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EMPLOYMENT AGREEMENT

Employment Agreement (the "Employment Agreement") made as of this 20th day of
February, 2008 and effective as of January 23, 2008 (the "Effective Date) is by
and between TERRY THOMPSON, an individual residing at 36 Beacon Hill, Sparta,
New Jersey 07871 (the "Employee"), SUSSEX BANK, a state chartered bank with its
principal place of business located at 399 State Highway 23, Franklin, New
Jersey 07416 (the “Employer”), and SUSSEX BANCORP, a New Jersey corporation with
its principal place of business located at 399 State Highway 23, Franklin, New
Jersey 07416 (the "Company").
 
WHEREAS, the Board of Directors of the Employer and the Board of Directors of
the Company have each determined that it is in the best interests of each of the
Employer and the Company to enter into this Agreement with Employee, and each
respective Board has authorized the Employer and the Company to enter into this
Agreement;
 
WHEREAS, the Employee agrees to be employed pursuant to the terms and conditions
of this Agreement;
 
NOW, THEREFORE, in consideration of the premises and covenants contained herein,
and with the intent to be legally bound hereby, the parties hereto hereby agree
as follows:
 
1.           Employment.  The Employer agrees to employ the Employee, and the
Employee hereby accepts such employment, upon the terms and conditions set forth
herein.
 
2.           Position and Duties.  The Employee shall be employed as President
and the Chief Operating Officer of the Employer, to perform such services in
that capacity as are usual and customary for comparable institutions and as
shall from time-to-time be established by the Chief Executive Officer and the
Board of Directors of the Employer.  Employee agrees that he will devote his
full business time and efforts to his duties hereunder.
 
3.           Cash Compensation.  Employer shall pay to the Employee compensation
for his services as follows:
 
(a)           Base Salary.  The Employee shall be entitled to receive,
commencing upon the date of this Agreement, an annual base salary (the "Base
Salary") of $140,343, which shall be payable in installments in accordance with
Employer's usual payroll method.  Annually thereafter, on or prior to the
anniversary date of this Agreement, the Chief Executive Officer and

 
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Board of Directors shall review the Employee's performance, the status of
Employer and such other factors as the Board of Directors or a committee thereof
shall deem appropriate and shall adjust the Base Salary accordingly. Employee
acknowledges that his Base Salary hereunder may be adjusted upward or downward;
provided, however, that in no event will his Base Salary be adjusted downward
below the minimum base salary established by the Employer as part of its regular
annual employee review process for employees having the same grade as Employee.
 
(b)           Discretionary Bonus.  Employee may be entitled to receive annually
at the discretion of the Board of Directors or a committee thereof a cash bonus.
 
4.           Other Benefits; Fringe Benefits.  The Employee shall be entitled to
the exclusive and unlimited use of an automobile or a cash allowance to be used
for the purpose of maintaining an automobile of a type and style commensurate
with the Employee's status as President of the Employer.  In addition, the
Employee shall be entitled to receive hospital, health, medical, and life
insurance of a type currently provided to and enjoyed by other senior officers
of Employer, and shall be entitled to participate in any other employee benefit
or retirement plans offered by Employer to its employees generally or to its
senior management.
 
5.           Term.   The term of this Agreement shall be three (3) years,
commencing on the date hereof and continuing until the third anniversary of the
date hereof; provided, however, that the term of this Agreement shall
automatically renew for one (1) additional year on the third anniversary  hereof
unless, at least three (3) months prior to such anniversary date, either
Employer or Employee shall have provided the other with written notice of their
intention not to extend the term of this Agreement; further provided, however,
that in the event the term of this Agreement is so extended, it shall also
automatically renew for one (1) additional year on the fourth
anniversary  hereof unless, at least three (3) months prior to such anniversary
date, either Employer or Employee shall have provided the other with written
notice of their intention not to further extend the term of this Agreement.
 
6.           Termination.  Employee may be terminated at any time, without
prejudice to Employee's right to compensation or benefits as provided
herein.  Employee's rights upon a termination shall be as follows:
 
(a)           Cause.  As used in this Agreement, the term "Cause" shall mean the
Employee's personal dishonesty, willful misconduct, breach of fiduciary duty
involving personal

 
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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, or a material breach of any provision of this
Agreement.  Notwithstanding the above, the Employee shall not be deemed to have
been terminated for cause unless and until there shall have been delivered to
him a copy of a resolution duly adopted by the affirmative vote of not less than
three-fourths of the members of the Board of Directors of the Employer at a
meeting of its Board called and held for that purpose (after reasonable notice
to the Employee and an opportunity for him, together with counsel, to be heard
before such Board of Directors), finding that in the good faith opinion of the
Board of Directors, the Employee was guilty of conduct justifying termination
for cause and specifying the particulars thereof in detail; provided, however,
that nothing contained herein shall prohibit Employee from being suspended from
his duties hereunder by a duly authorized agent of the Board upon a good faith
determination that "cause" exists.  Such suspension shall last until such time
as the Board meeting provided for above shall have occurred, provided that such
Board meeting shall occur within a reasonable period of time.  During such
suspension Employee shall continue to be an employee, entitled to all salary and
benefits provided for hereunder.
 
(b)           Termination With Cause.  Employer shall have the right to
terminate the Employee for "cause", upon written notice to him of such
determination, specifying the alleged "cause".  In the event of such
termination, the Employee shall not be entitled to any further benefits under
this Agreement.
 
(c)           Termination Without Cause.   Upon a termination of Employee's
employment hereunder without "cause", Employee shall be entitled to receive his
then current base salary for the remaining term of this Agreement.  Such
payments may be made over the remaining term of this Agreement in periodic
payments in the same manner in which the Employee's salary was paid through the
time of such termination, or by a lump sum payment of the discounted present
value of all base salary payments through the remaining term of this
Agreement.  The determination of the method of payment shall be made mutually by
Employer and the Employee; provided, however, that in the event the parties
cannot agree on the method of payment, Employer shall be entitled to choose.  In
addition, Employer shall continue to provide the Employee with hospital, health,
medical and life insurance, and any other like benefits in

 
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effect at the time of such termination through the end of the term of this
Agreement.  The Employee shall have no duty to mitigate damages in connection
with his termination by Employer without "cause".  However, if the Employee
obtains new employment and such new employment provides for hospital, health,
medical and life insurance, and other benefits, in a manner substantially
similar to the benefits payable by Employer hereunder, Employer may permanently
terminate the duplicative benefits it is obligated to provide hereunder.
 
(d)           Suspension and Special Regulatory Rules.
 
(i)           If the Employee is suspended and/or temporarily prohibited from
participating in the conduct of the affairs of the Employer by a notice served
under Section 8(e)(3) or Section 8(g)(1) of the Federal Deposit Insurance Act
("FDI Act"), Employer's obligations under this Agreement shall be suspended as
of the date of service, unless stayed by appropriate proceedings.
 
(ii)           If the Employee is removed and/or permanently prohibited from
participating in the conduct of the affairs of the Employer by an order issued
under Section 8(e) or Section 8(g)(1) of the FDI Act, all obligations of
Employer under this Agreement shall terminate as of the effective date of the
order and the Employee shall not be entitled to received the payments provided
for under Paragraph (c) above.
 
(iii)           If the Employer is in default, as defined in Section 3(x)(1) of
the FDI Act, all obligations of Employer under this Agreement shall terminate as
of the date of default.
 
7.           Resignation for Cause.  During the term of this Agreement, the
Employee shall be entitled to resign from his employment with Employer, and
receive the payments provided for below, in the event that the Employee is not
in breach of this Agreement and Employer (i) reassigns the Employee to a
position of lesser rank or status than President, or (ii) reduces the Employee's
compensation or other benefits below the amounts provided for under Sections 3
and 4 hereof.  Upon the occurrence of any of these events, the Employee shall
have thirty days to provide Employer notice of his intention to terminate this
Agreement.  In the event the Employee elects to so terminate this Agreement,
such termination shall be treated as a termination without "cause" by Employer
under Section 6(c) hereof, and the Employee shall be entitled to receive all
payments and other benefits called for under such Section 6(c).

 
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8.           Change in Control.
 
(a)           Upon the occurrence of a Change in Control (as herein defined)
followed at any time during the term of this Agreement by the involuntary
termination of the Employee's employment other than for "cause", as defined in
Section 6(a) hereof, or, as provided below the voluntary termination of the
Employee within eighteen (18) months of such Change in Control, Employee shall
become entitled to receive the payments provided for under paragraph (c)
below.  Upon the occurrence of a Change in Control, the Employee shall have the
right to elect to voluntarily terminate his employment within eighteen (18)
months of such Change in Control following any demotion, loss of title, office
of significantly authority, reduction in his annual compensation or benefits, or
relocation of his principal place of employment by more than thirty (30) miles
from its location immediately prior to the Change in Control.
 
(b)           A "Change in Control" shall mean:
 
 
(i)
a reorganization, merger, consolidation or sale of all or substantially all of
the assets of the Company, or a similar transaction, in which the shareholders
of the Company prior to such transaction hold less than a majority of the voting
power of the resulting entity;

 
(ii)
individuals who constitute the Incumbent Board (as herein defined) of the
Company cease for any reason to constitute a majority thereof;

 
(iii)
an event of a nature that would be required to be reported in response to Item I
of the current report on Form 8-K, as in effect on the date hereof, pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act")
if Employer were a reporting company subject to the Exchange Act; or

 
(iv)
Without limitation, a change in control shall be deemed to have occurred at such
time as any "person" (as the term is used in Section 13(d) and 14(d) of the
Exchange Act) other than the Company or the Employer or the trustees or any
administration of any employee stock ownership plan and trust, or any other
employee benefit plans, established by the Company or the Employer from
time-to-time in is or becomes a "beneficial owner" (as defined in Rule 13-d
under the Exchange Act) directly or indirectly, of securities of the Employer
representing 25% or more of the Company’s outstanding securities ordinarily
having the right to vote at the election of directors (the “Trigger Amount”);

 
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provided, however, that in the event any such person acquires the Trigger Amount
in a transaction (i) which has been approved in advance by the Incumbent Board
and (ii) which does not result in such person controlling a majority  of the
voting power of the full Board of Directors of the Company, then any such
transaction shall not be deemed a Change in Control under this subsection (iv);
or

 
(v)
A tender offer is made for 25% or more of the voting securities of the Company
and the shareholder owning beneficially or of record 25% or more of the
outstanding securities of the Company have tendered or offered to sell their
shares pursuant to such tender and such tendered shares have been accepted by
the tender offeror.

For these purposes, "Incumbent Board" means the Board of Directors of the
Company on the date hereof, provided that any person becoming a director
subsequent to the date hereof whose election was approved by a voting of at
least three-quarters of the directors comprising the Incumbent Board, or whose
nomination for election by members or stockholders was approved by the same
nominating committee serving under an Incumbent Board, shall be considered as
though he were a member of the Incumbent Board.
 
(c)           In the event the conditions of Section (a) above are satisfied,
Employee shall be entitled to receive a lump sum payment equal to 2.99 times
Employee's then current Base Salary; provided, however, that in no event shall
any payments provided for hereunder constitute an "excess parachute payment"
under Section 280G of the Internal Revenue Code of 1986, as amended or any
successor thereto, and in order to avoid such a result the benefits provided for
hereunder will be reduced, if necessary, to an amount which is One Dollar
($1.00) less than an amount equal to three (3) times Employee's "base amount" as
determined in accordance with such Section 280G.  In addition to the foregoing,
Employee shall be entitled to receive from Employer, or its successor, hospital,
health, medical and life insurance on the terms and at the cost to Employee as
Employee was receiving such benefits upon the date of his
termination.  Employer's obligation to continue such insurance benefits will be
for a period of three (3) years.
 
9.           Covenant Not to Compete.  Employee agrees that during the term of
his employment hereunder and for a period of one (1) year after the termination
of his employment, he will not in any way, directly or indirectly, manage,
operate, control, accept employment or a consulting position with or otherwise
advise or assist or be connected with or own or have any

 
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other interest in or right with respect to (other than through ownership of not
more than five percent (5%) of the outstanding shares of a corporation whose
stock is listed on a national securities exchange or on the National Association
of Securities Dealers Automated Quotation System) any enterprise which competes
with the Company in the financial services business  in the counties in which
the Company conducts its business on the date of Employee's termination.  In the
event that this covenant not to compete shall be found by a court of competent
jurisdiction to be invalid or unenforceable as against public policy, such court
shall exercise discretion in reforming such covenant to the end that Employee
shall be subject to a covenant not to compete that is reasonable under the
circumstances and enforceable by the Company.  Employee agrees to be bound by
any such modified covenant not to compete.
 
10.           Miscellaneous.
 
(a)           Governing Law.  In the absence of controlling Federal law, this
Agreement shall be governed by and interpreted under the substantive law of the
State of New Jersey.
 
(b)           Severability.  If any provision of this Agreement shall be held to
be invalid, void, or unenforceable, the remaining provisions hereof shall in no
way be affected or impaired, and such remaining provisions shall remain in full
force and effect.
 
(c)           Entire Agreement; Amendment.  This Agreement sets for the entire
understanding of the parties with regarding to the subject matter contained
herein and supersedes any and all prior agreements, arrangements or
understandings relating to the subject matter hereof and may only be amended by
written agreement signed by both parties hereto or their duly authorized
representatives.
 
   (d)           Successors and Assigns.  This Agreement shall be binding upon
and become the legal obligation of the successors and assigns of Employer.
 
[this space left intentionally blank; signature for Employment Agreement on next
page]

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

 
SUSSEX BANK
             
By:
     
Name:   Donald L. Kovach
   
Title:     Chief Executive Officer
             
EMPLOYEE:
             
Name:   Terry Thompson

Sussex Bancorp guarantees the payments described in paragraphs 4(b), 6(c), 7 &
8(c) of this Agreement and executes this Agreement solely for that purpose.

 
SUSSEX BANCORP
             
By:
     
Name:  Donald L. Kovach
   
Title:    President and Chief Executive Officer

 
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