mgmtagree3.htm


    SUN
      BANCORP, INC.

    


    CHANGE
      IN CONTROL SEVERANCE AGREEMENT

    As
      Amended and Restated

    


    


    THIS
      CHANGE IN CONTROL SEVERANCE
      AGREEMENT ("Agreement") entered into this 18th day of October, 2007 ("Effective
      Date"), by and between Sun Bancorp, Inc. (the "Company") and Sidney R. Brown
      (the "Executive").

    


    WHEREAS,
      the Executive is currently
      employed by the Company as Vice Chairman and is experienced in all phases of
      the
      business of the Company; and

    


    WHEREAS,
      the parties desire by this
      writing to set forth the continuing rights and responsibilities of the Company
      and Executive if the Company should undergo a change in control (as defined
      hereinafter in the Agreement) after the Effective Date.

    


    NOW,
      THEREFORE, it is AGREED as
      follows:

    


    1.Employment.  The
      Executive is employed in the capacity as Vice Chairman of the
      Company.  The Executive shall render such administrative and
      management services to the Company and Sun National Bank ("Bank"),  as
      are currently rendered and as are customarily performed by persons situated
      in a
      similar executive capacity.  The Executive's other duties shall be
      such as the Board of Directors for the Company (the "Board of Directors" or
      "Board") may from time to time reasonably direct, including normal duties as
      an
      officer of the Company and the Bank.

    


    2.Term
      of
      Agreement.  The term of this Agreement shall be for the period
      commencing on the Effective Date and ending thirty-six (36) months thereafter
      ("Term").   Additionally, as of each December 31, thereafter, the
      Term of this Agreement shall be extended for an additional period such that
      the
      Term of the Agreement as of such date of extension shall be for a new period
      of
      thirty-six months thereafter; provided, however, such Term shall not be
      automatically extended as of December 31 of any given year if the Board shall
      give the Executive written notice not later October 1 immediately prior to
      such
      December 31 date that the Board has made a determination by an affirmative
      vote
      of not less than a majority of the members of the full Board then in office
      that
      such Agreement shall not be extended thereafter absent a future affirmative
      determination and resolution of the Board of Directors that the Term of such
      Agreement shall be extended beyond the then in effect expiration date of such
      Agreement.  The Term shall refer to the initial Term or any subsequent
      extension of such Term thereafter.

    


    
      	
               

            	
              3.Termination
                of Employment in Connection with or Subsequent to a Change in
                Control.

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (a)Notwithstanding
      any provision herein
      to the contrary, in the event of the involuntary termination of Executive's
      employment with the Company during the term of this Agreement following any
      Change in Control of the Company or Bank, or within 24 months thereafter of
      such
      Change in Control, absent Just Cause,  Executive shall be paid an
      amount equal to the product of 2.999 times the Executive's average annual
      aggregate taxable compensation paid by the Company as reported, or to be
      reported,  on the IRS Form W-2, box 1, or IRS Form 1099 for the most
      recently completed five calendar years ending on, or before, the date of such
      Change in Control.  Said sum shall be paid by the Company to the
      Executive in one (1) lump sum not later than the date of Executive's termination
      of service.  In addition, the Executive and his dependents shall be
      eligible to continue coverage under the Company's  (or its
      successor's) medical and dental insurance reimbursement plans similar to that
      in
      effect on the date of termination of employment at the participants' election
      and expense. Notwithstanding the forgoing, all sums payable hereunder shall
      be
      reduced in such manner and to such extent that the Bank shall have made payments
      to the Executive upon termination of employment in accordance with any
      Employment Agreement between the Executive and the Bank related to such Change
      in Control.  The term"Change in Control" shall refer to (i) the sale
      of all, or a material portion, of the assets of the Company or the Bank; (ii)
      the merger or recapitalization of the Company or the Bank whereby the Company
      or
      the Bank is not the surviving  entity; (iii) a change in control of
      the Company or the Bank, as otherwise defined or determined by the Office of
      the
      Comptroller of the Currency or regulations promulgated by it; or (iv) the
      acquisition, directly or indirectly, of the beneficial ownership (within the
      meaning of that term as it is used in Section 13(d) of the Securities Exchange
      Act of 1934 and the rules and regulations promulgated thereunder) of twenty-five
      percent (25%) or more of the outstanding voting securities of the Company or
      the
      Bank by any person, trust, entity or group.  The term "person" means
      an individual other than the Executive, or a corporation, partnership, trust,
      association, joint venture, pool, syndicate, sole proprietorship, unincorporated
      organization or any other form of entity not specifically listed
      herein.  The provisions of this  Section 3(a) shall survive
      the expiration of this Agreement occurring after a Change in
      Control.

     

    (b)Notwithstanding
      any other provision
      of this Agreement to the contrary, Executive may voluntarily terminate his
      employment during the term of this Agreement following a Change in Control
      of
      the Company or Bank, or within twenty-four months following such Change in
      Control, and Executive shall thereupon be entitled to receive the payment
      described in Section 3(a) of this Agreement, upon the occurrence, or within
      six
      months thereafter, of any of the following events, which have not been consented
      to in advance by the Executive in writing: (i) if Executive would be required
      to
      move his personal residence or perform his principal executive functions more
      than thirty-five (35) miles from the Executive's primary office as of the
      signing of this Agreement; (ii) if in the organizational structure of the
      Company, Executive would be required to report to a person or persons other
      than
      the Board of Directors of the Company or its Chairman; (iii) if the Company
      should fail to maintain Executive's base compensation in effect as of the date
      of the Change in Control and the existing Executive benefits plans, including
      material fringe benefit, stock option and retirement plans; (iv) if Executive
      would be assigned duties and responsibilities other than those normally
      associated with his position as referenced at Section 1, herein; (v) if
      Executive's responsibilities or authority have in any way been materially
      diminished or reduced; or (vi) if Executive would not be reelected to the Board
      of Directors of the Company.  The
      provisions of this  Section 3(b) shall survive the expiration of this
      Agreement occurring after a Change in Control.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

                (c)Additional
      Payments by the Company related to Section 280G of the Code.

    


    (i)Anything
      in this Agreement to the
      contrary notwithstanding, in the event it shall be determined that any payment
      or distribution by the Company or otherwise to or for the benefit of the
      Executive (whether paid or payable or distributed or distributable pursuant
      to
      the terms of this Agreement or by any other compensation plan or arrangement
      of
      the Company or the Bank (a "Payment") would be subject to the excise tax imposed
      by Section 4999 of the Code or any interest or penalties are incurred by the
      Executive with respect to such excise tax (such excise tax, together with any
      such interest and penalties, are hereinafter collectively referred to as the
      "Excise Tax"), then the Executive shall be entitled to receive an additional
      payment (a "Gross-Up Payment") in an amount such that after payment by the
      Executive of all taxes (including all federal, state and local tax and any
      interest or penalties imposed with respect to such taxes), including, without
      limitation, any income taxes (and any interest and penalties imposed with
      respect thereto) and any excise tax imposed under Section 4999 of the Code
      imposed upon the Gross-Up Payment, the Executive retains an amount of the
      Gross-Up Payment equal to the Excise Tax imposed upon the Payments; provided
      that for purposes of determining the amount of any Gross-Up Payment, the
      Executive shall be deemed to pay federal income taxes at the highest marginal
      rate of federal income taxation in the calendar year in which the Gross-Up
      Payment is to be made and state and local income taxes at the highest marginal
      rate of taxation in the state and locality of residence of the Executive on
      the
      date the Payment is made, net of the maximum reduction in federal income taxes
      that could reasonably be obtained from the deduction of such state and local
      taxes related to such Gross-up Payment.

    


    (ii)Subject
      to the provisions of this
      Section 3(c), all determinations required to be made under this Section 3(c),
      including whether and when a Gross-Up Payment is required and the amount of
      such
      Gross-Up Payment and the assumptions to be utilized in arriving at such
      determination, shall be made by a certified public accounting firm (the
“Accounting Firm”) reasonably acceptable to the Executive as may be designated
      by the Company which shall provide detailed supporting calculations both to
      the
      Company and the Executive within 15 business days of the receipt of notice
      from
      the Executive that there has been a Payment, or such earlier time as is
      requested by the Company. All fees and expenses of the Accounting Firm shall
      be
      borne solely by the Company. Any Gross-Up Payment, as determined pursuant to
      this Section 3(c), shall be paid by the Company to the Executive, or withheld
      on
      the Executive’s behalf, within five days of the later of (A) the due date for
      the payment of any Excise Tax, and (B) the receipt of the Accounting Firm's
      determination. Any determination by the Accounting Firm shall be binding upon
      the Company and the Executive. As a result of the uncertainty in the application
      of Section 4999 of the Code at the time of the initial determination by the
      Accounting Firm hereunder, it is possible that Gross-Up Payments which will
      not
      have been made by the Company should have been made ("Underpayment"), consistent
      with the calculations required to be made hereunder. In the event that the
      Company exhausts its remedies pursuant to Section 3(c) and the Executive
      thereafter is required to make a payment of any Excise Tax, the Accounting
      Firm
      shall determine the amount of the Underpayment that has occurred and any such
      Underpayment shall be promptly paid by the Company to or for the benefit of
      the
      Executive.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

                          
(iii)The
      Executive shall notify the Company in writing of any claim by the Internal
      Revenue Service that, if successful, would require the payment by the Company
      of
      the Gross-Up Payment. Such notification shall be given as soon as practicable
      but no later than ten business days after the Executive is informed in writing
      of such claim and shall apprise the Company of the nature of such claim and
      the
      date on which such claim is requested to be paid. The Executive shall not pay
      such claim prior to the expiration of the 30-day period following the date
      on
      which it gives such notice to the Company (or such shorter period ending on
      the
      date that any payment of taxes with respect to such claim is due). If the
      Company notifies the Executive in writing prior to the expiration of such period
      that it desires to contest such claim, the Executive shall:

    


    (A)give
      the Company any information
      reasonably requested by the Company relating to such claim,

    


    (B)take
      such action in connection with
      contesting such claim as the Company shall reasonably request in writing from
      time to time, including, without limitation, accepting legal representation
      with
      respect to such claim by an attorney reasonably selected by the
      Company,

    


    (C)cooperate
      with the Company in good
      faith in order effectively to contest such claim, and

    


    (D)permit
      the Company to participate
      in any proceedings relating to such claim;

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

                                      
provided,
      however, that the Company shall bear and pay directly all costs and expenses
      (including additional interest and penalties) incurred in connection with such
      contest and shall indemnify and hold the Executive harmless, on an after-tax
      basis, for any Excise Tax or income tax (including interest and penalties with
      respect thereto) imposed as a result of such representation and payment of
      costs
      and expenses. Without limitation on the foregoing provisions of this Section
      3(c), the Company shall control all proceedings taken in connection with such
      contest and, at its sole option, may pursue or forgo any and all administrative
      appeals, proceedings, hearings and conferences with the taxing authority in
      respect of such claim and may, at its sole option, either direct the Executive
      to pay the tax claimed and sue for a refund or contest the claim in any
      permissible manner, and the Executive agrees to prosecute such contest to a
      determination before any administrative tribunal in a court of initial
      jurisdiction and in one or more appellate courts, as the Company shall
      determine; provided, however, that if the Company directs the Executive to
      pay
      such claim and sue for a refund, the Company shall (to the extent permitted
      by
      law) advance the amount of such payment to the Executive, on an interest-free
      basis and shall indemnify and hold the Executive harmless, on an after-tax
      basis, from any Excise Tax or income tax (including interest or penalties with
      respect thereto) imposed with respect to such advance or with respect to any
      imputed income with respect to such advance; and further provided that any
      extension of the statute of limitations relating to payment of taxes for the
      taxable year of the Executive with respect to which such contested amount is
      claimed to be due is limited solely to such contested amount. Furthermore,
      the
      Company's control of the contest shall be limited to issues with respect to
      which a Gross-Up Payment would be payable hereunder and the Executive shall
      be
      entitled to settle or contest, as the case may be, any other issue raised by
      the
      Internal Revenue Service or any other taxing authority.

    


    (iv)If,
      after the receipt by the Executive of an amount advanced by the Company pursuant
      to Section 3(c), the Executive becomes entitled to receive any refund with
      respect to such claim, the Executive shall (subject to the Company's complying
      with the requirements of Section 3(c)) promptly pay to the Company the amount
      of
      such refund (together with any interest paid or credited thereon after taxes
      applicable thereto). If, after the receipt by the Executive of an amount
      advanced by the Company pursuant to Section 3(c), a determination is made that
      the Executive shall not be entitled to any refund with respect to such claim
      and
      the Company does not notify the Executive in writing of its intent to contest
      such denial of refund prior to the expiration of 30 days after such
      determination, then such advance shall be forgiven and shall not be required
      to
      be repaid and the amount of such advance shall offset, to the extent thereof,
      the amount of Gross-Up Payment required to be paid.

    


    (v)The
      Executive shall cooperate in good faith with all reasonable requests by the
      Company to assist the Company in minimizing the effect of Section 4999 and
      Section 280G of the Code, provided that the Executive shall not be required
      to
      take actions that adversely affect his rights hereunder.

    


    4.Other
      Changes in Employment Status.  Except as provided for at Section
      3, herein, the Board of Directors may terminate the Executive's employment
      at
      any time, but any termination by the Board of Directors other than termination
      for Just Cause, shall not prejudice the Executive's right to compensation or
      other benefits under the Agreement.  The Executive shall have no right
      to receive compensation or other benefits for any period after termination
      for
      Just Cause.  Termination for "Just Cause" shall include termination
      because of the Executive's personal dishonesty, incompetence, willful
      misconduct, breach of fiduciary duty involving personal profit, intentional
      failure to perform stated duties, willful violation of any law, rule or
      regulation (other than traffic violations or similar offenses) or final
      cease-and-desist order issued by a federal banking regulatory having regulatory
      authority over the Company or Bank, or a material breach of any provision of
      the
      Agreement.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

                5.Regulatory
      Exclusions. 

    


    (a)Notwithstanding
      anything herein to
      the contrary, any payments made to the Executive pursuant to the Agreement,
      or
      otherwise, shall be subject to and conditioned upon compliance with 12 USC
'1828(k)
      and any regulations promulgated thereunder.

    


    (b)Notwithstanding
      anything herein to
      the contrary, any payments to be made in accordance with Sections 3 or 4 of
      the
      Agreement shall not be made prior to the date that is 183 calendar days from
      the
      date of termination of employment, or such later date as determined in good
      faith by the Bank or Company (“Payment Date”), if it is determined by the Bank
      or the Company in good faith that the Executive is a “specified employee” within
      the meaning of Section 409A of the Code, that such payments to be made to such
      Executive are subject to the limitations at Section 409A of the Code and
      regulations promulgated thereunder, and payments made in advance of such Payment
      Date would result in the requirement for the Executive to pay additional
      interest and taxes to be imposed in accordance with Section 409A(a)(1)(B) of
      the
      Code.

    


    6.No
      Duty to
      Mitigate.  The Executive shall not be required to mitigate the
      amount of any payment of severance benefits if he or she accepts other
      compensation for employment with another entity.

    


    7.Successors
      and
      Assigns.

    


    (a)This
      Agreement shall inure to the
      benefit of and be binding upon any corporate or other successor of the Company
      which shall acquire, directly or indirectly, by merger, consolidation, purchase
      or otherwise, all or substantially all of the assets or stock of the
      Company.

    


    (b)The
      Executive shall be precluded
      from assigning or delegating his rights or duties hereunder without first
      obtaining the written consent of the Company.

    


    8.Amendments.  No
      amendments or additions to this Agreement shall be binding upon the parties
      hereto unless made in writing and signed by both parties, except as herein
      otherwise specifically provided.

    


    9.Applicable
      Law.  This agreement shall be governed by all respects whether as
      to validity, construction, capacity, performance or otherwise, by the laws
      of
      the State of New Jersey, except to the extent that Federal law shall be deemed
      to apply.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

                10.Severability.  The
      provisions of this Agreement shall be deemed severable and the invalidity or
      unenforceability of any provision shall not affect the validity or
      enforceability of the other provisions hereof.

    


    11.Arbitration.  Any
      controversy or claim arising out of or relating to this Agreement, or the breach
      thereof, shall be settled by arbitration in accordance with the rules then
      in
      effect of the district office of the American Arbitration Association ("AAA")
      nearest to the home office of the Company, and judgment upon the award rendered
      may be entered in any court having jurisdiction thereof, except to the extend
      that the parties may otherwise reach a mutual settlement of such
      issue.  The Company shall reimburse Executive for all reasonable costs
      and expenses, including reasonable attorneys' fees, arising from such dispute,
      proceedings or actions, following the delivery of the decision of the arbitrator
      that the Executive's claim has merit, whether or not the arbitrator finds in
      favor of the Executive.    The provisions of this Section 11
      shall survive the expiration of this Agreement occurring after a Change in
      Control.

    


    12.Non-Disclosure.  Executive
      will not, during or after the Term of this Agreement, directly or indirectly,
      disseminate or disclose to any person, firm or entity, except to his or her
      legal  advisor, the terms of this Agreement without the written
      consent of the Company.

    


    13.Entire
      Agreement.  This Agreement together with any understanding or
      modifications thereof as agreed to in writing by the parties, shall constitute
      the entire agreement between the parties hereto with respect to the subject
      matter herein.