As filed with the Securities and Exchange Commission on June 5,
1996.
Registration No. 33-_____
_________________________________________________________________
_________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
SOVEREIGN BANCORP, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2453088
(State of Incorporation) (I.R.S. Employer Identification No.)
1130 Berkshire Boulevard
Wyomissing, Pennsylvania 19610
(610) 320-8400
(Address and telephone number of principal executive offices)
Sovereign Bancorp, Inc. 1996 Stock Option Plan
(Full Title of the Plan)
With a copy to:
Jay S. Sidhu B. Tyler Lincoln, Esquire
President and Chief Executive Stevens & Lee
Officer 111 North Sixth Street
1130 Berkshire Boulevard P.O. Box 679
Wyomissing, Pennsylvania 19610 Reading, Pennsylvania 19603
(610) 320-8400 (610) 478-2000
____________________________
(Name, address and telephone
number of agent for service)
=================================================================
CALCULATION OF REGISTRATION FEE
=================================================================
Proposed Proposed
Maximum Maximum
Title of Amount Offering Aggregate Amount of
Securities to to be Price Per Offering Registration
be Registered Registered Share(1) Price(1) Fee
Common Stock, 5,000,000 $10.50 $52,500,000 $18,103.45
without par
value
=================================================================
(1) Estimated solely for the purpose of calculating the
registration fee pursuant to Rule 457(h). Price per share
represents the average of high and low sale prices for a
share of Registrant's Common Stock on May 30, 1996.
Page 1 of 49 pages.
Exhibit Index on Page 8.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents are incorporated by reference in
this Registration Statement:
(a) Registrant's Annual Report on Form 10-K for the year
ended December 31, 1995.
(b) Registrant's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1996.
(c) Registrant's Registration Statement on Form 8-A, dated
August 7, 1989, pursuant to which the Registrant
registered certain stock purchase rights under the
Securities Exchange Act of 1934, as amended (the
"Exchange Act") as amended by Amendment No. 1 to
Registrant's Registration Statement on Form 8-A, dated
January 8, 1996.
All documents subsequently filed by the Registrant pursuant
to sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior
to the filing of a post-effective amendment that indicates that
all securities offered have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to
be a part hereof from the date of filing of such documents.
Any statements contained herein or in a document
incorporated or deemed incorporated by reference herein shall be
deemed to be modified or superseded, for purposes of this
Registration Statement, to the extent that a statement contained
herein or in any subsequently filed document that also is or is
deemed incorporated by reference herein modifies or supersedes
such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to
constitute a part of this Registration Statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Certain legal matters in connection with the Plan have been
passed upon for the Registrant by the law firm of Stevens &
Lee, P.C., Reading, Pennsylvania. Joseph E. Lewis, Esquire, a
principal in Stevens & Lee, is a director of Sovereign Bank,
F.S.B., the principal subsidiary of the Registrant. Certain
attorneys at Stevens & Lee and members of their immediate
families own or have investment discretion with respect to an
aggregate of less than 213,000 shares of the Registrant's common
stock.
Item 6. Indemnification of Directors and Officers.
Pennsylvania law provides that a Pennsylvania corporation
may indemnify directors, officers, employees and agents of the
corporation against liabilities they may incur in such capacities
for any action taken or any failure to act, whether or not the
corporation would have the power to indemnify the person under
any provision of law, unless such action or failure to act is
determined by a court to have constituted recklessness or willful
misconduct. Pennsylvania law also permits the adoption of a
bylaw amendment, approved by shareholders, providing for the
elimination of a director's liability for monetary damages for
any action taken or any failure to take any action unless (1) the
director has breached or failed to perform the duties of his
office and (2) the breach of failure to perform constitutes
self-dealing, willful misconduct or recklessness.
Registrant's bylaws provide for (1) indemnification of
directors, officers, employees and agents of the registrant and
its subsidiaries and (2) the elimination of a director's
liability for monetary damages, to the fullest extent permitted
by Pennsylvania law.
Directors and officers are also insured against certain
liabilities for their actions, as such, by an insurance policy
obtained by the Registrant.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
4.1 Articles of Incorporation of Sovereign Bancorp, Inc.,
as amended. (Incorporated herein by reference to
Exhibit 3.1 of Sovereign's Annual Report on Form 10-K,
for the year ended December 31, 1995.)
4.2 Bylaws of Sovereign Bancorp, Inc. (Incorporated herein
by reference to Exhibit 3.2 to Sovereign's Annual
Report on Form 10-K, for the year ended December 31,
1993.)
4.3 Rights Agreement, dated September 19, 1989, between
Sovereign Bancorp, Inc. and Harris Trust Company of New
York, as Rights Agent. (Incorporated by reference to
Exhibit 4.3 to Sovereign's Registration Statement No.
33-89586 on Form 8-A.)
4.4 Amendment to Rights Agreement, dated as of
September 27, 1995, between Sovereign Bancorp, Inc. and
Chemical Bank, as successor to Harris Trust Company, as
Rights Agent. (Incorporated by reference to
Exhibit 2.2 of Amendment No. 1 of Sovereign's
Registration Statement No. 33-89586 on Form 8-A.)
4.5 Sovereign Bancorp, Inc. 1996 Stock Option Plan.
4.6 Stock Option Agreement for Incentive Stock Options.
4.8 Stock Option Agreement for Nonqualified Stock Options.
5. Opinion of Stevens & Lee.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of BDO Seidman, LLP.
23.3 Consent of Stevens & Lee. (Contained in Exhibit 5 of
this Registration Statement.)
24. Power of Attorney of certain directors and officers
(included on signature page).
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
registration statement to include any material information with
respect to the plan of distribution not previously disclosed in
the registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933, each filing of the Registrant's annual report pursuant to
section 13(a) or section 15(d) of the Securities Exchange Act of
1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the Registrant pursuant to
the provisions described in Item 6 above, or otherwise, the
Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of
the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on
Form S-8 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the Borough of Wyomissing, Commonwealth of
Pennsylvania, on May 22, 1996.
SOVEREIGN BANCORP, INC.
By /s/Jay S. Sidhu
-----------------------------------
Jay S. Sidhu, President
and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Joseph M.
Harenza, Esquire, Jay S. Sidhu, Karl D. Gerhart, and Lawrence M.
Thompson, Jr., and each of them, his true and lawful
attorney-in-fact, as agent with full power of substitution and
resubstitution for him and in his name, place and stead, in any
and all capacity, to sign any or all amendments to this
Registration Statement and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said
attorney-in-fact and agents full power and authority to do and
perform each and every act and thing requisite and necessary to
be done in and about the premises, as fully and to all intents
and purposes as they might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and
agents, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of
1933, this registration statement has been signed by the
following persons in the capacities indicated and on the dates
indicated.
Signature Title
/s/ Howard D. Mackey Director May 22, 1996
- -------------------------
Howard D. Mackey
/s/ Richard E. Mohn Chairman and Director May 22, 1996
- -------------------------
Richard E. Mohn
/s/ Rhoda S. Oberholtzer Director May 22, 1996
- -------------------------
Rhoda S. Oberholtzer
/s/ Patrick J. Petrone Director May 22, 1996
- -------------------------
Patrick J. Petrone
/s/ Daniel K. Rothermel Director May 22, 1996
- -------------------------
Daniel K. Rothermel
/s/ Jay S. Sidhu President, Chief May 22, 1996
- ------------------------- Executive Officer and
Jay S. Sidhu Director (Principal
Executive Officer)
/s/ G. Arthur Weaver Director May 22, 1996
- -------------------------
G. Arthur Weaver
/s/ Theodore Ziaylek, Jr. Director May 22, 1996
- -------------------------
Theodore Ziaylek, Jr.
/s/ Karl D. Gerhart Chief Financial Officer May 22, 1996
- ------------------------- (Principal Financial
Karl D. Gerhart Officer)<PAGE>
EXHIBIT INDEX
Page Number
in Manually
Signed
Exhibit Original
4.1 Articles of Incorporation of Sovereign
Bancorp, Inc., as amended. (Incorporated
herein by reference to Exhibit 3.1 of
Sovereign's Annual Report on Form 10-K,
for the year ended December 31, 1995.)
4.2 Bylaws of Sovereign Bancorp, Inc.
(Incorporated herein by reference to
Exhibit 3.2 of Sovereign's Annual Report
on Form 10-K, for the year ended
December 31, 1993.)
4.3 Rights Agreement, dated September 19,
1989, between Sovereign Bancorp, Inc.
and Harris Trust Company of New York,
as Rights Agent. (Incorporated by
reference to the Registration Statement
No. 33-89586 on Form 8-A of Sovereign
Bancorp, Inc.)
4.4 Amendment to Rights Agreement, dated
as of September 27, 1995, between
Sovereign Bancorp, Inc. and Chemical
Bank, as successor to Harris Trust
Company, as Rights Agent. (Incorporated
by reference to Exhibit 2.2 of Amendment
No. 1 of Sovereign's Registration
Statement No. 33-89586 on Form 8-A.)
4.5 Sovereign Bancorp, Inc. 1996 Stock
Option Plan. 10
4.6 Stock Option Agreement for Incentive
Stock Options. 29
4.7 Stock Option Agreement for Nonqualified
Stock Options. 36
5. Opinion of Stevens & Lee. 43
23.1 Consent of Ernst & Young LLP. 46
23.2 Consent of BDO Seidman, LLP. 48
23.3 Consent of Stevens & Lee. (Contained in
Exhibit 5 of this Registration Statement.)
24. Power of Attorney of certain directors
and officers (included on signature page).
SOVEREIGN BANCORP, INC.
1996 STOCK OPTION PLAN
<PAGE>
TABLE OF CONTENTS
Page
Article
Article 1. PURPOSE OF THE PLAN........................... 1
Article 2. DEFINITIONS................................... 1
Article 3. ADMINISTRATION OF THE PLAN.................... 5
Article 4. COMMON STOCK SUBJECT TO THE PLAN.............. 6
Article 5. STOCK OPTIONS................................. 7
Article 6. ELIGIBILITY................................... 8
Article 7. TERM AND EXERCISE OF OPTIONS.................. 9
Article 8. TERMINATION OF EMPLOYMENT..................... 11
Article 9. ADJUSTMENT PROVISIONS......................... 12
Article 10. GENERAL PROVISIONS............................ 13
<PAGE>
Article 1. PURPOSE OF THE PLAN
1.1 Purpose - The Sovereign Bancorp, Inc. 1996 Stock
Option Plan (the "Plan") is intended to provide
key employees of Sovereign Bancorp, Inc. (the
"Corporation") and its Subsidiaries an opportunity
to acquire Common Stock of the Corporation. The
Plan is designed to help the Corporation attract,
retain and motivate key employees to make
substantial contributions to the success of the
business. Stock Options are granted under the
Plan based on the Participant's level of
responsibility and performance within the
Corporation.
1.2 Stock Options to be Granted - Incentive Stock
Options within the meaning of Code Section 422(b)
and Nonqualified Stock Options may be granted
within the limitations of the Plan herein
described.
Article 2. DEFINITIONS
2.1 "Agreement" - The written instrument evidencing
the grant of an Option. A Participant may be
issued one or more Agreements from time to time,
reflecting one or more Options.
2.2 "Board" - The Board of Directors of the
Corporation.
2.3 "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 between the Corporation
and Harris Trust Company of New York, as
amended.
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.
2.4 "Code" - The Internal Revenue Code of 1986, as
amended.
2.5 "Committee" - The Committee which the Board
appoints to administer the Plan.
2.6 "Common Stock" - The common stock of the
Corporation (no par value) as described in the
Corporation's Articles of Incorporation, or such
other stock as shall be substituted therefor.
2.7 "Corporation" - Sovereign Bancorp, Inc., a
Pennsylvania corporation.
2.8 "Employee" - Any key employee (including officers)
of the Corporation or a Subsidiary.
2.9 "Exchange Act" - The Securities Exchange Act of
1934, as amended.
2.10 "Incentive Stock Option" - A stock option intended
to satisfy the requirements of Code
Section 422(b).
2.11 "Nonqualified Stock Option" - A stock option other
than an incentive stock option.
2.12 "Optionee" - A Participant who is awarded a Stock
Option pursuant to the provisions of the Plan.
2.13 "Participant" - An Employee selected by the
Committee to receive a grant of an Option under
the Plan.
2.14 "Plan" - Sovereign Bancorp, Inc. 1996 Stock Option
Plan.
2.15 "Retirement" - The attainment of age sixty-five as
provided in the Sovereign Bancorp, Inc. Pension
Plan.
2.16 "Securities Act" - The Securities Act of 1933, as
amended.
2.17 "Stock Option" or "Option" - An award of a right
to purchase Common Stock pursuant to the
provisions of the Plan.
2.18 "Subsidiary" - A subsidiary corporation as defined
in Code Section 424(f) that is a subsidiary of the
Corporation.
Article 3. ADMINISTRATION OF THE PLAN
3.1 The Committee - The Plan shall be administered by
a committee of the Board (the "Committee")
composed of three or more members of the Board,
all of whom are (a) "disinterested persons" as
such term is defined under the rules and
regulations adopted from time to time by the
Securities and Exchange Commission pursuant to
Section 16(b) of the Exchange Act, and
(b) "outside directors" within the meaning of Code
Section 162(m). The Board may from time to time
remove members from, or add members to, the
Committee. Vacancies on the Committee, howsoever
caused, shall be filled by the Board.
3.2 Powers of the Committee -
(a) The Committee shall be vested with full
authority to make such rules and regulations
as it deems necessary or desirable to
administer the Plan and to interpret the
provisions of the Plan, unless otherwise
determined by a majority of the disinterested
members of the Board. Any determination,
decision or action of the Committee in
connection with the construction,
interpretation, administration or application
of the Plan shall be final, conclusive and
binding upon all Optionees and any person
claiming under or through an Optionee, unless
otherwise determined by a majority of the
disinterested members of the Board.
(b) Subject to the terms, provisions and
conditions of the Plan and subject to review
and approval by a majority of the
disinterested members of the Board, the
Committee shall have exclusive jurisdiction
to:
(i) determine and select, based upon
the recommendation of the
Corporation's Chief Executive
Office, the key Employees to be
granted Options (it being
understood that more than one
Option may be granted to the same
person);
(ii) determine the number of shares
subject to each Option;
(iii) determine the date or dates when
the Options will be granted;
(iv) determine the purchase price of the
shares subject to each Option in
accordance with Article 5 of the
Plan;
(v) determine the date or dates when
each Option may be exercised within
the term of the Option specified
pursuant to Article 7 of the Plan;
(vi) determine whether or not an Option
constitutes an Incentive Stock
Option; and
(vii) prescribe the form, which shall be
consistent with the Plan, of the
Agreement evidencing any Options
granted under the Plan.
3.3 Terms - The grant of an Option under the Plan
shall be evidenced by an Agreement and may include
any terms and conditions consistent with this
Plan, as the Committee may determine.
3.4 Liability - No member of the Board or the
Committee shall be liable for any action or
determination made in good faith by the Board or
the Committee with respect to this Plan or any
Options granted under this Plan.
Article 4. COMMON STOCK SUBJECT TO THE PLAN
4.1 Common Stock Authorized - The aggregate number of
shares of Common Stock for which Options may be
granted under the Plan shall not exceed
5,000,000 shares. The limitation established by
the preceding sentence shall be subject to
adjustment as provided in Article 9 of the Plan.
4.2 Shares Available - The Common Stock to be issued
upon exercise of Options granted under the Plan
shall be the Corporation's Common Stock which
shall be made available at the discretion of the
Board, either from authorized but unissued Common
Stock or from Common Stock acquired by the
Corporation, including shares purchased in the
open market. In the event that any outstanding
Option under the Plan for any reason expires or is
terminated, the shares of Common Stock allocable
to the unexercised portion of such Option may
thereafter be regranted subject to option under
the Plan.
Article 5. STOCK OPTIONS
5.1 Exercise Price - The exercise price of Common
Stock shall be, in the case of an Incentive Stock
Option, 100 percent of the fair market value of
one share of Common Stock on the date the Option
is granted, except that the purchase price per
share shall be 110 percent of such fair market
value in the case of an Incentive Stock Option
granted to any individual described in Section 6.2
of the Plan. The exercise price of Common Stock
shall be, in the case of a Nonqualified Stock
Option, not less than 100 percent of the fair
market value of one share of Common Stock on the
date the Option is granted. The exercise price
shall be subject to adjustment only as provided in
Article 9 of the Plan.
5.2 Limitation on Incentive Stock Options - The
aggregate fair market value (determined as of the
date an Option is granted) of the stock with
respect to which Incentive Stock Options are
exercisable for the first time by any individual
in any calendar year (under the Plan and all other
plans maintained by the Corporation and
Subsidiaries) shall not exceed $100,000.
5.3 Determination of Fair Market Value -
(a) During such time as Common Stock is not
listed on an established stock exchange or
exchanges but is listed on the NASDAQ Stock
Market, the fair market value per share shall
be the closing sale price for the Common
Stock on the day the Option is granted. If
no sale of Common Stock has occurred on that
day, the fair market value shall be
determined by reference to such price for the
next preceding day on which a sale occurred.
(b) During such time as the Common Stock is not
listed on an established stock exchange or on
the NASDAQ Stock Market, fair market value
per share shall be the mean between the
closing dealer "bid" and "asked" prices for
the Common Stock for the day of the grant,
and if no "bid" and "asked" prices are quoted
for the day of the grant, the fair market
value shall be determined by reference to
such prices on the next preceding day on
which such prices were quoted.
(c) If the Common Stock is listed on an
established stock exchange or exchanges, the
fair market value shall be deemed to be the
closing price of Common Stock on such stock
exchange or exchanges on the day the Option
is granted or, if no sale of Common Stock has
been made on any stock exchange on that day,
the fair market value shall be determined by
reference to such price for the next
preceding day on which a sale occurred.
(d) In the event that the Common Stock is not
traded on an established stock exchange or in
the NASDAQ Stock Market, and no closing
dealer "bid" and "asked" prices are available
on the date of a grant, then fair market
value will be the price established by the
Committee in good faith.
5.4 Limitation on Grants - Commencing January 1, 1996,
grants to any Employee under this Plan shall not
exceed in the aggregate 300,000 Options during any
period of 12 consecutive months. Such limitation
shall be subject to adjustment in the manner
described in Article 9.
Article 6. ELIGIBILITY
6.1 Participation - Options shall be granted only to
persons who are Employees, as determined by the
Committee, based upon the recommendation of the
Chief Executive Officer (except as to himself) and
ratified by a majority of the disinterested
members of the Board.
6.2 Incentive Stock Option Eligibility -
Notwithstanding any other provision of the Plan,
an individual who owns more than 10 percent of the
total combined voting power of all classes of
outstanding stock of the Corporation shall not be
eligible for the grant of an Incentive Stock
Option, unless the special requirements set forth
in Sections 5.1 and 7.1 of the Plan are satisfied.
For purposes of this Section 6.2, in determining
stock ownership, an individual shall be considered
as owning the stock owned, directly or indirectly,
by or for his brothers and sisters (whether by the
whole or half blood), spouse, ancestors and lineal
descendants. Stock owned, directly or indirectly,
by or for a corporation, partnership, estate or
trust shall be considered as being owned
proportionately by or for its shareholders,
partners or beneficiaries. "Outstanding stock"
shall include all stock actually issued and
outstanding immediately before the grant of the
Option. "Outstanding stock" shall not include
shares authorized for issue under outstanding
Options held by the Optionee or by any other
person.
Article 7. TERM AND EXERCISE OF OPTIONS
7.1 Termination -
(a) Each Option granted under the Plan shall
terminate on the date determined by the
Committee and approved by a majority of the
disinterested members of the Board, and
specified in the Agreement; provided,
however, that (i) each intended Incentive
Stock Option granted to an individual
described in Section 6.2 of the Plan shall
terminate not later than five years after the
date of the grant, (ii) each other intended
Incentive Stock Option shall terminate not
later than ten years after the date of grant,
and (iii) each Option granted under the Plan
which is intended to be a Nonqualified Stock
Option shall terminate not later than ten
years and one month after the date of grant.
Each Option granted under the Plan shall be
exercisable only after the earlier of the
date on which (i) the Optionee has completed
one year of continuous employment with the
Corporation or a Subsidiary immediately
following the date of the grant of the Option
or (ii) a Change in Control occurs. An
Option may be exercised only during the
continuance of the Optionee's employment,
except as provided in Article 8 and shall not
be assignable or transferable by the Optionee
other than by will or the laws of descent and
distribution, and during the lifetime of an
Optionee shall be exercisable only by such
Optionee.
7.2 Exercise -
(a) A person electing to exercise an Option shall
give written notice to the Corporation of
such election and of the number of shares he
has elected to purchase, in such form as the
Committee shall have prescribed or approved,
and shall at the time of exercise tender the
full purchase price of the shares he has
elected to purchase. The purchase price
shall be paid in full, in cash, upon the
exercise of the Option, provided, however,
that in lieu of cash, with the approval of
the Committee at or prior to exercise, an
Optionee may exercise his Option by tendering
to the Corporation shares of Common Stock
owned by him and having a fair market value
equal to the cash exercise price applicable
to his Option (with the fair market value of
such stock to be determined in the manner
provided in Section 5.3 hereof) or by
delivering such combination of cash and such
shares as the Committee in its sole
discretion may approve. Notwithstanding the
foregoing, Common Stock acquired pursuant to
the exercise of an Incentive Stock Option may
not be tendered as payment unless the holding
period requirements of Code Section 422(a)(1)
have been satisfied, and Common Stock not
acquired pursuant to the exercise of an
Incentive Stock Option may not be tendered as
payment unless it has been held, beneficially
and of record, for at least one year.
(b) A person holding more than one Option at any
relevant time may, in accordance with the
provisions of the Plan, elect to exercise
such Options in any order.
(c) In addition, at the request of the
Participant and to the extent permitted by
applicable law, the Corporation may, in its
sole discretion, selectively approve
arrangements with a brokerage firm under
which such brokerage firm, on behalf of the
Participant, shall pay to the Corporation the
exercise price of the Stock Options being
exercised, and the Corporation, pursuant to
an irrevocable notice from the Participant,
shall promptly deliver the shares being
purchased to such firm.
Article 8. TERMINATION OF EMPLOYMENT
8.1 Retirement - In the event of Retirement, an Option
shall lapse at the earlier of the term of the
Option or:
(a) In the case of an Incentive Stock Option,
three months from the date of Retirement; and
(b) in the case of Options other than Incentive
Stock Options, up to 24 months, at the
discretion of the Committee, from the date of
Retirement.
8.2 Death or Total and Permanent Disability - In the
event of termination of employment due to death or
"Total and Permanent Disability," as defined in
Code Section 72m(7), the Option shall lapse at the
earlier of (a) the term of the Option, or (b) one
year after termination due to such causes.
8.3 Other Termination - Except as otherwise provided
in Section 8.4, in the event of termination of
employment at the election of the Corporation, all
Options shall lapse as of the earlier of (a) the
term of the Option, or (b) three months after the
date of termination of employment. In the event
of termination of employment at the election of
the Employee, all options granted to such Employee
shall lapse as of the date of termination of
employment.
8.4 Termination For Cause - In the event of
termination of employment "for cause," all Options
granted to such Employee shall lapse on the date
of termination of employment. Termination "for
cause" shall mean the Employee was terminated
after
(a) the Office of Thrift Supervision or any other
government regulatory agency recommends or
orders in writing that the Corporation or any
Subsidiary terminate the employment of the
Employee or relieve him of his duties;
(b) the Employee 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 Employee for a period of
forty-five consecutive days; or
(c) the Employee wilfully fails to follow the
lawful instructions of the Board after the
Employee's receipt of written notice of such
instructions, other than a failure resulting
from the Employee's incapacity because of
physical or mental illness.
Article 9. ADJUSTMENT PROVISIONS
9.1 Share Adjustments -
(a) In the event that the shares of Common Stock
of the Corporation, 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 of
another corporation (whether by reason of
merger, consolidation, recapitalization,
reclassification, split-up, combination of
shares or otherwise) or if the number of such
shares of stock shall be increased through
the payment of a stock dividend, then,
subject to the provisions of Subsection (c)
below, there shall be substituted for or
added to each share of stock of the
Corporation which was theretofore
appropriated, or which thereafter may become
subject to an option under the Plan, the
number and kind of shares of stock or other
securities into which each outstanding share
of the stock of the Corporation shall be so
changed or for which each such share shall be
exchanged or to which each such share shall
be entitled, as the case may be. Outstanding
Options shall also be appropriately amended
as to price and other terms, as may be
necessary to reflect the foregoing events.
(b) If there shall be any other change in the
number or kind of the outstanding shares of
the stock of the Corporation, or of any stock
or other securities in which such 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 in
any Option which was theretofore granted or
which may thereafter be granted under the
Plan, then such adjustment shall be made in
accordance with such determination.
(c) The grant of an Option pursuant to the Plan
shall not affect in any way the right or
power of the Corporation to make adjustments,
reclassifications, reorganizations or changes
of its capital or business structure, to
merge, to consolidate, to dissolve, to
liquidate or to sell or transfer all or any
part of its business or assets.
9.2 Corporate Changes - A dissolution or liquidation
of the Corporation, or a merger or consolidation
in which the Corporation is not the surviving
Corporation, shall cause each outstanding Option
to terminate, except to the extent that another
corporation may and does in the transaction assume
and continue the Option or substitute its own
options.
9.3 Fractional Shares - Fractional shares resulting
from any adjustment in Options pursuant to this
Article 9 may be settled as a majority of the
disinterested members of the Board or the
Committee (as the case may be) shall determine.
9.4 Binding Determination - To the extent that the
foregoing adjustments relate to stock or
securities of the Corporation, such adjustments
shall be made by a majority of the disinterested
members of the Board, whose determination in that
respect shall be final, binding and conclusive.
Notice of any adjustment shall be given by the
Corporation to each holder of an Option which
shall have been so adjusted.
Article 10. GENERAL PROVISIONS
10.1 Effective Date - The Plan shall become effective
upon its adoption by the Board, provided that any
grant of Options is subject to the approval of the
Plan by the shareholders of the Corporation within
12 months of adoption by the Board.
10.2 Termination of the Plan - Unless previously
terminated by the Board of Directors, the Plan
shall terminate on, and no Options shall be
granted after, the tenth anniversary of its
adoption by the Board.
10.3 Limitation on Termination, Amendment or
Modification
(a) The Board may at any time terminate, amend,
modify or suspend the Plan, provided that
without the approval of the shareholders of
the Corporation no amendment or modification
shall be made by the Board which:
(i) increases the maximum number of
shares of Common Stock as to which
Options may be granted under the
Plan;
(ii) changes the class of eligible
Employees; or
(iii) otherwise requires the approval of
shareholders in order to maintain
the exemption available under Rule
16b-3 (or any similar rule) under
the Exchange Act.
(b) No amendment, modification, suspension or
termination of the Plan shall in any manner
affect any Option theretofore granted under
the Plan without the consent of the Optionee
or any person validly claiming under or
through the Optionee.
10.4 No Right to Employment - Neither anything
contained in the Plan or in any instrument under
the Plan nor the grant of any Option hereunder
shall confer upon any Optionee any right to
continue in the employ of the Corporation or of
any Subsidiary or limit in any respect the right
of the Corporation or of any Subsidiary to
terminate the Optionee's employment at any time
and for any reason.
10.5 Withholding Taxes -
(a) Subject to the provisions of Subsection (b),
the Corporation will require that an Optionee
as a condition of the exercise of an Option
(other than an Incentive Stock Option), or
any other person or entity receiving Common
Stock upon exercise of an Option, pay or
reimburse any taxes which the Corporation is
required to withhold in connection with the
exercise of the Option.
(b) An Optionee may satisfy the withholding
obligation described in Subsection (a), in
whole or in part, by electing to have the
Corporation withhold shares of Common Stock
(otherwise issuable upon the exercise of an
Option) having a fair market value equal to
the amount required to be withheld. An
election by an Optionee to have shares
withheld for this purpose shall be subject to
the following restrictions:
(i) it must be made prior to the date
on which the amount of tax to be
withheld is determined (the "Tax
Date");
(ii) it shall be irrevocable;
(iii) it shall be subject to disapproval
by the Committee;
(iv) if the Optionee is an officer of
the Corporation within the meaning
of Section 16 of the Exchange Act
(an "Officer"), such election may
not be made within six months of
the grant of the Option (except
that this restriction shall not
apply in the event of the death or
disability of the Optionee prior to
the expiration of the six-month
period);
(v) if the Optionee is an Officer, such
election must be made either at
least six months prior to the Tax
Date or in the ten-day "window
period" beginning on the third day
following the release of the
Corporation's quarterly or annual
summary statement of revenues and
earnings; and
(vi) where the Tax Date of an Officer is
deferred up to six months after the
exercise of an Option, the full
number of Option shares will be
issued or transferred to him upon
exercise, but he will be
unconditionally obligated to tender
back to the Corporation the proper
number of shares of Common Stock on
the Tax Date.
10.6 Listing and Registration of Shares -
(a) No Option granted pursuant to the Plan shall
be exercisable in whole or in part if at any
time a majority of the disinterested members
of the Board shall determine in its
discretion that the listing, registration or
qualification of the shares of Common Stock
subject to such Option on any securities
exchange or under any applicable law, or the
consent or approval of any governmental
regulatory body, is necessary or desirable as
a condition of, or in connection with, the
granting of such Option or the issue of
shares thereunder, unless such listing,
registration, qualification, consent or
approval shall have been effected or obtained
free of any conditions not acceptable to a
majority of the disinterested members of the
Board.
(b) If a registration statement under the
Securities Act with respect to the shares
issuable upon exercise of any Option granted
under the Plan is not in effect at the time
of exercise, as a condition of the issuance
of the shares the person exercising such
Option shall give the Committee a written
statement, satisfactory in form and substance
to the Committee, that he is acquiring the
shares for his own account for investment and
not with a view to their distribution. The
Corporation may place upon any stock
certificate for shares issuable upon exercise
of such Option the following legend or such
other legend as the Committee may prescribe
to prevent disposition of the shares in
violation of the Securities Act or other
applicable law:
"THE SHARES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 ("ACT")
AND MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED OR
OFFERED FOR SALE IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT WITH
RESPECT TO THEM UNDER THE ACT OR A
WRITTEN OPINION OF COUNSEL FOR THE
CORPORATION THAT REGISTRATION IS NOT
REQUIRED."
STOCK OPTION AGREEMENT FOR
INCENTIVE STOCK OPTION
______________________
BETWEEN
SOVEREIGN BANCORP, INC.
AND
________________________
(the Optionholder)
Date of Grant: _________________________
Number of Shares: _________________________
Purchase Price: _________________________
Option Expires: _________________________
<PAGE>
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. 1996 Stock Option 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 ("Common
Stock") at the purchase price of $__________ per share; such
option to be exercised as hereinafter provided.
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
Paragraph 2(d), the option granted hereby shall
expire on _________________ [not more than
10 years from the date of grant, except for an
option granted to a 10% shareholder, which shall
be limited to 5 years].
(b) Exercise of Option. Except in the case of a
Change in Control (as defined in the Plan), no
part of this option may be exercised until the
Optionholder has remained in the continuous employ
of the Corporation or of a Subsidiary of the
Corporation (as defined in the Plan) for a period
of one year after the date hereof.
This option may be exercised, to the extent then
vested under Article 7 of the Plan, in whole at
any time, or from time to time in part, 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.
If there is a Change in Control, the option
granted hereby shall become immediately
exercisable.
(c) Payment of Purchase Price Upon Exercise. At the
time of any exercise, the purchase 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
shares and cash equal to the purchase price set
forth in Paragraph 1 hereof) to the Corporation.
In addition, at the request of the Optionholder
and, if approved by the Corporation, the
Optionholder may make arrangements with a
brokerage firm, under which such firm, on behalf
of the Optionholder, pays the purchase price per
share to the Corporation (as described in the
Plan).
(d) Exercise Upon Death or Termination of Employment.
(1) If the Optionholder's employment with the
Corporation or a Subsidiary terminates
because of early, normal or late retirement,
as described in the Sovereign Bancorp, Inc.
Pension Plan, then the Optionholder may
exercise this option, to the extent that the
Optionholder was entitled to do so at the
date of early, normal or late retirement, as
the case may be, 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).
(2) In the event of the death of the Optionholder
while an employee of the Corporation or of a
Subsidiary, 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, by the person
or persons to whom the Optionholder's rights
under this option pass by will or applicable
law, or, if no such person has such right, by
the estate's executors or administrators, in
whole at any time, or from time to time in
part, within one year after the
Optionholder's death, but in no event later
than the expiration date specified in
Paragraph 2(a).
(3) If the Optionholder's employment with the
Corporation or a Subsidiary terminates
because of total and permanent disability,
then the Optionholder may exercise this
option, 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 date of such
termination, but in no event later than the
expiration date specified in Paragraph 2(a).
(4) Except as otherwise provided in
Paragraph (6), below, if the Optionholder's
employment with the Corporation or a
Subsidiary is terminated by the Corporation,
then the Optionholder may exercise this
option, 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, but in no event later than
the expiration date specified in
Paragraph 2(a).
(5) If the Optionholder's employment with the
Corporation or a Subsidiary is voluntarily
terminated by the Optionholder (other than
for early, normal or late retirement, as
described in the Sovereign Bancorp, Inc.
Pension Plan), then the option will expire on
the date of such termination of employment.
(6) Notwithstanding anything herein to the
contrary, if the Optionholder's employment is
terminated by the Corporation or a Subsidiary
"for cause," as defined in the Plan, all
rights to exercise this option shall
terminate at the date of such termination of
employment.
(e) Nontransferability. This option shall not be
transferable other than by will or by the laws of
descent and distribution or pursuant to a
qualified domestic relations order, as defined in
the Internal Revenue Code of 1986, as amended, or
Title I of the Employee Retirement Income Security
Act of 1974, as amended, or the rules thereunder.
During the lifetime of the Optionholder, this
option shall be exercisable only by the
Optionholder.
(f) Adjustments. In the event of any change in the
Common Stock of the Corporation by reason of any
stock dividend, recapitalization,
reclassification, merger, consolidation, split-up,
combination or exchange of shares, or of any
similar change affecting the Common Stock, then in
any such event the number and kind of shares
subject to this option and their purchase price
per share shall be appropriately adjusted
consistent with such change. If any other change
in the number or kind of the outstanding shares of
stock of the Corporation occurs, an adjustment may
be made to the number and kind of shares subject
to this option and their purchase price per share
in such manner as a majority of the disinterested
members of the Board of Directors may deem
equitable to prevent substantial dilution or
enlargement of the rights granted to the
Optionholder hereunder. Any adjustment so made
shall be final and binding upon the Optionholder.
(g) No Rights as Stockholder. The Optionholder shall
have no rights as a stockholder 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.
(h) No Right To Continued Employment. This option
shall not confer upon the Optionholder any right
with respect to continuance of employment by 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.
(i) 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 the
Corporation shall, in its sole discretion,
determine to be necessary or advisable.
3. Investment Representation
The Committee appointed pursuant to Article 3 of the
Plan 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 such
Committee 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 and agrees to be bound by all the terms and
provisions thereof, which, to the extent relevant, are
incorporated herein by reference.
5. Notices
Any notice hereunder to the Corporation shall be
addressed to it at its office, 1130 Berkshire Boulevard,
Wyomissing, Pennsylvania 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.
SOVEREIGN BANCORP, INC. OPTIONHOLDER
By____________________________ ______________________________
(Signature) (Signature)
______________________________ ______________________________
(Print Name)
______________________________ ______________________________
(Print Title) (Print Address)
STOCK OPTION AGREEMENT FOR
NONQUALIFIED STOCK OPTION
_________________________
BETWEEN
SOVEREIGN BANCORP, INC.
AND
____________________
(the Optionholder)
Date of Grant: _____________________
Number of Shares: _____________________
Purchase Price: _____________________
Option Expires: _____________________
<PAGE>
NONQUALIFIED 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. 1996 Stock Option 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 ("Common
Stock") at the purchase price of $__________ per share; such
option to be exercised as hereinafter provided.
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
Paragraph 2(d), the option granted hereby shall
expire on __________________ [not more than ten
years and one month from the date of grant].
(b) Exercise of Option. Except in the case of a
Change in Control (as defined in the Plan), no
part of this option may be exercised until the
Optionholder has remained in the continuous employ
of the Corporation or of a Subsidiary of the
Corporation (as defined in the Plan) for a period
of one year after the date hereof.
This option may be exercised in whole at any time,
or from time to time in part, 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. In the
event of a Change in Control, the option granted
hereby shall become exercisable.
(c) Payment of Purchase Price Upon Exercise. At the
time of any exercise the purchase 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 price per share
set forth in Paragraph 1 hereof) to the
Corporation. In addition, at the request of the
Optionholder and, if approved by the Corporation,
the Optionholder may make arrangements with a
brokerage firm, under which such firm, on behalf
of the Optionholder, pays the purchase price per
share to the Corporation (as described in the
Plan).
(d) Exercise Upon Death, Termination of Employment or
Retirement.
(1) If the Optionholder's employment with the
Corporation or a Subsidiary terminates
because of early, normal or late retirement,
as described in the Sovereign Bancorp, Inc.
Pension Plan, then the Optionholder may
exercise this option, to the extent that the
Optionholder was entitled to do so at the
date of early, normal or late retirement, as
the case may be, in whole at any time, or
from time to time in part, within 24 [not
more than 24] months after the date of such
termination of employment, but in no event
later than the expiration date specified in
Paragraph 2(a).
(2) In the event of the death of the Optionholder
while an employee of the Corporation or of a
Subsidiary, 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, by the person
or persons to whom the Optionholder's rights
under this option pass by will or applicable
law, or, if no such person has such right, by
the estate's executors or administrators, in
whole at any time, or from time to time in
part, within one year after the
Optionholder's death, but in no event later
than the expiration date specified in
Paragraph 2(a).
(3) If the Optionholder's employment with the
Corporation or a Subsidiary terminates
because of total and permanent disability,
then the Optionholder may exercise this
option, 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 date of such
termination, but in no event later than the
expiration date specified in Paragraph 2(a).
(4) Except as otherwise provided in
paragraph (6), below, if the Optionholder's
employment with the Corporation or a
Subsidiary is terminated by the Corporation,
then the Optionholder may exercise this
option, 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, but in no event later than
the expiration date specified in
Paragraph 2(a).
(5) If the Optionholder's employment with the
Corporation or a Subsidiary is voluntarily
terminated by the Optionholder (other than
for early, normal or late retirement, as
described in the Sovereign Bancorp, Inc.
Pension Plan), then the option will expire on
the date of such termination of employment.
(6) Notwithstanding anything herein to the
contrary, if the Optionholder's employment is
terminated by the Corporation or a Subsidiary
"for cause," as defined in the Plan, all
rights to exercise this option shall
terminate at the date of such termination.
(e) Nontransferability. This option shall not be
transferable other than by will or by the laws of
descent and distribution or pursuant to a
qualified domestic relations order, as defined in
the Internal Revenue Code of 1986, as amended, or
Title I of the Employment Retirement Income
Security Act of 1974, as amended, or the rules
thereunder. During the lifetime of the
Optionholder, this option shall be exercisable
only by the Optionholder.
(f) Adjustments. In the event of any change in the
Common Stock of the Corporation by reason of any
stock dividend, recapitalization,
reclassification, merger, consolidation, split-up,
combination or exchange of shares, or of any
similar change affecting the Common Stock, then in
any such event the number and kind of shares
subject to this option and their purchase price
per share shall be appropriately adjusted
consistent with such change. If any other change
in the number or kind of the outstanding shares of
stock of the Corporation occurs, an adjustment may
be made to the number and kind of shares subject
to this Option and their purchase price per share
in such manner as a majority of the disinterested
members of the Board of Directors may deem
equitable to prevent substantial dilution or
enlargement of the rights granted to the
Optionholder hereunder. Any adjustment so made
shall be final and binding upon the Optionholder.
(g) No Rights As Stockholder. The Optionholder shall
have no rights as a stockholder 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.
(h) No Right to Continued Employment. This option
shall not confer upon the Optionholder any right
with respect to continuance of employment by 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.
(i) 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 the
Corporation shall, in its sole discretion,
determine to be necessary or advisable.
3. Investment Representation
The Committee appointed pursuant to Article 3 of the
Plan 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 such
Committee 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 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 10.5 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, 1130 Berkshire Boulevard,
Wyomissing, Pennsylvania 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.
SOVEREIGN BANCORP, INC. OPTIONHOLDER
By_______________________ _____________________________
(Signature) (Signature)
_________________________ _____________________________
(Print Name)
_________________________ _____________________________
(Print Title) (Print Address)
(610) 478-2000
June 5, 1996
Board of Directors
Sovereign Bancorp, Inc.
1130 Berkshire Boulevard
Wyomissing, Pennsylvania 19610
Re: Sovereign Bancorp, Inc. 1996 Stock Option Plan
Ladies and Gentlemen:
You have asked us to provide you with our opinion whether
the 500,000 shares of Sovereign Bancorp, Inc. ("Sovereign")
common stock (without par value) (the "Common Stock") that may be
issued from time to time pursuant to the exercise of options
issued under the Sovereign Bancorp, Inc. 1996 Stock Option Plan
(the "Plan"), when and if such shares are issued pursuant to and
in accordance with the Plan, will be duly and validly issued,
fully paid and nonassessable.
In connection with this matter, we, as counsel to Sovereign,
have reviewed the following:
1. the Pennsylvania Business Corporation Law of 1988, as
amended;
2. Sovereign's Articles of Incorporation, as amended and
restated;
3. Sovereign's By-Laws, as amended;
4. Resolutions adopted by Sovereign's Board of Directors
on February 28, 1996; and
5. the Plan.
Based upon such review, it is our opinion that the Common
Stock issuable upon the exercise of options granted under the
Plan, when and as issued in accordance with the provisions of the
Plan, will be duly and validly issued, fully paid and
nonassessable. In giving the foregoing opinion, we have assumed
that the Company will have, at the time of the issuance of such
Common Stock, a sufficient number of authorized shares available
for issue.
We hereby consent to the filing of this opinion as an
exhibit to the registration statement that the Company is filing
this date in connection with the registration of 5,000,000 shares
of Common Stock issuable under the Plan, and to the references to
us under the caption "Interests of Named Experts and Counsel" in
such registration statement. In giving this consent, however, we
do not acknowledge or admit that we come within the category of
persons whose consent is required under Section 7 of the
Securities Act of 1933 or the Rules and Regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
STEVENS & LEE
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" in the Registration Statement (Form S-8) of Sovereign
Bancorp, Inc. pertaining to the 1996 Stock Option Plan for the
registration of 5,000,000 shares of its Common Stock and to the
incorporation by reference therein of our report dated
January 17, 1996, with respect to the consolidated financial
statements of Sovereign Bancorp, Inc. included in its Annual
Report (Form 10-K) for the year ended December 31, 1995, filed
with the Securities and Exchange Commission.
Ernst & Young LLP
Reading, Pennsylvania
May 28, 1996
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors Sovereign Bancorp, Inc.
We hereby consent to the incorporation in Registration Statement
on Form S-8 of Sovereign Bancorp, Inc. relating to the 1996 Stock
Option Plan to be filed on or about May 30, 1996 of our report
dated November 23, 1994, with respect to the consolidated
statements of income, changes in shareholders' equity and cash
flows for the year ended September 30, 1993 of Charter FSB
Bancorp, Inc. and subsidiary, which report appears in the Annual
Report on Form 10-K of Sovereign Bancorp, Inc. for the year ended
December 31, 1995.
/s/ BDO Seidman, LLP
BDO SEIDMAN, LLP
Woodbridge, New Jersey
May 30, 1996
