8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

August 22, 2007
Date of Report (Date of earliest event reported)

SOVEREIGN BANCORP, INC.

(Exact name of registrant as specified in its charter)

Pennsylvania
(State or other jurisdiction
of incorporation) 1-16581
(Commission
File Number) 23-2453088
(IRS Employer
Ident. No.)

1500 Market Street, Philadelphia, Pennsylvania		19102
(Address of principal executive offices)	(Zip Code)

(215) 557-4630
Registrant’s telephone number, including area code

N/A
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c))

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

     (e) As previously disclosed on June 8, 2007, James J. Lynch, Chairman and Chief Executive Officer of Sovereign Bank Mid-Atlantic Division and Vice Chairman of Sovereign Bancorp, Inc. (“Sovereign”), will resign from employment effective September 30, 2007. Mr. Lynch is a party to an Employment Agreement, dated September 16, 2002, as amended by an Agreement to Amend, dated May 30, 2006 (collectively, the “Amended Employment Agreement”), with Sovereign. On August 22, 2007, Sovereign and Mr. Lynch entered into an Amendment #2 to Employment Agreement, effective as of June 25, 2007 (the “Amendment”), a copy of which is attached hereto as Exhibit 10.3. The Amendment (i) reduces Mr. Lynch’s base salary, effective June 25, 2007, to $100,000 per year and eliminates provisions of the Amended Employment Agreement entitling Mr. Lynch, as a matter of right, to participate in any incentive compensation or similar plans maintained by Sovereign or any of its affiliates for their respective employees, other than welfare, retirement and fringe benefit plans; (ii) eliminates provisions in the Amended Employment Agreement relating to a resignation for good reason and termination of employment after a change in control; (iii) provides that upon Mr. Lynch’s termination of employment on September 30, 2007, Mr. Lynch will be entitled to receive within 15 days of such termination (a) a lump-sum cash severance payment of approximately $2.0 million and (b) a lump-sum cash payment of approximately $30,000 in lieu of the continuation of any and all welfare benefits to which he was entitled under the Amended Employment Agreement; and (iv) clarifies the noncompetition provision in the Amended Employment Agreement to permit, under limited circumstances, Mr. Lynch to work with, or invest in, certain businesses which make investments in or provide services to entities in the financial services sector. The foregoing description of the Amended Employment Agreement and Amendment are qualified in their entirety be reference to copies of such agreements, which are filed as exhibits hereto.

Item 9.01 Financial Statements and Exhibits.

     (d) Exhibits:

10.1	Employment Agreement, dated September 16, 2002, by and between Sovereign Bancorp, Inc. and James J. Lynch (incorporated by reference to Exhibit 10.1 of Sovereign Bancorp’s Quarterly Report on Form 10-Q, SEC File No. 001-16581, for the period ended September 30, 2002).
10.2	Agreement to Amend, dated May 30, 2006, by and between Sovereign Bancorp, Inc. and James J. Lynch (incorporated by reference to Exhibit 10.19 of Sovereign Bancorp’s Annual Report on Form 10-K, SEC File No. 001-16581, for the fiscal year ended December 31, 2006).
10.3	Amendment #2 to Employment Agreement, effective as of June 25, 2007, by and between Sovereign Bancorp, Inc. and James J. Lynch.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	SOVEREIGN BANCORP, INC.
Dated: August 22, 2007	By:	/s/ Richard Toomey
		Richard Toomey
		Executive Vice President and General Counsel

EXHIBIT INDEX

Exhibit Number	Description
10.1	Employment Agreement, dated September 16, 2002, by and between Sovereign Bancorp, Inc. and James J. Lynch (incorporated by reference to Exhibit 10.1 of Sovereign Bancorp’s Quarterly Report on Form 10-Q, SEC File No. 001-16581, for the period ended September 30, 2002)
10.2	Agreement to Amend, dated May 30, 2006, by and between Sovereign Bancorp, Inc. and James J. Lynch (incorporated by reference to Exhibit 10.19 of Sovereign Bancorp’s Annual Report on Form 10-K, SEC File No. 001-16581, for the fiscal year ended December 31, 2006)
10.3	Amendment #2 to Employment Agreement, effective as of June 25, 2007, by and between Sovereign Bancorp, Inc. and James J. Lynch

EX-10.3

AMENDMENT #2
TO EMPLOYMENT AGREEMENT

     AGREEMENT made the 25th day of June, 2007, by and between SOVEREIGN BANCORP, INC., a Pennsylvania corporation (“SBI”), and JAMES J. LYNCH, an individual (the “Executive”).

WITNESSETH:

     WHEREAS, the parties entered into an agreement dated September 16, 2002 relating, among other things, to the Executive’s employment by SBI (the “Original Employment Agreement”); and

     WHEREAS, the Original Employment Agreement was amended on May 30, 2006 in several respects (the Original Employment Agreement, as so amended thereby, being referred to as the “Amended Employment Agreement”); and

     WHEREAS, SBI has advised the Executive that it intends to terminate the Amended Employment Agreement without Cause as of September 30, 2007; and

     WHEREAS, the parties desire, among other things, to further amend the Amended Employment Agreement by executing this document (“Amendment #2”) to reflect the consequences to the Executive and the obligations of SBI resulting from the Executive’s proposed termination without Cause.

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

     1. Notwithstanding the provisions of Section 4(a) of the Amended Employment Agreement, the prohibition in such section against a reduction in the Executive’s salary shall no longer apply, so that any such reduction will not constitute a breach of such section (or any other provision of the Amended Employment Agreement, including Section 5(a) thereof [prior to its deletion hereby]), nor shall any such reduction give the Executive any other right under the Amended Employment Agreement, including the right to terminate his employment on the basis of a deemed constructive discharge or otherwise.

     2. The Executive’s salary under Section 4(a) shall be reduced to $100,000 per annum, payable periodically at such times as other executives are paid their salaries.

     3. Notwithstanding the provisions of Sections 4(b), (c) and (d) of the Amended Employment Agreement (but subject to the following sentence), effective as of January 1, 2007, the Executive shall no longer, as a matter of right, be entitled to participate in any incentive compensation (or similar) plan, including any stock-based compensation plan or arrangement, maintained by SBI or any of its affiliates for its or their employees. This Paragraph 3 is not intended to affect the provisions of Section 4(c) of the Amended Employment Agreement insofar as it relates to the provision of welfare, retirement and fringe benefits during the term of the Amended Employment Agreement.

1

     4. Section 5 of the Amended Employment Agreement and all provisions of the Amended Employment Agreement to the extent they relate to such Section 5 are deleted. All deleted sections, subsections and the like shall be deemed to be marked as “reserved”.

     5. Section 6 of the Amended Employment Agreement and all provisions of the Amended Employment Agreement to the extent they relate to such Section 6 are deleted. All deleted sections, subsections and the like shall be deemed to be marked as “reserved”.

     6. Section 7 of the Amended Employment Agreement is amended and restated to read as follows—

     7. Termination Without Cause at September 30, 2007. Effective September 30, 2007, to the extent Executive’s employment has not theretofore terminated, SBI declares this Agreement, as amended, and the Executive’s employment to be terminated by SBI without Cause. In consideration of such termination, the Executive shall be entitled to the payments and benefits set forth below.

     (a) Within 15 days after his termination of employment, the Executive shall be paid a lump sum severance amount of $2,041,631 in cash.

     (b) Within 15 days after his termination of employment, the Executive shall be paid a additional lump sum amount of $30,016, in cash, in lieu of the continuation of any and all welfare benefits to which he was entitled prior to his termination of employment or otherwise entitled under this Agreement.

Notwithstanding the nature of the Executive’s termination of employment, the noncompetition and nonsolicitation provisions of Section 8 shall apply to him for the 12-month period described therein; provided, however, that nothing set forth in the noncompetition provisions of Section 8 shall restrict Executive from engaging, directly or indirectly, for his own account or as an agent, consultant, employee, partner, officer, director, or investor with respect to any investment company or private equity, hedge, or similar fund (a “Financial Services Fund”) which makes portfolio or similar investments in, or provides services to, entities in the financial services sector in the geographic area in which SBI or its affiliates, including the Bank, are conducting business at the time of the Executive’s termination of employment (a “Financial Services Entity”), if (x) the ownership interest by the Financial Services Fund in the Financial Services Entity represents less than 5% of the total outstanding voting power of the Financial Services Entity or (y) the Executive provides written notice to the general counsel of SBI no more than 5 business days following the Financial Services Fund acquiring 5% or more of the total outstanding voting power of the Financial Services Entity; provided, however, that such permissible duties shall not include performance as an employee, director or advisory committee member of any bank if such duties are otherwise prohibited by the terms of Section 8 nor shall such

2

permissible duties include any direct or indirect involvement in the Financial Services Fund’s investment in a Financial Services Entity in the geographic area in which SBI or its affiliates, including the Bank, are conducting business at the time of the Executive’s termination of employment. SBI may, in its sole and absolute discretion, upon written request from Executive, permit, in writing, Executive to serve as a director or advisory committee member of a bank prior to the end of the 12-month period described above, provided that such bank has no operations where Sovereign is conducting business in the states of Pennsylvania, New Jersey or Maryland. In all events, the provisions of Section 8 regarding nonsolicitation of customers and employees shall apply to the Executive, the Financial Services Fund and any Financial Services Entity to the full extent and for the full time period set forth in Section 8.

     7. The payments provided for in Section 7 of the Amended Employment Agreement, as further amended and restated by Paragraph 6 above, shall be in complete discharge of the obligations of SBI and its affiliated companies to the Executive in connection with his termination as described in such Section 7; provided, however, that the provisions of such Section 7 shall not affect any other right or benefit to which he may be entitled under an employee or executive benefit plan outside the scope of the provisions of such Section 7.

     8. Except as otherwise provided herein, the effective date of the several paragraphs of this Amendment #2 shall be the date first above written.

     IN WITNESS WHEREOF, the parties hereto have executed this Amendment #2, or caused it to be executed, as of the date first above written.

	SOVEREIGN BANCORP, INC.
	By	/s/ Thomas J. McAuliffe
		Director of Human Resources
		Date: August 21, 2007
[CORPORATE SEAL]	Attest	/s/ Richard Toomey
		Secretary
		Date: August 21, 2007
			(SEAL)
		/s/ James J. Lynch
		James J. Lynch Date: August 22, 2007

3