FORM OF SUN BANCORP, INC. MANAGEMENT CHANGE IN CONTROL SEVERANCE AGREEMENT Amended and Restated
FORM
OF
SUN
BANCORP, INC.
MANAGEMENT
CHANGE IN CONTROL SEVERANCE AGREEMENT
Amended
and Restated
THIS
CHANGE IN CONTROL SEVERANCE
AGREEMENT ("Agreement") entered into this 18th day of October,
2007 ("Effective Date"), by and between Sun Bancorp, Inc. (the "Company") and(A.
Xxxxx Xxxxxxxx, Executive Vice President and Chief Operating Officer; Xxx X.
Xxxxx, Executive Vice President and Chief Financial Officer; and Xxxx X.
Xxxxxxxx, Executive Vice President) (the "Executive").
WHEREAS,
the Executive is currently
employed by the Company as Executive Vice President and is experienced in all
phases of the business of the Company; and
WHEREAS,
the parties desire by this writing to set forth the continuing rights and
responsibilities of the Company and the Executive with respect to if the Company
should undergo a change in control (as defined hereinafter in the Agreement)
after the Effective Date and other circumstances that might result in the
termination of the Executive’s employment with the Company.
NOW,
THEREFORE, each party, intending to be legally bound, does hereby agree, as
follows:
1.Employment. The
Executive is employed in the capacity as Executive Vice President the
Company. The Executive’s employment shall be for no definite period
of time and the Executive or the Company may terminate such employment
relationship at any time for any reason or no reason. The employment
at-will relationship remains in full force and effect regardless of any
statements to the contrary made by company personnel or set forth in any
documents other than those explicitly made to the contrary and signed by the
President or the Chairman of the Company. The Executive shall render such
administrative and management services to the Company and Sun National Bank
("Bank"), as are currently rendered and as are customarily performed
by persons situated in a similar executive capacity. The Executive's
other duties shall be such as the Board of Directors for the Company (the "Board
of Directors" or "Board") may from time to time reasonably direct, including
normal duties as an officer of the Company and the Bank.
2.Term
of Agreement. The term of this Agreement shall be for the period commencing
on the Effective Date and ending twenty-four (24) months thereafter
("Term"). Additionally, as of each December 31, thereafter, the
Term of this Agreement shall be extended for an additional period such that
the
Term of the Agreement as of such date of extension shall be for a new period
of
twenty-four (24) months thereafter; provided, however, such Term shall not
be
automatically extended as of December 31 of any given year if the Board shall
give the Executive written notice not later October 1 immediately prior to
such
December 31 date that the Board has made a determination by an affirmative
vote
of not less than a majority of the members of the full Board then in office
that
such Agreement shall not be extended thereafter absent a future affirmative
determination and resolution of the Board of Directors that the Term of such
Agreement shall be extended beyond the then in effect expiration date of such
Agreement. The Term shall refer to the initial Term or any subsequent
extension of such Term thereafter.
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3.Termination
of Employment in Connection with or Subsequent to a Change in
Control.
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(a)Notwithstanding
any provision herein
to the contrary, in the event of the involuntary termination of Executive's
employment with the Company or the Bank during the Term of this Agreement
following any Change in Control of the Company or Bank, or within 18 months
thereafter of such Change in Control, absent Just Cause, Executive
shall be paid an amount equal to the product of (2.999) times the Executive's
average annual aggregate taxable compensation paid by the Company and the Bank
as reported, or to be reported, on the IRS Form W-2, box 1, or IRS Form 1099
for
the most recently completed five calendar years ending on, or before, the date
of such Change in Control (which annual aggregate compensation amount for any
year shall be annualized if during any of such years such term of employment
during such period is less than for the full calendar year and any such year
shall be disregarded if no compensation was paid during any such
year. Said sum shall be paid by the Company to the Executive in one
(1) lump sum not later than the date of Executive's termination of service
to
the extent not otherwise paid by the Bank. In addition,
the Executive and his dependents shall be eligible to continue coverage under
the Company's (or its successor's) medical and dental insurance
reimbursement plans similar to that in effect on the date of termination of
employment at the participants' election and expense. Notwithstanding the
forgoing, all sums payable hereunder shall be reduced in such manner and to
such
extent that the Bank shall have made payments to the Executive upon termination
of employment in accordance with any Employment Agreement between the Executive
and the Bank related to such Change in Control. The term "Change in
Control" shall refer to (i) the sale of all, or a material portion, of the
assets of the Company or the Bank; (ii) the merger or recapitalization of the
Company or the Bank whereby the Company or the Bank is not the
surviving entity; (iii) a change in control of the Company or the
Bank, as otherwise defined or determined by the Office of the Comptroller of
the
Currency or regulations promulgated by it; or (iv) the acquisition, directly
or
indirectly, of the beneficial ownership (within the meaning of that term as
it
is used in Section 13(d) of the Securities Exchange Act of 1934 and the rules
and regulations promulgated thereunder) of twenty-five percent (25%) or more
of
the outstanding voting securities of the Company or the Bank by any person,
trust, entity or group. The term "person" means an individual other
than the Executive, or a corporation, partnership, trust, association, joint
venture, pool, syndicate, sole proprietorship, unincorporated organization
or
any other form of entity not specifically listed herein. The
provisions of this Section 3(a) shall survive the expiration of this
Agreement occurring after a Change in Control.
(b)Notwithstanding
any other provision
of this Agreement to the contrary, Executive may voluntarily terminate his
employment during the Term of this Agreement following a Change in Control
of
the Company or Bank, or within 18 months following such Change in Control,
and
Executive shall thereupon be entitled to receive the payment described in
Section 3(a) of this Agreement, upon the occurrence, or within six months
thereafter, of any of the following events, which have not been consented to
in
advance by the Executive in writing: (i) if Executive would be required to
move
his personal residence or perform his principal executive functions more than
thirty-five (35) miles from the Executive's primary office as of the signing
of
this Agreement; (ii) if in the organizational structure of the Company,
Executive would be required to report to a person or persons other than the
Board of Directors of the Company or its President; (iii) if the Company should
fail to maintain Executive's base compensation in effect as of the date of
the
Change in Control and the existing Executive benefits plans, including material
fringe benefit, stock option and retirement plans; (iv) if Executive would
be
assigned duties and responsibilities other than those normally associated with
his position as referenced at Section 1, herein; or (v) if Executive's
responsibilities or authority have in any way been materially diminished or
reduced. The provisions of this Section 3(b) shall survive
the expiration of this Agreement occurring after a Change in
Control.
(c)Additional
Payments by the Company
related to Section 280G of the Code.
(i)Anything
in this Agreement to the
contrary notwithstanding, in the event it shall be determined that any payment
or distribution by the Company or otherwise to or for the benefit of the
Executive (whether paid or payable or distributed or distributable pursuant
to
the terms of this Agreement or by any other compensation plan or arrangement
of
the Company or the Bank (a "Payment") would be subject to the excise tax imposed
by Section 4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including all federal, state and local tax and any
interest or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and any excise tax imposed under Section 4999 of the Code
imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments; provided
that for purposes of determining the amount of any Gross-Up Payment, the
Executive shall be deemed to pay federal income taxes at the highest marginal
rate of federal income taxation in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at the highest marginal
rate of taxation in the state and locality of residence of the Executive on
the
date the Payment is made, net of the maximum reduction in federal income taxes
that could reasonably be obtained from the deduction of such state and local
taxes related to such Gross-up Payment.
(ii)Subject
to the provisions of this Section 3(c), all determinations required to be made
under this Section 3(c), including whether and when a Gross-Up Payment is
required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by a certified public
accounting firm (the "Accounting Firm") reasonably acceptable to the Executive
as may be designated by the Company which shall provide detailed supporting
calculations both to the Company and the Executive within 15 business days
of
the receipt of notice from the Executive that there has been a Payment, or
such
earlier time as is requested by the Company. All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment,
as
determined pursuant to this Section 3(c), shall be paid by the Company to the
Executive, or withheld on the Executive’s behalf, within five days of the later
of (A) the due date for the payment of any Excise Tax, and (B) the receipt
of
the Accounting Firm's determination. Any determination by the Accounting Firm
shall be binding upon the Company and the Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have
been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 3(c) and the Executive thereafter is required to make a payment of
any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive.
(iii)The
Executive shall notify the
Company in writing of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but no later than ten
business days after the Executive is informed in writing of such claim and
shall
apprise the Company of the nature of such claim and the date on which such
claim
is requested to be paid. The Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which it gives such notice
to the Company (or such shorter period ending on the date that any payment
of
taxes with respect to such claim is due). If the Company notifies the Executive
in writing prior to the expiration of such period that it desires to contest
such claim, the Executive shall:
(A)give
the Company any information
reasonably requested by the Company relating to such claim,
(B)take
such action in connection with
contesting such claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal representation
with
respect to such claim by an attorney reasonably selected by the
Company,
(C)cooperate
with the Company in good faith in order effectively to contest such claim,
and
(D)permit
the Company to participate
in any proceedings relating to such claim;
provided,
however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless, on an after-tax
basis, for any Excise Tax or income tax (including interest and penalties with
respect thereto) imposed as a result of such representation and payment of
costs
and expenses. Without limitation on the foregoing provisions of this Section
3(c), the Company shall control all proceedings taken in connection with such
contest and, at its sole option, may pursue or forgo any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct the Executive
to pay the tax claimed and xxx for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to
pay
such claim and xxx for a refund, the Company shall (to the extent permitted
by
law) advance the amount of such payment to the Executive, on an interest-free
basis and shall indemnify and hold the Executive harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest or penalties with
respect thereto) imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which such contested amount is
claimed to be due is limited solely to such contested amount. Furthermore,
the
Company's control of the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and the Executive shall
be
entitled to settle or contest, as the case may be, any other issue raised by
the
Internal Revenue Service or any other taxing authority.
(iv)If,
after the receipt by the Executive of an amount advanced by the Company pursuant
to Section 3(c), the Executive becomes entitled to receive any refund with
respect to such claim, the Executive shall (subject to the Company's complying
with the requirements of Section 3(c)) promptly pay to the Company the amount
of
such refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 3(c), a determination is made that
the Executive shall not be entitled to any refund with respect to such claim
and
the Company does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required
to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
(v)The
Executive shall cooperate in good faith with all reasonable requests by the
Company to assist the Company in minimizing the effect of Section 4999 and
Section 280G of the Code, provided that the Executive shall not be required
to
take actions that adversely affect his rights hereunder.
4.Other
Changes in Employment Status.
(a)Except
as provided for at Section 3, herein, the Board of Directors may terminate
the
Executive's employment at any time with or without Just Cause within its sole
discretion. This Agreement shall not be deemed to give the Executive
any right to be retained in the employment or service of the Company, or to
interfere with the right of the Company to terminate the employment of the
Executive at any time for any reason. In the event that the
Executive's employment with the Company is terminated for reasons other than
in
conjunction with or within eighteen months following a Change in Control (in
accordance with Section 3 herein) or for Just Cause during the Term of the
Agreement, the Executive shall receive a lump-sum severance payment (“Severance
Payment”) equal to: the sum of his highest annual base salary in effect during
the prior twelve (12) month period, plus an amount equal to
his average bonus payment received during the prior 3 years, all
multiplied by the number (1.25); provided that the Executive shall comply with
the limitations and restrictions set forth at Section 4(b), herein.
Notwithstanding the forgoing, all sums payable hereunder shall be reduced in
such manner and to such extent that the Bank shall have made duplicate severance
payments to the Executive upon termination of employment in accordance with
any
Employment Agreement between the Executive and the Bank. In addition,
the Executive and his dependents shall be eligible to continue coverage under
the Company’s or the Bank's medical and dental insurance reimbursement plans
similar to that in effect on the date of termination of employment for a period
of eighteen months following the date of termination of employment at the
Company’s expense. Such Severance Payment shall be made as soon as
administratively feasible and in accordance with the limitations set forth
at
Section 5(b) herein. The Executive shall have no right to receive
compensation or other benefits for any period after termination for Just
Cause. Termination for "Just Cause" shall include, but is not limited
to, termination because of the Executive's personal dishonesty, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule or
regulation (other than traffic violations or similar offenses) or final
cease-and-desist order issued by a federal banking regulatory having regulatory
authority over the Bank or Company, or a material breach of any provision of
the
Agreement.
(b)Following
termination of employment, the Executive will not, without the express written
consent of Company, directly or indirectly communicate or divulge to, or use
for
his own benefit or for the benefit of any other person, firm, association,
or
corporation, any of the trade secrets, proprietary data or other confidential
information communicated to or otherwise learned or acquired by the Executive
from the Company, the Bank, or any subsidiary of such entities, except that
Executive may disclose such matters to the extent that disclosure is required
by
a court or other governmental agency of competent jurisdiction.
(c) During the seven and one-half month period
following termination of employment in accordance with Section 4(a), absent
termination for Just Cause or termination in conjunction with or within eighteen
months following a Change in Control (in accordance with Section 3
herein):
(i)Executive
will not contact (with a
view toward selling any product or service competitive with any product or
service sold or proposed to be sold by the Company, the Bank, or any subsidiary
of such entities) any person, firm, association or corporation (A) to which
the
Company, the Bank, or any subsidiary of such entities sold any product or
service, (B) which Executive solicited, contacted or otherwise dealt with on
behalf of the Company, the Bank, or any subsidiary of such entities, or (C)
which Executive was otherwise aware was a client of the
Company, the Bank, or any subsidiary of such
entities. Executive will not directly or indirectly make any such
contact, either for his own benefit or for the benefit of any other person,
firm, association, or corporation.
(ii)Executive
hereby agrees that he shall not engage in providing professional services or
enter into employment as an employee, director, consultant, representative,
or
similar relationship to any financial services enterprise (including but not
limited to a savings and loan association, bank, credit union, or insurance
company) whereby the Executive will have a work location within the State of
New
Jersey, and is within 50 miles of the home office of the Company and
the Bank located in Vineland, New Jersey or is within 15 miles of any
office of the Company, the Bank, or any subsidiary of such entities
existing as of the date of such termination of employment.
(iii)Executive
hereby agrees that
he shall not, on his own behalf or on behalf of others, employ, solicit,
or induce, or attempt to employ, solicit or induce, any employee of the Company,
the Bank, or any subsidiary of such entities, for employment with any financial
services enterprise (including but not limited to a savings and loan
association, bank, credit union, or insurance company), nor will the Executive
directly or indirectly, on his behalf or for others, seek to influence any
employee of the Company, the Bank, or any subsidiary of such
entities to leave the employ of the Company, the Bank, or any
subsidiary of such entities.
(iv)Executive
will not make any public statements regarding the Company, the Bank, or any
subsidiary of such entities without the prior consent of the Company or the
Bank, and the Executive shall not make any statements that disparage the
Company, the Bank, or any subsidiary of such entities or the business practices
of the Company, the Bank, or any subsidiary of such entities.
(v)Executive
acknowledges and agrees that irreparable injury will result to the Bank in
the
event of a breach of any of the provisions of Sections 4(b) and 4(c) (the
"Designated Provisions") and that the Company will have no adequate remedy
at
law with respect thereto. Accordingly, in the event of a material
breach of any Designated Provision, and in addition to any other legal or
equitable remedy the Company may have, the Company shall be entitled to the
entry of a preliminary and a permanent injunction (including, without
limitation, specific performance by a court of competent jurisdiction located
in
Cumberland County, New Jersey, or elsewhere), to restrain the violation or
breach thereof by Executive, and Executive shall submit to the jurisdiction
of
such court in any such action.
(vi)The
provisions of Sections 4(b) and 4(c) shall survive the expiration of this
Agreement.
5.Regulatory
Exclusions.
(a)Notwithstanding
anything herein to
the contrary, any payments made to the Executive pursuant to the Agreement,
or
otherwise, shall be subject to and conditioned upon compliance with 12 USC
'1828(k)
and any regulations promulgated thereunder.
(b)Notwithstanding
anything herein to
the contrary, any payments to be made in accordance with Sections 3 or 4 of
the
Agreement shall not be made prior to the date that is 183 calendar days from
the
date of termination of employment, or such later date as determined in good
faith by the Bank or Company (“Payment Date@),
if it is determined by the Bank or the Company in good faith that the Executive
is a “specified employee” within the meaning of Section 409A of the Code, that
such payments to be made to such Executive are subject to the limitations at
Section 409A of the Code and regulations promulgated thereunder, and payments
made in advance of such Payment Date would result in the requirement for the
Executive to pay additional interest and taxes to be imposed in accordance
with
Section 409A(a)(1)(B) of the Code.
0.Xx
Duty to
Mitigate. The Executive shall not be required to mitigate the
amount of any payment of severance benefits if he or she accepts other
compensation for employment with another entity.
7.Successors
and
Assigns.
(a)This
Agreement shall inure to the
benefit of and be binding upon any corporate or other successor of the Company
which shall acquire, directly or indirectly, by merger, consolidation, purchase
or otherwise, all or substantially all of the assets or stock of the
Company.
(b)The
Executive shall be precluded from assigning or delegating his rights or duties
hereunder without first obtaining the written consent of the
Company.
8.Amendments. No
amendments or additions to this Agreement shall be binding upon the parties
hereto unless made in writing and signed by both parties, except as herein
otherwise specifically provided.
9.Applicable
Law. This agreement shall be governed by all respects whether as
to validity, construction, capacity, performance or otherwise, by the laws
of
the State of New Jersey, except to the extent that Federal law shall be deemed
to apply.
10.Severability. The
provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.
11.Arbitration. Any
controversy or claim arising out of or relating to this Agreement, or the breach
thereof, shall be settled by arbitration in accordance with the rules then
in
effect of the district office of the American Arbitration Association ("AAA")
nearest to the home office of the Company, and judgment upon the award rendered
may be entered in any court having jurisdiction thereof, except to the extend
that the parties may otherwise reach a mutual settlement of such
issue. The Company shall reimburse Executive for all reasonable costs
and expenses, including reasonable attorneys' fees, arising from such dispute,
proceedings or actions, following the delivery of the decision of the arbitrator
that the Executive's claim has merit, whether or not the arbitrator finds in
favor of the Executive. The provisions of this Section 11 shall
survive the expiration of this Agreement occurring after a Change in
Control.
12.Non-Disclosure. Executive
will not, during or after the Term of this Agreement, directly or indirectly,
disseminate or disclose to any person, firm or entity, except to his or her
legal advisor, the terms of this Agreement without the written
consent of the Company.
13.Entire
Agreement. This Agreement together with any understanding or
modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement between the parties hereto, and shall supersede any prior
agreements or understandings with respect to the subject matter
herein.
