Document:

EX-10.2

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.EX-10.3

Exhibit 10.3

Sovereign Bancorp, Inc.

Stock Ownership Requirement Policy

(As Amended and Restated effective October 1, 2005)

Introduction

In order to align the interests of the management and directors of Sovereign Bancorp, Inc.
(“Bancorp” or “Sovereign”) and Sovereign Bank (“Bank”), with the long-term interests of Sovereign
shareholders, Bancorp’s Board of Directors adopted, in January 1998, a policy which requires
directors of both Bank and Bancorp and executive and senior management of Bancorp and Bank to own,
by certain dates, a specified dollar value of Sovereign common stock (the “Policy”). The ownership
requirements for Bancorp and Bank employees is based upon an individual’s degree of responsibility
within Bank or Bancorp’s management structure. The ownership requirements for directors (both Bank
and Bancorp) is fixed by the Board of Directors of Bancorp. A director who sits on both Bank and
Bancorp Boards must meet the ownership requirement for Bancorp directors. The Chief Executive
Officer must meet his specific stock ownership requirements. Any other employee who falls within
more than one category of participation must meet the stock ownership requirement of the category
of participation which results in the largest ownership requirement. This Policy has been amended
and restated effective as of October 1, 2005.

Participation

The Sovereign common stock ownership requirement is applicable to the following directors and
classification of employees:

	 	 	 
	Board Members

	 	- Bancorp Board of Directors
	 
	 	 
	Board Members

	 	- Bank Board of Directors
	 
	 	 
	Chief Executive Officer

	 	- Bancorp/Bank
	 
	 	 
	Executive Management (Office of the

Chairman/Chief Executive Officer -

designated by the Chairman/Chief

Executive Officer)

	 	

- Bancorp/Bank
	 
	 	 
	Senior Management (Those employees who

report directly to Executive Management

and are classified as Senior Leaders

and are grade 16 or above.)

	 	

- Bancorp/Bank
	 
	 	 

1

What is Included and Excluded

for Stock Ownership Requirements

	 
	 

	The following common stock ownership (both beneficial and outright)

is included in the determination of ownership for Policy

requirements:

	 

	 	•	 	Sovereign common stock allocated to an employee’s account under the
401(k) provisions of the Sovereign Bancorp, Inc. Retirement Plan.

	 	•	 	Sovereign common stock purchased, pursuant to salary deduction under the
Sovereign Bancorp, Inc. Employee Stock Purchase Plan (ESPP).

	 	•	 	Shares of Sovereign common stock issued upon the exercise of stock
options.

	 	•	 	Shares of Sovereign common stock received upon lapse of restrictions
(restricted stock awards).

	 	•	 	Shares of Sovereign common stock held in an employee’s bonus deferral
account (employee’s deferred bonus) in the Sovereign Bancorp, Inc. Bonus
Recognition and Retention Program’s related trust (“BRRP”).

	 	•	 	Shares of Sovereign common stock held in an employee’s vested matching
account (Sovereign bonus match) in the BRRP’s related trust after vesting in
accordance with the BRRP provisions.

	 	•	 	Shares of Sovereign common stock (owned beneficially or outright)
purchased in the open market or otherwise acquired.
—

	 
	 

	The following common stock ownership (both beneficial and outright)

is excluded from the determination of ownership for Policy

requirements:

	 

	 	•	 	Shares of Sovereign common stock subject to unexercised stock options
(both vested and non-vested).

	 	•	 	Shares of Sovereign common stock allocated to an employee’s account
under the ESOP provisions of the Sovereign Bancorp, Inc. Retirement Plan.

	 	•	 	Restricted stock awards subject to restrictions which have not yet
lapsed.

	 	•	 	Shares of Sovereign common stock held in an employee’s unvested match
account (Sovereign bonus match) in the BRRP’s related trust which have not yet
vested in accordance with the BRRP provisions.
—

Stock Ownership Requirements

(See Administrative Rules and Policies for more detailed explanation)

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Date of
	 	 	Share Value	 	Date of Commencement	 	Completion of
	Level	 	Requirement	 	of Requirement	 	Requirement
	Bancorp Directors -	 	$100,000	 	January 1, 1999	 	December 31, 1999
	 	 	$200,000	 	October 1, 2005	 	December 31, 2010
	Bank Directors -	 	$ 50,000	 	January 1, 1999	 	December 31, 1999
	 	 	six times base	 	 	 	 
	 	 	salary (determined	 	 	 	 
	 	 	as of January 1,	 	 	 	 
	Chief Executive Officer -	 	1999)	 	January 1, 1999	 	December 31, 1999
	 	 	three times base	 	 	 	 
	 	 	salary (determined	 	 	 	 
	 	 	as of January 1,	 	 	 	 
	Executive Management -	 	1999)	 	January 1, 1999	 	December 31, 2002
	 	 	one time base	 	 	 	 
	 	 	salary (determined	 	 	 	 
	 	 	as of January 1,	 	 	 	 
	Senior Management -	 	1999)	 	January 1, 1999	 	December 31, 2004
	 	 	 	 	 	 	December 31 of the
	 	 	 	 	 	 	fifth calendar year
	 	 	 	 	 	 	following the
	 	 	 	 	 	 	calendar year in
	New Bancorp Directors	 	 	 	Date of first Board	 	which ownership
	(not previously a Bank	 	 	 	meeting following	 	requirement
	Director) -	 	$200,000	 	appointment	 	commenced
	 	 	 	 	 	 	December 31 of the
	 	 	 	 	 	 	third calendar year
	 	 	 	 	 	 	following the
	 	 	 	 	 	 	calendar year in
	New Bank Director (not	 	 	 	Date of first Board	 	which ownership
	previously a Bank or	 	 	 	meeting following	 	requirement
	Bancorp Director)	 	$ 50,000	 	appointment	 	commenced
	 	 	 	 	 	 	December 31 of the
	 	 	 	 	 	 	fifth calendar year
	 	 	 	 	 	 	following the
	 	 	 	 	 	 	calendar year in
	 	 	 	 	 	 	which increased
	New Bancorp Director	 	 	 	Date of first Board	 	ownership
	(previously Bank	 	 	 	meeting following	 	requirement
	Director only)	 	$200,000	 	appointment	 	commenced
	 	 	$ Amount required	 	 	 	 
	 	 	based upon	 	 	 	 
	 	 	applicable	 	 	 	December 31 of the
	 	 	classification and	 	 	 	fifth calendar year
	 	 	salary as of date	 	 	 	following the year
	New Employee	 	of hire	 	Date of hire	 	of hire
	Employee promoted into

higher classification

which requires

additional ownership

requirements or employee

first promoted into

classification which is

subject to ownership

requirements

	 	

$ Amount required

based upon

applicable

classification and

salary as of date

of promotion
	 	

Effective date of

promotion
	 	

December 31 of the

fifth calendar year

following the year

of promotion
	 

	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 

2

Administrative Rules and Policies

	 	•	 	Directors and employees who are subject to the ownership reporting requirements of Section 16(a) of The
Securities Exchange Act of 1934 should consult with Sovereign’s general counsel prior to acquiring any Sovereign
common stock.

	 	•	 	The acquisition of Sovereign common stock by employees is subject to the Sovereign Policy on Personal Securities
Transactions (effective April 8, 2002) as such policy may be amended from time to time.

	 	•	 	The Policy is administered and monitored by the Director of Team Member Services.

	 	•	 	All Policy participants are required to submit a progress report of stock ownership requirement (number of full
 shares of Sovereign common stock) to the Director of Team Member Services annually as of June 30 of each calendar
year. The progress report is due by July 31 of each calendar year, even after ownership requirement is achieved.

	 	•	 	Once common stock ownership requirement is achieved, there is no further requirement to increase ownership (i.e.,
if value of stock decreases below requirement); provided, however, that none of the shares are sold (i.e.,
increase in value of stock does not decrease ownership requirement after compliance is achieved and, likewise,
decrease in value of stock does not increase ownership requirement after compliance is achieved).

	 	•	 	Penalties for the failure of a director (both Bancorp and Bank) to meet the ownership requirements are at the
discretion of the Compensation Committee of Bancorp’s Board of Directors and include, but are not limited to, the
direction of cash director fees to purchase Sovereign common stock.

	 	•	 	Penalties for the failure of Senior Management to meet the ownership requirements are at the discretion of
Executive Management and include, but are not limited to, all future bonuses directed to common stock purchase.

	 	•	 	Penalties for the failure of Chief Executive Officer to meet the ownership requirements are at the discretion of
the Compensation Committee of Bancorp’s Board of Directors and include, but are not limited to, all future
bonuses directed to common stock purchase.

	 	•	 	Penalties for the failure of Executive Management to meet the ownership requirements are at the discretion of the
Chief Executive Officer and include, but are not limited to, all future bonuses directed to common stock
purchase.

	 	•	 	Team Member Services will calculate the value of the shares of common stock reported to Team Member Services each
compliance period using the highest closing price of Sovereign common stock for the calendar year to date as of
each annual compliance date. For purposes of this calculation, the highest closing price will be the highest
price at which Sovereign common stock closes for at least two consecutive trading days. For example, if during a
compliance period, Sovereign common stock closes at $19.60 per share and the following day closes at $20.10 and
then on the third day declines below $19.60 and stays there for the remainder of the compliance period, the
closing price used for the calculation will be $19.60, the highest closing price for at least two consecutive
trading days.

	 	•	 	If an individual is appointed to the Bancorp Board of Directors (and was not previously a Bank director), the new
Bancorp Director must meet the ownership requirement by the end of the fifth calendar year following the year in
which the first Bancorp Board meeting following appointment as a Bancorp Director occurs.

	 	•	 	If a Bank Director is appointed to the Bancorp Board, the new Bancorp Director must meet the additional ownership
requirements by the end of the fifth calendar year following the year in which the first Bancorp Board meeting
following appointment as a Bancorp Director occurs.

	 	•	 	If an individual is appointed to the Bank Board, the new Bank Director must meet the ownership requirements by
the end of the third calendar year following the year in which the first Bank Board meeting following appointment
as a Bank Director occurs.

	 	•	 	Newly hired employees must meet the ownership requirements of the participation group into which they were hired
by the end of the fifth calendar year following the year of hire.

	 	•	 	If an employee is first promoted into a category of participation, the employee is treated as a newly hired
employee and must meet the ownership requirement of the participant classification into which they were promoted
by the end of the fifth calendar year following the year in which the employee was promoted.

	 	•	 	If a current employee subject to the ownership requirements is promoted into a category of participation which
requires additional ownership, the employee must meet such requirements by the end of the fifth calendar year
following the year in which the employee was promoted.

	 	•	 	An individual who was hired into a category of participation or promoted into a category of participation after
January 1, 1999, but prior to the October 1, 2005 effective date of this amended and restated policy, must meet
the ownership requirements by the end of the fifth calendar year following the year in which such individual was
hired or promoted.

	 	•	 	Ownership requirements may be postponed for articulated hardships. The determination of hardship will be made on
a case by case basis by the Chief Executive Officer upon the recommendation of the Director of Team Member
Services (with respect to Executive or Senior Management) and by the Compensation Committee of the Board of
Directors of Bancorp (with respect to Bancorp or Bank directors or the Chief Executive Officer).

	 	•	 	The Director of Team Member Services reserves the right to require proof of ownership of Sovereign common stock
(deemed acceptable to the Director of Team Member Services) that cannot be independently verified by Team Member
Services.

3

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