Document:

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 Lista,
      an
      individual residing at 123 Holland Road, Wantage, NJ 07461, (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 Section 3 (c) (the "Bonus") which terminates
      on
      September 28, 2006.

     

    2.    Employment
      and Term.

     

    (a) Employer
      hereby employs the Executive as the Chief Executive Officer (“CEO”) 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 five (5) years
      (the "Term"), and which, subject to Section 2(b), hereof, shall terminate on
      December 31, 2011, 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 prior
      to
      the expiration of the Term hereof; 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 of this Agreement. In
      addition, to the extent such termination is without Cause, for the remaining
      term of this Agreement, 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 or that of Sussex, (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
      (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-

    
      
         

      

      
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    and-desist
      order issued by or regulatory consent agreement with any regulatory agency
      having jurisdiction over Employer 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. The determination of whether a disability exists will be
      made by the Board in its good faith discretion.

     

    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 CEO of the Employer. In such capacity, Executive shall have
      full
      authority over the day to day business operations of the Employer, shall have
      the authority to retain and terminate personnel, set compensation, determine
      the
      product lines offered by the Employer and insurance companies with whom Employer
      conducts business, establish and maintain competitive product lines by adding
      carriers, support negotiations in new agency acquisitions, hire new producers
      consistent with the annual budget requirements and policies of the Employer
      and
      Sussex, coordinate the regulatory compliance of the Employer under its industry
      specific rules and regulations, oversee the origination and maintenance of
      all
      records of activity on client accounts including reconciling and reporting
      activity for the books of original entry for all financial activities resulting
      from Employer's operation, sales of personal line and commercial
      line,

    
      
         

      

      
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    property
      and casualty, life, health and disability insurance policies; review and monitor
      claims, policy changes, and audits; collecting and processing direct payment
      premiums to the Employer and generally have the authority to manage the
      operations of the Employer as its CEO. The CEO shall report to the Sussex Chief
      Executive Officer and the Board.

     

    (b) In
      addition to the above defined duties, the Executive shall participate in the
      development of a cross-selling plan by and among Sussex, Employer and their
      affiliates and its implementation and execution in cooperation with Sussex
      executives, with direct responsibility for the cross-selling between loan
      officers and insurance producers and development of a program to monitor
      specific sales goals and objectives.

     

    (c) 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.

    

    

    
      
         

      

      
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    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 $140,000 annually, to be paid in bi-weekly
      installments (the “Base Salary”), said base salary to be adjusted annually on
      January 1st
      for
      applicable CPI increase;

     

    (b) In
      addition to the compensation provided for under subparagraph (a) hereof,
      Executive shall be entitled to receive personal commissions on the sale of
      insurance products actually placed by Executive as the agent of record of 40%
      of
      the gross commissions earned by Employer on such sales.

     

    (c) In
      addition to the compensation provided for under subsections (a) and (b) hereof,
      Executive shall be entitled to a bonus (the “Bonus”) as a participant in the
      Sussex Executive Incentive and Deferred Compensation Plan (the “Plan”), as it
      may be amended from time to time. Executive's participation in such plan will
      commence as of January 1, 2007, and Executive shall execute such plan agreements
      as may be necessary to evidence his participation on such plan. Executive’s
      initial bonus calculation formula shall be as set forth on Exhibit B hereto,
      although Executive acknowledges that pursuant to the Plan, the Plan
      Administrators and the Compensation Committee of Sussex Bancorp have authority
      to alter the terms of the Plan. 

     

    (d) In
      addition to the compensation provided for under subsections (a), (b) and (c),
      Executive shall be entitled to participate in those employee benefit plans
      generally made available to executive officers of Sussex and its
      Parent.

     

    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 Sussex, 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

    
      
         

      

      
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    this
      Section 5(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 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-Compete.
      Executive hereby agrees that for the Covenant Term (as defined below), he will
      not work for any entity which is engaged in competition with Employer and Sussex
      during the Term of this Agreement and as of the date of its termination nor
      himself so engage during such Covenant Term, directly or indirectly, as
      principal, agent, partner, shareholder, consultant, or employee, in any such
      business in competition with Employer and Sussex during the Term of this
      Agreement and as of the date of its termination; provided, however, that the
      parties agree that those positions listed on Schedule A hereto shall not be
      deemed to be in competition with Employer and Sussex and shall not be prohibited
      hereunder. For purposes of this provision, the “Covenant Term” shall mean the
      Term of this Agreement and a period of six (6) months thereafter. ; further
      provided, however, that in the event Executive's employment is terminated
      without Cause pursuant to Section 2(b) hereof, the Covenant Term shall be
      extended to run contemporaneously with the period during which Executive
      receives payments under Section 4(b )
      and for
      six months thereafter.

     

    (c) Non-Solicitation.
      

    
      
         

      

      
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    (i)           
      Executive
      agrees that for a period of six 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 or Sussex. 

    

    
      	 	
              (ii)

            	
              Executive
                agrees that for a period of six 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, depositor or borrower of Employer and Sussex to become
                a
                customer, depositor or borrower of another financial institution.
                

            

    

    

    (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. 

     

    (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

    
      
         

      

      
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    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 Lista

    

    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

    

    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,
      

     

     

    
      
         

      

      
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    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.
      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.

     

     

    
      
         

      

      
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    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.

    

    
      	
              ATTEST:

            	 	
              TRI-STATE
                INSURANCE AGENCY, INC.

            
	 	 	 	 
	 	 	 	 
	 	 	
              By:

            	 
	 	 	 	
              DONALD
                L. KOVACH, CHAIRMAN

            
	 	 	 	 
	 	 	 	 
	 	 	 	 
	
              WITNESS:

            	 	
              EXECUTIVE:

            
	 	 	 	 
	 	 	 	 
	 	 	 
	 	 	
              GEORGE
                LISTA

            

    

    

    
      
         

      

      
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    SCHEDULE
      A

    

    

    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
      Lista Only:

    

    
      	
              ·

            	
              President
                of Rainbows of Learning Day Care
                Center

            

    

    
      	
              ·

            	
              Sasse
                Glass Shop, Inc. - Flat Glass, 4
                Employees

            

    

    
      	
              ·

            	
              BBC
                Custom Builders LLC - Custom Home Building
                Company

            

    

    

    

    

    
      
         

      

      
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    EXHIBIT
      B

    

    The
      Bonus
      will be based upon Net Profit Before Taxes, total revenue and commissions and
      fees per producers. Each year, Sussex shall determine the Incentive Award amount
      using the following formula or such other criteria of performance as Sussex
      determines:

     

    
      	 	
              i.

            	
              NBP/T.
                Sussex
                shall calculate the NPB/T portion of the Incentive Award as
                follows:

            

    

    
      	 	
              a.

            	
              Calculate
                the NPB/T for the current Plan Year

            

    

    
      	 	
              b.

            	
              Determine
                the average of the NPB/T for the last five (5)
                years

            

    

    
      	 	
              c.

            	
              Calculate
                percent (a divided by b)

            

    

    
      	 	
              ii.

            	
              Total
                Revenue.
                Sussex shall calculate the Total Revenue portion of the Incentive
                Award as
                follows:

            

    

    
      	 	
              a.

            	
              Calculate
                the Total Revenue for the current Plan
                Year

            

    

    
      	 	
              b.

            	
              Determine
                the average of the Total Revenue for the last five (5)
                years

            

    

    
      	 	
              c.

            	
              Calculate
                percent (a divided by b)

            

    

    
      	 	
              iii.

            	
              Commissions
                and fees per Non-Executive Producers.
                Sussex shall calculate the Commissions and fees per Non-Executive
                Producers portion of the Incentive Award as
                follows:

            

    

    
      	 	
              a.

            	
              Calculate
                the Commissions and fees per Non-Executive Producers for the current
                Plan
                Year

            

    

    
      	 	
              b.

            	
              Determine
                the average of the Commissions and fees per Non-Executive Producers
                for
                the last five (5) years

            

    

    
      	 	
              c.

            	
              Calculate
                percent (a divided by b)

            

    

    
      	 	
              iv.

            	
              Determination
                of Incentive Award.
                Using the percentages calculated in steps (i) through (iii) above,
                determine the Incentive Award percentages according to the following
                schedule:

            

    

    

    Percentage
      Award Schedule

    

    
      	
              Performance

              Relative
                to Average 5 Year Highest

            	
               

              Weight

            	
               

              Lista

            
	 	 	 
	
              Net
                Profit before NPB/T

            	
              40%

            	
              12.0%

            
	
               

              Below
                90%

              Threshold
                = 90%

              Target
                = 100%

              Stretch
                = 150%

            	 	
               

              0.0%

              6.00%

              12.00%

              18.00%

            
	
              Total
                Income

            	
              30%

            	
              4.0%

            
	
               

              Below
                90%

              Threshold
                = 90%

              Target
                = 100%

              Stretch
                = 150%

            	 	
               

              0.0%

              2.00%

              4.00%

              6.00%

            
	
              Commission
                and Fees per

              Non-Executive
                Producers

            	
               

              30%

            	
               

              4.0%

            
	
               

              Below
                90%

              Threshold
                = 90%

              Target
                = 100%

              Stretch
                = 150%

            	 	
               

              0.0%

              2.00%

              4.00%

              6.00%

            
	
              Below
                Threshold

            	 	
              0%

            
	
              Threshold
                Opportunity

            	 	
              10.00%

            
	
              Target
                Opportunity

            	 	
              20.00%

            
	
              Stretch
                Opportunity

            	 	
              30.00%

            

    

    

    

    12EMPLOYMENT
      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

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    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

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (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

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    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

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    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

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    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. 

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    (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

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    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.
      

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    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.

     

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    
      	
              ATTEST:

            	 	
              TRI-STATE
                INSURANCE AGENCY, INC.

            
	 	 	 	 
	 	 	 	 
	 	 	
              By:

            	 
	 	 	
               

            	
              DONALD
                L. KOVACH, CHAIRMAN

            
	 	 	 	 
	 	 	 	 
	
              WITNESS:

            	 	
              EXECUTIVE:

            
	 	 	 	 
	 	 	 	 
	 	 	
               

            
	 	 	
              GEORGE
                B. HARPER

            

    

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    

    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%

            

    

     

    

    
      

      

    

    
       

      
        	 

                Agency
                  commission resulting from sales by Executive of Life Insurance:
                  

                

                50%
                  of agency commission.

              

      

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    
 

    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

            

    

    

    

    

    12

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