AGREEMENT TO AMEND
AGREEMENT TO AMEND
AGREEMENT dated May 30, 2006 among Sovereign Bancorp, Inc., a Pennsylvania corporation (the
“Corporation”), and Xxxxxx X. Xxxxxxxxxx (the “Executive”).
WHEREAS, the Corporation entered into an Employment Agreement with Executive dated as of
January 30, 2003 (the “Employment Agreement”); and
WHEREAS, the Corporation has entered into an Investment Agreement with Banco Santander Central
Hispano, S.A. dated October 24, 2005, and amended November, 22, 2005 (the “Investment Agreement”);
and
WHEREAS, pursuant to the terms of the Investment Agreement, each of the Corporation and
Executive desires to amend the Employment Agreement to modify the definition of Change in Control
in certain respects.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants set forth herein,
the parties hereto agree as follows:
1. Amendment of Employment Agreement.
Effective as of the date hereof, the following amendment to the Employment Agreement shall
become effective and the modifications to the Employment Agreement set forth herein shall be
incorporated into the terms of Employment Agreement as follows:
(a) Section 5(b) shall be amended to read as follows:
(b) As used in this Agreement, “Change in Control” means the first to occur of any of the
following events:
(i) any “Person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), except for any of SBI’s employee
benefit plans, or any entity holding SBI’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 SBI’s
securities representing 19.9% or more of the combined voting power of SBI’s then
outstanding securities, other than: (A) pursuant to a transaction excepted in Clause
(iii) or (iv); or (B) pursuant to a Buyer Acquisition Transaction (as defined in the
Investment Agreement (the “Investment Agreement”), between SBI and Banco Santander
Central Hispano, S.A., dated as of October 24, 2005, as amended as of November 22,
2005) effectuated in accordance with the terms of the Investment Agreement other
than a Buyer Acquisition Transaction contemplated in Sections 8.06 through 8.08 and
8.10 of the Investment Agreement;
(ii) there occurs a contested proxy solicitation of SBI’s shareholders that
results in the contesting party obtaining the ability to vote securities
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representing 19.9% or more of the combined voting power of SBI’s then outstanding
securities;
(iii) a binding written agreement is executed (and, if legally required,
approved by SBI’s shareholders) providing for a sale, exchange, transfer or other
disposition of all or substantially all of the assets of SBI or of Sovereign Bank to
another entity, except to an entity controlled directly or indirectly by SBI;
(iv) the shareholders of SBI approve a merger, consolidation, or other
reorganization of SBI, unless:
(A) under the terms of the agreement approved by SBI’s shareholders
providing for such merger, consolidation or reorganization, the
shareholders of SBI 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 SBI 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;
(B) under the terms of the agreement approved by SBI’s shareholders
providing for such merger, consolidation or reorganization, the
individuals who were members of the Board of Directors of SBI 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
(C) based on the terms of the agreement approved by SBI’s
shareholders providing for such merger, consolidation or reorganization,
no Person (other than (A) SBI or any Subsidiary of SBI, (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;
(v) a plan of liquidation or dissolution of SBI, other than pursuant to
bankruptcy or insolvency laws, is adopted;
(vi) during any period of two consecutive years, individuals, who at the
beginning of such period, constituted the Board of Directors of SBI cease for any
reason to constitute at least a majority of the Board of Directors of SBI unless the
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election, or the nomination for election by SBI’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
(vii) the occurrence of a Triggering Event within the meaning of the Second
Amended and Restated Rights Agreement, between SBI and Mellon Investor Services LLC,
as rights agent, dated as of January 19, 2005, as amended on October 24, 2005, and
as it may be further amended from time to time.
Notwithstanding Clause (i), a Change in Control shall not be deemed to have occurred
if a Person becomes the beneficial owner, directly or indirectly, of SBI’s
securities representing 19.9% or more of the combined voting power of SBI’s then
outstanding securities solely as a result of an acquisition by SBI 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 SBI’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 SBI’s then outstanding securities by reason of share purchases by SBI and
shall, after such share purchases by SBI, become the beneficial owner, directly or
indirectly, of any additional voting securities of SBI (other than as a result of a
stock split, stock dividend or similar transaction), then a Change in Control of SBI
shall be deemed to have occurred with respect to such Person under Clause (a). In
no event shall a Change in Control of SBI be deemed to occur under Clause (a) with
respect to Benefit Plans.
2. Effectiveness of the Terms of this Agreement.
(a) Operative Effect Dependent on Closing of Investment Agreement. The operative effect of
this amendment to the Employment Agreement is subject to the occurrence of the Closing (as such
term is defined in the Investment Agreement). If the Closing does not occur, this amendment to the
Employment Agreement shall be null and void ab initio.
(b) Binding on Executive. Notwithstanding anything to the contrary, Executive’s agreements
hereunder are binding, subject only to the occurrence of the Closing, and Executive has no right to
revoke, rescind or otherwise terminate or modify Executive’s agreements hereunder.
3. Applicable Law.
This amendment to the Employment 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.
4. Representations and Warranties.
The parties hereto represent and warrant to each other that they have carefully read this
amendment to the Employment Agreement and consulted with respect thereto with their respective
counsel, and that each of them fully understands the content of this amendment to the
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Employment Agreement and its legal effect. Each party hereto also represents and warrants
that this amendment to the Employment Agreement is a legal, valid and binding obligation of such
party which is enforceable against such party in accordance with its terms.
5. Successors and Assigns.
This amendment to the Employment Agreement shall be binding upon, inure to the benefit of and
be enforceable by the parties hereto and their respective heirs, legal representatives, successors
and assigns. The Corporation shall require any successor (whether direct, indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business or assets of the
Corporation to expressly assume and agree to perform this amendment to the Employment Agreement, in
the same manner and to the same extent that the Corporation would be required to perform it if no
such succession had taken place, unless the provisions hereof will be binding upon such successor
by operation of law.
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IN WITNESS WHEREOF, the parties have executed this amendment to the Employment Agreement
effective as of the 30th day of May, 2006.
| SOVEREIGN BANCORP, INC. |
||||
| /s/ Xxx X. Xxxxx | ||||
| By: Xxx X. Xxxxx | ||||
| Title: President and Chief Executive Officer | ||||
| EXECUTIVE |
||||
| /s/ Xxxxxx X. Xxxxxxxxxx | ||||
| Xxxxxx X. Xxxxxxxxxx | ||||
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