Exhibit 10
 
 
SUSSEX BANCORP/SUSSEX BANK
DIRECTOR DEFERRED COMPENSATION AGREEMENT

THIS DIRECTOR DEFERRED COMPENSATION AGREEMENT (the “Agreement”) is adopted this
19th day of June, 2006, by and between SUSSEX BANCORP, a New Jersey bank holding
company (the “Company”), SUSSEX BANK, a state-chartered commercial bank located
in Franklin, New Jersey (the “Bank”) and ____________________ (the “Director”).

The purpose of this Agreement is to provide specified benefits to the Director
who contributes to the continued growth, development and future business success
of the Company and/or the Bank.

Article 1
Definitions

Whenever used in this Agreement, the following words and phrases shall have the
meanings specified:

1.1
“Beneficiary” means each designated person, or the estate of a deceased
Director, entitled to benefits, if any, upon the death of the Director
determined pursuant to Article 6.

1.2
“Beneficiary Designation Form” means the form established from time to time by
the Plan Administrator that the Director completes, signs and returns to the
Plan Administrator to designate one or more beneficiaries.

1.3
“Board” means the Board of Directors of the Company and/or the Bank as from time
to time constituted.

1.4
“Change in Control” means a change in the ownership or effective control of the
Company and/or the Bank, or in the ownership of a substantial portion of the
assets of the Company and/or the Bank, as such change is defined in Section 409A
of the Code and regulations thereunder.

1.5
“Code” means the Internal Revenue Code of 1986, as amended.

1.6
“Crediting Rate” means a rate equal to the average interest rate earned by the
Bank on its investment portfolio.

1.7
“Deferrals” means the amount of the Director’s Compensation which the Director
elects to defer according to this Agreement.

1.8
“Deferral Account” means the Company and/or the Bank’s accounting of the
Director’s accumulated Deferrals, plus accrued interest.

1

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

1.9    “Deferral Election Form” means the form established from time to time by
the Plan Administrator that the Director completes, signs and returns to the
Plan Administrator to designate the amount of the Deferrals.

1.10
“Disability” means Director: (i) is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a
continuous period of not less than twelve (12) months; or (ii) is, by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or can be expected to last for a continuous period of not
less than twelve (12) months, receiving income replacement benefits for a period
of not less than three (3) months under an accident and health plan covering
directors of the Bank. Medical determination of Disability may be made by either
the Social Security Administration or by the provider of an accident or health
plan covering directors of the Bank. Upon the request of the Plan Administrator,
the Director must submit proof to the Plan Administrator of the Social Security
Administration’s or the provider’s determination.

1.11
“Early Termination” means Separation from Service before Normal Retirement Age
except when such Separation from Service occurs due to death, Disability, Change
in Control or Termination for Cause.

1.12
“Effective Date” means June_____, 2006.

1.13
“Fees” means the total fees payable to the Director during a Plan Year.

1.14
“Normal Retirement Age” means the Director attaining age 75

 
1.15
“Normal Retirement Date” means the later of Normal Retirement Age or Separation
from Service.

1.16
“Plan Administrator” means the plan administrator described in Article 8.

1.17
“Plan Year” means each twelve-month period commencing on January 1 and ending on
December 1 of each year, other than the initial Plan Year. The initial Plan Year
shall commence on the Effective Date of this Agreement and end on the following
December 31st.

1.18
“Separation from Service” means the termination of the Director’s service with
the Company and/or the Bank for reasons other than death or Disability. Whether
a Separation from Service takes place is determined based on the facts and
circumstances surrounding the termination of the Director’s service and whether
the Company and/or the Bank and the Director intended for the Director to
provide significant services for the Company and/or the Bank following such
termination.

2

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

  

1.19 “Specified Employee” means a key employee (as defined in Section 416(i) of
the Code without regard to paragraph 5 thereof) of the Company and/or the Bank
if any stock of the Company and/or the Bank is publicly traded on an established
securities market or otherwise.

   

1.20
“Termination for Cause” means a Separation from Service for:

 
(a)
Gross negligence or gross neglect of duties to the Company and/or the Bank; or

 
(b)
Conviction of a felony or of a gross misdemeanor involving moral turpitude in
connection with the Director’s service with the Company and/or the Bank; or

Fraud, disloyalty, dishonesty or willful violation of any law or significant
Company or Bank policy committed in connection with the Director's service.

1.21
“Unforeseeable Emergency” means a severe financial hardship to the Director
resulting from an illness or accident of the Director, the Director’s spouse, or
the Director’s dependent (as defined in Section 152(a) of the Code), loss of the
Director’s property due to casualty, or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the control of
the Director.

Article 2
Deferral Election

2.1
Elections Generally. The Director may annually file Fees Deferral Election
Form(s) with the Plan Administrator no later than the end of the Plan Year
preceding the Plan Year in which services leading to such Fees will be
performed;

2.2
Initial Election. After being notified by the Plan Administrator of becoming
eligible for participation in the Agreement, the Director may make an initial
deferral election under this Agreement by delivering to the Plan Administrator a
signed Deferral Election Form(s) and Beneficiary Designation Form within thirty
(30) days of becoming eligible. The Deferral Election Form(s) shall set forth
the amount of Fees to be deferred. However, if the Director was eligible to
participate in any other account balance plans sponsored by the Company or the
Bank (as referenced in Section 409A of the Code or the regulations thereunder)
prior to becoming eligible to participate in this Agreement, the initial
election to defer Fees under this Agreement shall not be effective until the
Plan Year following the Plan Year in which the Director became eligible to
participate in this Agreement.

Article 3
Deferral Account

3.1
Establishing and Crediting. The Bank shall establish a Deferral Account on its
books for the Director and shall credit to the Deferral Account the following
amounts:

 
(a)
Any Deferrals hereunder;

 
(b)
Interest as follows:

 
(i)
On the last day of each month and immediately prior to the distribution of any
benefits, but only until commencement of benefit distributions under

3

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

this Agreement, interest shall be credited on the Deferral Account at an annual
rate equal to the Crediting Rate, compounded monthly; and

 
(ii)
On the last day of each month during any applicable installment period, interest
shall be credited on the unpaid Deferral Account balance at an annual rate equal
to the Crediting Rate, compounded monthly.

3.2
Accounting Device Only. The Deferral Account is solely a device for measuring
amounts to be paid under this Agreement. The Deferral Account is not a trust
fund of any kind. The Director is a general unsecured creditor of the Company
and the Bank for the distribution of benefits. The benefits represent the mere
promise by the Company and/or the Bank to distribute such benefits. The
Director's rights are not subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by
the Director's creditors.

Article 4
Distributions During Lifetime

4.1
Normal Retirement Benefit. Upon the Normal Retirement Date, the Company and/or
the Bank, depending upon which Board the Director was a member of, shall
distribute to the Director the benefit described in this Section 4.1 in lieu of
any other benefit under this Article.

 
4.1.1
Amount of Benefit. The benefit under this Section 4.1 is the Deferral Account
balance at the Normal Retirement Date.

 
4.1.2
Distribution of Benefit. The annual benefit shall be distributed to the Director
in (12) equal monthly installments commencing on the first day of the month
following Separation from Service. The annual benefit shall be distributed to
the Director for ten (10) years.

4.2
Early Termination Benefit. Upon Early Termination, the Company and/or the Bank,
depending upon which Board the Director was a member of, shall distribute to the
Director the benefit described in this Section 4.2 in lieu of any other benefit
under this Article.

 
4.2.1
Amount of Benefit. The benefit under this Section 4.2 is the Deferral Account
balance determined as of the date of Separation from Service.

 
4.2.2
Distribution of Benefit. The annual benefit shall be distributed to the Director
in (12) equal monthly installments commencing on the first day of the month
following Separation from Service. The annual benefit shall be distributed to
the Director for ten (10) years.

4.3
Disability Benefit. If Director experiences a Disability which results in a
Separation from Service prior to Normal Retirement Age, the Company and/or the
Bank, depending upon

4

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

which Board the Director was a member of, shall distribute to the Director the
benefit described in this Section 4.3 in lieu of any other benefit under this
Article.

 
4.3.1
Amount of Benefit. The benefit under this Section 4.3 is the Deferral Account
balance determined as of the date of Separation from Service.

 
4.3.2
Distribution of Benefit. The annual benefit shall be distributed to the Director
in (12) equal monthly installments commencing on the first day of the month
following Normal Retirement Age.

4.4
Change in Control Benefit. Upon a Change in Control followed by a Separation
from Service, the Company and/or the Bank, depending upon which Board the
Director was a member of, shall distribute to the Director the benefit described
in this Section 4.4 in lieu of any other benefit under this Article.

 
4.4.1
Amount of Benefit. The benefit under this Section 4.4 is the Deferral Account
balance determined as of the date of Separation from Service.

 
4.4.2
Distribution of Benefit. The annual benefit shall be distributed to the Director
in (12) equal monthly installments commencing on the first day of the month
following Separation from Service. The annual benefit shall be distributed to
the Director for ten (10) years.

4.5
Restriction on Timing of Distribution.  Notwithstanding any provision of this
Agreement to the contrary, if the Director is considered a Specified Employee at
Separation from Service under such procedures as established by the Company
and/or the Bank in accordance with Section 409A of the Code, benefit
distributions that are made upon Separation from Service may not commence
earlier than six (6) months after the date of such Separation from Service.
Therefore, in the event this Section 4.5 is applicable to the Director, any
distribution which would otherwise be paid to the Director within the first six
months following the Separation from Service shall be accumulated and paid to
the Director in a lump sum on the first day of the seventh month following the
Separation from Service. All subsequent distributions shall be paid in the
manner specified.

4.6
Distributions Upon Income Inclusion Under Section 409A of the Code. Upon the
inclusion of any portion of the Deferral Account balance into the Director’s
income as a result of the failure of this non-qualified deferred compensation
plan to comply with the requirements of Section 409A of the Code, to the extent
such tax liability can be covered by the Deferral Account balance, a
distribution shall be made as soon as is administratively practicable following
the discovery of the plan failure.

4.7
Change in Form or Timing of Distributions. For distribution of benefits under
this Article 4, the Director may amend this Agreement to delay the timing or
change the form of distributions by submitting the appropriate Distribution
Election Form(s) to the Plan Administrator. Any such amendment:

5

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

(a)   may not accelerate the time or schedule of any distribution, except as
provided in Section 409A of the Code and the regulations thereunder;

 
(b)
must, for benefits distributable under Section 4.3, be made at least twelve (12)
months prior to the first scheduled distribution;

 
(c)
must, for benefits distributable under Sections 4.1, 4.2, 4.3 and 4.4, delay the
commencement of distributions for a minimum of five (5) years from the date the
first distribution was originally scheduled to be made; and

 
(d)
must take effect not less than twelve (12) months after the election is made.

4.8
Hardship Distribution. If an Unforeseeable Emergency occurs, the Director may
petition the Board to receive a distribution from the Agreement. The Board in
its sole discretion may grant such petition. If granted, the Director shall
receive, within sixty (60) days, a distribution from the Agreement (i) only to
the extent deemed necessary by the Board to remedy the Unforeseeable Emergency,
plus an amount necessary to pay taxes reasonably anticipated as a result of the
distribution; and (ii) after taking into account the extent to which such
hardship is or may be relieved through reimbursement or compensation by
insurance or otherwise or by liquidation of the Director’s assets (to the extent
the liquidation would not itself cause severe financial hardship). In any event,
the maximum amount which may be paid out pursuant to this Section 4.8 is the
Deferral Account balance as of the day that the Director petitioned the Board to
receive a Hardship Distribution under this Section.

Article 5
Distributions at Death

5.1
Death During Active Service. If the Director dies while in active service to the
Company and/or the Bank, the Company and/or the Bank shall distribute to the
Beneficiary the benefit described in this Section 5.1. This benefit shall be
distributed in lieu of the benefits under Article 4.

 
5.1.1
Amount of Benefit. The benefit under this Section 5.1 is the Deferral Account
balance determined as of the date of the Director’s death.

 
5.1.2
Distribution of Benefit. The annual benefit shall be distributed to the
Beneficiary in (12) equal monthly installments commencing on the first day of
the month commencing within thirty (30) days following receipt by the Company
and/or the Bank of the Director’s death certificate. The annual benefit shall be
distributed to the Beneficiary for ten (10) years.

5.2
Death During Distribution of a Benefit. If the Director dies after any benefit
distributions have commenced under this Agreement but before receiving all such
distributions, the remaining benefits shall be distributed to the Beneficiary by
the Bank and/or the Company, depending upon which Board the Director was a
member of, at the same time and in the same amounts that would have been
distributed to the Director had the Director survived.

6

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

5.3
Death After Separation from Service But Before Benefit Distributions Commence.
If the Director is entitled to benefit distributions under this Agreement, but
dies prior to the commencement of said benefit distributions, the Company and/or
the Bank shall distribute to the Beneficiary the same benefits that the Director
was entitled to prior to death except that the benefit distributions shall
commence within thirty (30) days following receipt by the Company and/or the
Bank of the Director’s death certificate.

Article 6
Beneficiaries

6.1
Beneficiary. The Director shall have the right, at any time, to designate a
Beneficiary(ies) to receive any benefits distributable under the Agreement to a
Beneficiary upon the death of the Director. The Beneficiary designated under
this Agreement may be the same as or different from the beneficiary designation
under any other plan of the Company and/or the Bank in which the Director
participates.

6.2
Beneficiary Designation: Change. The Directors shall designate a Beneficiary by
completing and signing the Beneficiary Designation Form, and delivering it to
the Plan Administrator or its designated agent. The Director's beneficiary
designation shall be deemed automatically revoked if the Beneficiary predeceases
the Director or if the Director names a spouse as Beneficiary and the marriage
is subsequently dissolved. The Director shall have the right to change a
Beneficiary by completing, signing and otherwise complying with the terms of the
Beneficiary Designation Form and the Plan Administrator’s rules and procedures,
as in effect from time to time. Upon the acceptance by the Plan Administrator of
a new Beneficiary Designation Form, all Beneficiary designations previously
filed shall be cancelled. The Plan Administrator shall be entitled to rely on
the last Beneficiary Designation Form filed by the Director and accepted by the
Plan Administrator prior to the Director’s death.

6.3
Acknowledgment. No designation or change in designation of a Beneficiary shall
be effective until received, accepted and acknowledged in writing by the Plan
Administrator or its designated agent.

6.4
No Beneficiary Designation. If the Director dies without a valid Beneficiary
designation, or if all designated Beneficiaries predecease the Director, then
the Director’s spouse shall be the designated Beneficiary. If the Director has
no surviving spouse, the benefits shall be paid to the personal representative
of the Director's estate.

6.5
Facility of Distribution. If the Plan Administrator determines in its discretion
that a benefit is to be paid to a minor, to a person declared incompetent, or to
a person incapable of handling the disposition of that person’s property, the
Plan Administrator may direct distribution of such benefit to the guardian,
legal representative or person having the care or custody of such minor,
incompetent person or incapable person. The Plan Administrator may require proof
of incompetence, minority or guardianship as it may deem appropriate prior to
distribution of the benefit. Any distribution of a benefit shall

7

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

be a distribution for the account of the Director and the Beneficiary, as the
case may be, and shall be a complete discharge of any liability under the
Agreement for such distribution amount.
 
Article 7
General Limitations

7.1
Termination for Cause. Notwithstanding any provision of this Agreement to the
contrary, the Company and/or the Bank shall not distribute any benefit under
this Agreement in excess of the Deferrals (i.e., Deferral Account minus interest
credited thereon) if the Director’s service with the Company and/or the Bank is
terminated due to a Termination for Cause.

7.2
Removal. Notwithstanding any provision of this Agreement to the contrary, the
Company and/or the Bank shall not distribute any benefit under this Agreement in
excess of the Deferrals (i.e., Deferral Account minus interest credited thereon)
if the Director is subject to a final removal or prohibition order issued by an
appropriate federal banking agency pursuant to Section 8(e) of the Federal
Deposit Insurance Act.

Article 8
Administration of Agreement

8.1   Plan Administrator Duties. This Agreement shall be administered by a Plan
Administrator which shall consist of the Board, or such committee or person(s)
as the Board shall appoint. The Plan Administrator shall administer this
Agreement according to its express terms and shall also have the discretion and
authority to (i) make, amend, interpret and enforce all appropriate rules and
regulations for the administra-tion of this Agreement and (ii) decide or resolve
any and all ques-tions including interpretations of this Agreement, as may arise
in connection with the Agreement to the extent the exercise of such discretion
and authority does not conflict with Section 409A of the Code and regulations
thereunder.

8.2   Agents. In the administration of this Agreement, the Plan Administrator
may employ agents and delegate to them such administrative duties as it sees
fit, (including acting through a duly appointed representative), and may from
time to time consult with counsel who may be counsel to the Company and/or the
Bank.

8.3   Binding Effect of Decisions. The decision or action of the Plan
Administrator with respect to any question arising out of or in connection with
the administration, interpretation and application of the Agreement and the
rules and regulations promulgated hereunder shall be final and conclusive and
binding upon all persons having any interest in the Agreement.

8

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

8.4
Indemnity of Plan Administrator. The Company and/or the Bank shall indemnify and
hold harmless the members of the Plan Administrator against any and all claims,
losses, damages, expenses or liabilities arising from any action or failure to
act with respect to this Agreement, except in the case of willful misconduct by
the Plan Administrator or any of its members.

8.5
Company and Bank Information. To enable the Plan Administrator to perform its
functions, the Company and the Bank shall supply full and timely information to
the Plan Administrator on all matters relating to the Compensation of its
Directors, the date and circum-stances of the retirement, Disability, death or
Separation from Service of its Directors, and such other pertinent information
as the Plan Administrator may reasonably require.

8.6
Statement of Accounts. The Plan Administrator shall provide to the Director,
within one hundred twenty (120) days after the end of each Plan Year, a
statement setting forth the Deferral Account balance.

Article 9
Claims and Review Procedures

9.1
Claims Procedure. The Director or Beneficiary (“claimant”) who has not received
benefits under the Agreement that he or she believes should be paid shall make a
claim for such benefits as follows:

 
9.1.1
Initiation - Written Claim. The claimant initiates a claim by submitting to the
Plan Administrator a written claim for the benefits. If such a claim relates to
the contents of a notice received by the claimant, the claim must be made within
sixty (60) days after such notice was received by the claimant. All other claims
must be made within 180 days of the date on which the event that caused the
claim to arise occurred. The claim must state with particularity the
determination desired by the claimant.

 
9.1.2
Timing of Company and/or Bank Response. The Plan Administrator shall respond to
such claimant within 90 days after receiving the claim. If the Plan
Administrator determines that special circumstances require additional time for
processing the claim, the Plan Administrator can extend the response period by
an additional 90 days by notifying the claimant in writing, prior to the end of
the initial 90-day period, that an additional period is required. The notice of
extension must set forth the special circumstances and the date by which the
Plan Administrator expects to render its decision.

 
9.1.3
Notice of Decision. If the Plan Administrator denies part or all of the claim,
the Plan Administrator shall notify the claimant in writing of such denial. The
Plan Administrator shall write the notification in a manner calculated to be
understood by the claimant. The notification shall set forth:

 
(a)
The specific reasons for the denial,

9

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

 
(b)
A reference to the specific provisions of the Agreement on which the denial is
based,

 
(c)
A description of any additional information or material necessary for the
claimant to perfect the claim and an explanation of why it is needed, and

 
(d)
An explanation of the Agreement’s review procedures and the time limits
applicable to such procedures.

9.2
Review Procedure. If the Plan Administrator denies part or all of the claim, the
claimant shall have the opportunity for a full and fair review by the Plan
Administrator of the denial, as follows:

 
9.2.1
Initiation - Written Request. To initiate the review, the claimant, within 60
days after receiving the Plan Administrator’s notice of denial, must file with
the Plan Administrator a written request for review.

 
9.2.2
Additional Submissions - Information Access. The claimant shall then have the
opportunity to submit written comments, documents, records and other information
relating to the claim. The Plan Administrator shall also provide the claimant,
upon request and free of charge, reasonable access to, and copies of, all
documents, records and other information relevant to the claimant’s claim for
benefits.

 
9.2.3
Considerations on Review. In considering the review, the Plan Administrator
shall take into account all materials and information the claimant submits
relating to the claim, without regard to whether such information was submitted
or considered in the initial benefit determination.

 
9.2.4
Timing of Plan Administrator Response. The Plan Administrator shall respond in
writing to such claimant within 60 days after receiving the request for review.
If the Plan Administrator determines that special circumstances require
additional time for processing the claim, the Plan Administrator can extend the
response period by an additional 60 days by notifying the claimant in writing,
prior to the end of the initial 60-day period, that an additional period is
required. The notice of extension must set forth the special circumstances and
the date by which the Plan Administrator expects to render its decision.

 
9.2.5
Notice of Decision. The Plan Administrator shall notify the claimant in writing
of its decision on review. The Plan Administrator shall write the notification
in a manner calculated to be understood by the claimant. The notification shall
set forth:

 
(a)
The specific reasons for the denial,

 
(b)
A reference to the specific provisions of the Agreement on which the denial is
based, and

 
(c)
A statement that the claimant is entitled to receive, upon request and free of
charge, reasonable access to, and copies of, all documents, records and other
information relevant to the claimant’s claim for benefits.

10

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

Article 10
Amendments and Termination

10.1
Amendments. This Agreement may be amended only by a written agreement signed by
the Company, the Bank and the Director. However, the Company and the Bank may
unilaterally amend this Agreement to conform with written directives to the
Company and/or the Bank from its auditors or banking regulators or to comply
with legislative changes or tax law, including without limitation Section 409A
of the Code and any and all Treasury regulations and guidance promulgated
thereunder.

10.2
Plan Termination Generally. This Agreement may be terminated only by a written
agreement signed by the Company, the Bank and the Director. Except as provided
in Section 10.3, the termination of this Agreement shall not cause a
distribution of benefits under this Agreement. Rather, upon such termination
benefit distributions will be made at the earliest distribution event permitted
under Article 4 or Article 5.

10.3
Plan Terminations Under Section 409A. Notwithstanding anything to the contrary
in Section 10.2, if the Company and the Bank terminates this Agreement in the
following circumstances:

 
(a)   Within thirty (30) days before, or twelve (12) months after a Change in
Control, provided that all distributions are made no later than twelve (12)
months following such termination of the Agreement and further provided that
all the Company’s and the Bank's arrangements which are substantially similar to
the Agreement are terminated so the Director and all participants in the
similar arrangements are required to receive all amounts of compensation
deferred under the terminated arrangements within twelve (12) months of the
termination of the arrangements;
(b)   Upon the Company’s and the Bank’s dissolution or with the approval of a
bankruptcy court provided that the amounts deferred under the Agreement are
included in the Director's gross income in the latest of (i) the calendar year
in which the Agreement terminates; (ii) the calendar year in which the amount is
no longer subject to a substantial risk of forfeiture; or (iii) the first
calendar year in which the distribution is administratively practical; or
(c)   Upon the Company’s and the Bank’s termination of this and all other
account balance plans (as referenced in Section 409A of the Code or the
regulations thereunder), provided that all distributions are made no earlier
than twelve (12) months and no later than twenty-four (24) months following such
termination, and the Company and/or the Bank does not adopt any new account
balance plans for a minimum of five (5) years following the date of such
termination;

the Company and/or the Bank may distribute the Deferral Account balance,
determined as of the date of the termination of the Agreement to the Director,
in a lump sum subject to the above terms.
 

11

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

Article 11
Miscellaneous

11.1
Binding Effect. This Agreement shall bind the Director and the Company and the
Bank and their beneficiaries, survivors, executors, administrators and
transferees.

11.2
No Guarantee of Service. This Agreement is not a contract for service. It does
not give the Director the right to remain as a director of the Company and/or
the Bank, nor does it interfere with the Company and/or the Bank's right to
discharge the Director. It also does not require the Director to remain a
director nor interfere with the Director's right to terminate service at any
time.

11.3
Non-Transferability. Benefits under this Agreement cannot be sold, transferred,
assigned, pledged, attached or encumbered in any manner.

11.4
Tax Withholding and Reporting. The Company and/or the Bank shall withhold any
taxes that are required to be withheld, including but not limited to taxes owed
under Section 409A of the Code and regulations thereunder, from the benefits
provided under this Agreement. The Director acknowledges that the Company and/or
the Bank’s sole liability regarding taxes is to forward any amounts withheld to
the appropriate taxing authority(ies). Further, the Company and/or the Bank
shall satisfy all applicable reporting requirements, including those under
Section 409A of the Code and regulations thereunder.

11.5
Applicable Law. The Agreement, and all rights hereunder shall be governed by the
laws of the State of New Jersey except to the extent preempted by the laws of
the United States of America.

11.6
Unfunded Arrangement. The Director and the Beneficiary are general unsecured
creditors of the Company and/or the Bank for the distribution of benefits under
this Agreement. The benefits represent the mere promise by the Company and/or
the Bank to distribute such benefits. The rights to benefits are not subject in
any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by creditors. Any insurance on the
Director's life or other informal funding asset is a general asset of the
Company and/or the Bank to which the Director and the Beneficiary have no
preferred or secured claim.

11.7
Reorganization. The Company and/or the Bank shall not merge or consolidate into
or with another bank, or reorganize, or sell substantially all of its assets to
another bank, firm, or person unless such succeeding or continuing bank, firm,
or person agrees to assume and discharge the obligations of the Company and/or
the Bank under this Agreement. Upon the occurrence of such event, the term
“Bank” as used in this Agreement shall be deemed to refer to the successor or
survivor bank.

12

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

11.8         Entire Agreement. This Agreement constitutes the entire agreement
between the Company and/or the Bank and the Director as to the subject matter
hereof. No rights are granted to the Director by virtue of this Agreement other
than those specifically set forth herein.

11.9
Interpretation. Wherever the fulfillment of the intent and purpose of this
Agreement requires, and the context will permit, the use of the masculine gender
includes the feminine and use of the singular includes the plural

11.10
Alternative Action. In the event it shall become impossible for the Company
and/or the Bank or the Plan Administrator to perform any act required by this
Agreement, the Company and/or the Bank or Plan Administrator may in its
discretion perform such alternative act as most nearly carries out the intent
and purpose of this Agreement and is in the best interests of the Company and/or
the Bank, provided that such alternative acts do not violate Section 409A of the
Code.

11.11
Headings. Article and section headings are for convenient reference only and
shall not control or affect the meaning or construction of any of its
provisions.

11.12
Validity. In case any provision of this Agreement shall be illegal or invalid
for any reason, said illegality or invalidity shall not affect the remaining
parts hereof, but this Agreement shall be construed and enforced as if such
illegal and invalid provision has never been inserted herein.

11.13
Notice. Any notice or filing required or permitted to be given to the Plan
Administrator under this Agreement shall be sufficient if in writing and
hand-delivered, or sent by registered or certified mail, to the address below:

       

 
Such notice shall be deemed given as of the date of delivery or, if delivery is
made by mail, as of the date shown on the postmark or the receipt for
registration or certification.
 
Any notice or filing required or permitted to be given to the Director under
this Agreement shall be sufficient if in writing and hand-delivered, or sent by
mail, to the last known address of the Director.

11.14
Compliance with Section 409A. This Agreement shall at all times be administered
and the provisions of this Agreement shall be interpreted consistent with the
requirements of Section 409A of the Code and any and all regulations thereunder,
including such regulations as may be promulgated after the Effective Date of
this Agreement.

13

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

IN WITNESS WHEREOF, the Director, the Company and the Bank have signed this
Agreement as of ______________, 2006

Director:
 
Bank:
         
SUSSEX BANK

   
By:
   
[Director]
           
Title:
   

   
Company:
         
SUSSEX BANCORP

 
By:
             
Title:
   

14

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

Fee Election

Amount of Deferral
Duration
 
[Initial and Complete One]
 
____  I elect to defer ______% of my Fees (amount not to exceed _____ %).
 
____  I elect to defer $______________ of my Fees (amount not to exceed
$______________).
 
____   I elect not to defer any of my Fees.
 
 
[Initial and Complete One]
 
____  For ____ year(s)
 
____  For all future Plan Years

Printed Name:
             
Signature:
     

Date:
     

 
Received by the Plan Administrator this ________ day of ___________________,
2______

By:
             
Title:
     

 

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

{ } New Designation 
{ } Change in Designation

I, ________________________________, designate the following as Beneficiary
under the Plan:

Primary:
___________________________________________________________
 
___________________________________________________________
 
_____%
 
_____%
Contingent:
___________________________________________________________
 
___________________________________________________________
 
_____%
 
_____%

Notes:

 
·
Please PRINT CLEARLY or TYPE the names of the beneficiaries.

 
·
To name a trust as Beneficiary, please provide the name of the trustee(s) and
the exact name and date of the trust agreement.

 
·
To name your estate as Beneficiary, please write “Estate of _[your name]_”.

 
·
Be aware that none of the contingent beneficiaries will receive anything unless
ALL of the primary beneficiaries predecease you.

I understand that I may change these beneficiary designations by delivering a
new written designation to the Plan Administrator, which shall be effective only
upon receipt and acknowledgment by the Plan Administrator prior to my death. I
further understand that the designations will be automatically revoked if the
Beneficiary predeceases me, or, if I have named my spouse as Beneficiary and our
marriage is subsequently dissolved.

Name:
     

Signature:
     
Date:
     

 
Received by the Plan Administrator this ________ day of ___________________,
2___

By:
             
Title: