Vice President, Sales Employment Agreement

EMPLOYMENT AGREEMENT



THIS AGREEMENT is made as of this 23rd day of December, 2002, between SUN BANCORP, INC. ("Corporation"), a Pennsylvania business corporation having a place of business at 2-16 South Market Street, Selinsgrove, Pennsylvania 17870, SUN BANK ("Bank"), a Pennsylvania chartered banking institution having a place of business at 2-16 South Market Street, Selinsgrove, Pennsylvania 17870, MID-PENN INSURANCE ASSOCIATES, INC. ("Agency"), a Pennsylvania business corporation having a place of business at 51 South Fourth Street, Sunbury, Pennsylvania 17801 and CHRISTOPHER J. FELLON ("Executive"), an individual whose address is R.R. #1, Box 282F, Northumberland, Pennsylvania 17857 (collectively, the "Parties" and, individually, sometimes a "Party").



WHEREAS , Corporation is a registered bank holding company;



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



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





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



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



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



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





1. Employment . Corporation, Bank and Agency hereby employ Executive and Executive hereby accepts employment with Corporation, Bank or Agency, 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 Agency as may be assigned to Executive from time to time by the Board of Directors of Corporation. Executive shall be employed as Vice President and Vice President, Sales of Agency, and shall hold such other titles as may be given to him from time to time by the Board of Directors of Corporation.





3. Engagement in Other Employment . Executive shall devote his full time, attention and energies to the business of Corporation, Bank and Agency during the Employment Period (as defined in Section 4(a) of this Agreement); provided, however, that this Section 3 shall not be construed as preventing Executive from (a) investing Executive92s personal assets in enterprises that do not compete with Corporation, Bank and Agency or any of their subsidiaries or affiliates, (b) being involved in any charitable or civic activity, or (c) being involved in any other activity with the prior approval of the Boards of Directors of Corporation, Bank and Agency. 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, Agency 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, Agency or any of their subsidiaries or affiliates. Notwithstanding any other provision of this Agreement, Executive shall be permitted to form, own and operate an insurance agency for the sole purpose of marketing and selling property, casualty and accident insurance products offered by the Brotherhood Mutual Insurance Company, or any other Church insurance carriers in the event that Agency can no longer maintain a relationship with Brotherhood Mutual Insurance Company, consistent with Agency92s past practices, to Churches. Executive will direct any inquiries for insurance received from any individuals or entities, other than Churches, to Agency. For purposes of this Agreement, a "Church" shall mean an entity that qualifies as an exempt organization organized and operated exclusively for religions purposes, pursuant to Section 501(c)(3) of the Internal Revenue Code.





4. Term of Agreement .





(a) Employment Period. This Agreement shall be for a three (3) year period (the "Employment Period") beginning on the date first mentioned above, and if not previously terminated pursuant to the terms of this Agreement, the Employment Period shall end three (3) years later.



(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) Executive92s 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) Executive92s failure to follow the good faith lawful instructions of the Board of Directors of Corporation with respect to its operations, after notice from Corporation, and a failure to cure such violation within twenty (20) days of said notice;

(iii) the willful failure by the Executive to substantially perform his duties hereunder, other than a failure resulting from Executive92s incapacity because of physical or mental illness, as provided in Section 4(d) of this Agreement, after notice from the Corporation and a failure to cure such violation within twenty (20) days of said notice;

(iv) Executive92s intentional violation of the provisions of this Agreement, after notice from Corporation, and a failure to cure such violation within twenty (20) days of said notice;

(v) dishonesty or gross negligence of the Executive in the performance of his duties;

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

(vii) Executive92s breach of fiduciary duty involving personal profit;

(viii) Executive92s 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) Executive92s unlawful discrimination, including harassment, against Corporation92 s employees, customers, business associates, contractors or visitors;

(x) Executive92s theft or abuse of Corporation92s property or the property of Corporation92s 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 Executive92s employment with Corporation, Bank and Agency;

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

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

(xvi) willful and serious violation(s) by Executive of the Bank92s "Core Values," and a failure to cure such violation(s) within twenty (20) days after notice by Corporation; if the violation is so serious that an attempt to cure would be fruitless, no notice need be given by the Corporation.

(xvii) the existence of any material conflict between the interests of Corporation and the Executive that is not disclosed in writing by the Executive to Corporation, Bank and Agency and approved in writing by the Boards of Directors of Corporation, Bank and Agency 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 Executive92s rights under this Agreement shall cease as of the effective date of such termination and all of Corporation, Bank, and Agency92s 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 Agency92s obligations under this Agreement shall terminate automatically upon Executive92s voluntary termination of employment.





(d) Disability. Notwithstanding the provisions of Section 4(a) of this Agreement, if, as a result of physical or mental injury or impairment, Executive is unable to perform all of the essential job functions of his position on a full time basis, taking into account any reasonable accommodation required by law, and without posing a direct threat to himself and others, for a period up to one hundred eighty (180) days, all obligations of Corporation, Bank and Agency to pay Executive the compensation as set forth in this Agreement are suspended. Any paid time off, sick leave, or short term disability pay Executive may be entitled








to receive, pursuant to an established disability plan or program of the Agency, Bank and/or Corporation, if any exists, shall be considered part of the compensation Executive shall receive while disabled, and shall not be in addition to the compensation received by Executive under this provision of the Agreement. Executive further agrees that should he remain unable to perform all of the essential functions of his position on a full time basis, taking into account any reasonable accommodation required by law, and without posing a direct threat to himself or others, after one hundred eighty (180) days, the Agency, Bank and Corporation will suffer an undue hardship by continuing Executive in his position. Upon this event, all compensation and employment obligations of the Agency, Bank and Corporation under this Agreement shall cease (except Executive92s rights under the Corporation92s then existing short term and/or long term disability plans, if any), and this Agreement shall terminate.





(e) Death. Notwithstanding the provisions of Section 4(a) of this Agreement, this Agreement shall terminate automatically upon Executive92s death and Executive92s rights under this Agreement shall cease as of the date of such termination.





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