Exhibit 4.27
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PREFERRED SECURITIES GUARANTEE AGREEMENT
Sovereign Bancorp, Inc.
Dated as of _______________
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation................. 1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application............... 5
SECTION 2.2 Lists of Holders of Securities................. 5
SECTION 2.3 Reports by the Preferred Securities Guarantee
Trustee........................................ 6
SECTION 2.4 Periodic Reports to Preferred Securities Guarantee
Trustee........................................ 6
SECTION 2.5 Evidence of Compliance with Conditions Xxxxx-
xxxx........................................... 6
SECTION 2.6 Events of Default; Waiver...................... 7
SECTION 2.7 Event of Default; Notice....................... 7
SECTION 2.8 Conflicting Interests.......................... 7
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED SECURITIES GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Securities
Guarantee Trustee............................. 7
SECTION 3.2 Certain Rights of Preferred Securities Guarantee
Trustee....................................... 9
SECTION 3.3 Not Responsible for Recitals or Issuance of
Preferred Securities Guarantee................ 12
ARTICLE IV
PREFERRED SECURITIES GUARANTEE TRUSTEE
SECTION 4.1 Preferred Securities Guarantee Trustee;
Eligibility.................................... 12
SECTION 4.2 Appointment, Removal and Resignation of Preferred
Securities Guarantee Trustee................... 13
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee...................................... 14
SECTION 5.2 Waiver of Notice and Demand.................... 14
SECTION 5.3 Obligations Not Affected....................... 14
SECTION 5.4 Rights of Holders.............................. 15
SECTION 5.5 Guarantee of Payment........................... 16
SECTION 5.6 Subrogation.................................... 16
SECTION 5.7 Independent Obligations........................ 16
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions..................... 16
SECTION 6.2 Ranking........................................ 17
ARTICLE VII
TERMINATION
SECTION 7.1 Termination.................................... 18
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation.................................... 18
SECTION 8.2 Indemnification................................ 19
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns......................... 19
SECTION 9.2 Amendments..................................... 19
SECTION 9.3 Notices........................................ 19
SECTION 9.4 Benefit........................................ 20
SECTION 9.5 Governing Law.................................. 20
PREFERRED SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Preferred Securities
Guarantee"), dated as of _______________, is executed and
delivered by Sovereign Bancorp, Inc., a Pennsylvania corporation
(the "Guarantor"), and The Bank of New York, a New York banking
corporation, as trustee (the "Preferred Securities Guarantee
Trustee"), for the benefit of the Holders (as defined herein)
from time to time of the Preferred Securities (as defined herein)
of Sovereign Capital Trust IV, a Delaware statutory business
trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated
Declaration of Trust (the "Trust Agreement"), dated as of
_____________, among the trustees of the Issuer, the Guarantor,
as sponsor, and the holders from time to time of undivided
beneficial interests in the assets of the Issuer, the Issuer is
issuing on the date hereof __________ preferred securities,
having an aggregate liquidation amount of $______________, such
capital securities being designated the Series A ___% Preferred
Securities (collectively the "Preferred Securities").
WHEREAS, as incentive for the Holders to purchase the
Preferred Securities, the Guarantor desires irrevocably and
unconditionally to agree, to the extent set forth in this
Preferred Securities Guarantee, to pay to the Holders the
Guarantee Payments (as defined below). The Guarantor agrees to
make certain other payments on the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the purchase by
each Holder, which purchase the Guarantor hereby acknowledges
shall benefit the Guarantor, the Guarantor executes and delivers
this Preferred Securities Guarantee for the benefit of the
Holders.
ARTICLE I.
DEFINITIONS AND INTERPRETATION
SECTION A. Definitions and Interpretation
In this Preferred Securities Guarantee, unless the
context otherwise requires:
1. Capitalized terms used in this Preferred
Securities Guarantee but not defined in the preamble above
have the respective meanings assigned to them in this
Section 1.1;
2. Terms defined in the Trust Agreement as at
the date of execution of this Preferred Securities Guarantee
have the same meaning when used in this Preferred Securities
Guarantee unless otherwise defined in this
Preferred Securities Guarantee;
3. a term defined anywhere in this Preferred
Securities Guarantee has the same meaning throughout;
4. all references to "the Preferred Securities
Guarantee" or "this Preferred Securities Guarantee" are to
this Preferred Securities Guarantee as modified,
supplemented or amended from time to time;
5. all references in this Preferred Securities
Guarantee to Articles and Sections are to Articles and
Sections of this Preferred Securities Guarantee, unless
otherwise specified;
6. a term defined in the Trust Indenture Act has
the same meaning when used in this Preferred Securities
Guarantee, unless otherwise defined in this Preferred
Securities Guarantee or unless the context otherwise
requires; and
7. a reference to the singular includes the
plural and vice versa.
"Affiliate" has the same meaning as given to that term
in Rule 405 under the Securities Act of 1933, as amended, or any
successor rule thereunder.
"Business Day" means any day other than a Saturday or a
Sunday, or a day on which banking institutions in The City of New
York are authorized or required by law or executive order to
close.
"Preferred Securities Guarantee Trustee" means The Bank
of New York, a New York banking corporation, until a Successor
Preferred Securities Guarantee Trustee has been appointed and has
accepted such appointment pursuant to the terms of this Preferred
Securities Guarantee and thereafter means each such Successor
Preferred Securities Guarantee Trustee.
"Common Securities" means the securities representing
common undivided beneficial interests in the assets of the
Issuer.
"Corporate Trust Office" means the office of the
Preferred Securities Guarantee Trustee at which the corporate
trust business of the Preferred Securities Guarantee Trustee
shall, at any particular time, be principally administered, which
office at the date of execution of this Agreement is located at
000 Xxxxxxx Xxxxxx, 00 Xxxx, Xxx Xxxx, Xxx Xxxx 00000.
"Covered Person" means any Holder or beneficial owner
of Preferred Securities.
"Debentures" means the series of subordinated debt
securities of the Guarantor designated the Series A _____% Junior
Subordinated Deferrable Interest Debentures due _____________
held by the Property Trustee (as defined in the Trust Agreement)
of the Issuer.
"Event of Default" means a default by the Guarantor on
any of its payment or other obligations under this Preferred
Securities Guarantee.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Preferred
Capital Securities, to the extent not paid or made by the Issuer:
(i) any accumulated and unpaid Distributions (as defined in the
Trust Agreement) that are required to be paid on such Preferred
Securities to the extent the Issuer has funds on hand legally
available therefor at such time, (ii) the redemption price,
including all accumulated and unpaid Distributions to the date of
redemption (the "Redemption Price") to the extent the Issuer has
funds on hand legally available therefor at such time, with
respect to any Preferred Securities called for redemption by the
Issuer, and (iii) upon a voluntary or involuntary termination and
liquidation of the Issuer (other than in connection with the
distribution of Debentures to the Holders in exchange for
Preferred Securities as provided in the Trust Agreement), the
lesser of (a) the aggregate of the liquidation amount and all
accumulated and unpaid Distributions on the Preferred Securities
to the date of payment, to the extent the Issuer has funds on
hand legally available therefor, and (b) the amount of assets of
the Issuer remaining available for distribution to Holders in
liquidation of the Issuer.
"Holder" shall mean any holder, as registered on the
books and records of the Issuer, of any Preferred Securities;
provided, however, that, in determining whether the holders of
the requisite percentage of Preferred Securities have given any
request, notice, consent or waiver hereunder, "Holder" shall not
include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Preferred Securities
Guarantee Trustee, any Affiliate of the Preferred Securities
Guarantee Trustee, or any officers, directors, shareholders,
members, partners, employees, representatives, nominees,
custodians or agents of the Preferred Securities Guarantee
Trustee.
"Indenture" means the Indenture dated as of
September 1, 1999, among the Guarantor (the "Debenture Issuer")
and Xxxxxx Trust and Savings Bank, as trustee, pursuant to which
the Debentures are to be issued to the Property Trustee of the
Issuer.
"Indenture Event of Default" shall mean any event
specified in Section ____ of the Indenture.
"Majority in liquidation amount of the Preferred
Securities" means, except as provided by the Trust Indenture Act,
a vote by Holder(s) of more than 50% of the aggregate liquidation
amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accumulated and unpaid
Distributions to the date upon which the voting percentages are
determined) of all Preferred Securities.
"Officers' Certificate" means, with respect to any
person, a certificate signed by the Chairman, a Vice Chairman,
the Chief Executive Officer, the President, a Vice President, the
Comptroller, and the Secretary or an Assistant Secretary of the
Guarantor. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this
Preferred Securities Guarantee (other than pursuant to
Section 314(a)(4) of the Trust Indenture Act) shall include:
(a) a statement that each officer signing the
Officers' Certificate has read the covenant or condition and
the definitions relating thereto;
(b) a statement that each such officer has made
such examination or investigation as, in such officer's
opinion, is necessary to enable such officer to express an
informed opinion as to whether or not such covenant or
condition has been complied with; and
(c) a statement as to whether, in the opinion of
each such officer, such condition or covenant has been
complied with.
"Other Debentures" means all junior subordinated
debentures issued by the Guarantor from time to time and sold to
any other trust, partnership or other entity affiliated with the
Guarantor that is a financing vehicle of the Guarantor (if any),
in each case similar to the Issuer.
"Other Guarantees" means all guarantees to be issued by
the Guarantor with respect to capital securities (if any) similar
to the Preferred Securities issued by any other trust,
partnership or other entity affiliated with the Guarantor that is
a financing vehicle of the Guarantor (if any), in each case
similar to the Issuer.
"Person" means a legal person, including any
individual, corporation, estate, partnership, joint venture,
association, joint stock company, limited liability company,
trust, unincorporated association, or government or any agency or
political subdivision thereof, or any other entity of whatever
nature.
"Responsible Officer" means any officer within the
Corporate Trust Office of the Preferred Securities Guarantee
Trustee, including any vice president, any assistant vice
president, any assistant secretary, the treasurer, any
assistant treasurer or other officer of the Corporate Trust
Office of the Preferred Securities Guarantee Trustee customarily
performing functions similar to those performed by any of the
above designated officers and also means, with respect to a
particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and
familiarity with the particular subject.
"Successor Preferred Securities Guarantee Trustee"
means a successor Preferred Securities Guarantee Trustee
possessing the qualifications to act as Preferred Securities
Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of
1939, or any successor legislation, in each case, as amended.
"Trust Securities" means the Common Securities and the
Preferred Securities, collectively.
ARTICLE II.
TRUST INDENTURE ACT
SECTION A. Trust Indenture Act; Application
1. This Preferred Securities Guarantee is subject to
the provisions of the Trust Indenture Act that are required to be
part of this Preferred Securities Guarantee and shall, to the
extent applicable, be governed by such provisions; and
2. if and to the extent that any provision of this
Preferred Securities Guarantee limits, qualifies or conflicts
with the duties imposed by Section 310 to 317, inclusive, of the
Trust Indenture Act, such imposed duties shall control.
SECTION B. Lists of Holders of Securities
1. The Guarantor shall provide the Preferred
Securities Guarantee Trustee (unless the Preferred Securities
Guarantee Trustee is otherwise the registrar of the Preferred
Securities) with a list, in such form as the Preferred Securities
Guarantee Trustee may reasonably require, of the names and
addresses of the Holders ("List of Holders") as of such date,
(i) within one Business Day after May 15 and November 15 of each
year, and (ii) at any other time within 30 days of receipt by the
Guarantor of a written request for a List of Holders as of a date
no more than 14 days before such List of Holders is given to the
Preferred Securities Guarantee Trustee, provided, that the
Guarantor shall not be obligated to provide such List of Holders
at any time the List of Holders does not differ from the most
recent List of Holders given to the Preferred Securities
Guarantee Trustee by the Guarantor. The Preferred Securities
Guarantee Trustee may destroy any List of Holders
previously given to it on receipt of a new List of Holders.
2. The Preferred Securities Guarantee Trustee shall
comply with its obligations under Sections 311(a), 311(b) and
Section 312(b) of the Trust Indenture Act.
SECTION C. Reports by the Preferred Securities Guarantee
Trustee
Within 60 days after January 15 of each year,
commencing ________________, the Preferred Securities Guarantee
Trustee shall provide to the Holders such reports as are required
by Section 313 of the Trust Indenture Act, if any, in the form
and in the manner provided by Section 313 of the Trust Indenture
Act. The Preferred Securities Guarantee Trustee shall also
comply with the other requirements of Section 313 of the Trust
Indenture Act.
SECTION D. Periodic Reports to Preferred Securities Guarantee
Trustee
The Guarantor shall provide to the Preferred Securities
Guarantee Trustee such documents, reports and information as
required by Section 314 (if any) and the compliance certificate
required by Section 314 of the Trust Indenture Act in the form,
in the manner and at the times required by Section 314 of the
Trust Indenture Act provided that such compliance certificate
shall be delivered on or before 120 days after the end of each
fiscal year of the Guarantor. Delivery of such reports,
information and documents to the Preferred Securities Guarantee
Trustee is for informational purposes only and the Preferred
Securities Guarantee Trustee's receipt of such shall not
constitute constructive notice of any information contained
therein or determinable from information contained therein,
including the Guarantor's compliance with any of its covenants
hereunder (as to which the Preferred Securities Guarantee Trustee
is entitled to rely exclusively on Officers' Certificates).
SECTION E. Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Preferred Securities
Guarantee Trustee such evidence of compliance with any conditions
precedent, if any, provided for in this Preferred Securities
Guarantee that relate to any of the matters set forth in
Section 314(c) of the Trust Indenture Act. Any certificate or
opinion required to be given by an officer pursuant to
Section 314(c)(1) may be given in the form of an Officers'
Certificate.
SECTION F. Events of Default; Waiver
The Holders of a Majority in liquidation amount of
Preferred Securities may, by vote, on behalf of all Holders,
waive any past Event of Default and its consequences.
Upon such waiver, any such Event of Default shall cease to exist,
and any Event of Default arising therefrom shall be deemed to
have been cured, for every purpose of this Preferred Securities
Guarantee, but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent
thereon.
SECTION G. Event of Default; Notice
1. The Preferred Securities Guarantee Trustee shall,
within 90 days after the occurrence of a default with respect to
this Preferred Securities Guarantee, mail by first class postage
prepaid, to all Holders, notices of all defaults actually known
to a Responsible Officer, unless such defaults have been cured
before the giving of such notice, provided, that, except in the
case of default in the payment of any Guarantee Payment, the
Preferred Securities Guarantee Trustee shall be protected in
withholding such notice if and so long as the board of directors,
the executive committee, or a trust committee of directors and/or
a Responsible Officer in good faith determines that the
withholding of such notice is in the interests of the Holders.
2. The Preferred Securities Guarantee Trustee shall
not be deemed to have knowledge of any Event of Default unless
the Preferred Securities Guarantee Trustee shall have received
written notice from the Guarantor, or a Responsible Officer
charged with the administration of the Trust Agreement shall have
obtained actual knowledge, of such Event of Default.
SECTION 2.8 Conflicting Interests
The Trust Agreement shall be deemed to be specifically
described in this Preferred Securities Guarantee for the purposes
of clause (i) of the first proviso contained in Section 310(b) of
the Trust Indenture Act.
ARTICLE III.
POWERS, DUTIES AND RIGHTS OF
PREFERRED SECURITIES GUARANTEE TRUSTEE
SECTION X. Xxxxxx and Duties of the Preferred Securities
Guarantee Trustee
1. This Preferred Securities Guarantee shall be held
by the Preferred Securities Guarantee Trustee for the benefit of
the Holders, and the Preferred Securities Guarantee Trustee shall
not transfer this Preferred Securities Guarantee to any Person
except a Holder exercising his or her rights pursuant to
Section 5.4(b) or to a Successor Preferred Securities Guarantee
Trustee on acceptance by such Successor Preferred Securities
Guarantee Trustee of its appointment to act as Successor
Preferred Securities Guarantee Trustee. The right, title and
interest of the Preferred Securities Guarantee Trustee
shall automatically vest in any Successor Preferred Securities
Guarantee Trustee, and such vesting and succession of title shall
be effective whether or not conveyancing documents have been
executed and delivered pursuant to the appointment of such
Successor Preferred Securities Guarantee Trustee.
\A If an Event of Default actually known to a
Responsible Officer has occurred and is continuing, the Preferred
Securities Guarantee Trustee shall enforce this Preferred
Securities Guarantee for the benefit of the Holders.
3. The Preferred Securities Guarantee Trustee, before
the occurrence of any Event of Default and after the curing of
all Events of Default that may have occurred, shall undertake to
perform only such duties as are specifically set forth in this
Preferred Securities Guarantee, and no implied covenants shall be
read into this Preferred Securities Guarantee against the
Preferred Securities Guarantee Trustee. In case an Event of
Default has occurred (that has not been cured or waived pursuant
to Section 2.6) and is actually known to a Responsible Officer,
the Preferred Securities Guarantee Trustee shall exercise such of
the rights and powers vested in it by this Preferred Securities
Guarantee, and use the same degree of care and skill in its
exercise thereof, as a prudent person would exercise or use under
the circumstances in the conduct of his or her own affairs.
4. No provision of this Preferred Securities
Guarantee shall be construed to relieve the Preferred Securities
Guarantee Trustee from liability for its own negligent action,
its own negligent failure to act, or its own willful misconduct,
except that:
a. prior to the occurrence of any Event of Default
and after the curing or waiving of all such Events of
Default that may have occurred:
(1) the duties and obligations of the Preferred
Securities Guarantee Trustee shall be determined solely
by the express provisions of this Preferred Securities
Guarantee, and the Preferred Securities Guarantee
Trustee shall not be liable except for the performance
of such duties and obligations as are specifically set
forth in this Preferred Securities Guarantee, and no
implied covenants or obligations shall be read into
this Preferred Securities Guarantee against the
Preferred Securities Guarantee Trustee; and
(2) in the absence of bad faith on the part of
the Preferred Securities Guarantee Trustee, the
Preferred Securities Guarantee Trustee may conclusively
rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Preferred
Securities Guarantee Trustee and conforming to
the requirements of this Preferred Securities
Guarantee; but in the case of any such certificates or
opinions that by any provision hereof are specifically
required to be furnished to the Preferred Securities
Guarantee Trustee, the Preferred Securities Guarantee
Trustee shall be under a duty to examine the same to
determine whether or not they conform to the
requirements of this Preferred Securities Guarantee;
b. the Preferred Securities Guarantee Trustee shall
not be liable for any error of judgment made in good faith
by a Responsible Officer, unless it shall be proved that the
Preferred Securities Guarantee Trustee was negligent in
ascertaining the pertinent facts upon which such judgment
was made;
c. the Preferred Securities Guarantee Trustee shall not
be liable with respect to any action taken or omitted to be
taken by it in good faith in accordance with the direction
of the Holders of a Majority in liquidation amount of the
Preferred Securities relating to the time, method and place
of conducting any proceeding for any remedy available to the
Preferred Securities Guarantee Trustee, or exercising any
trust or power conferred upon the Preferred Securities
Guarantee Trustee under this Preferred Securities Guarantee;
and
d. no provision of this Preferred Securities
Guarantee shall require the Preferred Securities Guarantee
Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of
its duties or in the exercise of any of its rights or
powers, if the Preferred Securities Guarantee Trustee shall
have reasonable grounds for believing that the repayment of
such funds or liability is not reasonably assured to it
under the terms of this Preferred Securities Guarantee or
indemnity, reasonably satisfactory to the Preferred
Securities Guarantee Trustee, against such risk or liability
is not reasonably assured to it.
SECTION B. Certain Rights of Preferred Securities Guarantee
Trustee
1. Subject to the provisions of Section 3.1:
a. The Preferred Securities Guarantee Trustee may
conclusively rely, and shall be fully protected in acting or
refraining from acting, upon any resolution, certificate,
statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed
by it to be genuine and to have been signed, sent or
presented by the proper party or parties.
b. Any direction or act of the Guarantor
contemplated by this Preferred Securities Guarantee may be
sufficiently evidenced by an Officers' Certificate.
c. Whenever, in the administration of this
Preferred Securities Guarantee, the Preferred Securities
Guarantee Trustee shall deem it desirable that a matter be
proved or established before taking, suffering or omitting
any action hereunder, the Preferred Securities Guarantee
Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part,
request and conclusively rely upon an Officers' Certificate
which, upon receipt of such request, shall be promptly
delivered by the Guarantor.
d. The Preferred Securities Guarantee Trustee
shall have no duty to see to any recording, filing or
registration of any instrument (or any rerecording, refiling
or registration thereof).
e. The Preferred Securities Guarantee Trustee may
consult with counsel of its selection, and the advice or
opinion of such counsel with respect to legal matters shall
be full and complete authorization and protection in respect
of any action taken, suffered or omitted by it hereunder in
good faith and in accordance with such advice or opinion.
Such counsel may be counsel to the Guarantor or any of its
Affiliates and may include any of its employees. The
Preferred Securities Guarantee Trustee shall have the right
at any time to seek instructions concerning the
administration of this Preferred Securities Guarantee from
any court of competent jurisdiction.
f. The Preferred Securities Guarantee Trustee
shall be under no obligation to exercise any of the rights
or powers vested in it by this Preferred Securities
Guarantee at the request or direction of any Holder, unless
such Holder shall have provided to the Preferred Securities
Guarantee Trustee such security and indemnity, reasonably
satisfactory to the Preferred Securities Guarantee Trustee,
against the costs, expenses (including attorneys' fees and
expenses and the expenses of the Preferred Securities
Guarantee Trustee's agents, nominees or custodians) and
liabilities that might be incurred by it in complying with
such request or direction, including such reasonable
advances as may be requested by the Preferred Securities
Guarantee Trustee; provided that, nothing contained in this
Section 3.2(a)(vi) shall be taken to relieve the Preferred
Securities Guarantee Trustee, upon the occurrence of an
Event of Default, of its obligation to exercise the rights
and powers vested in it by this Preferred Securities
Guarantee.
g. The Preferred Securities Guarantee Trustee
shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Preferred
Securities Guarantee Trustee, in its discretion, may make
such further inquiry or investigation into such facts or
matters as it may see fit.
h. The Preferred Securities Guarantee Trustee may
execute any of the trusts or powers hereunder or perform any
duties hereunder either directly or by or through agents,
nominees, custodians or attorneys, and the Preferred
Securities Guarantee Trustee shall not be responsible for
any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder.
i. Any action taken by the Preferred Securities
Guarantee Trustee or its agents hereunder shall bind the
Holders, and the signature of the Preferred Securities
Guarantee Trustee or its agents alone shall be sufficient
and effective to perform any such action. No third party
shall be required to inquire as to the authority of the
Preferred Securities Guarantee Trustee to so act or as to
its compliance with any of the terms and provisions of this
Preferred Securities Guarantee, both of which shall be
conclusively evidenced by the Preferred Securities Guarantee
Trustee's or its agent's taking such action.
j. Whenever in the administration of this
Preferred Securities Guarantee the Preferred Securities
Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right
or taking any other action hereunder, the Preferred
Securities Guarantee Trustee (i) may request instructions
from the Holders of a Majority in liquidation amount of the
Preferred Securities, (ii) may refrain from enforcing such
remedy or right or taking such other action until such
instructions are received, and (iii) shall be protected in
conclusively relying on or acting in accordance with such
instructions.
k. The Preferred Securities Guarantee Trustee
shall not be liable for any action taken, suffered, or
omitted to be taken by it in good faith, without negligence,
and reasonably believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this
Preferred Securities Guarantee.
2. No provision of this Preferred Securities
Guarantee shall be deemed to impose any duty or obligation on the
Preferred Securities Guarantee Trustee to perform any act or acts
or exercise any right, power, duty or obligation conferred or
imposed on it in any jurisdiction in which it shall be
illegal, or in which the Preferred Securities Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable
law, to perform any such act or acts or to exercise any such
right, power, duty or obligation. No permissive power or
authority available to the Preferred Securities Guarantee Trustee
shall be construed to be a duty.
SECTION C. Not Responsible for Recitals or Issuance of
Preferred Securities Guarantee
The recitals contained in this Preferred Securities
Guarantee shall be taken as the statements of the Guarantor, and
the Preferred Securities Guarantee Trustee does not assume any
responsibility for their correctness. The Preferred Securities
Guarantee Trustee makes no representation as to the validity or
sufficiency of this Preferred Securities Guarantee.
ARTICLE IV.
PREFERRED SECURITIES GUARANTEE TRUSTEE
SECTION A. Preferred Securities Guarantee Trustee;
Eligibility
1. There shall at all times be a Preferred Securities
Guarantee Trustee which shall:
a. not be an Affiliate of the Guarantor; and
b. be a corporation organized and doing business
under the laws of the United States of America or any State
or Territory thereof or of the District of Columbia, or a
corporation or Person permitted by the Securities and
Exchange Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws to
exercise corporate trust powers, having a combined capital
and surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or examination by
Federal, State, Territorial or District of Columbia
authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority
referred to above, then, for the purposes of this
Section 4.1(a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition
so published.
2. If at any time the Preferred Securities Guarantee
Trustee shall cease to be eligible to so act under Section
4.1(a), the Preferred Securities Guarantee Trustee shall
immediately resign in the manner and with the effect set out in
Section 4.2(c).
3. If the Preferred Securities Guarantee Trustee has
or shall acquire any "conflicting interest" within the meaning
of Section 310(b) of the Trust Indenture Act, the Preferred
Securities Guarantee Trustee and Guarantor shall in all respects
comply with the provisions of Section 310(b) of the Trust
Indenture Act.
SECTION B. Appointment, Removal and Resignation of Preferred
Securities Guarantee Trustee
1. Subject to Section 4.2(b), the Preferred
Securities Guarantee Trustee may be appointed or removed without
cause at any time by the Guarantor except during an Event of
Default. Subject to the provisions of this Section 4.2, the
Preferred Securities Guarantee Trustee may be removed by the
holders of a Majority in Liquidation Amount of the Series A
Capital Securities during an Event of Default.
2. The Preferred Securities Guarantee Trustee shall
not be removed in accordance with Section 4.2(a) until a
Successor Preferred Securities Guarantee Trustee has been
appointed and has accepted such appointment by written instrument
executed by such Successor Preferred Securities Guarantee Trustee
and delivered to the Guarantor.
3. The Preferred Securities Guarantee Trustee shall
hold office until a Successor Preferred Securities Guarantee
Trustee shall have been appointed or until its removal or
resignation. The Preferred Securities Guarantee Trustee may
resign from office (without need for prior or subsequent
accounting) by an instrument in writing executed by the Preferred
Securities Guarantee Trustee and delivered to the Guarantor,
which resignation shall not take effect until a Successor
Preferred Securities Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by
such Successor Preferred Securities Guarantee Trustee and
delivered to the Guarantor and the resigning Preferred Securities
Guarantee Trustee.
4. If no Successor Preferred Securities Guarantee
Trustee shall have been appointed and accepted appointment as
provided in this Section 4.2 within 60 days after delivery of an
instrument of removal or resignation, the Preferred Securities
Guarantee Trustee resigning or being removed may petition any
court of competent jurisdiction for appointment of a Successor
Preferred Securities Guarantee Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Preferred Securities Guarantee
Trustee.
5. No Preferred Securities Guarantee Trustee shall be
liable for the acts or omissions to act of any Successor
Preferred Securities Guarantee Trustee.
6. Upon termination of this Preferred Securities
Guarantee or removal or resignation of the Preferred Securities
Guarantee Trustee pursuant to this Section 4.2, the Guarantor
shall pay to the Preferred Securities Guarantee Trustee all
amounts due to the Preferred Securities Guarantee Trustee accrued
to the date of such termination, removal or resignation.
ARTICLE V.
GUARANTEE
SECTION A. Guarantee
The Guarantor irrevocably and unconditionally agrees to
pay in full to the Holders the Guarantee Payments (without
duplication of amounts theretofore paid by the Issuer), as and
when due, regardless of any defense, right of set-off or
counterclaim that the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders
or by causing the Issuer to pay such amounts to the Holders.
SECTION B. Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of
this Preferred Securities Guarantee and of any liability to which
it applies or may apply, presentment, demand for payment, any
right to require a proceeding first against the Issuer or any
other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption
and all other notices and demands.
SECTION C. Obligations Not Affected
The obligations, covenants, agreements and duties of
the Guarantor under this Preferred Securities Guarantee shall in
no way be affected or impaired by reason of the happening from
time to time of any of the following:
1. the release or waiver, by operation of law or
otherwise, of the performance or observance by the Issuer of any
express or implied agreement, covenant, term or condition
relating to the Preferred Securities to be performed or observed
by the Issuer;
2. the extension of time for the payment by the
Issuer of all or any portion of the Distributions, Redemption
Price, Liquidation Distribution or any other sums payable under
the terms of the Preferred Securities or the extension of time
for the performance of any other obligation under, arising out
of, or in connection with, the Preferred Securities (other than
an extension of time for payment of Distributions, Redemption
Price, Liquidation Distribution or other sum payable that results
from the extension of any interest payment period on
the Debentures permitted by the Indenture);
3. any failure, omission, delay or lack of diligence
on the part of the Holders to enforce, assert or exercise any
right, privilege, power or remedy conferred on the Holders
pursuant to the terms of the Preferred Securities, or any action
on the part of the Issuer granting indulgence or extension of any
kind;
4. the voluntary or involuntary liquidation,
dissolution, sale of any collateral, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, the Issuer or any of
the assets of the Issuer;
5. any invalidity of, or defect or deficiency in, the
Preferred Securities;
6. the settlement or compromise of any obligation
guaranteed hereby or hereby incurred;
7. the consummation of the Exchange Offer; or
8. any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense of
a guarantor, it being the intent of this Section 5.3 that the
obligations of the Guarantor with respect to the Guarantee
Payments shall be absolute and unconditional under any and all
circumstances.
There shall be no obligation of the Holders to give
notice to, or obtain consent of, the Guarantor with respect to
the happening of any of the foregoing.
SECTION D. Rights of Holders
1. The Holders of a Majority in liquidation amount of
the Preferred Securities have the right to direct the time,
method and place of conducting any proceeding for any remedy
available to the Preferred Securities Guarantee Trustee in
respect of this Preferred Securities Guarantee or exercising any
trust or power conferred upon the Preferred Securities Guarantee
Trustee under this Preferred Securities Guarantee.
2. If the Preferred Securities Guarantee Trustee
fails to enforce such Preferred Securities Guarantee, any Holder
may institute a legal proceeding directly against the Guarantor
to enforce the Preferred Securities Guarantee Trustee's rights
under this Preferred Securities Guarantee, without first
instituting a legal proceeding against the Issuer, the Preferred
Securities Guarantee Trustee or any other person or entity. The
Guarantor waives any right or remedy to require that any action
be brought first against the Issuer or any other person
or entity before proceeding directly against the Guarantor.
SECTION E. Guarantee of Payment
This Preferred Securities Guarantee creates a guarantee
of payment and not of collection.
SECTION F. Subrogation
The Guarantor shall be subrogated to all (if any)
rights of the Holders against the Issuer in respect of any
amounts paid to such Holders by the Guarantor under this
Preferred Securities Guarantee; provided, however, that the
Guarantor shall not (except to the extent required by mandatory
provisions of law) be entitled to enforce or exercise any right
that it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of
payment under this Preferred Securities Guarantee, if, at the
time of any such payment, any amounts are due and unpaid under
this Preferred Securities Guarantee. If any amount shall be paid
to the Guarantor in violation of the preceding sentence, the
Guarantor agrees to hold such amount in trust for the Holders and
to pay over such amount to the Holders.
SECTION G. Independent Obligations
The Guarantor acknowledges that its obligations
hereunder are independent of the obligations of the Issuer with
respect to the Preferred Securities, and that the Guarantor shall
be liable as principal and as debtor hereunder to make Guarantee
Payments pursuant to the terms of this Preferred Securities
Guarantee notwithstanding the occurrence of any event referred to
in subsections (a) through (h), inclusive, of Section 5.3 hereof.
ARTICLE VI.
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION A. Limitation of Transactions
So long as any Preferred Securities remain outstanding,
the Guarantor shall not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Guarantor's
capital stock (which includes common and preferred stock) or
(ii) make any payment of principal of or premium, if any, or
interest on or repay, repurchase or redeem any debt securities of
the Guarantor (including any Other Debentures) that rank
pari passu with or junior in right of payment to the Debentures
or (iii) make any guarantee payments with respect to any
guarantee by the Guarantor of the debt securities of any
subsidiary of the Guarantor (including Other Guarantees) if such
guarantee ranks pari passu with or junior in right of payment to
the Debentures (other than (a) dividends or distributions in
shares of, or options, warrants, rights to subscribe
for or purchase shares of, common stock of the Guarantor, (b) any
declaration of a dividend in connection with the implementation
of a stockholders' rights plan, or the issuance of stock under
any such plan in the future, or the redemption or repurchase of
any such rights pursuant thereto, (c) payments under this
Preferred Securities Guarantee, (d) as a result of a
reclassification of the Guarantor's capital stock or the exchange
or the conversion of one class or series of the Guarantor's
capital stock for another class or series of the Guarantor's
capital stock, (e) the purchase of fractional interests in shares
of the Guarantor's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being
converted or exchanged, and (f) purchases of common stock related
to the issuance of common stock or rights under any of the
Guarantor's benefit plans for its directors, officers or
employees or any of the Guarantor's dividend reinvestment plans)
if at such time (i) there shall have occurred any event of which
the Guarantor has actual knowledge that (a) is, or with the
giving of notice or the lapse of time, or both, would be an
Indenture Event of Default and (b) in respect of which the
Guarantor shall not have taken reasonable steps to cure, (ii) if
such Debentures are held by the Property Trustee, the Guarantor
shall be in default with respect to its payment of any
obligations under this Preferred Securities Guarantee or
(iii) the Guarantor shall have given notice of its election of
the exercise of its right to extend the interest payment period
pursuant to Section ______ of the Indenture and any such
extension shall be continuing.
SECTION B. Ranking
This Preferred Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank
(i) subordinate and junior in right of payment to Senior Debt (as
defined in the Indenture), to the same extent and in the same
manner that the Debentures are subordinated to Senior Debt
pursuant to the Indenture (except as indicated below), it being
understood that the terms of Article ___ of the Indenture shall
apply to the obligations of the Guarantor under this Preferred
Securities Guarantee as if (x) such Article ___ were set forth
herein in full and (y) such obligations were substituted for the
term "Securities" appearing in such Article __, except that with
respect to Section ________ of the Indenture only, the term
"Senior Debt" shall mean all liabilities of the Guarantor,
whether or not for money borrowed (other than obligations in
respect of Other Guarantees), (ii) pari passu with the most
senior preferred or preference stock now or hereafter issued by
the Guarantor, any guarantee now or hereafter entered into by the
Guarantor in respect of any preferred or preference stock of any
Affiliate of the Guarantor, and any Other Guarantee, and
(iii) senior to the Guarantor's capital stock.
ARTICLE VII.
TERMINATION
SECTION A. Termination
This Preferred Securities Guarantee shall terminate
(i) upon full payment of the Redemption Price (as defined in the
Trust Agreement) of all Preferred Securities, or (ii) upon
liquidation of the Issuer, the full payment of the amounts
payable in accordance with the Trust Agreement or the
distribution of the Debentures to the Holders. Notwithstanding
the foregoing, this Preferred Securities Guarantee will continue
to be effective or will be reinstated, as the case may be, if at
any time any Holder must restore payment of any sums paid under
the Preferred Securities or under this Preferred Securities
Guarantee.
ARTICLE VIII.
INDEMNIFICATION
SECTION A. Exculpation
1. No Indemnified Person shall be liable, responsible
or accountable in damages or otherwise to the Guarantor or any
Covered Person for any loss, damage or claim incurred by reason
of any act or omission performed or omitted by such Indemnified
Person in good faith in accordance with this Preferred Securities
Guarantee and in a manner that such Indemnified Person reasonably
believed to be within the scope of the authority conferred on
such Indemnified Person by this Preferred Securities Guarantee or
by law, except that an Indemnified Person shall be liable for any
such loss, damage or claim incurred by reason of such Indemnified
Person's negligence or willful misconduct with respect to such
acts or omissions.
2. An Indemnified Person shall be fully protected in
relying in good faith upon the records of the Guarantor and upon
such information, opinions, reports or statements presented to
the Guarantor by any Person as to matters the Indemnified Person
reasonably believes are within such other Person's professional
or expert competence and who has been selected with reasonable
care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which
Distributions to Holders might properly be paid.
SECTION B. Indemnification
The Guarantor agrees to indemnify each Indemnified
Person for, and to hold each Indemnified Person harmless against,
any and all loss, liability, damage, claim or expense incurred
without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of the trust or
trusts hereunder, including the costs and expenses
(including reasonable legal fees and expenses) of defending
itself against, or investigating, any claim or liability in
connection with the exercise or performance of any of its powers
or duties hereunder. The obligation to indemnify as set forth in
this Section 8.2 shall survive the termination of this Preferred
Securities Guarantee.
ARTICLE IX.
MISCELLANEOUS
SECTION A. Successors and Assigns
All guarantees and agreements contained in this
Preferred Securities Guarantee shall bind the successors,
assigns, receivers, trustees and representatives of the Guarantor
and shall inure to the benefit of the Holders then outstanding.
SECTION B. Amendments
Except with respect to any changes that do not
materially adversely affect the rights of Holders (in which case
no consent of Holders will be required), this Preferred
Securities Guarantee may only be amended with the prior approval
of the Holders of a Majority in liquidation amount of the
Securities (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages are
determined). The provisions of the Trust Agreement with respect
to consents to amendments thereof (whether at a meeting or
otherwise) shall apply to the giving of such approval.
SECTION C. Notices
All notices provided for in this Preferred Securities
Guarantee shall be in writing, duly signed by the party giving
such notice, and shall be delivered, telecopied or mailed by
first class mail, as follows:
1. If given to the Issuer, in care of the
Administrative Trustee at the Issuer's mailing address set forth
below (or such other address as the Issuer may give notice of to
the Holders and the Preferred Securities Guarantee Trustee):
Sovereign Capital Trust IV
c/o Sovereign Bancorp, Inc.
0000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxxx, XX 00000
Attention: Administrative Trustee
Telecopy: (000) 000-0000
2. If given to the Preferred Securities Guarantee
Trustee, at the Preferred Securities Guarantee Trustee's mailing
address set forth below (or such other address as the Preferred
Securities Guarantee Trustee may give notice of to the
Holders and the Issuer):
The Bank of New York
000 Xxxxxxx Xxxxxx, 00 Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust Trustee
Administration
Telecopy: (000) 000-0000
3. If given to the Guarantor, at the Guarantor's
mailing address set forth below (or such other address as the
Guarantor may give notice of to the Holders and the Preferred
Securities Guarantee Trustee):
Sovereign Bancorp, Inc.
0000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx X. XxXxxxxx
Telecopy: (000) 000-0000
4. If given to any Holder, at the address set forth
on the books and records of the Issuer.
All such notices shall be deemed to have been given
when received in person, telecopied with receipt confirmed, or
mailed by first class mail, postage prepaid except that if a
notice or other document is refused delivery or cannot be
delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been
delivered on the date of such refusal or inability to deliver.
SECTION D. Benefit
This Preferred Securities Guarantee is solely for the
benefit of the Holders and, subject to Section 3.1(a), is not
separately transferable from the Preferred Securities.
SECTION E. Governing Law
THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES THEREOF.
THIS PREFERRED SECURITIES GUARANTEE is executed as of
the day and year first above written.
SOVEREIGN BANCORP, INC., as
Guarantor
By:_______________________________
Name:
Title:
THE BANK OF NEW YORK, as Preferred
Securities Guarantee Trustee
By:_______________________________
Name:
Title:
