Exhibit 10.4
AMENDMENT #2
TO EMPLOYMENT AGREEMENT
     AGREEMENT made November 9, 2007, by and between SOVEREIGN BANCORP, INC., a
Pennsylvania corporation (“SBI”), and MARK R. McCOLLOM, an individual (the
“Executive”).
WITNESSETH:
     WHEREAS, the parties entered into an agreement dated May 20, 2005,
relating, among other things, to the Executive’s employment by SBI (the
“Employment Agreement”); and
     WHEREAS, the Parties entered into an agreement dated May 30, 2006, amending
the Original Employment Agreement to modify the definition of Change in Control
in certain respects (“Amended Employment Agreement”); and
     WHEREAS, the Parties mutually desire to further amend the Amended
Employment Agreement by executing this document (“Amendment #2”); and
     WHEREAS, the parties desire to amend the Employment Agreement to comply
with Section 409A of the Internal Revenue Code of 1986, as amended, by executing
Amendment #2, effective May 20, 2005.
     NOW, THEREFORE, the parties, intending to be legally bound hereby, further
agree as follows, effective May 20, 2005:
     1. The last sentence of Section 5(a) of the Employment Agreement is amended
and restated to read as follows—
     At the option of the Executive, exercisable by the Executive within ninety
(90) days after the occurrence of the event constituting Good Reason, the
Executive may resign from employment under this Agreement by a notice in writing
(the “Notice of Termination”) delivered to SBI (or its successor) and the
provisions of Section 6 shall thereupon apply, provided, however, that SBI shall
have thirty (30) days from the day it receives the Notice of Termination to
remedy such event. Notwithstanding the foregoing, any amounts payable upon
termination by Executive for Good Reason shall be paid only if the Executive
actually terminates employment within two (2) years following the initial
existence of the event giving rise to such Good Reason.
     2. Section 5(a)(iv) of the Employment Agreement is amended and restated to
read as follows—
     (iv) a reduction in the Executive’s base salary and/or annual target
incentive compensation below a level as in effect on the date hereof or as the
same may be increased from time to time;

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     3. Section 6(a)(i) of the Employment Agreement is amended and restated to
read in its entirety as follows—
     (i) For purposes of this section, the term “Current Compensation at
Termination” means the sum of (A) the greatest of the Executive’s base salary as
of the date of termination of employment (or prior to any reduction thereof
resulting in Good Reason for resignation) and for any of the three immediately
preceding calendar years, and (B) a dollar amount equal to the greater of
(i) the target bonus in the year of termination, or (ii) the highest of the
awards Executive received as bonuses (including deferred bonuses) in any of the
three calendar years preceding the year in which the termination of employment
occurs.
     4. Section 6(a)(ii) of the Employment Agreement is amended and restated to
read as follows—
     (ii) Amounts required to be paid to Executive under this Section 6(a) shall
be paid to Executive in a lump sum cash payment not later than the thirtieth
(30th) day following the date of termination of employment or the receipt by SBI
of the approval of payment of such amounts by the Office of Thrift Supervision
or such other regulatory agency to the extent such approval is required at that
time.
     5. Section 6(b) of the Employment Agreement is amended and restated to read
as follows—
     (b) Benefits. For a period of three (3) years from the date of termination
of employment, Executive shall receive a continuation of all life, disability,
medical insurance and other welfare benefits in effect with respect to Executive
during the two calendar years prior to his termination of employment, or, if SBI
cannot provide such benefits (or cause them to be provided) because Executive is
no longer an employee, within thirty (30) days following Executive’s termination
under this Section, a dollar amount in a lump sum payment equal to the after-tax
cost to Executive of obtaining such benefits (or substantially similar
benefits), less any amount he was actually paying himself for such benefits
immediately prior to termination. To the extent it is determined that any
benefits under this Section are taxable to the Executive, they are intended to
constitute payments made upon an involuntary termination from service and
payable pursuant to Section 1.409A-1(b)(9)(iii) of the Treasury Regulations, to
the maximum extent permitted by said provision and to the extent the payment of
such taxable benefits would exceed the specified time period under
Section 1.409A-1(b)(9)(iii), Executive shall be paid, within 15 days of the Date
of Termination, a lump sum amount in cash equal to the present value (determined
based upon 120% of the then prevailing monthly short-term applicable federal
rate) of SBI’s cost, as of the Date of Termination, of otherwise providing such
benefit beyond the specified time period under Section 1.409A-1(b)(9)(iii).

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     6. Section 6(c) of the Employment Agreement is amended and restated to read
as follows—
     (c) Matters Relating to Certain Federal Excise Tax. In the event that the
amounts and benefits payable under this Agreement, when added to other amounts
and benefits which may become payable to the Executive by SBI and any affiliated
company, are such that he becomes subject to the excise tax provisions of
Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), SBI
shall pay him such additional amount or amounts as will result in his retention
(after the payment of all federal, state and local excise, employment and income
taxes on such payments and the value of such benefits) of a net amount equal to
the net amount he would have retained had the initially calculated payments and
benefits been subject only to income and employment taxation. For purposes of
the preceding sentence, the Executive shall be deemed to be subject to the
highest marginal federal, relevant state and relevant local tax rates. All
calculations required to be made under this subsection shall be made by
independent public accountants retained by SBI, subject to the right of
Executive’s representative to review the same. All such amounts required to be
paid shall be paid at the time any withholding may be required under applicable
law, and any additional amounts to which the Executive may be entitled shall be
paid or reimbursed no later than 15 days following confirmation of such amount
by SBI’s accountants, but in no event later than the end of the Executive’s
taxable year next following the Executive’s taxable year in which the Executive
remits the related taxes. In the event any amounts paid hereunder are
subsequently determined to be in error because estimates were required or
otherwise, the parties agree to reimburse each other to correct such error, as
appropriate, and to pay interest thereon at the applicable federal rate (as
determined under Code Section 1274 for the period of time such erroneous amount
remained outstanding and unreimbursed). The parties recognize that the actual
implementation of the provisions of this subsection are complex and agree to
deal with each other in good faith to resolve any questions or disagreements
arising hereunder.
     7. Section 7(a)(ii) of the Employment Agreement is amended and restated to
read as follows—
     (ii) Amounts required to be paid to Executive under Section 7(a) shall be
paid to Executive in a lump sum cash payment not later than the thirtieth (30th)
day following the date of termination of employment or the receipt by SBI of the
approval of payment of such amounts by the Office of Thrift Supervision or such
other regulatory agency to the extent such approval is required at that time.
     8. Section 7(b) of the Employment Agreement is amended and restated to read
as follows—
     (b) Benefits. For a period of one (1) year from the date of termination of
employment or the remaining term of this Agreement, Executive shall receive a

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continuation of all life, disability, medical insurance and other welfare
benefits in effect with respect to Executive during the two calendar years prior
to his termination of employment, or, if SBI cannot provide such benefits (or
cause them to be provided) because Executive is no longer an employee, within
thirty (30) days following Executive’s termination under this Section, a dollar
amount in a lump sum payment equal to the after-tax cost to Executive of
obtaining such benefits (or substantially similar benefits).
     9. The Employment Agreement is amended and restated to include the
following sentence as the last sentence of Section 7(b)—
     To the extent it is determined that any benefits under this Section are
taxable to the Executive, they are intended to constitute payments made upon an
involuntary termination from service and payable pursuant to Section
1.409A-1(b)(9)(iii) of the Treasury Regulations, to the maximum extent permitted
by said provision and to the extent the payment of such taxable benefits would
exceed the specified time period under Section 1.409A-1(b)(9)(iii), Executive
shall be paid, within 15 days of the Date of Termination, a lump sum amount in
cash equal to the present value (determined based upon 120% of the then
prevailing monthly short-term applicable federal rate) of SBI’s cost, as of the
Date of Termination, of otherwise providing such benefit beyond the specified
time period under Section 1.409A-1(b)(9)(iii).
     IN WITNESS WHEREOF, the parties hereto have executed this Amendment, or
caused it to be executed, as of the date first above written.

                  SOVEREIGN BANCORP, INC.    
 
           
 
  By   /s/ Thomas J. McAuliffe              
 
            Thomas J. McAuliffe, Director of    
 
            Human Resources    
 
  Date:   November 9, 2007    
 
           
[CORPORATE SEAL]
  Attest   /s/ Richard Toomey              
 
      Richard Toomey, Secretary    
 
  Date:   November 9, 2007    
 
                /s/ Mark R. McCollom   (SEAL)          
 
      Mark R. McCollom    
 
  Date:   November 9 , 2007    

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