Document:

QuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 10.3    
  

Employment
Agreement

between Sandra Miller,

the Registrant and Sun Bank,

dated October 24, 2002 

 
 

EMPLOYMENT AGREEMENT    
  

        THIS AGREEMENT is made as of the 24th 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 SANDRA MILLER ("Executive"), an individual residing at 19 Farley Circle, 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 Senior Vice President and Director of Marketing and Retail Delivery 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: 

        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 and/or Corporation's President and CEO. Executive shall be employed as
Senior Vice President and Director of Marketing and Retail Delivery of the Bank and Corporation, and shall hold such other titles as may be given to her 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 her 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 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 her duties hereunder, other than a failure resulting from Executive's incapacity because of physical or
mental illness, as provided in Section 3(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 her duties; 

        (vi)  conduct
on the part of the Executive which brings public discredit to Corporation as determined by a vote of two-thirds (2/3) of the Board of
Directors of Corporation; 

        (vii) Executive's
breach of fiduciary duty involving personal profit; 

        (viii)Executive's
violation of any law, rule or regulation governing banks or bank officers or any final cease and desist order issued by a bank regulatory authority; 

        (ix)  Executive's
unlawful discrimination, including harassment, against Corporation's employees, customers, business associates, contractors or visitors; 

        (x)  Executive's
theft or abuse of Corporation's property or the property of Corporation's customers, employees, contractors, vendors or business associates; 

        (xi)  any
final removal or prohibition order to which the Executive is subject, by a federal banking agency pursuant to Section 8(e) of the Federal Deposit Insurance
Act; 

        (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 her 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 

2

 

        (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 her
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 her 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 her regulatory
removal and/or in connection with termination of the Executive's employment for Cause. 

        If
Executive terminates her employment for Good Reason, then she 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 she 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 her 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 

3

 

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 her position on a full time basis, taking into account any reasonable accommodation
required by law, and without posing a direct threat to herself 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 she remain unable to perform all of the essential functions of her position on a
full time basis, taking into account any reasonable accommodation required by law, and without posing a direct threat to herself or others, after one hundred eighty (180) days, the Bank and
Corporation will suffer an undue hardship by continuing Executive in her 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 Seventy-Two Thousand Dollars and Twenty-Four Cents ($72,000.24) 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 

4

 

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 her, 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 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 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. 

5

 

        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 her 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 her 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 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 her 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 her 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. 

7

 

        (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 her 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 her 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; 

        (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 her 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 her duties as an executive of Corporation, any material confidential information
obtained by her 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 her 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 her
employment, regardless of the reason for termination, she 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 

8

 

property, or reproductions of any of the aforementioned items developed or obtained by the Executive during the course of her employment. 

        13.    Resignation as Director.    Executive agrees that in the event that this Agreement or her employment under this
Agreement is terminated, Executive shall resign as a director of Corporation, Bank or any of their affiliates or subsidiaries, if she 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 her by reason of the fact that
she 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:	 	Ms. Sandra Miller

19 Farley Circle

Lewisburg, PA 17837
	

 	
 	

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, between 

9

 

the parties with regard to the employment of Executive by Corporation, including the Change of Control Agreement dated October 7, 2000 and the Employment Agreement dated March 15, 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 her 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/ Cheri A. Little

Cheri A. Little	
 	

/s/ Robert J. McCormack

Robert J. McCormack, President and CEO
	

ATTEST:	
 	

SUN BANK
	

/s/ Cheri A. Little

Cheri A. Little	
 	

/s/ Robert J. McCormack

Robert J. McCormack, President and CEO
	

WITNESS:	
 	

EXECUTIVE:
	

/s/ Cheri A. Little

Cheri A. Little	
 	

/s/ Sandra Miller

Sandra Miller

11

QuickLinks

Exhibit 10.3

EMPLOYMENT AGREEMENTQuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 10.4    
  

Change
of Control Agreement

between Maureen M. Bufalino,

the Registrant and Sun Bank,

dated May 31, 2001 

THIS AGREEMENT is made as of this 31st day of May, 2001 between SUN BANCORP, INC., A Pennsylvania
Corporation and a bank holding company with offices at 2-16 South Market Street, Selinsgrove, Pennsylvania 17870 (the "Corporation"). Sun
Bank, a Pennsylvania Chartered banking institution and wholly owned subsidiary of the Corporation (the "Bank") and Maureen Moran Bufalino, an adult individual who resides at 41
White Tail Drive Dallas, PA 18612 (the "Executive"). 

        WHEREAS, the Employer employs the Executive as President—Guaranty Bank, SVP—SunBank, SVP—Sun
Bancorp, Inc. 

        WHEREAS, the purpose of this Agreement is to define these severance benefits and to specify the conditions under which they are to be
paid. This Agreement is not intended to affect and does not effect the terms of Executive's employment as employment "at will" in the absence of a Change of Control of the Bank and/or the Corporation.
Accordingly, although this Agreement will take effect upon execution as a binding legal obligation of the Bank and the Corporation, it will become operative only upon a Change of Control of the Bank
and/or the Corporation as that concept is defined below. 

        NOW, THEREFORE, IN CONSIDERATION OF THE Executive's service to the Corporation and the Bank and of the mutual covenants, undertakings and
agreements set forth herein and intending to be legally bound hereby, the parties agree as follows: 

        1.    UNDERTAKINGS OF THE BANK AND CORPORATION.    The Bank and Corporation shall provide to Executive the severance
benefits specified in Section 5 below in the event that within twelve (12) months following a Change of Control of the Bank and/or Corporation (as defined herein) and any of the
following occurs: 

	(a)
	Executive
is discharged by the Bank and/or the Corporation, or a successor thereto, other than for Cause pursuant to Section 3 below; or

	(b)
	Executive
resigns from the Bank and Corporation, or a successor thereto, for Good Reason pursuant to Section 4 below. 

        2.    DEFINITION OF CHANGE OF CONTROL.    For purposes of this Agreement, the term "Change of Control" shall mean a
change of 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 of Control shall be deemed to have occurred if (a) any "person" or group of "persons", as such term is defined or used in Sections 3, 13(d) and 14(d) pf the 1934 Act
(hereinafter referred to as Person), other than the Bank, the Corporation, the Executive or any Person who on the date hereof is a Director of Officer of the Bank and/or the Corporation, is or becomes
the "beneficial owner" (as defined in Rule 13d-3 and Rule 13d-5, or any successor rule or regulation, promulgated under the 1934 Act), directly or indirectly, or
securities of the Corporation which represent forty percent (40%) or more of the combined voting power of the Corporation's then outstanding securities, or (b) during any period of two
consecutive years during the term of this Agreement, individuals who at the beginning of such period constitute the Boards of Directors of the Bank or the 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 not less than
two-thirds of the Directors then in office who were Directors at the beginning of the period, or (c) the Bank and/or the corporation shall be merged or consolidated or substantially
all of its or their assets shall be purchased by another Person and, as a result of such merger, consolidation or sale of assets, less than a majority of the outstanding voting stock of the surviving,
resulting or purchasing Person is owned, immediately after the transaction, by the holders of the voting stock of the Corporation before the transaction. 

        3.    DEFINITION OF CAUSE.    Nothing in this Agreement shall change Executive's status as an "at will" employee. The
Bank and the Corporation, or a successor thereto, may terminate Executive's employment for Cause without breach of this Agreement any time upon: (a) the intentional willful failure by Executive
to substantially perform his duties after notice is delivered by Bank or Corporation, 

 

or a successor thereto, to Executive (in accordance with Section 8 of this Agreement) identifying such failure of performance in detail and an opportunity to cure within 30 days of
receipt of such written notice; (b) the intentional engagement by Executive in misconduct injurious to Bank or Corporation, or a successor thereto (monetarily or otherwise); (c) the
dishonesty or gross negligence of the Executive in the performance of his duties; (d) the breach of the Executive's fiduciary duties involving personal profit, a violation or violations of a
banking regulation, or the issuance of a cease and desist order; or (e) the commission of any act constituting moral turpitude or other conduct on the part of the Executive which publicly
discredits the Bank or Corporation, or a successor thereto. If Executive is terminated or discharged for Cause as defined herein, he is not entitled to any payments under this Agreement. 

        4.    DEFINITION OF RESIGNATION FOR GOOD REASON.    Executive may terminate his employment with the Bank and the
Corporation, or a successor thereto, following a Change of Control and such termination will constitute and be deemed a Resignation for Good Reason for purposes of this Agreement if the Bank and /or
Corporation, or a successor thereto within twelve (12) months following a Change of Control; (a) assigns to the Executive, without the Executive's express written consent, any duties
inconsistent with the Executive's position, duties, responsibilities and status with the Bank immediately prior to a Change of Control; (b) changes in the Executive's reporting
responsibilities, titles or offices as in effect immediately prior to a Change of Control, or removes the Executive from or fails to re-elect Executive to any such positions, titles or
offices, except in connection with the termination of Executive's employment of Cause, disability or retirement, as a result of Executive's death, or by Executive other than for good Reason;
(c) reduces the Executive's annual salary paid to him on the date of the Change of control or as the same may be increased from time to time thereafter; or (d) fails to continue in
effect any benefit or compensation plan, stock ownership plan, stock purchase plan, stock option plan, life insurance plan, health and accident plan, disability plan, or any other benefit plan which
the Executive is participating at the time of a Change of Control, or the Bank and/or corporation, or a successor thereto, takes any action which would adversely materially affect the Executive's
participation in or materially reduces the Executive's benefits under any of such plan, or the Bank and/or the Corporation, or a successor thereto, deprive Executive of any material fringe benefit
enjoyed by Executive at the time of a Change of control. 

        Any
purported resignation for Good Reason by Executive shall be communicated by notice to the other party hereto, as specified in Section 8 of this Agreement, which shall
expressly indicate the specific termination provision in this Section 4 of the Agreement relied upon by the Executive and shall set forth the facts and circumstances claimed to provide a basis
for resignation for Good Reason by Executive under the provision so indicated. 

        5.    SEVERANCE BENEFITS.    The severance benefits to be provided to Executive by the Bank and/or Corporation, or a
successor thereto, under this Agreement are as follows: 

	(a)
	The
Bank and/or the Corporation, or a successor thereto, shall pay to Executive full salary for a period of two (2) years in a lump sum payment.

	(b)
	In
addition, the Executive shall be entitled during the Severance Benefit Period to remain a participant in any health, accident, disability, and/or life insurance plan of Corporation
or Bank in which Executive was a participant on the date of termination provided such continued participation does not violate the provisions or conditions of such plan or policies or does not violate
state or federal law, rule or regulation. If Executive's participation in such plan amounts to a violation of the plans or policies or of state or federal laws or regulations, the Corporation shall
pay to Executive a monthly basis during the Severance Benefit Period those sums equal to premiums which the Corporation would have paid on behalf of Executive if he had been permitted to continue
participating in the applicable health and accident, disability 

2

 

or
life insurance plan. These payments shall be subject to withholding of such amounts as are required under applicable state, federal or local law. 

        6.    SEVERANCE BENEFIT PERIOD.    The Severance Benefit Period shall commence upon the effective date of Executive's
termination of employment, whether by discharge (for reasons other than Cause) or resignation (for Good Reason) and shall terminate upon the expiration of a period of two (2) years. 

        7.    MITIGATION AND SET OFF.    Executive shall be required to mitigate the amount of any payment or benefit provided
for in Section 5 above by seeking employment or otherwise in a substantially similar position and the Bank and Corporation, or a successor thereto, shall be entitled to SET OFF against the
amount of any payment or benefit provided for in Section 5 above by any amounts earned by Executive in other employment during the Severance Benefit Period. 

        8.    NOTICE.    For the purposes of this Agreement, notices and all other communications provided for in the
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: 

	If to the Corporation or Bank:	 	SUN BANCORP, INC.
	 	 	Attn:	Robert J. McCormack

President & CEO
	 	 	2-16 South Market Street

Selinsgrove, PA 17870

Or
such other address as any party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt thereof. 

        9.    EXPIRATION OF THIS AGREEMENT.    This Agreement shall remain in effect for thirty-six
(36) months and shall thereafter terminate. Provided, however, that should a Change of Control as defined in Section 2 herein occur during the thirty-six (36) month
period, the provisions regarding the twelve (12) month window following a Change of Control described in Sections 1, 2, 3 and 4 shall survive until such time as the twelve (12) month
period has passed. Should the Executive be receiving severance benefits pursuant to this Agreement a the end of the thirty-six (36) month period discussed herein, the provisions of
the Agreement shall be extended until the Severance Benefit Period is concluded. 

        10.    SUCCESSORS AND PARTIES IN INTEREST.    

	(a)
	This
Agreement shall be binding upon and shall inure to the benefit of the Bank and Corporation and their successors and assigns, including without limitation, any corporation which
acquires, directly or indirectly, by purchase, merger, consolidation or otherwise, all or substantially all of the business or assets of the Bank and /or Corporation. Without limitation of the
foregoing, the Bank and Corporation shall require any such successor, by agreement in form and substance satisfactory to Executive, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that it is required to be performed by the Bank and Corporation. Failure to obtain such assumption and agreement shall serve as Good Reason for resignation by Executive
under Section 4 of this Agreement.

	(b)
	This
Agreement is binding upon and shall inure to the benefit of Executive, his heirs and personal representatives; provided, however, that the Executive may not commute, anticipate,
encumber, dispose of or assign any payment herein except as specifically set forth in Section 12 herein. 

3

 

        11.    RIGHTS UNDER OTHER PLANS.    This Agreement is not intended to reduce, restrict or eliminate any benefit to
which Executive may otherwise be entitled at the time of his discharge or resignation under any employee benefit plan of the Bank and Corporation then in effect. 

        12.    ATTORNEY'S FEES AND COSTS.    If any action at law or in equity is necessary to enforce the Executive's rights
hereunder following a Change of control, the Executive shall be entitled to recover all such attorney's fees, costs and disbursements reasonably incurred by him in connection with any such suit
brought by him. 

        13.    PAYMENT OF MONEY DUE DECEASED EXECUTIVE.    Should Executive die while any amount would still be payable
hereunder if Executive had continued to live, all such amounts shall be paid in accordance with the terms of this Agreement to the person designated by Executive in writing for this purpose, or, in
the absence of any such designation, to his estate. 

        14.    NO GUARANTEE OF EMPLOYMENT.    Nothing in this Agreement shall constitute or give rise to any guarantee or
contract of employment of the Executive by the Bank or the Corporation, and shall not give the Executive any right to be employed by or retained in the employ of the Bank as the
President—Guaranty Bank, SVP—SunBank, SVP—Sun Bancorp, Inc. or in any other position or capacity of the Bank or the Corporation. 

        15.    LIMITATION OF DAMAGES FOR BREACH OF AGREEMENT.    In the event of a breach of this Agreement by the Bank and/or
the Corporation, or a successor thereto, or the Executive, each hereby waives to the fullest extent permitted by law the right to assert any claim against the others for punitive or exemplary damages. 

        16.    GOVERNING LAW, JURISDICTION AND VENUE.    This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania. 

        17.    CAPTIONS.    The captions included herein are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement. 

        18.    AMENDMENT AND TERMINATION.    This Agreement may be amended or canceled only by mutual agreement of the parties
in writing. This Agreement may not be terminated except by mutual consent of the parties, as evidenced by a written instrument duly executed by the Bank, the Corporation and the Executive. 

        19.    ENTIRE AGREEMENT.    This Agreement constitutes the entire agreement between the parties and supersedes any and
all prior agreements, either oral or in writing, between the parties with respect to payments upon termination after a Change of Control. 

        IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have caused this Agreement to be duly executed in their
respective names and, in the case of the corporation and the Bank by their respective authorized representatives the day and year above mentioned. 

	

ATTEST:

Susan Houseknecht

/s/ Susan Houseknecht	
 	

SUN BANCORP, INC.

Robert J. McCormack

/s/ Robert J. McCormack
	

ATTEST:

Susan Houseknecht

/s/ Susan Houseknecht	
 	

Sun Bank

Robert J. McCormack

/s/ Robert J. McCormack
	

WITNESS:

Mary Hobbs

/s/ Mary Hobbs	
 	

Maureen M. Bufalino

/s/ Maureen M. Bufalino

4

QuickLinks

Exhibit 10.4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00048-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00048-of-00352.parquet"}]]