EXHIBIT 99(b)
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STOCK PURCHASE AGREEMENT
FOR SHARES OF
SUSSEX BANCORP
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of this 20th
day of October, 2000, is made by and between Sussex Bancorp ("Sussex"), a New
Jersey corporation, having its principal place of business at 399 Route 23,
Franklin, New Jersey 07416, and LAKELAND BANCORP, INC. (the "Purchaser"), a New
Jersey corporation, having its principal place of business at 250 Oak Ridge
Road, Oak Ridge, New Jersey 07438.
WHEREAS, Sussex desires to issue and sell its common stock, without par
value (the "Common Stock"), in an amount equal to 9.9% of Sussex's outstanding
shares of Common Stock (calculated as explained in Section I(B)), subject to
regulatory approval in the manner hereinafter set forth; and
WHEREAS, the Purchaser desires to purchase such Common Stock from
Sussex, subject to regulatory approval, in the manner hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, agreements, representations and warranties herein contained, the
parties hereto do hereby agree as follows:
I. PURCHASE AND SALE
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A. Purchase by the Purchaser. Subject to the terms and conditions set
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forth in this Agreement, at the Closing (defined below), the Purchaser agrees to
purchase from Sussex and Sussex agrees to issue and sell to the Purchaser, the
Shares (defined below).
B. The Shares. The "Shares," as used herein, refers to that number of
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shares of Common Stock to be issued and sold to the Purchaser at the Closing,
which, after giving effect to the issuance of such shares and including shares
of Common Stock, if any, already owned by the Purchaser, the Lakeland Bank
Profit Sharing Plan and any controlling shareholders, directors or executive
officers (and any trusts controlled by or members of the immediate family of
such controlling shareholders, directors or executive officers) of the Purchaser
(collectively, the "Lakeland Affiliates") prior to the issuance of the Shares
under this Agreement, will equal 9.9% of Sussex's outstanding shares of Common
Stock as of the close of business on the Closing Date. The term "Share" refers
to an individual share of the Shares.
C. Purchase Price. The purchase price for each Share to be
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acquired by the Purchaser shall be $8.50 per Share (the "Purchase Price").
D. Closing.
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1. The sale and purchase of the Shares shall occur in a
closing (the
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"Closing") at 10:00 a.m. on that date which is fifteen days after the
satisfaction of all of the conditions contained in Article V, or on such other
date on which the parties shall mutually agree (the "Closing Date"), at
Purchaser's headquarters in Oak Ridge, New Jersey, or at such other place or
places as shall be mutually agreeable to the parties.
2. At the Closing, the Purchaser shall pay to Sussex an amount
equal to the Purchase Price multiplied by the number of Shares purchased. Sussex
shall deliver certificate(s) for such amount of Shares to the Purchaser as soon
as practicable following the Closing.
E. Payments. The payment provided for in this Article I shall be
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made by wire transfer of immediately available funds to an account specified by
Sussex.
II. REPRESENTATIONS AND WARRANTIES OF SUSSEX
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Sussex hereby represents and warrants to the Purchaser as follows:
A. Organization.
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1. Sussex is a corporation validly existing and in good
standing under the laws of the State of New Jersey, and is a bank holding
company registered with the Federal Reserve Board (the "FRB").
2. Sussex is a one-bank holding company for its wholly owned
Sussex County State Bank ("SCSB"). SCSB's deposits are insured by the Bank
Insurance Fund of the Federal Deposit Insurance Corporation up to applicable
limits.
3. SCSB has two wholly owned subsidiaries, Sussex Bancorp
Mortgage Company and SCB Investment Company. There are no other subsidiaries of
Sussex or SCSB, direct or indirect, wholly owned or partially owned.
4. SCSB and its subsidiaries are validly existing and in good
standing in the jurisdictions of their incorporation.
B. Capitalization. The authorized capital stock of Sussex
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consists solely of 5,000,000 shares of Common Stock. As of September 30, 2000,
there were 1,506,555 shares of Common Stock outstanding and 13,088 shares of
Common Stock were held in the treasury. As of September 30, 2000, 67,422 shares
of Common Stock were reserved for issuance upon the exercise or conversion of
outstanding options, warrants or convertible securities granted or issuable by
Sussex. Each outstanding share of Common Stock is, and all Shares of Common
Stock to be issued in connection with the transactions contemplated hereby will
be, duly authorized and validly issued, fully paid and nonassessable, with no
personal liability attaching to the ownership thereof, and each outstanding
share of Common Stock has not been, and all Shares of Common Stock to be issued
in connection with the transactions contemplated hereby will not be, subject to
or issued in violation of any preemptive rights, rights of first refusal or
similar rights.
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C. Authority; No Violation.
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1. Sussex has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by Sussex have been duly and validly approved
by the Board of Directors of Sussex, and no other corporate proceedings on the
part of Sussex are necessary to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Sussex and
constitutes a valid and binding obligation of Sussex, enforceable against Sussex
in accordance with its terms.
2. Assuming receipt of all regulatory approvals, neither the
execution and delivery of this Agreement by Sussex, nor the consummation by
Sussex of the transactions contemplated hereby, nor compliance by Sussex with
any of the terms or provisions hereof, will (i) conflict with or result in a
breach of any provision of the certificate of incorporation or by-laws of Sussex
or its subsidiaries; (ii) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to Sussex or
its subsidiaries; or (iii) violate, conflict with, result in a breach of any
provisions of, constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, result in the termination of,
accelerate the performance required by, or result in a right of termination or
acceleration or the creation of any lien, security interest, charge or other
encumbrance upon any of the properties or assets of Sussex or its subsidiaries
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement, commitment or other
instrument or obligation to which Sussex or its subsidiaries are a party, or by
which Sussex or its subsidiaries or any of their properties or assets may be
bound or affected.
D. Consents and Approvals. No consents or approvals of, or
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filings or registrations with, any public body or authority or other third
parties are necessary in connection with the execution and delivery of this
Agreement by Sussex or the consummation by Sussex of the transactions
contemplated hereby, other than consents and approvals of or filings pursuant to
Section 3(a)(3) of the Bank Holding Company Act (12 U.S.C. 1842(a)(3)) and
Section 225.11 of the Federal Reserve Board's Regulation Y (12 CFR 225.11) to
acquire more than 5% of the Common Stock and the filing of a notice of listing
of additional shares with the American Stock Exchange. Sussex has no reason to
believe that any required consents or approvals will not be received, or that
any required consents or approvals will be received with conditions, limitations
or restrictions which will prevent or materially impede the consummation by
Sussex of the transactions contemplated hereby. Neither Sussex nor any of its
direct or indirect subsidiaries are subject to any written order, agreement or
memorandum of understanding of or with a bank regulatory authority.
E. Accuracy of SEC Filings and Financial Statements.
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1. Sussex has filed with the Securities and Exchange
Commission (the "SEC") all required forms, reports and documents required to be
filed by it with the SEC since
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January 1, 1996 (collectively, the "SEC Reports"), all of which, when filed (in
the case of forms, reports and documents filed pursuant to the Securities
Exchange Act of 1934, as amended, the "Exchange Act") or when declared effective
(in the case of registration statements filed pursuant to the Securities Act of
1933, as amended, the "Securities Act"), complied as to form in all material
respects with the applicable provisions of the Securities Act and the Exchange
Act, as the case may be. As of their respective dates, the SEC Reports
(including documents incorporated by reference therein) did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
2. Sussex will deliver to the Purchaser as soon as they become
available true and complete copies of any report or statement mailed by Sussex
to its security holders generally or filed by it with the SEC, in each case
subsequent to the date hereof and prior to the Closing Date.
3. Sussex's audited consolidated year-end financial statements
and Sussex's unaudited consolidated interim financial statements included or
incorporated by reference in the SEC Reports, or that will be included or
incorporated by reference in reports filed by Sussex with the SEC between the
date hereof and the Closing Date, have been, or will be, as the case may be,
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved (except as may be indicated in
the notes to such financial statements), and in accordance with all applicable
published accounting requirements under the Securities Act and the Exchange Act,
and fairly present, or will fairly present, as the case may be, in all material
respects the consolidated financial position of the entities described therein
as of the dates thereof and the consolidated results of operations and
consolidated cash flows of such entities for the periods then ended (subject, in
the case of any unaudited interim financial statements, to normal year-end
adjustments and to the extent they may not include footnotes or may be condensed
or summary statements).
4. Since June 30, 2000, except for matters publicly disclosed
by Sussex prior to the date hereof in SEC Reports filed prior to the date
hereof, Sussex has not suffered, singly or in the aggregate, any material
adverse change in its business, financial condition, or results of operations,
and to Sussex's knowledge, there has occurred no development, state of facts, or
circumstances that could, singly or in the aggregate, reasonably be expected to
have a material adverse effect on Sussex or any of its subsidiaries, taken as a
whole.
F. Litigation. Except for legal proceedings described in the
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SEC Reports, there are no material pending or, to the knowledge of Sussex,
threatened actions, suits, proceedings or investigations by, against or
affecting Sussex or any of its subsidiaries or any of their properties, assets
or operations, or with respect to which Sussex or any of its subsidiaries is
responsible by way of indemnity or otherwise, which would, singly or in the
aggregate with all such other actions, suits, investigations or proceedings,
reasonably be expected to have a material adverse effect on Sussex or any of its
subsidiaries, taken as a whole.
G. Absence of Undisclosed Liabilities. As of the date hereof,
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neither Sussex nor any
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of its subsidiaries has any liabilities or obligations of any nature, whether
absolute, accrued, unmatured, contingent or otherwise, or any unsatisfied
judgments or any leases of personalty or realty or unusual or extraordinary
commitments, except for those liabilities or allowances recorded, accrued or
reserved against on Sussex's consolidated balance sheet as of June 30, 2000 as
filed with the SEC in an SEC Report or described in the notes thereto, and
except for liabilities or obligations arising in the ordinary course of business
since the date of such consolidated balance sheet.
H. Calculating 9.9% of the Outstanding Common Stock. The number
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of Shares of Common Stock that Sussex will issue and sell to the Purchaser at
the Closing will, after giving effect to the issuance of such Shares and
including shares of Common Stock, if any, already owned by the Purchaser and the
Lakeland Affiliates prior to the issuance of the Shares under this Agreement,
equal 9.9% of Sussex's outstanding shares of Common Stock as of the close of
business on the Closing Date; provided, however, that Purchaser acknowledges
that it has provided the number of shares of Common Stock owned by the Lakeland
Affiliates for purposes of determining the number of Shares to be purchased.
I. Loan Reserves. As of the date hereof, Sussex's allowance
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for possible loan losses is, and as of the Closing Date will be, at a level
adequate to provide for potential loan losses.
III. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
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The Purchaser hereby represents and warrants to Sussex as follows:
A. Organization. The Purchaser is a corporation duly organized,
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validly existing and in good standing under the laws of the State of New Jersey,
and is a bank holding company registered with the FRB.
B. Authority; No Violation.
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1. The Purchaser has full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by the Purchaser have been
duly and validly approved by the Board of Directors of the Purchaser, and no
other corporate proceedings on the part of the Purchaser are necessary to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by the Purchaser and constitutes a valid and
binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms.
2. Assuming receipt of all regulatory approvals, neither the
execution and delivery of this Agreement by the Purchaser, or the consummation
by the Purchaser of the transactions contemplated hereby, nor compliance by the
Purchaser with any of the terms or provisions hereof, will (i) conflict with or
result in a breach of any provision of the certificate of incorporation or
by-laws of the Purchaser; or (ii) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to the
Purchaser.
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C. Consents and Approvals. No consents or approvals of, or
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filings or registrations with, any public body or authority or other third
parties are necessary in connection with the execution and delivery of this
Agreement by the Purchaser or the consummation by the Purchaser of the
transactions contemplated hereby, other than (i) consents and approvals of or
filings pursuant to Section 3(a)(3) of the Bank Holding Company Act (12 U.S.C.
1842(a)(3)) and Section 225.11 of the Federal Reserve Board's Regulation Y (12
CFR 225.11) for approval to acquire more than 5% of the shares of the Common
Stock and (ii) the filing of a Schedule 13D with the SEC. The Purchaser has no
reason to believe that any required consents or approvals will not be received,
or that any required consents or approvals will be received with conditions,
limitations or restrictions which will prevent or materially impede the
consummation by the Purchaser of the transactions contemplated hereby. The
Purchaser is not subject to any written order, agreement or memorandum of
understanding of or with a bank regulatory authority.
D. Investment Intent. The Purchaser is purchasing the Shares for
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its own account, for investment purposes, and not with a current view to a
distribution thereof. Purchaser acknowledges that the Shares are being issued
pursuant to an exemption from registration under the Securities Act of 1933, as
amended (the "Securities Act") and that therefore the Purchaser's ability to
transfer the Shares is restricted pursuant to the terms of the Securities Act
and SEC regulations and interpretations promulgated thereunder. In particular,
Purchaser acknowledges that the Shares will be deemed "restricted securities"
pursuant to SEC Rule 144 and that any transfer of the Shares must be in
compliance with SEC Rule 144 or some other exemption from the registration
provisions of Section 5 of the Securities Act or pursuant to a registration
statement.
E. Information. The Purchaser acknowledges that it has received
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the financial information described in Sussex's (i) Annual Report on Form 10-KSB
for the fiscal year ended December 31, 1999, as amended, (ii) Proxy Statement
for the Annual Meeting of Shareholders on June 28, 2000, (iii) Quarterly Reports
filed on Form 10-Q for the quarterly periods ended March 31, 2000, and June 30,
2000, and (iv) Current Report on Form 8-K filed July 28, 2000. The Purchaser
acknowledges that prior to the execution of this Agreement, the Purchaser had
the opportunity to ask questions of, and receive answers from, Sussex concerning
the terms and conditions of the sale of the securities hereunder, and to obtain
additional information about Sussex.
IV. COVENANTS AND AGREEMENTS OF THE PARTIES
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A. Regulatory Matters and Consents.
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1. As promptly as practicable after the date hereof, each
party will use its best efforts to obtain all necessary permits, consents,
waivers, approvals and authorizations of all third parties and governmental
bodies necessary or advisable for such party to consummate the transactions
contemplated by this Agreement, including the preparation and filing of all
required applications.
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2. Sussex will furnish the Purchaser with all information
concerning Sussex and its subsidiaries as may be necessary in connection with
any application or filing made by or on behalf of the Purchaser to any
governmental body in connection with the transactions, applications or filings
contemplated by this Agreement; provided, however, that in the event that Sussex
delineates any such information as confidential information, Purchaser shall
take all such steps that are available to it to maintain the confidentiality of
such information, including requesting any regulatory agency which has requested
or is otherwise entitled to receive such information to maintain such
information on a confidential basis.
3. The Purchaser will promptly furnish Sussex with all
information concerning the Purchaser as may be necessary in connection with any
application or filing made by or on behalf of Sussex to any governmental body in
connection with the transactions, applications or filings contemplated by this
Agreement.
B. Taking of Necessary Action. Subject to the terms and
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conditions herein provided, and in addition to any specific agreements contained
herein, each of the parties hereto agrees to use reasonable efforts to take or
cause to be taken all action and to do or cause to be done all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, provided that in no
event shall either party hereto be obligated to comply with or to satisfy the
conditions precedent to any regulatory approval if the management of such party,
in the exercise of its reasonable business judgment, determines that such
conditions would render the consummation of the transactions contemplated hereby
so unduly burdensome as materially to deprive such party of the intended
economic, business or financial benefits of the transactions contemplated
hereby.
C. Public Announcements. The parties agree to consult with each
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other prior to distributing any news release, other public information
disclosure, internal announcement or customer or shareholder disclosure with
respect to this Agreement or any of the transactions contemplated hereby.
D. Registration Rights.
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1. If Sussex, at any time and from time to time within seven
(7) years after the Closing Date, proposes to register any of its equity
securities under the Securities Act, for sale to the public, whether for its own
account or for the account of other security holders or both (except with
respect to registration statements on Forms S-4 or S-8 or another form not
available for registering equity securities for sale to the public, a
registration statement on Form S-3 to be filed by Sussex to register securities
issued in consideration for an acquisition, a registration statement on Form S-1
covering solely an employee benefit plan or a registration statement relating to
a dividend reinvestment plan), Sussex will give written notice at such time to
the Purchaser. Upon the written request of the Purchaser, given within twenty
(20) days after receipt of any such notice by Sussex, to register any of its
Shares of Common Stock (which request shall state the intended method of
disposition thereof), Sussex will use its best efforts to cause such Shares of
Common Stock as to which registration shall have been so requested, to be
included in the securities to be covered by the registration statement proposed
to be filed by Sussex, all to the extent requisite to permit the sale or other
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disposition by the Purchaser (in accordance with its written request); provided
that nothing herein shall prevent Sussex from abandoning or delaying any such
registration at any time. In the event that any registration pursuant to this
Section IV(D) shall be, in whole or in part, an underwritten public offering of
equity securities, any request by the Purchaser pursuant to this Section IV(D)
to register Shares of Common Stock shall specify that such Shares are to be
included in the underwriting on the same terms and conditions as the equity
securities otherwise being sold through underwriters under such registration.
The number of Shares of Common Stock held by selling shareholders and to be
included in such an underwriting may be reduced (pro rata among all persons or
entities having registration rights), if and to be the extent that the managing
underwriter shall be of the opinion that such inclusion would adversely affect
the marketing of the securities to be sold by Sussex therein; provided, however
that except in the case of an underwritten offering of an equity security other
than Common Stock (in which the number of Shares to be offered on behalf of the
Purchaser may be reduced to zero), in no event shall the number of Shares to be
registered on behalf of the Purchaser be less than all of the Shares for which
Purchaser has requested registration or twenty percent (20%) of the aggregate
number of shares to be offered in such underwriting. If the offering covered by
this Section IV(D) shall be an underwritten public offering, Sussex shall
designate the managing underwriter of such offering. In the event of any such
reduction or cutback in the number of Shares of Common Stock to be registered on
behalf of Purchaser, or in the event that Sussex abandons any such registration
prior to the effective date thereof, the Purchaser shall continue to maintain
the rights provided by this Section IV(D), subject to the termination provisions
of this Agreement.
2. The Purchaser will cooperate with Sussex in all respects in
connection with this Section IV(D), including timely supplying all information
reasonably requested by Sussex and executing and returning all documents
reasonably requested in connection with the registration and sale of the Shares
of Common Stock.
3. The parties agree that the Registration Procedures and
Indemnification provisions set forth in Attachment A are incorporated herein and
shall apply to any registration sought by the Purchaser pursuant to this Section
IV(D).
E. SEC Filings. As of the dates as of which Sussex files any SEC Report
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with the Securities and Exchange Commission, such SEC Reports will comply as to
form in all material respects with the applicable provisions of the Securities
Act and the Exchange Act, will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
are made, not misleading, and will further comply in all material respects with
all applicable requirements of law.
V. CLOSING CONDITIONS
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A. Conditions to Sussex's Obligations under this Agreement. The
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obligations of Sussex hereunder shall be subject to satisfaction at or prior to
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the Closing Date of each of the following conditions, unless waived in whole or
in part by Sussex in its sole discretion:
1. All action required to be taken by, or on the part of, the
Purchaser to authorize the execution, delivery and performance of this Agreement
and the consummation by the Purchaser of the transactions contemplated hereby
shall have been duly and validly taken by the Purchaser.
2. The obligations of the Purchaser required to be performed
by the Purchaser at or prior to the Closing Date pursuant to the terms of this
Agreement shall have been duly performed and complied with in all material
respects, and the representations and warranties of the Purchaser set forth in
this Agreement shall be true and correct in all material respects (other than
representations and warranties of the Purchaser contained in this Agreement that
are qualified as to materiality, which shall be true in all respects) as of the
date of this Agreement and as of the Closing Date, as though made on and as of
such Closing Date, except as to any representation or warranty which
specifically relates to an earlier date.
3. The Purchaser shall have delivered to Sussex a certificate,
dated the Closing Date, and signed by its president or any executive vice
president, to the effect that the conditions set forth in this Section V(A)(1)
and (2) have been satisfied.
4. The parties shall have received all regulatory approvals
required in connection with the sale and purchase of the Shares of Common Stock,
and all notice and waiting periods imposed thereby shall have expired or been
terminated.
5. There shall not be in effect any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits consummation of the transactions contemplated hereby, and neither
party shall have been notified by any regulatory authority of any objection to
the consummation of such transactions.
B. Conditions to the Purchaser's Obligations under this Agreement. The
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obligations of the Purchaser hereunder shall be subject to fulfillment at or
prior to Closing Date, of each of the following conditions, unless waived in
whole or in part by the Purchaser in its sole discretion:
1. All action required to be taken by, or on the part of,
Sussex to authorize the execution, delivery and performance of this Agreement
and the consummation by Sussex of the transactions contemplated hereby shall
have been duly and validly taken by Sussex.
2. The obligations of Sussex required to be performed by
Sussex at or prior to the Closing Date pursuant to the terms of this Agreement
shall have been duly performed and complied with in all material respects, and
the representations and warranties of Sussex set forth in this Agreement shall
be true and correct in all material respects (other than representations and
warranties of Sussex contained in this Agreement that are qualified as to
materiality, which shall be true in all respects) as of the date of this
Agreement and as of the Closing Date, as though made on and as of such Closing
Date, except as to any representation or warranty which specifically relates to
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an earlier date.
3. During the period from June 30, 2000 through the Closing
Date, there shall not have been any event, act or omission (individually or in
the aggregate) which shall have had a material adverse effect upon Sussex, SCSB
and its subsidiaries, whether or not insured, which materially affects the
ability of Sussex, SCSB and its subsidiaries to conduct their businesses.
4. Sussex shall have delivered to the Purchaser a certificate,
dated the Closing Date, and signed by its president or vice president, to the
effect that the conditions set forth in this Section V(B)(1), (2) and (3) have
been satisfied.
5. The parties shall have received all regulatory approvals
required in connection with the sale and purchase of the Shares of Common Stock,
and all notice and waiting periods imposed thereby shall have expired or been
terminated.
6. There shall not be in effect any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits consummation of the transactions contemplated hereby and neither party
shall have been notified by any regulatory authority of any objection to the
consummation of such transactions.
VI. TERMINATION
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A. Termination. This Agreement may be terminated in its entirety on or
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at any time prior to the Closing Date: (i) by the mutual written consent of the
parties hereto, or (ii) by the Purchaser or Sussex if there shall have been any
material breach of any obligation of the other party hereto and such breach
shall not have been remedied within 30 days after receipt by such other party of
notice in writing specifying the nature of such breach and requesting that it be
remedied, or (iii) by the Purchaser or Sussex if the Closing does not occur on
or before [ ], unless the failure to close by such date is due to the failure of
the party seeking to terminate this Agreement to perform or observe any
agreement set forth herein required to be performed or observed by such party.
B. Effect of Termination. In the event of termination of this Agreement
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by either the Purchaser or Sussex or by their mutual written consent as provided
above prior to the Closing, this Agreement shall forthwith become void and there
shall be no further liability on the part of the Purchaser or Sussex to the
other party hereto, except for liability under Sections VII(A) and VIII(A)
hereof and except for liability arising out of a breach of any representation,
covenant or other agreement contained in this Agreement.
VII. Indemnification
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A. Duty to Indemnify. Sussex shall indemnify, defend and hold harmless
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the Purchaser, its officers, directors and representatives, and the Purchaser
shall indemnify, defend and hold harmless Sussex, its officers, directors and
representatives (any party entitled to such indemnification being hereinafter
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referred to as an "Indemnified Party"), from and against all demands, claims,
actions or causes of action, assessments, deficiencies, losses, damages,
liabilities, reasonable costs and reasonable expenses (including, without
limitation, reasonable attorneys' fees and expenses) asserted against, imposed
upon or incurred by an Indemnified Party (collectively, "Damages") as a result
of, or arising from, a breach of any representation, warranty or covenant of an
Indemnifying Party (as defined below) contained in or made pursuant to this
Agreement, other than Damages associated with a decline in the market price of
Sussex's Common Stock suffered by an Indemnified Party as a shareholder;
provided that a claim for such Damages is brought by the Indemnified Party
against the Indemnifying Party (as defined below) within two years after the
Closing Date. The indemnification provisions relating to the Purchaser's
registration rights granted in Section IV(D) hereof are set forth in Attachment
A to this Agreement, entitled "Registration Procedures and Indemnification."
Nothing contained herein is intended to limit any rights that Purchaser may
have, now or in the future, as a shareholder of Sussex under federal or state
law.
B. Conditions of Indemnification. The obligations and liabilities
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of the Indemnifying Party under this Article VII with respect to "Claims" (which
shall mean Damages resulting from the assertion of liability by unrelated third
parties) shall be subject to the following terms and conditions:
1. The Indemnified Party shall give the indemnifying party
(the "Indemnifying Party") prompt notice of any Claim asserted against or
imposed upon or incurred by the Indemnified Party, and the Indemnifying Party
shall undertake the defense thereof by representatives of its own choosing,
subject to the approval of the Indemnified Party, which approval shall not be
unreasonably withheld or delayed.
2. The Indemnified Party shall be entitled to participate at
its own expense in the defense of any Claim, but such defense shall be
controlled by counsel to the Indemnifying Party.
3. The Indemnifying Party shall not, without the Indemnified
Party's prior written consent, settle or compromise any Claim or consent to
entry of any judgment which would impose an injunction or other equitable relief
upon the Indemnified Party or which does not include as an unconditional term
thereof the release by the claimant or the plaintiff of the Indemnified Party
from all liability in respect of such Claim.
C. Notice of Potential Claims. Notwithstanding the two-year limitation
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period set forth in Section VII(A) hereof, each party hereto agrees to give the
other party prompt notice of any Claim asserted against it which might be a
Claim for which indemnity could be sought against the other party.
VIII. MISCELLANEOUS
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A. Expenses. Each party hereto shall bear and pay all costs and
---------
expenses incurred by it in connection with the transactions contemplated hereby,
including fees and expenses of its own financial consultants, accountants and
counsel.
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<PAGE>
B. Survival of Representations and Warranties; Remedies Cumulative.
---------------------------------------------
Each representation and warranty hereunder shall survive the Closing for a
period of two years from and after the Closing Date. No representation or
warranty hereunder shall provide a basis for any claim by one party against the
other party from and after the date as of which it ceases to survive the
Closing. Nothing contained in this Section VIII(B) or otherwise in this
Agreement shall be deemed to limit the claims, rights and remedies to which the
Purchaser may be entitled as a purchaser of shares of Common Stock under federal
and state securities laws or otherwise. The rights and remedies provided to the
parties under this Agreement are cumulative and not exclusive of any other
rights or remedies the parties now have or may hereafter have at law or in
equity.
C. Amendment; Extension and Waiver. Subject to applicable law, at any
---------------------------------
time prior to the consummation of the transactions contemplated by this
Agreement, the parties may (a) amend this Agreement, (b) extend the time for the
performance of any of the obligations or other acts of the other party hereto,
(c) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto, or (d) waive compliance
with any of the agreements or conditions contained in Article IV hereof or
otherwise. This Agreement may not be amended except by an instrument in writing
signed by each of the parties hereto. Any waiver or failure to insist on strict
compliance with any obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
D. Entire Agreement. This Agreement contains the entire agreement and
-----------------
understanding of the parties with respect to the subject matter hereof. This
Agreement supersedes all prior arrangements and understandings between the
parties , both written or oral, with respect to its subject matter. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors; provided, that nothing in this Agreement,
expressed or implied, is intended to confer upon any party, other than the
parties hereto and their respective successors, any rights, remedies,
obligations or liabilities.
E. No Assignment. Neither party hereto may assign any of its rights or
--------------
obligations hereunder to any other person or entity.
F. Notices. All notices or other communications hereunder shall be in
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writing and shall be deemed given if delivered personally or mailed by
recognized overnight courier or by prepaid registered or certified mail (return
receipt requested), addressed as set forth in the preamble to this Agreement and
directed to the president of the intended recipient.
G. Captions. The captions contained in this Agreement are for reference
---------
purposes only and are not part of this Agreement.
H. Counterparts. This Agreement may be executed in any number of
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counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
Page 17 of 23
agreement.
I. Severability. If any provision of this Agreement or the application
-------------
thereof to any person or circumstance shall be invalid or unenforceable to any
extent, the remainder of this Agreement and the application of such provisions
to other persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
J. Governing Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of New Jersey.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
SUSSEX BANCORP
By: _______________________________
Name:
Title:
LAKELAND BANCORP, INC.
By: _______________________________
Name:
Title:
Page 18 of 23
<PAGE>
ATTACHMENT A
REGISTRATION RIGHTS
REGISTRATION PROCEDURES AND INDEMNIFICATION
1. Registration Procedures. If and whenever Sussex is required by any
------------------------
of the provisions of this Agreement to use its best efforts to effect the
registration of any of the Shares of Common Stock under the Securities Act,
Sussex shall (except as otherwise provided in this Agreement), as expeditiously
as possible:
(a) prepare and file with the SEC a registration statement and
shall use its best efforts to cause such registration statement to become
effective and remain effective until (i) all the Shares of Common Stock covered
thereby (the "Covered Securities") are sold or (ii) all holders (other than
"Affiliates" of Sussex, as such term is defined in Rule 144 under the Securities
Act) are eligible to take advantage of the provisions of Rule 144(k) under the
Securities Act with respect to all the Shares of Common Stock (held by persons
other than Affiliates) or (iii) two years from the date on which such
registration statement is declared effective, whichever is earliest;
(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act with respect to the sale or
other disposition of all the Covered Securities;
(c) furnish to the Purchaser such numbers of copies of a
summary prospectus or other prospectus, including a preliminary prospectus or
any amendment or supplement to any prospectus, in conformity with the
requirements of the Securities Act, and such other documents, as the Purchaser
may reasonably request in order to facilitate the public sale or other
disposition of the Covered Securities;
(d) use its best efforts to register and qualify the Covered
Securities under such other securities or blue sky laws of such jurisdictions as
the Purchaser shall reasonably request, and do any and all other acts and things
which may be necessary or advisable to enable the Purchaser to consummate the
public sale or other disposition in such jurisdictions of the Covered Securities
owned by the Purchaser, except that Sussex shall not for any such purpose be
required to qualify to do business as a foreign corporation in any jurisdiction
wherein it is not so qualified or to file therein any general consent to service
of process or to submit itself to taxation in any jurisdiction which otherwise
does not have the right to tax Sussex;
(e) use its best efforts to list such Covered Securities on
any securities exchange on which any securities of Sussex are then listed, if
the listing of such Covered Securities is then permitted under the rules of such
exchange;
(f) notify the Purchaser, at any time when a prospectus
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<PAGE>
relating thereto covered by such registration statement is required to be
delivered under the Securities Act, of the happening of any event of which it
has knowledge as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing; and
(g) take such other actions as shall be reasonably requested
by the Purchaser to facilitate the registration and sale of the Purchaser's
Shares of Common Stock.
2. Withdrawal Obligation. By including any Covered Securities in any
-----------------------
registration statement covered hereby, the Purchaser agrees that (x) Sussex
shall have the right to delay effecting any registration covered hereby in order
to allow Sussex to delay disclosure of sensitive information until such time as
Sussex is otherwise required to make such disclosure, and (y) the Purchaser
shall refrain from selling any Shares of Common Stock if requested to do so by
Sussex, provided that (1) such request shall only be made in order to defer
disclosure of sensitive information until Sussex is otherwise required to make
such disclosure and (2) the Purchaser is not required to refrain from selling
for a period of more than thirty (30) days in any ninety (90) day period.
3. Expenses. All expenses incurred in any registration of the
---------
Purchaser's Shares of Common Stock under this Agreement shall be paid by Sussex,
including, without limitation, printing expenses, fees and disbursements of
counsel for Sussex, expenses of any audits to which Sussex shall agree or which
shall be necessary to comply with governmental requirements in connection with
any such registration, all registration and filing fees for the Purchaser's
Shares of Common Stock under federal and state securities laws, and expenses of
complying with the securities or blue sky laws of any jurisdictions pursuant to
Paragraph 1(d) hereof; provided, however, that Purchaser shall pay any
underwriters' discounts or brokers' commissions incurred in connection with the
sale of Purchaser's Shares.
4. Indemnification. In the event any Shares of Common Stock held by the
----------------
Purchaser are included in a registration
statement pursuant to this Agreement:
(a) Sussex Indemnity. (i) Without limitation of any other
indemnity provided to the Purchaser, either in connection with the Agreement or
otherwise, to the extent permitted by law, Sussex shall indemnify and hold
harmless the Purchaser, its affiliates, counsel, officers, stockholders,
representatives directors, partners, underwriters (as defined in the Securities
Act), control persons, underwriter's control persons (within the meaning of the
Securities Act or the Exchange Act (collectively, the "Indemnified Purchaser
Parties")), against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the Securities Act, the Exchange
Act or other federal or state law (collectively, the "Claims"), insofar as such
Claims (or actions in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively a "Violation"): (A)
any untrue statement or alleged untrue statement of a material fact contained in
such registration statement including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (B) the
omission or alleged omission to state therein a material fact required to be
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<PAGE>
stated therein, or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or (C) any violation
or alleged violation by Sussex of the Securities Act, the Exchange Act or any
state securities law or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any state securities law, and Sussex shall reimburse
the Indemnified Purchaser Parties for any reasonable legal or other reasonable
expenses incurred by them in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that Sussex shall
not be liable to any Indemnified Purchaser Party in any such case for any such
loss, claim, damage, liability or action to the extent that it arises out of or
is based upon a Violation which occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration statement by any such Indemnified Purchaser Party.
(ii) The foregoing notwithstanding, Sussex shall not
be liable to the extent that any such Claim arises out of or is based upon a
Violation or alleged Violation made in any preliminary prospectus if (A) such
Indemnified Purchaser Party failed to send or deliver a copy of the prospectus
with or prior to the delivery of written confirmation of the sale of Shares of
Common Stock giving rise to such Claim and (B) the prospectus would have
corrected such untrue statement or omission.
(iii) In addition, Sussex shall not be liable to the
extent that any such Claim arises out of or is based upon a Violation or alleged
Violation in a prospectus, (A) if such Violation or alleged Violation is
corrected in an amendment or supplement to such prospectus and (B) having
previously been furnished by or on behalf of Sussex with copies of the
prospectus as so amended or supplemented, such Indemnified Purchaser Party
thereafter fails to deliver such prospectus as so amended or supplemented prior
to or concurrently with the sale to the person who purchased Shares of Common
Stock from such Indemnified Purchaser Party and who is asserting such Claim.
(b) Purchaser Indemnity. The Purchaser shall indemnify and
---------------------
hold harmless Sussex, its affiliates, its counsel, officers, directors,
stockholders, representatives and partners, any underwriter (as defined in the
Securities Act) and each person, if any, who controls Sussex or the underwriter
(within the meaning of the Securities Act or the Exchange Act), against any
Claims (joint or several) to which they may become subject under the Securities
Act, the Exchange Act or any state securities law, and the Purchaser shall
reimburse Sussex and each such affiliate, counsel, officer, director,
stockholder, representative or partner, underwriter or controlling person for
any reasonable legal or other reasonable expenses incurred by them in connection
with investigating or defending any such Claim insofar as such Claims (or
actions and respect thereof) arise out of or are based upon (i) written
information provided by the Purchaser to Sussex expressly for inclusion in such
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto or (ii) any sale by
the Purchaser after receipt from Sussex of the notice described in Paragraph
1(f) hereof and prior to acceptance from Sussex of an amended or supplemental
prospectus; provided, however, that the maximum amount which may be recovered
from the Purchaser pursuant to the indemnification granted under clause (i) in
this paragraph shall be limited to the amount of proceeds received by the
Purchaser from the sale of Shares of Common Stock by the Purchaser pursuant to
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<PAGE>
such registration statement.
(c) Notice; Right to Defend. Promptly after receipt by an
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indemnified party under this Paragraph 4 of notice of the commencement of any
action (including any governmental action), such indemnified party shall, if a
claim in respect thereof is to be made against any indemnifying party under this
Paragraph 4, deliver to the indemnifying party a written notice of the
commencement thereof, and the indemnifying party shall have the right to
participate in and, if the indemnifying party agrees in writing that it will be
responsible for any costs, expenses, judgments, damages and losses incurred by
the indemnified party with respect to such claim, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that an indemnified
party shall have the right to retain its own counsel, with the fees and expenses
to be paid by the indemnifying party, if the indemnified party reasonably
believes that representation of such indemnified party by the counsel retained
by the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action shall relieve such indemnifying party of any liability to the
indemnified party under this provision only if and to the extent that such
failure is prejudicial to its ability to defend such action, and the omission so
to deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
provision.
If an indemnified party notifies an indemnifying party in
writing that such indemnified party elects to employ separate counsel at the
expense of the indemnifying party as permitted by the provisions of the
preceding paragraph, the indemnifying party shall not have the right to assume
the defense of such action or proceeding on behalf of such indemnified party.
The foregoing notwithstanding, the indemnifying party shall not be liable for
the fees and expenses of more than one separate firm of attorneys at any time
for such indemnified party and any other indemnified parties (which firm shall
be designated in writing by such indemnified parties) in connection with any one
such action or proceeding or separate but substantially similar or related
actions or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances.
(d) Contribution. If the indemnification provided for in this
-------------
provision is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any Claim referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party thereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such loss, liability, claim, damage or expense in such proportion as
is appropriate to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other hand in connection with the
statements or omissions which resulted in such loss, liability, claim, damage or
expense as well as any other relevant equitable considerations. The relative
fault of the indemnifying party and the indemnified party shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to information and opportunity
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<PAGE>
to correct or prevent such statement or omission. Notwithstanding the foregoing,
the amount the Purchaser shall be obligated to contribute pursuant to this
provision (other than as described in Paragraph 4(b)(ii) hereof) shall be
limited to an amount equal to the proceeds to the Purchaser of the Shares of
Common Stock sold pursuant to the registration statement which gives rise to
such obligation to contribute (less the aggregate amount of any damages which
the Purchaser has otherwise been required to pay in respect of such Claim or any
substantially similar Claim arising from the sale of such Shares of Common
Stock).
(e) Survival of Indemnity. The indemnification provided by
this provision shall be a continuing right to indemnification and shall survive
the registration and sale of any Shares of Common Stock by Purchaser hereunder
and the expiration or termination of this Agreement.
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