Document:

Exhibit 10.8

 

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT is made as of the 12th day of
January, 2004, between SUN BANCORP, INC.
(“Corporation”), a Pennsylvania business corporation having a place of business
at 155 North 15th Street, Lewisburg, Pennsylvania 17837, SUNBANK (“Bank”), a Pennsylvania chartered
banking institution having a place of business at 155 North 15th
Street, Lewisburg, Pennsylvania 17837, SUBI
SERVICES, LLC (“Services Company”), a Pennsylvania limited liability
company having a place of business at 155 North 15th Street,
Lewisburg, Pennsylvania 17837 and Byron M.
Mertz, III  (“Executive”), an
individual residing at 670 Susquehanna Rd., Northumberland, PA 17857  (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, the Services Company is a
subsidiary of the Bank;

 

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

 

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

 

WHEREAS, Executive desires to accept
employment with Corporation, Bank and Services Company 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, Bank and Services Company hereby employ Executive and
Executive hereby accepts employment with Corporation, Bank and Services
Company, 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 Regional President and Senior Vice
President of the Services Company, 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 within the Corporation and/or Bank and/or Services
Company and assigned duties consistent with such a position without the
Corporation, Bank or Services Company 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, Bank and Services Company 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, Services Company 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, Bank and Services Company.  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, Services Company 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, Services Company 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 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 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, Bank and Services Company;

  
	
   

  	
   

  
	
  (xiv)

  	
  direction or
  recommendation of a state or federal bank regulatory authority to remove the
  Executive from his position with Corporation and/or Bank and/or Services
  Company, 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 Corporation.

  
	
   

  	
   

  
	
  (xvii)

  	
  the existence of any
  material conflict between the interests of Corporation and the Executive that
  is not disclosed in writing by the Executive to Corporation,  Bank and Services Company and approved in
  writing by the Boards of Directors of Corporation, Bank and Services Company
  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,
  Bank and Services Company’s 

  

 

 

compensation and
employment obligations under this Agreement shall terminate.

 

(c)                                  Notwithstanding the provisions of
Section 4(a) of this Agreement, all of Corporation, Bank and Services
Company’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 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, Bank and Services
Company 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 Services Company and/or 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 Services Company,
Bank and Corporation will suffer an undue hardship by continuing Executive in
his position.  Upon this event, all
compensation and employment obligations of the Services Company, 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 Ninety Eight Thousand Six Hundred dollars
($98,600) 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, Bank and Services Company.  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.

 

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.

  

 

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, Bank and Services Company,
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 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.

 

 

9.                                       Restrictive
Covenant.

 

(a)                                  Executive hereby acknowledges and
recognizes the highly competitive nature of the business of Corporation, Bank
and Services Company 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, Services Company 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, Services
Company 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, Services Company 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, Services Company 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, Services Company 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, Services Company or any of their
subsidiaries or affiliates, or to seek, obtain or accept employment with any
person or entity other than Corporation, Bank, Services Company or any of their
subsidiaries or affiliates.

 

(b)                                 It is expressly understood and
agreed that, although Executive, Corporation, Bank and Services Company
consider the restrictions contained in Section 9(a) reasonable for the
purpose of preserving for Corporation, Bank, Services Company 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 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;

 

(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, Services Company or
any of their subsidiaries or affiliates, the disclosure of which could be or
will be damaging to Corporation, Bank, Services Company 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, Services Company
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,
Services Company 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, Services Company 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, Services Company 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.

 

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, Services Company 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, Bank and Services Company 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, if
not prohibited by federal law, 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. Byron M. Mertz,
  III

  
	
   

  	
  670 Susquehanna Road

  
	
   

  	
  Northumberland, PA
  17857

  
	
   

  
	
  If to the Services
  Company:

  
	
   

  	
  Mr. Robert McCormack

  
	
   

  	
  President and CEO

  
	
   

  	
  SUBI Services, LLC

  
	
   

  	
  155 North 15th
  Street

  
	
   

  	
  Lewisburg,
  Pennsylvania  17837

  

 

 

	
  If to the Bank:

  
	
   

  	
  Mr. Robert McCormack

  
	
   

  	
  President and CEO

  
	
   

  	
  Sun Bank

  
	
   

  	
  155 North 15th
  Street

  
	
   

  	
  Lewisburg,
  Pennsylvania  17837

  
	
   

  	
   

  
	
  If to the Corporation:

  	
  Mr. Robert McCormack

  
	
   

  	
  President and CEO

  
	
   

  	
  Sun Bancorp, Inc.

  
	
   

  	
  155 North 15th
  Street

  
	
   

  	
  Lewisburg,
  Pennsylvania  17837

  

 

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, Bank and Services Company.  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 parties with regard to the employment of Executive
by Corporation, including the Change of Control Agreement entered between
Executive, Corporation and Bank, dated April 19, 1999.

 

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.

 

[THIS SPACE WAS INTENTIONALLY LEFT BLANK]

 

 

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

 

 

	
  ATTEST:

  	
   

  	
  SUN BANCORP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Sandra J. Miller

  	
   

  	
   

  	
  /s/ Robert J. McCormack

  	
   

  
	
   

  	
   

  	
  Robert J. McCormack,
  President and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  SUN BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Sandra J. Miller

  	
   

  	
   

  	
  /s/ Robert J.
  McCormack

  	
   

  
	
   

  	
   

  	
  Robert J. McCormack,
  President and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  SUBI SERVICES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Sandra J. Miller

  	
   

  	
   

  	
  /s/ Robert J. McCormack

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Robert J. McCormack,
  President and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  WITNESS:

  	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Annette Sarsfield

  	
   

  	
   

  	
  /s/ Byron M. Mertz,
  III

  	
   

  
	
   

  	
   

  	
  Byron M. Mertz, IIIExhibit 10.9

 

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT is made as of this 17th day of
December, 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, BANK CAPITAL SERVICES CORPORATION
(“Services Corporation”), a Pennsylvania business corporation having a place of
business at 1853 Highway 315, Pittston, Pennsylvania 18640,  and GARY COOK,  (“Executive”),
an individual, (collectively, the “Parties” and, individually, sometimes a
“Party”).

 

WHEREAS, Corporation is a registered bank
holding company;

 

WHEREAS, Corporation and Services
Corporation have executed an agreement for Corporation to acquire Services
Corporation;

 

WHEREAS, Services Corporation will be a
subsidiary of Corporation or Bank;

 

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

 

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

 

WHEREAS, Executive desires to accept
employment with Corporation, Bank and Services Corporation 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, Bank and Services Corporation hereby employ Executive and
Executive hereby accepts employment with Bank and Services Corporation, 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 Services Corporation and
Bank as may be assigned to Executive from time to time by the Boards of
Directors of Corporation, Bank and/or Services Corporation.  Executive shall be employed as President of
Services Corporation and Senior Vice President of Bank, and shall hold such
other titles as may be given to him from time to time by the Boards of
Directors of Corporation, Bank and/or Services Corporation.

 

3.                                       Engagement in Other Employment.  Executive shall devote his full time,
attention and energies to the business of Corporation, Bank and Services
Corporation 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 and Services
Corporation or any of their subsidiaries or affiliates, (b) being involved in
any charitable or civic activity, or (c) being involved in any other activity
with the prior approval of the Boards of Directors of Corporation, Bank and
Services Corporation.  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,
Services Corporation 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, Services
Corporation 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 Effective Date as set forth in the Agreement and Plan
of Reorganization between, among others, Services Corporation and Corporation,
and if not previously terminated pursuant to the terms of this Agreement, the
Employment Period shall end three (3) years later.  If the Agreement and Plan of Reorganization between, among
others, Services Corporation and Corporation, is terminated pursuant to its
terms, the parties to this Agreement shall have no further obligations under
this Agreement and this Agreement shall be null and void.

 

(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(d) of this Agreement, after notice
  from the Corporation and a failure to cure such violation within twenty (20)
  days of said notice;

  
	
   

  	
   

  
	
  (iv)

  	
  Executive’s
  intentional violation of the provisions of this Agreement, after notice from
  Corporation, and a failure to cure such violation within twenty (20) days of
  said notice;

  
	
   

  	
   

  
	
  (v)

  	
  dishonesty or gross
  negligence of the Executive in the performance of 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;

  
	
   

  	
   

  
	
  (xiv)

  	
  direction or
  recommendation of a state or federal bank regulatory authority to remove the
  Executive from his position with Corporation, as identified herein;

  
	
   

  	
   

  
	
  (xv)

  	
  the willful engaging
  by the Executive in misconduct injurious to Corporation, after notice from
  Corporation, and a failure to cure such conduct within twenty (20) days of
  said notice; or

  
	
   

  	
   

  
	
  (xvi)

  	
  willful and serious
  violation(s) by Executive of the Bank’s “Core Values,” and a failure to cure
  such violation(s) within twenty (20) days after notice by Corporation; if the
  violation is so serious that an attempt to cure would be fruitless, no notice
  need be given by the Corporation.

  
	
   

  	
   

  
	
  (xvii)

  	
  the existence of any
  material conflict between the interests of Corporation and the Executive that
  is not disclosed in writing by the Executive to Corporation, Bank and
  Services Corporation and approved in writing by the Boards of Directors of
  Corporation, Bank and Services Corporation 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,
  Bank, and Services Corporation’s compensation and employment obligations
  under this Agreement shall terminate.

  

 

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

 

(d)                                 Disability. 
Notwithstanding the provisions of Section 4(a) of this Agreement,
if, as a result of physical or mental injury or impairment, Executive is 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, Bank and Services
Corporation to pay Executive the compensation as set forth in 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 Services
Corporation, 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 Services Corporation, Bank and Corporation
will suffer an undue hardship by continuing Executive in his position.  Upon this event, all compensation and
employment obligations of the Services Corporation, 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.

 

(e)                                  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 Fifty Thousand Dollars
($150,000.00) 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 will be eligible for incentive compensation under the terms
and conditions of an incentive compensation plan upon which Corporation, Bank,
Services Corporation and Executive shall mutually agree.

 

(c)                                  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, pension and profit sharing plans that Corporation may have in effect,
subject to the terms and conditions of those plans.

 

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

 

(e)                                  Automobile. 
During the term of this Agreement, Executive shall be provided with use
of an automobile or reimbursed for automobile expenses in accordance with the
terms of the automobile program in effect at Services Corporation at the time
that this Agreement was executed.

 

6.                                       Rights in Event of Termination of Employment.

 

(a)                                  If Corporation terminates
Executive’s employment under this Agreement without cause, then Executive shall
receive his Annual Base Salary for the remainder of the Employment Period under
this Agreement.  The Annual Base Salary
will be paid to Executive in substantially equal installments on regular
paydays for Services Corporation.  The
amounts payable pursuant to this Section 6 shall constitute Executive’s
sole and exclusive remedy in the event of involuntary termination, without
cause, of Executive’s employment by Corporation.

 

 

(b)                                 In the event that Executive
voluntarily terminates his employment all of Executive’s rights under this
Agreement shall cease as of the effective date of termination and all of
Corporation, Bank and Services Corporation’s compensation and employment
obligations under this Agreement shall terminate.

 

7.                                       Restrictive Covenant.

 

(a)                                  Executive hereby acknowledges and
recognizes the highly competitive nature of the business of Corporation, Bank
and Services Corporation and, accordingly, agrees that, beginning on the date
first mentioned above and continuing until the second anniversary date of the
effective date of termination of Executive’s employment with Corporation, Bank
and Services Corporation, Executive shall not:

 

(i)                                     except for Corporation, Bank,
Services Corporation or their subsidiaries or affiliates, 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 equipment and/or
automobile leasing industries or (2) any other activity in which Services
Corporation or any of its 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 Services Corporation or any of its 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
equipment and/or automobile leasing industry or (2) any other activity in which
Services Corporation or any of its 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, Services Corporation or any
of their subsidiaries or affiliates, during the term of Executive’s employment
or on the date of termination of Executive’s employment to be a customer or
referral source of any person or entity other than Corporation, Bank, Services
Corporation or their subsidiaries or affiliates; or

 

(iv)                              directly or indirectly solicit,
induce or encourage any employee of Corporation, Bank, Services Corporation 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, Services Corporation or their
subsidiaries or affiliates, or to seek, obtain or accept employment with any
person or entity other than

 

 

Corporation, Bank,
Services Corporation or their subsidiaries or affiliates.

 

(b)                                 It is expressly understood and
agreed that, although Executive, Corporation, Bank and Services Corporation
consider the restrictions contained in Section 7(a) reasonable for the
purpose of preserving for Corporation, Bank, Services Corporation and 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 7(a) is an unreasonable or otherwise unenforceable restriction
against Executive, the provisions of Section 7(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)                                  It is expressly understood and
agreed that in the event of a material breach of any provision in this
Section 7, and in addition to any other legal or equitable remedy the
Corporation may have, the Corporation shall be entitled to the entry of a
preliminary and permanent injunction (including, without limitation, specific
performance by a court of competent jurisdiction in Pennsylvania, or elsewhere)
to restrain the violation or breach thereof by Executive, and Executive submits
to the jurisdiction of such court in any such action.

 

(d)                                 It is expressly understood and
agreed that if the Executive’s employment is terminated under this Agreement,
other than for Cause (as defined herein), then the restrictions contained in
this Section 7 shall only apply during the remainder of the Employment
Period, while Executive receives the payments identified in Section 6(a)
of this Agreement.  If the Executive’s
employment is terminated after the Employment Period and this Agreement have
expired, other than for Cause (as defined herein), then the restrictions
contained in this Section 7 shall not apply to Executive.

 

8.                                       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, Services Corporation or their
subsidiaries or affiliates, the disclosure of which could be or will be
damaging to Corporation, Bank, Services Corporation or 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, Services Corporation
or their subsidiaries or affiliates or any information that must be disclosed
as required by law.

 

 

9.               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, Services Corporation 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,
Services Corporation 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.  Executive further agrees that any business
that he generates, produces or sells during his employment is the exclusive
business of Corporation, Bank and Services Corporation and Executive has no individual
rights to or ownership of such business.

 

10.         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, Services Corporation 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.

 

11.         Change
in Control. 
If a Change in Control (as defined in Section 11(b) of this
Agreement) shall occur, then, Executive shall be entitled to receive a lump sum
amount equal to all monies that remain due to Executive under this Agreement
for the remainder of the Employment Period. 
Said payment shall be made to the Executive on the Change in Control
Date; provided, however, that 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.

 

 

(a)                                  As used in this Agreement, “Change
in Control” shall mean a change in control of Corporation (other than one
occurring by reason of an acquisition of the Corporation Bank 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 shall be merged
or consolidated, or (B) substantially all of the assets of Corporation 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;

 

provided, however, that
no Change in Control shall be deemed to have occurred if an agreement of
merger, acquisition or consolidation is executed, but the merger, acquisition
or consolidation is never completed.

 

(b)                                 Executive shall not be required to
mitigate the amount of any payment provided for in this Section 11 by
seeking other employment or otherwise.

 

12.                                 Date of Change in Control. 
For purposes of this Agreement, the “Date of Change of Control” shall
mean:

 

 

(a)                                  the first date on which a single
person and/or entity, or group of affiliated persons and/or entities, acquire
the beneficial ownership of thirty (30%) percent or more of the Corporation’s
voting securities; or

 

(b)                                 the date of the closing of an
Agreement, transferring all or substantially all of the Corporation’s assets;
or

 

(c)                                  the date on which a merger,
consolidation or business combination is consummated, as applicable; or

 

(d)                                       the date on which individuals that
formerly constituted a majority of the Board of Directors of the Corporation
under Section 11(a)(iii) of this Agreement, cease to be a majority.

 

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, Services Corporation or any of their affiliates
or subsidiaries, if he is then serving as a director of any such entities.

 

14.                                 Office Location. 
It is agreed that Corporation may not require Executive to move his
office more than twenty-five (25) miles from the location of Services
Corporation at the time that this Agreement is executed, without Executive’s
consent.  Any such requirement will be
deemed to be a breach of this Agreement.

 

15.                                 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. Gary Cook

  
	
   

  	
   

  	
  c/o Myles R. Wren,
  Esquire

  
	
   

  	
   

  	
  415 Wyoming Avenue

  
	
   

  	
   

  	
  Scranton, PA 18503

  
	
   

  	
   

  	
   

  
	
  If to the Services
  Corporation:

  	
   

  	
  President

  
	
   

  	
   

  	
  Bank Capital Services
  Corporation

  
	
   

  	
   

  	
  1853 Highway 315

  
	
   

  	
   

  	
  Pittston, Pennsylvania
  18640

  
	
   

  	
   

  	
   

  
	
  If to the Bank:

  	
   

  	
  Mr. Robert J.
  McCormack

  
	
   

  	
   

  	
  President & CEO

  
	
   

  	
   

  	
  Sun Bank

  
	
   

  	
   

  	
  2-16 South Market
  Street

  
	
   

  	
   

  	
  Selinsgrove,
  Pennsylvania 17870

  
	
   

  	
   

  	
   

  
	
  If to the Corporation:

  	
   

  	
  Mr. Robert J.
  McCormack

  
	
   

  	
   

  	
  President & CEO

  
	
   

  	
   

  	
  Sun Bancorp, Inc.

  
	
   

  	
   

  	
  2-16 South Market
  Street

  
	
   

  	
   

  	
  Selinsgrove, Pennsylvania
  17870

  

 

16.                                 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 Boards of Directors of
Corporation, Bank and Services Corporation. 
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 14, 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.

 

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

 

18.                                 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 parties with regard to the employment of Executive
by Corporation.

 

19.                                 Successors; Binding Agreement.

 

(a)                                  Corporation, Bank and Services
Corporation 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, Bank and Services Corporation to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that Corporation, Bank and Services Corporation 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 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.

 

20.                                 Arbitration.  
Corporation, Bank, Services 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 7, 8, 9, or 10, 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, Services Corporation 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 7, 8, 9, or 10.

 

21.                                 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.

 

22.                                 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.

 

23.                                 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.

 

24.                                 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.

 

 

[THIS SPACE WAS INTENTIONALLY LEFT BLANK]

 

 

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

 

	
  ATTEST:

  	
  SUN BANCORP, INC.

  
	
   

  	
   

  
	
  /s/ Sandra J. Miller

  	
   

  	
  /s/ Robert J.
  McCormahck

  	
   

  
	
   

  	
  Robert J. McCormack

  
	
   

  	
  President & CEO

  
	
   

  	
   

  
	
  ATTEST:

  	
  SUN BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Sandra J. Miller

  	
   

  	
  /s/ Robert J.
  McCormack

  	
   

  
	
   

  	
  Robert J. McCormack

  
					

 

 

	
   

  	
  President &CEO

  
	
   

  	
   

  
	
  ATTEST:

  	
   

  
	
   

  	
   

  
	
  /s/ Carol Phillips

  	
   

  	
  /s/ Gary Cook

  	
   

  
	
   

  	
  BANK CAPITAL SERVICES
  CORPORATION

  
	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
  WITNESS:

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Thomas W. Bixler

  	
   

  	
  /s/ Gary Cook

  	
   

  
	
   

  	
  Gary Cook

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