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EXHIBIT 1
STOCK PURCHASE AGREEMENT
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FOR SHARES OF
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SUSSEX BANCORP
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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 acquired by
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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
"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.
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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 made by
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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 consists solely
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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 filings or
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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 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
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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 SEC Reports,
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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,
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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, neither
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Sussex nor any 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 of Shares
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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 for possible
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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, validly
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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
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Purchaser; or (ii) violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to the Purchaser.
C. Consents and Approvals. No consents or approvals of, or filings or
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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 its own
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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 the
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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 conditions herein
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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 other
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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 disposition by
the Purchaser (in accordance with its written request); provided that nothing
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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
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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
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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
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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 with
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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.
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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
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
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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. 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 at
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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.
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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
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 of the
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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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<PAGE>
A. Expenses. Each party hereto shall bear and pay all costs and expenses
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incurred by it in connection with the transactions contemplated hereby,
including fees and expenses of its own financial consultants, accountants and
counsel.
B. Survival of Representations and Warranties; Remedies Cumulative. Each
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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
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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
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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.
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<PAGE>
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
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
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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: /s/Donald L. Kovach
-------------------
Name: Donald L. Kovach
Title: President/CEO
LAKELAND BANCORP, INC.
By: /s/Roger Bosma
--------------
Name: Roger Bosma
Title: President & Chief Executive Officer
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<PAGE>
ATTACHMENT A
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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 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
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<PAGE>
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 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
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<PAGE>
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 such registration statement.
(c) Notice; Right to Defend. Promptly after receipt by an 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
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<PAGE>
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
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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
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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