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Exhibit 10.1    
  

Employment
Agreement

between Robert J. McCormack,

the Registrant and Sun Bank,

dated October 31, 2002 

 
 

EMPLOYMENT AGREEMENT    
  

        THIS AGREEMENT is made as of the 31st day of October, 2002, between SUN BANCORP, INC. ("Corporation"), a Pennsylvania business corporation having a place
of business at 2-16 South Market Street, Selinsgrove, Pennsylvania 17870, SUN BANK ("Bank"), a Pennsylvania chartered banking institution having a place of business at 2-16
South Market Street, Selinsgrove, Pennsylvania 17870, and ROBERT J. McCORMACK ("Executive"), an individual residing at RR #6, Box 266-K, Lewisburg, Pennsylvania, 17837 (collectively, the
"Parties" and, individually, sometimes a "Party"). 

        WHEREAS,
the Corporation is a registered bank holding company; 

        WHEREAS,
the Bank is a subsidiary of the Corporation; 

        WHEREAS,
any reference solely to Corporation in this Agreement shall mean Corporation or Bank; 

        WHEREAS,
Corporation and Bank desire to employ Executive to serve in the capacity of President and CEO of the Bank and Corporation under the terms and conditions set forth in this
Agreement; and 

        WHEREAS,
Executive desires to accept employment with Corporation and Bank under the terms and conditions set forth in this Agreement. 

        NOW,
THEREFORE, the parties hereto, intending to be legally bound, agree as follows: 

        1.    Employment. Corporation and Bank hereby employ Executive and Executive hereby accepts employment with Corporation and
Bank, on the terms and conditions set forth in this Agreement. 

        2.    Duties and Position of Executive. Executive shall perform and discharge well and faithfully such duties as an executive
officer of Corporation as may be assigned to Executive from time to time by the Board of Directors of Corporation. Executive shall be employed as President and Chief Executive Officer of the Bank and
Corporation, and shall hold such other titles as may be given to him from time to time by the Board of Directors of Corporation. 

        3.    Engagement in Other Employment. Executive shall devote his full time, attention and energies to the business of
Corporation and Bank during the Employment Period (as defined in Section 4(a) of this Agreement); provided, however, that this Section 3 shall not be construed as preventing Executive
from (a) investing Executive's personal assets in enterprises that do not compete with Corporation, Bank or any of their subsidiaries or affiliates or (b) being involved in any other
activity with the prior approval of the Boards of Directors of Corporation and Bank. The Executive shall not engage in any business or commercial activities, duties or pursuits which compete with the
business or commercial activities of Corporation, Bank or any of their subsidiaries or affiliates, nor may the Executive serve as a director or officer or in any other capacity in a company which
competes with Corporation, Bank or any of their subsidiaries or affiliates. 

        4.    Term of Agreement.

        (a)  Employment
Period. This Agreement shall be for a three (3) year period (the "Employment Period") beginning on the date first mentioned above, and if not
previously terminated pursuant to the terms of this Agreement, the Employment Period shall end three (3) years later; provided however, that the Employment Period shall be automatically renewed
one year later on the first anniversary date of the commencement of the Employment Period (the "Renewal Date") for a period ending three
(3) years from the Renewal Date unless either party shall give written notice of non-renewal to the other party at least sixty (60) days prior to the Renewal Date, in which
event this Agreement shall terminate at the end of the Employment Period. If this Agreement is renewed on the Renewal Date, it will be automatically renewed on the first anniversary date of the
Renewal Date and each subsequent year (the "Annual Renewal Date") for a period ending three (3) years from each Annual Renewal Date, unless either party gives written notice of
non-renewal to the other party at least sixty (60) days prior to the Annual 

 

Renewal Date, in which case this Agreement will continue in effect for a term ending two (2) years from the Annual Renewal Date immediately following such notice. 

        (b)  Cause.
Notwithstanding the provisions of Section 4(a) of this Agreement, this Agreement shall terminate automatically for Cause (as defined herein) upon written
notice from the Board of Directors of Corporation to Executive. As used in this Agreement, the term "Cause" shall mean 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 his duties hereunder, other than a failure resulting from Executive's incapacity because of physical or
mental illness, as provided in Section 4(e) 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 his 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; 

        (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 and Bank; 

        (xiv) direction
or recommendation of a state or federal bank regulatory authority to remove the Executive from his position with Corporation and/or Bank, 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 the
Corporation; if the violation is so serious that an attempt to cure would be fruitless, no notice need be given by the Bank. 

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        (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 and
Bank and approved in writing by the Boards of Directors of Corporation and Bank and, after notice from Corporation, a failure to cure such conflict within twenty (20) days of said notice. 

        If
this Agreement is terminated for Cause, all of Executive's rights under this Agreement shall cease as of the effective date of such termination and all of Corporation and Bank's
compensation and employment obligations under this Agreement shall terminate. 

        (c)  Notwithstanding
the provisions of Section 4(a) of this Agreement, all of Corporation and Bank's obligations under this Agreement shall terminate automatically
upon Executive's voluntary termination of employment. 

        (d)  Good
Reason. Notwithstanding the provisions of Section 4(a) of this Agreement, the Executive may terminate his employment under this Agreement for Good Reason. As
used in this Agreement, "Good Reason" shall mean any of the following: 

        (i)    any
reduction in the Executive's Annual Base Salary, as in effect on the date this Agreement is executed or as the same may be increased from time to time, except such
reductions that are the result of a national financial depression or national or bank emergency, or when such reduction has been implemented by the Board of Directors for the Corporation's senior
management; or 

        (ii)  a
requirement that Executive move his principal residence more than seventy-five (75) miles from the location of Corporation's principal executive
office immediately prior to this Agreement; or 

        (iii)  any
removal of the Executive from any of the positions indicated in Section 2 of this Agreement, other than for a promotion, except as a result of his
regulatory removal and/or in connection with termination of the Executive's employment for Cause. 

        If
Executive terminates his employment for Good Reason, then he may give notice of intention to collect benefits under this Agreement by delivering a notice in writing (the "Notice of
Termination") and Corporation shall pay Executive an amount equal to one (1) times the Executive's Annual Base Salary as defined in Section 5(a) of this Agreement, which amount shall be
payable in twelve (12) equal
monthly installments and shall be subject to federal, state and local tax withholdings. In addition, Executive shall receive a continuation, for a period of twelve (12) months from the date of
termination of employment, or until Executive secures substantially similar benefits through other employment, whichever shall first occur, of all health, accident, life and disability insurance
benefits in effect with respect to Executive on the date of termination of employment and that were in effect during the two (2) years prior to Executive's termination of employment, or, if
Corporation cannot provide such benefits because Executive is no longer an employee, a dollar amount equal to the cost to Executive of obtaining such benefits or substantially similar benefits.
Executive only becomes entitled to receive these payments and continuation of benefits if he executes a General Release in favor of Corporation, Bank and their subsidiaries and affiliates. However, in
the event the payments described herein, when added to all other amounts or benefits provided to or on behalf of the Executive in connection with his termination of employment, would result in the
imposition of an excise tax under Code Section 4999, such payments shall be retroactively (if necessary) reduced to the extent necessary to avoid such excise tax imposition. Upon written notice
to Executive, together with calculations of Corporation's independent auditors, Executive shall remit to Corporation the amount of the reduction, plus such interest as may be necessary to avoid the
imposition of such excise tax. Notwithstanding the foregoing or any other provision of this contract to the contrary, if any portion of the amount herein payable to the Executive is determined to be
non-deductible pursuant to the regulations promulgated under Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), then 

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Corporation shall be required only to pay to Executive the amount determined to be deductible under Section 280G. 

        (e)  Disability.
Notwithstanding the provisions of Section 4(a) of this Agreement, if, as a result of physical or mental injury or impairment, Executive is unable to
perform all of the essential job functions of his position on a full time basis, taking into account any reasonable accommodation required by law, and without posing a direct threat to himself and
others, for a period up to one hundred eighty (180) days, all obligations of Corporation and Bank to pay Executive an Annual Base Salary as set forth in Paragraph 5(a) of this Agreement
are suspended. Any paid time off, sick leave, or short term disability pay Executive may be entitled to receive, pursuant to an established disability plan or program of the Bank and/or Corporation,
if any exists, shall be considered part of the compensation Executive shall receive while disabled, and shall not be in addition to the compensation received by Executive under this provision of the
Agreement. Executive further agrees that should he remain unable to perform all of the essential functions of his position on a full time basis, taking into account any reasonable accommodation
required by law, and without posing a direct threat to himself or others, after one hundred eighty (180) days, the Bank and Corporation will suffer an undue hardship by continuing Executive in
his position. Upon this event, all compensation and employment obligations of the Bank and Corporation under this Agreement shall cease (except Executive's rights under the Corporation's then existing
short term and/or long term disability plans, if any), and this Agreement shall terminate. 

        (f)    Death.
Notwithstanding the provisions of Section 4(a) of this Agreement, this Agreement shall terminate automatically upon Executive's death and Executive's
rights under this Agreement shall cease as of the date of such termination. 

        5.    Employment Period Compensation.

        (a)  Annual
Base Salary. For services performed by Executive under this Agreement, Corporation shall pay Executive an Annual Base Salary in the aggregate during the
Employment Period at the rate of One Hundred Eighty Thousand Three Dollars and Twenty Cents ($180,003.20) per year, payable at the same times as salaries are payable to other executive employees of
Corporation. Corporation may, from time to time, increase Executive's Annual Base Salary, and any and all such increases shall be deemed to constitute amendments to this Section 5(a) to reflect
the increased amounts, effective as of the date established for such increases by the Board of Directors of Corporation or any committee of such Board in the resolutions authorizing such increases. 

        (b)  Bonus.
Executive may be eligible for incentive compensation under the terms and conditions of any incentive compensation plan that Corporation may have in effect from
time to time. 

        (c)  Vacations.
During the term of this Agreement, Executive shall be entitled to paid annual vacation in accordance with the policies as established from time to time by the
Board of Directors of Corporation and Bank. However, Executive shall not be entitled to receive any additional compensation from Corporation for failure to take a vacation, nor shall Executive be able
to accumulate unused vacation time from one year to the next, except to the extent authorized by the Board of Directors of Corporation. 

        (d)  Employee
Benefit Plans. During the term of this Agreement, Executive shall be entitled to participate in and receive the benefits of any Employee Benefit Plan currently
in effect at Corporation, until such time that the Board of Directors of Corporation authorizes a change in such benefits. Executive shall also be entitled to participate in any stock option and
profit sharing plans that Corporation may have in effect, subject to the terms and conditions of those plans. Nothing paid to Executive under any plan or arrangement presently in effect or made
available in 

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the future shall be deemed to be in lieu of the salary payable to Executive pursuant to Section 5(a) hereof. 

        (e)  Business
Expenses. During the term of this Agreement, Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by him, which are
properly accounted for, in accordance with the policies and procedures established by the Board of Directors of Corporation for its executive officers. 

        6.    Termination of Employment Following Change in Control.

        (a)  If
a Change in Control (as defined in Section 6(b) of this Agreement) shall occur then, at the option of Executive, exercisable by Executive within one hundred
eighty (180) days of the Change of Control,
Executive may resign from employment with Corporation and Bank (or, if involuntarily terminated, give notice of intention to collect benefits under this Agreement) by delivering a notice in writing
(the "Notice of Termination") to Corporation and Bank and the provisions of Section 7 of this Agreement shall apply. 

        (b)  As
used in this Agreement, "Change in Control" shall mean a change in control (other than one occurring by reason of an acquisition of the Bank and/or Corporation by
Executive) of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A or any successor rule or regulation promulgated under the
Securities Exchange Act of 1934, as amended (the "1934 Act"); provided that, without limiting the foregoing, a Change in Control shall be deemed to have occurred if: 

        (i)    (A)
the Corporation and/or Bank shall be merged or consolidated, or (B) substantially all of the assets of Corporation and/or Bank shall be sold, exchanged,
transferred or otherwise disposed of, and, as a result of such merger, consolidation, sale, exchange or transfer, less than a majority of the outstanding voting stock of the surviving, resulting,
purchasing "person"is owned, immediately after the transaction, by the holders of voting stock of the Corporation before the transaction, unless (y) such merger, consolidation, sale, exchange,
purchase or transfer is approved in advance by seventy percent (70%) or more of the members of the Board of Directors of Corporation who are not interested in the transaction and (z) a majority
of the members of the Board of Directors of the legal entity resulting from, or existing after, any such transaction, and of the Board of Directors of such entity's parent corporation, if any, are
former members of the Board of Directors of Corporation, or 

        (ii)  any
"person" or group of "persons"(as such term is used in Sections 13(d) and 14(d) of the 1934 Act), other than Corporation, Bank or any "person" who on the date
hereof is a director or officer of Corporation and/or Bank is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the 1934 Act or any successor rule or regulation
promulgated under the 1934 Act), directly or indirectly, of securities of Corporation representing (30%) percent more of the combined voting power of Corporation's then outstanding securities, or 

        (iii)  during
any period of two (2) consecutive years during the term of Executive's employment under this Agreement, individuals who at the beginning of such period
constitute the Board of Directors of Corporation cease for any reason to constitute at least a majority thereof, unless the election of each director who was not a director at the beginning of such
period has been approved in advance by directors representing at least two-thirds of the directors then in office who were directors at the beginning of the period. 

        7.    Rights in Event of Termination of Employment Following Change in Control.

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        (a)  In
the event that a Change in Control occurs and Executive delivers a Notice of Termination (as defined in Section 6(a) of this Agreement) to Corporation and
Bank, Executive shall be entitled to receive the compensation and benefits set forth below: 

        (i)    a
lump sum equal to three (3) times the Executive's Annual Base Salary as defined in Section 5(a), which amount shall be subject to federal, state and
local tax withholdings; and 

        (ii)  for
a period of three (3) years from the date of termination of employment, or until Executive secures substantially similar benefits through other employment,
whichever shall first occur, Executive shall receive a continuation of all health, accident, life and disability insurance benefits in effect with respect to Executive during the two (2) years
prior to his termination of employment, or, if Corporation cannot provide such benefits because Executive is no longer an employee, a dollar amount equal to the cost to Executive of obtaining such
benefits or substantially similar benefits. 

        However,
in the event the payment described herein, when added to all other amounts or benefits provided to or on behalf of the Executive in connection with his termination of
employment, would result in the imposition of an excise tax under Code Section 4999, such payments shall be retroactively (if necessary) reduced to the extent necessary to avoid such excise tax
imposition. Upon written notice to Executive, together with calculations of Corporation's independent auditors, Executive shall remit to Corporation the amount of the reduction plus such interest as
may be necessary to avoid the imposition of such excise tax. Notwithstanding the foregoing or any other provision of this contract to the contrary, if any portion of the amount herein payable to the
Executive is determined to be non-deductible pursuant to the regulations promulgated under Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), the
Corporation shall be required only to pay to Executive the amount determined to be deductible under Section 280G. 

        (b)  Executive
shall not be required to mitigate the amount of any payment provided for in this Section 7 by seeking other employment or otherwise. The amount of
payment provided for in this Section 7(a)(i) shall not be reduced by any compensation earned by Executive as the result of employment by another employer or by reason of Executive's
receipt of or right to receive any retirement or other benefits after the date of termination of employment or otherwise. 

        8.    Rights in Event of Termination of Employment Absent Change in Control.

        (a)  In
the event that Executive's employment is involuntarily terminated by Corporation without Cause and no Change in Control shall have occurred at the date of such
termination, Corporation shall pay Executive an amount equal to and no greater than three (3) times the Executive's Annual Base Salary as defined in Section 5(a) of this Agreement, which
amount shall be payable in thirty-six (36) equal monthly installments. In addition, Executive shall be entitled to a continuation of health, accident, life and disability insurance
benefits for thirty-six (36) months or until Executive secures substantially similar benefits through other employment, whichever shall first occur. However, if the payment
described
herein, when added to all other amounts or benefits provided to or on behalf of the Executive in connection with his termination of employment, would result in the imposition of an excise tax under
Code Section 4999, such payments shall be retroactively (if necessary) reduced to the extent necessary to avoid such imposition. Upon written notice to Executive, together with calculations of
Corporation's independent auditors, Executive shall remit to Corporation the amount of the reduction plus such interest as may be necessary to avoid the imposition of such excise tax. Notwithstanding
the foregoing or any other provision of this contract to the contrary, if any portion of the amount herein payable to the Executive is determined to be non-deductible pursuant to the
regulations promulgated under Section 280G of the Code, then Corporation shall be required only to pay to Executive the amount determined to be deductible under Section 280G. 

6

 

        (b)  Executive
shall not be required to mitigate the amount of any payment provided for in this Section 8 by seeking other employment or otherwise. The amount of
payment provided for in this Section 8 (not continuation of benefits) shall not be reduced by any compensation earned by Executive as the result of employment by another employer or by reason
of Executive's receipt of or right to receive any retirement or other benefits after the date of termination of employment or otherwise. 

        (c)  The
amounts payable pursuant to this Section 8 shall constitute Executive's sole and exclusive remedy in the event of involuntary termination without cause of
Executive's employment by Corporation in the absence of a Change in Control. 

        9.    Restrictive Covenant.

        (a)  Executive
hereby acknowledges and recognizes the highly competitive nature of the business of Corporation and Bank and, accordingly, agrees that, during and for the
applicable period set forth in Section 9(c) hereof, Executive shall not: 

        (i)    be
engaged, directly or indirectly, either for his own account or as agent, consultant, employee, partner, officer, director, proprietor, investor (except as an investor
owning less than 5% of the stock of a publicly owned company) or otherwise of any person, firm, corporation or enterprise engaged in (1) the banking or financial services industry (including
bank holding company), or (2) any other activity in which Corporation, Bank or any of their subsidiaries or affiliates are engaged during the Employment Period, in any county in which, at any
time during the Employment Period or on the date of termination of the Executive's employment, a branch, office or other facility of Corporation, Bank or any of their subsidiaries or affiliates is
located, or in any county contiguous to such a county, including contiguous counties located outside of the Commonwealth of Pennsylvania (the "Non-Competition Area"); or 

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

        (iii)  directly
or indirectly contact, solicit or induce any person, corporation or other entity who or which is a customer or referral source of Corporation, Bank or any of
their subsidiaries or affiliates, during the term of Executive's employment or on the date of termination of Executive's employment; or 

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

        (b)  It
is expressly understood and agreed that, although Executive, Corporation and Bank consider the restrictions contained in Section 9(a) reasonable for the
purpose of preserving for Corporation, Bank and any of their subsidiaries or affiliates, their good will and other proprietary rights, if a final judicial determination is made, by a court or
arbitration panel having jurisdiction, that the time or territory or any other restriction contained in Section 9(a) is an unreasonable or otherwise unenforceable restriction against Executive,
the provisions of Section 9(a) shall not be rendered void, but shall be deemed amended to apply as to such maximum time and territory and to such other extent as such court may judicially
determine or indicate to be reasonable. 

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        (c)  The
provisions of this Section 9 shall be applicable, commencing on the date of this Agreement and ending on one of the following dates, as applicable: 

        (i)    if
Executive voluntarily terminates his employment without Good Reason, the first anniversary date of the effective date of termination of employment; 

        (ii)  if
Executive's employment terminates in accordance with the provisions of Section 4(b) of this Agreement (relating to termination for Cause) or the Executive
voluntarily terminates his employment in accordance with the provisions of Section 4(c) of this Agreement (relating to termination by Executive for Good Reason), the second anniversary date of
the effective date of termination of employment; 

        (iii)  if
the Executive's employment is involuntarily terminated in accordance with the provisions of Section 6 of this Agreement (relating to involuntary termination
without Cause following a Change in Control), the third anniversary date of the effective date of termination of employment;. 

        (iv)  if
the Executive's employment is involuntarily terminated in accordance with the provisions of Section 8 of this Agreement (relating to involuntary termination
without Cause absent a Change in Control), the third anniversary date of the effective date of termination of employment; 

        (v)  if
Executive's employment terminates in accordance with the provisions of Section 4(a) relating to non-renewal of contract, the effective date of
termination of employment. 

        10.  Unauthorized Disclosure. During the term of his employment hereunder, or at any later time, the Executive shall not,
without the written consent of the Board of Directors of Corporation or a person authorized thereby, knowingly disclose to any person, other than an employee of the Corporation or a person to whom
disclosure is reasonably necessary or appropriate in connection with the performance by the Executive of his duties as an executive of Corporation, any material confidential information obtained by
him while in the employ of Corporation with respect to any of the services, products, improvements, formulas, designs or styles, processes, customers, customer lists, methods of business or any
business practices of Corporation, Bank or any of their subsidiaries or affiliates, the disclosure of which could be or will be damaging to Corporation, Bank or any of their subsidiaries or
affiliates; provided, however, that confidential information shall not include any information known generally to the public (other than as a result of unauthorized disclosure by the Executive or any
person with the assistance, consent or direction of the Executive) or any information of a type not otherwise considered confidential by persons engaged in the same business or a business similar to
that conducted by Corporation, Bank or any of their subsidiaries or affiliates or any information that must be disclosed as required by law. 

        11.  Work Made for Hire. Any work performed by the Executive under this Agreement should be considered a "Work Made for Hire"
as that phrase is defined by the U.S. patent laws and shall be owned by and for the express benefit of Corporation, Bank and their subsidiaries and affiliates. In the event it should be established
that such work does not qualify as a Work Made for Hire, the Executive agrees to and does hereby assign to Corporation, Bank and their affiliates and subsidiaries, all of his rights, title, and/or
interest in such work product, including, but not limited to, all copyrights, patents, trademarks, and proprietary rights. 

        12.  Return of Company Property and Documents. The Executive agrees that, at the time of termination of his employment,
regardless of the reason for termination, he will deliver to Corporation, Bank and their subsidiaries and affiliates, 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, 

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blueprints, sketches, software programs, equipment, other documents or property, or reproductions of any of the aforementioned items developed or obtained by the Executive during the course of his
employment. 

        13.  Resignation as Director. Executive agrees that in the event that this Agreement or his employment under this Agreement is
terminated, Executive shall resign as a director of Corporation, Bank or any of their affiliates or subsidiaries, if he is then serving as a director of any such entities. 

        14.  Liability Insurance. Corporation shall use its best efforts to obtain insurance coverage for the Executive under an
insurance policy covering officers and directors of Corporation and Bank against lawsuits, arbitrations or other legal or regulatory proceedings; however, nothing herein shall be construed to require
Corporation to obtain such insurance, if the Board of Directors of the Corporation determines that such coverage cannot be obtained at a reasonable price. 

        15.  Indemnification. Corporation will indemnify the Executive as required by Pennsylvania law and as provided by the Articles
and By-laws of Corporation, with respect to any threatened, pending or completed legal or regulatory action, suit or proceeding brought against him by reason of the fact that he is or was
a director, officer, employee or agent of Corporation or is or was serving at the request of Corporation as a director, officer, employee or agent of another person or entity. 

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

	 	 	If to the Executive:	 	Mr. Robert McCormack

RR #6 Box 266-K

Lewisburg, PA 17837
	

 	
 	

If to the Bank:	
 	

Mr. Robert Hormell

Personnel Committee Chair

Sun Bank

2-16 South Market Street

Selinsgrove, Pennsylvania 17870
	

 	
 	

If to the Corporation:	
 	

Mr. Robert Hormell

Personnel Committee Chair

Sun Bancorp, Inc.

2-16 South Market Street

Selinsgrove, Pennsylvania 17870

        17.  Waiver. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by Executive and an executive officer specifically designated by the Board of Directors of Corporation and Bank. No waiver by either party, at any time, of
any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. Notwithstanding this Section 17, a promotion of Executive in accordance with Section 2 of this Agreement shall not constitute a
breach of this Agreement or require an amendment in writing. 

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

        19.  Entire Agreement. This Agreement contains the entire agreement of the parties relating to the employment of Executive and
supersedes any and all agreements, either oral or in writing, between the 

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parties with regard to the employment of Executive by Corporation, including the Change of Control Agreement dated December 7, 1998 and the Employment Agreement dated March 1, 2002. 

        20.  Successors; Binding Agreement.

        (a)  Corporation
and Bank will require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the
businesses and/or assets of Corporation and Bank to expressly assume and agree to perform this Agreement in the same manner and to the same extent that Corporation and Bank would be required to
perform it if no such succession had taken place. 

        (b)  This
Agreement shall inure to the benefit of and be enforceable by Executive's personal or legal representatives, executors, administrators, heirs, distributees,
devisees and legatees. If Executive should die after a Notice of Termination is delivered by Executive, or following termination of Executive's employment without Cause, and any amounts would be
payable to Executive under this Agreement if Executive had continued to live, all such amounts shall be paid in accordance with the terms of this Agreement to Executive's devisee, legatee, or other
designee, or, if there is no such designee, to Executive's estate. 

        21.  Arbitration. Corporation and Executive recognize that in the event a dispute should arise between them concerning the
interpretation or implementation of this Agreement (except for any enforcement sought with respect to Sections 9, 10, 11, or 12, which may be litigated in court), lengthy and expensive litigation will
not afford a practical resolution of the issues within a reasonable period of time. Consequently, each party agrees that all disputes, disagreements and questions of interpretation concerning this
Agreement are to be submitted for resolution, in Philadelphia, Pennsylvania, to the American Arbitration Association (the "Association") in accordance with the Association's National Rules for the
Resolution of Employment Disputes or other applicable rules then in effect ("Rules"). Corporation or Executive may initiate an arbitration proceeding at any time by giving notice to the other in
accordance with the Rules. Corporation and Executive may, as a matter or right, mutually agree on the appointment of a particular arbitrator from the Association's pool. The arbitrator shall not be
bound by the rules of evidence and procedure of the courts of the Commonwealth of Pennsylvania, but shall be bound by the substantive law applicable to this Agreement. The decision of the arbitrator,
absent fraud, duress, incompetence or gross and obvious error of fact, shall be final and binding upon the parties and shall be enforceable in courts of proper jurisdiction. Following written notice
of a request for arbitration, Corporation, Bank and Executive shall be entitled to an injunction restraining all further proceedings in any pending or subsequently filed litigation concerning this
Agreement, except as otherwise provided herein or any enforcement sought with respect to Sections 9, 10, 11, or 12. 

        22.  Attorney's Fees and Costs. If any action at law or in equity is necessary to enforce or interpret the terms of this
Agreement, each party shall bear his or its own attorney's fees, costs, and expenses incurred in connection with the litigation, unless mandated by statute. 

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

        24.  Applicable Law. This Agreement shall be governed by and construed in accordance with the domestic, internal laws of the
Commonwealth of Pennsylvania, without regard to its conflicts of laws principles. 

        25.  Headings. The section headings of this Agreement are for convenience only and shall not control or affect the meaning or
construction or limit the scope or intent of any of the provisions of this Agreement. 

10

 

        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. 

	ATTEST:	 	SUN BANCORP, INC.
	

/s/  SANDRA J. MILLLER      	
 	

/s/  ROBERT HORMELL    

/s/  ROBERT HORMELL    

Personnel Committee Chair
	

ATTEST:	
 	

SUN BANK
	

/s/  SANDRA J. MILLLER      	
 	

/s/  ROBERT HORMELL    

/s/  ROBERT HORMELL    

Personnel Committee Chair
	

WITNESS:	
 	

EXECUTIVE:
	

/s/  SANDRA J. MILLER      	
 	

/s/  ROBERT J. MCCORMACK    

Robert J. McCormack

11

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Exhibit 10.1

EMPLOYMENT AGREEMENTQuickLinks
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Exhibit 10.2    
  

Employment
Agreement between

Thomas W. Bixler, the Registrant

and Sun Bank, dated November 3, 2002 

 
 

EMPLOYMENT AGREEMENT    
  

        THIS AGREEMENT is made as of the 3rd day of November, 2002, between SUN
BANCORP, INC. ("Corporation"), a Pennsylvania business corporation having a place of business at 2-16 South Market Street, Selinsgrove, Pennsylvania 17870,  SUN BANK ("Bank"),
 a Pennsylvania chartered banking institution having a place of business at 2-16 South Market Street, Selinsgrove,
Pennsylvania 17870, and THOMAS W. BIXLER ("Executive"), an individual residing at 501 Highland Terrace, Williamsport, Pennsylvania 17701, (collectively,
the "Parties" and, individually, sometimes a "Party"). 

        WHEREAS, the Corporation is a registered bank holding company; 

        WHEREAS, the Bank is a subsidiary of the Corporation; 

        WHEREAS, any reference solely to Corporation in this Agreement shall mean Corporation or Bank; 

        WHEREAS, Corporation and Bank desire to employ Executive to serve in the capacity of Senior Vice President and Senior Lender of Bank and
Corporation on the terms and conditions set forth in this Agreement; and 

        WHEREAS, Executive desires to accept employment with Corporation and Bank on the terms and conditions set forth in this Agreement. 

        NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as follows: 

	I.
	Employment.    Corporation and Bank hereby employ Executive and Executive hereby accepts
employment with Corporation and Bank, on the terms and conditions set forth in this Agreement.

	II.
	Duties and Position of Executive.    Executive shall perform and discharge well and faithfully
such duties as an executive officer of Corporation as may be assigned to Executive from time to time by the Board of Directors of Corporation and/or Corporation's President and CEO. Executive shall be
employed as Senior Vice President and Senior Lender of the Bank and Corporation, and shall hold such other titles as may be given to him from time to time by the Board of Directors of Corporation. The
Executive may be promoted to other positions with the Corporation and/or Bank and assigned duties consistent with such a position without the Corporation or Bank breaching this Agreement. Such
promotion may occur without amendment of this Agreement; all other provisions of this Agreement will remain in full force and effect.

	3.
	Engagement in Other Employment.    Executive shall devote his full time, attention and energies
to the business of Corporation and Bank during the Employment Period (as defined in Section 4(a) of this Agreement); provided, however, that this Section 3 shall not be construed as
preventing Executive from (a) investing Executive's personal assets in enterprises that do not compete with Corporation, Bank or any of their subsidiaries or affiliates or (b) being
involved in any other activity with the prior approval of the Boards of Directors of Corporation and Bank. The Executive shall not engage in any business or commercial activities, duties or pursuits
which compete with the business or commercial activities of Corporation, Bank or any of their subsidiaries or affiliates, nor may the Executive serve as a director or officer or in any other capacity
in a company which competes with Corporation, Bank or any of their subsidiaries or affiliates.

	4.
	Term of Agreement.

	(a)
	Employment Period.    This Agreement shall be for a two (2) year period (the "Employment Period") beginning on the
date first mentioned above, and if not previously terminated pursuant to the terms of this Agreement, the Employment Period shall end two (2) years later. The Employment Period shall be
automatically extended on the second anniversary date of the commencement of the Employment Period (the "Renewal Date") for a period ending one (1) year from the Renewal Date unless either
party shall 

 

give
written notice of non-renewal to the other party at least sixty (60) days prior to the Renewal Date, in which event this Agreement shall terminate at the end of the Employment
Period. If this Agreement is renewed on the Renewal Date, it will be automatically renewed on the first anniversary date of the Renewal Date and each subsequent year (the "Annual Renewal Date") for a
period ending one (1) year from each Annual Renewal Date, unless either party gives written notice of non-renewal to the other party at least sixty (60) days prior to the
Annual Renewal Date, in which case this Agreement will terminate on the Annual Renewal Date immediately following such notice. 

	(b)
	Cause.    Notwithstanding the provisions of Section 4(a) of this Agreement, this Agreement shall terminate
automatically for Cause (as defined herein) upon written notice from the Board of Directors of Corporation to Executive. As used in this Agreement, the term "Cause" shall mean 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 his duties hereunder, other than a failure resulting from Executive's incapacity because of physical or mental illness, as provided in Section (e) 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 his 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;
	

 	
 	

(xii)	
 	

any act of fraud or misappropriation by Executive;
	
 	
 	

 	
 	

 

2

 

	

 	
 	

(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 and Bank;
	

 	
 	

(xiv)	
 	

direction or recommendation of a state or federal bank regulatory authority to remove the Executive from his position with Corporation and/or Bank, 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 the Corporation; if the violation is so serious that an attempt to cure would be fruitless,
 no notice need be given by the Bank.
	

 	
 	

(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 and Bank and approved in writing by the Boards of Directors of Corporation and Bank and,
after notice from Corporation, a failure to cure such conflict within twenty (20) days of said notice.

If
this Agreement is terminated for Cause, all of Executive's rights under this Agreement shall cease as of the effective date of such termination and all of Corporation and Bank's compensation and
employment obligations under this Agreement shall terminate. 

	(c)
	Notwithstanding
the provisions of Section 4(a) of this Agreement, all of Corporation and Bank's obligations under this Agreement shall terminate automatically upon Executive's
voluntary termination of employment.

	(d)
	Good Reason.    Notwithstanding the provisions of Section 4(a) of this Agreement, the Executive may terminate his
employment under this Agreement for Good Reason. As used in this Agreement, "Good Reason" shall mean any of the following:

	(i)
	any
reduction in the Executive's Annual Base Salary, as in effect on the date this Agreement is executed or as the same may be increased from time to
time, except such reductions that are the result of a national financial depression or national or bank emergency, or when such reduction has been implemented by the Board of Directors for the
Corporation's senior management; or

	(ii)
	a
requirement that Executive move his principal residence more than seventy-five (75) miles from the location of Corporation's
principal executive office immediately prior to this Agreement; or

	(iii)
	any
removal of the Executive from any of the positions indicated in Section 2 of this Agreement, other than for a promotion, except as a result
of his regulatory removal and/or in connection with termination of the Executive's employment for Cause. 

If
Executive terminates his employment for Good Reason, then he may give notice of intention to collect benefits under this Agreement by delivering a notice in writing (the "Notice of Termination")
and Corporation shall pay Executive an amount equal to one (1) times the Executive's Annual Base Salary as defined in Section 5(a) of this Agreement, which amount shall be payable in
twelve (12) equal monthly installments and 

3

 

shall be subject to federal, state and local tax withholdings. In addition, Executive shall receive a continuation, for a period of twelve (12) months from the date of termination of
employment, or until Executive secures substantially similar benefits through other employment, whichever shall first occur, of all health, accident, life and disability insurance benefits in effect
with respect to Executive on the date of termination of employment and that were in effect during the two (2) years prior to Executive's termination of employment, or, if Corporation cannot
provide such benefits because Executive is no longer an employee, a dollar amount equal to the cost to Executive of obtaining such benefits or substantially similar benefits. Executive only becomes
entitled to receive these payments and
continuation of benefits if he executes a General Release in favor of Corporation, Bank and their subsidiaries and affiliates. However, in the event the payments described herein, when added to all
other amounts or benefits provided to or on behalf of the Executive in connection with his termination of employment, would result in the imposition of an excise tax under Code Section 4999,
such payments shall be retroactively (if necessary) reduced to the extent necessary to avoid such excise tax imposition. Upon written notice to Executive, together with calculations of Corporation's
independent auditors, Executive shall remit to Corporation the amount of the reduction, plus such interest as may be necessary to avoid the imposition of such excise tax. Notwithstanding the foregoing
or any other provision of this contract to the contrary, if any portion of the amount herein payable to the Executive is determined to be non-deductible pursuant to the regulations
promulgated under Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), then Corporation shall be required only to pay to Executive the amount determined to be deductible
under Section 280G. 

	(e)
	Disability.    Notwithstanding the provisions of Section 4(a) of this Agreement, if, as a result of physical or mental
injury or impairment, Executive is unable to perform all of the essential job functions of his position on a full time basis, taking into account any reasonable accommodation required by law, and
without posing a direct threat to himself and others, for a period up to one hundred eighty (180) days, all obligations of Corporation and Bank to pay Executive an Annual Base Salary as set
forth in Paragraph 5(a) of this Agreement are suspended. Any paid time off, sick leave, or short term disability pay Executive may be entitled to receive, pursuant to an established disability
plan or program of the Bank and/or Corporation, if any exists, shall be considered part of the compensation Executive shall receive while disabled, and shall not be in addition to the compensation
received by Executive under this provision of the Agreement. Executive further agrees that should he remain unable to perform all of the essential functions of his position on a full time basis,
taking into account any reasonable accommodation required by law, and without posing a direct threat to himself or others, after one hundred eighty (180) days, the Bank and Corporation will
suffer an undue hardship by continuing Executive in his position. Upon this event, all compensation and employment obligations of the Bank and Corporation under this Agreement shall cease (except
Executive's rights under the Corporation's then existing short term and/or long term disability plans, if any), and this Agreement shall terminate.

	(f)
	Death.    Notwithstanding the provisions of Section 4(a) of this Agreement, this Agreement shall terminate
automatically upon Executive's death and Executive's rights under this Agreement shall cease as of the date of such termination. 

	5.
	Employment Period Compensation.

	(a)
	Annual Base Salary.    For services performed by Executive under this Agreement, Corporation shall pay Executive an Annual
Base Salary in the aggregate during the 

4

 

Employment
Period at the rate of One Hundred Six Thousand Fifty-Nine Dollars and Twenty Cents ($106,059.20) per year, payable at the same times as salaries are payable to other executive
employees of Corporation. Corporation may, from time to time, increase Executive's Annual Base Salary, and any and all such increases shall be deemed to constitute amendments to this
Section 5(a) to reflect the
increased amounts, effective as of the date established for such increases by the Board of Directors of Corporation or any committee of such Board in the resolutions authorizing such increases. 

	(b)
	Bonus.    Executive may be eligible for incentive compensation under the terms and conditions of any incentive compensation
plan that Corporation may have in effect from time to time.

	(c)
	Vacations.    During the term of this Agreement, Executive shall be entitled to paid annual vacation in accordance with the
policies as established from time to time by the Board of Directors of Corporation and Bank. However, Executive shall not be entitled to receive any additional compensation from Corporation for
failure to take a vacation, nor shall Executive be able to accumulate unused vacation time from one year to the next, except to the extent authorized by the Board of Directors of Corporation.

	(d)
	Employee Benefit Plans.    During the term of this Agreement, Executive shall be entitled to participate in and receive the
benefits of any Employee Benefit Plan currently in effect at Corporation, until such time that the Board of Directors of Corporation authorizes a change in such benefits. Executive shall also be
entitled to participate in any stock option and profit sharing plans that Corporation may have in effect, subject to the terms and conditions of those plans. Nothing paid to Executive under any plan
or arrangement presently in effect or made available in the future shall be deemed to be in lieu of the salary payable to Executive pursuant to Section 5(a) hereof.

	(e)
	Business Expenses.    During the term of this Agreement, Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by him, which are properly accounted for, in accordance with the policies and procedures established by the Board of Directors of Corporation for its executive officers.

	(f)
	Club Memberships.    The Corporation shall provide the Executive with a social club membership to Williamsport Country Club,
paying only social membership dues and business related expenses. Any initiation fees or contributions associated with the club membership are the sole responsibility of the Executive and are to be
paid by the Executive. Upon termination of Executive's employment, regardless of the reason for termination, the Executive agrees to take all necessary actions to relinquish, assign or transfer the
membership to the benefit of Corporation and/or Bank. 

	6.
	Termination of Employment Following Change in Control.

	(a)
	If
a Change in Control (as defined in Section 6(b) of this Agreement) shall occur and if, within twelve (12) months following the Change in Control (as defined in
Section 6(b) of this Agreement), Executive's employment is involuntarily terminated (other than for the Cause as defined in Section 4(b) of this Agreement), then, Executive may give
notice of intention to collect benefits under this
Agreement, by delivering a notice in writing (the "Notice of Termination") to Corporation and Bank and the provisions of Section 7 of this Agreement shall apply.

	(b)
	As
used in this Agreement, "Change in Control" shall mean a change in control (other than one occurring by reason of an acquisition of the Bank and/or Corporation by Executive) of a
nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A or any successor rule or regulation promulgated under 

5

 

the
Securities Exchange Act of 1934, as amended (the "1934 Act"); provided that, without limiting the foregoing, a Change in Control shall be deemed to have occurred if: 

	(i)
	(A)
the Corporation and/or Bank shall be merged or consolidated, or (B) substantially all of the assets of Corporation and/or Bank shall be sold,
exchanged, transferred or otherwise disposed of, and, as a result of such merger, consolidation, sale, exchange or transfer, less than a majority of the outstanding voting stock of the surviving,
resulting, purchasing "person"is owned, immediately after the transaction, by the holders of voting stock of the Corporation before the transaction, unless (y) such merger, consolidation, sale,
exchange, purchase or transfer is approved in advance by seventy percent (70%) or more of the members of the Board of Directors of Corporation who are not interested in the transaction and
(z) a majority of the members of the Board of Directors of the legal entity resulting from, or existing after, any such transaction, and of the Board of Directors of such entity's parent
corporation, if any, are former members of the Board of Directors of Corporation, or

	(ii)
	any
"person" or group of "persons"(as such term is used in Sections 13(d) and 14(d) of the 1934 Act), other than Corporation, Bank or any "person" who
on the date hereof is a director or officer of Corporation and/or Bank is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the 1934 Act or any successor rule or
regulation promulgated under the 1934 Act), directly or indirectly, of securities of Corporation representing thirty (30%) percent or more of the combined voting power of Corporation's then
outstanding securities, or

	(iii)
	during
any period of two (2) consecutive years during the term of Executive's employment under this Agreement, individuals who at the beginning
of such period constitute the Board of Directors of Corporation cease for any reason to constitute at least a majority thereof, unless the election of each director who was not a director at the
beginning of such period has been approved in advance by directors representing at least two-thirds of the directors then in office who were directors at the beginning of the period. 

	7.
	Rights in Event of Termination of Employment Following Change in Control.

	(a)
	In
the event that a Change in Control occurs and Executive delivers a Notice of Termination (as defined in Section 6(a) of this Agreement) to Corporation and Bank, Executive
shall be entitled to receive the compensation and benefits set forth below:

	(i)
	a
lump sum equal to two (2) times the Executive's Annual Base Salary as defined in Section 5(a), which amount shall be subject to federal,
state and local tax withholdings; and

	(ii)
	for
a period of two (2) years from the date of termination of employment, or until Executive secures substantially similar benefits through
other employment, whichever shall first occur, Executive shall receive a continuation of all health, accident, life and disability insurance benefits in effect with respect to Executive during the two
(2) years prior to his termination of employment, or, if Corporation cannot provide such benefits because Executive is no longer an employee, a dollar amount equal to the cost to Executive of
obtaining such benefits or substantially similar benefits. 

However,
in the event the payment described herein, when added to all other amounts or benefits provided to or on behalf of the Executive in connection with his termination of employment, would result
in the imposition of an excise tax under Code Section 4999, such payments shall be retroactively (if necessary) reduced to the extent necessary to 

6

 

avoid such excise tax imposition. Upon written notice to Executive, together with calculations of Corporation's independent auditors, Executive shall remit to Corporation the amount of the reduction
plus such interest as may be necessary to avoid the imposition of such excise tax. Notwithstanding the foregoing or any other provision of this contract to the contrary, if any portion of the amount
herein payable to the Executive is determined to be non-deductible pursuant to the regulations promulgated under Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), the Corporation shall be required only to pay to Executive the amount determined to be deductible under Section 280G. 

	(b)
	Executive
shall not be required to mitigate the amount of any payment provided for in this Section 7 by seeking other employment or otherwise. The amount of payment provided
for in this Section 7(a)(i) shall not be reduced by any compensation earned by Executive as the result of employment by another employer or by reason of Executive's receipt of or right
to receive any retirement or other benefits after the date of termination of employment or otherwise. 

	8.
	Rights in Event of Termination of Employment Absent Change in Control.

	(a)
	In
the event that Executive's employment is involuntarily terminated by Corporation without Cause and no Change in Control shall have occurred at the date of such termination,
Corporation shall pay Executive an amount equal to and no greater than two (2) times the Executive's Annual Base Salary as defined in Section 5(a) of this Agreement, which amount shall
be payable in twenty-four (24) equal monthly installments. In addition, Executive shall be entitled to a continuation of health, accident, life
and disability insurance benefits for twenty-four (24) months or until Executive secures substantially similar benefits through other employment, whichever shall first occur.
However, if the payment described herein, when added to all other amounts or benefits provided to or on behalf of the Executive in connection with his termination of employment, would result in the
imposition of an excise tax under Code Section 4999, such payments shall be retroactively (if necessary) reduced to the extent necessary to avoid such imposition. Upon written notice to
Executive, together with calculations of Corporation's independent auditors, Executive shall remit to Corporation the amount of the reduction plus such interest as may be necessary to avoid the
imposition of such excise tax. Notwithstanding the foregoing or any other provision of this contract to the contrary, if any portion of the amount herein payable to the Executive is determined to be
non-deductible pursuant to the regulations promulgated under Section 280G of the Code, then Corporation shall be required only to pay to Executive the amount determined to be
deductible under Section 280G.

	(b)
	Executive
shall not be required to mitigate the amount of any payment provided for in this Section 8 by seeking other employment or otherwise. The amount of payment provided
for in this Section 8 (not continuation of benefits) shall not be reduced by any compensation earned by Executive as the result of employment by another employer or by reason of Executive's
receipt of or right to receive any retirement or other benefits after the date of termination of employment or otherwise.

	(c)
	The
amounts payable pursuant to this Section 8 shall constitute Executive's sole and exclusive remedy in the event of involuntary termination without cause of Executive's
employment by Corporation in the absence of a Change in Control. 

7

 

	9.
	Restrictive Covenant.

	(a)
	Executive
hereby acknowledges and recognizes the highly competitive nature of the business of Corporation and Bank and, accordingly, agrees that, during and for the applicable period
set forth in Section 9(c) hereof, Executive shall not:

	(i)
	be
engaged, directly or indirectly, either for his own account or as agent, consultant, employee, partner, officer, director, proprietor, investor
(except as an investor owning less than 5% of the stock of a publicly owned company) or otherwise of any person, firm, corporation or enterprise engaged in (1) the banking or financial services
industry (including bank holding company), or (2) any other activity in which Corporation, Bank or any of their subsidiaries or affiliates are engaged during the Employment Period, in any
county in which, at any time during the Employment Period or on the date of termination of the Executive's employment, a branch, office or other facility of Corporation, Bank or any of their
subsidiaries or affiliates is located, or in any county contiguous to such a county, including contiguous counties located outside of the Commonwealth of Pennsylvania (the "Non-Competition
Area"); or

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

	(iii)
	directly
or indirectly contact, solicit or induce any person, corporation or other entity who or which is a customer or referral source of
Corporation, Bank or any of their subsidiaries or affiliates, during the term of Executive's employment or on the date of termination of Executive's employment; or

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

	(b)
	It
is expressly understood and agreed that, although Executive, Corporation and Bank consider the restrictions contained in Section 9(a) reasonable for the purpose of
preserving for Corporation, Bank and any of their subsidiaries or affiliates, their good will and other proprietary rights, if a final judicial determination is made, by a court or arbitration panel
having jurisdiction, that the time or territory or any other restriction contained in Section 9(a) is an unreasonable or otherwise unenforceable restriction against Executive, the provisions of
Section 9(a) shall not be rendered void, but shall be deemed amended to apply as to such maximum time and territory and to such other extent as such court may judicially determine or indicate
to be reasonable.

	(c)
	The
provisions of this Section 9 shall be applicable, commencing on the date of this Agreement and ending on one of the following dates, as applicable:

	(i)
	if
Executive voluntarily terminates his employment without Good Reason, the first anniversary date of the effective date of termination of employment;

	(ii)
	if
Executive's employment terminates in accordance with the provisions of Section 4(b) of this Agreement (relating to termination for Cause) or
the Executive 

8

 

voluntarily
terminates his employment in accordance with the provisions of Section 4(c) of this Agreement (relating to termination by Executive for Good Reason), the first anniversary date of
the effective date of termination of employment; or 

	(iii)
	if
the Executive's employment is involuntarily terminated in accordance with the provisions of Section 6 of this Agreement (relating to
involuntary termination without Cause following a Change in Control), the second anniversary date of the effective date of termination of employment;

	(iv)
	if
the Executive's employment is involuntarily terminated in accordance with the provisions of Section 8 of this Agreement (relating to
involuntary termination without Cause absent a Change in Control), the second anniversary date of the effective date of termination of employment;

	(v)
	if
Executive's employment terminates in accordance with the provisions of Section 4(a) (relating to non-renewal of contract), the
effective date of termination of employment. 

	10.
	Unauthorized Disclosure.    During the term of his employment hereunder, or at any later time, the Executive shall not,
without the written consent of the Board of Directors of Corporation or a person authorized thereby, knowingly disclose to any person, other than an employee of the Corporation or a person to whom
disclosure is reasonably necessary or appropriate in connection with the performance by the Executive of his duties as an executive of Corporation, any material confidential information obtained by
him while in the employ of Corporation with respect to any of the services, products, improvements, formulas, designs or styles, processes, customers, customer lists, methods of business or any
business practices of Corporation, Bank or any of their subsidiaries or affiliates, the disclosure of which could be or will be damaging to Corporation, Bank or any of their subsidiaries or
affiliates; provided, however, that confidential information shall not include any information known generally to the public (other than as a result of unauthorized disclosure by the Executive or any
person with the assistance, consent or direction of the Executive) or any information of a type not otherwise considered confidential by persons engaged in the same business or a business similar to
that conducted by Corporation, Bank or any of their subsidiaries or affiliates or any information that must be disclosed as required by law.

	11.
	Work Made for Hire.    Any work performed by the Executive under this Agreement should be considered a "Work Made for Hire"
as that phrase is defined by the U.S. patent laws and shall be owned by and for the express benefit of Corporation, Bank and their subsidiaries and affiliates. In the event it should be established
that such work does not qualify as a Work Made for Hire, the Executive agrees to and does hereby assign to Corporation, Bank and their affiliates and subsidiaries, all of his rights, title, and/or
interest in such work product, including, but not limited to, all copyrights, patents, trademarks, and proprietary rights.

	12.
	Return of Company Property and Documents.    The Executive agrees that, at the time of termination of his employment,
regardless of the reason for termination, he will deliver to Corporation, Bank and their subsidiaries and affiliates, 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, or reproductions of any of the aforementioned items developed or obtained by the Executive during the course of his
employment. 

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	13.
	Resignation as Director.    Executive agrees that in the event that this Agreement or his employment under this Agreement is
terminated, Executive shall resign as a director of Corporation, Bank or any of their affiliates or subsidiaries, if he is then serving as a director of any such entities.

	14.
	Liability Insurance.    Corporation shall use its best efforts to obtain insurance coverage for the Executive under an
insurance policy covering officers and directors of Corporation and Bank against lawsuits, arbitrations or other legal or regulatory proceedings; however, nothing herein shall be construed to require
Corporation to obtain such insurance, if the Board of Directors of the Corporation determines that such coverage cannot be obtained at a reasonable price.

	15.
	Indemnification.    Corporation will indemnify the Executive as required by Pennsylvania law and as provided by the Articles
and By-laws of Corporation, with respect to any threatened, pending or completed legal or regulatory action, suit or proceeding brought against him by reason of the fact that he is or was
a director, officer, employee or agent of Corporation or is or was serving at the request of Corporation as a director, officer, employee or agent of another person or entity.

	16.
	Notices.    For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be
in writing and shall be deemed to have been duly given when delivered or mailed by United States certified mail, return receipt requested, postage prepaid, addressed as follows (or to such other
addresses provided by a party to the other parties in writing): 

	 	 	If to the Executive:	 	Mr. Thomas W. Bixler

501 Highland Terrace

Williamsport, PA 17701
	

 	
 	

If to the Bank:	
 	

Mr. Robert McCormack

President and CEO

Sun Bank

2-16 South Market Street

Selinsgrove, Pennsylvania 17870
	

 	
 	

If to the Corporation:	
 	

Mr. Robert McCormack

President and CEO

Sun Bancorp, Inc.

2-16 South Market Street

Selinsgrove, Pennsylvania 17870

	17.
	Waiver.    No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge
is agreed to in writing and signed by Executive and an executive officer specifically designated by the Board of Directors of Corporation and Bank. No waiver by either party, at any time, of any
breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. Notwithstanding this Section 17, a promotion of Executive in accordance with Section 2 of this Agreement shall not constitute a
breach of this Agreement or require an amendment in writing.

	18.
	Assignment.    This Agreement shall not be assignable by any party, except by Corporation to any successor in interest to its
respective businesses.

	19.
	Entire Agreement.    This Agreement contains the entire agreement of the parties relating to the employment of Executive and
supersedes any and all agreements, either oral or in writing, 

10

 

between
the parties with regard to the employment of Executive by Corporation, including the Change of Control Agreement dated August 8, 2000 and executed by the parties to this Agreement. 

	20.
	Successors; Binding Agreement.

	(a)
	Corporation
and Bank will require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the businesses and/or
assets of Corporation and Bank to expressly assume and agree to perform this Agreement in the same manner and to the same extent that Corporation and Bank would be required to perform it if no such
succession had taken place.

	(b)
	This
Agreement shall inure to the benefit of and be enforceable by Executive's personal or legal representatives, executors, administrators, heirs, distributees, devisees and
legatees. If Executive should die after a Notice of Termination is delivered by Executive, or following termination of Executive's employment without Cause, and any amounts would be payable to
Executive under this Agreement if Executive had continued to live, all such amounts shall be paid in accordance with the terms of this Agreement to Executive's devisee, legatee, or other designee, or,
if there is no such designee, to Executive's estate. 

	21.
	Arbitration.    Corporation and Executive recognize that in the event a dispute should arise between them concerning the
interpretation or implementation of this Agreement (except for any enforcement sought with respect to Sections 9, 10, 11, or 12, which may be litigated in court), lengthy and expensive litigation will
not afford a practical resolution of the issues within a reasonable period of time. Consequently, each party agrees that all disputes, disagreements and questions of interpretation concerning this
Agreement are to be submitted for resolution, in Philadelphia, Pennsylvania, to the American Arbitration Association (the "Association") in accordance with the Association's National Rules for the
Resolution of Employment Disputes or other applicable rules then in effect ("Rules"). Corporation or Executive may initiate an arbitration proceeding at any time by giving notice to the other in
accordance with the Rules. Corporation and Executive may, as a matter or right, mutually agree on the appointment of a particular arbitrator from the Association's pool. The arbitrator shall not be
bound by the rules of evidence and procedure of the courts of the Commonwealth of Pennsylvania, but shall be bound by the substantive law applicable to this Agreement. The decision of the arbitrator,
absent fraud, duress, incompetence or gross and obvious error of fact, shall be final and binding upon the parties and shall be enforceable in courts of proper jurisdiction. Following written notice
of a request for arbitration, Corporation, Bank and Executive shall be entitled to an injunction restraining all further proceedings in any pending or subsequently filed litigation concerning this
Agreement, except as otherwise provided herein or any enforcement sought with respect to Sections 9, 10, 11, or 12.

	22.
	Attorney's Fees and Costs.    If any action at law or in equity is necessary to enforce or interpret the terms of this
Agreement, each party shall bear his or its own attorney's fees, costs, and expenses incurred in connection with the litigation, unless mandated by statute.

	23.
	Validity.    The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in full force and effect.

	24.
	Applicable Law.    This Agreement shall be governed by and construed in accordance with the domestic, internal laws of the
Commonwealth of Pennsylvania, without regard to its conflicts of laws principles.

	25.
	Headings.    The section headings of this Agreement are for convenience only and shall not control or affect the meaning or
construction or limit the scope or intent of any of the provisions of this Agreement. 

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        IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. 

	ATTEST:	 	SUN BANCORP, INC.
	

/s/  SANDRA J. MILLER      
 Sandra J. Miller	
 	

/s/  ROBERT J. MCCORMACK      
 Robert J. McCormack, President and CEO
	

ATTEST:	
 	

SUN BANK
	

/s/  SANDRA J. MILLER      
 Sandra J. Miller	
 	

/s/  ROBERT J. MCCORMACK      
 Robert J. McCormack, President and CEO
	

WITNESS:	
 	

EXECUTIVE:
	

/s/  SANDRA J. MILLER      
 Sandra J. Miller	
 	

/s/  THOMAS W. BIXLER      
 Thomas W. Bixler

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QuickLinks

Exhibit 10.2

EMPLOYMENT AGREEMENT

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