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Stock Option Agreement - Sovereign Bancorp Inc. and Bankers Corp.

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                             STOCK OPTION AGREEMENT

        THIS STOCK OPTION AGREEMENT ("Stock Option Agreement") dated February 5,
1997, is by and between SOVEREIGN BANCORP, INC., a Pennsylvania corporation
("Sovereign") and BANKERS CORP. a New Jersey corporation ("Bankers").

                                   BACKGROUND

        1. Sovereign and Bankers desire to enter into a Agreement and Plan of
Merger, dated February 5, 1997 (the "Agreement"), providing, among other things,
for the acquisition by Sovereign of Bankers through the merger of Bankers with
and into Sovereign, with Sovereign surviving the merger (the "Merger").

        2. As a condition to Sovereign to enter into the Plan, Bankers is
granting to Sovereign an option to purchase up to that number of shares of
common stock of Bankers as shall equal 19.9% of shares of common stock of
Bankers issued and outstanding immediately prior to such purchase, on the terms
and conditions hereinafter set forth.

                                    AGREEMENT

        In consideration of the foregoing and the mutual covenants and
agreements set forth herein, Sovereign and Bankers, intending to be legally
bound hereby, agree:

        1. Grant of Option. Bankers hereby grants to Sovereign, on the terms and
conditions set forth herein, the option to purchase (the "Option") up to
2,463,258 shares (as adjusted as set forth herein, the "Option Shares") of
common stock, par value $.01 per share (the "Common Stock"), of Bankers at a
price per share (as adjusted as set forth herein, the "Option Price") equal to
the lower of (i) $22.50 or (ii) the lowest price per share that a person or a
group, other than Sovereign or an affiliate of Sovereign, paid or offers to pay
after the date hereof for Common Stock in a transaction constituting a
Triggering Event under Section 2 hereof.

        2. Exercise of Option. Provided that (i) Sovereign shall not be in
breach of the agreements or covenants contained in this Agreement or the Plan,
and (ii) no preliminary or permanent injunction or other order against the
delivery of shares covered by the Option issued by any court of competent
jurisdiction in the United States shall be in effect, upon or after the
occurrence of a Triggering Event (as such term is hereinafter defined) and until
termination of this Stock Option Agreement in accordance with the provisions of
Section 21, Sovereign may exercise the Option, in whole or in part, at any



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time or one or more times, from time to time. As used herein, the term
"Triggering Event" means the occurrence of any of the following events:

          (a) a person or group (as such terms are defined in the Securities
     Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
     regulations thereunder), other than Sovereign or an affiliate of Sovereign,
     acquires beneficial ownership (within the meaning of Rule 13d-3 under the
     Exchange Act) of 10% or more of the then outstanding shares of Common Stock
     (excluding any shares eligible to be reported on Schedule 13G of the
     Securities and Exchange Commission);

          (b) a person or group, other than Sovereign or an affiliate of
     Sovereign, enters into an agreement or letter of intent with Bankers
     pursuant to which such person or group or any affiliate of such person or
     group would (i) merge or consolidate, or enter into any similar
     transaction, with Bankers, (ii) acquire all or substantially all of the
     assets or liabilities of Bankers or all or substantially all of the assets
     or liabilities of Bankers Savings the wholly-owned subsidiary of Bankers
     ("Bankers Savings"), or (iii) acquire beneficial ownership of securities
     representing, or the right to acquire beneficial ownership or to vote
     securities representing, 10% or more of the then outstanding shares of
     Common Stock (excluding any shares eligible to be reported on Schedule 13G
     of the Securities and Exchange Commission) or the then outstanding shares
     of common stock of Bankers Savings, or

          (c) a person or group, other than Sovereign or an affiliate of
     Sovereign, publicly announces a bona fide proposal (including a written
     communication that is or becomes the subject of public disclosure) for (i)
     any merger, consolidation or acquisition of all or substantially all the
     assets or liabilities of Bankers or all or substantially all the assets or
     liabilities of Bankers Savings, or any other business combination involving
     Bankers or Bankers Savings, or (ii) a transaction involving the transfer of
     beneficial ownership of securities representing, or the right to acquire
     beneficial ownership or to vote securities representing, 10% or more of the
     then outstanding shares of Common Stock or the then outstanding shares of
     common stock of Bankers Savings (collectively, a "Proposal"), and
     thereafter, if such Proposal has not been Publicly Withdrawn (as such term
     is hereinafter defined) at least 30 days prior to the meeting of
     shareholders of Bankers called to vote on the Merger, Bankers' shareholders
     fail to approve the Merger by the vote required by applicable law at the
     meeting of shareholders called for such purpose or such meeting has been
     cancelled; or




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          (d) a person or group, other than Sovereign or an affiliate of
     Sovereign, makes a bona fide Proposal and thereafter, but before such
     Proposal has been Publicly Withdrawn, Bankers willfully takes any action in
     a manner which would likely result in the failure of either party to
     satisfy a material condition to the closing of the Merger or materially
     reduce the value of the transaction to Sovereign; or

          (e) Bankers breaches, in any material respect, any binding term of the
     Agreement with respect to the Merger, or this Stock Option Agreement after
     a Proposal is made and before it is Publicly Withdrawn or publicly
     announces an intention to authorize, recommend or accept any such Proposal;

provided, however, that any purchase of shares upon exercise of the Option shall
be subject to compliance with applicable law.

        If more than one of the transactions giving rise to a Triggering Event
under this Section is undertaken or effected, then all such transactions shall
give rise only to one Triggering Event, which Triggering Event shall be deemed
continuing for all purposes hereunder until all such transactions are abandoned.

        "Publicly Withdrawn" for purposes of this Section 2 shall mean
an unconditional bona fide withdrawal of the Proposal coupled with a public
announcement of no further interest in pursuing such Proposal or in acquiring
any controlling influence over Bankers or in soliciting or inducing any other
person (other than Sovereign or an affiliate of Sovereign) to do so.

        Notwithstanding the foregoing, the obligation of Bankers to issue Option
Shares upon exercise of the Option shall be deferred (but shall not terminate)
(i) until the receipt of all required governmental or regulatory approvals or
consents necessary for Bankers to issue the Option Shares, or Sovereign to
exercise the Option, or until the expiration or termination of any waiting
period required by law, or (ii) so long as any injunction or other order, decree
or ruling issued by any federal or state court of competent jurisdiction is in
effect which prohibits the sale or delivery of the Option Shares, and, in each
case, notwithstanding any provision to the contrary set forth herein, the Option
shall not expire or otherwise terminate.

        Bankers shall notify Sovereign promptly in writing of the occurrence of
any Triggering Event known to it, it being understood that the giving of such
notice by Bankers shall not be a condition to the right of Sovereign to exercise
the Option. Bankers will not take any action which would have the effect of
preventing or disabling Bankers from delivering the Option Shares to Sovereign
upon exercise of the Option or otherwise performing its obligations under this
Stock Option Agreement. In the event Sovereign wishes to exercise the Option,
Sovereign shall send a



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written notice to Bankers (the date of which is hereinafter referred to as the
"Notice Date") specifying the total number of Option Shares it wishes to
purchase and a place and date between two and ten business days inclusive from
the Notice Date for the closing of such a purchase (a "Closing"); provided,
however, that a Closing shall not occur prior to two days after the later of
receipt of any necessary regulatory approvals or the expiration of any legally
required notice or waiting period, if any.

        3. Payment and Delivery of Certificates. At any Closing hereunder, (a)
Sovereign will make payment to Bankers of the aggregate price for the Option
Shares so purchased by wire transfer of immediately available funds to an
account designated by Bankers, (b) Bankers will deliver to Sovereign a stock
certificate or certificates representing the number of Option Shares so
purchased, registered in the name of Sovereign or its designee, in such
denominations as were specified by Sovereign in its notice of exercise, and (c)
Sovereign will pay any transfer or other taxes required by reason of the
issuance of the Option Shares so purchased.

        A legend will be placed on each stock certificate evidencing Option
Shares issued pursuant to this Stock Option Agreement, which legend will read
substantially as follows:

          "The shares of stock evidenced by this certificate have not been the
     subject of a registration statement filed under the Securities Act of 1933,
     as amended (the "Act"), and declared effective by the Securities and
     Exchange Commission. These shares may not be sold, transferred or otherwise
     disposed of prior to such time unless Bankers Corp. receives an opinion of
     counsel stating that an exemption from the registration provisions of the
     Act is available for such transfer."

        4. Registration Rights. Upon or after the occurrence of a Triggering
Event and upon receipt of a written request from Sovereign, Bankers shall
prepare and file as soon as practicable a registration statement under the
Securities Act of 1933, as amended, with the Securities and Exchange Commission
covering the Option and such number of Option Shares as Sovereign shall specify
in its request, and Bankers shall use its best efforts to cause such
registration statement to be declared effective in order to permit the sale or
other disposition of the Option and the Option Shares, provided that Sovereign
shall in no event have the right to have more than one such registration
statement become effective, and provided further that Bankers shall not be
required to prepare and file any such registration statement in connection with
any proposed sale with respect to which counsel to Bankers delivers to Bankers
and to Sovereign its opinion to the effect that no such filing is required under
applicable laws and regulations with respect to such sale or disposition;
provided, however, that Bankers may delay any registration of



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Option Shares above for a period not exceeding 90 days provided Bankers shall in
good faith determine that any such registration would adversely affect an
offering or contemplated offering of other securities by Bankers. Sovereign
shall provide all information reasonably requested by Bankers for inclusion in
any registration statement to be filed hereunder. In connection with such
filing, Bankers shall use its best efforts to cause to be delivered to Sovereign
such certificates, opinions, accountant's letters and other documents as
Sovereign shall reasonably request and as are customarily provided in connection
with registration of securities under the Securities Act of 1933, as amended.
Bankers shall provide to Sovereign such number of copies of the preliminary
prospectus and final prospectus and any amendments and supplements thereto as
Sovereign may reasonably request. All reasonable expenses incurred by Bankers in
complying with the provisions of this Section 4, including, without limitation,
all registration and filing fees, reasonable printing expenses, reasonable fees
and disbursements of counsel for Bankers and blue sky fees and expenses, shall
be paid by Bankers. Underwriting discounts and commissions to brokers and
dealers relating to the Option Shares, fees and disbursements of counsel to
Sovereign and any other expenses incurred by Sovereign in connection with such
filing shall be borne by Sovereign. In connection with such filing, Bankers
shall indemnify and hold harmless Sovereign against any losses, claims, damages
or liabilities, joint or several, to which Sovereign may become subject, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any preliminary or final registration
statement or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading;
and Bankers will reimburse Sovereign for any legal or other expense reasonably
incurred by Sovereign in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that Bankers will
not be liable in any case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such preliminary or final
registration statement or such amendment or supplement thereto in reliance upon
and in conformity with written information furnished by or on behalf of
Sovereign specifically for use in the preparation thereof. Sovereign will
indemnify and hold harmless Bankers to the same extent as set forth in the
immediately preceding sentence but only with reference to written information
furnished by or on behalf of Sovereign for use in the preparation of such
preliminary or final registration statement or such amendment or supplement
thereto; and Sovereign will reimburse Bankers for any legal or other expense
reasonably incurred by Bankers in connection with investigating or defending any
such loss, claim, damage, liability or action.


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        5. Adjustment Upon Changes in Capitalization. In the event of any change
in the Common Stock by reason of stock dividends, split-ups, recapitalizations,
combinations, conversions, divisions, exchanges of shares or the like, then the
number and kind of Option Shares and the Option Price shall be appropriately
adjusted.

        6. Filings and Consents. Each of Sovereign and Bankers will use its best
efforts to make all filings with, and to obtain consents of, all third parties
and governmental authorities necessary to the consummation of the transactions
contemplated by this Stock Option Agreement. Within 10 days from the date
hereof, Sovereign shall file a report of beneficial ownership on Form 13D with
the Securities and Exchange Commission under the Exchange Act which discloses
the rights of Sovereign hereunder.

        7. Representations and Warranties of Bankers. Bankers hereby represents
and warrants to Sovereign as follows:

          (a) Due Authorization. Bankers has full corporate power and authority
     to execute, deliver and perform this Stock Option Agreement and all
     corporate action necessary for execution, delivery and performance of this
     Stock Option Agreement has been duly taken by Bankers. This Stock Option
     Agreement constitutes a legal, valid and binding obligation of Bankers,
     enforceable against Bankers in accordance with its terms (except as may be
     limited by applicable bankruptcy, insolvency, reorganization, moratorium,
     fraudulent transfer and similar laws of general applicability relating to
     or affecting creditors' rights or by general equity principles).

          (b) Authorized Shares. Bankers has taken all necessary corporate
     action to authorize and reserve for issuance all shares of Common Stock
     that may be issued pursuant to any exercise of the Option.

        8. Representations and Warranties of Sovereign. Sovereign hereby
represents and warrants to Bankers that Sovereign has full corporate power and
authority to execute, deliver and perform this Stock Option Agreement and all
corporate action necessary for execution, delivery and performance of this Stock
Option Agreement has been duly taken by Sovereign. This Stock Option Agreement
constitutes a legal, valid and binding obligation of Sovereign, enforceable
against Sovereign in accordance with its terms (except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws of general applicability relating to or affecting
creditors' rights or by general equity principles).

        9. Specific Performance. The parties hereto acknowledge that damages
would be an inadequate remedy for a



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breach of this Stock Option Agreement and that the obligations of the parties
hereto shall be specifically enforceable.

        10. Entire Agreement. This Stock Option Agreement and the Agreement
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all other prior agreements and understandings, both
written and oral, among the parties or any of them with respect to the subject
matter hereof.

        11. Assignment or Transfer. Sovereign may not sell, assign or otherwise
transfer its rights and obligations hereunder, in whole or in part, to any
person or group of persons other than to a subsidiary of Sovereign. Sovereign
represents that it is acquiring the Option for Sovereign's own account and not
with a view to, or for sale in connection with, any distribution of the Option
or the Option Shares. Sovereign is aware that neither the Option nor the Option
Shares is the subject of a registration statement filed with, and declared
effective by, the Securities and Exchange Commission pursuant to Section 5 of
the Securities Act of 1933, as amended, but instead each is being offered in
reliance upon the exemption from the registration requirement provided by
Section 4(2) thereof and the representations and warranties made by Sovereign in
connection therewith.

        12. Amendment of Stock Option Agreement. By mutual consent of the
parties hereto, this Stock Option Agreement may be amended in writing at any
time, for the purpose of facilitating performance hereunder or to comply with
any applicable regulation of any governmental authority or any applicable order
of any court or for any other purpose.

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

        14. Notices. All notices, requests, consents and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given when delivered personally, by telegram or telecopy, or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties as follows:




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                     (i)      If to Sovereign, to:

                              Sovereign Bancorp, Inc.
                              1130 Berkshire Boulevard
                              Wyomissing, Pennsylvania  19610

                              Attention:  Jay S. Sidhu, President
                                          and Chief Executive Officer

                              Telecopy No.:  (610) 320-8448

                              with a copy to:

                              Stevens & Lee
                              111 North Sixth Street
                              P.O. Box 679
                              Reading, Pennsylvania  19603

                              Attention:  Joseph M. Harenza, Esquire
                                          David W. Swartz, Esquire

                              Telecopy No.:  (610) 376-5610

                     (ii)     If to Bankers, to:

                              Bankers Corp.
                              210 Smith Street
                              Perth Amboy, New Jersey  08861

                              Attention:  Joseph P. Gemmell
                                          Chairman of the Board, President
                                          and Chief Executive Officer

                              Telecopy No.:  (908) 324-7813

                              with copies to:

                              Thacher Proffitt & Wood
                              Two World Trade Center
                              New York, New York  10048

                              Attention: Omer S.J. Williams, Esquire

                              Telecopy No.: (212) 432-7152

or to such other address as the person to whom notice is to be given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).

        15. Governing Law. This Stock Option Agreement shall be governed by and
construed in accordance with the domestic internal law (but not the law of
conflicts of law) of the Commonwealth of Pennsylvania.



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        16. Captions. The captions in this Stock Option Agreement are inserted
for convenience and reference purposes, and shall not limit or otherwise affect
any of the terms or provisions hereof.

        17. Waivers and Extensions. The parties hereto may, by mutual consent,
extend the time for performance of any of the obligations or acts of either
party hereto. Each party may waive (i) compliance with any of the covenants of
the other party contained in this Stock Option Agreement and/or (ii) the other
party's performance of any of its obligations set forth in this Stock Option
Agreement.

        18. Parties in Interest. This Stock Option Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and, nothing in this
Stock Option Agreement, express or implied, is intended to confer upon any other
person any rights or remedies of any nature whatsoever under or by reason of
this Stock Option Agreement.

        19. Counterparts. This Stock Option Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.

        20. Expenses. Subject to the terms of the Plan and except as otherwise
provided herein, all costs and expenses incurred by the parties hereto in
connection with the transactions contemplated by this Stock Option Agreement or
the Option shall be paid by the party incurring such cost or expense.

        21. Termination. This Stock Option Agreement shall terminate and be of
no further force or effect upon the earliest to occur of (A) the Effective Time
or (B) termination of the Agreement in accordance with the terms thereof, except
that if the Agreement is terminated by Sovereign pursuant to Section 6.01(b)(i)
of the Agreement or pursuant to Section 6.01(b)(ii) of the Agreement (provided
the failure of the occurrence of the event specified in Section 6.01(b)(ii) of
the Agreement shall be due to the failure of Bankers to perform or observe its
agreements set forth in the Agreement required to be performed or observed by
Bankers prior to the Closing Date (as defined in the Agreement)), this Stock
Option Agreement shall not terminate until one year after the date of
termination of the Agreement.

        IN WITNESS WHEREOF, each of the parties hereto, pursuant to resolutions
adopted by its Board of Directors, has caused this Stock Option Agreement to be
executed by its duly authorized officer and has caused its corporate seal to be



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affixed hereunto and to be duly attested, all as of the day and year first
above written.

                                       SOVEREIGN BANCORP, INC.

                                       By /s/ Jay S. Sidhu
                                          -------------------------------
                                            Jay S. Sidhu,
                                            President and Chief
                                            Executive Officer

                                       BANKERS CORP.

                                       By /s/ Joseph P. Gemmell
                                          -------------------------------
                                            Joseph P. Gemmell
                                            Chairman of the Board,
                                            President and Chief Executive
                                            Officer



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