Document:

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                                                                  Exhibit # 10.1

                                    AGREEMENT

      THIS AGREEMENT ("Agreement") made the 16th day of September, 2002, between
SOVEREIGN BANCORP, INC., a Pennsylvania business corporation ("SBI"), and JAMES
J. LYNCH, an individual (the "Executive").

                                   WITNESSETH:

      WHEREAS, Sovereign Bank (the "Bank") is a wholly owned subsidiary of SBI;
and

      WHEREAS, the SBI and the Bank have created an unincorporated division of
the Bank to be know as Sovereign Bank/Mid-Atlantic ("SBMA"); and

      WHEREAS, SBI and the Executive desire to enter in an agreement regarding,
among other things, the employment of and services to be rendered by the
Executive.

                                   AGREEMENT:

            NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:

            1. Employment. The Executive is hereby employed on the terms and
conditions set forth in this Agreement.

            2. Duties of Employee. The Executive shall perform and discharge
well and faithfully such duties as an executive officer of SBI or SBMA as may be
assigned to the Executive from time to time by the Chief Executive Officer of
SBI or the Board of Directors of the Bank. The Executive shall chair the SBMA
Senior Leader Group, shall be employed as Chairman and Chief Executive Officer
of SBMA, shall be a member of the Office of the Chairman, the Management Credit
Policy Committee and such other management committees as the Executive may
choose, and shall hold such other titles as may be given to him from time to
time by the Board of Directors of SBI (or of any of its affiliated companies).
In addition, the Executive shall attend meetings of the Directors' Loan
Committee. The Executive shall devote his full time, attention and energies to
the business of SBMA and SBI (and its affiliated companies) and shall not,
during the Employment Period (as defined in Section 3 hereof), be employed or
involved in any other business activity, whether or not such activity is pursued
for gain, profit or other pecuniary advantage; provided, however, that this
Section 2 shall not be

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construed as preventing the Executive from (a) investing the Executive's
personal assets, (b) acting as a member of the Board of Directors of any other
corporation or as a member of the Board of Trustees of any other organization,
or (c) being involved in any other activity with the prior approval of the
Chairman or Chief Executive Officer of SBI. The Executive's offices will be
located at 3 Terry Drive, Suite 102, Newtown, Pennsylvania, or in such other
location that is not further than 50 miles therefrom, unless otherwise
explicitly agreed to by the Executive. Notwithstanding, the preceding sentence
however, the parties agree that any required move of the Executive's offices to
the Reading/Wyomissing, Pennsylvania area will not constitute a violation of the
provision of this section. In any event, the Executive will have use of an
office at the Bank's offices in the Wyomissing/Reading, Pennsylvania area.
Executive will be invited to attend all regularly scheduled meetings of the
Boards of Directors of the Bank and SBI.

            3. Term of Employment. The Executive's employment under this
Agreement shall be for a period (the "Employment Period") commencing on the date
of this Agreement and ending on the date that is three (3) years subsequent
thereto, provided that on the first and each subsequent annual anniversary date
of this Agreement, and unless a party has given the other party written notice
at least sixty (60) days prior to such anniversary date that such party does not
agree to renew this Agreement, the term of this Agreement and the Employment
Period shall be deemed renewed for a term ending three (3) years subsequent to
such anniversary date, unless sooner terminated in accordance with this Section
5 hereof or one of the following provisions:

                  (a) The Executive's employment under this Agreement may be
terminated at any time during the Employment Period for "Cause" (as herein
defined), by action of the Board of Directors of SBI, upon giving notice of such
termination to the Executive at least fifteen (15) days prior to the date upon
which such termination shall take effect. As used in this Agreement, "Cause"
means any of the following events:

                        (i) The Executive is convicted of or enters a plea of
      guilty or nolo contendere to a felony, a crime of falsehood, or a crime
      involving fraud or moral turpitude, or the actual incarceration of the
      Executive for a period of forty-five (45) consecutive days;

                        (ii) The Executive willfully fails to follow the lawful
      instructions of the Chairman, Chief Executive Officer or Board of
      Directors of SBI after the Executive's receipt of written notice of such
      instructions, other than a failure resulting from the Executive's
      incapacity because of physical or mental illness; or

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                        (iii) Any government regulatory agency recommends or
      orders, in either case in writing, that SBI terminate the employment of
      the Executive or relieve him of his duties.

If the Executive's employment is terminated under the provisions of this Section
3(a), then all rights of the Executive under Section 4 hereof shall cease as of
the effective date of such termination.

                  (b) The Executive's employment under this Agreement may be
terminated at any time during the Employment Period without "Cause" (as defined
in Section 3(a) hereof), by action of the Board of Directors of SBI, upon giving
notice of such termination to the Executive at least thirty (30) days prior to
the date upon which such termination shall take effect. If the Executive's
employment is terminated under the provisions of this Section 3(b), then the
Executive shall be entitled to receive the compensation and benefits set forth
in Section 6 or Section 7 hereof, whichever shall be applicable. To the extent
the Executive becomes entitled to and receives the payment and benefits set
forth in Section 6 or 7, such payments and benefits shall constitute liquidated
damages for any possible breach of this Agreement by SBI or the Bank and shall
represent the maximum extent of liability therefore that the Executive can claim
against SBI or any of its affiliates, including the Bank.

                  (c) If the Executive retires or dies, the Executive's
employment under this Agreement shall be deemed terminated as of the date of the
Executive's retirement or death, and all rights of the Executive under Section 4
hereof shall cease as of the date of such termination and any benefits payable
to the Executive shall be determined in accordance with the retirement and
insurance programs of SBI then in effect.

                  (d) If the Executive is incapacitated by accident, sickness,
or otherwise so as to render the Executive mentally or physically incapable of
performing the services required of the Executive under Section 2 of this
Agreement for a continuous period of six (6) months, then, upon the expiration
of such period or at any time thereafter, by action of the Board of Directors of
SBI, the Executive's employment under this Agreement may be terminated
immediately upon giving the Executive notice to that effect. If the Executive's
employment is terminated under the provisions of this Section 3(d), then all
rights of the Executive under Section 4 hereof shall cease as of the last
business day of the week in which such termination occurs and any benefits
payable to the Executive shall be determined in accordance with the retirement
and insurance programs of SBI then in effect.

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            4. Employment Period Compensation.

                  (a) Salary. For services performed by the Executive under this
Agreement, SBI shall pay (or cause to be paid to) the Executive a salary, during
the Employment Period, at the following annual rates:

      From September 15, 2002 through February 28, 2003.........$400,000
      From March 1, 2003 through December 31, 2003..............$450,000
      From January 1, 2004 through August 31, 2004..............$500,000

Effective September 1, 2004, the Executive's salary shall be $525,000 per annum.
Thereafter, SBI may, from time to time, increase the Executive's salary (or
cause it to be increased), and any and all such increases shall be deemed to
constitute amendments to this Section 4(a) to reflect the increased amounts,
effective as of the dates established for such increases by the Board of
Directors of SBI in the resolutions authorizing such increases. The Executive's
salary, as provided herein, shall be payable at the same time as salaries are
payable to other executive employees of SBI.

                  (b) Bonus. Contingent upon SBI achieving the annual objectives
established for it by the Chief Executive Officer or Board of Directors of SBI,
the Executive, during the Employment Period, shall be eligible for a bonus to be
awarded by the Board of Directors of SBI of up to a maximum of the greater of
100% of base salary at the relevant year end or $500,000 per annum.
Notwithstanding the foregoing, the parties contemplate that the bonus to be paid
to Executive with respect to 2002 shall, at least in part, be determined by SBI
by reference to the bonus foregone by him in connection with leaving his
immediately prior employment, but in no event shall such bonus be less than
$230,000, or more than $250,000. In addition, SBI may, from time to time, pay
such other bonus or bonuses to the Executive as SBI, in its sole discretion,
deems appropriate. The payment of any such bonuses shall not reduce or otherwise
affect any other obligation of SBI to the Executive provided for in this
Agreement. In addition, the Executive shall be eligible, each year, to be
awarded an option to purchase up to 50,000 shares of SBI common stock at an
exercise price determined in accordance with the terms of SBI's existing stock
option plans.

                  (c) Other Benefits. SBI will provide the Executive, during the
Employment Period, with insurance, vacation, retirement, and other fringe
benefits, including the ability to participate in SBI's Deferred Bonus
Recognition and Retention Program, which benefits are, in the aggregate, not
less favorable than those received by all comparable executive employees of SBI.

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                  (d) Stock-Based Compensation.

                        (i) At the first SBI directors meeting following
      commencement of the Executive's employment under this Agreement, the
      Executive shall receive a non-qualified stock option award of 60,000
      shares of SBI common stock under an existing SBI employee stock option
      plan at an exercise price determined in accordance with such plan as of
      the actual date of grant. The Executive shall vest in the right to
      exercise one hundred percent (100%) of such options (60,000 shares) upon
      the third anniversary of the date of grant, provided that if this
      Agreement is terminated prior to such third anniversary date for any
      reason other than as specified in Sections 3(a), (c) or (d), or as
      provided in Section 7 hereof, all of the 60,000 options shall immediately
      vest. In addition, upon a "Change in Control", as defined in Section 5(b)
      hereof, all of the options not previously vested shall immediately vest.

                        (ii) Executive will be eligible to receive an award of
      50,000 shares of SBI common stock, as follows:

                              (A)   10,000 shares if SBI meets its 2004
                                    operating earnings, "tier 1" capital and
                                    asset quality goals.

                              (B)   15,000 shares if SBI meets its 2005
                                    operating earnings, "tier 1" capital and
                                    asset quality goals.

                              (C)   15,000 shares if SBI meets its 2007
                                    operating earnings, "tier 1" capital and
                                    asset quality goals.

                              (D)   10,000 shares if SBI meets its 2008
                                    operating earnings, "tier 1" capital and
                                    asset quality goals.

            These awards will be subject to such vesting provisions as apply to
            other executive officers with respect to such awards, but will vest
            immediately in the event that there is a "change in control" (as
            such term is defined with respect to awards granted to other
            executive officers) before 2008. In addition, these awards, which
            are intended to be issued pursuant to a program to be adopted

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            for senior executive officers, shall be subject to such
            shareholder and other approval SBI deems necessary or
            appropriate under its corporate governance procedures or
            applicable law.

                  (e) Sign-On Bonus. Within thirty (30) days after the date of
this Agreement, SBI will pay to the Executive a "sign-on" bonus equal to
$108,333.

                  (f) Other Matters.

                        (i) The Executive shall be entitled to the use of an
      automobile and/or automobile allowances consistent with his title and
      responsibilities.

                        (ii) The Executive shall be paid or reimbursed for two
      country club dues and business-related expenses.

                        (iii) The Executive shall be paid or reimbursed for
      Union League dues and business expenses.

                        (iv) Within thirty (30) days of the presentation to SBI
      of a copy of an invoice for services rendered in connection with his
      counsel's review and negotiation of this Agreement, SBI will reimburse the
      Executive for the legal fees actually incurred by him, but not in excess
      of $2,000.

            5. Resignation of the Executive for Good Reason.

                  (a) The Executive may resign for "Good Reason" (as herein
defined) at any time during the three year period following a "Change in
Control" (as defined in Section 5(b) hereof), as hereinafter set forth. As used
in this Agreement, "Good Reason" means any of the following:

                        (i) Any reduction in title, change in reporting
      structure or significant reduction in the Executive's responsibilities or
      authority, including such responsibilities and authority as the same may
      be increased at any time during the term of this Agreement, or the
      assignment to the Executive of duties inconsistent with the Executive's
      status as Chairman and Chief Executive Officer of SBMA;

                        (ii) Any reassignment of the Executive which requires
      the Executive to move his principal residence;

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                        (iii) Any removal of the Executive from office or any
      adverse change in the terms and conditions of the Executive's employment,
      except for any termination of the Executive's employment under the
      provisions of Section 3(a) hereof;

                        (iv) Any reduction in the Executive's annual base salary
      as in effect on the date hereof or as the same may be increased from time
      to time;

                        (v) Any failure of SBI to provide the Executive with
      benefits at least as favorable as those enjoyed by the Executive under any
      of the retirement, life insurance, medical, health and accident,
      disability or other employee plans of SBI in which the Executive
      participated at the time of the Change in Control, or the taking of any
      action that would materially reduce any of such benefits in effect at the
      time of the Change in Control unless such reduction is part of a reduction
      applicable to all employees;

                        (vi) Any failure to obtain a satisfactory agreement from
      any successor to assume and agree to perform this Agreement, as
      contemplated in Section 15 hereof;

                        (vii) Any breach of this Agreement of any nature
      whatsoever on the part of SBI; or

                        (viii) Termination of the Executive's membership in the
      Office of the Chairman (or any successor group of individuals).

At the option of the Executive, exercisable by the Executive within 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 hereof shall thereupon apply.

                  (b) As used in this Agreement, "Change in Control" means a
change of control of a nature that would be required to be reported in response
to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as enacted and in force
on the date hereof, whether or not SBI is then subject to such reporting
requirement; provided, however, that, without limitation, such a Change in
Control shall be deemed to have occurred if:

                        (i) Any "person" (including a group acting in concert,
      as the term "person" is defined in Section 13(d) of the Exchange Act, as

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      enacted and in force on the date hereof) becomes the beneficial owner" (as
      that term is defined in Rule 13d-3, as enacted and in force on the date
      hereof, under the Exchange Act) of securities of SBI representing 19.9% or
      more of the combined voting power of SBI's securities then outstanding;

                        (ii) There occurs a merger, consolidation or other
      business combination or reorganization to which SBI or the Bank is a
      party, whether or not approved in advance by the Board of Directors of SBI
      or the Bank (as the case may be) in which (A) the members of the Board of
      Directors of SBI or the Bank (as the case may be) immediately preceding
      the consummation of such transaction do not constitute a majority of the
      members of the Board of Directors of the resulting corporation and of any
      parent corporation thereof immediately after the consummation of such
      transaction, and (B) the shareholders of the acquired corporation
      immediately before such transaction do not hold 51% or more of the voting
      power of securities of the resulting corporation;

                        (iii) There occurs a sale, exchange, transfer, or other
      disposition of substantially all of the assets of SBI or the Bank to
      another entity, whether or not approved in advance by the Board of
      Directors of SBI;

                        (iv) A plan of liquidation or dissolution, other than
      pursuant to bankruptcy or insolvency, is adopted; or

                        (v) During a period of two consecutive years,
      individuals who at the beginning of such period constitute the Board of
      Directors of SBI cease to constitute a majority of such Board (unless the
      election or nomination of each new director was approved by a vote of at
      least 51% of directors who were directors at the beginning of such
      period).

            6. Rights in Event of Termination of Employment After Change in
Control. In the event that Executive resigns from employment for Good Reason
following a Change in Control, by delivery of a Notice of Termination to SBI, or
Executive's employment is terminated by SBI without Cause after a Change in
Control, Executive shall be absolutely entitled to receive the amounts and
benefits set forth in this section.

                  (a) For a period of three (3) years from the date of
termination of employment, Executive shall be paid his Current Compensation at
Termination.

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                        (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 (3) immediately preceding calendar years, and (B)
      a dollar amount equal to the highest of the awards Executive received as
      bonuses in any of the three (3) calendar years preceding the year in which
      the termination of employment occurs.

                        (ii) Amounts required to be paid to Executive under
      Section 6(a) shall be paid in equal monthly installments, beginning on the
      later of thirty (30) days 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.

                  (b) 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 normal welfare benefits in effect with
respect to Executive during the two (2) calendar years prior to his termination
of employment, or, if SBI cannot provide such benefits because Executive is no
longer an employee, a dollar amount equal to the cost after-tax to Executive of
obtaining such benefits (or substantially similar benefits).

                  (c) 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 SBI's independent public
accountants, 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
fifteen (15) days following confirmation

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of such amount by SBI's accountants. 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. Rights in Event of Termination of Employment Without Cause in
Absence of Change in Control. In the event that Executive's employment is
terminated by SBI without Cause and no Change in Control shall have occurred at
the date of such termination, Executive shall be entitled to receive the amounts
and benefits set forth in this section.

                  (a) For a period of the greater of one (1) year from the date
of termination of employment or the remaining term of this Agreement, Executive
shall be paid his Current Compensation.

                        (i) For purposes of this section, the term "Current
      Compensation at Termination" means the sum of (A) Executive's base salary
      as of the date of termination of employment (or prior to any reduction
      thereof preceding termination of employment), and (B) a dollar amount
      equal to the average of the awards Executive received as bonuses for each
      of the three (3) calendar years preceding the year in which the
      termination of employment occurs.

                        (ii) Amounts required to be paid to Executive under
      Section 6(a) shall be paid in equal monthly installments, beginning on the
      later of thirty (30) days 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.

                  (b) For a period of the greater of one (1) year from the date
of termination of employment or the remaining term of this Agreement, Executive
shall receive a continuation of all life, disability, medical insurance and
other normal welfare benefits in effect with respect to Executive during the two
(2) calendar years prior to his termination of employment, or, if SBI cannot
provide such benefits because Executive is no longer an employee, a dollar
amount equal

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to the cost after-tax to Executive of obtaining such benefits (or substantially
similar benefits).

                  (c) Executive shall not be required to mitigate the amount of
any payment provided for in this section by seeking employment or otherwise.

            8. Covenant Not to Compete; Non-Solicitation of Customers and
Employees. If Executive voluntarily leaves employment hereunder during the term
of this Agreement, Executive agrees that, for a period of twelve (12) months
following the date of the termination of his employment, Executive shall not
work directly or indirectly for or on behalf of another bank that offers
products or services similar or equivalent to those offered by the Bank in the
geographic area in which SBI or its affiliates, including the Bank, are
conducting such business at the date of termination of Executive's employment.
Nor during such period shall Executive solicit customers or employees of SBI or
any of its affiliates, including the Bank, to cease doing business, in whole or
in part, or cease employment with SBI, or any of its affiliates, including the
Bank.

            9. Arbitration. SBI and the Executive recognize that in the event a
dispute should arise between them concerning the interpretation or
implementation of this Agreement, lengthy and expensive litigation will not
afford a practical resolution of the issues within a reasonable period of time.
Consequently, each party agrees that all disputes, disagreements and questions
of interpretation concerning this Agreement are to be submitted for resolution
to the American Arbitration Association (the "Association") in Philadelphia,
Pennsylvania. SBI, or the Executive, may initiate an arbitration proceeding at
any time by giving notice to the others in accordance with the rules of the
Association. The Association shall designate a single arbitrator to conduct the
proceeding, but SBI, and the Executive, may, as a matter of right, require the
substitution of a different arbitrator chosen by the Association. Each such
right of substitution may be exercised only once. The arbitrator shall not be
bound by the rules of evidence and procedure of the courts of the Commonwealth
of Pennsylvania but shall be bound by the substantive law applicable to this
Agreement. The decision of the arbitrator, absent fraud, duress, incompetence or
gross and obvious error of fact, shall be final and binding upon the parties and
shall be enforceable in courts of proper jurisdiction. Following written notice
of a request for arbitration, SBI, and the Executive, shall be entitled to an
injunction restraining all further proceedings in any pending or subsequently
filed litigation concerning this Agreement, except as otherwise provided herein.

            10. Legal Expenses. SBI shall pay to the Executive all reasonable
legal fees and expenses when incurred by the Executive in successfully obtaining
or enforcing any right or benefit provided by this Agreement.

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            11. Notices. Any notice required or permitted to be given under this
Agreement shall be deemed properly given if in writing and if mailed by
registered or certified mail, postage prepaid with return receipt requested, to
the residence of the Executive, in the case of notices to the Executive, and to
the principal office of SBI, in the case of notices to SBI.

            12. Waiver. No provision of this Agreement may be modified, waived,
or discharged unless such waiver, modification, or discharge is agreed to in
writing and signed by the Executive and an executive officer of SBI specifically
designated by the Board of Directors of SBI. No waiver by any party hereto at
any time of any breach by any other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time.

            13. Assignment. This Agreement shall not be assignable by either
party hereto, except by SBI to any successor in interest to the business of SBI.

            14. Entire Agreement. This Agreement contains the entire agreement
of the parties relating to the subject matter of this Agreement and supersedes
any prior agreement of the parties.

            15. Successors, Binding Agreement.

                  (a) SBI will require any successor (whether direct or
indirect, by purchase, merger, consolidation, or otherwise) to all or
substantially all of the business and/or assets of SBI to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
SBI would be required to perform it if no such succession had taken place.
Failure by SBI to obtain such assumption and agreement prior to the
effectiveness of any such succession shall constitute a breach of this Agreement
and the provisions of Section 6 hereof shall apply. As used in this Agreement,
"SBI" shall mean SBI as hereinbefore defined and any successor to the respective
business and/or assets of SBI as aforesaid which assumes and agrees to perform
this Agreement by operation of law, or otherwise.

                  (b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, heirs, distributees, devisees, and legatees. If the Executive
should die while any amount is payable to the Executive under this Agreement if
the Executive had continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to the

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Executive's devisee, legatee, or other designee, or, if there is no such
designee, to the Executive's estate.

            16. Termination. Any termination of the Executive's employment under
this Agreement or of this Agreement shall not affect the provisions of Sections
6, 7 or 8 hereof which shall survive any such termination and remain in full
force and effect in accordance with their respective terms.

            17. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.

            18. Applicable Law. This Agreement shall be governed by and
construed in accordance with the domestic laws (but not the law of conflict of
laws) of the Commonwealth of Pennsylvania.

            19. Headings. The headings of the Sections of this Agreement are for
convenience only and shall not control or affect the meaning or construction or
limit the scope or intent of any of the provisions of this Agreement.

            20. Effective Date; Termination of Prior Agreement. This Agreement
shall become effective immediately, upon the execution and delivery of this
Agreement by the parties hereto. Upon the execution and delivery of this
Agreement by the parties hereto, any prior agreement relating to the subject
matter hereof, shall be automatically terminated and be of no further force or
effect.

            21. Allocation of Costs Generally. SBI and the Bank agree that, as
between themselves, they shall bear their respective costs incurred under this
Agreement in such manner as is determined on a mutually satisfactory basis.
Notwithstanding the preceding sentence, regardless of any internal cost
allocation arrangements between SBI and the Bank, SBI shall remain primarily
obligated to Executive for the payments and benefits to which he may become
entitled hereunder.

            22. Guaranty and SBI and Bank Representation. To the extent
permitted by law, the Bank hereby irrevocably and unconditionally guarantees to
the Executive the full and timely performance by SBI of each and every
obligation of SBI set forth in this Agreement. SBI and the Bank represent to the
Executive that this Agreement has been fully authorized by all necessary
corporate action and is fully enforceable in accordance with its terms.

            23. Cooperation Covenant. Both during and after the Employment
Period, the Executive shall cooperate fully with SBI and with any legal counsel,

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expert or consultant it may retain to assist it in connection with any judicial
proceeding, arbitration, administrative proceeding, governmental investigation
or inquiry or internal audit in which SBI or any affiliate thereof, including
the Bank, may be or become involved, including full disclosure of all relevant
information and truthfully testifying on SBI's behalf (or, at the request of
SBI, on behalf of such affiliate of SBI, including the Bank) in connection with
any such proceeding or investigation.

            24. Tax Withholding. All payments made and benefits provided
hereunder shall be subject to required tax withholding, the cost of which,
except as otherwise specifically provided herein, shall be borne by the
Executive. In the case of a noncash benefit, SBI may require the Executive, as a
condition of the receipt of such benefit, to deposit sufficient funds with SBI
to discharge any required withholding obligation.

            25. Representation of Executive. As an inducement to entering into
this Agreement, the Executive represents to SBI and the Bank that his execution
of and performance under this Agreement will not constitute a violation by him
of any written or other contract, understanding, arrangement, duties or other
obligation pertaining to his performance of personal services, solicitation of
employees or customers, or other conduct on his part contemplated by this
Agreement.

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      IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

                                    SOVEREIGN BANCORP, INC.

                                    By /s/ Jay S. Sidhu
                                       ---------------------------------
                                       Jay S. Sidhu
                                       President

(SEAL)

                                    Attest: /s/ John R. Merva
                                            ----------------------------
                                           John R. Merva
                                           Assistant Secretary

                                    ("SBI")
Witness:

                                    /s/ James J. Lynch                  (SEAL)
                                    ------------------------------------
                                    James J. Lynch

                                    ("Executive")

Agreed to as of the date
of this Agreement.

SOVEREIGN BANK

By    /s/ Jay S. Sidhu
  ----------------------------
      Jay S. Sidhu
      President

                                       15<PAGE>
                                                                    EXHIBIT 10.1

                              EMPLOYMENT AGREEMENT

      THIS AGREEMENT is made and entered into as of JUNE 1, 2002 by and between
MAGUIRE INSURANCE AGENCY, INC., a Pennsylvania corporation ("Employer"), and
JAMES J. MAGUIRE ("Employee") for the purposes herein stated.

                             Background of Agreement

      Employee desires to continue in the employ of the Employer, and desires
certain protections and benefits; and

      Employee and the Employer deem it to be in their respective best interests
to enter into an agreement providing for compensation and benefits for Employee
pursuant to the terms stated in this Agreement; and

      The Employer desires to place reasonable restraints upon Employee's
ability to compete with the Employer during a specified period immediately
following Employee's termination from employment;

      Accordingly, in consideration of the mutual promises and agreements
contained herein, the parties hereto agree to the following:

      1. EMPLOYMENT. The Employer agrees to continue Employee in its employ, and
Employee agrees to remain in the employ of the Employer, for the Term of this
Agreement, subject to Sections 6 and below.

      2. DEFINITIONS. The following terms when used herein shall have the
meanings given below:

            (a) "AFFILIATE" means any party controlled by, under the control of,
or under common control with, Employer or PCHC.

            (b) "AGREEMENT AND GENERAL RELEASE" means a general release of
claims against the Employer in a form acceptable to the Employer.

            (c) "BASE COMPENSATION" means the annual base salary of Employee,
exclusive of any bonus, insurance, or other fringe benefits and perquisites.

            (d) "BOARD" means the Board of Directors of PCHC.

            (e) "CAUSE" means commission of any of the following listed conduct
by Employee: a felony or any crime involving moral turpitude (whether or not
related to Employee's employment), incompetence or gross negligence,
unsatisfactory performance of a substantial nature, drug or alcohol use which
interferes with Employee's job performance, insubordination, willful misconduct,
violation of any express directive or regulation established by the Employer
from time to time regarding the conduct of its business, misrepresentations by
<PAGE>
Employee related to this Agreement, any violation by Employee of the terms and
conditions of this Agreement not cured within ten days after written notice
thereof is given by the Employer to Employee, acceptance of employment with
another company (other than employment with a Successor or a purchaser of assets
from the Employer), and/or performing work for another company, as an employee,
consultant or in any other capacity, while still an employee of the Employer and
any other act, omission or circumstance which, under applicable law, would
result in a termination by the Employer of Employee's employment hereunder to be
deemed to be a termination for cause.

            (f) "EFFECTIVE DATE" means the date upon which this Agreement
becomes effective, as set forth in Section 4 below.

            (g) "GOOD REASON" means either of the following:

                  (i) A change in Employee's position of authority in a manner
that materially reduces the responsibility of Employee's current position of
(i), provided, however, the fact that there may be additional executives in the
reporting structure above Employee will not be deemed to materially reduce the
responsibility of Employee's position.

                  (ii) A reduction in Employee's Base Compensation.

            (h) "HOSTILE CHANGE IN CONTROL" mean individuals who are Continuing
Directors cease to constitute a majority of the members of the Board
("Continuing Directors" for this purpose being the members of the Board on the
date of this Agreement, provided that any person becoming a member of the Board
subsequent to such date whose election or nomination for election was supported
by two-thirds of those directors who were Continuing Directors at that time of
the election or nomination shall be deemed to be c Continuing Director).

            (i) "PCHC" means Philadelphia Consolidated Holding Corp., a
Pennsylvania corporation.

            (j) "SUCCESSORS" means any entity that acquires at least fifty (50)
percent of the shares of outstanding stock, and/or fifty percent (50%) of the
assets, of the Employer or PCHC (whether direct or indirect, by purchase,
merger, consolidation or otherwise).

            (k) "TERM" shall have the meaning set forth in Section 4 below.

      3. POSITION AND RESPONSIBILITIES.

            (a) During the Term of this Agreement, Employee agrees to serve the
Employer as CHAIRMAN & CEO until October 1, 2002, thereafter as Chairman. This
in no way inhibits him from being promoted to another position during the Term
of this Agreement, or assigned different duties, consistent with Employee's
status and responsibility, which changes are in the sole discretion of the
Employer.

            (b) Throughout the Term of this Agreement, Employee shall devote his
entire working time, energy, attention, skill and best efforts to the affairs of
the Employer and its

                                     - 2 -
<PAGE>
Affiliates and to the performance of his duties hereunder in a manner which will
faithfully and diligently further the business and interests of the Employer.

      4. TERM. This Agreement shall be effective on JUNE 1, 2002 (the "Effective
Date") and shall expire in the absence of a Hostile Change in Control on the
fifth anniversary of such date, unless extended by agreement of Employee and the
Employer. In the event of a Hostile Change in Control, this Agreement shall be
automatically extended for a period of three years, commencing upon the
expiration date set forth in the immediately preceding sentence. Notwithstanding
the foregoing, Employee and the Employer agree that the provisions of Section 7
shall remain in effect and enforceable in accordance with its terms following
the expiration of this Agreement, except as otherwise provided in such Section
7. The applicable period referred to above is referred to herein as the "Term"
of this Agreement.

      5. COMPENSATION AND BENEFITS. During the Term of this Agreement, Employee
shall be eligible for the following, in return for all services rendered by
Employee to the Employer during the period of employment, subject to the
provisions of Section 6, as applicable:

            (a) BASE COMPENSATION. Upon the effective date of this Agreement,
Employee shall receive Base Compensation at the annual rate of $600,000 Dollars
(Six Hundred Thousand Dollars), subject to periodic reviews and possible
increases in the sole discretion of the Employer. Employee's Base Compensation
shall be payable in accordance with the Employer's regular payroll practices in
effect from time to time.

            (b) BENEFITS. Employee shall be entitled to all group health,
disability, life insurance and pension benefits as are made available to
employees of the Company generally as such benefit programs may be amended from
time to time. Benefits due under any Bonus Plan or Stock Option Plan will be
paid based upon the Agreements signed specific to those plans.

            (c) BUSINESS EXPENSES. Employee shall be reimbursed reasonable and
necessary expenses related to Employee's employment by the Employer in
accordance with, and subject to, the Employer's regular policies from time to
time in effect regarding reimbursement of expenses and the documentation
required.

      6. TERMINATION OF EMPLOYMENT. The following provisions shall govern in the
event that Employee's employment is terminated by the Employer or by Employee
during the term of this Agreement, except as provided in Section 8, if
applicable:

            (a) Discharge Without Cause or Resignation for Good Reason. Employee
shall receive from the Employer, provided (unless waived by the Employer)
Employee executes (without subsequent revocation) a General Release (except that
Employee shall not be obligated to do so following a Hostile Change in Control),
in the event that Employee either: (A) is discharged without Cause and for
reasons unrelated to his disability or death; or (B) resigns from the Employer
for Good Reason within twelve (12) weeks of the occurrence of the event upon
which Employee relies for claiming that his resignation is for Good Reason:

                  His Base Compensation for the lesser of (A) 36 months or (B)
the remainder of the Terms of this Agreement, but in no event less than 6
months, paid in accordance with the Employer's regular payroll practices then in
effect.

                                     - 3 -
<PAGE>
            (b) Discharge With Cause, Resignation Without Good Reason, Discharge
in Connection With Disability or Death.

                  (i)   Employee shall not be eligible for any payments or
                        benefits for the period subsequent to his separation in
                        any of the following circumstances: (A) he is discharged
                        with Cause; (B) he resigns without Good Reason, or more
                        than twelve (12) weeks following the occurrence of the
                        event upon which Employee relies for claiming that his
                        resignation was for Good Reason; (C) he is discharged
                        due to his inability or failure to perform
                        satisfactorily the essential functions of his position
                        for six (6) months due to disability; or (D) his death.

                  (ii)  Employee shall receive all Base Compensation for work
                        performed and benefits applicable to the period prior to
                        his separation from the Employer (including any earned
                        and not paid bonus for the prior year and any Base
                        Compensation and/or benefits for which he is entitled in
                        accordance with the Employer's compensation and
                        disability policies, if applicable, then in effect). In
                        the event of his disability or death, Employee shall be
                        eligible, in addition, for any disability or life
                        insurance payments to which he or his estate or
                        beneficiaries may be entitled pursuant to the applicable
                        insurance documents relating to any group disability or
                        life insurance plans in which he participated prior to
                        his separation.

            (c) Notice of Termination. Any termination by the Employer or by
Employee shall be communicated by written Notice of Termination to the other
party given in accordance with Section 16 below. Such Notice of Termination
shall indicate the specific termination provision(s) in this Agreement relied
upon and specify the effective date of the termination if other than the date
such Notice of Termination is given (which effective date shall be not more than
thirty (30) calendar days thereafter).

      7. RESTRICTIVE COVENANTS AND CONFIDENTIALITY.

            (a) During Employee's employment with the Employer and for two (2)
years following Employee's separation from the Employer for any reason (whether
initiated by the Employer or Employee), Employee shall not directly or
indirectly either: (A) with respect to a Competitive Business (defined above),
solicit, divert or appropriate, or attempt to solicit, divert or appropriate,
any customer, distributor or supplier, or any potential customer, or supplier of
the Employer; or (B) solicit or entice, or attempt to solicit or entice, any of
the Employer's employees, consultants, directors or officers to terminate
her/his employment with the Employer, or join with any individual who is or was
within the prior six (6) months an employee, consultant, director or officer of
the Employer, in any direct or indirect capacity, or to hire, or commit to hire,
as an employee or consultant any individual who is or was within the prior six
(6) months an employee, consultant, officer or director of the Employer.

                                     - 4 -
<PAGE>
            (b) During Employee's employment with the Employer and at all times
thereafter, Employee shall not use for his personal benefit, or disclose,
communicate or divulge to, or use for the direct or indirect benefit of, any
person, firm, association or company other than the Employer, any confidential
information of the Employer which Employee acquires in the course of his
employment, which is not otherwise lawfully known by and readily available to
the general public. This confidential information includes, but is not limited
to: business, development, marketing, legal and accounting methods, policies,
plans, procedures, strategies and techniques; research and development projects
and results; trade secrets or other knowledge or processes of or developed by
the Employer; names and addresses of employees, suppliers and customers; and any
data on or relating to past, present or prospective customers, including
customer lists. Employee agrees that such information is confidential and
constitutes the exclusive property of the Employer, and Employee agrees that,
immediately upon Employee's termination, whether by Employee, or by the
Employer, Employee will deliver to the Employer, all correspondence, documents,
books, records, lists and other writings relating to the Employer's business,
retaining no copies.

            (c) The term "Employer", as used in this Section 7 and in Section
11, shall include as well all Affiliates of Employer and PCHC.

            (d) Employee acknowledges and agrees that the provisions of this
Section 7 are reasonable with respect to their duration, scope and geographical
area. In particular, Employee acknowledges that the geographic scope of the
Employer's business makes reasonable the geographic restrictions of this
Agreement. Employee agrees that his general executive skills and abilities are
applicable outside of the Competitive Business and that he will therefore not be
unduly restricted by this Agreement. If, at the time of enforcement of any of
the provisions of this Section 7, a court holds that the restrictions therein
exceed those allowed by applicable law, then such court will be requested by the
Employer, Employee and all other relevant parties to enforce the provisions in
this Section 7 to the broadest extent possible under applicable law and this
Section 7 shall be deemed to have been so modified.

            (e) In the event of a breach or threatened breach of the provisions
of this Section 7, the Employer shall be entitled to an injunction restraining
such breach, but nothing herein shall be construed as prohibiting the Employer
from pursuing any other remedy available to them for such breach or threatened
breach, including, without limitation, an action at law for damages.

            (f) Notwithstanding anything to the contrary contained in this
Section 7 or any other provisions of the Agreement, Employee shall not be bound
by any of the provisions of Section 7(a) following a Hostile Change in Control.

      8. HOSTILE CHANGE IN CONTROL. In the event of a Hostile Change in Control:

            (a) Section 6 shall apply, except as set forth in Section 8(b)
below.

            (b) Enhanced Severance Package in the Event of Hostile Change in
Control. In the event that Employee, at any time after a Hostile Change in
Control, is discharged without Cause and for reasons unrelated to his disability
or death, or resigns for Good Reason within

                                     - 5 -
<PAGE>
twelve (12) weeks of the occurrence of the event upon which Employee relies for
claiming that his resignation is for Good Reason:

                  (i) The period specified in Section 6(a)(i) above during which
Employee shall receive his Base Compensation shall be increased to 48 months
from 36 months.

                  (ii) The maximum period during which Employee and his
eligible, previously enrolled dependents shall be eligible for Employer-paid
group medical and dental insurance under Section 6(a)(iii) above shall be
increased to 36 months from twelve (12) months.

      9. INELIGIBILITY FOR PARTICIPATION IN OTHER EMPLOYER SEVERANCE PLANS. In
the event that Employee becomes entitled to the severance benefits set forth in
Section 6 above, Employee shall be ineligible for (and deemed to have waived his
right to receive) payments under any other severance plan, program or
arrangement maintained by the Employer.

      10. ARBITRATION. Except as set forth in Section 10(f), all disputes
arising under this Agreement or relating to Employee's employment or termination
of employment, including but not limited to statutory claims for violation of
Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, the
Americans with Disabilities Act, the Family Medical Leave Act and ERISA as well
as state laws governing discrimination shall be exclusively resolved in
arbitration in accordance with the following:

            (a) The Rules for the Resolution of Employment Disputes ("Rules"),
then in effect, of the American Arbitration Association ("AAA") shall govern,
except that Employee and the Employer may mutually agree to utilize another
process for selection of the Arbitrator.

            (b) The Arbitrator, in cooperation with Employee and the Employer,
shall set the date, time and place of the hearing in Philadelphia, Pennsylvania.

            (c) The Arbitrator shall have all of the power of a court of
competent jurisdiction for hearing the particular claim, including the power to
order discovery, as set forth in the AAA's rules, and to grant such remedies as
a court would have authority to grant.

            (d) The decision of the Arbitrator shall be in writing and shall set
forth the findings and conclusions upon which the decision is based. It shall be
final and binding, and may be enforced under the terms of the Federal
Arbitration Act (9 U.S.C. Section 1 et seq), but may be set aside or modified by
a reviewing court in the event of a material error of law.

            (e) The Employer and Employee shall share the cost of the
Arbitrator's fees but each shall bear his or its, as applicable, attorneys'
fees, expenses and costs and its respective filing fees charged by the AAA;
provided, however, that the Arbitrator shall have the power to award such fees,
expenses and costs to the prevailing party in accordance with the law and to
require the Employer at the beginning of the proceedings to fully or partially
reimburse to employee the filing fee in the event Employee can demonstrate that
the amount of the fee is an unreasonable impediment to adjudication of his
claims in arbitration.

            (f) This Section 10 shall not apply to any action by the Employer to
enforce Section 7 of this Agreement.

                                     - 6 -
<PAGE>
      11. EMPLOYER PROPERTY. All Employer information, including without
limitation, data processing reports, analyses, invoices, and/or any other
materials or data of any kind furnished to Employee by the Employer or developed
by Employee on behalf of the Employer, or at the Employer's direction or for the
Employer's use, or otherwise in connection with Employee's employment hereunder,
are and shall remain the sole and confidential property of the Employer, except
to the extent such information has been publicly disclosed voluntarily by the
Employer. If the Employer requests the return of such materials, Employee shall
immediately deliver them, retaining no copies.

      12. INCOME TAX WITHHOLDING. The Employer may withhold from any payments
made under this Agreement all Federal, State, City or other taxes and
withholdings as shall be required pursuant to any law or governmental regulation
or ruling.

      13. NO RESTRICTIONS ON EMPLOYEE'S EMPLOYMENT BY EMPLOYER. Employee
represents to Employer that: (i) there are no restrictions, agreements or
understandings whatsoever to which Employee is a party and no laws or
regulations of which he is aware which would or may prevent or make unlawful his
employment by the Employer; (ii) his execution of this Agreement and his
employment hereunder shall not constitute a breach of any contract, agreement or
understanding, oral or written, to which he is a party or by which he is bound;
and (iii) he is free and able to execute this Agreement and to enter into
employment with the Employer.

      14. ENTIRE UNDERSTANDING. This Agreement contains the entire understanding
between the Employer, and Employee superceding all others with respect to the
subject matter hereof, and there are no other agreements, understandings,
representations or warranties among the parties.

      15. SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law of law or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.

      16. NOTICES. All notices hereunder shall be sufficient upon receipt for
all purposes hereunder if in writing and delivered personally, sent by
documented overnight delivery service or, to the extent receipt is confirmed,
telecopy, telefax or other documented transmission service to the appropriate
address or number as set forth below:

            (a) If to the Employee:

                James J. Maguire Sr.
                8405 Flourtown Road
                Wyndmoor, PA 19038

                                     - 7 -
<PAGE>
or at such other address as Employee may designate by written notice to the
Employer as specified below.

            (b) If to the Employer:

                Philadelphia Consolidated Holding Corp.
                One Bala Plaza
                Bala Cynwyd, PA
                Attention:  James J. Maguire, Jr.

or at such other address and to the attention of such other person as the
Employer may designate by written notice to Employee as specified above.

      17. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of Employee, Employee's heirs and legal representatives, and to
the Employer, and its Successors and assigns. PCHC and its Affiliates are third
party beneficiaries of this Agreement.

      18. NO ASSIGNMENT BY EMPLOYEE. This Agreement is personal to Employee, and
Employee may not assign or delegate any of Employee's rights or obligations
hereunder without first obtaining the express written consent of the Employer.

      19. COUNTERPARTS AND PREREQUISITES TO BINDING EFFECT OF AGREEMENT. This
Agreement may be executed in one or more counterparts, all of which shall be
considered one and the same agreement, and shall be effective when one or more
counterparts have been signed by each of the parties and delivered to the other
party.

      20. AMENDMENTS AND WAIVERS. This Agreement may not be modified or amended
except by an instrument or instruments in writing signed by the party against
whom enforcement of any modification or amendment is sought. A party hereto may,
only by an instrument in writing, waive compliance by the other party hereto
with any term or provision of the Agreement on the part of such other party
hereto to be performed or complied with. The waiver by any party hereto of a
breach of any term or provision of the Agreement shall not be construed as a
waiver of any subsequent breach.

      21. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania without reference
to the choice of law principles thereof.

      22. JURISDICTION AND VENUE. The courts of Montgomery County, Pennsylvania
and the United States District Court for the Eastern District of Pennsylvania
shall have exclusive jurisdiction and venue with respect to any action to
enforce this Agreement which is not subject to arbitration.

      IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have duly executed and delivered, in Pennsylvania, this Agreement.

                                     - 8 -
<PAGE>
                                        MAGUIRE INSURANCE AGENCY, INC.

                                        By:  /s/ J. Eustace Wolfington
                                           -------------------------------------
                                           Title: Director

                                        I UNDERSTAND AND AGREE
                                        TO BE BOUND

                                        /s/ James J. Maguire           8/13/02
                                        ----------------------------------------
                                        Employee                          DATE

                                     - 9 -

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