generally on the New York Stock
Exchange or the American Stock Exchange or in the over-the-counter market, or trading in any
securities of the Company on the New York Stock Exchange or in the over-the-counter market,
shall have been suspended or materially limited or the settlement of such trading generally
shall have been materially disrupted or minimum prices shall have been established on any
such exchange or such market by the Commission, by such exchange or by any other regulatory
body or governmental authority having jurisdiction, (ii) a banking moratorium shall have
been declared by federal or state authorities, (iii) the United States shall have become
engaged in hostilities, there shall have been an escalation in hostilities involving the
United States or there shall have been a declaration of a national emergency or war by the
United States or (iv) there shall have occurred such a material adverse change in general
economic, political or financial conditions, including, without limitation, as a result of
terrorist activities after the date hereof (or the effect of international conditions on the
financial markets in the United States shall be such), as to make it, in the judgment of the
Underwriter, impracticable or inadvisable to proceed with the public offering or delivery of
the Stock being delivered on such Delivery Date on the terms and in the manner contemplated
in the Prospectus.
(n) The New York Stock Exchange shall have approved the Stock for listing, subject only
to official notice of issuance.
(o) The Lock-Up Agreements between the Underwriter and the officers, directors and
stockholders of the Company set forth on Schedule 1, delivered to the Underwriter on
or before the date of this Agreement, shall be in full force and effect on such Delivery
Date.
All opinions, letters, evidence and certificates mentioned above or elsewhere in this
Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form
and substance reasonably satisfactory to counsel for the Underwriter.
8. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless the Underwriter, its directors,
officers and employees and each person, if any, who controls the Underwriter within the
meaning of Section 15 of the Securities Act, from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof (including, but not limited
to, any loss, claim, damage, liability or action relating to purchases and sales of Stock),
to which that Underwriter, director, officer, employee or controlling person may become
subject, under the Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in (A) any Preliminary Prospectus, the
Registration Statement, the Prospectus or in any amendment or supplement thereto, (B) any
Issuer Free Writing Prospectus or in any amendment or supplement thereto or (C) any
Permitted Issuer Information used or referred to in any “free writing prospectus” (as
defined in Rule 405) used or referred to by the Underwriter, (D) any “road show” (as defined
in Rule 433) not constituting an Issuer Free Writing Prospectus (a “Non-Prospectus Road
Show”) or (E) any Blue Sky application or other document prepared or executed by the Company
(or based upon any written information furnished by the Company for use therein)
specifically for the purpose of qualifying any or all of the Stock under the securities laws
of any state or other jurisdiction (any such application, document or information being
hereinafter called a “Blue Sky Application”) or (ii) the omission or alleged omission to
state in any Preliminary Prospectus, the Registration Statement, the Prospectus, any Issuer
Free Writing Prospectus or in any amendment or supplement thereto or in any Permitted Issuer
Information, any Non-Prospectus Road Show or any Blue Sky Application, any material fact
required to be stated therein or necessary to make the statements therein not misleading,
and shall reimburse the Underwriter and each such director, officer, employee or controlling
person promptly upon demand for any legal or other expenses reasonably incurred by the
Underwriter, director, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that the Company shall
not be liable in any such case to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, any untrue statement or alleged untrue statement or
omission or alleged omission made in any Preliminary Prospectus, the Registration Statement,
the Prospectus, any Issuer Free Writing Prospectus or in any such amendment or supplement
thereto or in any Permitted Issuer Information, any Non-Prospectus Road Show or any Blue Sky
Application, in reliance upon and in conformity with written information concerning the
Underwriter furnished to the Company by the Underwriter specifically for inclusion therein,
which information consists solely of the information specified in Section 8(e). The
foregoing indemnity agreement is in addition to any liability which the Company may
otherwise have to the Underwriter or to any director, officer, employee or controlling
person of the Underwriter.
(b) The Underwriter shall indemnify and hold harmless the Company, its directors,
officers and employees, and each person, if any, who controls the Company within the meaning
of Section 15 of the Securities Act, from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof, to which the
Company or any such director, officer, employee or controlling person may become
subject, under the Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement, the Prospectus, any Issuer Free Writing Prospectus or in any
amendment or supplement thereto or in any Non-Prospectus Road Show or Blue Sky Application,
or (ii) the omission or alleged omission to state in any Preliminary Prospectus, the
Registration Statement, the Prospectus, any Issuer Free Writing Prospectus or in any
amendment or supplement thereto or in any Non-Prospectus Road Show or Blue Sky Application,
any material fact required to be stated therein or necessary to make the statements therein
not misleading, but in each case only to the extent that the untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon and in conformity
with written information concerning the Underwriter furnished to the Company by the
Underwriter specifically for inclusion therein, which information is limited to the
information set forth in Section 8(e). The foregoing indemnity agreement is in addition to
any liability that the Underwriter may otherwise have to the Company or any such director,
officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under this Section 8 of notice of
any claim or the commencement of any action, the indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party under this Section 8, notify
the indemnifying party in writing of the claim or the commencement of that action; provided,
however, that the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has been materially
prejudiced by such failure and, provided, further, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may have to an
indemnified party otherwise than under this Section 8. If any such claim or action shall be
brought against an indemnified party, and it shall notify the indemnifying party thereof,
the indemnifying party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume the defense
thereof with counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the defense of
such claim or action, the indemnifying party shall not be liable to the indemnified party
under this Section 8 for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than reasonable costs of
investigation; provided, however, that the indemnified party shall have the right to employ
counsel to represent jointly the indemnified party and those other indemnified parties and
their respective directors, officers, employees and controlling persons who may be subject
to liability arising out of any claim in respect of which indemnity may be sought under this
Section 8 if (i) the indemnified party and the indemnifying party shall have so mutually
agreed; (ii) the indemnifying party has failed within a reasonable time to retain counsel
reasonably satisfactory to the indemnified party; (iii) the indemnified party and its
directors, officers, employees and controlling persons shall have reasonably concluded that
there may be legal defenses available to them that are different from or in addition to
those available to the indemnifying party; or (iv) the named parties in any such proceeding
(including any impleaded parties) include
both the indemnified parties or their respective directors, officers, employees or
controlling persons, on the one hand, and the indemnifying party, on the other hand, and
representation of both sets of parties by the same counsel would be inappropriate due to
actual or potential differing interests between them, and in any such event the fees and
expenses of such separate counsel shall be paid by the indemnifying party. No indemnifying
party shall (i) without the prior written consent of the indemnified parties (which consent
shall not be unreasonably withheld), settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or proceeding in
respect of which indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action) unless such
settlement, compromise or consent includes an unconditional release of each indemnified
party from all liability arising out of such claim, action, suit or proceeding and does not
include any findings of fact or admissions of fault or culpability as to the indemnified
party, or (ii) be liable for any settlement of any such action effected without its written
consent (which consent shall not be unreasonably withheld), but if settled with the consent
of the indemnifying party or if there be a final judgment for the plaintiff in any such
action, the indemnifying party agrees to indemnify and hold harmless any indemnified party
from and against any loss or liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall for any reason be
unavailable to or insufficient to hold harmless an indemnified party under Section 8(a),
8(b) or 8(c) in respect of any loss, claim, damage or liability, or any action in respect
thereof, referred to therein, then each indemnifying party shall, in lieu of indemnifying
such indemnified party, contribute to the amount paid or payable by such indemnified party
as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Underwriter, on the other, from the offering of the Stock
or (ii) if the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits referred to
in clause (i) above but also the relative fault of the Company, on the one hand, and the
Underwriter, on the other, with respect to the statements or omissions that resulted in such
loss, claim, damage or liability, or action in respect thereof, as well as any other
relevant equitable considerations. The relative benefits received by the Company, on the
one hand, and the Underwriter, on the other, with respect to such offering shall be deemed
to be in the same proportion as the total net proceeds from the offering of the Stock
purchased under this Agreement (before deducting expenses) received by the Company, as set
forth in the table on the cover page of the Prospectus, on the one hand, and the total
underwriting discounts and commissions received by the Underwriter with respect to the
shares of the Stock purchased under this Agreement, as set forth in the table on the cover
page of the Prospectus, on the other hand. The relative fault shall be determined by
reference to whether the untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact relates to information supplied by the Company
or the Underwriter, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission. The Company
and the Underwriter agree that it would not be just and equitable if contributions pursuant
to this Section 8(d) were to be determined by pro rata
allocation (even if the Underwriter were treated as one entity for such purpose) or by
any other method of allocation that does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified party as a result of the
loss, claim, damage or liability, or action in respect thereof, referred to above in this
Section 8(d) shall be deemed to include, for purposes of this Section 8(d), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the provisions of this
Section 8(d), the Underwriter shall not be required to contribute any amount in excess of
the amount by which the net proceeds from the sale of the Stock underwritten by it exceeds
the amount of any damages that the Underwriter has otherwise paid or become liable to pay by
reason of any untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The Underwriter confirms and the Company acknowledges and agrees that the
statements regarding delivery of shares by the Underwriter set forth on the cover page of,
and the concession and reallowance figures and the paragraph relating to stabilization by
the Underwriter appearing under the caption “Underwriting” in, the most recent Preliminary
Prospectus and the Prospectus are correct and constitute the only information concerning the
Underwriter furnished in writing to the Company by the Underwriter specifically for
inclusion in any Preliminary Prospectus, the Registration Statement, the Prospectus, any
Issuer Free Writing Prospectus or in any amendment or supplement thereto or in any
Non-Prospectus Road Show.
9. Termination. The obligations of the Underwriter hereunder may be terminated by the
Underwriter by notice given to and received by the Company prior to delivery of and payment for the
Firm Stock if, prior to that time, any of the events described in Sections 7(k), 7(l) and 7(m)
shall have occurred or if the Underwriter shall decline to purchase the Stock for any reason
permitted under this Agreement.
10. Reimbursement of Underwriter’s Expenses. If the Company shall fail to tender the Stock
for delivery to the Underwriter for any reason or (b) the Underwriter shall decline to purchase the
Stock for any reason permitted under this Agreement, the Company will reimburse the Underwriter for
all reasonable out-of-pocket expenses (including fees and disbursements of counsel) incurred by the
Underwriter in connection with this Agreement and the proposed purchase of the Stock, and upon
demand the Company shall pay the full amount thereof to the Underwriter. If this Agreement is
terminated pursuant to Section 9 by reason of the default of the Underwriter, the Company shall not
be obligated to reimburse the Underwriter on account of those expenses.
11. Research Analyst Independence. The Company acknowledges that the Underwriter’s research
analysts and research departments are required to be independent from their respective investment
banking divisions and are subject to certain regulations and internal policies, and that the
Underwriter’s research analysts may hold views and make statements or investment recommendations
and/or publish research reports with respect to the Company and/or the offering that differ from
the views of their respective investment banking divisions. The
Company hereby waives and releases, to the fullest extent permitted by law, any claims that
the Company may have against the Underwriter with respect to any conflict of interest that may
arise from the fact that the views expressed by their independent research analysts and research
departments may be different from or inconsistent with the views or advice communicated to the
Company by the Underwriter’s investment banking divisions. The Company acknowledges that the
Underwriter is a full service securities firm and as such from time to time, subject to applicable
securities laws, may effect transactions for its own account or the account of its customers and
hold long or short positions in debt or equity securities of the companies that may be the subject
of the transactions contemplated by this Agreement.
12. No Fiduciary Duty. The Company acknowledges and agrees that in connection with this
offering, sale of the Stock or any other services the Underwriter may be deemed to be providing
hereunder, notwithstanding any preexisting relationship, advisory or otherwise, between the parties
or any oral representations or assurances previously or subsequently made by the Underwriter: (i)
no fiduciary or agency relationship between the Company and any other person, on the one hand, and
the Underwriter, on the other, exists; (ii) the Underwriter is not acting as advisor, expert or
otherwise, to the Company, including, without limitation, with respect to the determination of the
public offering price of the Stock, and such relationship between the Company, on the one hand, and
the Underwriter, on the other, is entirely and solely commercial, based on arms-length
negotiations; (iii) any duties and obligations that the Underwriter may have to the Company shall
be limited to those duties and obligations specifically stated herein; and (iv) the Underwriter and
its respective affiliates may have interests that differ from those of the Company. The Company
hereby waives any claims that the Company may have against the Underwriter with respect to any
breach of fiduciary duty in connection with this offering.
13. Notices, Etc. All statements, requests, notices and agreements hereunder shall be in
writing, and:
(a) if to the Underwriter, shall be delivered or sent by mail or facsimile
transmission to Xxxxxx Brothers Inc., 1271 Avenue of the Xxxxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Syndicate Registration (Fax:
000-000-0000), with a copy, in the case of any notice pursuant to Section 8(c), to
the Director of Litigation, Office of the General Counsel, Xxxxxx Brothers Inc.,
2171 Avenue of the Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (Fax:
000-000-0000); and
(b) if to the Company, shall be delivered or sent by mail or facsimile
transmission to the address of the Company set forth in the Registration Statement,
Attention: Xxxxxxx Xxxxxx (Fax: 000-000-0000).
Any such statements, requests, notices or agreements shall take effect at the time of receipt
thereof.
14. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of
and be binding upon the Underwriter, the Company, and their respective successors. This Agreement
and the terms and provisions hereof are for the sole benefit of only
those persons, except that (A) the representations, warranties, indemnities and agreements of
the Company contained in this Agreement shall also be deemed to be for the benefit of the
directors, officers and employees of the Underwriter and each person or persons, if any, who
control the Underwriter within the meaning of Section 15 of the Securities Act and (B) the
indemnity agreement of the Underwriter contained in Section 8(b) of this Agreement shall be deemed
to be for the benefit of the directors of the Company, the officers of the Company who have signed
the Registration Statement and any person controlling the Company within the meaning of Section 15
of the Securities Act. Nothing in this Agreement is intended or shall be construed to give any
person, other than the persons referred to in this Section 14, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision contained herein.
15. Survival. The respective indemnities, representations, warranties and agreements of the
Company and the Underwriter contained in this Agreement or made by or on behalf of either of them,
respectively, pursuant to this Agreement, shall survive the delivery of and payment for the Stock
and shall remain in full force and effect, regardless of any investigation made by or on behalf of
either of them or any person controlling either of them.
16. Definition of the Terms “Business Day” and “Subsidiary”. For purposes of this Agreement,
(a) “business day” means each Monday, Tuesday, Wednesday, Thursday or Friday that is not a day on
which banking institutions in New York are generally authorized or obligated by law or executive
order to close and (b) “subsidiary” has the meaning set forth in Rule 405.
17. Governing Law. This Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York.
18. Counterparts. This Agreement may be executed in one or more counterparts and, if executed
in more than one counterpart, the executed counterparts shall each be deemed to be an original but
all such counterparts shall together constitute one and the same instrument.
19. Headings. The headings herein are inserted for convenience of reference only and are not
intended to be part of, or to affect the meaning or interpretation of, this Agreement.
If the foregoing correctly sets forth the agreement between the Company and the Underwriter,
please indicate your acceptance in the space provided for that purpose below.
| Very truly yours, | ||||||
| SOVEREIGN BANCORP, INC. | ||||||
| By: | ||||||
| Title: | ||||||
| Accepted: | ||||
| Xxxxxx Brothers Inc. | ||||
By: |
||||
SCHEDULE 1
PERSONS DELIVERING LOCK-UP AGREEMENTS
Directors
Xxxxxxx de Las Xxxxx
P. Xxxxxxx Xxxxxxxx, Chairman of the Board of Directors
Xxxxx Hard
Xxxxxx X. Xxxxx
Xxxxxx X. Xxxx, Xx.
Xxxxxxx X. Xxxxx
Xxxxx Xxxxxxx Xxxxxxx
Xxxx Xxxxxxxxx-Xxxxxxxx
Xxxxxxx Xxxxxxx
Xxxxxxx X. Xxxxxx, Xx.
Xxxxx X. Xxxxxxxxx
Officers
Xxxxxx X. Xxxxxxxxxx, President and Chief Executive Officer
Xxxx X. Xxxxxxx, Chief Financial Officer
Xxxxxxxxx X. Xxxxxxx, Executive Vice President and Chief of Staff to the Chief Executive Officer
M. Xxxxxx Xxxx, Executive Vice President and Chief Risk Management Officer
Xxxxxxx X. Xxxxxxxx, Chairman and Chief Executive Officer of the Sovereign Bank – New England
Division
Stockholders
Banco Santander Central Hispano S.A.
Relational Investors LLC
Other
Xxxxx Xxxxxxx
SCHEDULE 2
1. Public offering price: $8.00 per share of Stock
2. Number of shares of Stock offered: 156,250,000 shares of Firm Stock and 23,437,500 shares of
Option Stock
Exhibit A
LOCK-UP LETTER AGREEMENT
Xxxxxx Brothers Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
The undersigned understands that you (the “Underwriter”) proposes to enter into an
Underwriting Agreement (the “Underwriting Agreement”) providing for the purchase by the Underwriter
of shares (the “Stock”) of Common Stock, no par value per share (the “Common Stock”), of Sovereign
Bancorp, Inc., a Pennsylvania corporation (the “Company”), and that the Underwriter proposes to
reoffer the Stock to the public (the “Offering”).
In consideration of the execution of the Underwriting Agreement by the Underwriter, and for
other good and valuable consideration, the undersigned hereby irrevocably agrees that, without the
prior written consent of the Underwriter, the undersigned will not, directly or indirectly, (1)
offer for sale, sell, pledge or otherwise dispose of (or enter into any transaction or device that
is designed to, or could be expected to, result in the disposition by any person at any time in the
future of) any shares of Common Stock (including, without limitation, shares of Common Stock that
may be deemed to be beneficially owned by the undersigned in accordance with the rules and
regulations of the Securities and Exchange Commission and shares of Common Stock that may be issued
upon exercise of any options or warrants) or securities convertible into or exchangeable for Common
Stock, or sell or grant options, rights or warrants with respect to any shares of Common Stock or
securities convertible into or exchangeable for Common Stock (other than the grant of options
pursuant to option plans existing on the date hereof), (2) enter into any swap or other derivatives
transaction that transfers to another, in whole or in part, any of the economic benefits or risks
of ownership of such shares of Common Stock, whether any such transaction described in clause (1)
or (2) above is to be settled by delivery of Common Stock or other securities, in cash or
otherwise, (3) make any demand for or exercise any right or cause to be filed a registration
statement, including any amendments, with respect to the registration of any shares of Common Stock
or securities convertible, exercisable or exchangeable into Common Stock or any other securities of
the Company or (4) publicly disclose the intention to do any of the foregoing, for a period
commencing on the date hereof and ending on the 90th day after the date of the Prospectus relating
to the Offering (such 90-day period, the “Lock-Up Period”).
Notwithstanding the foregoing, if (1) during the last 17 days of the Lock-Up Period, the
Company issues an earnings release or material news or a material event
relating to the Company occurs or (2) prior to the expiration of the Lock-Up Period, the
Company announces that it will release earnings results during the 16-day period beginning on the
last day of the Lock-Up Period, then the restrictions imposed by this
Lock-Up Letter Agreement
shall continue to apply until the expiration of the 18-day period beginning on the issuance of the
earnings release or the announcement of the material news or the occurrence of the material event,
unless the Underwriter waives such extension in writing. The undersigned hereby further agrees
that, prior to engaging in any transaction or taking any other action that is subject to the terms
of this Lock-Up Letter Agreement during the period from the date of this Lock-Up Letter Agreement
to and including the 34th day following the expiration of the Lock-Up Period, it will
give notice thereof to the Company and will not consummate such transaction or take any such action
unless it has received written confirmation from the Company that the Lock-Up Period (as such may
have been extended pursuant to this paragraph) has expired. The foregoing sentence shall not apply
to bona fide gifts, sales or other dispositions of shares of any class of the Company’s capital
stock, in each case that are made exclusively between and among the undersigned or members of the
undersigned’s family, or affiliates of the undersigned, including its partners (if a partnership)
or members (if a limited liability company); provided that it shall be a condition to any such
transfer that (i) the transferee/donee agrees to be bound by the terms of the lock-up letter
agreement (including, without limitation, the restrictions set forth in the preceding sentence) to
the same extent as if the transferee/donee were a party hereto, (ii) no filing by any party (donor,
donee, transferor or transferee) under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), shall be required or shall be voluntarily made in connection with such transfer or
distribution (other than a filing on a Form 5, Schedule 13D or Schedule 13G (or 13D-A or 13G-A)
made after the expiration of the 90-day period referred to above), (iii) each party (donor, donee,
transferor or transferee) shall not be required by law (including without limitation the disclosure
requirements of the Securities Act of 1933, as amended, and the Exchange Act) to make, and shall
agree to not voluntarily make, any public announcement of the transfer or disposition, and (iv) the
undersigned notifies Xxxxxx Brothers Inc. at least two business days prior to the proposed transfer
or disposition.
[Insert for Santander] Notwithstanding anything herein to the contrary, it is agreed that the
restrictions set forth in this Lock-Up Letter will not prevent Banco Santander, S.A. or any of its
affiliates (as such term is defined in Rule 12b-2 promulgated under the Securities Exchange Act of
1934) or any of its representatives from engaging in brokerage, investment advisory or management,
trust and fiduciary, arbitrage, trading and lending activities in the normal and usual course of
business that otherwise would have been in violation of this Lock-Up Letter Agreement, provided
that any such arbitrage or trading activities are not for its own account or otherwise proprietary
in nature.]
[Insert for Santander Directors] [This Lock-Up Letter Agreement is being entered into by the
undersigned solely in his individual capacity and, for the avoidance of doubt, nothing contained
herein shall in any way bind or apply to Banco Santander, S.A.
or any of its affiliates (as such term is defined in Rule 12b-2 promulgated under the
Securities Exchange Act of 1934) or representatives.]
2
In furtherance of the foregoing, the Company and its transfer agent are hereby authorized to
decline to make any transfer of securities if such transfer would constitute a violation or breach
of this Lock-Up Letter Agreement.
It is understood that, if the Company notifies the Underwriter that it does not intend to
proceed with the Offering, if the Underwriting Agreement does not become effective, or if the
Underwriting Agreement (other than the provisions thereof which survive termination) shall
terminate or be terminated prior to payment for and delivery of the Stock, the undersigned will be
released from its obligations under this Lock-Up Letter Agreement.
The undersigned understands that the Company and the Underwriter will proceed with the
Offering in reliance on this Lock-Up Letter Agreement.
Whether or not the Offering actually occurs depends on a number of factors, including market
conditions. Any Offering will only be made pursuant to an Underwriting Agreement, the terms of
which are subject to negotiation between the Company and the Underwriter.
[Signature page follows]
3
The undersigned hereby represents and warrants that the undersigned has full power and
authority to enter into this Lock-Up Letter Agreement and that, upon request, the undersigned will
execute any additional documents necessary in connection with the enforcement hereof. Any
obligations of the undersigned shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
| Very truly yours, |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
Dated: _______________
4
EXHIBIT B-1
FORM OF OPINION OF GENERAL COUNSEL TO THE COMPANY
(i) The Bank has been duly organized, is validly existing and in good standing as a federal
savings bank under the law of the United States. The Bank has all corporate power and authority
necessary to own or hold its properties and conduct the businesses in which it is engaged as
described in the most recent Preliminary Prospectus and the Prospectus.
(ii) There are no preemptive or other rights to subscribe for or to purchase, nor any
restriction upon the voting or transfer of, any shares of the Stock pursuant to any agreement or
other instrument known to such counsel.
(iii) The execution, delivery and performance of the Agreement by the Company, the
consummation of the transactions contemplated by the Agreement, the application of the proceeds
from the sale of the Stock as described under “Use of Proceeds” in each of the most recent
Preliminary Prospectus and the Prospectus do not and will not conflict with or result in a breach
or violation of any of the terms or provisions of, impose any lien, charge or encumbrance upon any
property or assets of the Company and its subsidiaries, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement, license or other agreement or instrument known
to such counsel to which the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries is bound or to which any of the property or assets of the Company or any
of its subsidiaries is subject.
(iv) To such counsel’s knowledge, there are no contracts, agreements or understandings between
the Company and any person granting such person the right (other than rights which have been waived
in writing or otherwise satisfied) to require the Company to file a registration statement under
the Securities Act with respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the securities registered pursuant
to the Registration Statement or in any securities being registered pursuant to any other
registration statement filed by the Company under the Securities Act, other than the Registration
Rights Agreement between Banco Santander Central Hispano S.A. and Sovereign Bancorp, Inc. dated
October 24, 2005.
(v) Except as disclosed in the most recent form of Preliminary Prospectus and the Prospectus
(including by reason of incorporation by reference therein), to such counsel’s knowledge, there are
no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a
party or of which any property or assets of the Company or any of its subsidiaries is the subject
that could reasonably be expected to have a Material Adverse Effect or could reasonably be expected
to have a material adverse effect on the performance of the Agreement or the consummation of the
transactions contemplated thereby; and, to such counsel’s knowledge, no such proceedings are
threatened or contemplated by governmental authorities or others.
(vii) The Company has been duly registered as a savings and loan holding company under the
Home Owners’ Loan Act of 1933, as amended.
(viii) The Bank (a) was chartered under the laws of the United States to transact the business
of a Federal savings bank and its charter is in full force and effect and (b) is in good standing
under the laws of the United States.
(ix) No consent, approval, authorization or order of, or filing or registration with, any
court or governmental agency or body under United States federal laws regulating savings banks and
thrifts is required for the execution, delivery and performance of this Agreement by the Company
and the consummation of the transactions contemplated hereby.
(x) All of the issued and outstanding shares of capital stock of the Bank have been duly
authorized and validly issued, are fully paid, non-assessable and are owned directly or indirectly
by the Company, free and clear, to the knowledge of such counsel, of all liens, encumbrances,
equities or claims, except for such liens, encumbrances, equities or claims as would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
EXHIBIT B-2
FORM OF OPINION OF XXXX XXXXX LLP
(i) The Company is a corporation duly incorporated, validly existing and in good standing
under the laws of the Commonwealth of Pennsylvania. The Company has all corporate power and
authority necessary to own or hold its properties and conduct the businesses in which it is engaged
as described in the most recent Preliminary Prospectus and the Prospectus.
(ii) The Company has an authorized capitalization as set forth in each of the most recent
Preliminary Prospectus and the Prospectus. The shares of Stock to be issued and sold by the
Company to the Underwriter under the Agreement have been duly authorized and, upon payment and
delivery in accordance with the Agreement, will be validly issued, fully paid and non-assessable
and will conform to the description thereof contained in each of the most recent Preliminary
Prospectus and the Prospectus.
(iii) The shares of Stock to be issued and sold by the Company to the Underwriter under the
Agreement have been duly authorized and, upon payment and delivery in accordance with the
Agreement, will be validly issued, fully paid and non-assessable and will conform to the
description thereof contained in each of the most recent Preliminary Prospectus and the Prospectus.
(iv) There are no preemptive rights under the Pennsylvania Business Corporation Law to
subscribe for or purchase shares of the Stock. There are no preemptive or other rights to
subscribe for or to purchase, nor any restriction upon the voting or transfer of, any shares of the
Stock pursuant to the Company’s charter or by-laws (or similar organizational documents).
(v) The Agreement has been duly and validly authorized, executed and delivered by the Company.
(vi) The execution, delivery and performance of the Agreement by the Company, the consummation
of the transactions contemplated by the Agreement, and the application of the proceeds from the
sale of the Stock as described under “Use of Proceeds” in each of the most recent Preliminary
Prospectus and the Prospectus do not and will not (i) result in any violation of the provisions of
the charter or by-laws (or similar organizational documents) of the Company; or (ii) result in any
violation of any statute or any rule or regulation of the Commonwealth of Pennsylvania, or any
order known to us issued by any court or governmental agency or body of the Commonwealth of
Pennsylvania.
(vii) No consent, approval, authorization or order of, or filing or registration with, any
court or governmental agency or body of the Commonwealth of Pennsylvania is required for the
execution, delivery and performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby.
(viii) The statements made in each of the most recent Preliminary Prospectus and the
Prospectus under the caption “Description of Capital Stock,” insofar as they purport to constitute
summaries of the terms of the Common Stock (including the Stock), constitute accurate summaries of
the terms of such Common Stock in all material respects.
EXHIBIT B-3
FORM OF OPINION OF MILBANK, TWEED, XXXXXX & XxXXXX LLP
(i) Except for the registration of the Stock under the Securities Act and such consents,
approvals, authorizations, registrations or qualifications as may be required under the Exchange
Act, United States federal laws regulating savings banks and thrifts and applicable state
securities laws in connection with the purchase and sale of the Stock by the Underwriter, no
consent, approval, authorization or order of, or filing or registration with, any court or
governmental agency or body of the State of New York or the United States of America is required
for the execution, delivery and performance of this Agreement by the Company and the consummation
of the transactions contemplated hereby.
(ii) The Registration Statement became effective under the Securities Act on April 25, 2006
(as amended by Post-Effective Amendment No. 1 to the Registration Statement (Form S-3ASR) which
became effective June 2, 2006). To such counsel’s knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceeding or examination for
such purpose has been instituted or threatened by the Commission.
(iii) (A) The Registration Statement, as of the latest Effective Date, and (B) the Prospectus,
when filed with the Commission pursuant to Rule 424(b), appeared on their face to be appropriately
responsive, in all material respects, to the requirements of the Securities Act and the Rules and
Regulations, except that in each case such counsel need express no opinion with respect to the
financial statements or other financial data contained or incorporated by reference in or omitted
from the Registration Statement or the Prospectus.
(iv) Subject to the limitations and qualifications stated therein, the statements made in each
of the most recent Preliminary Prospectus and the Prospectus under the caption “Certain U.S.
Federal Income Tax Consequences to Non-U.S. Holders,” in each case to the extent that they purport
to summarize the tax consequences of U.S. federal income tax laws referred to therein, fairly
summarize in all material respects the consequences of such U.S. federal income tax laws.
(v) To such counsel’s knowledge, there are no contracts or other documents of a character
required to be described in the Registration Statement or the most recent Preliminary Prospectus to
be filed as exhibits to the Registration Statement or incorporated by reference therein that are
not described and filed therewith or incorporated by reference therein as required.
(vi) The Company is not an “investment company” within the meaning of and subject to
regulation under the Investment Company Act of 1940, as amended.
Such counsel shall also have furnished to the Representative a separate letter including a
written statement, addressed to the Underwriter and dated such Delivery Date, in form and substance
satisfactory to the Representative, to the effect that (x) such counsel has acted as special New
York counsel to the Company in connection with the preparation of the
Registration Statement, the Prospectus and the Pricing Disclosure Package, and (y) that they
have reviewed the Registration Statement, the Pricing Disclosure Package and the Prospectus
prepared by the Company, reviewed certain corporate records and documents furnished to them by the
Company and participated in discussions with representatives of the Company, special Pennsylvania
counsel to the Company, special federal regulatory counsel to the Company, the independent
registered public accountants for the Company and representatives of the Underwriter and counsel to
the Underwriter, regarding the Registration Statement, the Pricing Disclosure Package and the
Prospectus and related matters. Such counsel may note that they did not participate in the
preparation of the documents incorporated by reference in the Registration Statement, the Pricing
Disclosure Package and the Prospectus, although they have reviewed such documents and considered
the factual matters set forth therein as a part of the Registration Statement, the Disclosure
Package and the Final Prospectus as of the dates set forth in this letter.
Such counsel may indicate that the purpose of their professional engagement was not to
establish or confirm factual matters set forth in the Registration Statement, the Pricing
Disclosure Package or the Prospectus and that they have not undertaken to verify independently any
of such factual matters. Moreover, such counsel may note that many of the determinations required
to be made in the preparation of the Registration Statement, the Pricing Disclosure Package and the
Prospectus involve matters of a non-legal nature. Accordingly, such counsel may indicate that they
are not passing upon and do not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement, the Pricing Disclosure Package
and the Prospectus and make no representation that they have independently verified the accuracy,
completeness or fairness of such statements except to the extent set forth in paragraph (iv) of its
separate opinion letter to you dated the Delivery Date In addition, such counsel may indicate that
they are not passing upon and do not assume any responsibility for ascertaining whether or when any
of the Pricing Disclosure Package or the Prospectus was conveyed to any person for purposes of Rule
159 under the Securities Act.
The statement of such counsel shall indicate that on the basis of and subject to the foregoing
statements, they confirm to you that nothing has come to their attention that causes them to
believe that:
(i) the Registration Statement (other than the financial statements and schedules and other
financial, accounting and statistical data and management’s report on the effectiveness of internal
control over financial reporting and that part of the Registration Statement that constitutes any
Form T-1, as to which they need express no belief and make no statement), as of its most recent
Effective Date, contained an untrue statement of a material fact or omitted to state any material
fact required to be stated therein or necessary to make the statements therein not misleading;
(ii) the Pricing Disclosure Package (other than the financial statements and other financial,
accounting and statistical data and management’s report on the effectiveness of internal control
over financial reporting, as to which such counsel need express no belief and make no statement),
as of the Applicable Time, contained an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; or
(iii) the Prospectus (other than the financial statements and other financial, accounting and
statistical data and management’s report on the effectiveness of internal control over financial
reporting, as to which such counsel need express no belief and make no statement), as of its date
or as of the Delivery Date, contained or contains an untrue statement of a material fact or omitted
or omits to state a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
