Document:

EXHIBIT 10.1

 

INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT (this “Agreement”) is entered into by and between Drew Industries Incorporated, a Delaware corporation (the “Company”), and [Name] (the “Indemnitee”) as of [_____],  2005.

Background

A.         Highly competent persons have become more reluctant to serve publicly-held companies as directors, officers, or in other capacities, unless they are provided with better protection from the risk of claims and actions against them arising out of their service to and activities on behalf of such corporations.

B.         The high cost of obtaining adequate insurance and the uncertainties related to indemnification have increased the difficulty of attracting and retaining such persons, and the Board of Directors of the Company (the “Board”) has determined that the potential inability to attract and retain such persons is detrimental to the best interests of the Company’s stockholders. Accordingly, such persons should be assured that they will have adequate protection.

C.         It is reasonable, prudent and necessary for the Company to obligate itself contractually to indemnify such persons to the fullest extent permitted by applicable law so that such persons will serve or continue to serve the Company free from undue concern that they will not be adequately indemnified.

D.         In recognition of Indemnitee’s need for protection against personal liability in order to enhance Indemnitee’s continued service to the Company in an effective manner and of Indemnitee’s reliance on the protections currently provided by the Company’s certificate of incorporation and by-laws, and in part to provide Indemnitee with specific contractual assurance that the protection promised thereby will be available to Indemnitee (regardless of, among other things, any amendment thereto or revocation thereof or any change in the composition of the Company’s Board of Directors or acquisition transaction relating to the Company), the Company wishes to provide in this Agreement for the indemnification of and the advancing of expenses to Indemnitee to the fullest extent permitted by law and as set forth in this
Agreement, and, to the extent insurance is maintained, for the continued coverage of Indemnitee under the Company’s directors’ and officers’ liability insurance policies.

E.         Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that Indemnitee be indemnified according to the terms of this Agreement.

NOW THEREFORE, in consideration of the preceding premises and of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and Indemnitee agree as follows:

 

 

 

	
            Section 1.
 	
            Definitions. For purposes of this Agreement:
 

(a)             “Change in Control” means a change in control of the Company occurring after the date of this Agreement of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated, under the Securities Exchange Act of 1934, as amended (the “1934 Act”), whether or not the Company is then subject to such reporting requirement; provided, that, without limitation, such change in control shall be deemed to have occurred if (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the
1934 Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the combined voting power of the Company’s then outstanding securities without the prior approval of at least two-thirds of the members of the Board in office immediately prior to such person attaining such percentage interest; (ii) the Company is a party to a merger, consolidation, sale of assets or other reorganization, or a proxy contest, as a consequence of which members of the Board in office immediately prior to such transaction or event constitute less than a majority of the Board thereafter, or (iii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board (including for this purpose any new director whose election or nomination for election by the Company’s stockholders was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the beginning of such period) cease for any reason to constitute at least a majority of the Board.

(b)             “Company Status” means (i) a person’s status as a current or former director, officer, employee, agent or fiduciary of the Company, or (ii) a person’s status as a current or former director, officer, employee, agent or fiduciary of any other corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise if such person is or was serving in such capacity at the request of the Company.

(c)             “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

(d)             “Expense” means all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, or being or preparing to be a witness in a Proceeding.

(e)             “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any other matter material to either such party, or (ii) any other party to the proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.

 

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(f)              “Potential Change in Control” shall be deemed to have occurred if (i) the Company enters into an agreement or arrangement, the consummation of which would result in the occurrence of a Change in Control or (ii) the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred.

(g)             “Proceeding” means any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, administrative hearing or any other proceeding, whether civil, criminal, administrative or investigative, whether formal or informal, except one initiated by an Indemnitee pursuant to Section 11 to enforce the Indemnitee’s rights under this Agreement.

Section 2.              Services by Indemnitee. Subject to the rights of the Company’s stockholders with respect to election of directors, Indemnitee agrees to serve or continue to serve as a director and/or officer, as the case may be, of the Company, and, if an officer, at the Company’s request, as a director, officer, employee, agent or fiduciary of affiliated corporations and entities. Indemnitee may at any time and for any reason resign from any such position (subject to any other contractual obligation or any obligation imposed by operation of law). Notwithstanding anything to the contrary herein, this Agreement shall not, at any time before, as of, or after the date of this Agreement, create in any person the right to be employed by or
otherwise to be retained or engaged by the Company (or any affiliated entity thereof), or the right to any incidents of employment except as may be expressly set forth herein. 

Section 3.              Indemnification—General. The Company shall indemnify, and advance Expenses to, Indemnitee as provided in this Agreement to the fullest extent permitted by applicable law in effect on the date hereof and to such greater extent as applicable law may thereafter from time to time permit. The rights of Indemnitee provided under the preceding sentence shall include, but shall not be limited to, the rights set forth in the other Sections of this Agreement. For purposes hereof, “permitted” means anything not expressly prohibited by applicable law.

Section 4.              Proceedings Other Than Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the rights of indemnification provided in this Section if, by reason of Indemnitee’s Company Status, Indemnitee is, or is threatened to be made, a party to any threatened, pending or completed Proceeding, other than a Proceeding by or in the right of the Company. Pursuant to this Section, Indemnitee shall be indemnified against Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by or on behalf of Indemnitee in connection with any such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or
not opposed to the best interests of the Company, and, with respect to any criminal Proceeding, had no reasonable cause to believe Indemnitee’s conduct was unlawful.

Section 5.              Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the rights of indemnification provided in this Section if, by reason of Indemnitee’s Company Status, Indemnitee is, or is threatened to be made, a party to any threatened proceeding or completed Proceeding brought by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section, Indemnitee shall be indemnified against Expenses actually and reasonably incurred by Indemnitee or on behalf of Indemnitee in connection with any such 

 

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Proceeding if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company. Notwithstanding the foregoing, no indemnification against such Expenses shall be made in respect of any claim, issue or matter in any such proceeding as to which Indemnitee shall have been adjudged to be liable to the Company if applicable law prohibits such indemnification unless the Court of Chancery of the State of Delaware, or the court in which such Proceeding shall have been brought or is pending, shall determine that indemnification against Expenses may nevertheless be made by the Company.

Section 6.              Indemnification for Expenses of Party Who is Wholly or Partly Successful. Notwithstanding any other provision of this Agreement, to the extent the Indemnitee is, by reason of Indemnitee’s Company Status, a party to and is successful, on the merits or otherwise, in any Proceeding, Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by Indemnitee or on behalf of Indemnitee in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on
behalf of Indemnitee in connection with each successfully resolved claim, issue or matter. For the purposes of this Section and without limiting the foregoing, the termination of any claim, issue or matter in any such Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

Section 7.              Indemnification of Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of Indemnitee’s Company Status, a witness in any Proceeding, Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by or on behalf of Indemnitee in connection therewith.

Section 8.              Advancement of Expenses. The Company shall advance all Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding within twenty (20) days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by an undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately be determined that Indemnitee is not entitled to be indemnified against such Expenses.

	
            Section 9.
 	
            Procedure for Determination of Entitlement to Indemnification.
 

(a)             If indemnification or advancement of expenses is desired hereunder by Indemnitee, Indemnitee shall submit a written request (including therein or therewith any documentation and information as is reasonably available to Indemnitee and reasonably requested by the Company) to the Company as soon as practicable after the Indemnitee becomes aware of any fact, condition or event which may give rise to claim for which indemnification or advancement may be sought under this Agreement. If any Proceeding is filed or threatened to be filed against an Indemnitee, written notice thereof shall be given to the Company as promptly as practicable (and in any event within fifteen (15) calendar days after the service of the citation or 

 

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summons or receipt of the written notification of a Proceeding or threatened Proceeding). The failure of an Indemnitee to give timely notice under this Section shall not affect its rights to indemnification hereunder, except to the extent the Company demonstrates actual damage caused by such failure. After the Company’s receipt of the written notice, if the Company acknowledges in writing to the Indemnitee that it shall be obligated under the indemnification terms hereof in connection with such Proceeding, then the Company shall be entitled, if it so elects, (i) to take control of the defense and investigation of the Proceeding, (ii) to employ and engage attorneys (who are reasonably acceptable to the Indemnitee) to handle and defend the Proceeding at the Company’s cost, risk, and expense (unless the named parties to the Proceeding include both the Indemnitee and the Company, and the Indemnitee
has been advised by counsel that there may be one or more legal defenses available to it that are different from or additional to those available to the Company), and (iii) to compromise or settle the Proceeding, which compromise or settlement shall be made only with the written consent of the Indemnitee, such consent not to be unreasonably withheld. If the Company fails to assume the defense of the Proceeding within five (5) calendar days after receipt of the indemnification notice, the Indemnitee shall (upon delivering notice to such effect to the Company) have the right to undertake, at the Company’s cost and expense, the defense, compromise or settlement of the Proceeding instead and on behalf of and for the account and risk of the Company; provided, however, that the Proceeding shall not be compromised or settled without the written consent of the Company, which consent shall not be
unreasonably withheld. In the event the Indemnitee assumes the defense of the Proceeding, the Indemnitee shall keep the Company reasonably informed of the progress of any such defense, compromise or settlement. The Company shall be liable for any settlement of any Proceeding effected pursuant to and in accordance with this Section for any final judgment (subject to any right of appeal), and the Company shall indemnify and hold harmless any Indemnitee from and against any damages and costs by reason of such settlement or judgment. The Secretary of the Company shall, promptly upon receipt of any such request for indemnification, advise the Board in writing that Indemnitee has requested indemnification.

(b)             Upon written request by Indemnitee for indemnification pursuant to Section 9(a) hereof, a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall be made: (i) if a Change in Control shall have occurred, then by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee (unless Indemnitee shall request that such determination be made by the Board or the Company’s stockholders, in which case in the manner provided for in clauses (ii) or (iii) of this Section 9(b)); (ii) if a Change in Control shall not have occurred, then (A) by the affirmative vote of a majority of a quorum of the Board consisting of Disinterested Directors, or (B) if a quorum of the Board consisting of
Disinterested Directors is not obtainable, or even if such quorum is obtainable, if such quorum of Disinterested Directors so directs, either (x) by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee, or (y) by the stockholders of the Company, as determined by such quorum of Disinterested Directors, or a quorum of the Board, as the case may be; or (iii) as provided in Section 10(b). If it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such determination. Indemnitee shall cooperate with any and all individuals or entities making such determination (such person or persons, the “Determining Person”) with respect to Indemnitee’s entitlement to indemnification, including providing to the Determining Person upon reasonable advance request any documentation or information which is not privileged or
otherwise protected from disclosure and which is reasonably available to 

 

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Indemnitee and reasonably necessary to such determination. Any costs or expenses (including attorneys’ fees and disbursements) incurred by Indemnitee in cooperating with the Determining Person shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

	
            (c)
 	
            (i)
 	
            If required, Independent Counsel shall be selected as follows:
 

(A)            if a Change in Control shall not have occurred, Independent Counsel shall be selected by the Board, and the Company shall give written notice to Indemnitee advising Indemnitee of the identity of Independent Counsel so selected, or 

(B)            if a Change in Control shall have occurred, Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board, in which event the foregoing clause (i) shall apply), and Indemnitee shall give written notice to the Company advising it of the identity of Independent Counsel so selected. 

In either event, Indemnitee or the Company, as the case may be, may, within seven (7)  days after written notice of selection shall have been given, deliver to the Company or to Indemnitee (as the case may be) a written objection to such selection. Such objection may be asserted only on the ground that the Independent Counsel selected does not meet the requirements of “Independent Counsel” as defined in Section 1. Such objection shall set forth with particularity the factual basis of such assertion. If such written objection is made, the person selected may not serve as Independent Counsel unless and until a court has determined that such objection is without merit. 

(ii)            If, within twenty (20) days after submission by Indemnitee of a written request for indemnification pursuant to Section 9(a) hereof, no Independent Counsel shall have been selected, or if a person shall have been selected as Independent Counsel and objected to by the person not selecting such person, then either the Company or Indemnitee may petition the Court of Chancery of the State of Delaware, or other court of competent jurisdiction, for resolution of any objection which may have been made, and/or for the appointment as Independent Counsel of a person selected by such court (or by a person delegated by the court). The person with respect to whom an objection is so resolved, or the person so appointed, shall act as Independent Counsel under Section 9(b) hereof. The
Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with its actions pursuant to this Agreement, and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 9(c), regardless of the manner in which such Independent Counsel was selected or appointed. Upon the due commencement date of any judicial proceeding or arbitration pursuant to Section 11(a), Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

 

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            Section 10.
 	
            Presumptions and Effects of Certain Proceedings.
 

(a)             If a Change in Control shall have occurred, in making a determination with respect to entitlement to indemnification hereunder, the Determining Person shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 9(a), and the Company shall have the burden of proof to overcome that presumption in connection with the making by the Determining Person of any determination contrary to that presumption.

(b)             If the Determining Person shall not have made a determination within sixty (60) days after receipt by the Company of the request, the determination of entitlement to indemnification shall be deemed to have been made. In such an event, the Indemnitee shall be entitled to such indemnification provided there shall not have been (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) any prohibition of such indemnification under applicable law. However, such sixty-day period may be extended for a reasonable time (not to exceed an additional thirty (30) days) if the Determining Person in good faith require(s) such
additional time for obtaining or evaluating documentation and/or information and notifies Indemnitee in writing of such requirement prior to the expiration of such sixty-day period. Additionally, the foregoing provisions of this Section 10(b) shall not apply either (i) if the determination of entitlement is to be made by Independent Counsel pursuant to Section 9(b), or (ii) if the determination of entitlement is to be made by the stockholders pursuant to Section 9(b) and either (A) if within fifteen (15) days after receipt by the Company of the request for determination the Board has resolved to submit such determination to the stockholders for their consideration at an annual meeting of stockholders to be held within seventy-five (75) days after such receipt and such determination is made at that meeting, or (B) if a special meeting of stockholders is called within fifteen (15) days after such receipt for the purpose of making such
determination, such meeting is held for such purpose within sixty (60) days after having been so called, and such determination is made at that meeting. 

(c)             The termination of any Proceeding or of any claim, issue or matter that is part of a Proceeding, by judgment, order, settlement or conviction, or upon a plea of nolo contendere (no contest) or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal proceeding, that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.

	
            Section 11.
 	
            Remedies of Indemnitee.
 

(a)             If (i) a determination is made pursuant to Section 9 that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 8, (iii) the determination of indemnification is to be made by 

 

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Independent Counsel pursuant to Section 9(b) and such determination shall not have been made and delivered in a written opinion within ninety (90) days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Section 7 within ten (10) days after receipt by the Company of a written request therefor, or (v) payment of indemnification is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to Section 9 or 10, then Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Delaware, or in any other court of competent jurisdiction, of entitlement to such indemnification or advancement of Expenses. Alternatively, the Indemnitee, at Indemnitee’s option,
may seek an award in arbitration to be conducted by a single arbitrator pursuant to the rules of the American Arbitration Association. Indemnitee shall commence such proceeding seeking an adjudication or an award in arbitration within one-hundred eighty (180) days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 11(a). The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.

(b)             If a determination shall have been made pursuant to Section 9 that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section shall be conducted in all respects as a de novo trial or arbitration on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination. If a Change in Control shall have occurred in any judicial proceeding or arbitration commenced pursuant to this Section, the Company shall have the burden of proving that Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be.

(c)             If a determination shall have been made or deemed to have been made pursuant to Section 9 or 10 that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section, so long as there is no (i) misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) prohibition of such indemnification under applicable law.

(d)             The Company shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 11 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement.

(e)             If Indemnitee, pursuant to this Section 11, seeks a judicial adjudication of, or an award in arbitration to enforce Indemnitee’s rights under, or to recover damages for breach of, this Agreement, Indemnitee shall be entitled to recover from the Company, and shall be indemnified by the Company against, any and all expenses (of the kinds described in the definition of Expenses) actually and reasonably incurred by Indemnitee in such judicial adjudication or arbitration, but only to the extent Indemnitee prevails therein. If it shall be determined in such judicial adjudication or arbitration that Indemnitee is not entitled to receive all of the indemnification or advancement of expenses sought, the expenses incurred by Indemnitee in connection with such judicial
adjudication or arbitration shall be appropriately prorated.

 

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            Section 12.
 	
            Non-Exclusivity; Survival of Rights; Insurance; Subrogation.
 

(a)             The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of, and shall not diminish, any other rights to which Indemnitee may at any time be entitled under applicable law, the certificate of incorporation or by-laws of the Company, any agreement, a vote of stockholders or a resolution of directors, or otherwise, and shall neither be deemed to be a substitute therefor nor to diminish or abrogate any rights of Indemnitee thereunder. No amendment, alteration or repeal of this Agreement or any provision hereof shall be effective as to any Indemnitee with respect to any action taken or omitted by such Indemnitee in Indemnitee’s Company Status prior to such amendment, alteration or repeal.

(b)             To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, agents or fiduciaries of the Company (or of any other corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise which such person serves at the request of the Company), the Company shall ensure that the Indemnitee is covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, employee, agent or fiduciary under such policy or policies. If Indemnitee seeks a judicial adjudication of, or an award in arbitration to enforce Indemnitee’s rights under any such policy, Indemnitee shall be
entitled to recover from the Company, and shall be indemnified by the Company against, any and all expenses (of the kinds described in the definition of Expenses) actually and reasonably incurred by Indemnitee in such judicial adjudication or arbitration, but only to the extent Indemnitee prevails therein. 

(c)             In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

(d)             The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

Section 13.           Establishment of Trust. In the event of a Potential Change in Control or a Change in Control, the Company shall, promptly upon written request by Indemnitee, create a Trust for the benefit of Indemnitee and from time to time, upon written request of Indemnitee to the Company, shall fund such Trust in an amount, as set forth in such request, sufficient to satisfy any and all Expenses reasonably anticipated at the time of each such request, if, by reason of Indemnitee’s Company Status, Indemnitee is, or is threatened to be made, a party to any threatened, pending or completed Proceeding, and any and all judgments, fines, penalties and settlement amounts actually and reasonably incurred by or on behalf of Indemnitee in connection with any such
Proceeding from time to time actually paid or claimed, reasonably anticipated or proposed to be paid. The terms of the Trust shall provide that upon a Change in Control (i) the Trust shall not be revoked or the principal thereof invaded, without the 

 

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written consent of Indemnitee; (ii) the Trustee shall advance, within two (2) business days of a request by Indemnities, any and all Expenses to Indemnitee, not advanced directly by the Company to Indemnitee (and Indemnitee hereby agrees to reimburse the Trust under the circumstances under which Indemnitee would be required to reimburse the Company under Section 8); (iii) the Trust shall continue to be funded by the Company in accordance with the funding obligation set forth above; (iv) the Trustee shall promptly pay to Indemnitee all amounts for which Indemnitee shall be entitled to indemnification pursuant to this Agreement or otherwise; and (v) all unexpended funds in such Trust shall revert to the Company upon a final determination by the Board, arbitrator or court of competent jurisdiction, as the case may be, that Indemnitee has been fully indemnified under the terms of this Agreement. The Trustee
shall be chosen by Indemnitee. Nothing in this Section 13 shall relieve the Company of any of its obligations under this Agreement.

Section 14.           Contribution. If the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for expenses, in connection with the Proceeding as to which such indemnification is unavailable, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such action by the Board, arbitrator or court before which such action was brought, as the case may be, in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s)
giving cause to such action; and/or (ii) the relative fault of the Company (and its other directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transactions(s). Indemnitee’s right to contribution under this Section 14 shall be determined in accordance with, pursuant to and in the same manner as, the provisions hereof relating to Indemnitee’s right to indemnification under this Agreement.

Section 15.           Duration of Agreement. This Agreement shall continue until and terminate upon the later of: (a) ten (10) years after the date that Indemnitee shall have ceased to serve as a director, officer, employee, agent or fiduciary of the Company or of any other corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise which Indemnitee served at the request of the Company; or (b) the final termination of all pending Proceedings in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and or any proceeding commenced by Indemnitee pursuant to Section 11. This Agreement shall be binding upon the Company and its successors and assigns and shall inure to the
benefit of Indemnitee and Indemnitee’s heirs, executors and administrators.

Section 16.           Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Company or any affiliate of the Company against Indemnitee, Indemnitee’s spouse, heirs, executors or personal or legal representatives after the expiration of two (2) years from the date of accrual of such cause of action, and any claim or cause of action of the Company or its affiliates shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, that if any shorter period of limitations is otherwise applicable, by law or otherwise, to any such cause of action such shorter period shall apply.

 

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Section 17.           Exception to Right of Indemnification or Advancement of Expenses. Except as provided in Section 11(e), Indemnitee shall not be entitled to indemnification or advancement of Expenses under this Agreement with respect to any Proceeding, or any claim therein, brought or made by Indemnitee against the Company.

Section 18.           Notice by Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating any Proceeding or matter which may be subject to indemnification or advancement of Expenses covered hereunder.

	
            Section 19.
 	
            Miscellaneous.
 

(a)             Severability. If any provision of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever, then (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby, and (b) to the fullest extent possible, the provisions of this Agreement including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

(b)             Identical Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

(c)             Headings. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not to constitute part of this Agreement or to affect the construction thereof. 

(d)             Modification and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

(e)             Notices. All  notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom such notice or other communication shall have been directed, or (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed as follows:

 

11

 

 

 

 

If to Indemnitee, to:

[Name]

[Address]

 

If to the Company, to:

Drew Industries Incorporated 

200 Mamaroneck Avenue

White Plains, New York  10601

Attention:  Leigh J. Abrams, President

 

or to such other address or such other person as Indemnitee or the Company shall designate in writing in accordance with this Section, except that notices regarding changes in notices shall be effective only upon receipt.

(f)              Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware without giving effect to its conflicts of laws provisions.

(g)             Further Assurances. Each party hereto shall execute such other documents and take such further action as any other party reasonably deems necessary or appropriate to effectuate the intent of this Agreement or any provision hereof.

*  *  *  *

[The signatures hereto are set forth on the following page.]

 

12

 

 

 

 

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

	
            DREW INDUSTRIES INCORPORATED
 
	
             
 
	
             
 
	
             
 
	
            By:                                          
                    
 
	
            Name:
 
	
            Title:
 
	
             
 
	
             
 
	
            INDEMNITEE
 
	
             
 
	
             
 
	
                                                      
                          
 
	
            Name:
 

 

 

 

13Employment Agreement with Maureen M. Bufalino

DATE:           September 8, 2004

TO:             Maureen Bufalino

FROM:           Donita Koval, Chief Operating Officer

RE:             EMPLOYMENT WITH OMEGA FINANCIAL CORPORATION

This memo is to confirm that upon the completion of the merger between Omega
Financial Corporation and Sun Bancorp, Inc., Omega will assume the Employment
Agreement, dated January 12, 2004, between you and Sun Bancorp, Inc. and you
will become an employee of Omega Financial Corporation.

If you intend to work for Omega upon the effective date of the merger, please
indicate so by returning a signed copy of this memo to me by September 15, 2004.
On the effective date of the Merger, you will continue as an employee of SUBI
Services, LLC ("SUBI"), which will become a wholly owned subsidiary of Omega
Financial Corporation, subject to your existing Sun Bancorp/SUBI, LLC. benefit
plans and payroll schedule through December 31, 2004. Effective January 1, 2005,
you will be eligible for benefit plans under Omega, consistent with the terms of
your contract.

Of course, your employment with Omega is contingent upon completion of the
merger between Sun Bancorp and Omega Financial Corporation. This memo supersedes
and terminates any previous oral or written communications regarding the same
subject.

We hope that your employment with Omega Financial Corporation will be rewarding
and we look forward to you joining us in this new venture.

--------------------------------------------------------------------------------

I hereby acknowledge that my Employment Agreement with Sun Bancorp will be
assumed by Omega Financial Corporation, subject to the completion of the merger
between Sun Bancorp and Omega Financial Corporation, and that I intend to work
for Omega after the effective date of the merger.

----------------                   ---------------------------------------------
DATE                               MAUREEN M. BUFALINO

                                       28
<PAGE>

                              EMPLOYMENT AGREEMENT

      THIS AGREEMENT is made effective 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 Maureen M. Bufalino ("Executive"), an individual residing at 41 White
Tail Drive, Dallas, PA 18612 (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 Guaranty Bank 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 Guaranty Bank and Senior Vice President of
      the Services Company, 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 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.

                                       29
<PAGE>

3.    Engagement in Other Employment. Executive shall devote her 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
                  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

                                       30
<PAGE>

                  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, Bank and
                  Services Company;

            (xiv) direction or recommendation of a state or federal bank
                  regulatory authority to remove the Executive from her 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.

                                       31
<PAGE>

            (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 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

                                       32
<PAGE>

            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 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, 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 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 Services Company, Bank and
            Corporation will suffer an undue hardship by continuing Executive in
            her 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.

                                       33
<PAGE>

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 Five Thousand Four Hundred Dollars ($105,400) 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 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

                                       34
<PAGE>

            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.

                                       35
<PAGE>

      (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
                  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)

                                       36
<PAGE>

            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.

      (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 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, 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

                                       37
<PAGE>

                  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 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

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<PAGE>

                  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, 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 her employment, regardless of the reason for
      termination, she will deliver to Corporation, Bank, Services Company and
      their subsidiaries and affiliates, any and all

                                       39
<PAGE>

      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 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, Services Company or any
      of their affiliates or subsidiaries, if she is then serving as a director
      of any such entities. Notwithstanding such a resignation by Executive,
      Corporation and Bank will continue to honor their contractual obligations
      as set forth in Section 18 ("Board of Directors") of the Agreement and
      Plan of Reorganization that they entered with Guaranty Bank on January 15,
      2001.

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 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:     Mrs. Maureen Bufalino
                                              41 White Tail Drive
                                              Dallas, Pennsylvania 18612

         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

                                       40
<PAGE>

                     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
      May 31, 2001.

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

                                       41
<PAGE>

      (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.

                    [THIS SPACE WAS INTENTIONALLY LEFT BLANK]

                                       42
<PAGE>

      IN WITNESS WHEREOF, the parties have executed this Agreement as of the
dates indicated below.

ATTEST:                       SUN BANCORP, INC.                           DATE

--------------------------    ------------------------------------       ------
                              Robert J. McCormack, President & CEO

ATTEST:                       SUN BANK                                    DATE

--------------------------    ------------------------------------       ------
                              Robert J. McCormack, President & CEO

ATTEST:                       SUBI SERVICES, LLC                          DATE

--------------------------    ------------------------------------       ------
                              Robert J. McCormack, President & CEO

WITNESS:                      EXECUTIVE:                                  DATE

--------------------------    ------------------------------------       ------
                              Maureen M. Bufalino

                                       43

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