EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (this “Agreement”) made as of this ____1st___ day of
________September_____________, 2006__ by and between TRI-STATE INSURANCE
AGENCY, INC., a New Jersey corporation ("Employer"), and George B. Harper, an
individual residing at 16 Bevans Road, Layton, NJ 07851, (the "Executive").
W I T N E S S E T H:
WHEREAS, Employer is a subsidiary of Sussex Bank (“Sussex”);
 
WHEREAS, Executive has heretofore been employed by Employer pursuant to a
certain Employment Agreement dated the 28th day of September, 2001 (the "2001
Agreement");
 
WHEREAS, the parties wish to enter into this Agreement commencing on January 1,
2007 (the "Effective Date") in accordance with the terms and conditions as
contained herein;
 
WHEREAS, the parties agree to extend the employment of Executive by Employer
pursuant to the 2001 Agreement until December 31, 2006 (the "Extension Period");
 
NOW, THEREFORE, in consideration of the mutual promises and undertakings herein
contained, the parties hereto, intending to be legally bound, agree as follows:
 
1.     Extension of 2001 Employment Agreement.
 
Employer agrees to extend the 2001 Agreement from the 28th day of September,
2001 until December 31, 2006, according to the terms and conditions thereof with
the exception of Paragraph 3 (c) (the "Bonus") which terminates on September 28,
2006.
 
2.     Employment and Term.
 
(a) Employer hereby employs the Executive as the President of the Employer (the
"Position") and the Executive agrees to serve in the Position from and after
January 1, 2007 (the "Effective Date") for a term of three (3) years (the
"Term"), and which, subject to paragraph

 
 

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2(b), hereof, shall terminate on December 31, 2009, unless extended pursuant to
the terms hereof. Unless either Executive or Employer give written notice at
least twelve (12) months prior to the end of the Term of their intention not to
have this Agreement renew, this Agreement shall automatically renew for two
additional one (1) year terms (the “Additional Terms”) at the expiration of the
Term. For purposes of this Agreement, each Additional Term shall be considered
to be a part of the Term hereof.
 
(b) Employer shall have the right to terminate the Executive's employment
hereunder at any time during the Term; provided, however, that unless such
termination is for "cause", as defined below, Executive shall be entitled to
receive his Base Salary (as defined herein) and all insurance benefits provided
on the date of such termination for the remaining Term (without taking into
consideration any Additional Term(s) which have not already commenced). In
addition, in the event Executive’s employment is terminated without “cause”, for
the remaining Term of this Agreement (without taking into consideration any
Additional Term(s) which have not already commenced), Executive shall be
entitled to an annual payment equal to the commissions earned by Executive under
Section 4(b) hereof for the proceeding fiscal year. Such payments shall be made
in accordance with Employer's normal payroll practices. If such termination is
for "cause", Executive shall not be entitled to receive any compensation from
and after the date of such termination; provided, however, that Executive shall
be entitled to payments for periods, or partial periods, that occurred prior to
the date of termination and for which Executive has not yet been paid. For
purposes of this Agreement, "cause" means (i) the Executive's willful and
continued failure substantially to perform the duties of the Position, (ii)
fraud, misappropriation or other deliberate dishonesty of Executive with respect
to Employer's business or property, (iii) the Executive's plea of guilty to or
conviction of, or plea of nolo contendere to, any felony that, in the reasonable
judgment of the Board of Directors of Employer

 
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(the "Board"), adversely affects Employer's reputation or the Executive's
ability to perform his duties hereunder; or (iv) Executive's willful violation
of (A) any law, rule or regulation relating to the business of Employer and
Sussex, or (B) final cease-and-desist order issued by or regulatory consent
agreement with any regulatory agency having jurisdiction over the Employer
and/or Sussex.
 
(c) This Agreement shall terminate upon Executive's death or his disability, as
defined herein. Upon Executive's death or his disability, the obligation of
Employer hereunder to pay Executive the compensation called for under Section 4
hereof shall terminate, and Employer’s only obligation shall be to pay Executive
any and all benefits to which Executive was entitled at the time of such death
or disability under any benefit plans of Employer then in place. For purposes of
this Agreement, the term "disability" shall mean Executive's inability to
substantially perform his material duties as prescribed in this Agreement due to
his incapacity or disability, physical or mental, for a period of six (6)
consecutive months.
 
3.     Duties.
 
(a) Subject to the ultimate reasonable control and discretion of the Board of
Directors of Employer, the Executive shall serve in the position and perform all
the duties and services as President of the Employer. The duties of the
President shall include the following: assume the day to day management of
Employer, new business production and renewals resulting from Sussex referrals;
the supervision of the Employer staff and participation with Sussex officers and
staff in implementing a Sussex specific sales culture; tracking cross-selling
system (the BVS cross-selling program), including review and reporting of
monthly results; solicit and prospect potential agency acquisitions; actively
solicit new commission sources; continue maintaining accounts gained by the
Garrera Agency acquisition as a duty without commission compensation for
accounts existing as of the date hereof; negotiate and recommend to the Board of
Directors of

 
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Employer the annual renewal of Employer's Errors and Omissions Policy; assist
the Employer's Board of Directors in the annual review and update of the
Employer Strategic Plan including management continuity; and the continuing
sales production of commercial, personal, life and health insurance products of
Employer including obtaining and retaining the necessary licenses required by
Employer.
 
(b) The Executive shall devote all of the Executive's professional time and
attention to the performance of the Executive's duties hereunder and, during the
term of the Executive's employment hereunder, shall not engage in any other
business enterprise which, in the reasonable, good faith opinion of the Board,
interferes with Executive’s performance of the duties set forth in subparagraph
(a) above. The foregoing shall not prevent the Executive's purchase, ownership
or sale of investment securities or of any interest in, any business which
competes with the business of Employer, provided that such ownership or
investment constitutes not more than five percent 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, or the
Executive's involvement in charitable or community activities, provided that the
time and attention which the Executive devotes to such activities does not
materially interfere with the performance of the Executive's duties hereunder.
 
4.     Compensation pursuant to this Agreement
 
(a) For all services to be rendered by the Executive under this Agreement,
Employer agrees to pay the Executive a salary of $50,000 annually, to be paid in
bi-weekly installments (the “Base Salary”), said Base Salary to be adjusted
annually on January 1st for applicable CPI increases;
 
(b) In addition to the Compensation provided for under subsection (a), Executive
shall be entitled to receive commissions produced by Executive after January 1,
2007 in

 
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accordance with Schedule A which schedule may be adjusted by mutual consent as
deemed necessary by the parties based upon business decisions related to market
conditions, staff changes and the like. Said commissions to be paid quarterly to
Executive by the 30th day of the following month (i.e. January 1st through March
31st shall be paid by April 30th, April 1st through June 30th shall be paid by
July 30th; July 1st through September 30th shall be paid by October 30th, and
October 1st through December 31st shall be paid by January 30th.).
 
(c) In addition to the Compensation provided for under subsections (a) and (b),
Executive shall be entitled to participate in those employee benefit plans
generally made available to executive officers of Sussex .
 
(d) The parties acknowledge and agree that Executive's compensation shall be
reviewed each year during the term of this agreement, said review to commence no
later than September 1st of each year of the term hereof.
 
5.     Additional Covenants.
 
(a) Confidential Information. Except as required in the performance of his
duties hereunder, the Executive shall not use or disclose to any third party any
Confidential Information (as hereinafter defined) or any know-how or experience
related thereto without the express prior written authorization of the Bank,
either during the term of this Agreement or thereafter. Upon termination of his
employment, the Executive shall leave with Employer all documents and other
items in his possession which contain Confidential Information, and shall be
prohibited from disclosing to any third party any Confidential Information. For
purposes of this Section 6(a), the term "Confidential Information" shall mean
all information about Employer and Sussex or relating to any of their respective
services or any phase of their respective operations not generally known to any
of their competitors and which is treated by Employer and Sussex as

 
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confidential information, and shall specifically include all customer lists of
Employer and Sussex.
 
The term “Confidential Information” shall not include any of the foregoing which
(i) is in the public domain, (ii) is in Executive’s lawful possession prior to a
disclosure thereof and not subject to a confidentiality agreement or (iii) is
hereafter lawfully disclosed to Executive by a third party who or which did not
acquire the information under an obligation of confidentiality to Employer.
 
(b) Non-Solicitation
 

   
Executive agrees that for a period of six (6) months following the termination
of this Agreement, he will not recruit for employment or induce to terminate his
or her employment with Employer and Sussex any person who is, at the time of
such solicitation, or who was within thirty (30) days of such solicitation, an
employee of Employer and/or Sussex.

(c) Non-Piracy
 

   
Executive agrees that for a period of six (6) months following the termination
of this Agreement, he will not directly or indirectly solicit, cause any other
person to solicit, or assist any other person with soliciting any customer,
clients being quoted or customers of Employer and/or Sussex.

(d) Modification. If a court of competent jurisdiction determines that the
scope, time duration or other limitations of any of the restrictive covenants
contained in this Section 5 are not reasonably necessary to protect the
legitimate business interests of Employer and Sussex, then such scope, time
duration or other limitations will be deemed to become and thereafter will be
the maximum time period or scope which such court deems reasonable and
enforceable. 
 
(e) Definitions. For purposes of this Section 5, to act "directly or indirectly"
means to act personally or through an associate, affiliate, family member or
otherwise, as proprietor, partner, shareholder, director, officer, employee,
agent, consultant or in any other capacity or manner whatsoever.

 
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(f) Specific Performance. Employer and the Executive agree that in the event of
a breach of the provisions of this Section 5, the injury which would be suffered
by Employer and Sussex would be of a character which could not be fully
compensated for solely by a recovery of monetary damages. Accordingly, Executive
agrees that in the event of a breach of the terms of this Section 5, in addition
to and not in lieu of any other remedies which Employer may pursue, Employer
shall have the right to equitable relief, including issuance of a temporary or
permanent injunction by any court of competent jurisdiction against the
commission or continuance of any breach of this Section 5.
 
6.     Notices.
 
Any and all notices, demands or requests required or permitted to be given under
this Agreement shall be given in writing and sent, (i) by registered or
certified U.S. mail, return receipt requested, (ii) by hand, (iii) by overnight
courier or (iv) by telecopier addressed to the parties hereto at their addresses
set forth above or such other addresses as they may from time-to-time designate
by written notice, given in accordance with the terms of this Section, together
with copies thereof as follows:
 
In the case of Executive, with a copy to:
 
Tri-State Insurance Agency
96 Highway 206
Augusta, New Jersey 07822
Telecopier No. (973) 579-0111
Attention: George Harper

In the case of Employer, with a copy to:
 
Windels Marx Lane & Mittendorf, LLP
120 Albany Street, 6th Floor
New Brunswick, New Jersey 08901
Telecopier No. (732) 846-8877
Attention: Robert A. Schwartz

 
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Notice given as provided in this Section shall be deemed effective: (i) on the
date hand delivered, (ii) on the first business day following the sending
thereof by overnight courier, (iii) on the seventh calendar day (or, if it is
not a business day, then the next succeeding business day thereafter) after the
depositing thereof into the exclusive custody of the U.S. Postal Service or (iv)
on the date telecopied.
 
7.     Assignability.
 
The services of the Executive hereunder are personal in nature, and neither this
Agreement nor the rights or obligations of Executive hereunder may be assigned,
whether by operation of law or otherwise. This Agreement shall be binding upon,
and inure to the benefit of, Employer and its Successors and assigns. This
Agreement shall inure to the benefit of the Executive's heirs, executors,
administrators and other legal representatives.
 
8.     Waiver.
 
The waiver by Employer or the Executive of a breach of any provision of this
Agreement by the other shall not operate or be construed as a waiver of any
subsequent or other breach hereof.
 
9.     Applicable Law.
 
This Agreement shall be governed by and construed in accordance with the laws of
the State of New Jersey without giving effect to principles of conflict of laws.
 
10.    Entire Agreement.
 
This Agreement contains the entire agreement of the parties hereto with respect
to the subject matter hereof and may not be amended, waived, changed, modified
or discharged, except by an agreement in writing signed by the parties hereto.
 
11.    Counterparts.
 

 
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This Employment Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which taken together shall
constitute one and the same instrument.
 
12.      Amendment.
 
This Employment Agreement may be modified or amended only by an amendment in
writing signed by both parties.
 
13.      Severability.
 
If any provision of this Employment Agreement shall be held invalid or
unenforceable, such invalidity or unenforceability shall attach only to such
provision, only to the extent it is invalid or unenforceable, and shall not in
any manner affect or render invalid or unenforceable any other severable
provision of this Agreement, and this Agreement shall be carried out as if any
such invalid or unenforceable provision were not contained herein.
 
14.      Section Headings. 
 
The headings contained in this Agreement are solely for convenience of reference
and shall be given no effect in the construction or interpretation of this
Employment Agreement.
 
15.      Fees and Expenses.
 
If any party to this Employment Agreement institutes any action or proceeding to
enforce this Employment Agreement, the prevailing party in such action or
proceeding shall be entitled to recover from the non-prevailing party all legal
costs and expenses incurred by the prevailing party in such action, including,
but not limited to, reasonable attorneys’ fees and other reasonable legal costs
and expenses.
 
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under their
respective hands and seals as of the day and year first above written.
 
 
 
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ATTEST:
 
TRI-STATE INSURANCE AGENCY, INC.
                   
By:
     
 
DONALD L. KOVACH, CHAIRMAN
               
WITNESS:
 
EXECUTIVE:
                   
 
   
GEORGE B. HARPER

 
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Schedule A

PERCENTAGE OF AGENCY COMMISSIONS TO BE PAID TO EXECUTIVE
FROM AND AFTER JANUARY 1, 2007

Agency Commissions received from Property and Casualty sales produced by
Executive excluding Bank Referred Personal Lines unless related to a major
commercial account
Executive Commissions Including Sussex Bank Referral Produced
Exclusively by Executive
 
 
 
 
New Business
Renewals
$75,000 or less
50%
35.0%
$75,000-$100,000
55%
35.0%
$100,000-$125,000
60%
35.0%
$125,000-$150,000
65%
35.0%
$150,000-$175,000
70%
35.0%
$175,000-$200,000
75%
35.0%
$200,000-$250,000
75%
35.0%
Over $250,000
75%
35.0%

 

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Agency commission resulting from sales by Executive of Life Insurance:

50% of agency commission.

 
 
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Schedule B

Present and continuing outside activities and business interests:

George Lista & George Harper combined:

 
·
TSI Leasing, Inc. - Small Auto & Equipment Leasing Company

 
·
Harlis Company, Inc. - Bermuda Re-Insurance Rent-A-Captive

George Harper Only:

 
·
Harper Farms, Inc. - Farming & Real Estate & Development Company

 
·
Harper Partners - Real Estate & Development Company

 
·
Chairman of Sussex County Crimestoppers

 
·
Treasurer of Robert Untig for Sheriff Campaign

 
·
Councilman/Mayor of Sandyston Township

 
·
Sussex County Committee - Republican

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