Investment Agreement

Exhibit 10.1 EXECUTION COPY INVESTMENT AGREEMENT dated as of October 24, 2005 between BANCO SANTANDER CENTRAL HISPANO, S.A. and SOVEREIGN BANCORP, INC.


TABLE OF CONTENTS Page ARTICLE 1 Definitions Section 1.01 . Definitions 1 Section 1.02 . Other Definitional and Interpretative Provisions 14 ARTICLE 2 Purchase and Sale Section 2.01. Purchase and Sale 14 Section 2.02. Closing 15 Section 2.03. Additional Purchases by Buyer 15 Section 2.04. Gross Up Rights 17 ARTICLE 3 Representations and Warranties of the Company Section 3.01. Organization. 20 Section 3.02. Capitalization 21 Section 3.03. Authority 22 Section 3.04. Non-Contravention 23 Section 3.05. Consents 23 Section 3.06. Financial Statements 24 Section 3.07. Taxes 24 Section 3.08. SEC Filings and the Sarbanes-Oxley Act 25 Section 3.09. Absence of Certain Changes 26 Section 3.10. Contracts 28 Section 3.11. No Undisclosed Material Liabilities 30 Section 3.12. Ownership of Property; Insurance Coverage 30 Section 3.13. Legal Proceedings 31 Section 3.14. Compliance with Applicable Law 32 Section 3.15. Employee Benefit Plans 32 Section 3.16. Brokers, Finders and Financial Advisors 33 Section 3.17. Environmental Matters 34 Section 3.18. Allowance for Losses 34 Section 3.19. Related Party Transactions 34 Section 3.20. Loans 35 Section 3.21. Labor Matters 35 Section 3.22. Risk Management Instruments 35 Section 3.23. Community Reinvestment Act, Anti-Money Laundering and Customer Information Security 36

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Page Section 3.24. Credit Card Accounts 36 Section 3.25. Agreements with Regulatory Authorities 36 Section 3.26. Regulatory Capital 37 Section 3.27. Regulatory Probability 37 Section 3.28. Directors' and Officers' Insurance 37 Section 3.29. Rights Plan 37 ARTICLE 4 Representations and Warranties of Buyer Section 4.01. Organization 38 Section 4.02. Authority 38 Section 4.03. Non-Contravention 38 Section 4.04. Financing 39 Section 4.05. Purchase for Investment 39 Section 4.06. Finders' Fees 39 Section 4.07. Ownership of the Company 39 Section 4.08. Compliance with Applicable Law 39 Section 4.09. Absence of Certain Changes 40 Section 4.10. Regulatory Probability 40 ARTICLE 5 Covenants of the Company Section 5.01. Conduct of the Company 40 Section 5.02. Access to Information; Reports 41 Section 5.03. Notices of Certain Events 43 Section 5.04. Certain Change in Control Provisions 43 Section 5.05. Takeover Laws 44 Section 5.06. Other Defensive Measures 45 Section 5.07. Regulatory Matters 46 Section 5.08. Certain Payments 46 Section 5.09. FIRPTA 46 ARTICLE 6 Covenants of Buyer Section 6.01. Confidentiality 46 Section 6.02. Right of First Purchase 47 Section 6.03. Voting Trust Agreement 48 Section 6.04. Tier 1 Capital; Debt Financing 48

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Page ARTICLE 7 Covenants of Buyer and the Company Section 7.01. Reasonable Best Efforts; Further Assurances 49 Section 7.02. Certain Filings 49 Section 7.03. Public Announcements 49 Section 7.04. Trademarks 50 Section 7.05. Exchange of Management 50 Section 7.06. Public Subsidiary Stock 51 ARTICLE 8 Investor Related Covenants Section 8.01. Standstill 51 Section 8.02. Transfer Restrictions 52 Section 8.03. Pre-Closing Period 55 Section 8.04. General Restrictions 56 Section 8.05. First Standstill Period 57 Section 8.06. Second Standstill Period 58 Section 8.07. Third Standstill Period 62 Section 8.08. First Look and Last Look Rights 65 Section 8.09. Post-Standstill Period 66 Section 8.10. Tender Offer Option 66 Section 8.11. Board Representation 67 Section 8.12. Approval Rights 69 Section 8.13. Certain Actions 69 Section 8.14. Voting Arrangements 69 ARTICLE 9 Post Acquisition Covenants Section 9.01. Company Headquarters 70 Section 9.02. The Company Board 70 Section 9.03. Exclusive Acquisition Vehicle 71 Section 9.04. Change in Control 71 ARTICLE 10 Conditions to Closing Section 10.01. Conditions to Obligations of Buyer and the Company 71 Section 10.02. Conditions to Obligation of Buyer 72 Section 10.03. Conditions to Obligation of the Company 72

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Page ARTICLE 11 Survival Section 11.01. Survival 73 ARTICLE 12 Termination Section 12.01. Grounds for Termination 73 Section 12.02. Effect of Termination 75 ARTICLE 13 Miscellaneous Section 13.01. Notices 75 Section 13.02. Amendments and Waivers 76 Section 13.03. Disclosure Schedule References 77 Section 13.04. Expenses 77 Section 13.05. Successors and Assigns 77 Section 13.06. Governing Law 77 Section 13.07. Jurisdiction 77 Section 13.08. WAIVER OF JURY TRIAL 78 Section 13.09. Counterparts; Effectiveness; Third-Party Beneficiaries 78 Section 13.10. Entire Agreement 78 Section 13.11. Severability 78 Section 13.12. Specific Performance 78 Section 13.13. Immaterial Breaches 79 Exhibit A Form of Voting Trust Agreement

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INVESTMENT AGREEMENT AGREEMENT (this " Agreement" ) dated as of October 24, 2005 between Banco Santander Central Hispano, S.A., a Spanish sociedad anf3nima (" Buyer" ), and Sovereign Bancorp, Inc., a Pennsylvania corporation (the " Company" ). W I T N E S S E T H: WHEREAS, the Company desires to sell the Shares to Buyer, and Buyer desires to purchase the Shares from the Company, upon the terms and subject to the conditions hereinafter set forth; The parties hereto agree as follows:ARTICLE 1Definitions Section 1.01 . Definitions. (a) The following terms, as used herein, have the following meanings: " Acquisition Proposal" means any offer, proposal or inquiry relating to, or any indication of interest by any Person or Group in (A) any acquisition or purchase, direct or indirect, of all or substantially all of the assets of the Company or any Material Subsidiary or over 25% of any class of equity or voting securities of the Company or any Material Subsidiary, (B) any tender offer by any Person or Group (other than the Company) or exchange offer that, if consummated, would result in such Person or Group beneficially owning 25% or more of any class of equity or voting securities of the Company or any Material Subsidiary, (C) a merger, consolidation, share exchange, business combination, reorganization, recapitalization, liquidation, dissolution or other similar transaction involving the Company or any Material Subsidiary, or (D) any proposition to nominate or elect as directors of the Company Persons other than those proposed by the Board or the Nominating Committee thereof, the effect of which, if approved by the Company' s shareholders, would cause a majority of the members of the Board to be Persons who are not (i) in the case of any Acquisition Proposal made prior to the Closing, directors of the Company as of the date hereof or (ii) in the case of any Acquisition Proposal made after the Closing Date, Persons who are directors of the Company after giving effect to Section 8.11(a) or successors to such directors who have been nominated by the Company or its Nominating Committee or elected by the Board to fill a vacancy in the Board; provided that, (i) a Surviving Company Merger shall not constitute an Acquisition Proposal and (ii) for purposes of Article 8, actions and transactions described in clauses (A) through (D) above will not constitute an Acquisition Proposal until such time as the Person or Group taking such actions or engaging in such transactions, or


proposing to do so, shall have made a reasonably specific bona fide offer or proposal (and not simply an inquiry as to whether the Company or its Subsidiaries would be interested in discussing a possible Acquisition Transaction, whether made publicly or privately and whether made orally or in writing). " Additional Shares" means any shares of Voting Securities purchased by Buyer pursuant to Section 2.03 or Section 2.04. " Affiliate" means, with respect to any Person at any time, any other Person directly or indirectly controlling, controlled by, or under common control with such Person as of such time; provided that, (i) prior to Closing, Independence will not be deemed to be an Affiliate of the Company and effective as of the Closing, Independence will be deemed to be an Affiliate of the Company, (ii) the Voting Trustee (solely in its capacity as the Trustee under the Voting Trust Agreement) will be deemed to be an Affiliate of Buyer, and (iii) neither the Company nor its Subsidiaries shall be deemed to be an Affiliate of Buyer prior to the consummation of a 100% Acquisition Proposal by Buyer. " Applicable Law" means, with respect to any Person, any foreign, federal, state or local law (statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, judgment, decree, ruling or other similar requirement enacted, adopted, promulgated or applied by a Governmental Authority that is binding upon or applicable to such Person, as amended unless expressly specified otherwise. " Balance Sheet Date" means December 31, 2004. " Bank" means Sovereign Bank. " Beneficial Ownership" by a Person of any securities includes ownership by any Person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares (i) voting power which includes the power to vote, or to direct the voting of, such security; and/or (ii) investment power which includes the power to dispose, or to direct the disposition, of such security; and shall otherwise be interpreted in accordance with the term " beneficial ownership" as defined in Rule 13d-3 adopted by the SEC under the Exchange Act; provided that for purposes of determining Beneficial Ownership, a Person shall be deemed to be the Beneficial Owner of any securities which may be acquired by such Person pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise (irrespective of whether the right to acquire such securities is exercisable immediately or only after the passage of time, including the passage of time in excess of 60 days, the satisfaction of any conditions, the occurrence of any event or any combination of the foregoing), except that in no event will Buyer or any of its Affiliates be deemed to

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Beneficially Own any securities which it has the right to acquire pursuant to this Agreement unless, and then only to the extent that, Buyer or such Affiliate shall have actually exercised such right. For purposes of this Agreement, a Person shall be deemed to Beneficially Own any securities Beneficially Owned by its Affiliates or any Group of which such Person or any such Affiliate is or becomes a member. Notwithstanding the foregoing, securities Beneficially Owned by Buyer and its Affiliates shall not include, for any purpose under this Agreement, any Voting Securities or other securities held by Buyer and its Subsidiaries in trust for the benefit of persons other than Buyer and its Affiliates, managed, brokerage, custodial, nominee or other customer accounts; in mutual funds, open- or closed-end investment funds or other pooled investment vehicles sponsored, managed and/or advised or subadvised by Buyer or its Affiliates; or by Affiliates of Buyer (or any division thereof) which are broker-dealers or otherwise engaged in the securities business, provided that in each case, such securities were acquired in the ordinary course of business of their respective banking, investment management and securities business and not with the intent or purpose on the part of Buyer or its Affiliates of influencing control of the Company or avoiding the provisions of this Agreement. The term " Beneficially Own" shall have a correlative meaning. " BHC Act" means the United States Bank Holding Company Act of 1956. " Board" means the Board of Directors of the Company. " Business Day" means a day, other than Saturday, Sunday or other day on which commercial banks in New York, New York or Madrid, Spain are authorized or required by Applicable Law to close. " Buyer Change in Control" means any Majority Board Change with respect to Buyer. " Buyer Disclosure Schedule" means a disclosure schedule delivered by Buyer to the Company pursuant to this Agreement. " Buyer Material Adverse Effect" means a " Material Adverse Effect" as defined in this Agreement but with respect to Buyer rather than the Company. " Bylaws" means the corporate bylaws of the Company as amended from time to time in accordance with the terms thereof, Applicable Law and this Agreement. " capital stock" means, with respect to any Person at any time, any and all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of capital stock, partnership interests (whether general or limited) or equivalent ownership interests in or issued by such Person.

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" Change in Control" means, with respect to any Person other than Buyer, (i) any acquisition or purchase, direct or indirect, by a third party, of 50% or more of the consolidated assets of such Person and its subsidiaries or over 50% of the voting securities of such Person or (ii) any Majority Board Change of such Person. " Charter" means the Articles of Incorporation of the Company as amended from time to time in accordance with the terms thereof and Applicable Law. " Closing Date" means the date of the Closing. " Code" means the U.S. Internal Revenue Code of 1986. " Common Stock" means the common stock of the Company. " Company Disclosure Schedule" means a disclosure schedule delivered by the Company to Buyer pursuant to this Agreement. " Company Financials" means (i) the audited consolidated financial statements of the Company as of December 31, 2004 (or, as of the Closing Date, as of December 31, 2005) and for the three years ended December 31, 2004 (or, as of the Closing Date, for the three years ending December 31, 2005), including the notes thereto, (ii) the unaudited interim consolidated financial statements of the Company as of each calendar quarter thereafter included in the Company SEC Documents filed by the Company, including the notes thereto. " Company Regulatory Reports" means the annual or quarterly reports, and accompanying schedules, of the Company, the Bank and, after the Closing, of Independence Community Bank, filed with the OTS, Federal Reserve Board, the New York Banking Department, or the FDIC since December 31, 2002. " Company Subsidiary" means (i) the Bank, (ii) any corporation or business trust or other entity, 50% or more of the capital stock or equity interests of which are owned, either directly or indirectly, by the Company, except any corporation the stock of which is held as security for loans made in the ordinary course of the lending activities of the Bank. " Competing Business" means a business (a) whose principal activities are those of (i) an FDIC-insured bank the principal business of which is that of a deposit-taking financial institution or branch-based commercial lending, (ii) non-bank lending, including consumer finance, (iii) mortgage brokerage, (iv) insurance agency, brokerage or service, and (v) asset or investment management and advice and (b) that has substantial operations in the Designated Area; provided that, none of the following shall constitute a " Competing Business" : (A)

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any of the businesses referred to in clauses (ii), (iii), (iv) or (v) of this definition that have an equity value of more than $300 million, or (B) any business which would otherwise be a Competing Business but which constitutes part of the business of a U.S. or foreign financial institution and is not the primary business of such financial institution. " Convertible Rights" means warrants, options, rights, convertible securities and any other securities or instruments that obligate an entity to issue capital stock, including the PIERS Instruments and any options, stock appreciation rights or restricted stock granted under the Employee Plans. " Defensive Measure" means (i) any provision of the Charter or Bylaws the purpose or effect of which is, in whole or in part, to defer, delay or make more costly or burdensome, the consummation of an Acquisition Proposal involving the Company, including Articles 8, 11, 15, 16 and 17 of the Charter and Sections 4.03, 4.04, 10.01 and 11.01 of the Bylaws, (ii) any shareholder rights plan or " poison pill" including the Rights Agreement, (iii) any employment or severance agreement and any Employee Plan that provides for enhanced benefits to officers, directors or employees of the Company or any of its Subsidiaries or any acceleration of any such benefits in connection with the consummation of an Acquisition Proposal involving the Company or any of its Subsidiaries, including the Employee Agreements and the Employee Plans, (iv) any contract or agreement to which the Company is a party that imposes on the Company or any of its Subsidiaries a material cost, or deprives the Company or any of its Subsidiaries of a material asset or benefit, in either case, in connection with the consummation of an Acquisition Proposal involving the Company or any of its Subsidiaries, (v) any Applicable Law, the effect of which is to provide special rights, including economic and voting rights, in connection with the consummation of an Acquisition Proposal involving the Company or any of its Subsidiaries, including the Pennsylvania Law and (vi) any act by the Board, the Company or any of its Subsidiaries that is intended to have or has any of the effects described in clauses (i) through (iv) above. " Designated Area" means the states of Maine, Vermont, New Hampshire, Massachusetts, Rhode Island, Connecticut, New York, New Jersey, Pennsylvania, Ohio, Delaware, Maryland, West Virginia, Kentucky, Virginia and North Carolina and the District of Columbia. " Environmental Law" means any foreign, federal, state or local law (including common law), statute, ordinance, rule, regulation, code, license, permit, authorization, approval, consent, order, judgment, decree, injunction requirement or restriction or agreement with any Governmental Authority relating to (i) the protection, preservation or restoration of the environment (including, without limitation, air, water vapor, surface water, groundwater, drinking water supply, surface soil, subsurface soil, plant and animal life or any other natural

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resource), (ii) the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of any substance presently listed, defined, designated or classified as hazardous, toxic, radioactive or dangerous, or otherwise regulated, whether by type or by quantity, including any material containing any such substance as a component, and/or (iii) employee health and safety matters. " ERISA" means the Employee Retirement Income Security Act of 1974. " ERISA Affiliate" of any entity means any other entity which, together with such entity, would be treated as a single employer under Section 414 of the Code. " Exchange Act" means the Securities Exchange Act of 1934. " Exclusive Agreement" means a legally binding merger, acquisition or similar agreement relating to a 100% Acquisition Proposal pursuant to which the Board is prohibited from soliciting Acquisition Proposals, entertaining any Unsolicited Acquisition Proposals from Persons who are not a party to such agreement and not permitting the Company or the Board to terminate such agreement based on the receipt of any other Acquisition Proposal. " FDIA" means the Federal Deposit Insurance Act, as amended. " FDIC" means the Federal Deposit Insurance Corporation. " Federal Reserve Board" means the Board of Government of the Federal Reserve System. " First Standstill Period" means the 24-month period commencing on the Closing Date. " GAAP" means generally accepted accounting principles in the United States as in effect from time to time. " Governmental Authority" means any transnational, domestic or foreign federal, state or local, governmental authority, department, court, agency or official, including any political subdivision thereof. " Group" has the meaning assigned to it in Section 13(d)(3) of the Exchange Act. " HOLA" means the Home Owners' Loan Act of 1933. " Hostile Action" means (i) with respect to Voting Securities, any unsolicited offer, tender offer or other acquisition proposal or acquisition of

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Voting Securities made without the prior consent or invitation of the Board, (ii) any initiation of or participation in any Proxy Solicitation against any action approved by a majority of the Unaffiliated Directors or for any action opposed by the Unaffiliated Directors, or (iii) a failure to vote in favor of the slate of Board nominees recommended by the Board at any time after the PA Law Termination Date; provided that Acquisition Proposals that Buyer is permitted to make under the terms of this Agreement shall not constitute Hostile Actions. " Independence" means Independence Community Bank Corp. " Independence Agreement" means the Agreement and Plan of Merger dated as of the date hereof by and among the Company, Independence and Iceland Acquisition Corp., as in effect on the date hereof. " Independence Transaction" means the transactions contemplated by the Independence Agreement. " Knowledge" of any Person that is not an individual means the actual knowledge of such Person' s officers after reasonable inquiry. " Lien" means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest, encumbrance or other adverse claim of any kind in respect of such property or asset. For the purposes of this Agreement, a Person shall also be deemed to own, subject to a Lien, any property or asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such property or asset. " Majority Board Change" means as to any Person, any action, event, transaction or set of circumstances that results in a majority of the members of the board of directors of such Person being persons who were not members of such board of directors (the " Pre-existing Directors" ) before such action, event, transaction or set of circumstances, or successors to such Pre-existing Directors who were nominated for election by such board of directors (or any Nominating Committee thereof) or elected by such board of directors to fill a vacancy in such board of directors. " Material Adverse Effect" shall mean, with respect to the Company, any material adverse effect on its business, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole; provided that in determining whether a Material Adverse Effect has occurred, there shall be excluded any effect resulting from, or attributable to, (i) any change in interest rates generally, (ii) any change occurring after the date hereof in any federal or state law, rule or regulation (or in any interpretation of the foregoing) or in GAAP or applicable regulatory accounting principles, which change affects banking

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institutions (or their holding companies) generally, (iii) changes in general economic or political conditions affecting banking institutions (or their holding companies) generally, (iv) this Agreement or the Independence Agreement, including the announcement of the transactions contemplated by this Agreement or of the Independence Transaction, (v) expenses (including legal fees, costs and expenses relating to any litigation) and costs arising as a result of the transactions contemplated by this Agreement or the Independence Agreement, (vi) actions or omissions of the Company or any of its Subsidiaries with the prior written consent of Buyer in furtherance of the transactions contemplated hereby or by the Independence Agreement or otherwise required to be taken by the Company or any of its Subsidiaries hereunder or under the Independence Agreement or (vii) actions taken by Buyer or its Affiliates in breach of Buyer' s obligations hereunder; and provided further that, a decrease in the trading or market price of the Common Stock shall not be considered by itself and without regard to matters affecting the business, financial condition or results of operations of the Company or its Subsidiaries, to constitute a Material Adverse Effect. " Material Subsidiary" means any Subsidiary whose assets constitute more than 10% of the total consolidated assets of the Company and its Subsidiaries. " 100% Acquisition Proposal" means any Acquisition Proposal, whether payable in cash, securities or a combination thereof, by any Person or Group to acquire Beneficial Ownership of 100% of the equity securities (including those issuable pursuant to Convertible Rights) of the Company that are not already Beneficially Owned by such Person or Group. " OTS" means the Office of Thrift Supervision. " Ownership Percentage" means, at any time, (a) with respect to Voting Securities Beneficially Owned by Buyer or its Affiliates, the quotient, expressed as a percentage, of (i) the Total Voting Power of all Voting Securities Beneficially Owned by Buyer and its Affiliates divided by (ii) the Total Voting Power of all Voting Securities then outstanding and (b) with respect to any Participating Preferred Stock, the greater of (x) the Ownership Percentage of the Voting Securities Beneficially Owned by Buyer and its Affiliates at such time and (y) the quotient, expressed as a percentage, of (A) the total number of Participating Preferred Shares owned by Buyer and its Affiliates at such time divided by (B) the total number of all shares of Participating Preferred Stock outstanding at such time; provided that, to the extent that the Ownership Percentage of Buyer or its Affiliates is reduced as a result of actions taken by the Company or the Company Subsidiaries or by holders of Convertible Rights and such Ownership has not been fully restored pursuant to Section 2.04 to the Ownership Percentage of Buyer or its Affiliates prior to such actions other than as a result of a failure by Buyer to exercise its rights thereunder, then for purposes of Sections 5.02(b), 6.02(b),

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8.04, 8.09 and 8.11 and for purposes of the Registration Rights Agreement, Buyer' s Ownership Percentage shall be calculated without giving effect to the dilution in such Ownership Percentage arising out of such actions and before giving effect to any actions taken by Buyer or the Company pursuant to Section 2.04. " PA Law Termination Date" means the first date on which the Pennsylvania Law shall have become inapplicable to the transactions contemplated by this Agreement or inapplicable to the Company in accordance with Applicable Law and the Charter. " Participating Preferred Stock" means any preferred stock of the Company, whether or not Voting Securities, that has the right to participate together with the Common Stock in connection with distributions of dividends. " Pennsylvania Law" means Subchapter E of Chapter 25 of the Pennsylvania Business Corporation Law of 1988, as amended, 15 Pa. C.S. Sections 2541-2548. " Person" means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a Governmental Authority. " PIERS Instruments" means the Contingent Convertible Trust Preferred Income Equity Redeemable Securities issued by Sovereign Capital Trust IV. " Pre-closing Period" means the period commencing on the date hereof and ending on the Closing Date. " Prevailing Fair Market Value" means, (i) as to any securities (other than Publicly Traded Securities) or other property, the cash price at which a willing seller would sell and a willing buyer would buy such securities or property in an arm' s length negotiated transaction without time constraints, as determined by an internationally recognized investment banking firm selected by mutual agreement of Buyer and the Company, and (ii) with respect to Publicly Traded Securities, as of any date, the arithmetic average weighted by reference to the daily trading volume of the closing prices of such securities on their principal exchange or quotation system for the 20 consecutive trading days immediately preceding the applicable date of determination. " Proxy Solicitation" means any solicitation of proxies (as such words are defined in Rule 14a-1 of Regulation 14A promulgated pursuant to the Exchange Act disregarding clause (iv) of Rule 14a-1(1)(2) and including exempt solicitations pursuant to Rule 14a-2(b)(1)).

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" Publicly Traded Securities" means any securities that are listed and regularly traded on a national securities exchange (including the New York Stock Exchange and the Madrid Stock Exchange) or quoted on the NASDAQ National Market or t ...