Document:

exv10w1

 

Exhibit 10.1

AMENDMENT NO. 2

AND WAIVER

          AMENDMENT NO. 2 AND WAIVER (this “Amendment and Waiver”), dated as of March 19, 2007,
to that certain Credit Agreement, dated as of February 24, 2005, as amended, supplemented and in
effect from time to time (the “Credit Agreement”; capitalized terms used herein and not
defined shall have the meanings set forth in the Credit Agreement), among SELECT MEDICAL HOLDINGS
CORPORATION (“Holdings”), SELECT MEDICAL CORPORATION (the “Borrower”), JPMORGAN
CHASE BANK, N.A., as Administrative Agent and Collateral Agent (the “Administrative Agent”
and the “Collateral Agent” respectively), WACHOVIA BANK, NATIONAL ASSOCIATION, as
Syndication Agent, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED and CIBC INC., as
Co-Documentation Agents, and the several banks and other financial institutions from time to time
party thereto as lenders (the “Lenders”).

W I T N E S S E T H:

          WHEREAS, Section 9.02 of the Credit Agreement permits the Credit Agreement to be amended and
provisions thereof waived from time to time;

          NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

          SECTION ONE. Amendments.

          (a) Subclause (g) of Section 6.05 of the Credit Agreement is hereby amended by replacing the
figure “$100,000,000” therein with the figure “$200,000,000.”

          (b) The table set forth in Section 6.12 of the Credit Agreement is hereby deleted in its
entirety and replaced by the following table:

	 	 	 
	Date	 	Ratio
	March 31, 2005
	 	1.75 to 1.00
	 	 	 
	June 30, 2005
	 	1.75 to 1.00
	 	 	 
	September 30, 2005
	 	1.75 to 1.00
	 	 	 
	December 31, 2005
	 	2.00 to 1.00
	 	 	 
	March 31, 2006
	 	2.00 to 1.00
	 	 	 
	June 30, 2006
	 	2.00 to 1.00

 

-2-

	 	 	 
	Date	 	Ratio
	September 30, 2006
	 	2.00 to 1.00
	 	 	 
	December 31, 2006
	 	2.00 to 1.00
	 	 	 
	March 31, 2007
	 	1.75 to 1.00
	 	 	 
	June 30, 2007
	 	1.75 to 1.00
	 	 	 
	September 30, 2007
	 	1.75 to 1.00
	 	 	 
	December 31, 2007
	 	1.75 to 1.00
	 	 	 
	March 31, 2008
	 	1.75 to 1.00
	 	 	 
	June 30, 2008
	 	1.75 to 1.00
	 	 	 
	September 30, 2008
	 	1.75 to 1.00
	 	 	 
	December 31, 2008
	 	1.75 to 1.00
	 	 	 
	March 31, 2009
	 	1.75 to 1.00
	 	 	 
	June 30, 2009
	 	1.75 to 1.00
	 	 	 
	September 30, 2009
	 	2.00 to 1.00
	 	 	 
	December 31, 2009
	 	2.00 to 1.00
	 	 	 
	March 31, 2010
	 	2.00 to 1.00
	 	 	 
	June 30, 2010
	 	2.00 to 1.00
	 	 	 
	September 30, 2010
	 	2.00 to 1.00
	 	 	 
	December 31, 2010
	 	2.00 to 1.00
	 	 	 
	March 31, 2011
	 	2.25 to 1.00
	 	 	 
	June 30, 2011
	 	2.25 to 1.00
	 	 	 
	September 30, 2011
	 	2.25 to 1.00
	 	 	 
	December 31, 2011
	 	2.25 to 1.00

          (c) The table set forth in Section 6.13 of the Credit Agreement is hereby deleted in its
entirety and replaced by the following table:

 

-3-

	 	 	 
	Date	 	Ratio
	March 31, 2005
	 	5.50 to 1.00
	 	 	 
	June 30, 2005
	 	5.50 to 1.00
	 	 	 
	September 30, 2005
	 	5.25 to 1.00
	 	 	 
	December 31, 2005
	 	5.00 to 1.00
	 	 	 
	March 31, 2006
	 	4.75 to 1.00
	 	 	 
	June 30, 2006
	 	4.75 to 1.00
	 	 	 
	September 30, 2006
	 	4.50 to 1.00
	 	 	 
	December 31, 2006
	 	4.50 to 1.00
	 	 	 
	March 31, 2007
	 	6.00 to 1.00
	 	 	 
	June 30, 2007
	 	6.00 to 1.00
	 	 	 
	September 30, 2007
	 	6.00 to 1.00
	 	 	 
	December 31, 2007
	 	6.00 to 1.00
	 	 	 
	March 31, 2008
	 	6.00 to 1.00
	 	 	 
	June 30, 2008
	 	6.00 to 1.00
	 	 	 
	September 30, 2008
	 	6.00 to 1.00
	 	 	 
	December 31, 2008
	 	5.75 to 1.00
	 	 	 
	March 31, 2009
	 	5.50 to 1.00
	 	 	 
	June 30, 2009
	 	5.25 to 1.00
	 	 	 
	September 30, 2009
	 	5.00 to 1.00
	 	 	 
	December 31, 2009
	 	5.00 to 1.00
	 	 	 
	March 31, 2010
	 	4.75 to 1.00
	 	 	 
	June 30, 2010
	 	4.75 to 1.00

 

-4-

	 	 	 
	Date	 	Ratio
	September 30, 2010
	 	4.50 to 1.00
	 	 	 
	December 31, 2010
	 	4.50 to 1.00
	 	 	 
	March 31, 2011
	 	4.50 to 1.00
	 	 	 
	June 30, 2011
	 	4.50 to 1.00
	 	 	 
	September 30, 2011
	 	4.50 to 1.00
	 	 	 
	December 31, 2011
	 	4.50 to 1.00

          SECTION TWO. Limited Waiver. The Tranche B Required Lenders (as defined below) hereby
waive Borrower’s obligation to comply with the obligation to prepay Tranche B Term Loan Borrowings
pursuant to Section 2.11(d) of the Credit Agreement for the fiscal year ended December 31, 2006.
The Tranche B Required Lenders hereby waive any past Default that occurred as a result of the
Borrower’s failure to comply with Section 2.11(d) within five Business Days of the date on which
financial statements were delivered pursuant to Section 5.01 of the Credit Agreement with respect
to the fiscal year ended December 31, 2006.

          SECTION THREE. Conditions to Effectiveness. This Amendment and Waiver shall become
effective as of the date (the “Effective Date”) when, and only when, (a) the Administrative
Agent shall have received counterparts of this Amendment executed by Holdings, the Borrower and
each Subsidiary Loan Party and (i) with respect to the amendments described in Section One above, a
number of Lenders sufficient to constitute the Required Lenders and (ii) with respect to the waiver
described in Section Two above, a number of Tranche B Lenders representing more than 50% of the
outstanding Tranche B Term Loans (the “Tranche B Required Lenders”), (b) the Administrative
Agent shall have received, to the extent invoiced, reimbursement or payment of all reasonable
out-of-pocket expenses (including the reasonable fees, charges and disbursements of Cahill Gordon &
Reindel LLP, counsel to the Lenders) required to be reimbursed or paid by any Loan Party hereunder
or under any other Loan Document and (c) the Borrower has paid to the Administrative Agent for the
account of each Lender which shall have executed this Amendment and Waiver, an amendment fee equal
to 0.125% of such Lender’s outstanding Tranche B Term Loans and Revolving Commitments. The
effectiveness of this Amendment and Waiver (other than Sections Six, Seven and Eight hereof) is
conditioned upon the accuracy of the representations and warranties set forth in Section Four
hereof.

          SECTION FOUR. Representations and Warranties. In order to induce the Lenders and the
Administrative Agent to enter into this Amendment and Waiver, the Borrower represents and warrants
to each of the Lenders and the Administrative Agent that, after giving effect to this Amendment and
Waiver, and both before and after giving effect to the transactions contemplated by this Amendment
and Waiver

     (a) no Default or Event of Default has occurred and is continuing; and

     (b) each of the representations and warranties made by each of the Loan Parties in or
pursuant to the Loan Documents are true and correct in all material respects on and as of

 

-5-

the date hereof as if made on the date hereof (or, if any such representation or
warranty is expressly stated to have been made as of a specific date, as of such specific
date).

          SECTION FIVE. Reference to and Effect on the Loan Documents. On and after the
Effective Date, each reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof”
or words of like import referring the Credit Agreement, and each reference in the Notes and each of
the other Loan Documents to “the Credit Agreement,” “thereunder,” “thereof” or words of like import
referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement, as
amended by this Amendment and Waiver. The Credit Agreement, the Notes and each of the other Loan
Documents, as specifically amended by this Amendment and Waiver, are and shall continue to be in
full force and effect. The execution, delivery and effectiveness of this Amendment and Waiver
shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy
of any Lender or any Agent under any of the Loan Documents, nor constitute a waiver of any
provision of any of the Loan Documents.

          SECTION SIX. Costs, Expenses and Taxes. The Borrower agrees to pay all reasonable
out-of-pocket expenses incurred by the Administrative Agent in connection with the preparation,
execution and delivery of this Amendment and Waiver and the other instruments and documents to be
delivered hereunder, if any (including, without limitation, the reasonable fees, charges and
disbursements of Cahill Gordon & Reindel llp, counsel to the Lenders) in accordance with
the terms of Section 9.03 of the Credit Agreement.

          SECTION SEVEN. Execution in Counterparts. This Amendment and Waiver may be executed
in counterparts (and by different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a single contract.
Delivery of an executed counterpart of a signature page to this Amendment and Waiver by telecopy
shall be effective as delivery of a manually executed counterpart of this Amendment and Waiver.

          SECTION EIGHT. Governing Law. THIS AMENDMENT AND WAIVER AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT AND WAIVER SHALL BE CONSTRUED AND GOVERNED BY, IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

[Signature Pages Follow]

 

	 	 	 	 	 	 	 
	 	 	SELECT MEDICAL CORPORATION,
	 	 	as the Borrower
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Martin F. Jackson
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Martin F. Jackson
	 

	 	 	 	Title:
	 	Executive Vice President and Chief
	 

	 	 	 	 	 	Financial Officer

	 	 	 	 	 	 	 
	 	 	SELECT MEDICAL HOLDINGS CORPORATION
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Martin F. Jackson
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Martin F. Jackson
	 

	 	 	 	Title:
	 	Executive Vice President and Chief
	 

	 	 	 	 	 	Financial Officer

 

 

	 	 	 	 	 	 	 
	 	 	EACH OF THE SUBSIDIARIES
	 	 	LISTED ON SCHEDULE I HERETO
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Martin F. Jackson
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Martin F. Jackson
	 

	 	 	 	Title:
	 	Executive Vice President and Chief Financial Officer

 

 

	 	 	 	 	 	 	 
	 	 	JPMORGAN CHASE BANK, N.A.,
	 	 	as Administrative Agent
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Stephanie Parker
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Stephanie Parker
	 

	 	 	 	Title:
	 	Executive Director

 

 

Schedule I to

Amendment No. 2

and Waiver

SUBSIDIARY LOAN PARTIES

	1.	 	American Transitional Hospitals, Inc.
	 
	2.	 	Argosy Health, LLC
	 
	3.	 	Arizona Rehab Provider Network, Inc.
	 
	4.	 	Athens Sports Medicine Clinic, Inc.
	 
	5.	 	Atlantic Rehabilitation Services, Inc.
	 
	6.	 	Buendel Physical Therapy, Inc.
	 
	7.	 	C.E.R. — West, Inc.
	 
	8.	 	C.O.A.S.T. Institute Physical Therapy, Inc.
	 
	9.	 	CCISUB, Inc.
	 
	10.	 	Cenla Physical Therapy & Rehabilitation Agency, Inc.
	 
	11.	 	Center for Evaluation & Rehabilitation, Inc.
	 
	12.	 	CenterTherapy, Inc.
	 
	13.	 	Community Rehab Centers of Massachusetts, Inc.
	 
	14.	 	Crowley Physical Therapy Clinic, Inc.
	 
	15.	 	Douglas Avery & Associates, Ltd.
	 
	16.	 	Elk County Physical Therapy, Inc.
	 
	17.	 	Fine, Bryant & Wah, Inc.
	 
	18.	 	Gallery Physical Therapy Center, Inc.
	 
	19.	 	Georgia Physical Therapy of West Georgia, Inc.
	 
	20.	 	Georgia Physical Therapy, Inc.
	 
	21.	 	GP Therapy, L.L.C.
	 
	22.	 	Greater Sacramento Physical Therapy Associates, Inc.
	 
	23.	 	Gulf Breeze Physical Therapy, Inc.
	 
	24.	 	Hand Therapy and Rehabilitation Associates, Inc.
	 
	25.	 	Hand Therapy Associates, Inc.
	 
	26.	 	Hawley Physical Therapy, Inc.
	 
	27.	 	Hudson Physical Therapy Services, Inc.
	 
	28.	 	Indianapolis Physical Therapy and Sports Medicine, Inc.
	 
	29.	 	Intensiva Healthcare Corporation
	 
	30.	 	Intensiva Hospital of Greater St. Louis, Inc.
	 
	31.	 	Joyner Sportsmedicine Institute, Inc.

 

 

	32.	 	Kentucky Rehabilitation Services, Inc.
	 
	33.	 	Kessler Assisted Living Corporation
	 
	34.	 	Kessler Institute for Rehabilitation, Inc.
	 
	35.	 	Kessler Occupational Medicine Centers, Inc.
	 
	36.	 	Kessler Orthotic & Prosthetic Services, Inc.
	 
	37.	 	Kessler Physical Therapy & Rehabilitation, Inc.
	 
	38.	 	Kessler Professional Services, LLC
	 
	39.	 	Kessler Rehab Centers, Inc.
	 
	40.	 	Kessler Rehabilitation Corporation
	 
	41.	 	Kessler Rehabilitation of Maryland, Inc.
	 
	42.	 	Kessler Rehabilitation Services, Inc.
	 
	43.	 	Metro Rehabilitation Services, Inc.
	 
	44.	 	Michigan Therapy Centre, Inc.
	 
	45.	 	Monmouth Rehabilitation, Inc.
	 
	46.	 	Northside Physical Therapy, Inc.
	 
	47.	 	NovaCare Occupational Health Services, Inc.
	 
	48.	 	NovaCare Outpatient Rehabilitation East, Inc.
	 
	49.	 	NovaCare Outpatient Rehabilitation, Inc.
	 
	50.	 	NovaCare Rehabilitation, Inc.
	 
	51.	 	NovaCare Rehabilitation of Ohio, Inc.
	 
	52.	 	P.T. Services Rehabilitation, Inc.
	 
	53.	 	Peter Trailov R.P.T. Physical Therapy Clinic, Orthopedic
Rehabilitation & Sports Medicine, Ltd.
	 
	54.	 	Physical Therapy Associates, Inc.
	 
	55.	 	Physical Therapy Institute, Inc.
	 
	56.	 	Physical Therapy Services of the Jersey Cape, Inc.
	 
	57.	 	Pro Active Therapy of Ahoskie, Inc.
	 
	58.	 	Pro Active Therapy of Greenville, Inc.
	 
	59.	 	Pro Active Therapy of North Carolina, Inc.
	 
	60.	 	Pro Active Therapy of Rocky Mount, Inc.
	 
	61.	 	Pro Active Therapy of South Carolina, Inc.
	 
	62.	 	Pro Active Therapy of Virginia, Inc.
	 
	63.	 	Pro Active Therapy, Inc.
	 
	64.	 	Professional Therapeutic Services, Inc.
	 
	65.	 	Quad City Management, Inc.
	 
	66.	 	RCI (Colorado), Inc.
	 
	67.	 	RCI (Exertec), Inc.

 

 

	68.	 	RCI (Michigan), Inc.
	 
	69.	 	RCI (S.P.O.R.T.), Inc.
	 
	70.	 	RCI (WRS), Inc.
	 
	71.	 	Rebound Oklahoma, Inc.
	 
	72.	 	Redwood Pacific Therapies, Inc.
	 
	73.	 	Rehab Provider Network — East I, Inc.
	 
	74.	 	Rehab Provider Network — East II, Inc.
	 
	75.	 	Rehab Provider Network — Indiana, Inc.
	 
	76.	 	Rehab Provider Network — Michigan, Inc.
	 
	77.	 	Rehab Provider Network — New Jersey, Inc.
	 
	78.	 	Rehab Provider Network — New York, Inc.
	 
	79.	 	Rehab Provider Network — Ohio, Inc.
	 
	80.	 	Rehab Provider Network — Pennsylvania, Inc.
	 
	81.	 	Rehab Provider Network of Colorado, Inc.
	 
	82.	 	Rehab Provider Network of Florida, Inc.
	 
	83.	 	Rehab Provider Network of Nevada, Inc.
	 
	84.	 	Rehab Provider Network of New Mexico, Inc.
	 
	85.	 	Rehab Provider Network of North Carolina, Inc.
	 
	86.	 	Rehab Provider Network of South Carolina, Inc.
	 
	87.	 	Rehab Provider Network of Texas, Inc.
	 
	88.	 	Rehab Provider Network of Virginia, Inc.
	 
	89.	 	RehabClinics (GALAXY), Inc.
	 
	90.	 	RehabClinics (PTA), Inc.
	 
	91.	 	RehabClinics (SPT), Inc.
	 
	92.	 	RehabClinics Abilene, Inc.
	 
	93.	 	RehabClinics Dallas, Inc.
	 
	94.	 	RehabClinics, Inc.
	 
	95.	 	RPN of NC, Inc.
	 
	96.	 	S.T.A.R.T., Inc.
	 
	97.	 	Select Air II, Inc.
	 
	98.	 	Select Employment Services, Inc.
	 
	99.	 	Select Hospital Investors, Inc.
	 
	100.	 	Select Medical of Kentucky, Inc.
	 
	101.	 	Select Medical of Maryland, Inc.
	 
	102.	 	Select Medical of New York, Inc.
	 
	103.	 	Select Medical Rehabilitation Clinics, Inc.
	 
	104.	 	Select Medical Rehabilitation Services, Inc.

 

 

	105.	 	Select Medical Property Ventures, LLC
	 
	106.	 	Select Provider Networks, Inc.
	 
	107.	 	Select Rehabilitation Management Services, Inc.
	 
	108.	 	Select Software Ventures, LLC
	 
	109.	 	Select Specialty Hospital — Akron/SHS, Inc.
	 
	110.	 	Select Specialty Hospital — Ann Arbor, Inc.
	 
	111.	 	Select Specialty Hospital — Arizona, Inc.
	 
	112.	 	Select Specialty Hospital — Augusta/UH, Inc.
	 
	113.	 	Select Specialty Hospital — Baton Rouge, Inc.
	 
	114.	 	Select Specialty Hospital — Battle Creek, Inc.
	 
	115.	 	Select Specialty Hospital — Beech Grove, Inc.
	 
	116.	 	Select Specialty Hospital — Bloomington, Inc.
	 
	117.	 	Select Specialty Hospital — Brevard, Inc.
	 
	118.	 	Select Specialty Hospital — Broward, Inc.
	 
	119.	 	Select Specialty Hospital — Central Detroit, Inc.
	 
	120.	 	Select Specialty Hospital — Charleston, Inc.
	 
	121.	 	Select Specialty Hospital — Cincinnati, Inc.
	 
	122.	 	Select Specialty Hospital — Colorado Springs, Inc.
	 
	123.	 	Select Specialty Hospital — Columbus/East, Inc.
	 
	124.	 	Select Specialty Hospital — Columbus, Inc.
	 
	125.	 	Select Specialty Hospital — Columbus/University, Inc.
	 
	126.	 	Select Specialty Hospital — Conroe, Inc.
	 
	127.	 	Select Specialty Hospital — Dade, Inc.
	 
	128.	 	Select Specialty Hospital — Dallas, Inc.
	 
	129.	 	Select Specialty Hospital — Danville, Inc.
	 
	130.	 	Select Specialty Hospital — Denver, Inc.
	 
	131.	 	Select Specialty Hospital — Des Moines, Inc.
	 
	132.	 	Select Specialty Hospital — Durham, Inc.
	 
	133.	 	Select Specialty Hospital — Duval, Inc.
	 
	134.	 	Select Specialty Hospital — Erie, Inc.
	 
	135.	 	Select Specialty Hospital — Eastern Iowa, Inc.
	 
	136.	 	Select Specialty Hospital — Evansville, Inc.
	 
	137.	 	Select Specialty Hospital — Flint, Inc.
	 
	138.	 	Select Specialty Hospital — Fort Smith, Inc.
	 
	139.	 	Select Specialty Hospital — Fort Wayne, Inc.
	 
	140.	 	Select Specialty Hospital — Gadsden, Inc.
	 
	141.	 	Select Specialty Hospital — Gainesville, Inc.

 

 

	142.	 	Select Specialty Hospital — Greensboro, Inc.
	 
	143.	 	Select Specialty Hospital — Greensburg, Inc.
	 
	144.	 	Select Specialty Hospital — Grosse Pointe, Inc.
	 
	145.	 	Select Specialty Hospital — Gulf Coast, Inc.
	 
	146.	 	Select Specialty Hospital — Honolulu, Inc.
	 
	147.	 	Select Specialty Hospital — Houston, Inc.
	 
	148.	 	Select Specialty Hospital — Huntsville, Inc.
	 
	149.	 	Select Specialty Hospital — Indianapolis, Inc.
	 
	150.	 	Select Specialty Hospital — Jackson, Inc.
	 
	151.	 	Select Specialty Hospital — Jefferson County, Inc.
	 
	152.	 	Select Specialty Hospital — Johnstown, Inc.
	 
	153.	 	Select Specialty Hospital — Kalamazoo, Inc.
	 
	154.	 	Select Specialty Hospital — Kansas City, Inc.
	 
	155.	 	Select Specialty Hospital — Knoxville, Inc.
	 
	156.	 	Select Specialty Hospital — Lake, Inc.
	 
	157.	 	Select Specialty Hospital — Lancaster, Inc.
	 
	158.	 	Select Specialty Hospital — Lansing, Inc.
	 
	159.	 	Select Specialty Hospital — Lee, Inc.
	 
	160.	 	Select Specialty Hospital — Leon, Inc.
	 
	161.	 	Select Specialty Hospital — Lexington, Inc.
	 
	162.	 	Select Specialty Hospital — Little Rock, Inc.
	 
	163.	 	Select Specialty Hospital — Little Rock/BMC, Inc.
	 
	164.	 	Select Specialty Hospital — Longview, Inc.
	 
	165.	 	Select Specialty Hospital — Louisville, Inc.
	 
	166.	 	Select Specialty Hospital — Macomb County, Inc.
	 
	167.	 	Select Specialty Hospital — Madison, Inc.
	 
	168.	 	Select Specialty Hospital — Manatee
	 
	169.	 	Select Specialty Hospital — Marion, Inc.
	 
	170.	 	Select Specialty Hospital — McKeesport, Inc.
	 
	171.	 	Select Specialty Hospital — Memphis, Inc.
	 
	172.	 	Select Specialty Hospital — Midland, Inc.
	 
	173.	 	Select Specialty Hospital — Milwaukee, Inc.
	 
	174.	 	Select Specialty Hospital — Nashville, Inc.
	 
	175.	 	Select Specialty Hospital — New Orleans, Inc.
	 
	176.	 	Select Specialty Hospital — Newark, Inc.
	 
	177.	 	Select Specialty Hospital — North Atlanta, Inc.
	 
	178.	 	Select Specialty Hospital — North Knoxville, Inc.

 

 

	179.	 	Select Specialty Hospital — Northeast New Jersey, Inc.
	 
	180.	 	Select Specialty Hospital — Northeast Ohio, Inc.
	 
	181.	 	Select Specialty Hospital — Northwest Detroit, Inc.
	 
	182.	 	Select Specialty Hospital — Northwest Indiana, Inc.
	 
	183.	 	Select Specialty Hospital — Oklahoma City, Inc.
	 
	184.	 	Select Specialty Hospital — Oklahoma City/East Campus, Inc.
	 
	185.	 	Select Specialty Hospital — Omaha, Inc.
	 
	186.	 	Select Specialty Hospital — Orlando, Inc.
	 
	187.	 	Select Specialty Hospital — Palm Beach, Inc.
	 
	188.	 	Select Specialty Hospital — Panama City, Inc.
	 
	189.	 	Select Specialty Hospital — Paramus, Inc.
	 
	190.	 	Select Specialty Hospital — Pensacola, Inc.
	 
	191.	 	Select Specialty Hospital — Phoenix, Inc.
	 
	192.	 	Select Specialty Hospital — Pine Bluff, Inc.
	 
	193.	 	Select Specialty Hospital — Pittsburgh, Inc.
	 
	194.	 	Select Specialty Hospital — Pittsburgh/UPMC, Inc.
	 
	195.	 	Select Specialty Hospital — Plainfield, Inc.
	 
	196.	 	Select Specialty Hospital — Pontiac, Inc.
	 
	197.	 	Select Specialty Hospital — Quad Cities, Inc.
	 
	198.	 	Select Specialty Hospital — Reno, Inc.
	 
	199.	 	Select Specialty Hospital — Riverview, Inc.
	 
	200.	 	Select Specialty Hospital — St. Lucie, Inc.
	 
	201.	 	Select Specialty Hospital — Saginaw, Inc.
	 
	202.	 	Select Specialty Hospital — San Antonio, Inc.
	 
	203.	 	Select Specialty Hospital — Sarasota, Inc.
	 
	204.	 	Select Specialty Hospital — Savannah, Inc.
	 
	205.	 	Select Specialty Hospital — Sioux Falls, Inc.
	 
	206.	 	Select Specialty Hospital — South Dallas, Inc.
	 
	207.	 	Select Specialty Hospital — Springfield, Inc.
	 
	208.	 	Select Specialty Hospital — Tallahassee, Inc.
	 
	209.	 	Select Specialty Hospital — Topeka, Inc.
	 
	210.	 	Select Specialty Hospital — TriCities, Inc.
	 
	211.	 	Select Specialty Hospital — Tulsa, Inc.
	 
	212.	 	Select Specialty Hospital — Tupelo, Inc.
	 
	213.	 	Select Specialty Hospital — Western Michigan, Inc.
	 
	214.	 	Select Specialty Hospital — Western Missouri, Inc.
	 
	215.	 	Select Specialty Hospital — Wichita, Inc.

 

 

	216.	 	Select Specialty Hospital — Wilmington, Inc.
	 
	217.	 	Select Specialty Hospital — Winston-Salem, Inc.
	 
	218.	 	Select Specialty Hospital — Wyandotte, Inc.
	 
	219.	 	Select Specialty Hospital — Youngstown, Inc.
	 
	220.	 	Select Specialty Hospital — Zanesville, Inc.
	 
	221.	 	Select Specialty Hospitals, Inc.
	 
	222.	 	Select Synergos, Inc.
	 
	223.	 	Select Transport, Inc.
	 
	224.	 	Select Unit Management, Inc.
	 
	225.	 	SelectMark, Inc.
	 
	226.	 	SemperCare Hospital of Fort Myers, Inc.
	 
	227.	 	SemperCare Hospital of Hartford, Inc.
	 
	228.	 	SemperCare Hospital of Lakeland, Inc.
	 
	229.	 	SemperCare Hospital of Lakewood, Inc.
	 
	230.	 	SemperCare Hospital of Mobile, Inc.
	 
	231.	 	SemperCare Hospital of Pensacola, Inc.
	 
	232.	 	SemperCare Hospital of Sarasota, Inc.
	 
	233.	 	SemperCare Hospital of Volusia, Inc.
	 
	234.	 	SemperCare Hospital of Washington, Inc.
	 
	235.	 	SemperCare, Inc.
	 
	236.	 	SLMC Finance Corporation
	 
	237.	 	South Jersey Rehabilitation and Sports Medicine Center, Inc.
	 
	238.	 	Southwest Physical Therapy, Inc.
	 
	239.	 	Sports & Orthopedic Rehabilitation Services, Inc.
	 
	240.	 	Stephenson-Holtz, Inc.
	 
	241.	 	The Orthopedic Sports and Industrial Rehabilitation Network, Inc.
	 
	242.	 	Vanguard Rehabilitation, Inc.
	 
	243.	 	Victoria Healthcare, Inc.
	 
	244.	 	Waltham Physical Therapy Associates, Inc.
	 
	245.	 	Wayzata Physical Therapy Center, Inc.
	 
	246.	 	West Side Physical Therapy, Inc.
	 
	247.	 	West Suburban Health Partners, Inc.exv4w2

 

Exhibit 4.2

SOVEREIGN BANCORP, INC.

Senior Floating Rate Notes due 2010

 

FIRST SUPPLEMENTAL INDENTURE

Dated as of March 23, 2007

To Senior Indenture dated as of November 1, 2005

 

BNY MIDWEST TRUST COMPANY,

Trustee

 

 

     This FIRST SUPPLEMENTAL INDENTURE is dated as of March 23, 2007, between SOVEREIGN
BANCORP, INC., a Pennsylvania corporation (the “Company”) and BNY MIDWEST TRUST COMPANY, an
Illinois corporation, as Trustee (the “Trustee”).

     This First Supplemental Indenture supplements and, to the extent provided herein, amends the
Indenture dated as of November 1, 2005 (the “Base Indenture”) between the Company and BNY Midwest
Trust Company. The Base Indenture and this First Supplemental Indenture are collectively referred
to herein as the “Indenture”.

     Each party agrees as follows for the benefit of the other party and for the equal and ratable
benefit of the Holders of the Company’s Senior Floating Rate Notes due 2010 (the “Notes”), to be
issued, from time to time, as separate series as provided in the Indenture.

     WHEREAS, the Company and the Trustee have heretofore executed and delivered the Base Indenture
to provide for the issuance of the Company’s Debt Securities (as defined in the Base Indenture) in
one or more registered series;

     WHEREAS, Section 9.1 of the Base Indenture provides, among other things, that the Company and
the Trustee may without the consent of Holders enter into indentures supplemental to the Base
Indenture to, among other things, (i) under clause (6) of such Section, establish the form of Debt
Securities of any series as permitted by Sections 2.1 and 3.1 thereof, and (ii) under clause (5) of
such Section, to change any provisions of the Base Indenture provided that any such change shall
become effective only when there is no Debt Security Outstanding of any series created prior to the
execution of such supplemental indenture which is entitled to the benefit of such provision;

     WHEREAS, the Company desires (a) to provide for the issuance of new series of Debt Securities
to be designated as the Senior Floating Rate Notes due 2010, and to set forth the terms that will
be applicable thereto, (b) to change the governing law of the Indenture with respect to the Notes,
and (c) to change certain other terms of the Indenture with respect to the Notes as specifically
set forth herein;

     WHEREAS, all action on the part of the Company necessary to authorize the issuance of the
Notes under the Indenture has been duly taken; and

     WHEREAS, all acts and things necessary to make the Notes, when executed by the Company and
authenticated and delivered by the Trustee as provided in the Indenture, the legal, valid and
binding obligations of the Company, and to constitute this a valid and binding supplemental
indenture binding on the Company, have been done and performed, and the execution of this First
Supplemental Indenture and the creation and issuance under the Indenture of the Notes have in all
respects been duly authorized, and the Company in the exercise of the legal right

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and power vested in it, executes this First Supplemental Indenture and proposes to create,
execute, issue and deliver the Notes.

     NOW, THEREFORE, in consideration of the agreements and obligations set forth herein and for
other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties
hereto hereby agree as follows:

ARTICLE I

DEFINITIONS AND INCORPORATION BY REFERENCE

          Section 1.01. Definitions.

          (a) All capitalized terms used herein and not otherwise defined below shall have the
meanings ascribed thereto in the Base Indenture.

          (b) The following are definitions used in this First Supplemental Indenture and to the
extent that a term is defined both herein and in the Base Indenture, the definition in this
First Supplemental Indenture shall govern.

          “Base Indenture” has the meaning set forth in the preamble.

          “Business Day” means each day other than a Saturday, a Sunday or any other day on which
banking institutions in New York, New York are authorized or required by law or executive order to
remain closed.

          “Capital Stock” means, with respect to any Person, any shares or other equivalents (however
designated) of any class of corporate stock or partnership interests or any other participations,
rights, warrants, options or other interests in the nature of an equity interest in such Person,
including preferred stock, but excluding any debt security convertible or exchangeable into such
equity interest.

          “Company” means the party named as such in this First Supplemental Indenture until a successor
replaces it pursuant to the applicable provisions hereof, and thereafter means such successor.

          “Default” means any event which is, or after notice or passage of time or both would be, an
Event of Default.

          “Exchange Act” means the Securities Exchange Act of 1934, as amended.

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          “Holder” or “Holder” means the Person in whose name a Note is registered on the Security
Register.

          “Indenture” has the meaning set forth in the preamble.

          “Officer” means the Chief Executive Officer, the President, the Chief Financial Officer, any
Executive Vice President, any Senior Vice President, or the Principal Accounting Officer (so long
as such Principal Accounting Officer is at least a Senior or Executive Vice President) of the
Company.

          “Officers’ Certificate” means a certificate signed by any Officer of the Company and delivered
to the Trustee.

          “Regular Record Dates” means each March 8, June 8, September 8, and December 8.

          “SEC” means the Securities and Exchange Commission.

          “Securities Act” means the Securities Act of 1933, as amended.

          “Subsidiary” means, in respect of any Person, any corporation, company (including any limited
liability company), association, partnership, joint venture or other business entity of which a
majority of the total voting power of the Voting Stock is at the time owned or controlled, directly
or indirectly, by:

               (a) such Person,

               (b) such Person and one or more Subsidiaries of such Person, or

               (c) one or more Subsidiaries of such Person.

          “TIA” means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.77aaa-77bbbb) as in effect on the
date of this First Supplemental Indenture; provided, however, that, in the event the TIA is amended
after such date, “Trust Indenture Act” means, to the extent required by any such amendments, the
Trust Indenture Act of 1939 as so amended.

          “Trustee” means the party named as such in the preamble until a successor replaces it and,
thereafter, means the successor.

          “Voting Stock” means any Capital Stock that entitles the holder thereof to vote for the
election of directors or similar positions.

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          “Wholly Owned Subsidiary” means, at any time, a Subsidiary all the Voting Stock of which
(except directors’ qualifying shares) is at such time owned, directly or indirectly, by the Company
and its other Wholly Owned Subsidiaries.

          Section 1.02. Other Definitions.

	 	 	 
	 	 	Defined
	Term	 	in Section
	“Securities Custodian”
	 	Appendix A
	“Event of Default”
	 	6.01
	“OID”
	 	2.01
	“Original Notes”
	 	2.01

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          Section 1.03. Incorporation by Reference of Trust Indenture Act. This Indenture is subject to the
mandatory provisions of the TIA, which are incorporated by reference in and made a part of the
Indenture. The following TIA terms have the following meanings:

          “Commission” means the SEC.

          “indenture securities” means the Notes.

          “indenture security holder” means a Holder.

          “indenture to be qualified” means the Indenture.

          “indenture trustee” or “institutional trustee” means the Trustee.

          “obligor” on the indenture securities means the Company and any other obligor on the Notes.

          All other TIA terms used but not otherwise defined in the Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned
to them by such definitions.

          Section 1.04. Rules of Construction. Unless the context otherwise requires:

               (1) references in the Base Indenture to Debt Securities shall be deemed to
include the Notes covered by this First Supplemental Indenture;

               (2) a term has the meaning assigned to it;

               (3) an accounting term not otherwise defined has the meaning assigned to it in
accordance with United States generally accepted accounting principles (“GAAP”);

               (4) “or” is not exclusive;

               (5) “including” means including without limitation; and

               (6) words in the singular include the plural and words in the plural include
the singular.

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ARTICLE II

THE NOTES

          Section 2.01. Designation; Amount of Notes; Issuable in Series. There is hereby
authorized a series of Debt Securities designated as the Senior Floating Rate Notes due 2010. The
Notes shall be a series of Debt Securities for all purposes under the Base Indenture. The
aggregate principal amount of Notes that may be authenticated and delivered under this First
Supplemental Indenture is $500,000,000. All Notes of the same series shall be identical in all
respects other than issue prices and issuance dates and denomination. The Original Notes will be
issued in separate series and any additional Notes will be issued in the same series as the
Original Notes; provided, however, that any Notes issued with original issue discount (“OID”) for
Federal income tax purposes shall not be issued as part of the same series as any Notes that are
issued with a different amount of OID or are not issued with OID; and provided further that no
additional Notes shall be issued if an Event of Default has occurred and is continuing. Except as
otherwise provided in the Indenture, the Notes will vote as a separate series from other series of
Debt Securities on matters under the Indenture.

          Subject to Section 3.3 of the Base Indenture, the Trustee shall authenticate Notes for
original issue on the Issue Date in the aggregate principal amount of $300,000,000 (the “Original
Notes”). With respect to any Notes issued after the Issue Date (except for Notes authenticated and
delivered upon registration of transfer of, or in exchange for, or in lieu of, Original Notes
pursuant to Section 3.5 of the Base Indenture), there shall be established in or pursuant to a
resolution of the Board of Directors, and subject to Section 3.3 of the Base Indenture, set forth,
or determined in the manner provided in an Officers’ Certificate, or established in one or more
indentures supplemental hereto, prior to the issuance of such Notes:

               (1) the aggregate principal amount of such Notes that may be authenticated and
delivered under this First Supplemental Indenture, which together with the Original
Notes and any other Notes issued pursuant to this First Supplemental Indenture,
shall be in an aggregate principal amount not to exceed $500,000,000 (except for
Notes authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Notes of the same series pursuant to Section 3.5 of the
Base Indenture and except for Notes which, pursuant to Section 3.3 of the Base
Indenture, are deemed never to have been authenticated and delivered hereunder); and

               (2) the issue price and issuance date of such Notes, including the date from
which interest on such Notes shall accrue;

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Section 2.02. Terms; Form and Dating.

               (1) The Stated Maturity of the Notes shall be March 23, 2010.

          (2) Interest shall be payable on the Notes as set forth in Exhibit 1 to
Appendix A, the terms of which are incorporated into this First Supplemental
Indenture.

          (3) The Notes are not subject to redemption by the Company prior to maturity
and are not repayable prior to maturity at the option of the Holder, and are not
exchangeable for Capital Securities of the Company.

               (4) The Notes shall not be subject to any sinking fund.

               (5) The form of the Notes shall be as set forth in Appendix A.

          (6) The Notes are not subject to payments of additional amounts as contemplated
in Section 10.6 of the Base Indenture.

          (7) The currency of denomination of the Notes shall be Dollars, and payment of
principal or and interest on the Notes shall be made in Dollars.

               (8) Additional Events of Default relating to the Notes shall be as set forth in
Section 5.01 hereof.

          (9) The Company’s obligations under the Indenture may be terminated as set
forth in Articles Four and Seventeen of the Base Indenture.

               (10) The Trustee shall be Security Registrar and Paying Agent for the Notes.

               (11) The Notes shall not be Convertible Securities.

          Additional provisions relating to the Notes are set forth in Appendix A, which is hereby
incorporated in and expressly made part of this First Supplemental Indenture. The Notes and the
Trustee’s certificate of authentication shall be substantially in the form of Exhibit 1 to Appendix
A which is hereby incorporated in and expressly made a part of this First Supplemental Indenture.
The Notes may have notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company is subject, if any, or usage, provided that any such notation,
legend or endorsement is in a form reasonably acceptable to the Company. Each Note shall be dated
the date of its authentication. The terms of the Notes set forth in Exhibit 1 to Appendix A are
part of the terms of this First Supplemental Indenture.

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          Section 2.03. Registrar and Paying Agent. The Company shall maintain an office or
agency where Notes may be presented for registration of transfer or for exchange as provided in the
Base Indenture (the “Security Registrar”) and an office or agency where Notes may be presented for
payment as provided in the Base Indenture (the “Paying Agent”). The Registrar shall keep a
register of the Notes and of their transfer and exchange. The Company may have one or more
co-registrars and one or more additional paying agents. The term “Paying Agent” includes any
additional paying agent.

          The Company initially appoints the Trustee as Security Registrar and Paying Agent in
connection with the Notes. If the Notes are issued in definitive form, the Corporate Trust Office
shall be the office or agency of the Paying Agent and the Security Registrar for the Notes.

          Section 2.04. Holder Lists. This Section 2.04 shall supersede Section 7.01 of the
Base Indenture. So long as the Trustee is the Security Registrar, the Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it of the names and
addresses of Holders. If the Trustee is not the Registrar, the Company shall furnish to the
Trustee, in writing at least five Business Days before each Interest Payment Date and at such other
times as the Trustee may request in writing, a list in such form and as of such date as the Trustee
may reasonably require of the names and addresses of Holders.

          Section 2.05. CUSIP Numbers. The Company in issuing the Notes may use “CUSIP” numbers
(if then generally in use) and, if so, the Trustee shall use “CUSIP” numbers in notices of
redemption as a convenience to Holders; provided, however, that neither the Company nor the Trustee
shall have any responsibility for any defect in the “CUSIP” number that appears on any Note, check,
advice of payment or redemption notice, and any such notice may state that no representation is
made as to the correctness of such numbers either as printed on the Notes or as contained in any
notice of a redemption and that reliance may be placed only on the other identification numbers
printed on the Notes, and any such redemption shall not be affected by any defect in or omission of
such numbers.

ARTICLE III

REDEMPTION

[Reserved]

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ARTICLE IV

ADDITIONAL COVENANTS

          Section 4.01. Further Instruments and Acts. Upon request of the Trustee, the Company
shall execute and deliver such further instruments and do such further acts as may be reasonably
necessary or proper to carry out more effectively the purpose of the Indenture.

ARTICLE V

ADDITIONAL EVENTS OF DEFAULT

          Section 5.01. Events of Default. Pursuant to Sections 3.1 and 5.1(7) of the Base
Indenture, the following events shall be added to and supplement the definition of “Events of
Default” with respect to the Notes:

               (1) a default by the Company under any mortgage, indenture, (including the
Indenture) or other instrument under which any debt of the Company shall be
outstanding, which default results in acceleration of the maturity of such debt, or
the failure to pay any such debt at maturity, in an aggregate amount in excess of
$300,000,000 or its foreign currency equivalent at the time.

          Section 5.02. The Company shall deliver to the Trustee, within 30 days after the occurrence
thereof, written notice in the form of an Officers’ Certificate of any Event of Default and any
event that with the giving of notice or the lapse of time would become an Event of Default, its
status and what action the Company is taking or proposes to take with respect thereto.

ARTICLE VI

AMENDMENTS; MEETINGS

          Section 6.01. Amendment Without Consent of Holders. Section 9.1 of the Base Indenture
shall be superseded by this Section 6.01. Without the consent of any Holders, the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from time to time, may amend the
Indenture and the Notes to:

               (1) add to the covenants of the Company for the benefit of the Holders;

9

 

               (2) add to the Events of Default under the Indenture;

               (3) surrender any right or power herein conferred upon the Company;

               (4) provide for the assumption of the Company’s obligations to the Holders in
the case of a merger, consolidation, conveyance, transfer or lease pursuant to
Article 8 of the Base Indenture;

               (5) comply with the requirements of the SEC in order to maintain the
qualification of the Indenture under the Trust Indenture Act; or

               (6) cure any ambiguity, to correct or supplement any provision herein which may
be inconsistent with any other provision herein or which is otherwise defective, or
to make any other provisions with respect to matters or questions arising under the
Indenture which the Company and the Trustee may deem necessary or desirable and
which shall not be inconsistent with the provisions of the Indenture, provided, that
such action pursuant to this clause (6) does not adversely affect the interests of
the Holders in any material respect.

          After an amendment under this Section becomes effective, the Company shall mail to Holders a
notice briefly describing such amendment. The failure to give such notice to all Holders, or any
defect therein, shall not impair or affect the validity of an amendment under this Section.

          Section 6.02. Meetings of Holders.

               (1) Section 16.1 of the Base Indenture shall be superseded by this Section
6.02(1) for purposes of the Notes and this Supplemental Indenture. A meeting of
Holders of Notes may be called at any time and from time to time pursuant to this
Article to make, give or take any request, demand, authorization, direction, notice,
consent, waiver or other Act provided by the Indenture to be made, given or taken by
Holders of the Notes.

               (2) For purposes of the Notes and this Supplemental Indenture, the words “of
any series issuable as Bearer Securities” shall be deleted from paragraph (a) of
Section 16.2 of the Base Indenture, such that the Trustee may at any time call a
meeting of Notes for any purpose specified above.

               (3) The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to give their consent or take any other
action described above or required or permitted to be taken pursuant to the
Indenture. If a record date is

10

 

fixed, then notwithstanding the immediately preceding paragraph, those Persons
who were Holders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons continue to
be Holders after such record date. No such consent shall be valid or effective for
more than 120 days after such record date.

          Section 6.03. Notation on or Exchange of Notes. If an amendment changes the terms of
a Note, the Trustee may require the Holder of the Note to deliver such Note to the Trustee. The
Trustee may place an appropriate notation on the Note regarding the changed terms and return such
Note to the Holder. Alternatively, if the Company or the Trustee so determines, the Company in
exchange for the Note shall issue and the Trustee shall authenticate a new Note that reflects the
changed terms. Failure to make the appropriate notation or to issue a new Note shall not affect
the validity of such amendment.

          Section 6.04. Trustee To Sign Amendments. The Trustee shall sign any amendment
authorized pursuant to this Article VI if the amendment does not adversely affect the rights,
duties, liabilities or immunities of the Trustee. If it does, the Trustee may but need not sign
it. In signing such amendment the Trustee shall be entitled to receive indemnity reasonably
satisfactory to it and to receive, and (subject to Section 6.1 of the Base Indenture) shall be
fully protected in relying upon, an Officers’ Certificate and an Opinion of Counsel stating that
such amendment is authorized or permitted by the Indenture.

          Section 6.05. Rules by Trustee, Paying Agent and Registrar. The Trustee may make any
additional reasonable rules for action by or a meeting of Holders to the extent not inconsistent
with the Indenture. The Registrar and the Paying Agent or co-registrar may make reasonable rules
for their functions.

          Section 6.06. Payment for Consent. Neither the Company nor any Affiliate of the
Company shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of the Indenture or the Notes unless such consideration
is offered to be paid to all Holders that so consent, waive or agree to amend in the time frame set
forth in solicitation documents relating to such consent, waiver or agreement.

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ARTICLE VII

MISCELLANEOUS

          Section 7.01. Trust Indenture Act Controls. If any provision of the Indenture limits,
qualifies or conflicts with another provision that is required to be included in the Indenture by
the TIA, the required provision shall control.

          Section 7.02. Notices. Any notice or communication shall be in writing and (a)
delivered in person, (b) sent by overnight commercial courier service (such as Federal Express)
promising next business day delivery, (c) mailed by United States first-class mail, or (d) sent by
facsimile (with a hard copy delivered in person or by mail promptly thereafter) and addressed as
follows:

if to the Company:

Sovereign Bancorp, Inc.

1130 Berkshire Boulevard

Wyomissing, Pennsylvania 19610

Attention of: Treasurer

Fax No. (610) 320 - 8448

with a copy to:

Stevens & Lee

111 North Sixth Street

Reading, PA 19603

Attention: Joseph M. Harenza

Fax No. (610) 371-8500

if to the Trustee:

BNY Midwest Trust Company

2 North LaSalle Street

Suite 1020

Chicago, IL 60602

Attention of: Indenture Trust Department

Fax No. (312) 827 - 8542

          The Company or the Trustee by notice to the other may designate additional or different
addresses for subsequent notices or communications.

          Section 7.03. [Intentionally Left Blank]

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           Section 7.04. Certificate and Opinion as to Conditions Precedent. Upon any request or
application by the Company to the Trustee to take or refrain from taking any action under this
First Supplemental Indenture, the Company shall furnish to the Trustee:

               (1) an Officers’ Certificate in form and substance reasonably satisfactory to
the Trustee stating that, in the opinion of the signers, all conditions precedent,
if any, provided for in the Indenture relating to the proposed action have been
complied with; and

               (2) an Opinion of Counsel in form and substance reasonably satisfactory to the
Trustee stating that, in the opinion of such counsel, all such conditions precedent
have been complied with.

          Section 7.05. Statements Required in Certificate or Opinion. Each certificate or
opinion with respect to compliance with a covenant or condition provided for in this Indenture
shall include:

               (1) a statement that the individual making such certificate or opinion has read
such covenant or condition;

               (2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such certificate or
opinion are based;

               (3) a statement that, in the opinion of such individual, he has made such
examination or investigation as is necessary to enable him to express an informed
opinion as to whether or not such covenant or condition has been complied with; and

               (4) a statement as to whether or not, in the opinion of such individual, such
covenant or condition has been complied with.

          Section 7.06. Governing Law. THIS SECTION 7.06 SUPERSEDES SECTION 1.12 OF THE BASE
INDENTURE. THE INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICT OF
LAWS TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED
THEREBY.

          Section 7.07. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any obligations of the
Company under the Notes or the Indenture or for any claim based on, in respect of or by reason of
such obligations or their creation. By accepting a Note, each

13

 

Holder shall waive and release all such liability. The waiver and release shall be part of
the consideration for the issue of the Notes.

          Section 7.08. Successors. All agreements of the Company in this First Supplemental
Indenture and the Notes shall bind its successors. All agreements of the Trustee in the Indenture
shall bind its successors.

          Section 7.09. Multiple Originals. The parties may sign any number of copies of this
First Supplemental Indenture. Each signed copy shall be an original, but all of them together
represent the same agreement. One signed copy is enough to prove this First Supplemental
Indenture.

          Section 7.10. Table of Contents; Headings. The table of contents, cross-reference
sheet and headings of the Articles and Sections of the Indenture have been inserted for convenience
of reference only, are not intended to be considered a part hereof and shall not modify or restrict
any of the terms or provisions hereof.

          Section 7.11. Ratification of Indenture. The Indenture, as supplemented by this First
Supplemental Indenture, is in all respects ratified and confirmed (to the extent not expressly
superseded for purposes of the Notes), and this First Supplemental Indenture shall be deemed part
of the Indenture in the manner and to the extent herein and therein provided.

          Section 7.12. Provisions Severable. In case any one or more of the provisions
contained in this First Supplemental Indenture or in the Notes shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this First Supplemental Indenture or of the Notes, but
this First Supplemental Indenture and the Notes shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein or therein.

14

 

          IN WITNESS WHEREOF, the parties have caused this First Supplemental Indenture to be duly
executed as of the date first written above.

	 	 	 	 	 
	 	 	SOVEREIGN BANCORP, INC.
	 
	 	 	 	 
	 

	 	By
	 	/s/ Thomas R. Brugger
	 

	 	 	 	 
	 

	 	 	 	Thomas R. Brugger
	 

	 	 	 	Executive Vice President and Treasurer
	 
	 	 	 	 
	 	 	BNY MIDWEST TRUST COMPANY
	 
	 	 	 	 
	 

	 	By
	 	/s/ Daniel G. Donovan
	 

	 	 	 	 
	 

	 	 	 	Daniel G. Donovan
	 

	 	 	 	Vice President

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APPENDIX A

PROVISIONS RELATING TO NOTES

       1. Definitions

       1.1 Definitions

          For the purposes of this Appendix A the following terms shall have the meanings indicated
below:

               “Notes” means the Floating Rate Senior Notes due 2010.

               “Definitive Security” means a certificated Note.

               “Depository” means The Depository Trust Company, its nominees and their respective
successors.

               “Original Notes” means Notes in the aggregate principal amount of $300,000,000 issued
on March 23, 2007.

               “Securities Act” means the Securities Act of 1933, as amended.

             “Securities Custodian” means the custodian with respect to a Global Security (as
appointed by the Depository) or any successor thereto, who shall initially be the Trustee.

       1.2 Other Definitions

	 	 	 	 	 
	 	 	Defined in
	Term	 	Section
	“Participants”
	 	 	2.1	(b)
	 
	 	 	 	 
	“Global Security”
	 	 	2.1	(a)

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     2. The Notes

     2.1 Form and Dating

          The Notes will be offered and sold by the Company, from time to time, pursuant to one or more
Underwriting Agreements.

          (a) Global Securities. Notes shall be issued in the form of one or more permanent
Global Securities in definitive, fully registered form (collectively, the “Global Securities”)
without interest coupons and with the global securities legend set forth in Exhibit 1 hereto, which
shall be deposited on behalf of the purchasers of the Notes represented thereby with the
Depository, and registered in the name of the Depository or a nominee of the Depository, duly
executed by the Company and authenticated by the Trustee as provided in the Indenture. The
aggregate principal amount of the Global Securities may from time to time be increased or decreased
by adjustments made on the records of the Trustee and the Depository or its nominee as hereinafter
provided.

          (b) Book-Entry Provisions. This Section 2.1(b) shall apply only to a Global Security
deposited with or on behalf of the Depository.

               The Company shall execute and the Trustee shall, in accordance with this Section 2.1(b) and
pursuant to an order of the Company, authenticate and deliver initially one or more Global
Securities that (a) shall be registered in the name of the Depository for such Global Security or
Global Securities or the nominee of such Depository and (b) shall be delivered by the Trustee to
such Depository or pursuant to such Depository’s instructions or held by the Trustee as Securities
Custodian.

               Members of, or participants in, the Depository (“Participants”) shall have no rights under the
Indenture with respect to any Global Security held on their behalf by the Depository or the Trustee
as Securities Custodian or under such Global Security, and the Depository may be treated by the
Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such
Global Security for all purposes whatsoever.

               Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any
agent of the Company or the Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between the Depository and its
Participants, the operation of customary practices of such Depository governing the exercise of the
rights of a holder of a beneficial interest in any Global Security.

          (c) Definitive Securities. Except as provided in Section 2.3 or 2.4, owners of
beneficial interests in Global Securities will not be entitled to receive physical delivery of
Definitive Securities.

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     2.2 Authentication. The Trustee shall authenticate and deliver: (1) Original Notes
for original issue representing an aggregate principal amount of $300,000,000 and (2) additional
Notes, if and when issued, in an aggregate principal amount of up to $200,000,000, upon a written
order of the Company signed by an Officer of the Company. Such order shall specify the amount of
the Notes to be authenticated and the date on which the issue of Notes is to be authenticated. The
aggregate principal amount of Notes outstanding at any time under the First Supplemental Indenture
may not exceed $500,000,000.

     2.3 Transfer and Exchange.

          (a) Transfer and Exchange of Definitive Notes. When Definitive Notes are presented to
the Registrar or a co-registrar with a request:

               (x) to register the transfer of such Definitive Notes; or

               (y) to exchange such Definitive Notes for an equal principal amount of Definitive Notes of
other authorized denominations, the Registrar or co-registrar shall register the transfer or make
the exchange as requested if its reasonable requirements for such transaction are met; provided,
however, that the Definitive Notes surrendered for transfer or exchange shall be duly endorsed or
accompanied by a written instrument of transfer in form reasonably satisfactory to the Company and
the Registrar or co-registrar, duly executed by the Holder thereof or his attorney duly authorized
in writing.

          (b) Transfer and Exchange of Global Securities. (i) The transfer and exchange of
Global Securities or beneficial interests therein shall be effected through the Depository, in
accordance with the Indenture (including applicable restrictions on transfer set forth herein, if
any) and the procedures of the Depository therefor. A transferor of a beneficial interest in a
Global Security shall deliver a written order given in accordance with the Depository’s procedures
containing information regarding the participant account of the Depository to be credited with a
beneficial interest in the Global Security and such account shall be credited in accordance with
such instructions with a beneficial interest in the Global Security and the account of the Person
making the transfer shall be debited by an amount equal to the beneficial interest in the Global
Security being transferred.

               (ii) Notwithstanding any other provisions of this Appendix A (other than the provisions set
forth in Section 2.4), a Global Security may not be transferred as a whole except by the Depository
to a nominee of the Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a successor Depository or a
nominee of such successor Depository.

          (c) Cancellation or Adjustment of Global Security. At such time as all beneficial
interests in a Global Security have either been exchanged for Definitive Notes, redeemed,
repurchased or canceled, such Global

3

 

Security shall be returned by the Depository to the Trustee for cancellation or retained and
canceled by the Trustee. At any time prior to such cancellation, if any beneficial interest in a
Global Security is exchanged for Definitive Notes, redeemed, repurchased or canceled, the principal
amount of Notes represented by such Global Security shall be reduced and an adjustment shall be
made on the books and records of the Trustee (if it is then the Securities Custodian for such
Global Security) with respect to such Global Security, by the Trustee or the Securities Custodian,
to reflect such reduction.

          (d) Obligations with Respect to Transfers and Exchanges of Notes.

               (i) To permit registrations of transfers and exchanges, the Company shall execute and the
Trustee shall authenticate Definitive Securities and Global Securities at the Registrar’s or
co-registrar’s request.

               (ii) No service charge shall be made for any registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any transfer tax, assessments, or similar
governmental charge payable in connection therewith (other than any such transfer taxes,
assessments or similar governmental charge payable upon exchange or transfer pursuant to Section
3.5 of the Base Indenture).

               (iii) Prior to the due presentation for registration of transfer of any Note, the Company, the
Trustee, the Paying Agent, the Registrar or any co-registrar may deem and treat the person in whose
name a Note is registered as the absolute owner of such Note for the purpose of receiving payment
of principal of and interest on such Note and for all other purposes whatsoever, whether or not
such Note is overdue, and none of the Company, the Trustee, the Paying Agent, the Registrar or any
co-registrar shall be affected by notice to the contrary.

               (iv) All Notes issued upon any transfer or exchange pursuant to the terms of the Indenture
shall evidence the same debt and shall be entitled to the same benefits under the Indenture as the
Notes surrendered upon such transfer or exchange.

          (e) No Obligation of the Trustee. The Trustee shall have no responsibility or
obligation to any beneficial owner of a Global Security, a member of, or a participant in the
Depository or any other Person with respect to the accuracy of the records of the Depository or its
nominee or of any participant or member thereof, with respect to any ownership interest in the
Notes or with respect to the delivery to any participant, member, beneficial owner or other Person
(other than the Depository) of any notice (including any notice of redemption or repurchase) or the
payment of any amount, under or with respect to such Notes. All notices and communications to be
given to the Holders and all payments to be made to Holders under the Notes shall be given or made
only to the registered Holders (which shall be the Depository or its nominee in the case of a
Global Security). The rights of beneficial owners in any Global Security shall be exercised only
through the Depository subject to the applicable rules and

4

 

procedures of the Depository. The Trustee may rely and shall be fully protected in relying
upon information furnished by the Depository with respect to its members, participants and any
beneficial owners.

     2.4 Definitive Securities

          (a) A Global Security deposited with the Depository or with the Trustee as Securities
Custodian pursuant to Section 2.1 shall be transferred to the beneficial owners thereof in the form
of Definitive Securities in an aggregate principal amount equal to the principal amount of such
Global Security, in exchange for such Global Security, only if such transfer complies with Section
2.3 and (i) (a) the Depository notifies the Company that it is unwilling or unable to continue as a
Depository for such Global Security or (b) if at any time the Depository ceases to be a “clearing
agency” registered under the Exchange Act, and, in each case, a successor Depository is not
appointed by the Company within 90 days of such notice in the case of clause (a) or within 90 days
of becoming aware thereof in the case of clause (b), or (ii) a Default or an Event of Default has
occurred and is continuing, or (iii) the Company, in its sole discretion, notifies the Trustee in
writing that it elects to cause the issuance of Definitive Securities under the First Supplemental
Indenture.

          (b) Any Global Security that is transferable to the beneficial owners thereof pursuant to
this Section 2.4 shall be surrendered by the Depository to the Trustee, to be so transferred, in
whole or from time to time in part, without charge, and the Trustee shall authenticate and deliver,
upon such transfer of each portion of such Global Security, an equal aggregate principal amount of
Definitive Securities of authorized denominations. Definitive Securities issued in exchange for
any portion of a Global Security transferred pursuant to this Section shall be executed,
authenticated and delivered only in denominations of $1,000 and any integral multiple of $1,000 in
excess thereof and registered in such names as the Depository shall direct.

          (c) The registered Holder of a Global Security may grant proxies and otherwise authorize any
Person, including Participants and Persons that may hold interests through Participants, to take
any action that a Holder is entitled to take under the First Supplemental Indenture or the Notes.

          (d) In the event of the occurrence of any of the events specified in Section 2.4(a)(i), (ii)
or (iii), the Company will promptly make available to the Trustee a reasonable supply of Definitive
Securities in definitive, fully registered form without interest coupons.

5

 

EXHIBIT 1 to

APPENDIX A

[FORM OF FACE OF SECURITY]

[Global Securities Legend]

          THE NOTES ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK OR NONBANK
SUBSIDIARY OF SOVEREIGN BANCORP, INC. AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY.

          UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC”), TO SOVEREIGN BANCORP, INC. OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

          TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO
NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF
THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

[Definitive Securities Legend]

          [IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT
SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM
THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.]

 

 

[FORM OF FACE OF SECURITY]

			
	 	 	 
	CUSIP NO. 845905 AX6
	 	PRINCIPAL AMOUNT: $300,000,000

REGISTERED NO. R-1

SOVEREIGN BANCORP, INC.

Senior Floating Rate Notes due 2010

     SOVEREIGN BANCORP, INC., a Pennsylvania corporation (hereinafter called the “Company,” which
term includes any successor corporation under the Indenture hereinafter referred to), for value
received, hereby promises to pay to CEDE & Co., or registered assigns, the principal sum of Three
Hundred Million Dollars ($300,000,000) (or such lesser amount as shall be the outstanding principal
amount of this Note listed on Schedule A hereto) on March 23, 2010 (“Maturity”) and to pay interest
thereon from March 23, 2007, or from the most recent Interest Payment Date (as defined below) to
which interest has been paid or duly provided for on the dates and at the rate set forth below,
until the principal hereof is paid or made available for payment. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date (as defined below) for such interest
(whether or not a Business Day) next preceding such Interest Payment Date.

     The per annum rate at which this Note shall bear interest shall equal LIBOR (as defined below)
plus 0.23%, as determined by the Calculation Agent (as defined below) and shall be reset quarterly
on the first day of each Interest Period (as defined below). The amount of interest payable for
each day this Note is outstanding (the “Daily Interest Amount”) shall be calculated by dividing the
interest rate in effect for each such day by 360 and multiplying the result by the principal amount
of this Note. The amount of interest to be paid on this Note for each Interest Period will be
calculated by adding the Daily Interest Amounts for each day in the Interest Period.

     Interest on this Note shall be payable on each March 23, June 23, September 23, and December
23, commencing June 23, 2007, and at Maturity (each such date, an “Interest Payment Date”). If any
Interest Payment Date shall fall on a day that is not a Business Day, other than the Interest
Payment Date that is also the date of Maturity, such Interest Payment Date shall be postponed to
the following day that is a Business Day; provided, however, if such next Business Day is in a
different month, then interest on this Note shall be paid on the Business Day immediately preceding
such Interest Payment Date. If the date of Maturity for this Note falls on a day that is not a
Business Day, payment of the principal and interest with respect to this Note shall be paid on the
next

 

 

succeeding Business Day with the same force and effect as if made on such date, and no
interest on such payment will accrue from and after such date. “Business Day” as used herein is a
day other than a Saturday, a Sunday or any other day on which banking institutions in New York, New
York are authorized or required by law or executive order to remain closed. The “Regular Record
Date” shall be each March 8, June 8, September 8, and December 8. On each Interest Payment Date,
the Company shall pay interest for the period commencing on and including the immediately preceding
Interest Payment Date (or commencing on and including March 23, 2007 if no interest has been paid)
and ending on and including the next day preceding such Interest Payment Date (each such period, an
“Interest Period”).

     “LIBOR,” with respect to an Interest Period, shall be the rate (expressed as a percentage per
annum) for deposits in United States dollars for a three-month period beginning on the second
London Banking Day after the Determination Date (as defined below) that appears on Telerate Page
3750 (as defined below) as of 11:00 a.m., London time, on the Determination Date. If Telerate Page
3750 does not include this rate or is unavailable on the Determination Date, the Calculation Agent
shall request the principal London office of each of four major banks in the London interbank
market, as selected by the Calculation Agent, to provide that bank’s offered quotation (expressed
as a percentage per annum) as of approximately 11:00 a.m., London time, on the Determination Date
to prime banks in the London interbank market for deposits in a Representative Amount (as defined
below) in United States dollars for a three-month period beginning on the second London Banking Day
after the Determination Date. If at least two offered quotations are so provided, LIBOR for the
Interest Period will be the arithmetic mean of those quotations. If fewer than two quotations are
so provided, the Calculation Agent will request each of three major banks in New York City, as
selected by the Calculation Agent, to provide that bank’s rate (expressed as a percentage per
annum), as of approximately 11:00 a.m., New York City time, on the Determination Date for loans in
a Representative Amount in United States dollars to leading European banks for a three-month period
beginning on the second London Banking Day after the Determination Date. If at least two rates are
so provided, LIBOR for the Interest Period will be the arithmetic mean of those rates. If fewer
than two rates are so provided, then LIBOR for the Interest Period will be LIBOR in effect with
respect to the immediately preceding Interest Period.

     “Determination Date” means, with respect to an Interest Period, the second London Banking Day
preceding the first day of the Interest Period.

     “London Banking Day” means any day on which dealings in United States dollars are transacted
or, with respect to any future date, are expected to be transacted in the London interbank market.

     “Representative Amount” means a principal amount that is representative for a single
transaction in the relevant market at the relevant time.

 

 

     “Telerate Page 3750” means the display designated as “Page 3750” on Moneyline Telerate, Inc.
or any successor service (or such other page as may replace Page 3750 on that service or a
successor service).

     All percentages resulting from any of the above calculations will be rounded, if necessary, to
the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage
point rounded upwards (e.g., 9.876545% (or 0.09876545) being rounded to 9.87655% (or 0.0987655))
and all dollar amounts used in or resulting from such calculations will be rounded to the nearest
cent (with one-half cent being rounded upwards).

     The interest rate on the Notes of this series will in no event be higher than the maximum rate
permitted by New York law as the same may be modified by United States law of general application.

     The Company shall provide that, so long as the Notes remain outstanding, the Company shall
maintain under appointment a calculation agent (the “Calculation Agent”), initially BNY Midwest
Trust Company, to calculate the rate of interest payable on the Notes in respect of each Interest
Period. If the Calculation Agent is unable or unwilling to continue to act as the Calculation Agent
or if the Calculation Agent fails to establish the rate of interest for any Interest Period, the
Company shall appoint another bank to act as such in its place. The Calculation Agent shall not
resign its duties without a successor having been appointed as aforesaid. The Company may appoint a
successor Calculation Agent with the written consent of the Paying Agent, which consent shall not
be unreasonably withheld.

     The Calculation Agent will, upon the request of the Holder hereof, provide the interest rate
then in effect. All calculations of the Calculation Agent, in the absence of manifest error, shall
be conclusive for all purposes and binding on the Company and the Holder hereof.

     Any interest not punctually paid or duly provided for (“Defaulted Interest”) will forthwith
cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person
in whose name this Note (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Notes of this series not less than 10 days
prior to such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the Notes may be listed, and
upon such notice as may be required by such exchange, all as more fully provided in the Indenture.

     Payment of interest on this Note will be made in immediately available funds at the office or
agency of the Paying Agent for the Notes, initially BNY Midwest Trust Company, maintained for that
purpose in The City of New York in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts; provided, however, that,
at the option of the Company, payment of interest may be paid by check mailed to the Person
entitled thereto at such Person’s last address as it appears in the Security Register or by wire
transfer to such account as may have been designated by such Person. Payment of principal of and
interest

 

 

on this Note at Maturity will be made against presentation of this Note at the office or
agency of the Company maintained for that purpose in The City of New York.

     Reference is hereby made to the further provisions of this Note set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as if set forth at
this place.

     Unless the certificate of authentication hereon has been executed by the Trustee referred to
on the reverse hereof by manual signature, or its duly authorized agent under the Indenture
referred to on the reverse hereof by manual signature, the Note shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose.

     IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

DATED: March     , 2007

	 	 	 	 	 	 	 
	 	 	SOVEREIGN BANCORP, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 

TRUSTEE’S CERTIFICATE OF

AUTHENTICATION

Dated:                                        , 2007

BNY MIDWEST TRUST COMPANY,

This is one of the Notes, of the series

designated herein, described in the

within-mentioned Indenture.

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Authorized Signatory
	 	 

 

 

[FORM OF REVERSE SIDE OF SECURITY]

SOVEREIGN BANCORP, INC.

Senior Floating Rate Notes due 2010

     This Note is one of a duly authorized issue of Debt Securities of the Company, designated as
the Company’s “Senior Floating Rate Notes due 2010” (herein called the “Notes”), issued and to be
issued in one or more series under an indenture, dated as of November 1, 2005 (the “Base
Indenture”), between the Company and BNY Midwest Trust Company, as trustee (herein called the
“Trustee,” which term includes any successor trustee under the Indenture), as supplemented by a
First Supplemental Indenture, dated as of March 23, 2007, between the Company and the Trustee (the
“First Supplemental Indenture” and, together with the Base Indenture, the “Indenture”), to which
Indenture and all indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of the Company, the
Trustee and the Holders of the Notes, and of the terms upon which the Notes are, and are to be,
authenticated and delivered. This Note is one of the series designated on the face hereof,
initially limited in aggregate principal amount to $300,000,000; provided, however, that the
Company may, so long as no Event of Default has occurred and is continuing, without the consent of
the Holders of Notes, issue additional notes with the same terms (except as to public offering
price and issue date) as the Notes, and such additional Notes shall be considered part of the same
series under the Indenture as the Notes.

     The Notes are not subject to redemption at the option of the Company or repayment at the
option of the Holder hereof prior to March 23, 2010. The Notes will not be entitled to any sinking
fund.

     If an Event of Default, as defined in the Indenture, with respect to the Notes shall occur and
be continuing, the principal of the Notes may be declared due and payable in the manner and with
the effect provided in the Indenture.

     The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the rights of the Holders of the
Debt Securities of each series to be affected by such amendment or modification under the Indenture
at any time by the Company and the Trustee with the consent of the Holders of not less than 662/3% in
aggregate principal amount of the Outstanding Debt Securities of each such series to be so
affected. The Indenture also contains provisions permitting the Holders of not less than 662/3% in
aggregate principal amount of the Outstanding Debt Securities of any series, on behalf of the
Holders of all Debt Securities of such series, to waive compliance by the Company with certain
provisions of the Indenture and Holders of a majority in aggregate principal amount of Outstanding
Debt Securities of any series, on behalf of Holders of all Debt Securities of such series, to waive
certain past defaults under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Note shall be conclusive and binding upon such

 

 

Holder and upon all future Holders of this Note and of any Note issued upon the registration
of transfer hereof or in exchange herefor or in lieu hereof whether or not notation of such consent
or waiver is made upon this Note.

     Upon due presentment for registration of transfer of this Note at the office or agency of the
transfer agent for the Notes, initially BNY Midwest Trust Company, in The City of New York, a new
Note or Notes of this series in authorized denominations for an equal aggregate principal amount
will be issued to the transferee in exchange herefor, as provided in the Indenture and subject to
the limitations provided therein and to the limitations described below, without charge except for
any tax or other governmental charge imposed in connection therewith.

     No reference herein to the Indenture and no provision of this Note or the Indenture shall
alter or impair the obligation of the Company, which is absolute and unconditional, to pay the
principal of and interest on this Note at the times, place and rate, and in the coin or currency,
herein prescribed.

     Prior to due presentment of this Note for registration of transfer, the Company, the Trustee
and any agent of the Company or the Trustee may treat the Person in whose name this Note is
registered as the owner hereof for all purposes, whether or not this Note be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

     No recourse shall be had for the payment of the principal of or the interest on this Note, or
for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the
Indenture or any indenture supplemental thereto, against any incorporator, stockholder, officer or
director, as such, past, present or future, of the Company or any successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise. By accepting a Note, each Holder waives and releases all such liability.
The waiver and release are part of the consideration for the issue of the Notes.

     All terms used in this Note which are defined in the Indenture shall have the meanings
assigned to them in the Indenture unless otherwise defined in this Note.

     The Company will pay interest on the Notes (except defaulted interest) to the Persons who are
registered holders of Notes at the close of business on the Regular Record Date next preceding the
interest payment date even if Notes are canceled after the record date and on or before the
interest payment date.

     Initially, BNY MIDWEST TRUST COMPANY, an Illinois corporation (the “Trustee”), will act as
Paying Agent and Registrar. The Company may appoint and change any Paying Agent, Registrar or
co-registrar without notice. The Company or any of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar or co-registrar.

     The Notes are in registered form without coupons in denominations of $1,000 and whole
multiples of

 

 

$1,000 in excess thereof. A Holder may transfer or exchange Notes in accordance with the
Indenture. Upon any transfer or exchange, the Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes
required by law or permitted by the Indenture.

     The registered Holder of this Note may be treated as the owner of it for all purposes.

     If money for the payment of principal or interest remains unclaimed for two years, the Trustee
or Paying Agent shall pay the money back to the Company at its written request unless an abandoned
property law designates another Person. After any such payment, Holders entitled to the money must
look only to the Company and not to the Trustee for payment.

     Subject to certain conditions, the Company at any time may terminate certain of its
obligations under the Notes and the Indenture if the Company deposits with the Trustee money or
Eligible Instruments for the payment of principal and interest on the Notes when due to maturity,
and certain other conditions are met.

     Subject to certain exceptions set forth in the Indenture, the Indenture or the Notes may be
amended without prior notice to any Holder but with the written consent of the Holders of at least
662/3% in aggregate principal amount of the Outstanding Notes. Subject to certain exceptions set
forth in the Indenture, without the consent of any Holder of Notes, the Company and the Trustee may
amend the Indenture or the Notes in certain manners not adverse to Holders.

     If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in
aggregate principal amount of the Notes then Outstanding, subject to certain limitations, may
declare all the Notes to be immediately due and payable.

     Holders of Notes may not enforce the Indenture or the Notes except as provided in the
Indenture. The Trustee may refuse to enforce the Indenture or the Notes unless it receives
reasonable indemnity or security. Subject to certain limitations, Holders of a majority in
aggregate principal amount of the Notes then Outstanding may direct the Trustee in its exercise of
any trust or power under the Indenture. The Holders of a majority in aggregate principal amount of
the Notes then Outstanding, by written notice to the Company and the Trustee, may rescind any
declaration of acceleration and its consequences before any judgment or decree for the payment of
money due has been obtained by the Trustee if certain conditions set forth in the Indenture have
been met.

     Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its
individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal
with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were not Trustee.

 

 

     This Note shall not be valid until an authorized signatory of the Trustee (or an
authenticating agent) manually signs the certificate of authentication on the other side of this
Note.

     Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM
(=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of
survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).

     THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICT OF LAWS TO THE EXTENT THAT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

     Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused CUSIP numbers to be printed on the Notes and has directed the
Trustee to use CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the other identification
numbers placed thereon.

     The Company will furnish to any Holder of Notes upon written request and without charge to the
Holder a copy of the Indenture which has in it the text of this Note.

 

 

To assign this Note, fill in the form below:

     I or we assign and transfer this Note to ___(Print or type assignee’s name, address and
zip code) (Insert assignee’s soc. sec. or tax I.D. No.)                      and irrevocably appoint
                     as agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.

                                                            

	 	 	 	 	 	 	 	 	 	 	 
	Date:

	 	 	 	 	 	 	 	Your Signature:	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	[Sign exactly as your name appears on the other side of this Note.]
	 
	 	 	 	 	 	 	 	 	 	 
	Signature Guarantee:	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Signature of Signature Guarantee

     [Signature must be guaranteed by a participant in a recognized signature guaranty medallion
program or other
signature guarantor acceptable to the Trustee.]

 

 

 

[TO BE ATTACHED TO GLOBAL SECURITIES]

SCHEDULE OF EXCHANGES IN GLOBAL SECURITY

     The following exchanges of Notes for Notes represented by this Global Security have been made:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Change in	 	 	 	 	 	 	 
	 	 	 	 	 	 	principal	 	 	 	 	 	 	 
	 	 	 	 	 	 	amount of	 	 	 	 	 	 	 
	Principal	 	 	 	 	 	this	 	 	Principal	 	 	 	 
	amount of this	 	Date	 	 	Global Note	 	 	amount of this	 	 	Notation made	 
	Global Note as	 	exchange	 	 	due to	 	 	Global Note	 	 	by or on behalf	 
	of                     , 200_	 	made	 	 	exchange	 	 	due to exchange	 	 	of the Company	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	$

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