letter_agreement.htm


    SUN
      BANCORP, INC.

    226
      Landis Avenue

    Vineland,
      New Jersey 08360

    


    


    December
      5, 2007

    


    Mr.
      Thomas X. Geisel

    25
      Newell Court

    Menands,
      New York   12204

    


    Dear
      Tom:

    


    On
      behalf of the Board of Directors of Sun National Bank ("Bank") and Sun Bancorp,
      Inc.  (the “Company”), I am pleased to offer you this opportunity to
      serve as the President and Chief Executive Officer of the Bank and the
      Company. The details of this offer are summarized below:

     

    1.   Position.  You
      will serve in a full-time capacity as the President and Chief Executive Officer
      of the Bank and of the Company. You will report directly to the Chairman of
      the Board of the Bank and the Company. By signing this letter agreement,
      you represent and warrant to the Bank and the Company as a condition of our
      offer that as of your first day of employment you will be under no
      contractual commitments or limitations inconsistent with your obligations as
      an
      employee and officer of the Company and the Bank.

     

    2.  
      Salary.  You will be paid an initial salary by the Bank at the
      annual rate of $500,000, payable not less frequently than in monthly
      installments in accordance with the Bank's standard payroll practices for
      salaried employees.

     

    3.  
      Sign-On Bonus.  We will pay you a sign-on bonus in the amount
      of $250,000 payable as of 

    March
      10, 2008 as an employee of the Bank at such time.

     

    4.  
      Stock Options.  Upon your commencement of employment, you will
      be granted a stock option to purchase 185,000 shares of the Company’s common
      stock at an exercise price equal to the last reported sale price of such Company
      common stock determined at the close of trading on your first date of employment
      (“Initial Option Award”).  Separately, you will receive a Stock Option
      Award Agreement detailing the terms of such award consistent with the Company's
      2004 Stock-Based Incentive Plan (“Stock Plan”). Such options will be first
      earned and exercisable at the rate of 25% on the second anniversary of your
      employment commencement date, and 25% annually thereafter,  provided
      that you are still employed by the Company at such time.  The maximum
      permissible number of options in each vesting sequence will be deemed "incentive
      stock options" and the remainder of such options in each vesting sequence will
      not be deemed "incentive stock options." Such options will be immediately
      exercisable upon a "change in control" of the Company (as defined in accordance
      with the Company’s Stock Plan). In the event of death or
      disability prior to the next vesting event, a pro rata portion of such awards
      that would have vested at the next vesting event shall vest upon such death
      or
      disability.  For example, if 25% of the time has passed until the next
      vesting event, then upon death or disability, 25% of such awards that would
      have
      vested at the next vesting event shall vest upon death or disability. If your
      employment is involuntarily terminated by the Company within the first two
      years
      of employment (absent termination for “cause”), you will nevertheless be 25%
      vested in the Initial Option Award.  In addition, beginning in January
      2009 (or as soon as possible following the completion of the Company’s fiscal
      year and its annual audit), you will be eligible to

    
      
        

      

    

     

    receive
      the first of five (5) annual awards of stock options to purchase additional
      shares of Company common stock at an exercise price equal to the last reported
      sale price determined
      at the close of trading on the date of grant of such options.   The
      number of such options subject to each annual award of options shall be
      determined based upon the Company’s attainment of annually agreed upon financial
      targets (based upon earnings per share), provided that you remain employed
      by
      the Company and the Bank as of the date of determination of achieving such
      performance.  For example, upon attainment of 100% of the Company’s
      agreed upon financial targets, you will receive an additional award of 25,000
      stock options; attainment of 110% of the approved financial targets will result
      in an award of 33,333  stock options; attainment of 90% of the
      approved financial targets will result in an award of 20,000 stock
      options.  The attached chart also details the award determination upon
      attainment of 105% and 95% of the approved financial targets. Attainment of
      Company performance below 90% of the approved financial targets may result
      in an
      award of stock options determined within the discretion of the Compensation
      Committee.  Such annual awards will be 100% earned and exercisable as
      of the third anniversary of the date of grant,  provided that you are
      still employed by the Company at such time, and such options will be immediately
      earned and exercisable upon a "change in control" of the
      Company.  Upon termination of employment with the Company (unrelated
      to a Change in Control transaction), any Options that are then exercisable
      shall
      cease being exercisable not later than one year after the date of termination
      of
      employment; provided that such exercisability will cease upon the Executive
      commencing an employment, directorship, advisory or consulting relationship
      with
      a financial  services enterprise (including but not limited to a
      savings and loan association, bank,  credit union, or insurance
      company) whereby the Executive will have a work location within 25 miles of
      any
      office of the Company, the Bank, or any subsidiary of such entities existing
      as
      of the date of such termination of employment..  Upon Disability, all
      unvested options shall become immediately exercisable and remain exercisable
      for
      one year thereafter; Upon death, all unvested options shall become immediately
      exercisable and remain exercisable for the remaining term of such
      options;  Upon a change in control of the Company, all unvested
      options shall become immediately exercisable and remain exercisable
      for  the remaining term of such options.

     

    5.  
      Restricted Stock Awards.  Upon your commencement of employment,
      you will be granted a restricted stock award with a value of $500,000, with
      the
      number of shares subject to such award calculated based upon the last reported
      sale price of the Company’s common stock determined at the close of trading on
      your first date of employment (“Initial Stock Award”).  Separately,
      you will receive a Restricted Stock Award Agreement detailing the terms of
      such
      award consistent with the Company's Stock Plan.   Such shares of
      Company stock will be first earned and non-forfeitable at the rate of 25% on
      the
      second anniversary of your employment commencement date, and 25% annually
      thereafter, provided that you are still employed by the Company at such
      time.  Such restricted stock awards will be immediately earned and
      non-forfeitable upon a "change in control" of the
      Company. In the event of death or disability prior to the
      next vesting event, a pro rata portion of such awards that would have vested
      at
      the next vesting event shall vest upon such death or disability.  For
      example, if 25% of the time has passed until the next vesting event, then upon
      death or disability, 25% of such awards that would have vested at the next
      vesting event shall vest upon death or disability. If your employment is
      involuntarily terminated by the Company within the first two years of employment
      (absent termination for “cause”), you will nevertheless be 25% vested in the
      Initial Stock Award. In addition, beginning in January 2009 (or as soon as
      possible following the completion of the Company’s fiscal year and its annual
      audit), you will be eligible to receive the first of five (5) annual awards
      of
      restricted stock.   The number of such stock awards subject to
      each annual award of restricted stock shall be determined based upon the
      Company’s attainment of annually agreed upon 

    
      
        

      

    

     

    financial
      targets, provided that you remain employed by the Company and the Bank as of
      the
      date of determination of achieving such performance.  For example,
      upon attainment of 100% of the Company’s agreed upon financial targets, you will
      receive an award of 5,000 shares of restricted stock; attainment of 110% of
      the
      approved financial targets will result in an award of 6,667 shares of restricted
      stock; attainment of 90% of the approved financial targets will result
in
      an award of 4,000 shares of restricted stock.  The attached chart also
      details the award determination upon attainment of 105% and 95% of the approved
      financial targets. Attainment of Company performance below 90% of the approved
      financial targets may result in an award
      of restricted stock determined within the discretion of the Compensation
      Committee. Such annual awards will be 100% earned and non-forfeitable as of
      the
      third anniversary of the date of grant of each such award, provided that you
      are
      still employed by the Company at such time, and such awards will be immediately
      100% earned upon a "change in control" of the Company.

     

    6.  
      Period of Employment.  Your employment with the Company and the
      Bank will be “at will,” meaning that either you, or the Company or the Bank will
      be entitled to terminate your employment at any time and for any reason, with
      or
      without cause.  Any contrary representations which may have been made
      to you are superseded by this offer.  This is the full and complete
      agreement between you and the Company and the Bank on this
      matter.  Although your job duties, title, compensation and benefits,
      as well as the Company’s and the Bank's  personnel policies and
      procedures, may change from time to time, the “at will” nature of your
      employment may only be changed by an express written agreement signed by you
      and
      the Chairman of the Board of the Company.

     

    7.  
      Performance Bonus Plan.  As we have discussed, the Compensation
      Committee of the Board has developed a performance bonus plan.  Such
      plan will provide for a payment of a cash bonus to you calculated as a
      percentage of your base salary and dependent upon the Company’s attainment of
      annually agreed upon financial targets, provided that you remain employed as
      by
      the Company and the Bank through the payment date of such bonus.  For
      example, upon attainment of 100% of the Company’s agreed upon financial targets,
      you will receive a bonus of 70% of base salary; attainment of 110% of the
      approved financial targets will result in a bonus of 100% of base salary;
      attainment of 105% of the approved financial targets will result in a bonus
      of
      80% of base salary; attainment of 95% of the approved financial targets will
      result in a bonus of 65% of salary; attainment of 90% of the approved financial
      targets will result in a bonus of 60% of salary.   Attainment of
      Company performance below 90% of the approved financial targets may result
      in a
      bonus payment determined within the discretion of the Compensation Committee;
      attainment of Company performance above 110% of the approved financial targets
      may result in an additional bonus payment (in addition to a bonus of 100% of
      base salary) determined within the discretion of the Compensation
      Committee.  Such bonus will be paid to you on or before March 15
      following the completion of the Company’s fiscal year and its annual
      audit.

     

    8.  
      Other Perks.  We are pleased to offer you the following
      additional benefits:

    


    
      a)
        We will assume the lease payments for your current business-use automobile,and
        reimburse you for expenses related to its operations, including
        gas,repairs and insurance.

       

      
        b)
          Enrollment in medical/dental program and all other Company sponsoredbenefit
          plans available to our employees (including our 401K plan with amatching
          contribution of 50% of the employee deferral up to 6% of pay withthe match
          paid
          in Company stock.).

        
          
            

          

        

         

        
          c)
            Company sponsored term life insurance (currently equal to two timesyour
            annual
            base salary to a maximum death benefit of $900,000).

           

          d)
            Company paid annual membership dues in a local Country Club to a maximum
            of
            $12,000 per year.  Payment of a reasonable initiation fees, subject to
            approval by the Chairman, and that any future refund or repayment of
            such fee
            will be paid back to the Company, when applicable.

           

          
            e)
              A Company stock purchase plan permitting employees to make an annual
              investment
              of up to $25,000 in Company stock with a 5% discount frommarket value
              on the
              purchase price.

             

          

          9.  
            Board Seats.  Following commencement of employment, the Board
            of the Bank and the Company 

          will
            appoint you as a member of each Board of
            Directors.

        

      

    

     

    10. Severance
      Protection.  Separately, we will enter into a Severance Agreement
      between you and the Company and you and the Bank ("Severance
      Agreement").  Such Severance Agreement will provide that if your
      employment is terminated involuntarily (absent "cause") within the
      first year of employment, you will be paid a severance payment equal to 24
      months of base salary plus bonus, with the bonus amount calculated as 70% of
      such base salary (assumes a bonus calculated on 100% of Target
      performance).  In turn, you will agree not to compete with the
      business of the Bank and the Company for a period of fifteen (15) months
      following your date of termination of employment within 25
      miles of any Bank branch office.  After one year
      of employment, but less than three years, such severance payment amount will
      be
      equal to 21 months of base salary plus bonus, and will be calculated based
      upon
      the average base salary plus the average bonus paid for such prior two year
      period.  After three years of employment, such severance payment
      amount will be equal to 18 months of base salary plus bonus, and will be
      calculated based upon the average base salary plus the average bonus paid for
      such prior three year period.  Also, as will be detailed
      more fully in the Severance Agreement, upon termination of employment following
      a change in control transaction, you will receive a severance benefit equal
      to
      2.99 times your five year average annualized taxable compensation calculated
      in
      accordance with Section 280G of the Internal Revenue Code of 1986, as amended
      (and comparable to the change in control benefits payable to other senior
      officers of the Company).

     

    11. Relocation
      Assistance.  To assist you in the relocation of you and your family,
      the Bank will directly 

    pay
      for the following:

     

    a)
      The realtor commission on the sale of your current house.  Please
      exclude the Company and the Bank from payment of a real estate commission under
      any broker listing agreements that you sign.  We will reserve the
      right to purchase your home at 94% of the average of two current market
      appraisals.

     

    b)
      Customary closing costs on the purchase of your new home (excluding any interest
      buy-down points on the purchase of a new home).

     

    c)
      Customary closing costs on the sale of your current home (excluding
      any “points” paid by the seller on the sale of the home).

     

    d)
      The reasonable moving expenses associated with your household goods packing
      and
      relocation. Please provide us with three (3) written estimates.

    
      
        

      

    

     

    e)
      Temporary housing expenses associated with your relocation anticipated to be
      for
      a period not to exceed four (4) months.

     

    f)
      Reimbursement for your periodic travel expense to and from your current home
      while living in temporary housing.

     

    g)
      If you relocate your family to New Jersey but find yourself also paying the
      costs of a home in Albany, New York, pending its sale, we will assist with
      the
      monthly carrying costs of the New York home through reimbursement of real estate
      taxes, utilities, homeowner’s insurance and mortgage interest expense for a
      period of up to nine months. Also, the Bank will assist you by providing a
      “bridge” loan (subject to the limitations under Regulation ‘O’) as may be
      necessary to assist you in the purchase of a new home before the sale of your
      current home.  Also, we will reimburse you for any interest charges
      related to this bridge loan from Sun National Bank or any third party lender
      (related to interest charges applicable to up to $250,000 of loan principal)
      pending the sale of your current home for a period of up to nine
      months.

     

    12. Amendment
      and Governing Law.  This letter agreement may not be amended or
      modified except by an express written agreement signed by you and a duly
      authorized officer of the Company.  The terms of this letter agreement
      and the resolution of any disputes will be governed by New Jersey
      law.

     

    13. Contingencies.  This
      offer of employment is subject to our receipt of satisfactory results regarding
      customary pre-employment drug screen testing, a criminal background review
      and a
      financial credit review, and final approval of this offer by the Board of
      Directors of the Company and the Bank.

    


    We
      hope that you find the foregoing offer of employment in accordance with our
      discussions and understandings. You may indicate your acceptance of these terms
      and our offer by signing and dating the enclosed duplicate original of this
      letter and returning it to me. Please note that the terms of this offer will
      be
      the subject of public disclosure at a time and in a manner determined by the
      Company.

     

    We
      look forward to having you join our management team as soon as
      possible.   If you have any questions, please call me directly at
      (856)794-4727.

    


    Very
      truly yours,

    


    /s/
      Sidney R.
      Brown


    Sidney
      R. Brown

    Vice
      Chairman, Treasurer and Secretary

    


    Attachment:

    Chart
      related to Annual Performance

    and
      related Bonus, Option and Stock Awards.

     

    I
      have read and accept this offer of employment on the terms detailed
      herein.  My anticipated starting date will be January 7,
      2008.

     

    
      /s/
        Thomas  X. Geisel

      Mr.
        Thomas X. Geisel

       

    

    Dated:
      December 5, 2007