EXHIBIT 10.5
Non-Competition and Severance Agreement
This Non-Competition and Severance Agreement ("Agreement") is entered
into this 23rd day of February, 2001 ("Effective Date") by and among Sun
Bancorp, Inc. (the "Company") with its principal place of business headquartered
in Vineland, New Jersey, Sun National Bank ("Bank"), a national banking
organization having its principal place of business located in Vineland, New
Jersey and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III ("Employee").
WHEREAS, Employee has previously served the Company and the Bank as its
President, Chief Executive Officer and a Director, and Sun National Bank of
Delaware ("Delaware Bank") as an officer and director;
WHEREAS, the Company recognizes the specialized knowledge and expertise
of the Employee related to the business affairs of the Company, the Bank,
Delaware Bank, and other subsidiaries of the Company; and
WHEREAS, Employee and the Company desire to enter into such a
non-competition and severance agreement upon the terms and conditions
hereinafter contained;
NOW, THEREFORE, in consideration of the covenants and terms contained
in this Agreement as set forth herein and of the mutual benefits accruing to
Company, the Bank, the Delaware Bank and to Employee from the non-competition
and severance agreement between the parties as set forth by the terms of this
Agreement, Company, Bank and Employee agree as follows:
1. Resignation. This Agreement shall constitute written notice from the
Employee and acceptance by the Company, the Bank, the Delaware Bank and all
other subsidiaries of such entities that effective as of the Effective Date, the
Employee hereby irrevocably resigns as an officer and director of the Company,
the Bank, the Delaware Bank and all other subsidiaries of such entities
(collectively, the "Companies"). In addition, this Agreement shall constitute
written notice from the Employee and acceptance by the Companies that effective
as of November 30, 2001, the Employee hereby irrevocably resigns as an employee
of the Companies ("Termination Date").
2. Non-Competition and Confidential Business
During the period commencing on the Effective Date and ending as of
November 30, 2001;
(a) Employee will not, without the express written consent of the
Companies, 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 Employee
from the Companies, except that Employee may disclose such matters to the extent
that disclosure is required by a court or other governmental agency of competent
jurisdiction.
(b) Employee 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 Companies) any person, firm, association or corporation (A) to which the
Companies sold any product or service, (B) which Employee solicited, contacted
or otherwise dealt with on behalf of the Companies, or (C) which
Employee was otherwise aware was a client of the Companies. Employee 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.
(c) Employee 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 or
credit union) whereby the Employee will have a work location within 50 miles of
the home office of the Bank located in Vineland, New Jersey, or within 15 miles
of any office of the Companies existing as of the Effective Date.
(d) Employee 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 Companies, 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 Employee
directly or indirectly, on his behalf or for others, seek to influence any
employee of the Companies to leave the employ of the Companies.
(e) Employee will not make any public statements regarding the
Companies without the prior consent of the Companies, and the Employee shall not
make any statements that disparage the Companies or the business practices of
the Companies. The Company shall not knowingly or intentionally make any
statements that disparage the Employee.
(f) The Employee and the Companies acknowledge and agree that
irreparable injury will result to the parties in the event of a breach of any of
the provisions of this Section 2 (the "Designated Provisions") and that the
Employee and the Companies 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 Employee
or the Companies may have, the Employee or the Companies 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 either the Employee or the Companies, and the parties shall
submit to the jurisdiction of such court in any such action.
3. Compensation
a. Company agrees to pay Employee for his commitments and agreements
as contained herein, including Section 2 herein, the aggregate
compensation of $236,250 payable in the form of nine (9) equal
cash payments of $26,250 per month (less applicable tax
withholding) during the months of March 2001 through November
2001. The Company acknowledges that compliance by the Employee
with the conditions set forth at Section 2, herein, is an
essential component of this Agreement, and that such compliance
is necessary for the Company to obtain the full value of its
consideration paid under this Agreement. The parties agree that
Employee shall not be entitled to participate in or receive
benefits under any Company programs
Page -2-
maintained for its employees, except as specifically agreed to by
the parties. Further, as of the Effective Date, Employee hereby
waives any rights, claims and payments that may be due at any
time thereafter, if any, in accordance with the Change in Control
Severance Agreements between the Employee and the Bank and the
Employee and the Company, both dated June 22, 2000, and such
agreements shall be deemed terminated and of no further legal
force and effect as of the Effective Date.
b. The Company shall maintain the term life insurance policy in the
amount of $300,000 in the name of the Employee in effect as of
the Effective Date for the period ending as of December 31, 2001.
The Company shall permit the Employee to continue to use the
automobile (at Employee's own cost, except for lease and
insurance payments which shall be made by the Company) furnished
for the use of the Employee for a period of thirty days following
the Effective Date. The Employee shall continue to be eligible to
participate (on the same cost basis as other employees of the
Company) in the medical insurance reimbursement programs
maintained by the Bank through the Termination Date.
Notwithstanding anything herein to the contrary, thereafter, the
Employee shall be eligible to continue to participate in such
medical insurance reimbursement programs in accordance with
applicable law.
c. In addition to the payments referenced at Section 3(a), herein,
the Employee shall be paid the sum of $18,173, less applicable
tax withholding, for calendar year 2001vacation leave ($24,230
reduced by $6,057 for the five (5) days of vacation leave (one
week) paid for the period February 22, 2001 through February 28,
2001). Such payment shall be made not later than the Termination
Date.
d. Nothing contain in this Agreement shall be deemed to modify or
amend any previously awarded options to acquire common stock of
the Company held by the Employee. For purposes of determining the
Employee's right to exercise such options, the Employee shall be
deemed an employee of the Company through the Termination Date,
except in the event of the prior death of the Employee.
e. The compensation and benefits payable in accordance with this
Section 2 shall be payable to the estate of the Employee in the
event that such Employee shall die prior to the Termination Date,
absent a breach of the Agreement by the Employee prior to his
death.
4. Releases
(a) Employee hereby knowingly and voluntarily waives and releases the
Companies, and officers, directors, and employees of the Companies, from any and
all claims or causes of action, known or unknown, arising out of or in any way
relating to: 1)any wrongful discharge from the employ of the Companies, 2) any
rights or claims arising out of title VII of the Civil Rights Act of 1964, as
amended, 3)the Age Discrimination in Employment Act ("ADEA"), 4) the Americans
with Disabilities Act, or 5)any other federal, state or municipal
Page -3-
statute or ordinance relating to discrimination in employment (the
"Release"). However, Employee may pursue claims or institute legal
action to enforce the provisions of this Agreement.
(b) Employee further states that he has carefully read the foregoing,
has had sufficient opportunity to review and deliberate the foregoing with or
without counsel of Employee's own choosing, has been advised of the opportunity
to consult with an attorney, knows and understands the contents of this
Agreement and related Release, and signs the same as Employee's free and
independent act. No inducements, representations, or agreements have been made
or relied upon to make this Agreement except as stated in this Agreement.
(c) Employee understands and acknowledges that the Release and waiver
of claims contained herein is exchanged for a portion of the compensation
described at Section 3, herein, which compensation the Employee is not otherwise
entitled to receive.
(d) Employee understands that he has a period of seven (7) days from
the date of executing this Agreement during which time Employee shall have the
right to revoke this Agreement. Any such revocation shall be in writing and
delivered to the Chairman of the Board of the Company.
5. The Complete Agreement
This Agreement, and any attachments or exhibits appended hereto, shall represent
the complete Agreement between the Companies and Employee concerning the subject
matter hereof and supersedes all prior agreements or understandings, written or
oral. No attempted modification or waiver of any of the provisions hereof shall
be binding on either party unless made in writing and signed by both Employee
and the Companies.
6. Notices
Any notice required or permitted to be given hereunder shall be in writing and
shall be effective three business days after it is properly sent by registered
or certified mail, if to the Companies to the Chairman of the Board at the
administrative offices of the Company, or if to Employee to the address set
forth beneath his signature to this Agreement, or to such other address as
either party may from time to time designate by notice.
7. Assignability
This Agreement may not be assigned by any party without the prior written
consent of the other parties, except that no consent is necessary for the
Companies to assign this Agreement to a corporation succeeding to substantially
all the assets or business of the Companies whether by merger, consolidation,
acquisition or otherwise. This Agreement shall be binding upon Employee, his
heirs and permitted assigns and the Companies, its successors and permitted
assigns.
Page -4-
8. Severability
Each of the sections contained in this Agreement shall be enforceable
independently of every other section in this Agreement, and the invalidity or
nonenforceability of any section shall not invalidate or render nonenforceable
any other section contained herein. If any section or provision in a section is
found invalid or unenforceable, it is the intent of the parties that a court of
competent jurisdiction shall reform the section or provisions to produce its
nearest enforceable economic equivalent.
9. Arbitration
Except as provided at Section 2(f) herein, any controversy or claim arising out
of or relating to this Agreement or the breach thereof shall be settled by
binding arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association, with such arbitration hearing to be held at
the offices of the American Arbitration Association ("AAA") nearest to Vineland,
New Jersey, and judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof. Either the Employee or the
Company may file a request for such arbitration with the AAA.
10. Applicable Law
It is the intention of the parties hereto that all questions and interpretations
with respect to the construction and performance of this Agreement and the
rights and liabilities of the parties hereto shall be determined in accordance
with the laws of the State of New Jersey, with respect to any matter or thing
arising out of this Agreement or pursuant thereto.
