Document:

exv10w4

 

Exhibit 10.4

FORM OF RESTRICTED STOCK AGREEMENT

          AGREEMENT, made as of the___ day of _________, between SOVEREIGN BANCORP, INC., a
Pennsylvania corporation (the “Corporation”), and ____________(the “Employee”).

          1. Award.

          (a) Shares. Pursuant to the provisions of the Sovereign Bancorp, Inc. 2004
Broad-Based Stock Incentive Plan (the “Plan”), _____________________(______) shares (the “Restricted
Shares”) of the Corporation’s common stock, no par value (“Common Stock”), shall be issued as
hereinafter provided in the Employee’s name subject to the restrictions described herein.

          (b) Issuance of Restricted Shares. The Restricted Shares shall be issued upon
acceptance of this Agreement by the Employee and upon satisfaction of the Vesting Schedule as set
forth in Section 2(b) herein and the attainment of specific Performance Goals as may be set forth
in Section 2(c) herein in accordance with the provisions of the Plan.

          (c) Plan Incorporated. The Employee acknowledges receipt of a copy of the Plan and
agrees that this award of Restricted Stock shall be subject to all of the terms and conditions set
forth in the Plan, including future amendments thereto, if any, pursuant to the terms thereof,
which Plan is incorporated herein by reference as a part of this Agreement.

          2. Restricted Shares. The Employee hereby accepts the Restricted Shares when issued
and agrees as follows:

          (a) Restrictions. The potential rights of the Employee to the Restricted Shares may
not be assigned, transferred, sold, pledged, hypothecated, or otherwise encumbered or disposed
until such time as the Employee receives unrestricted certificates for such shares. Except as
provided in Section 2(d) below, in the event of termination of the Employee’s employment with the
Corporation or any subsidiary for any reason prior to vesting in all or any portion of the
Restricted Shares, the Employee shall, for no consideration, forfeit to the Corporation all
Restricted Shares to the extent then subject to the Restrictions (as hereinafter defined). The
prohibition against transfer and the obligation to forfeit and surrender Restricted Shares to the
Corporation upon termination of employment prior to satisfaction of the Vesting Schedule and
attainment of the Performance Goals are referred to herein as the “Restrictions.”

          (b) Vesting Schedule. Except as provided in Sections 2(c), 2(d), and 7 below, the
Restrictions shall lapse and cease to apply to the Restricted Shares provided that the Employee has
remained in the continuous employ of the Corporation for the following periods after the date
hereof (the “Vesting Schedule”):

[Vesting Schedule]

 

 

          (c) Performance Goals. The Restrictions shall lapse and cease to apply to the
Restricted Shares with respect to an Anniversary Date provided that
the Performance Criteria, if any, for
such Anniversary Date is satisfied as set forth in Appendix A.

          (d) Acceleration of Lapse of Restrictions. Notwithstanding Sections 2(b) and 2(c)
above, upon the occurrence of a Change in Control (as defined in the Plan) or if the Employee’s
employment with the Corporation terminates due to death or being “disabled” (as defined in the
Plan), any or all Restricted Shares still subject to restrictions shall vest and the Restrictions
shall lapse and cease to apply to such Restricted Shares.

          (e) Certificates. One or more share certificates evidencing the Restricted Shares
shall be issued by the Corporation in the name of a nominee of the Corporation. The Employee shall
not have voting rights and shall not be entitled to receive dividends unless and until the
Restrictions expire pursuant to the provisions of this Agreement. The certificate shall bear a
legend evidencing the nature of the Restricted Shares, and the Corporation may cause the
certificate to be delivered upon issuance to the Secretary of the Corporation or to such other
depository as may be designated by the Corporation as a depository for safekeeping until the
forfeiture occurs or the Restrictions expire pursuant to this award. At the time of award and upon
request of the Corporation, the Employee shall deliver to the Corporation a stock power, endorsed
in blank, relating to the Restricted Shares then subject to the Restrictions. Within 30 days of
the expiration of all the Restrictions without forfeiture, and upon satisfaction of all other terms
and conditions set forth in this Agreement, the Corporation shall cause a new certificate or
certificates to be issued without legend in the name of the Employee for the shares with respect to
which the Restrictions expired, together with an amount of cash (without interest) equal to the
dividends that have been paid, if any, on such shares with respect to record dates occurring on or
after the date of this award. Notwithstanding the forgoing, the Restricted Shares may be evidenced
by uncertificated shares or otherwise in book entry form in which case the Employee shall receive a
statement of holdings evidencing ownership of the Restricted Shares. In addition, notwithstanding
any other provisions of this Agreement, the issuance or delivery of any shares of stock (whether
subject to restrictions or unrestricted) may be postponed for such period as may be required to
comply with applicable requirements of any national securities exchange or any requirements under
any law or regulation applicable to the issuance or delivery of such shares. The Corporation shall
not be obligated to issue or deliver any shares of Common Stock if the issuance or delivery thereof
shall constitute a violation of any provision of any law or of any regulation of any governmental
authority or any national securities exchange.

          3. Deferral of Restricted Shares. In its sole and absolute discretion, the Committee
may approve an arrangement whereby the Employee may elect to defer receipt of the Restricted Shares
beyond the date on which the Restrictions terminate.

          4. Withholding of Tax. To the extent that the receipt of the Restricted Shares or the
expiration of any Restrictions results in income to the Employee for federal or state income tax
purposes, the Employee shall deliver to the Corporation at the time of such receipt or expiration,
as the case may be, such amount of money or shares of unrestricted Common Stock as the Corporation
may require to meet its withholding obligation under applicable tax laws or regulations, and, if
the Employee fails to do so, the Corporation is authorized to withhold from any cash or stock
remuneration then or thereafter payable to the Employee any tax required to be withheld by reason
of such resulting compensation income.

 

 

          5. Status of Common Stock. The Employee agrees that the Restricted Shares will not be
sold or otherwise disposed of in any manner that would constitute a violation of any applicable
federal or state securities laws. the Employee also agrees (i) that the certificates representing
the Restricted Shares may bear such legend or legends as the Corporation deems appropriate in order
to assure compliance with applicable securities laws, (ii) that the Corporation may refuse to
register the transfer of the Restricted Shares on the stock transfer records of the Corporation if
such proposed transfer would, in the opinion of counsel satisfactory to the Corporation, constitute
a violation of any applicable securities law and (iii) that the Corporation may give related
instructions to its transfer agent, if any, to stop registration of the transfer of the Restricted
Shares.

          6. Employment Relationship. Nothing contained in this Agreement or otherwise shall be
construed to confer upon the Employee any right to continue in the employ of the Corporation or any
subsidiary of the Corporation or limit in any respect the right of the Corporation or of any
subsidiary of the Corporation to terminate the Employee’s employment at any time and for any
reason. Any question as to whether and when there has been a termination of such employment, and
the cause of such termination, shall be determined by the Corporation and its determination shall
be final.

          7. Harmful Activity. If the Employee shall engage in any “harmful activity” while
employed by the Corporation or within six months after termination of employment with the
Corporation, then (a) any and all Restricted Shares held by the Employee that have vested shall be
surrendered to the Corporation, (b) any and all Restricted Shares that have not yet vested shall
immediately be forfeited and canceled, and (c) any Profits realized upon the sale of any vested
Restricted Shares, on or after one year prior to the termination of employment with the
Corporation, shall inure to the Corporation. The aforementioned restriction shall not apply in the
event that employment with the Corporation terminates within two years after a Change in Control if
any of the following have occurred: (a) a relocation of the Employee’s principal place of
employment more than 35 miles from the Employee’s principal place of employment immediately prior
to the Change in Control, (b) a reduction in the Employee’s base salary after a Change in Control,
or (c) termination of the Employee’s employment under circumstances in which the Employee is
entitled to severance benefits or salary continuation or similar benefits under a change in control
agreement, employment agreement, or severance or separation pay plan. If any vested Restricted
Shares are surrendered or any Profits realized upon the sale of any vested Restricted Shares inure
to the benefit of the Corporation in accordance with the first sentence of this paragraph, the
Employee shall surrender all such forfeited Restricted Shares and pay all such Profits to the
Corporation within 30 days after receiving written notice from the Corporation that the Employee
has engaged in a harmful activity. Consistent with the provisions of the Plan, the determination
by the Committee as to whether the Employee engaged in “harmful activity” while employed by the
Corporation or within six months after termination of employment with the Corporation shall be
final and conclusive, unless otherwise determined by a majority of disinterested members of the
Board.

          A “harmful activity” shall have occurred if the Employee shall do any one or more of the
following:

          (a) Use, publish, sell, trade or otherwise disclose Non-Public Information of the Corporation
unless such activity was inadvertent, done in good faith and did not cause significant harm to the
Corporation.

 

 

          (b) After notice from the Corporation, fail to return to the Corporation any document, data or
other item or items in the Employee’s possession or to which the Employee has access that may
involve Non-Public Information of the Corporation.

          (c) Upon the Employee’s own behalf or upon behalf of any other person or entity that competes
or plans to compete with the Corporation, solicit or entice for employment or hire any employee of
the Corporation.

          (d) Upon the Employee’s own behalf of upon behalf of any other person or entity that competes
or plans to compete with the Corporation, contact, call upon, solicit or do business with (other
than a business which does not compete with any business conducted by the Corporation), any
customer of the Corporation the Employee contacted, called upon, solicited, interacted with, or
became acquainted with, or learned of through access to information (whether or not such
information is or was non-public) while employed at the Corporation unless such activity was
inadvertent, done in good faith, and did not involve a customer whom the Employee should have
reasonably known was a customer of the Corporation.

          (e) Upon the Employee’s own behalf or upon behalf of any other person or entity that completes
or plans to compete with the Corporation, engage in any business activity in competition with the
Corporation in the same or a closely related activity that the Employee was engaged in for the
Corporation during the one year period prior to the termination of employment.

          For purposes of this Section:

               “Non-Public Information shall mean, but is not limited to, trade secrets, confidential
processes, programs, software, formulas, methods, business information or plans, financial
information, and listings of names (e.g., employees, customers, and suppliers) that are developed,
owned, utilized, or maintained by the Corporation, and that of its customers or suppliers, and that
are not generally known by the public.

               “Profits” shall mean, with respect to any Restricted Shares, any profits realized upon the
sale of any share of Common Stock that were acquired upon the vesting of such Restricted Shares.

          8. Corporation’s Powers. No provision contained in this Agreement shall in any way
terminate, modify, or alter, or be construed or interpreted as terminating, modifying, or altering
any of the powers, rights or authority vested in the Corporation or, to the extent delegated, in
its delegate including, without limitation, the right to make certain determinations and elections
with respect to the Restricted Shares.

          9. Binding Effect. This Agreement shall be binding upon and inure to the benefit of
any successors to the Corporation and all persons lawfully claiming under the Employee.

          10. Governing Law. This Agreement shall be governed by, and construed in accordance
with, the laws of the Commonwealth of Pennsylvania.

 

 

          IN WITNESS WHEREOF, the Corporation has caused this Agreement to be duly executed by an
officer thereunto duly authorized, and the Employee has executed this Agreement, all as of the date
first above written.

	 	 	 	 	 	 	 
	 	 	SOVEREIGN BANCORP, INC.	 	 
	 
	 	 	 	 	 	 
	 	 		 	 
	 
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	

	 	 	 	

	 	 
	

	 	 	 	Jay Sidhu	 	 
	

	 	 	 	President and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	EMPLOYEE	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 

 

 

Appendix A

Performance Criteriaexv10w5

 

Exhibit 10.5

SOVEREIGN BANCORP, INC. 2001 STOCK INCENTIVE PLAN

FORM OF STOCK OPTION AGREEMENT FOR

INCENTIVE STOCK OPTION

BETWEEN

SOVEREIGN BANCORP, INC.

AND

                                                            

	 	 	 	 	 
	Date of Grant:
	 	________________
	 
	 	 	 	 
	Number of Shares:
	 	________________
	 
	 	 	 	 
	Exercise Price:
	 	$________/share
	 
	 	 	 	 
	Option Expiration Date:
	 	________________

 

 

INCENTIVE STOCK OPTION AGREEMENT

Number of shares subject to option: ___ shares.

     This Agreement dated ____________, between Sovereign Bancorp, Inc. (the “Corporation”) and
_______________(the “Optionholder”).

WITNESSETH:

1. Grant of Option

     Pursuant to the provisions of the Sovereign Bancorp, Inc. 2001 Stock Incentive Plan (the
“Plan”) the Corporation hereby grants to the Optionholder, subject to the terms and conditions of
the Plan and subject further to the terms and conditions herein set forth, the right and option to
purchase from the Corporation for cash, or for common stock of the Corporation subject to the
approval of the Committee (as defined in the Plan), all or any part of an aggregate of ___shares
of common stock (without par value) of the Corporation (the “Common Stock”) at the exercise price
of $___ per share; such option to be exercised as hereinafter provided (this “Option”).

2. Terms and Conditions

     It is understood and agreed that the Option evidenced hereby is subject to the following terms
and conditions:

	 	(a)  	Expiration Date. Subject to the provisions of paragraphs 2(d) and 2(e),
the Option granted hereby shall expire on _________[not more than ten years from
the date of grant except for an Option granted to a 10% shareholder, which shall be
limited to five years].
	 
	 	(b)  	Exercise of Option. Except in the case of a Change In Control (as defined
in the Plan), this Option may not be exercised until both (1) the Optionholder has been
continuously employed by the Corporation or a Subsidiary of the Corporation (as defined
in the Plan) for a period of ___years following the date of grant (the “Service
Requirement”) and (2) certain performance goals (the “Performance Goals”) determined by
the Corporation on the date of grant and described in Appendix A hereto have been
achieved. Upon achievement of the Performance

 

 

	 	   	Goals and attainment of the Service Requirement, this Option may be exercised at any
time thereafter but no later than the Option’s expiration date.
	 
	 	   	This Option may be exercised in whole at any time, or from time to time in
part, to the extent vested, prior to the expiration date specified in paragraph
2(a). Any exercise shall be accompanied by a written notice to the Corporation
specifying the number of shares as to which the Option is being exercised.
Notwithstanding anything contained herein to the contrary, if a Change in
Control (as defined in the Plan) occurs, the Option granted hereby shall become
immediately exercisable.
	 
	 	(c)  	Payment of Exercise Price upon Exercise. At the time of any exercise, the
exercise price of the shares as to which this Option shall be exercised shall be paid
in cash (or, subject to the conditions and limitations described in the Plan, by
delivering shares of Common Stock of the Corporation or by delivering a combination of
such Common Stock and cash equal to the aggregate exercise price of the shares being
acquired, determined by reference to the exercise price per share set forth in
paragraph 1 hereof) to the Corporation.
	 
	 	(d)  	Exercise upon Death, Being Disabled, or Termination of Employment.

	 	(1)  	In the event of the termination of the Optionholder’s employment as
an employee of the Corporation or a Subsidiary by reason of death or being
disabled (as defined in the Plan), this Option may be exercised, to the extent
that the Optionholder was entitled to do so at the date of termination of
employment due to such cause, in whole at any time, or from time to time in part,
within one year after the Optionholder’s death or disability, but in no event
later than the expiration date specified in paragraph 2(a).
	 
	 	(2)  	In the event the Optionholder’s employment with the Corporation or a
Subsidiary is terminated by the Optionholder due to Retirement (as defined in the
Plan), this Option may be exercised, to the extent that the Optionholder was
entitled to do so at the date of termination of employment due to such cause, in

 

 

	 	   	whole at any time, or from time to time in part, within three months after the
date of such termination of employment, but in no event later than the expiration
date specified in paragraph 2(a).
	 
	 	(3)  	In the event the Optionholder’s employment with the Corporation or a
Subsidiary is voluntarily terminated by the Optionholder (other than for
Retirement), this Option will expire upon such termination of employment.
	 
	 	(4)  	Except as otherwise provided in (5) below, in the event the
Optionholder’s employment with the Corporation or a Subsidiary is terminated due
to a corporate downsizing (as determined in accordance with the provisions of the
Plan), Retirement, or other circumstances where it is deemed equitable to do so,
the Committee may waive any continuous service requirements for vesting purposes
in accordance with the terms of the Plan and permit the exercise of this Option.
In addition, the Committee may, in the case of a corporate downsizing or other
circumstances where it is deemed equitable to do so, waive the otherwise
applicable lapse provision of this Option and permit its exercise within three
months after the date of termination of employment due to such causes, but in no
event later than the expiration date specified in paragraph 2(a).
	 
	 	(5)  	Notwithstanding anything herein to the contrary, in the event the
Optionholder’s employment with the Corporation or a Subsidiary is terminated “for
cause” (as defined in the Plan), all rights to exercise this Option shall
terminate upon such termination of employment.

	 	(e)  	Harmful Activity. If the Optionholder shall engage in any “harmful
activity” while employed by the Corporation or within six months after termination of
employment with the Corporation, then (a) this Option, to the extent then unexercised
and whether vested or unvested, shall immediately be forfeited and canceled; and (b)
any Profits realized upon the exercise of this Option shall inure to the Corporation.
The aforementioned restriction shall not apply in the event that Optionholder’s
employment with the Corporation terminates within two years after a Change in Control
if any of the following have occurred: (a) a relocation of the Optionholder’s

 

 

	 	   	principal place of employment more than 35 miles from the Optionholder’s principal
place of employment immediately prior to the Change in Control, (b) a reduction in the
Optionholder’s base salary after a Change in Control, or (c) termination of the
Optionholder’s employment under circumstances in which the Optionholder is entitled to
severance benefits or salary continuation or similar benefits under a change in control
agreement, employment agreement, or severance or separation pay plan. If any Profits
realized upon the exercise of this Option inure to the benefit of the Corporation in
accordance with the first sentence of this paragraph, the Optionholder shall pay all
such Profits to the Corporation within 30 days after receiving written notice from the
Corporation that the Optionholder has engaged in a harmful activity. Consistent with
the provisions of the Plan, the determination by the Committee as to whether the
Optionholder engaged in “harmful activity” while employed by the Corporation or within
six months after termination of employment with the Corporation shall be final and
conclusive, unless otherwise determined by a majority of disinterested members of the
Board.

     A “harmful activity” shall have occurred if the Optionholder shall do any one or
more of the following:

	 	(1)  	Use, publish, sell, trade or otherwise disclose Non-Public
Information of the Corporation unless such activity was inadvertent, done in good
faith and did not cause significant harm to the Corporation.
	 
	 	(2)  	After notice from the Corporation, fail to return to the Corporation
any document, data or other item or items in the Optionholder’s possession or to
which the Optionholder has access that may involve Non-Public Information of the
Corporation.
	 
	 	(3)  	Upon the Optionholder’s own behalf or upon behalf of any other person
or entity that competes or plans to compete with the Corporation, solicit or
entice for employment or hire any employee of the Corporation.

 

 

	 	(4)  	Upon the Optionholder’s own behalf of upon behalf of any other person
or entity that competes or plans to compete with the Corporation, contact, call
upon, solicit or do business with (other than a business which does not compete
with any business conducted by the Corporation), any customer of the Corporation
the Optionholder contacted, called upon, solicited, interacted with, or became
acquainted with, or learned of through access to information (whether or not such
information is or was non-public) while employed at the Corporation unless such
activity was inadvertent, done in good faith, and did not involve a customer whom
the Optionholder should have reasonably known was a customer of the Corporation.
	 
	 	(5)  	Upon the Optionholder’s own behalf or upon behalf of any other person
or entity that completes or plans to compete with the Corporation, engage in any
business activity in competition with the Corporation in the same or a closely
related activity that the Optionholder was engaged in for the Corporation during
the one year period prior to the termination of employment.

For purposes of this subparagraph 2(e):

     “Non-Public Information shall mean, but is not limited to, trade secrets, confidential
processes, programs, software, formulas, methods, business information or plans, financial
information, and listings of names (e.g., employees, customers, and suppliers) that are
developed, owned, utilized, or maintained by the Corporation, and that of its customers or
suppliers, and that are not generally known by the public.

     “Profits” shall mean, with respect to this Option, the spread between the Fair Market
Value of a share of Common Stock on the date of exercise and the exercise price, multiplied
by the number of shares exercised under this Option.

	 	(f)  	Nontransferability. This Option shall not be transferable other than by
will or by the laws of descent and distribution. During the lifetime of the
Optionholder, this Option shall be exercisable only by the Optionholder.
	 
	 	(g)  	Adjustments. In the event that the shares of Common Stock, as presently
constituted, shall be changed into or exchanged for a different number or kind of

 

 

	 	   	shares of stock or other securities of the Corporation, or if the number of such shares
of Common Stock shall be changed through the payment of a stock dividend, stock split,
or reverse stock split, then the shares of Common Stock then subject to this Option and
the exercise price thereof shall be increased, decreased, or otherwise changed to such
extent and in such manner as may be necessary or appropriate to reflect any of the
foregoing events. If there shall be any other change in the number or kind of the
outstanding shares of the Common Stock, or of any stock or other securities into which
such Common Stock shall have been changed, or for which it shall have been exchanged,
and if a majority of the disinterested members of the Board shall, in its sole
discretion, determine that such change equitably requires an adjustment to the terms of
this Option, then such adjustment shall be made in accordance with such determination.
Any adjustment so made shall be final and binding upon the Optionholder.
	 
	 	(h)  	No Rights as Shareholder. The Optionholder shall have no rights as a
shareholder with respect to any shares of Common Stock subject to this Option prior to
the date of issuance of a certificate or certificates for such shares.
	 
	 	(i)  	No Right to Continued Employment. This Option shall not confer upon the
Optionholder any right to continue in the employ of the Corporation or any Subsidiary,
nor shall it interfere in any way with the right of the Corporation or any Subsidiary
to terminate the Optionholder’s employment at any time and for any reason.
	 
	 	(j)  	Compliance with Law and Regulations. This Option and the obligation of the
Corporation to sell and deliver shares hereunder shall be subject to all applicable
federal and state laws, rules, and regulations and to such approvals by any government
or regulatory agency as may be required. The Corporation shall not be required to
issue or deliver any certificates for shares of Common Stock prior to (1) the listing
of such shares on any stock exchange on which the Common Stock may then be listed and
(2) the completion of any registration or qualification of such shares under any
federal or state law, or any rule or regulation of any government

 

 

	 	   	body which a majority of the disinterested members of the Board shall, in its sole
discretion, determine to be necessary or advisable.

3. Investment Representation

     The Corporation may require the Optionholder to furnish to the Corporation, prior to the
issuance of any shares upon the exercise of all or any part of this Option, an agreement (in such
form as the Corporation may specify) in which the Optionholder represents that the shares acquired
upon exercise are being acquired for investment and not with a view to the sale or distribution
thereof.

4. Optionholder Bound by Plan

     The Optionholder hereby acknowledges receipt of a copy of the Plan, prospectus and any
amendments thereto, and agrees to be bound by all the terms and provisions thereof, which, to the
extent relevant, are incorporated herein by reference.

5. Withholding of Taxes

     The Corporation will require, as a condition precedent to the exercise of this Option, that
appropriate arrangements be made for the withholding of any applicable taxes. The obligation of
the Optionholder under this paragraph to provide for the payment of withholding taxes may be
satisfied, subject to the provisions of Section 11.5(b) of the Plan, by electing to have the
Corporation withhold certain of the shares that would otherwise be issuable pursuant to the
exercise of the Option granted hereby.

 

 

6. Notices

     Any notice hereunder to the Corporation shall be addressed to it at its office at 1130
Berkshire Boulevard, Wyomissing, PA 19610, Attention: Corporate Secretary, and any notice
hereunder to Optionholder shall be addressed to him or her at the address below, subject to the
right of either party to designate at any time hereafter in writing some other address.

     IN WITNESS WHEREOF, Sovereign Bancorp, Inc. has caused this Agreement to be executed by a duly
authorized officer and the Optionholder has executed this Agreement, both as of the day and year
first above written.

Jay S. Sidhu

President, Chairman, and Chief Executive Officer

	 	 	 
	OPTIONHOLDER:
	 	 
	 
	 	 
	

	 	 
	(Signature)
	 	 
	 
	 	 
	

	 	 
	 
	 	 
	

	 	 
	 
	 	 
	

	 	 
	(Print Address)
	 	 

 

 

APPENDIX A

PERFORMANCE GOALS FOR OPTION EXERCISE

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