**Exhibit 10.12**

 

EMPLOYMENT AGREEMENT

 

**THIS AGREEMENT** is made as of this 23rd day ofDecember, 2002, between **SUN BANCORP, INC.**(“Corporation”), a Pennsylvania business corporation having a place of businessat 2-16 South Market Street, Selinsgrove, Pennsylvania 17870, **SUN BANK** (“Bank”), a Pennsylvania charteredbanking institution having a place of business at 2-16 South Market Street,Selinsgrove, Pennsylvania 17870, **MID-PENN INSURANCE ASSOCIATES, INC.**(“Agency”),a Pennsylvania business corporation having a place of business at 51 SouthFourth Street, Sunbury, Pennsylvania 17801,****and **CHERYLA. ZELLERS**,****(“Executive”), an individual whoseaddress is R.R. # 3, Box 243 1⁄2, Sunbury, Pennsylvania 17801  (collectively, the “Parties” and,individually, sometimes a “Party”).

 

 

**WHEREAS**, Corporation is a registered bankholding company;

 

**WHEREAS**, Corporation and Agency haveexecuted an agreement for Corporation to acquire Agency;

 

**WHEREAS**, Agency will be a subsidiary ofCorporation or Bank;

 

**WHEREAS**, any reference solely toCorporation in this Agreement shall mean Corporation, Bank or Agency;

 

**WHEREAS,** Corporation, Bank and Agency desireto employ Executive to serve in the capacity of Secretary/Treasurer and VicePresident, Personal Lines of Agency under the terms and conditions set forth inthis Agreement; and

 

**WHEREAS,** Executive desires to acceptemployment with Corporation, Bank and Agency under the terms and conditions setforth in this Agreement.

 

 

**NOW, THEREFORE,** the parties hereto, intending to belegally bound, agree as follows:

 

1.                                       **Employment****.**  Corporation, Bank and Agency hereby employ Executive and Executivehereby accepts employment with Corporation, Bank or Agency, on the terms andconditions set forth in this Agreement.

 

2.                                       **Duties and Positionof Executive****.**  Executive shall perform and discharge welland faithfully such duties as an executive officer of Agency as may be assignedto Executive from time to time by the Board of Directors of Corporation.  Executive shall be employed asSecretary/Treasurer and Vice President, Personal Lines of Agency, and shallhold such other titles as may be given to her from time to time by the Board ofDirectors of Corporation.

 

3.                                       **Engagement in OtherEmployment****.**  Executive shall devote her full time,attention and energies to the business of Corporation, Bank and Agency duringthe Employment Period (as defined in Section 4(a) of this Agreement);provided, however, that this Section 3 shall not be construed aspreventing Executive from (a) investing Executive’s personal assets inenterprises that do not compete with Corporation, Bank and Agency or any oftheir subsidiaries or affiliates, (b) being involved in any charitable or civicactivity, or (c) being involved in any other activity with the prior approvalof the Boards of Directors of Corporation, Bank and Agency.  The Executive shall not engage in anybusiness or commercial activities, duties or pursuits which compete with thebusiness or commercial activities of Corporation, Bank, Agency or any of theirsubsidiaries or affiliates, nor may the Executive serve as a director or

 

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officer or in any othercapacity in a company which competes with Corporation, Bank, Agency or any oftheir subsidiaries or affiliates.

 

4.                                       **Term of Agreement****.**

 

(a)                                  Employment Period. This Agreement shall be for a three (3) year period (the “EmploymentPeriod”) beginning on the date first mentioned above, and if not previouslyterminated pursuant to the terms of this Agreement, the Employment Period shallend three (3) years later.

 

(b)                                 Cause. Notwithstanding the provisions of Section 4(a) of this Agreement,this Agreement shall terminate automatically for Cause (as defined herein) uponwritten notice from the Board of Directors of Corporation to Executive.  As used in this Agreement, the term “Cause” shallmean any of the following:

 
| (i)    | Executive’s conviction  of or plea of guilty or nolo contendere to a felony, a crime of falsehood or  a crime involving moral turpitude, or the actual incarceration of Executive;                                                                                                                                                                            |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                               |
| (ii)   | Executive’s failure to  follow the good faith lawful instructions of the Board of Directors of  Corporation with respect to its operations, after notice from Corporation,  and a failure to cure such violation within twenty (20) days of said notice;                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                               |
| (iii)  | the willful failure by  the Executive to substantially perform her duties hereunder, other than a  failure resulting from Executive’s incapacity because of physical or mental  illness, as provided in Section 4(d) of this Agreement, after notice  from the Corporation and a failure to cure such violation within twenty (20)  days of said notice; |
|   |                                                                                                                                                                                                                                                                                                                                                               |
| (iv)   | Executive’s intentional violation of the provisions of this  Agreement, after notice from Corporation, and a failure to cure such  violation within twenty (20) days of said notice;                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                               |
| (v)    | dishonesty or gross  negligence of the Executive in the performance of her duties;                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                               |
| (vi)   | conduct on the part of  the Executive which brings public discredit to  Corporation as determined by a vote of two-thirds (2/3) of the  Board of Directors of Corporation;                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                               |
| (vii)  | Executive’s breach of  fiduciary duty involving personal profit;                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                               |
| (viii) | Executive’s violation  of any law, rule or regulation governing banks or bank officers or any final  cease and desist order issued by a bank regulatory authority;                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                               |
| (ix)   | Executive’s unlawful  discrimination, including harassment, against Corporation’s employees,  customers, business associates, contractors or visitors;                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                               |
| (x)    | Executive’s theft or  abuse of Corporation’s property or the property of Corporation’s customers,  employees, contractors, vendors or business associates;                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                               |
| (xi)   | any final removal or  prohibition order to which the Executive is subject, by a federal banking  agency pursuant to Section 8(e) of the Federal Deposit Insurance Act;                                                                                                                                                                                        |

 

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| (xii)  | any act of fraud or misappropriation  by Executive;                                                                                                                                                                                                                                                                                                                                 |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                |
| (xiii) | intentional  misrepresentation of a material fact, or intentional omission of information  necessary to make the information supplied not materially misleading, in an  application or other information provided by the Executive to Corporation or  any representative of Corporation in connection with the Executive’s  employment with Corporation, Bank and Agency;      |
|   |                                                                                                                                                                                                                                                                                                                                                                                |
| (xiv)  | direction or  recommendation of a state or federal bank regulatory authority to remove the  Executive from her position with Corporation, as identified herein;                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                |
| (xv)   | the willful engaging  by the Executive in misconduct injurious to Corporation, after notice from  Corporation, and a failure to cure such conduct within twenty (20) days of  said notice; or                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                |
| (xvi)  | willful and serious  violation(s) by Executive of the Bank’s “Core Values,” and a failure to cure  such violation(s) within twenty (20) days after notice by Corporation; if the  violation is so serious that an attempt to cure would be fruitless, no notice  need be given by the Corporation.                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                |
| (xvii) | the existence of any  material conflict between the interests of Corporation and the Executive that  is not disclosed in writing by the Executive to Corporation, Bank and Agency  and approved in writing by the Boards of Directors of Corporation, Bank and  Agency and, after notice from Corporation, a failure to cure such conflict  within twenty (20) days of said notice. |

 

If this Agreement isterminated for Cause, all of Executive’s rights under this Agreement shall ceaseas of the effective date of such termination and all of Corporation, Bank, andAgency’s compensation and employment obligations under this Agreement shallterminate.

 

(c)                                  Notwithstanding the provisions ofSection 4(a) of this Agreement, all of Corporation, Bank and Agency’sobligations under this Agreement shall terminate automatically upon Executive’svoluntary termination of employment.

 

(d)                                 Disability. Notwithstanding the provisions of Section 4(a) of this Agreement,if, as a result of physical or mental injury or impairment, Executive is unableto perform all of the essential job functions of her position on a full timebasis, taking into account any reasonable accommodation required by law, andwithout posing a direct threat to herself and others, for a period up to onehundred eighty (180) days, all obligations of Corporation, Bank and Agency topay Executive the compensation as set forth in this Agreement aresuspended.  Any paid time off, sickleave, or short term disability pay Executive may be entitled to receive,pursuant to an established disability plan or program of the Agency, Bankand/or Corporation, if any exists, shall be considered part of the compensationExecutive shall receive while disabled, and shall not be in addition to the compensationreceived by Executive under this provision of the Agreement.  Executive further agrees that should sheremain unable to perform all of the essential functions of her position on afull time basis, taking into account any reasonable accommodation required bylaw, and without posing a direct threat to herself or others, after one hundredeighty (180) days, the Agency, Bank and Corporation will suffer an unduehardship by continuing Executive in her position.  Upon this event, all compensation and employment obligations ofthe Agency, Bank and Corporation under this Agreement shall cease (except

 

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Executive’s rights underthe Corporation’s then existing short term and/or long term disability plans,if any), and this Agreement shall terminate.

 

(e)                                  Death. Notwithstanding the provisions of Section 4(a) of this Agreement,this Agreement shall terminate automatically upon Executive’s death andExecutive’s rights under this Agreement shall cease as of the date of suchtermination.

 

5.                                       **Employment Period Compensation****.**

 

(a)                                  Annual Base Salary. For services performed by Executive under this Agreement, Corporationshall pay Executive an Annual Base Salary in the aggregate during theEmployment Period at the rate of Fifty-Two Thousand Dollars ($52,000.00) per year,payable at the same times as salaries are payable to other executive employeesof Corporation.  Corporation may, fromtime to time, increase Executive’s Annual Base Salary, and any and all suchincreases shall be deemed to constitute amendments to this Section 5(a) toreflect the increased amounts, effective as of the date established for suchincreases by the Board of Directors of Corporation or any committee of suchBoard in the resolutions authorizing such increases.

 

(b)                                 Bonus. Executive may be eligible for incentive compensation under the terms andconditions of any incentive compensation plan that Corporation may have ineffect from time to time or as determined by Corporation in its solediscretion.

 

(c)                                  Vacations. During the term of this Agreement, Executive shall be entitled to atotal of five (5) weeks of paid annual vacation and sick leave, in accordancewith the policies as established from time to time by the Board of Directors ofCorporation, Bank and Agency.  However,Executive shall not be entitled to receive any additional compensation fromCorporation for failure to take a vacation, nor shall Executive be able toaccumulate unused vacation time from one year to the next, except to the extentauthorized by the Board of Directors of Corporation.

 

(d)                                 Employee Benefit Plans. During the term of this Agreement, Executive shall be entitled toparticipate in and receive the benefits of any Employee Benefit Plan currentlyin effect at Corporation, until such time that the Board of Directors ofCorporation authorizes a change in such benefits.  Executive shall also be entitled to participate in any stockoption and profit sharing plans that Corporation may have in effect, subject tothe terms and conditions of those plans.

 

(e)                                  Business Expenses. During the term of this Agreement, Executive shall be entitled toreceive prompt reimbursement for all reasonable expenses incurred by her, whichexpenses are properly accounted for, in accordance with the policies andprocedures established by the Board of Directors of Corporation for itsexecutive officers.

 

(f)                                    Automobile. During the term of this Agreement, Executive shall be provided with useof an automobile, no more than three (3) years old and with a value of $30,000- $35,000.  All maintenance, includinggas, repairs and registration of said vehicle, will be the responsibility ofCorporation.  The Executive’s family, inaddition to Executive, shall be permitted to use the automobile provided underthis Agreement for personal use.  TheExecutive will be responsible for recording and reporting mileage for personaluse for tax purposes.

 

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6.                                       **Rights in Event ofTermination of Employment****.**

 

(a)                                  In the event that Executive’semployment is involuntarily terminated by Corporation without Cause, Corporationshall pay Executive an amount equal to one (1) times the average of theExecutive’s annual compensation (base salary and cash incentive compensation)for the three (3) previous calendar years or the period of time that Executivewas employed under this Agreement, whichever is less, which amount shall bepayable in twelve (12) equal monthly installments.  In addition, Executive shall be entitled to a continuation ofhealth, accident, life and disability insurance benefits for twelve (12) monthsor until Executive secures substantially similar benefits through otheremployment, whichever shall first occur. However, if the payment described herein, when added to all otheramounts or benefits provided to or on behalf of the Executive in connectionwith her termination of employment, would result in the imposition of an excisetax under Code Section 4999, such payments shall be retroactively (ifnecessary) reduced to the extent necessary to avoid such imposition.  Upon written notice to Executive, together withcalculations of Corporation’s independent auditors, Executive shall remit toCorporation the amount of the reduction plus such interest as may be necessaryto avoid the imposition of such excise tax. Notwithstanding the foregoing or any other provision of this contract tothe contrary, if any portion of the amount herein payable to the Executive isdetermined to be non-deductible pursuant to the regulations promulgated underSection 280G of the Code, then Corporation shall be required only to payto Executive the amount determined to be deductible under Section 280G.

 

(b)                                 The amounts payable pursuant to thisSection 6 shall constitute Executive’s sole and exclusive remedy in theevent of involuntary termination, without cause, of Executive’s employment byCorporation.

 

(c)                                  In the event that Executivevoluntarily terminates her employment all of Executive’s rights under thisAgreement shall cease as of the effective date of termination and all ofCorporation, Bank and Agency’s compensation and employment obligations underthis Agreement shall terminate.

 

7.                                       **RestrictiveCovenant**.

 

(a)                                  Executive hereby acknowledges andrecognizes the highly competitive nature of the business of Corporation, Bankand Agency and, accordingly, agrees that, beginning on the date first mentionedabove and continuing until the third anniversary date of the effective date oftermination of Executive’s employment with Corporation, Bank and Agency,Executive shall not:

 

(i)                                     except for Corporation, Bank, Agencyor their subsidiaries or affiliates, be engaged, directly or indirectly, eitherfor her own account or as agent, consultant, employee, partner, officer,director, proprietor, investor (except as an investor owning less than 5% ofthe stock of a publicly owned company) or otherwise of any person, firm,corporation or enterprise engaged in (1) the insurance banking or financialservices industry (including bank holding company), or (2) any other activityin which Corporation, Bank, Agency or any of their subsidiaries or affiliates areengaged during the Employment Period, in any county in which, at any timeduring the Employment Period or on the date of termination of the Executive’semployment, a branch, office or other facility of Corporation, Bank, Agency orany of their subsidiaries or affiliates is located (the “Non-CompetitionArea”); or

 

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(ii)                                  provide financial or otherassistance to any person, firm, corporation, or enterprise engaged in (1) theinsurance, banking or financial services industry (including bank holding company),or (2) any other activity in which Corporation, Bank, Agency or any of theirsubsidiaries or affiliates are engaged during the Employment Period in theNon-Competition Area; or

 

(iii)                               directly or indirectly contact,solicit or induce any person, corporation or other entity who or which is acustomer or referral source of Corporation, Bank, Agency or any of theirsubsidiaries or affiliates, during the term of Executive’s employment or on thedate of termination of Executive’s employment to be a customer or referralsource of any person or entity other than Corporation, Bank, Agency or theirsubsidiaries or affiliates; or

 

(iv)                              directly or indirectly solicit,induce or encourage any employee of Corporation, Bank, Agency or any of theirsubsidiaries or affiliates, who is employed during the term of Executive’semployment or on the date of termination of Executive’s employment, to leavethe employ of Corporation, Bank, Agency or their subsidiaries or affiliates, orto seek, obtain or accept employment with any person or entity other thanCorporation, Bank, Agency or their subsidiaries or affiliates.

 

(b)                                 It is expressly understood andagreed that, although Executive, Corporation, Bank and Agency consider therestrictions contained in Section 7(a) reasonable for the purpose ofpreserving for Corporation, Bank, Agency and their subsidiaries or affiliates,their good will and other proprietary rights, if a final judicial determinationis made, by a court or arbitration panel having jurisdiction, that the time or territoryor any other restriction contained in Section 7(a) is an unreasonable orotherwise unenforceable restriction against Executive, the provisions ofSection 7(a) shall not be rendered void, but shall be deemed amended toapply as to such maximum time and territory and to such other extent as suchcourt may judicially determine or indicate to be reasonable.

 

8.                                       **UnauthorizedDisclosure****.**  During the term of her employment hereunder,or at any later time, the Executive shall not, without the written consent ofthe Board of Directors of Corporation or a person authorized thereby, knowinglydisclose to any person, other than an employee of the Corporation or a personto whom disclosure is reasonably necessary or appropriate in connection withthe performance by the Executive of her duties as an executive of Corporation,any material confidential information obtained by her while in the employ ofCorporation with respect to any of the services, products, improvements,formulas, designs or styles, processes, customers, customer lists, methods ofbusiness or any business practices of Corporation, Bank, Agency or theirsubsidiaries or affiliates, the disclosure of which could be or will bedamaging to Corporation, Bank, Agency or their subsidiaries or affiliates;provided, however, that confidential information shall not include anyinformation known generally to the public (other than as a result ofunauthorized disclosure by the Executive or any person with the assistance,consent or direction of the Executive) or any information of a type nototherwise considered confidential by persons engaged in the same business or abusiness similar to that conducted by Corporation, Bank, Agency or theirsubsidiaries or affiliates or any information that must be disclosed asrequired by law.

 

9.                                       **Work Made for Hire.** Any work performed by the Executive under this Agreement should beconsidered a “Work Made for Hire” as that phrase is defined by the U.S. patentlaws and shall be owned by and for the express benefit of Corporation,

 

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Bank, Agency and theirsubsidiaries and affiliates.  In theevent it should be established that such work does not qualify as a Work Madefor Hire, the Executive agrees to and does hereby assign to Corporation, Bank,Agency and their affiliates and subsidiaries, all of her rights, title, and/orinterest in such work product, including, but not limited to, all copyrights,patents, trademarks, and proprietary rights. Executive further agrees that any business that she generates, producesor sells during her employment is the exclusive business of Corporation, Bankand Agency and Executive has no individual rights to or ownership of suchbusiness.

 

10.                                 **Return of CompanyProperty and Documents.**  The Executive agrees that, at the time oftermination of her employment, regardless of the reason for termination, hewill deliver to Corporation, Bank, Agency and their subsidiaries andaffiliates, any and all company property, including, but not limited to,automobiles, keys, security codes or passes, mobile telephones, pagers,computers, devices, confidential information, records, data, notes, reports,proposals, lists, correspondence, specifications, drawings, blueprints,sketches, software programs, equipment, other documents or property, orreproductions of any of the aforementioned items developed or obtained by theExecutive during the course of her employment.

 

11.                                 **Resignation asDirector****. **Executive agrees that in the eventthat this Agreement or her employment under this Agreement is terminated,Executive shall resign as a director of Corporation, Bank, Agency or any oftheir affiliates or subsidiaries, if she is then serving as a director of anysuch entities.

 

12.                                 **Notices****.** For the purposes of this Agreement, notices and all other communicationsprovided for in this Agreement shall be in writing and shall be deemed to havebeen duly given when delivered or mailed by United States certified mail,return receipt requested, postage prepaid, addressed as follows (or to suchother addresses provided by a party to the other parties in writing):

 
| If to the Executive: |   | Ms. Cheryl A. Zellers        |
|----------------------|--------|------------------------------|
|                 |   | R.R. #3, Box 243 1⁄2      |
|                 |   | Sunbury, Pennsylvania  17801 |

 

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| If to the Agency:      |   | Board of Directors                   |
|------------------------|--------|--------------------------------------|
|                   |   | Mid-Penn Insurance  Associates, Inc. |
|                   |   | 51 South Fourth Street               |
|                   |   | Sunbury, Pennsylvania  17801         |
|                   |   |                                 |
| If to the Bank:        |   | Mr. Robert J.  McCormack             |
|                   |   | President & CEO                  |
|                   |   | Sun Bank                             |
|                   |   | 2-16 South Market  Street            |
|                   |   | Selinsgrove,  Pennsylvania 17870     |
|                   |   |                                 |
| If to the Corporation: |   | Mr. Robert J.  McCormack             |
|                   |   | President & CEO                  |
|                   |   | Sun Bancorp, Inc.                    |
|                   |   | 2-16 South Market  Street            |
|                   |   | Selinsgrove,  Pennsylvania 17870     |

 

13.                                 **Waiver****.** No provision of this Agreement may be modified, waived or dischargedunless such waiver, modification or discharge is agreed to in writing andsigned by Executive and an executive officer specifically designated by theBoard of Directors of Corporation, Bank and Agency.  No waiver by either party, at any time, of any breach by theother party of, or compliance with, any condition or provision of thisAgreement to be performed by such other party shall be deemed a waiver ofsimilar or dissimilar provisions or conditions at the same or at any prior orsubsequent time.  Notwithstanding thisSection 13, a promotion of Executive in accordance with Section 2 ofthis Agreement shall not constitute a breach of this Agreement or require anamendment in writing.

 

14.                                 **Assignment****.** This Agreement shall not be assignable by any party, except byCorporation to any successor in interest to its respective businesses.

 

15.                                 **Entire Agreement****.** This Agreement contains the entire agreement of the parties relating tothe employment of Executive and supersedes any and all agreements, either oralor in writing, between the parties with regard to the employment of Executiveby Corporation.

 

16.                                 **Successors;**Binding**Agreement.**

 

(a)                                  Corporation, Bank and Agency willrequire any successor (whether direct or indirect, by purchase, merger,consolidation, or otherwise) to all or substantially all of the businessesand/or assets of Corporation, Bank and Agency to expressly assume and agree toperform this Agreement in the same manner and to the same extent thatCorporation, Bank and Agency would be required to perform it if no suchsuccession had taken place.

 

(b)                                 This Agreement shall inure to thebenefit of and be enforceable by Executive’s personal or legal representatives,executors, administrators, heirs, distributees, devisees and legatees.  If Executive should die followingtermination of Executive’s employment without Cause, and any amounts would bepayable to Executive under this Agreement if Executive had continued to live,all such amounts shall be paid in accordance with the terms of this Agreementto Executive’s devisee, legatee, or other designee, or, if there is no suchdesignee, to Executive’s estate.

 

17.                                 **Arbitration****.**  Corporation, Bank, Agency and Executive recognize that in the event adispute should arise between them concerning the interpretation orimplementation of this Agreement (except for any enforcement sought with respectto Sections 7, 8, 9, or 10, which may be litigated in court), lengthy andexpensive litigation will not afford a practical resolution of the issueswithin a reasonable period of time. Consequently, each party agrees that all

 

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disputes, disagreementsand questions of interpretation concerning this Agreement are to be submittedfor resolution, in Philadelphia, Pennsylvania, to the American ArbitrationAssociation (the “Association”) in accordance with the Association’s NationalRules for the Resolution of Employment Disputes or other applicable rules thenin effect (“Rules”).  Corporation orExecutive may initiate an arbitration proceeding at any time by giving noticeto the other in accordance with the Rules. Corporation and Executive may, as a matter or right, mutually agree onthe appointment of a particular arbitrator from the Association’s pool.  The arbitrator shall not be bound by therules of evidence and procedure of the courts of the Commonwealth ofPennsylvania, but shall be bound by the substantive law applicable to thisAgreement.  The decision of thearbitrator, absent fraud, duress, incompetence or gross and obvious error offact, shall be final and binding upon the parties and shall be enforceable incourts of proper jurisdiction. Following written notice of a request for arbitration, Corporation,Bank, Agency and Executive shall be entitled to an injunction restraining allfurther proceedings in any pending or subsequently filed litigation concerningthis Agreement, except as otherwise provided herein or any enforcement soughtwith respect to Sections 7, 8, 9, or 10.

 

18.                                 **Attorney’s Fees andCosts.**  If any action at law or in equity isnecessary to enforce or interpret the terms of this Agreement, each party shallbear her or its own attorney’s fees, costs, and expenses incurred in connectionwith the litigation, unless mandated by statute.

 

19.                                 **Validity****.** The invalidity or unenforceability of any provision of this Agreementshall not affect the validity or enforceability of any other provision of thisAgreement, which shall remain in full force and effect.

 

20.                                 **Applicable Law****. **This Agreement shall be governed by and construed in accordancewith the domestic, internal laws of the Commonwealth of Pennsylvania, withoutregard to its conflicts of laws principles.

 

21.                                 **Headings****.** The section headings of this Agreement are for convenience only andshall not control or affect the meaning or construction or limit the scope orintent of any of the provisions of this Agreement.

 

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**INWITNESS WHEREOF,** the parties have executed this Agreement as of the date firstabove written.

 
| ATTEST:               | SUN BANCORP, INC.   |
|-----------------------|---------------------|
|                  |                |
| /s/ Thomas W. Bixler  |                | /s/ Robert J.  McCormack |   |
|                  | Robert J. McCormack |
|                  | President & CEO |
|                  |                |
|                  |                |
| ATTEST:               | SUN BANK            |
|                  |                |
|                  |                |
| /s/ Thomas W. Bixler  |                | /s/ Robert J.  McCormack |   |
|                  | Robert J. McCormack |
|                  | President & CEO |
|                  |                |
| ATTEST:               |                |
|                  |                |
| /s/ Cheryl A. Zellers |                | /s/ Daniel R. Geise |   |
|                  | MID-PENN INSURANCE  |
|                  | ASSOCIATES, INC.    |
|                  |                |
|                  | Daniel R. Geise     | (print name) |
|                  | President           | (print title) |
|                  |                |
| WITNESS:              | EXECUTIVE           |
|                  |                |
| /s/ Cheryl A. Zellers |                | /s/ Cheryl A. Zellers |   |
|                  | Cheryl A. Zellers   |
|                       |                     |  |  |  |  |  |  |

 

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