EXHIBIT 10.2

SOVEREIGN BANCORP, INC.

NON-EMPLOYEE DIRECTORS SERVICES COMPENSATION PLAN

(As Amended by Amendments #1, #2 and #3)

1. PURPOSE

The Sovereign Bancorp, Inc. Non-Employee Directors Services Compensation Plan
(the “Plan”) was adopted by Sovereign Bancorp, Inc. (“Sovereign” or the
“Corporation”) and is designed to enhance Sovereign’s ability to attract and
retain competent and experienced non-employee directors by providing
retirement-type benefits for non-employee directors of Sovereign who retire
after the Effective Date.

2. DEFINITIONS

Except as otherwise specified or as the context may otherwise require, the
following terms have the meanings indicated below for all purposes of this Plan:

BOARD means the Board of Directors of Sovereign.

COMMITTEE means the Compensation Committee of the Board.

DIRECTOR means a member of the Board of Sovereign on or after the Effective Date
who is not an employee of Sovereign on his or her date of death or retirement as
a Director.

BOARD SERVICE means service as a Director of Sovereign both before and after the
Effective Date; provided, however, that Board Service shall not include any
period during which the Director was an employee of Sovereign or any subsidiary
thereof. The service of a Director will include service on the board of
Sovereign Bank, or an affiliate or service on the board of any merged or
acquired holding company, bank or other affiliate; provided, however, that
concurrent service with more than one such company shall be counted only once.

RETAINER means the annual calendar year retainer(s) paid to a Director as
compensation for services as a Director of Sovereign and, if applicable,
Sovereign Bank, excluding the amount of any incentive compensation or other
award that may have been paid to any Director during the course of any year. For
purposes of the preceding sentence (i) any such retainers received from any
company acquired by Sovereign or Sovereign Bank, through merger, consolidation,
acquisition of substantially all of its assets or similar transaction, shall be
taken into account and (ii) to the extent any such retainer was paid in stock or
other property, it shall be valued at the time of transfer in the same manner as
was used for federal income tax information reporting purposes or, if such
valuation was not made, the value of such stock or other property shall be the
value of the same as is fixed by the Board of Sovereign in good faith. Nothing
in this definition shall be construed as providing for the payment of a Plan
benefit to any person who is not, at the relevant time, a Director of Sovereign.
In the case of a Director’s termination of Board Service during a calendar year,
the Board may, in its discretion, annualize the Retainer being paid at the time
of termination for purposes of administering the Plan.

EFFECTIVE DATE means July 15, 1999.

3. ELIGIBILITY

Any Director who (i) has completed ten or more years of Board Service, (ii) has
attained the age of 65, (iii) has not been removed as a Director by the Board
for cause and (iv) retires from (or otherwise voluntarily terminates) such Board
Service on or after the Effective Date shall be eligible for a retirement
benefit as provided herein. The lawful surviving spouse (if any) of any
Director, who (v) has completed ten or more years of Board Service, (vi) has not
been removed as a Director by the Board for cause and (vii) has not terminated
as a Director, as of the date of his or her death, shall be eligible for a
spousal benefit. Notwithstanding the foregoing, no Director appointed or elected
after October 1, 2005 shall be eligible to participate in or receive a benefit
under the Plan.

4. DIRECTOR’S RETIREMENT BENEFIT

The retirement benefit payable to a Director hereunder shall be an amount equal
to three times the highest Retainer in effect at any time during the Director’s
period of Board Service. Benefits will be payable in a lump sum or in annual
installments, at the discretion of the Board. A benefit shall be paid or
commence at such time as the Board shall specify at the relevant time, but in no
event shall such benefit be paid or commence (i) earlier than the first day of
the month concurrent with or immediately following the Director’s termination of
Board Service prior to age 70 or (ii) later than the Director’s 70th birthday.
No installment payout shall extend beyond three years, nor shall any installment
payment bear interest. Upon the death of a former Director receiving a
retirement benefit, any unpaid benefit shall be made, or continue to be made, to
the former Director’s lawful surviving spouse; provided, however, that no
benefit payment shall thereafter be made or continue to be made if there is no
surviving spouse; and provided further, that if such surviving spouse shall die
prior to receipt of the entire remaining Plan benefit payable, the then unpaid
balance shall be paid, in a lump sum, to the deceased surviving spouse’s estate
as soon as administratively feasible. Notwithstanding anything in this Section 4
or the Plan to the contrary, the retirement benefit payable to a Director
hereunder who has, as of October 1, 2005, completed ten or more years of Board
Service and has attained the age of 65, shall be an amount equal to three times
the highest Retainer in effect at any time during such Director’s period of
Board Service. A Director who has not, as of October 1, 2005, completed ten or
more years of Board Service and has not yet attained the age of 65, but is
otherwise a participant in the Plan may receive a retirement benefit equal to an
amount determined by multiplying the amount equal to three times the highest
Retainer in effect at any time during such Director’s period of Board Service
through September 30, 2005, by the number of full years of Board Service of such
Director through September 30, 2005 divided by ten. In order to be eligible to
receive the retirement benefit determined pursuant to this formula, such
Director must complete ten or more years of Board Service and attain the age of
65 provided, however, that such Director has not been removed as a Director by
the Board for cause prior to the time such retirement benefit, if any, becomes
payable.

5. SPOUSAL BENEFIT

The benefit payable to the lawful surviving spouse (if any) of a Director who
has not yet retired or who has not yet commenced receiving a Plan benefit as of
his or her death shall be an amount determined in accordance with the provisions
of Section 4. A spousal benefit shall be paid in a lump sum or installments as
provided in Section 4, and shall be paid or commence to be paid on the first day
of the month immediately following receipt by Sovereign of proof of death;
provided, however, that no benefit payment shall be made under this section if
there is no surviving spouse; and provided further, that if such surviving
spouse shall die prior to receipt of the entire Plan benefit payable, the then
unpaid balance shall be paid, in a lump sum, to the deceased surviving spouse’s
estate as soon as administratively feasible.

6. DISABILITY

Notwithstanding Sections 3 and 4, any Director who (i) has completed five or
more years of Board Service, (ii) has not been removed as a Director by the
Board for cause and (iii) terminates Board Service by reason of becoming
disabled is eligible for a retirement benefit under the Plan. The retirement
benefit payable under this section shall be paid in accordance with the
provisions of Section 4, except that (iv) the date of reference for determining
the amount payable shall be the date his or her Board Service terminates by
reason of disability and (v) payment of the Plan benefit shall be made or
commence on the first day of the month immediately following the termination of
Board Service. In the event of the death of a former Director prior to receipt
of his or her entire benefit, the provisions of Section 4 shall govern the
rights of any person to receipt of the unpaid portion thereof. For purposes of
this Plan, the term “disability” or “disabled” shall mean an incapacity, due to
physical or mental illness or injury, to fulfill the normal duties of a Director
of Sovereign for a period reasonably anticipated to be at least one year.

7. CHANGE IN CONTROL

Change in Control means the first to occur of any of the following events:

(a) any “Person” (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act except for any of the Corporation’s employee benefit plans, or any
entity holding the Corporation’s voting securities for, or pursuant to, the
terms of any such plan (or any trust forming a part thereof) (the “Benefit
Plan(s)”), is or becomes the beneficial owner, directly or indirectly, of the
Corporation’s securities representing 19.9% or more of the combined voting power
of the Corporation’s then outstanding securities other than pursuant to a
transaction described in (d) below;

(b) there occurs a contested proxy solicitation of the Corporation’s
shareholders that results in the contesting party obtaining the ability to vote
securities representing 19.9% or more of the combined voting power of the
Corporation’s then outstanding securities;

(c) a binding written agreement is executed (and, if legally required, approved
by the Corporation’s shareholders) providing for a sale, exchange, transfer or
other disposition of substantially all of the assets of the Corporation or of
Sovereign Bank, a Federal Savings Bank to another entity, except to an entity
controlled directly or indirectly by the Corporation;

(d) the shareholders of the Corporation approve a merger, consolidation, or
other reorganization of the Corporation, unless:

(i) under the terms of the agreement approved by the Corporation’s shareholders
providing for such merger, consolidation or reorganization, the shareholders of
the Corporation immediately before such merger, consolidation or reorganization,
will own, directly or indirectly immediately following such merger,
consolidation or reorganization at least 51% of the combined voting power of the
outstanding voting securities of the Corporation resulting from such merger,
consolidation or reorganization (the “Surviving Corporation”) in substantially
the same proportion as their ownership of the voting securities immediately
before such merger, consolidation or reorganization;

(ii) under the terms of the agreement approved by the Corporation’s shareholders
providing for such merger, consolidation or reorganization, the individuals who
were members of the Board immediately prior to the execution of such agreement
will constitute at least 51% of the members of the board of directors of the
Surviving Corporation after such merger, consolidation or reorganization; and

(iii) based on the terms of the agreement approved by the Corporation’s
shareholders providing for such merger, consolidation or reorganization, no
Person (other than (A) the Corporation or any Subsidiary of the Corporation,
(B) any Benefit Plan (C) the Surviving Corporation or any Subsidiary of the
Surviving Corporation, or (D) any Person who, immediately prior to such merger,
consolidation or reorganization had beneficial ownership of 19.9% or more of the
then outstanding voting securities) will have beneficial ownership of 19.9% or
more of the combined voting power of the Surviving Corporation’s then
outstanding voting securities;

(e) a plan of liquidation or dissolution of the Corporation, other than pursuant
to bankruptcy or insolvency laws, is adopted;

(f) during any period of two consecutive years, individuals, who at the
beginning of such period, constituted the Board cease for any reason to
constitute at least a majority of the Board unless the election, or the
nomination for election by the Corporation’s shareholders, of each new director
was approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period; or

(g) the occurrence of a Triggering Event within the meaning of the Rights
Agreement dated as of September 19, 1989, as amended, and as further amended by
the Second Amended and Restated Rights Agreement dated as of January 19, 2005,
between the Corporation and Mellon Investor Services LLC, as rights agent.

Notwithstanding clause (a) of the preceding paragraph, a Change in Control shall
not be deemed to have occurred if a Person becomes the beneficial owner,
directly or indirectly, of the Corporation’s securities representing 19.9% or
more of the combined voting power of the Corporation’s then outstanding
securities solely as a result of an acquisition by the Corporation of its voting
securities which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 19.9% or
more of the combined voting power of the Corporation’s then outstanding
securities; provided, however, that if a Person becomes a beneficial owner of
19.9% or more of the combined voting power of the Corporation’s then outstanding
securities by reason of share purchases by the Corporation and shall, after such
share purchases by the Corporation, become the beneficial owner, directly or
indirectly, of any additional voting securities of the Corporation (other than
as a result of a stock split, stock dividend or similar transaction), then a
Change in Control of the Corporation shall be deemed to have occurred with
respect to such Person under clause (a) of the preceding paragraph. In no event
shall a Change in Control of the Corporation be deemed to occur under such
clause (a) above with respect to Benefit Plans.

Upon the occurrence of a Change in Control of Sovereign, and notwithstanding any
other provision of the Plan, a Director who was elected or appointed prior to
October 1, 2005 and who has completed five or more years of Board Service shall
immediately become entitled to receive the benefit amount determined under
Section 4.

8. PROVISION OF BENEFITS

All benefits payable hereunder shall be provided from the general assets of
Sovereign. No Director or spouse shall acquire any interest in any specific
assets of Sovereign by reason of this Plan.

9. AMENDMENT AND TERMINATION

Sovereign reserves the right to terminate this Plan or amend this Plan in any
respect at any time, and any such amendment may be retroactive; provided,
however, that no such termination or amendment may reduce the benefits of any
Director who has previously retired hereunder or any spouse receiving benefits
hereunder. Effective as of October 1, 2005, the Plan has been frozen, subject to
the provisions of Sections 3 and 4 as amended. Subject to the provisions of this
Section 9, the Plan will be deemed to be terminated effective as of the date
that all retirement benefits payable hereunder have been distributed in
accordance with the terms of the Plan.

10. ADMINISTRATION

This Plan shall be administered by the Compensation Committee of the Board of
Directors of Sovereign. Such Committee’s final decision, in making any
determination or construction under this Plan and in exercising any
discretionary power, shall in all instances be final and binding on all persons
having or claiming any rights under this Plan.

11. MISCELLANEOUS

The adoption and maintenance of this Plan shall not constitute a contract
between Sovereign and any Director. Nothing herein contained shall be deemed to
give any Director the right to be retained as a Director, nor shall it interfere
with the Director’s right to terminate his or her directorship at any time. No
benefit payable hereunder shall be subject to alienation or assignment, except
as otherwise provided by law.