SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or
ss.240.14a-12
SUSSEX BANCORP
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
[LOGO] SUSSEX BANCORP
399 ROUTE 23, P.O. BOX 353 . FRANKLIN, N.J. 07416 . (201) 827-2404
SUSSEX BANCORP
399 STATE HIGHWAY 23
P.O. BOX 353
FRANKLIN, NJ 07416
March 31, 1998
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders
(the "Annual Meeting") of Sussex Bancorp (the "Company"), the holding company
for The Sussex County State Bank (the "Bank"), to be held on April 22, 1998 at
3:30 p.m. at the Bank's Newton branch, 15 Trinity Street, Newton, New Jersey.
At the Annual Meeting stockholders will be asked to consider and vote
upon the election of two directors whose terms expire this year.
The Board of Directors of the Company believes that the election of its
nominees to the Board of Directors is in the best interests of the Company and
its stockholders and unanimously recommends that you vote "FOR" each of the
Board's nominees.
YOUR COOPERATION IS APPRECIATED SINCE A MAJORITY OF THE COMMON STOCK
MUST BE REPRESENTED, EITHER IN PERSON OR BY PROXY, TO CONSTITUTE A QUORUM FOR
THE CONDUCT OF BUSINESS. WHETHER OR NOT YOU EXPECT TO ATTEND, PLEASE SIGN, DATE
AND RETURN THE ENCLOSED PROXY CARD PROMPTLY IN THE POSTAGE-PAID ENVELOPE
PROVIDED SO THAT YOUR SHARES WILL BE REPRESENTED.
Very truly yours,
/s/ William E. Kulsar
William E. Kulsar
Secretary
<PAGE>
SUSSEX BANCORP
399 STATE HIGHWAY 23
P.O. BOX 353
FRANKLIN, NJ 07416
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 22, 1998
Notice is hereby given that the Annual Meeting of Stockholders (the
"Annual Meeting") of Sussex Bancorp (the "Company") will be held at the Bank's
Newton branch, 15 Trinity Street, Newton, New Jersey, on April 22, 1998, at 3:30
p.m. for the purpose of considering and voting upon the following matters:
1. The election of the two (2) persons named in the accompanying
Proxy Statement to serve as directors of the Company for a
term of three (3) years and until their successors are elected
and duly qualified; and
2. Such other business as shall properly come before the Annual
Meeting.
Stockholders of record at the close of business on February 27, 1998
are entitled to notice of and to vote at the Annual Meeting. Whether or not you
contemplate attending the Annual Meeting, it is suggested that the enclosed
proxy be executed and returned to the Company. You may revoke your proxy at any
time prior to the exercise of the proxy by delivering to the Company a later
proxy or by delivering a written notice of revocation to the Company.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ William E. Kulsar
William E. Kulsar, Secretary
Franklin, New Jersey
March 31, 1998
IMPORTANT---PLEASE MAIL YOUR PROXY PROMPTLY
<PAGE>
SUSSEX BANCORP
399 STATE HIGHWAY 23
P.O. BOX 353
FRANKLIN, NJ 07416
------------------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
APRIL 22, 1998
-----------------------------------
SOLICITATION AND VOTING OF PROXIES
This Proxy Statement is being furnished to stockholders of Sussex
Bancorp (the "Company") in connection with the solicitation by the Board of
Directors of proxies to be used at the annual meeting of stockholders (the
"Annual Meeting"), to be held on April 22, 1998, at 3:30 p.m., at the Bank's
Newton branch, 15 Trinity Street, Newton, New Jersey and at any adjournments
thereof. The 1997 Annual Report to Stockholders, including consolidated
financial statements for the fiscal year ended December 31, 1997, and a proxy
card, accompanies this Proxy Statement, which is first being mailed to record
holders on or about March 31, 1998.
Regardless of the number of shares of common stock, no par value, of
the Company ("Common Stock") owned, it is important that you vote by completing
the enclosed proxy card and returning it signed and dated in the enclosed
postage-paid envelope. Stockholders are urged to indicate their vote in the
spaces provided on the proxy card. PROXIES SOLICITED BY THE BOARD OF DIRECTORS
OF THE COMPANY WILL BE VOTED IN ACCORDANCE WITH THE DIRECTIONS GIVEN THEREIN.
WHERE NO INSTRUCTIONS ARE INDICATED, SIGNED PROXY CARDS WILL BE VOTED "FOR" THE
ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR NAMED IN THIS PROXY STATEMENT.
Other than the matters set forth on the attached Notice of Annual
Meeting of Stockholders, the Board of Directors knows of no additional matters
that may be presented for consideration at the Annual Meeting. Execution of a
proxy, however, confers on the designated proxy holders discretionary authority
to vote the shares in accordance with their best judgment on such other
business, if any, that may properly come before the Annual Meeting and at any
adjournments thereof, including whether or not to adjourn the Annual Meeting.
A proxy may be revoked at any time prior to its exercise by sending a
written notice of revocation to the Company, 399 State Highway 23, P.O. Box 353,
Franklin, New Jersey 07416, Attn: Candace A. Leatham. A proxy filed prior to the
Annual Meeting may be revoked by
<PAGE>
delivering to the Company a duly executed proxy bearing a later date, or by
attending the Annual Meeting and voting in person. However, if you are a
stockholder whose shares are not registered in your own name, you will need
appropriate documentation from your record holder to vote personally at the
Annual Meeting.
The cost of solicitation of proxies on behalf of the Board of Directors
will be borne by the Company. Proxies may also be solicited personally or by
mail or telephone by directors, officers and other employees of the Company and
The Sussex County State Bank (the "Bank"), its wholly-owned subsidiary, without
additional compensation therefor. The Company will also request persons, firms
and corporations holding shares in their names, or in the name of their
nominees, which are beneficially owned by others, to send proxy material to and
obtain proxies from such beneficial owners, and will reimburse such holders for
their reasonable expenses in doing so.
VOTING SECURITIES
The securities which may be voted at the Annual Meeting consist of
shares of the Company's Common Stock, with each share entitling its owner to one
vote on all matters to be voted on at the Annual Meeting, except as described
below. There is no cumulative voting for the election of directors.
The close of business on February 27, 1998, has been fixed by the Board
of Directors as the record date (the "Record Date") for the determination of
stockholders of record entitled to notice of and to vote at the Annual Meeting
and at any adjournments thereof. The total number of shares of Common Stock
outstanding on the Record Date was 700,749 shares.
The presence, in person or by proxy, of the holders of at least a
majority of the total number of shares of Common Stock entitled to vote is
necessary to constitute a quorum at the Annual Meeting. In the event that there
are not sufficient votes for a quorum, or to approve or ratify any matter being
presented at the time of the Annual Meeting, the Annual Meeting may be adjourned
in order to permit the further solicitation of proxies.
The proxy card being provided by the Board of Directors enables a
stockholder to vote "FOR" the election of the nominees proposed by the Board of
Directors, or to "WITHHOLD AUTHORITY" to vote for one or more of the nominees
being proposed. Under New Jersey law and the Company's Bylaws, directors are
elected by a plurality of votes cast, without regard to either broker non-votes,
or proxies as to which authority to vote for one or more of the nominees being
proposed is withheld.
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<PAGE>
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation and its Bylaws authorize a
minimum of five (5) and a maximum of twenty-five (25) directors but leave the
exact number to be fixed by resolution of the Board of Directors. The Board has
fixed the number of directors at six (6).
Directors will be elected to serve for staggered terms of three years
each, with the term of office of two (2) directors expiring each year. Directors
serve until their successors are duly elected and qualified.
If, for any reason, any of the nominees become unavailable for
election, the proxy solicited by the Board of Directors will be voted for a
substitute nominee selected by the Board of Directors. The Board has no reason
to believe that any of the named nominees is not available or will not serve if
elected. UNLESS AUTHORITY TO VOTE FOR THE NOMINEE IS WITHHELD, IT IS INTENDED
THAT THE SHARES REPRESENTED BY THE ENCLOSED PROXY CARD, IF EXECUTED AND
RETURNED, WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEES PROPOSED BY THE BOARD
OF DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE
NOMINEES NAMED IN THIS PROXY STATEMENT.
INFORMATION WITH RESPECT TO THE NOMINEES
The following tables set forth, as of the Record Date, the names of the
nominees for election and those directors whose terms continue beyond the annual
meeting, their ages, a brief description of their recent business experience,
including present occupations, and the year in which each became a director of
the Company or the Bank. No nominee is a director of another company registered
pursuant to Section 12 of the Securities Exchange Act of 1934 or subject to the
requirements of Section 15(d) of such Act or any company registered as an
investment company under the Investment Company Act of 1940.
-3-
<PAGE>
<TABLE>
<CAPTION>
TABLE I
NOMINEES FOR 1998 ANNUAL MEETING
- ------------------------------- ---------------------------------------------------- ------------------- -------------------
NAME, AGE AND POSITION PRINCIPAL OCCUPATIONS DURING DIRECTOR TERM
WITH THE COMPANY PAST FIVE YEARS SINCE (1) EXPIRES
<S> <C> <C> <C>
- ------------------------------- ---------------------------------------------------- ------------------- -------------------
Irvin Ackerson, 75 Excavating Contractor Ackerson Contracting Co.,
Director Oak Ridge, New Jersey 1976 2001
- ------------------------------- ---------------------------------------------------- ------------------- -------------------
William E. Kulsar, 60 Certified Public Accountant
Secretary and Director Caristia, Kulsar & Wade, P.A. 1976 2001
Sparta, New Jersey
- ------------------------------- ---------------------------------------------------- ------------------- -------------------
- -----------------------------------------
(1) Includes prior service on Board of Directors of the Bank.
<CAPTION>
TABLE II
DIRECTORS OF THE COMPANY WHOSE TERMS CONTINUE BEYOND THIS ANNUAL MEETING
- ------------------------------- ---------------------------------------------------- ------------------- -------------------
NAME, AGE AND POSITION PRINCIPAL OCCUPATIONS DURING DIRECTOR TERM
WITH THE COMPANY PAST FIVE YEARS SINCE (1) EXPIRES
<S> <C> <C> <C>
- ------------------------------- ---------------------------------------------------- ------------------- -------------------
Richard Scott, 61 Dentist, Richard Scott, DDS
Director Franklin, New Jersey 1976 1999
- ------------------------------- ---------------------------------------------------- ------------------- -------------------
Joseph Zitone, 66 General Contractor, Zitone Construction
Director Montague, New Jersey 1984 1999
- ------------------------------- ---------------------------------------------------- ------------------- -------------------
Donald L. Kovach, 62 Donald L. Kovach, Attorney at Law
Chairman of the Board, CEO Franklin, New Jersey 1976 2000
- ------------------------------- ---------------------------------------------------- ------------------- -------------------
Joel D. Marvil, 63 President/CEO of Manufacturing Co.
Director Ames Rubber Corporation 1989 2000
Hamburg, New Jersey
- ------------------------------- ---------------------------------------------------- ------------------- -------------------
</TABLE>
- ----------------------------------------
(1) Includes prior service on Board of Directors of the Bank
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<PAGE>
BOARD OF DIRECTORS' MEETINGS; COMMITTEES OF THE BOARD
The Board of Directors of the Company held 12 meetings during 1997. The
Board of Directors holds regularly scheduled meetings each month and special
meetings as circumstances require. All of the directors of the Company attended
at least 75% of the total number of Board meetings held and committee meetings
held during 1997.
AUDIT COMMITTEE. The Company and the Bank have a standing Audit
Committee of the Board of Directors. This committee arranges for the Bank's
directors' examinations through its independent certified public accountant,
reviews and evaluates the recommendations of the directors' examinations,
receives all reports of examination of the Company and the Bank by appropriate
regulatory agencies, analyzes such regulatory reports, and reports to the Board
the results of its analysis of the regulatory reports. This committee also
receives reports directly from the Company's internal auditing department and
recommends any action to be taken in connection therewith. The Audit Committee
met four times during 1997. The Audit Committee consisted during 1997 of
Directors Kulsar (Chairman), Scott and Marvil.
COMPENSATION COMMITTEE. The Company maintains a Compensation Committee
which sets the compensation for the executive officers of the Company. In 1997,
the Compensation Committee consisted of Directors Marvil (Chairman), Ackerson
and Kulsar and met once.
The Company does not maintain a separate Nominating Committee. The full
Board acts as a Nominating Committee.
COMPENSATION OF DIRECTORS
Directors of the Company are not compensated for their service of the
Company's Board of Directors. Directors of the Bank, other than full-time
employees of the Bank, receive an annual retainer of $1,000. In addition,
directors who are not full-time employees of the Bank receive a fee of $500 for
each regular monthly Board meeting or special Board meeting attended and $100
for each committee meeting attended. In addition, each director who undertakes a
special project at the request of management of the Bank and with Board of
Director approval is paid at an hourly rate of $100 per hour for their time
spent on the project.
The Company maintains the 1995 Stock Option Plan for Non-Employee
Directors (the "Non-Employee Plan), the purpose of which is to assist the
Company in attracting and retaining qualified persons to serve as members of the
Board of Directors. Under the Non-Employee Plan, options to purchase up to a
total of 32,000 shares of Common Stock may be granted at exercise prices which
may not be less than the fair market value of the Common Stock on the date of
grant. Under the Non-Employee Plan, each non-employee director elected at the
1995 Annual Meeting was granted an option to purchase 3,000 shares at $11.25 per
share. In addition, each non-employee director who is elected or re-elected to
serve on the Board of Directors at succeeding annual meetings will be granted an
option to purchase 500 shares of Common Stock
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<PAGE>
at the time of such re-election. The exercise price for options granted in
connection with the 1997 annual meeting was $18.00.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information concerning the beneficial
ownership of shares of Common Stock as of January 31, 1998, by (i) each person
who is known by the Company to own beneficially more than five percent (5%) of
the issued and outstanding Common Stock, (ii) each director and nominee for
director of the Company, (iii) each executive officer of the Company described
in this Proxy Statement under the caption "Executive Compensation" and (iv) all
directors and executive officers of the Company as a group. Other than as set
forth in this table, the Company is not aware of any individual or group which
holds in excess of 5% of the outstanding Common Stock.
<TABLE>
<CAPTION>
====================================================================================================================
NUMBER OF SHARES PERCENT
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED (1) OF CLASS
------------------------ ---------------------- --------
<S> <C> <C>
- ---------------------------------------------- ------------------------------------------- -------------------------
Irvin Ackerson 14,514 (2) 2.07%
- ---------------------------------------------- ------------------------------------------- -------------------------
Donald L. Kovach 68,249 (3)(4) 9.70%
- ---------------------------------------------- ------------------------------------------- -------------------------
William E. Kulsar 43,254 (4)(5) 6.15%
- ---------------------------------------------- ------------------------------------------- -------------------------
Joel D. Marvil 20,024(6) 2.85%
- ---------------------------------------------- ------------------------------------------- -------------------------
Richard Scott 23,952(7) 3.41%
- ---------------------------------------------- ------------------------------------------- -------------------------
Joseph Zitone 38,750(8) 5.53%
- ---------------------------------------------- ------------------------------------------- -------------------------
Directors & Principal Officers as a Group
(6 persons) 158,176 22.63%
- ---------------------------------------------- ------------------------------------------- -------------------------
BENEFICIAL OWNERS OF MORE THAN 5% OF COMMON
STOCK:
- ---------------------------------------------- ------------------------------------------- -------------------------
Ambrose Hamm
P.O. Box E
Branchville, NJ 07826 68,886 9.86%
====================================================================================================================
</TABLE>
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<PAGE>
(1) Beneficially owned shares include shares over which the named person
exercises either sole or shared voting power or sole or shared
investment power. It also includes shares owned (i) by a spouse, minor
children or by relatives sharing the same home, (ii) by entities owned
or controlled by the named person, and (iii) by other persons if the
named person has the right to acquire such shares within 60 days by the
exercise of any right or option. Unless otherwise noted, all shares are
owned of record and beneficially by the named person, either directly
or through the dividend reinvestment plan.
(2) Includes 5,179 shares owned by Mr. Ackerson's wife. Also includes 4,000
shares purchasable upon the exercise of immediately exercisable stock
options.
(3) Includes 8,137 shares owned by Mr. Kovach's wife, 16 shares registered
in the name of Kovach, Fitzgibbons & Goovaerts Trust, FBO Donald L.
Kovach, 2,154 shares in the name of Merrill Lynch Pierce Fenner &
Smith, FBO Donald L. Kovach and 1,597 shares in the name of Merrill
Lynch Pierce Fenner & Smith, FBO Betty J. Kovach. Also includes 4,445
shares purchasable upon the exercise of immediately exercisable stock
options.
(4) Includes 28,622 shares over which Messrs. Kovach and Kulsar have shared
voting authority as administrators for The Sussex County State Bank
Employee Stock Ownership Plan.
(5) Includes 10,632 shares registered in the name of the Caristia, Kulsar &
Wade, P.A. Profit Sharing Plan. Also includes 4,000 shares purchasable
upon the exercise of immediately exercisable stock options.
(6) Also includes 4,000 shares purchasable upon the exercise of immediately
exercisable stock options.
(7) Also includes 3,500 shares purchasable upon the exercise of immediately
exercisable stock options.
(8) Includes 4,922 shares owned by the Zitone Construction & Supply Co.,
Inc. Profit Sharing Plan Trust. Also includes 2,000 shares purchasable
upon the exercise of immediately exercisable stock options.
ANNUAL EXECUTIVE COMPENSATION AND ALL OTHER COMPENSATION
The following table sets forth a summary for the last three fiscal
years of the cash and non-cash compensation awarded to, earned by, or paid to,
the Chief Executive Officer of the Company and each of the four (4) most highly
compensated executive officers whose individual remuneration exceeded $100,000
for the last fiscal year.
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<PAGE>
SUMMARY COMPENSATION TABLE
CASH AND CASH EQUIVALENT FORMS
OF REMUNERATION
---------------
<TABLE>
<CAPTION>
=============================================================================================================================
Annual Compensation Award Payouts
------------------- ----- -------
Securities
Underlying LTIP All Other
Name and Principal Other Annual Options/SARs Payouts Compensation
Position Year Salary ($) Bonus ($) Compensation ($) (#) ($) ($)
- ------------------ ---- ---------- --------- ---------------- ------- ----- -----
(2)
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
Donald L. Kovach,
Chairman of the 1997 139,615 -0- 5,256 500 None -0-
Board and CEO
- -----------------------------------------------------------------------------------------------------------------------------
1996(1) $ 85,700 -0- --- -0- None -0-
=============================================================================================================================
</TABLE>
- ------------------------------
(1) Mr. Kovach became Chief Executive Officer of the Company on January 17,
1996.
(2) During the fiscal years presented, the Company provided additional life
insurance and an automobile and provided a match to Mr. Kovach's 401(k)
plan account membership for Mr. Kovach. The use made thereof for
personal purposes did not exceed 10% of the total cash compensation to
such persons which is the sum of base salary and bonus and therefore is
not included in the above table.
The Company and the Bank have entered into an Employment Agreement with
Mr. Donald L. Kovach pursuant to which he serve as President and Chief Executive
Officer of the Company and the Bank. The Employment Agreement provides for a
term commencing January 1, 1997 and terminating on December 31, 1999. The
Employment Agreement provides that Mr. Kovach will receive a base salary of
$140,000, subject to increase or decrease, and may be granted a discretionary
bonus as determined by the Board of Directors. The Employment Agreement permits
the Company to terminate Mr. Kovach's employment for cause at any time. The
Employment Agreement defines cause to mean personal dishonesty, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of law, rule or regulation,
other than traffic violations or similar offenses, or violation of a final cease
and desist order, or a material breach of any provision of the Agreement. In the
event Mr. Kovach is terminated for any reason other than cause, or in the event
Mr. Kovach resigns his employment because he is reassigned to a position of
lesser rank or status than President and Chief Executive Officer, his place of
employment is relocated by more than 30 miles from its location on the date of
the Agreement, or his compensation or other benefits are reduced, Mr. Kovach, or
in the event of his death, his beneficiary, will be entitled to receive his base
salary at the time of such termination or resignation for the remaining term of
the Agreement. In addition, the Company will continue to provide Mr. Kovach with
certain insurance and other benefits through the end of the term of the
Agreement. Mr. Kovach's Employment Agreement further provides that upon the
occurrence of a change in control of the
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<PAGE>
Company, as defined in the Employment Agreement, and in the event Mr. Kovach is
terminated for reasons other than cause or in the event Mr. Kovach, within 18
months of the change in control, resigns his employment for the reasons
discussed above, he shall be entitled to receive a severance payment based upon
his then current base salary. Under the Agreement, in the event the change in
control occurs during the first year of the Agreement, the severance payment
would equal Mr. Kovach's then current base salary, if a change in control occurs
during the second year of the Agreement, the severance payment would equal twice
Mr. Kovach's then current base salary, and if a change in control occurs during
the third year of the Agreement, the severance payment would equal 2.99 times
Mr. Kovach's then current base salary. The Employment Agreement also prohibits
Mr. Kovach from competing with the Bank and the Company for a period of one year
following termination of his employment.
NON-QUALIFIED BANK STOCK OPTION PLAN
The Company maintains the 1988 Non-Qualified Stock Option Plan. As of
December 31, 1997, options to purchase 31,857 authorized shares of Common Stock
may be granted under the 1988 Non-Qualified Stock Option Plan. Options may be
granted to any officer of the Company, at a grant price not to be less than 85%
of its fair market value at the grant date. Options are exercisable when
granted, with the term of the option determined by the Bank's Board of
Director's but not to exceed five years. As of December 31, 1997, no options
have been granted.
INCENTIVE STOCK OPTION PLAN
The Company maintains the 1995 Incentive Stock Option Plan which
provides for options to purchase shares of Common Stock to be issued to key
employees of the Company, the Bank and any other subsidiaries which the Company
may acquire or incorporate in the future. Individual employees to whom options
will be granted under the Plan are selected by the Stock Option Committee of the
Board of Directors. The Stock Option Committee has the authority to determine
the terms and conditions of options granted under the Plan and the exercise
price therefor, which may be no less than the fair market value of the Common
Stock.
The following table sets forth information regarding stock option
grants to the individuals named in the table above:
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<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
==============================================================================================================================
INDIVIDUAL GRANTS
- ------------------------------------------------------------------------------------------------------------------------------
Number of Securities % of Total
Underlying Option/SARs Granted Exercise or Present Value of
Options/SARs to Employees in Base Price Expiration Option on Date of
Name Granted (#)(1) Fiscal Year ($/SH) Date Grant($)(2)
---- -------------- ----------- ------ ---- -----------
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Donald L. Kovach 500 22% $18.00 7/22/02 $9,000
==============================================================================================================================
</TABLE>
- -------------------------
(1) All options are immediately exercisable.
(2) The present value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following weighted average
assumptions: dividend yield of 2.0%, expected volatility of 16.0%, risk free
interest rate of 6.6%, and an expected life of five (5) years.
The following table sets forth information concerning the fiscal
year-end value of unexercised options held by the executive officers of the
Company named in the table above. No stock options were exercised by such
executive officers during 1997:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL
YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
==============================================================================================================================
Value of Unexercised
Number of Securities In-the-Money Options/SARs at
Underlying Unexercised FY-End ($) (based on $19.75
Options/SARs at FY-End (#) per share)
Shares Acquired on Value Realized Exercisable/ Exercisable/
Name Exercise (#) $ Unexercisable Unexercisable
---- ------------ ----- --------------- -----------------
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Donald L. Kovach -0- -0- 3,500 $21,125
==============================================================================================================================
</TABLE>
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<PAGE>
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
The Bank has made in the past and, assuming continued satisfaction of
generally applicable credit standards, expects to continue to make loans to
directors, executive officers and their associates (i.e. corporations or
organizations for which they serve as officers or directors or in which they
have beneficial ownership interests of ten percent or more). These loans have
all been made in the ordinary course of the Bank's business on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons and do not involve more than
the normal risk of collectibility or present other unfavorable features.
The Bank paid $19,713 to Kovach, Vanderwiele and Gavan, Attorney at Law
at which Donald L. Kovach, Chairman of the Board and Chief Executive Officer, is
a member, for legal services rendered to the Bank during fiscal 1997. Said firm
renders legal services to the Bank on a continuing basis.
The Bank paid $11,831 during fiscal 1997 to Caristia, Kulsar & Wade,
P.A., Certified Public Accountants, at which William E. Kulsar, Secretary and a
Director of the Company and the Bank is a member, for accounting services
rendered to the Bank for IRS filing purposes and other accounting services
beyond those provided by the annually retained independent public accountants.
Caristia, Kulsar, & Wade, P.A. continues to render accounting services to the
Bank.
The Bank paid $12,370 to Irvin Ackerson for appraisal services rendered
to the Bank during fiscal 1997. Irvin Ackerson continues to render appraisal
services to the Bank.
The Bank leases its Montague branch office from Montague Mini Mall,
Inc. under a lease covering 1,200 square feet. The lease agreement was renewed
as of April 1, 1997. As renewed, the lease will terminate on March 31, 2002, and
provides for a monthly rent of $1,650. Mr. Joseph Zitone, a Director of the
Company, is a majority stockholder of Montague Mini Mall, Inc. The Company
considers the lease terms to be comparable to those which exist with
unaffiliated third parties.
RECOMMENDATION AND VOTE REQUIRED
Nominees will be elected by a plurality of the shares voting at the
Annual Meeting.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR ITS NOMINEES
"FOR" THE BOARD OF DIRECTORS.
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<PAGE>
INDEPENDENT AUDITORS
The Company's independent auditors for the fiscal year ended December
31, 1997 were Arthur Andersen LLP ("Andersen"). Andersen has advised the Company
that one or more of its representatives will be present at the Annual Meeting to
make a statement if they so desire and to respond to appropriate questions.
The Company's Board of Directors has appointed Radics & Co., L.L.P. to
serve as independent auditors for the year ending December 31, 1998. The
decision to change auditors was recommended by the Audit Committee and was
approved by the Company's Board of Directors. For the fiscal years ended
December 31, 1997 and 1996, there have been no disagreements with Andersen on
any matter of accounting principles or practices, financial statement disclosure
or auditing scope or procedure which, if not resolved to the satisfaction of
Andersen, would have caused it to make reference to the subject matter of the
disagreement in connection with their reports. The independent auditor's report
on the consolidated financial statements for the fiscal years ended December 31,
1997 and 1996 expressed an unqualified opinion.
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than ten percent stockholders are required by
regulation of the Securities and Exchange Commission to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it,
or written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during the fiscal year
ended December 31, 1997, all filing requirements applicable to its officers,
directors and greater than ten percent beneficial owners were met.
STOCKHOLDER PROPOSALS
Proposals of stockholders to be included in the Company's 1999 proxy
material must be received by the Secretary of the Company no later than December
1, 1998.
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<PAGE>
OTHER MATTERS
The Board of Directors is not aware of any other matters which may come
before the Annual Meeting. However, in the event such other matters come before
the meeting, it is the intention of the persons named in the proxy to vote on
any such matters in accordance with the recommendation of the Board of
Directors.
-13-
<PAGE>
SUSSEX BANCORP
REVOCABLE PROXY FOR
ANNUAL MEETING OF SHAREHOLDERS
APRIL 22, 1998
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Candace A. Leatham and Terry H. Thompson
and each of them, with full power of substitution, to vote all of the shares of
Sussex Bancorp (the "Company") standing in the undersigned's name at the Annual
Meeting of Shareholders of the Company, to be held at the Newton Office of The
Sussex County State Bank (the "Bank"), 15 Trinity Street, Newton, New Jersey,
Wednesday, April 22, 1998, at 3:30 P.M., and at any adjournment thereof. The
undersigned hereby revokes any and all proxies heretofore given with respect to
such meeting.
(TO BE SIGNED ON REVERSE SIDE)
<PAGE>
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF SHAREHOLDERS
SUSSEX BANCORP
APRIL 22, 1998
PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED
[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
WITHHOLD THIS PROXY WILL BE VOTED AS
FOR ALL AUTHORITY SPECIFIED BELOW. IF NO CHOICE
NOMINEES FOR ALL NOMINEES IS SPECIFIED, THE PROXY WILL
1. ELECTION OF THE [ ] [ ] BE VOTED "FOR" MANAGEMENT'S
FOLLOWING TWO NOMINEES TO THE BOARD OF
(2) NOMINEES TO EACH SERVE ON THE BOARD OF DIRECTORS.
Directors for a term of three (3) years and Nominees: Irvin Ackerson
until their successors are elected and duly William E. Kulsar
qualified.
TO WITHHOLD AUTHORITY FOR ANY OF THE NOMINEES AT RIGHT,
PRINT THE NOMINEE'S NAME ON THE LINE BELOW:
- -------------------------------------------------------
2. In their discretion, such other business as may properly come before the
Annual meeting.
PLEASE DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE.
Signature Signature
---------------------------- -----------------------------
Dated:
--------------------------------, 1998
NOTE: (Please sign exactly as your name appears. When signing as an executor,
administrator, guardian, trustee or attorney, please give your full title as
such. If signer is a corporation, please sign the full corporate name and then
an authorized officer should sign his name and print his name and title below
signature. If the shares are held in joint name, all joint owners should sign.
