Hector heads towards Santauruz, Matthew, Oswin, and Serra in tow. There he finds Eliwood's party under attack.
After trading Hector's group's weapons around so the undraftees can't attack, Hector proceeded to kick ass with both Axes, wrecking the shit out of everyone in the north as well as the Pegasus Knights, minus the Mercenary and an absconding Brigand. Serra was attacked, but that's a non-issue.
To the south, while Marcus retrieved the Secret Book from the village, all of the weapons were rounded up. Eliwood moved in to fight. First critting a Brigand who attacked Bartre. Next, after being stuck with a few arrows, he critted an Archer, and took down the cowardly Brigand.
Matthew snuck down to the shop and sold the Red Gem to buy some Iron Swords for Eliwood. When the two lords met, they worked together to take down Zagan, Eliwood dealing the final blow.
7 turns for Chapter 12.
Hector is level 7, Eliwood is level 3.