AGREEMENT
                                    ---------

     THIS AGREEMENT ("Agreement") made as of the 1st of July, 1997, between
SOVEREIGN BANCORP, INC., a Pennsylvania business corporation and savings and
loan holding company ("Sovereign"), and JOSEPH P. CAMPANELLI, an individual (the
"Executive").

                                   WITNESSETH:
                                   ----------

     WHEREAS, Sovereign Bank, a federal savings bank (the "Bank"), is a
wholly-owned subsidiary of Sovereign;

     WHEREAS, concurrently with the execution of this Agreement, the Bank is
executing an asset purchase agreement (the "Asset Purchase Agreement") with
Fleet Financial Group, Inc. ("Fleet"), and various affiliates (collectively, the
"Sellers"), relating to the purchase of certain assets and the assumption of
certain liabilities by the Bank, comprising the indirect consumer auto loan
business (the "Business") of the Sellers;

     WHEREAS, Sovereign and the Executive desire to enter into an agreement
regarding, among other things, the continued employment of the Executive by
Sovereign in the Bank's Auto Finance Division.

                                   AGREEMENT:
                                   ---------

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

     1. Employment. Sovereign hereby employs the Executive, and the Executive
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hereby accepts employment with the Bank, on the terms and conditions set forth
in this Agreement. Sovereign agrees that the Executive will not be required to
relocate his office more than fifty (50) miles from Boston, Massachusetts.

     2. Duties of Employee. The Executive shall perform and discharge such
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duties as an executive officer of Sovereign as may be reasonably assigned to the
Executive from time to time by the Board of Directors or the Chief Executive
Officer of Sovereign consistent with the responsibilities set forth in the job
description attached as Exhibit A hereto. The Executive shall be employed as
Executive Vice President and Director of Sovereign Auto Loan Company, a division
of the Bank, and shall hold such other titles as may be given to him from

<PAGE>

time to time by the Board of Directors or the Chief Executive Officer of
Sovereign. The Executive shall devote his full time, attention and energies to
the business of the Bank and shall not, during the Employment Period (as defined
in Section 3 hereof), be employed or involved in any other business activity,
whether or not such activity is pursued for gain, profit or other pecuniary
advantage; provided, however, that this Section 2 shall not be construed as
preventing the Executive from (a) investing the Executive's personal assets or
(b) being involved in any other activity with the prior approval of the Chief
Executive Officer of Sovereign. Nothing in this Section 2 shall restrict the
ability of Sovereign to promote the Executive or to increase his
responsibilities.

     3. Term of Employment. The Executive's employment under this Agreement
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shall be for a period (the "Employment Period") commencing on the date of
closing of the transactions contemplated by the Asset Purchase Agreement and
ending on the date that is two (2) years subsequent thereto, provided that on
the first and each subsequent annual anniversary date of the date of closing of
the transactions contemplated by the Asset Purchase Agreement, and unless a
party has given the other party written notice at least sixty (60) days prior to
such anniversary date that such party does not agree to renew this Agreement,
the term of this Agreement and the Employment Period shall be deemed renewed for
a term ending two (2) years subsequent to such anniversary date, unless sooner
terminated in accordance with this Section 3. Notwithstanding the foregoing,
this Agreement and the Executive's employment hereunder shall terminate:

        (a) The Executive's employment under this Agreement may be terminated
     at any time during the Employment Period for "Cause" (as herein defined),
     by action of the Board of Directors of Sovereign, upon giving notice of
     such termination to the Executive at least thirty (30) days prior to the
     date of such termination. Bancorp shall deliver such notice within thirty
     (30) days of the event constituting such Cause. As used in this Agreement,
     "Cause" means any of the following events:

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

               (ii) The Executive willfully fails to follow the lawful
          instructions of the Board of Directors or the Chief Executive Officer
          of Sovereign, which instructions are not inconsistent with the
          responsibilities set forth in the job description attached as Exhibit
          A hereto, as the same may be increased from time to time, after the
          Executive's receipt of good faith written notice of such instructions,
          if

<PAGE>

          such failure is not cured prior to the expiration of thirty days,
          other than a failure resulting from the Executive's incapacity because
          of physical or mental illness;

               (iii) The Executive willfully violates Sovereign's Code of
          Conduct as it may be amended from time to time (a copy of which as in
          effect on the date of this Agreement is attached hereto as Exhibit B)
          or any material banking statute or regulation or order applicable to
          Sovereign or the Bank; or

               (iv) The Office of Thrift Supervision or any other government
          regulatory agency having jurisdiction over Sovereign or the Bank
          recommends in writing to the Board of Directors or orders that
          Sovereign terminate the employment of the Executive or relieve him of
          his duties.

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

        (b) The Executive's employment under this Agreement may be terminated
     (i) at any time during the Employment Period without "Cause" (as defined in
     Section 3(a) hereof), by action of the Board of Directors or the Chief
     Executive Officer of Sovereign, upon giving notice of such termination to
     the Executive at least thirty (30) days prior to the date upon which such
     termination shall take effect or (ii) by the Executive for Good Reason (as
     defined in Section 5) following a Change in Control (as defined in Section
     5) as provided herein. If the Executive's employment is terminated under
     the provisions of this Section 3(b), then the Executive shall be entitled
     to receive the compensation and benefits set forth in Section 5 hereof.

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

          (d) If the Executive is incapacitated by accident, sickness, or
     otherwise so as to render the Executive mentally or physically incapable of
     performing the services required of the Executive under Section 2 of this

<PAGE>

     Agreement for a continuous period of six (6) months, then, upon the
     expiration of such period or at any time thereafter, by action of the Board
     of Directors or the Chief Executive Officer of Sovereign, the Executive's
     employment under this Agreement may be terminated immediately upon giving
     the Executive notice to that effect. If the Executive's employment is
     terminated under the provisions of this Section 3(d), then all rights of
     the Executive under Section 4 hereof shall cease as of the last business
     day of the week in which such termination occurs and any other amounts or
     benefits payable to the Executive shall be determined in accordance with
     the retirement and insurance programs of Sovereign then in effect.

     4.   Employment Period Compensation.
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          (a) Salary. For services performed by the Executive under this
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     Agreement, Sovereign shall pay the Executive a salary, during the
     Employment Period, at the rate of One Hundred Fifty Thousand Dollars
     ($150,000.00) per year, payable at the same times as salaries are payable
     to other executive employees of Sovereign. Sovereign will review the
     Executive's salary for possible increase at least annually on each
     anniversary date of closing the transactions contemplated by the Asset
     Purchase Agreement, and any and all such increases shall be deemed to
     constitute amendments to this Section 4(a) to reflect the increased
     amounts, effective as of the dates established for such increases.

          (b) Bonus. For services performed by the Executive under this
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     Agreement, Sovereign shall pay the Executive an annual bonus, during the
     Employment Period, on the annual anniversary date of closing the
     transactions contemplated by the Asset Purchase Agreement in such amounts
     and at such times as is provided pursuant to the terms of the Bank's
     Automotive Finance Division Executive Incentive Plan or any successor plan
     as shall be approved by the Board of Directors of Sovereign and in effect
     from time to time. The payment of any such bonuses shall not reduce or
     otherwise affect any other obligation of Sovereign to the Executive
     provided for in this Agreement. In no event shall the bonus payable to the
     Executive under this Section 4(b) for the initial twelve (12) months of
     this Agreement be less than Fifty Thousand Dollars ($50,000.00).

          (c) Stock Options. The Executive shall receive, as soon as practicable
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     following execution of this Agreement, a grant of 12,500 nonqualified stock
     options issuable under Sovereign's existing employee stock option plan at
     an exercise price determined in accordance with such plan as of the date of
     this Agreement. Such options shall be granted under the terms and
     conditions of such plan with the exception that

<PAGE>

     5,000 of such options shall vest only in the event that the Executive is an
     employee of Sovereign on the second anniversary date of the closing of the
     transactions contemplated by the Asset Purchase Agreement.

          (d) Other Benefits. Except as otherwise provided in Section 4(e), the
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     Executive shall be entitled to participate in Sovereign's tax-qualified
     employee benefit plans and the Bank shall provide the Executive, during the
     Employment Period, with insurance, vacation, pension, and other fringe
     benefits in the aggregate not less favorable than those received by other
     comparable executive employees of Sovereign. The benefits to be provided to
     the Executive as of the date of this Agreement are set forth on Exhibit C
     attached hereto. To the extent Sovereign or the Bank is unable to provide
     the Executive any of the benefits set forth on Exhibit C, Sovereign or the
     Bank will reimburse the Executive for the cost to obtain comparable
     benefits.

          (e) Certain Pension Benefits.
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               (i) Notwithstanding anything herein to the contrary, the
          Executive shall be provided, on an unfunded nonqualified deferred
          compensation basis, the additional pension benefit rights specified in
          this subsection. These additional rights are being granted in
          recognition of the fact that he will not otherwise be entitled to
          similar benefits under certain of Sovereign's tax-qualified pension
          benefit plans because of such plans' participation (and, possibly,
          vesting) provisions. Supplemental benefits provided under this
          subsection shall be provided pursuant to either (A) one or more of
          Sovereign's existing unfunded nonqualified plans, (B) one or more of
          such plans as they may hereafter be amended, or (C) one or more new
          unfunded nonqualified plans to be established for such purposes.

               (ii) The Executive shall receive past service credit, for
          participation and vesting purposes, for determining the defined
          benefit pension to which he may be directly or indirectly entitled
          from Sovereign. The amount of such service credit shall be equivalent
          to the service credit earned by him under Fleet's tax-qualified
          defined benefit pension plan to the date of the closing ("Closing
          Date") under the Asset Purchase Agreement. Regardless of the date on
          which he becomes a participant in Sovereign's tax-qualified defined
          benefit plan ("DB Plan"), he shall be entitled, at any time and from
          time to time after the date of this Agreement, to a nonqualified
          defined benefit pension payable from the general assets of Sovereign
          actuarially equivalent to the excess of (i) the actuarial value of the
          benefit to

<PAGE>

          which he would be entitled under the DB Plan if he had become a
          participant therein on the Closing Date with the Fleet past service
          credit referred to above, over (ii) the actual actuarial value of the
          benefit to which he is entitled under the DB Plan. For purposes of
          making such determinations, the actuarial, mortality and similar
          factors used by the DB Plan at any relevant time shall be the factors
          utilized.

               (iii) The Executive shall receive past service credit, for
          participation and vesting purposes, for determining the employee stock
          ownership plan ("ESOP") benefit to which he may be directly or
          indirectly entitled from Sovereign. The amount of such service credit
          shall be the same as the amount of service credit determined in
          Paragraph (ii). Regardless of the date on which he becomes a
          participant in Sovereign's ESOP, he shall be entitled, at any time and
          from time to time after the date of this Agreement, to a nonqualified
          benefit payable from the general assets of Sovereign equal to the
          excess of (i) the value of the benefit to which he would be entitled
          under the ESOP if he had become a participant therein on the Closing
          Date with the Fleet past service credit determined in Paragraph (ii),
          over (ii) the actual benefit to which he is entitled under the ESOP.
          For purposes of making such determinations, the ESOP contribution
          percentages generally applicable to executive employees for 1997 and
          1998 shall be used, without adjustment for the fact that such
          percentage may have been different if he had been a participant for
          such year. The benefit provided under this paragraph shall be paid in
          cash and shall be determined by reference to the value of Sovereign
          common stock as of the relevant valuation date.

               (iv) All supplemental benefits calculations to be provided under
          this subsection shall be performed by Sovereign's actuarial consulting
          firm at the relevant time. Such calculations shall be subject to
          review and agreement by the Executive's advisors upon his request.

     5.   Resignation of the Executive for Good Reason.
          --------------------------------------------
          (a) The Executive may resign for "Good Reason" (as herein defined)
     during the Employment Period without regard to the occurrence of a Change
     in Control (as defined in Section 5(b) hereof) (except for the event of
     Good Reason set forth in Section 5(a)(vii) for which the Executive may
     resign at any time during the two (2) year period following a Change in

<PAGE>

     Control), as hereinafter set forth. As used in this Agreement, "Good
     Reason" means any of the following:

               (i) a reduction by Sovereign in the Executive's base salary
          except for across-the-board salary reductions similarly affecting all
          senior executives of Sovereign and all senior executives of any person
          in control of Sovereign;

               (ii) the failure by Sovereign, without the Executive's consent,
          to pay the Executive any portion of his current compensation except
          pursuant to an across-the-board compensation deferral similarly
          affecting all senior executives of Sovereign and all senior executives
          of any person in control of Sovereign, or to pay to the Executive any
          portion of an installment of deferred compensation under any deferred
          compensation program of Sovereign, within thirty (30) days of the date
          such compensation is due;

               (iii) the failure by Sovereign or Sovereign to continue in effect
          any employee benefit plan, including any incentive compensation plan,
          which is material to the Executive's total compensation, unless such
          plan (A) is replaced by a successor plan providing substantially
          similar compensation and benefits (which replacement plan shall
          continue to be subject to this provision) or (B) terminates as a
          result of the normal expiration of such plan in accordance with its
          terms; or the taking of any other action, or the failure to act, by
          Sovereign which would materially adversely affect the Executive's
          continued participation in any of such plans, including by materially
          reducing the Executive's compensation opportunities or benefits in the
          future under any such plans;

               (iv) the failure by Sovereign to provide and credit the Executive
          with the number of paid vacation days to which he is entitled in
          accordance with Sovereign's vacation policy applicable to the
          Executive;

               (v) a change by Sovereign in the position of the Executive which
          does not represent a position commensurate in level, authority and
          responsibilities with, or assigning the Executive responsibilities
          which are materially inconsistent with, the duties and
          responsibilities set forth in the job description attached on Exhibit
          A hereto;

<PAGE>

               (vi) Sovereign's requiring the Executive to be based anywhere
          more than 50 miles from Boston, Massachusetts; or

               (vii) at any time during the two (2) year period following a
          Change in Control, a change by Sovereign in the position of the
          Executive which does not represent a position commensurate in level,
          authority and responsibilities with, or a promotion from the
          Executive's position with Sovereign immediately prior to the date of
          the Change in Control, or assigning the Executive responsibilities
          which are materially inconsistent with such prior position, as
          determined in the good faith reasonable judgment of the Executive.

          In each case after notice in writing from the Executive to Sovereign
          and a period of 30 days after such notice during which Sovereign fails
          to correct such conduct.

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

               (i) Any "person" (including a group acting in concert, as the
          term "person" is defined in Section 13(d) of the Exchange Act, as
          enacted and in force on the date hereof) becomes the "beneficial
          owner" (as that term is defined in Rule 13d-3, as enacted and in force
          on the date hereof, under the Exchange Act) of securities of Sovereign
          representing 25% or more of the combined voting power of Sovereign's
          securities then outstanding;

               (ii) there occurs a merger, consolidation or other business
          combination or reorganization to which Sovereign or the Bank is a
          party, whether or not approved in advance by the Board of Directors of
          Sovereign or the Bank (as the case may be) in which the members of the
          Board of Directors of Sovereign or the Bank (as the case may be)
          immediately preceding the consummation of such transaction do not
          constitute a majority of the members of the Board of Directors of the
          resulting corporation and of any parent corporation thereof
          immediately after the consummation of such transaction;

<PAGE>

               (iii) there occurs a sale, exchange, transfer, or other
          disposition of substantially all of the assets of Sovereign or the
          Bank to another entity;

               (iv) there occurs a contested proxy solicitation of the
          stockholders of Sovereign that results in the contesting party
          obtaining the ability to elect candidates to a majority of the
          positions on Sovereign's Board of Directors next up for election; or

               (v) there occurs a tender offer for the shares of voting
          securities of Sovereign that results in the tender offeror obtaining
          securities representing 25% or more of the combined voting power of
          Sovereign's securities then outstanding.

     6.   Rights in Event of Termination of Employment.
          --------------------------------------------
          (a) In the event that the Executive's employment is terminated by
     Sovereign without Cause during the Employment Period or the Executive
     terminates his employment for Good Reason, the Executive shall be entitled
     to receive the amounts and benefits set forth in this Section 6.

               (i) annual salary otherwise payable through the date of
          termination of employment, together with salary, incentive
          compensation or benefits which have been earned or become payable as
          of the date of termination but which have not yet been paid;

               (ii) a lump-sum severance payment equal to the sum of the
          Executive's base salary in effect immediately prior to the date of
          termination or, if greater, immediately prior to the date of the
          Change in Control plus the highest of the last three annual bonuses
          prior to the date of termination, multiplied by 2.0;

               (iii) for a period of 24 months after the date of termination of
          employment, benefits equivalent to the additional benefits the
          Executive would have received under the qualified and nonqualified
          pension plans in which the Executive was participating immediately
          prior to termination, as if the Executive had received credit under
          such plans for service with the Bank during such period following the
          Executive's termination, with such benefits payable by Sovereign at
          the same times, under the same terms, and in the same manner as such
          benefits would have been received by the Executive under such plans;

<PAGE>

               (iv) a lump-sum payment equal to the present value of the
          Executive's accrued benefit, if any, which shall be fully vested at
          date of termination of employment, under Sovereign's supplemental,
          nonqualified pension plans, unless funded in a secular trust; and

               (v) for a period terminating on the earlier of 24 months
          following the date of termination of employment and the commencement
          of equivalent benefits from a new employer, maintenance in effect for
          the continued benefit of the Executive and his dependents of:

                    (A) all insured and self-insured medical and dental benefit
               plans of Sovereign in which the Executive was participating
               immediately prior to termination, provided that the Executive's
               continued participation is possible under the general terms and
               conditions of such plans (and any applicable funding media) and
               the Executive continues to pay an amount equal to the Executive's
               regular contribution for such participation; and

                    (B) the group life insurance and group disability insurance
               policies of Sovereign then in effect for the Executive;

          provided, however, that if Sovereign so elects, or if such continued
          participation is not possible under the general terms and conditions
          of such plans or under such policies, Sovereign, in lieu of the
          foregoing, shall arrange to have issued for the benefit of the
          Executive and the Executive's dependents individual policies of
          insurance providing benefits substantially similar (on an after-tax
          basis) to those described in this paragraph (v), or, if such insurance
          is not available at a reasonable cost to Sovereign, shall otherwise
          provide the Executive and the Executive's dependents equivalent
          benefits (on an after-tax basis); provided further that, in no event
          shall the Executive be required to pay any premiums or other charges
          in an amount greater than that which the Executive would have paid in
          order to participate in Sovereign's plans and policies.

          (b) All payments required by clauses (i), (ii), and (iv) of paragraph
     (a) of this Section 6 shall be paid in cash not later than the thirtieth
     (30th) day following the date of termination of employment.

          (c) In the event of the death of the Executive, all payments hereunder
     due the Executive, shall be paid to his designated beneficiary or as
     provided in Section 14(b).

<PAGE>

          (d) The Executive shall not be required to mitigate the amount of any
     payment provided for in this section by seeking employment or otherwise nor
     shall the amount of any payment provided for in this Section be reduced or
     offset by the Executive's subsequent employment.

          (e) The Executive agrees that the amounts set forth in this Section 6
     constitute the Executive's sole and exclusive remedy in the event of a
     termination by Sovereign of the Executive's employment without Cause or a
     termination by the Executive of his employment for Good Reason.

     7.   Covenant Not to Compete; Nonsolicitation.
          ----------------------------------------
          (a) The Executive hereby acknowledges and recognizes the highly
     competitive nature of the business of Sovereign and of the Bank and
     accordingly agrees that, during and for the applicable period set forth in
     Section 7(c) hereof, the Executive shall not:

               (i) be engaged, directly or indirectly, either for his own
          account or as agent, consultant, employee, partner, officer, director,
          proprietor, investor (except as an investor owning less than 5% of the
          stock of a publicly owned company) or otherwise of, any person, firm,
          corporation, or enterprise engaged, in an indirect consumer motor
          vehicle lending business or in the business of offering floor plan and
          automobile leasing lines of credit (the "Business") in any geographic
          area in which, at any time during the Employment Period, Sovereign (or
          any of its affiliates) conducts the Business (the "Non-Competition
          Area"); or

               (ii) provide financial or other assistance to any person, firm,
          corporation, or enterprise engaged in the Business in the
          Non-Competition Area; or

               (iii) engage in any of the foregoing types of business with, or
          solicit the sale of or sell any financial service or product relating
          to the Business to, any customer or client of Sovereign, including
          former customers or clients of the Sellers, or any Dealer (as defined
          in the Asset Purchase Agreement); or

               (iv) solicit or hire any employees of Sovereign or the Bank who
          are engaged in the Business or induce any of such employees to
          terminate their employment relationship with Sovereign or the Bank.

<PAGE>

          (b) It is expressly understood and agreed that, although the Executive
     and Sovereign consider the restrictions contained in Section 7(a) hereof
     reasonable for the purpose of preserving for Sovereign and its subsidiaries
     their good will and other proprietary rights, if a final judicial
     determination is made by a court having jurisdiction that the time or
     territory or any other restriction contained in Section 7(a) hereof is an
     unreasonable or otherwise unenforceable restriction against the Executive,
     the provisions of Section 7(a) hereof shall not be rendered void but shall
     be deemed amended to apply as to such maximum time and territory and to
     such other extent as such court may judicially determine or indicate to be
     reasonable.

          (c) The provisions of this Section 7 shall be applicable commencing on
     the date of this Agreement and ending on the date that is twelve (12)
     months following the Executive's termination of employment unless the
     Executive's employment is terminated without Cause as provided in Section
     3(b) or the Executive resigns for Good Reason following a Change in Control
     as provided in Section 6 in which case the provisions of this Section 7
     shall be applicable on the date of this Agreement and ending on the date of
     termination of the Executive's employment.

     8.   No Disclosure of Confidential Information.
          -----------------------------------------
          (a) The Executive agrees that all customer lists, dealer lists, files
     and records now or hereafter used by Sovereign, including those acquired by
     the Bank pursuant to the Asset Purchase Agreement and those used by him in
     his employment by the Sellers, are the property of Sovereign and are its
     trade secrets. Accordingly, the Executive acknowledges that Sovereign's
     trade secrets as they may exist from time to time and other confidential
     information concerning Sovereign's business, products, technical
     information, sales activities, procedures, promotion, pricing techniques,
     business plans, customer and dealer lists and credit and financial data
     concerning customers are valuable, special and unique assets of Sovereign,
     access to and knowledge of which are essential to the performance of the
     Executive's duties under this Agreement. In light of the highly competitive
     nature of the industry in which the business of Sovereign is conducted, the
     Executive further agrees that all knowledge and information described in
     the preceding sentence not in the public domain and heretofore or in the
     future obtained by the Executive as a result of employment by Sovereign
     shall be considered confidential information. In recognition of this fact,
     the Executive agrees that the Executive will not, during or after the
     Employment Period, disclose any of such confidential information to any
     person or other entity for any reason or purpose

<PAGE>

     whatsoever, except as necessary in the performance of the Executive's
     duties as an employee of or consultant to Sovereign or any of its
     affiliates, nor shall the Executive make use of any such confidential
     information for the Executive's own purposes or for the benefit of any
     person or other entity (except Sovereign and its affiliates, if any) under
     any circumstances during or after the Employment Period.

          (b) Notwithstanding the provisions of Section 8(a) of this Agreement,
     Sovereign acknowledges and agrees that Sovereign's trade secrets and
     confidential information shall not be deemed to include (1) information
     which was in the Executive's possession prior to the Executive's employment
     by Sovereign or any of its affiliates, provided such information does not
     include customer or dealer lists or other assets acquired by the Bank (or
     intended to be acquired) from the Sellers, and is not known by the
     Executive to be subject to another confidentiality agreement with or other
     obligation of secrecy to Sovereign or any of its affiliates, (2)
     information which becomes generally available to and known by the public
     other than as a result of disclosure by the Executive or (3) information
     which becomes generally available to the Executive on a nonconfidential
     basis from a source other than the Bank or any of its affiliates, provided
     such source is not known by the Executive to be bound by a confidentiality
     agreement with or other obligation of secrecy to the Bank or any of its
     affiliates. In addition, nothing contained herein shall be deemed to
     preclude the Executive from responding to requests for information or
     inquiries from the Office of Thrift Supervision or the Federal Deposit
     Insurance Corporation.

     9. Arbitration. Sovereign and the Executive recognize that in the event a
        -----------
dispute should arise between them concerning the interpretation or
implementation of this Agreement, lengthy and expensive litigation will not
afford a practical resolution of the issues within a reasonable period of time.
Consequently, each party agrees that all disputes, disagreements and questions
of interpretation concerning this Agreement are to be submitted for resolution
to the American Arbitration Association (the "Association") in Hartford,
Connecticut. Sovereign, or the Executive, may initiate an arbitration proceeding
at any time by giving notice to the others in accordance with the rules of the
Association. The Association shall designate a single arbitrator to conduct the
proceeding, but Sovereign, and the Executive, may, as a matter of right, require
the substitution of a different arbitrator chosen by the Association. Each such
right of substitution may be exercised only once. The arbitrator shall not be
bound by the rules of evidence and procedure of the courts of the State of
Connecticut but shall be bound by the substantive law applicable to this
Agreement. The decision of the arbitrator,

<PAGE>

absent fraud, duress, incompetence or gross and obvious error of fact, shall be
final and binding upon the parties and shall be enforceable in courts of proper
jurisdiction. Following written notice of a request for arbitration, Sovereign
and the Executive shall each be entitled to an injunction restraining all
further proceedings in any pending or subsequently filed litigation concerning
this Agreement, except as otherwise provided herein.

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

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

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

     13. Entire Agreement; Other Arrangements Superseded. This Agreement
         -----------------------------------------------
contains the entire agreement of the parties relating to the subject matter of
this Agreement and supersedes any prior agreement of the parties. Nothing
contained herein shall in any way diminish amounts payable to the Executive from
his former employer with respect to any retention, stay or similar bonus.

     14. Successors, Binding Agreement.
         -----------------------------
          (a) Sovereign will require any successor (whether direct or indirect,
     by purchase, merger, consolidation, or otherwise) to all or substantially
     all of the business and/or assets of Sovereign to expressly assume and
     agree to perform this Agreement in the same manner and to the same extent
     that Sovereign would be required to perform it if no such succession had
     taken place. Failure by Sovereign to obtain such assumption and agreement
     prior to the effectiveness of any such succession shall constitute a breach
     of this Agreement and the provisions of Section 6 hereof

<PAGE>

     shall apply. As used in this Agreement, "Sovereign" shall mean Sovereign as
     hereinbefore defined and any successor to the respective business and/or
     assets of Sovereign as aforesaid which assumes and agrees to perform this
     Agreement by operation of law, or otherwise.

          (b) This Agreement shall inure to the benefit of and be enforceable by
     the Executive's personal or legal representatives, executors,
     administrators, heirs, distributees, devisees, and legatees. If the
     Executive should die while any amount is payable to the Executive under
     this Agreement if the Executive had continued to live, all such amounts,
     unless otherwise provided herein, shall be paid in accordance with the
     terms of this Agreement to the Executive's devisee, legatee, or other
     designee, or, if there is no such designee, to the Executive's estate.

     15. Effective Date. This Agreement shall become effective automatically
         --------------
concurrently with the closing of the transactions contemplated by the Asset
Purchase Agreement and shall have no force or effect prior thereto.

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

     17. Applicable Law, Jurisdiction. This Agreement shall be governed by and
         ----------------------------
construed in accordance with the domestic laws of the State of Connecticut
without regard to its conflicts of laws principles, unless and to the extent
preempted by the laws of the United States of America. Any action for
enforcement of any arbitration award rendered or to compel arbitration pursuant
to Section 9 shall be brought in the state or federal courts of the State of
Connecticut.

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

<PAGE>

     19. Offset for Bank Agreement. Notwithstanding anything herein contained,
         -------------------------
any compensation, payments or benefits of any nature whatsoever payable to the
Executive hereunder at any time shall be reduced and offset by the amount of any
compensation, payments or benefits received by the Executive under that certain
Agreement, dated the date hereof, between the Executive and the Bank.

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

                                            /S/ SOVEREIGN BANCORP, INC.

                                            /S/JOSEPH P. CAMPANELLI

Source: OneCLE Business Contracts.