<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission only (as permitted by Rule 14a-
6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-12
LAKELAND BANCORP, INC.
----------------------
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Consent Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
-----------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------
(5) Total fee paid:
------------------------------
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------
(3) Filing Party:
-----------------------
(4) Date Filed:
-----------------------
<PAGE>
[Lakeland Logo]
LAKELAND BANCORP, INC.
-----------------------
250 OAK RIDGE ROAD
------------------
OAK RIDGE, NEW JERSEY 07438
-----------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 3, 2000
Notice is hereby given that the Annual Meeting of Stockholders of Lakeland
Bancorp, Inc. will be held at Perona Farms, 350 Andover Sparta Road, Andover,
New Jersey 07821 on Wednesday, May 3, 2000 at 5:00 p.m. for the following
purposes:
1. To elect four directors as set forth in the annexed Proxy Statement.
2. To consider and vote upon a proposal to adopt the Lakeland Bancorp,
Inc. 2000 Equity Compensation Program.
3. To transact such other business as may properly come before the
meeting.
In accordance with the Bylaws of Lakeland Bancorp, Inc., the close of
business on March 20, 2000, has been fixed as the record date for the
determination of stockholders entitled to receive notice of, and to vote at, the
Annual Meeting of Stockholders or any adjournment or adjournments thereof.
Enclosed is the Annual Report, a Proxy Statement, and form of Proxy. You
are cordially invited to attend this meeting. It is important that your shares
be represented, regardless of the number you own. Whether or not you plan to
attend the meeting, please return the enclosed proxy, duly signed, as promptly
as possible, in the enclosed envelope.
By Order of the Board of Directors
BRUCE G. BOHUNY
SECRETARY
Oak Ridge, New Jersey
March 31, 2000
<PAGE>
LAKELAND BANCORP, INC.
------------------------
PROXY STATEMENT
----------------
Annual Meeting of Stockholders, May 3, 2000
Approximate Mailing Date: March 31, 2000
SOLICITATION OF PROXY
-----------------------
THE ENCLOSED PROXY IS SOLICITED BY AND ON BEHALF OF THE BOARD OF DIRECTORS
OF LAKELAND BANCORP, INC. (hereinafter called "Lakeland") for use in connection
with the Annual Meeting of Stockholders to be held at Perona Farms, 350 Andover
Sparta Road, Andover, New Jersey 07821 on Wednesday, May 3, 2000 at 5:00 p.m.,
and at any adjournments thereof. The matters to be considered and acted upon at
such meeting are referred to in the enclosed notice of such meeting and are more
fully discussed below.
Only stockholders of record at the close of business on March 20, 2000, the
record date fixed by the Board of Directors, will be entitled to notice of, and
to vote at, the Annual Meeting. If the enclosed Proxy is properly executed and
returned to Lakeland and not revoked before its exercise, all shares represented
thereby will be voted as specified in the form of Proxy. If the Proxy is signed
but no specification is given, the shares will be voted in favor of the Board's
nominees for election to the Board and in favor of the proposal to adopt the
Lakeland Bancorp, Inc. 2000 Equity Compensation Program (the "Stock Option
Plan"). The Proxy will enable you to assure that your shares are voted and to
aid in securing a quorum at the meeting.
The entire cost of this solicitation will be borne by Lakeland. Officers
and regular employees of Lakeland may also, but without additional compensation,
solicit proxies by further mailings, personal conversations, telephone,
telegraph, facsimile or e-mail.
REVOCATION OF PROXY
---------------------
THE ENCLOSED PROXY MAY BE REVOKED IN PERSON OR IN WRITING BY NOTIFICATION
TO THE SECRETARY, BRUCE G. BOHUNY, LAKELAND BANCORP, INC., 250 OAK RIDGE ROAD,
OAK RIDGE, NEW JERSEY 07438, AT ANY TIME PRIOR TO ITS EXERCISE OR BY SUBMITTING
A DULY SIGNED, LATER-DATED PROXY.
CAPITAL STOCK OUTSTANDING
---------------------------
At the close of business on March 20, 2000, there were 12,670,062 shares of
Lakeland's common stock, no par value (the "Common Stock"), outstanding and
entitled to vote at the Annual Meeting. Each share will be entitled to one vote
on all matters properly coming before the meeting. Provided that a quorum is
present, directors will be elected by a plurality vote (there is no right to
vote stock cumulatively) and the adoption of the Stock Option Plan will acquire
the affirmative vote of a majority of the votes cast with respect to such
proposal. A majority of the shares of Common Stock outstanding on the record
date will constitute a quorum for purposes of the Annual Meeting. For purposes
of determining the votes cast with respect to any matter presented for
consideration at the Annual Meeting, only those votes cast "for" or "against"
are included. Abstentions and broker non-votes are counted only for the purpose
of determining whether a quorum is present at the Annual Meeting.
To Lakeland's knowledge, no person beneficially owned more than 5% of the
outstanding voting securities of Lakeland as of December 31, 1999.
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<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
-----------------------
Unless a shareholder either indicates "withhold authority" on his proxy or
indicates on his proxy that his shares should not be voted for certain nominees,
it is intended that the persons named in the proxy will vote for the election as
directors of the four persons named in Table I below to serve until the
expiration of their respective three year terms and thereafter until their
successors shall have been duly elected and shall have qualified. Discretionary
authority is also solicited to vote for the election of a substitute for any of
said nominees who, for any reason presently unknown, cannot be a candidate for
election.
Table I sets forth the names and ages of the nominees for election to the
Board of Directors, the positions and offices presently held by each such person
within Lakeland, the period during which each such person has served on
Lakeland's Board of Directors, the expiration of their respective terms, the
principal occupations and employment of each such person during the past five
years, and the number of shares of Lakeland Common Stock which they beneficially
owned as of February 1, 2000. Table II set forth comparable information with
respect to those directors whose terms of office will continue beyond the date
of the Annual Meeting. Unless otherwise indicated, positions have been held for
more than five years. Unless otherwise stated in the footnotes following the
tables, the nominees and other directors listed in the tables have sole power to
vote and dispose of the shares which they beneficially owned as of February 1,
2000.
All of the persons named in both tables have been directors of Lakeland and
Lakeland Bank for at least five years, except as follows: (a) Mary Ann Deacon
was appointed to the Boards of Directors of Lakeland and Lakeland Bank on
November 8, 1995, (b) Paul P. Lubertazzi and Joseph P. O'Dowd were appointed to
the Boards of Lakeland and Lakeland Bank on February 25, 1998, following the
acquisition of Metropolitan State Bank (which was merged into Lakeland Bank in
January 2000), (c) Charles L. Tice, Michael A. Dickerson and George H. Guptill,
Jr. were appointed to the Board of Lakeland on July 15, 1999, in connection with
the acquisition of High Point Financial Corp. and (d) Roger Bosma was appointed
to the Boards of Lakeland and Lakeland Bank on June 1, 1999, upon becoming
Lakeland's Chief Executive Officer. Mark J. Fredericks is John W. Fredericks'
son.
TABLE I
NOMINEES FOR ELECTION AS DIRECTORS
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED AS OF
EXPIRATION FEBRUARY 1, 2000
NAME AND DIRECTOR OF TERM IF BUSINESS NUMBER PERCENT
AGE SINCE ELECTED EXPERIENCE OF SHARES OF CLASS
--- ----- ------- ---------- --------- --------
<S> <C> <C> <C> <C> <C>
Bruce G. Bohuny 1989 2003 Senior Vice President - Real 135,755 1.07%
Age 67 Estate, Lakeland Bancorp, Inc. (a)
(6/1/99 to present); Secretary,
Lakeland Bancorp, Inc. (5/19/89
to present); Secretary, Lakeland
Bank (5/19/69 to present);
President, Brooks Limited (a real
estate development corporation),
Wyckoff, NJ
Mary Ann Deacon 1995 2003 Secretary/Treasurer of Deacon 70,280 0.55%
Age 48 Homes, Inc. and Deacon (b)
Development Corp. (real estate
development), Sparta, NJ
</TABLE>
-3-
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Michael A. Dickerson 1999 2003 President and CEO, High Point 22,307 0.18%
Age 63 Financial Corp. (6/29/88 to (c)
7/14/99); President, The National
Bank of Sussex County (2/11/92 to
11/17/98); CEO, The National Bank
of Sussex County (2/11/92 to
12/31/99)
Joseph P. O'Dowd 1998 2003 President and Owner of O'Dowd 13,138 0.10%
Age 53 Advertising of Montville, NJ (d)
(4/14/82 to present); partner of
O'Dowd Associates (real estate
holding company) (7/1/86 to
present) and O'Dowd Realty
(7/1/86 to present)
</TABLE>
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<PAGE>
TABLE II
CONTINUING DIRECTORS
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED AS OF
FEBRUARY 1, 2000
NAME AND DIRECTOR EXPIRATION BUSINESS NUMBER PERCENT
AGE SINCE OF TERM EXPERIENCE OF SHARES OF CLASS
- --------------------- ------------ ------------------ -------------------------------- -------------- ---------------------
<S> <C> <C> <C> <C> <C>
Roger Bosma June, 1999 2002 President and CEO, Lakeland 6,000 0.05%
Age 57 Bancorp, Inc. (6/1/99 to (e)
present); Executive Vice
President, Hudson United
Bancorp (5/97 to 6/99);
President and CEO of
Independence Bank of New Jersey
(prior years to 5/97)
John W. Fredericks 1989 2001 Chairman, Lakeland Bancorp, 478,011 3.78%
Age 63 Inc. (6/1/99 to present); (f)
Chairman, Lakeland Bank (6/1/99
to present); President,
Lakeland Bancorp, Inc. (5/19/89
to 5/31/99); President,
Lakeland Bank (5/19/69 to
5/31/99); President and Owner,
Fredericks Fuel and Heating
Service, Oak Ridge, NJ
Mark J. Fredericks 1994 2002 President of Keil Oil Company, 284,011 2.24%
Age 39 Riverdale, NJ (g)
George H. Guptill, 1999 2002 President, Franklin Mutual 413,340 3.26%
Jr. Insurance Co., Branchville, NJ (h)
Age 61
Paul P. Lubertazzi 1998 2001 Retired; President and CEO, 43,232 0.34%
Age 65 Metropolitan State Bank (6/88 (i)
to 1/31/00); Chairman,
Metropolitan State Bank (4/96
to 1/31/00)
Robert B. Nicholson 1989 2002 Vice Chairman, Lakeland 308,504 2.44%
Age 71 Bancorp, Inc. (6/1/99 to (j)
present); Vice Chairman,
Lakeland Bank (6/1/99 to
present); Chairman, Lakeland
Bancorp, Inc. (5/19/89 to
5/31/99); Chairman, Lakeland
Bank (5/19/69 to 5/31/99);
Chairman, Eastern Propane
Corp., Oak Ridge, NJ (9/21/88
to present)
</TABLE>
-5-
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
John Pier, Jr. 1989 2001 Retired; Dentist, Vernon, NJ 90,694 0.72%
Age 73 (k)
Charles L. Tice 1999 2001 Chairman, High Point Financial 40,960 0.32%
Age 66 Corp. (5/21/96 to 7/14/99); (l)
Retired since 1993
Arthur L. Zande 1989 2002 Vice President and Treasurer, 22,122 0.17%
Age 65 Lakeland Bancorp, Inc. (6/1/99 (m)
to present); President and CEO,
Lakeland Bank (6/1/99 to
present); Executive Vice
President and CEO, Lakeland
Bancorp, Inc. (5/19/89 to
5/31/99); Executive Vice
President and CEO, Lakeland
Bank (10/1/72 to 5/31/99)
</TABLE>
________________
Included in the amounts beneficially owned listed in the tables, the directors
of Lakeland held the following interests:
(a) Includes 16,533 shares owned by Mr. Bohuny's wife, Judy Bohuny; 383 shares
held in name of the Estate of Emma Bohuny - Bruce G. Bohuny, Executor;
1,257 shares held by Brooks Ltd. of which Mr. Bohuny is President; 6,592
shares held by the Zurick Group, of which Mr. Bohuny is managing partner;
and 3,198 shares held in a retirement fund for Mr. Bohuny's benefit.
(b) Includes 28,292 shares in the name of Philip Deacon, husband of Mary Ann
Deacon.
(c) Includes 1 share held in name of Michael Dickerson and Suzanne Dickerson,
wife of Michael Dickerson; and 8,037 shares held for Michael Dickerson in an
IRA.
(d) Includes 12,881 shares owned jointly by Joseph O'Dowd and his wife Patricia.
(e) Includes 4,000 shares held jointly by Roger and Holly Bosma, wife of Roger
Bosma.
(f) Includes 127,594 shares owned by Mr. Fredericks' wife, Jane D. Fredericks;
119,379 shares held in the name of John W. Fredericks, Jane D. Fredericks
and Mark J. Fredericks, Trustees for Fredericks Fuel and Heating Service
Employee Profit Sharing Plan; and 97,996 shares held in the name of Edward
J. Fredericks and John W. Fredericks Trustees U/W Wilbur Fredericks Trust.
(g) Includes 22,437 shares owned by Mr. Fredericks' wife, Shelley B. Fredericks;
17,470 shares held by Mark J. Fredericks custodian for Douglas; 17,470 held
by Mark J. Fredericks custodian for William; 17,471 shares held by Mark J.
Fredericks custodian for Leanne; 17,467 shares held by Mark J. Fredericks
custodian for Emily; 17,363 shares held by Keil Oil Employee Profit Sharing
Plan; and 119,379 shares held by John W. Fredericks, Jane D. Fredericks, and
Mark J. Fredericks Trustees for Fredericks Fuel and Heating Service Profit
Sharing Plan.
(h) Includes 2,400 shares held in an IRA for George H. Guptill, Jr.; and 380,000
shares held in name of Franklin Mutual Insurance Co., of which Mr. Guptill
is President.
(i) Includes 39,326 shares owned jointly by Paul and Barbara Lubertazzi, Mr.
Lubertazzi's spouse; 250 shares owned jointly by Paul and Leslie Lubertazzi,
Mr. Lubertazzi's daughter; 250 shares owned jointly by Paul and Sandra
Lubertazzi, Mr. Lubertazzi's daughter; 250 shares jointly owned by Paul and
Glen Lubertazzi, Mr. Lubertazzi's son and 250 shares owned jointly by Paul
and Matthew Lubertazzi, Mr. Lubertazzi's son.
(j) Includes 93,844 shares owned by Mr. Nicholson's wife, Shirley M. Nicholson;
14,406 shares registered in the name of Eastern Propane Corp. (a corporation
of which Mr. Nicholson is Chairman of the Board).
-6-
<PAGE>
(k) Includes 4,599 shares owned by Mr. Pier's wife, Jane Pier; 9,609 shares
owned by Mr. Pier and his wife, Jane Pier, jointly; and 12,720 shares held
in an IRA for Mr. Pier.
(l) Includes 8,900 shares held by Charles Tice and Mark Tice, co-trustees U/W of
Gale A. Tice.
(m) Includes 2,080 shares held by Mr. Zande's wife, Nancy T. Zande.
Security Ownership of Management
The following table sets forth information regarding the beneficial ownership
of Lakeland's Common Stock as of February 1, 2000 by (i) the two Named Officers
(as defined below under "Executive Compensation") who are not directors of
Lakeland and (ii) all current executive officers and directors of Lakeland as a
group. Unless otherwise indicated, each of the named stockholders possesses
sole voting and investment power with respect to the shares beneficially owned.
For information concerning the beneficial ownership of Lakeland's Common Stock
by directors and nominees for director, see the tables above under "Proposal
One--Election of Directors".
Shares
Beneficially Owned
as of February 1, 2000
----------------------
Stockholder Number Percent
----------- ------ -------
Robert A. Vandenbergh...................... 12,858(A) .10%
Louis E. Luddecke.......................... 12,697 .10%
All current executive officers and
directors as a group (17 persons) (B).. 1,842,530 14.54%
- ------------------------
(A) Includes, 7,236 shares which have been allocated to Mr. Vandenbergh in the
ESOP.
(B) Includes Joseph F. Hurley, who joined Lakeland as Executive Vice President
and Chief Financial Officer in November 1999, and Jeffrey J. Buonforte, who
joined Lakeland as Executive Vice President and Chief Retail Officer in
November 1999.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder require Lakeland's directors,
executive officers and 10% shareholders to file with the SEC certain reports
regarding such persons' ownership of Lakeland's securities. Lakeland is
required to disclose any failures to file such reports on a timely basis.
During the year ended December 31, 1999, initial reports of beneficial ownership
on Form 3 were not filed on a timely basis for Michael A. Dickerson, Charles L.
Tice and George H. Guptill, Jr., all of whom became directors of Lakeland in
connection with Lakeland's acquisition of High Point Financial Corp. in July
1999. The failure to file on a timely basis was inadvertent; the filings were
made promptly after the failures to file were noted. There were no other
untimely filings for the year ended December 31, 1999.
Executive Compensation
The following table sets forth, for the years ended December 31, 1999,
1998, and 1997, the cash compensation paid by Lakeland and its subsidiaries, as
well as certain other compensation paid or accrued by such entities for those
years, to the two people who served as Lakeland's Chief Executive Officer during
1999, and the other three persons who were executive officers of Lakeland at
December 31, 1999 and whose total annual salary and bonus for 1999 exceeded
$100,000 (the "Named Officers"), for services rendered in all capacities as an
executive officer during such period.
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<PAGE>
SUMMARY COMPENSATION TABLE
----------------------------
<TABLE>
<CAPTION>
Name and Principal Annual Compensation (B)
---------------------------------------- All Other (C)
Position Year Salary Bonus Compensation
- -------- ---- ------ ----- ------------
<S> <C> <C> <C> <C>
Roger Bosma (A)................. 1999 $134,135 $30,000 $ 2,093
President and
Chief Executive
Officer
Arthur L. Zande (D)............. 1999 225,000 - 43,586
Executive Vice 1998 210,000 - 137,160
President and 1997 195,000 - 140,890
Chief Executive
Officer
Paul P. Lubertazzi (E).......... 1999 201,925(F) 50,000(G) 24,783
President and Chief 1998 165,000 15,000 9,124
Executive Officer of 1997 150,000 15,000 9,192
Metropolitan State Bank
Robert A. Vandenbergh (H)....... 1999 134,584 - 14,576
Executive Vice President 1998 122,225 - 7,190
and Chief Lending Officer 1997 108,458 - 3,584
Louis E. Luddecke (I)........... 1999 120,691 - 16,666
Executive Vice President 1998 109,498 11,990(J) 15,357
and Chief Operations Officer 1997 103,500 - 14,655
</TABLE>
_______________
(A) Mr. Bosma joined Lakeland as President and CEO on June 1, 1999.
(B) During the three years ended December 31, 1999, no Named Officer received
perquisites (i.e., personal benefits) in excess of 10% of such person's
reported salary and bonus.
(C) All other compensation for each of the Named Officers for 1999 consisted of
the following: Mr. Bosma, an annual contribution of $333 made by Lakeland
Bank for annual premiums for term life insurance in excess of $50,000 and
the fair market value of the personal use of a company car of $1,760; Mr.
Zande, an annual contribution of $1,404 made by Lakeland Bank for annual
premiums for term life insurance in excess of $50,000, annual contribution
to Lakeland Bank's profit sharing plan on behalf of Mr. Zande of $17,035,
increases to Mr. Zande's profit sharing plan account of $22,975, reflecting
his allocated portion of plan earnings and forfeitures, and the fair market
value of the personal use of a company car of $2,172; Mr. Lubertazzi, an
annual contribution of $2,923 paid by Metropolitan State Bank as insurance
premiums for Mr. Lubertazzi's benefit, the fair market value of the personal
use of a company car of $3,485, a contribution of $3,375 to Metropolitan
State Bank's 401(k) Plan to match 1999 pre-tax elective deferral
contributions (included under "Salary") made by Mr. Lubertazzi to such Plan
and $15,000 paid to Mr. Lubertazzi to lease an automobile; Mr. Vandenbergh,
a contribution to the NBSC 401(k) Plan to match elective deferral
contributions (included under "Salary") of $3,938, a cash contribution of
$10,378 to the ESOP on Mr. Vandenbergh's behalf and a company paid group
term insurance that does not have to be weighted based on age of $260; and
Mr. Luddecke, an annual contribution of $1,323 paid by Metropolitan State
Bank as insurance premiums for Mr. Luddecke's benefit, a contribution of
$8,448 to Metropolitan State Bank's 401(k) Plan to match 1999 pre-tax
elective deferral contributions (included under "Salary") made by Mr.
Luddecke to such Plan, the fair market value of the personal use of a
company car of $5,695, and a payment of $1,200 for club dues. In addition,
a total of 1,270 and 1,072 shares of
-8-
<PAGE>
common stock were allocated to Mr. Vandenbergh in 1998 and 1997, pursuant
to the ESOP. (High Point maintained an ESOP prior to its acquisition by
Lakeland. The High Point share numbers have been adjusted for the exchange
ratio applicable in Lakeland's acquisition of High Point.)
(D) Mr. Zande currently serves as Vice President and Treasurer of Lakeland and
President and Chief Executive Officer of Lakeland Bank.
(E) Mr. Lubertazzi became an executive officer of Lakeland upon the consummation
of Lakeland's acquisition of Metropolitan State Bank. He retired as an
executive officer effective January 31, 2000.
(F) Includes $15,000 of salary for January 2000 that was prepaid in 1999.
(G) Includes a $25,000 bonus for 1998 that was paid in 1999 and a $25,000 bonus
for 1999 that was paid in 1999.
(H) Mr. Vandenbergh became an Executive Vice President of Lakeland in October
1999. He served as President of The National Bank of Sussex County from
November 1998 until October 1999.
(I) Mr. Luddecke became an Executive Vice President of Lakeland in October 1999.
In prior years he served as Executive Vice President and Chief Financial
Officer of Metropolitan State Bank.
(J) Represents a bonus for 1997 that was paid in 1998.
Employment Agreement and Other Arrangements with Executive Officers
Lakeland and Lakeland Bank have entered into an employment agreement
(the "Employment Agreement") with Mr. Bosma as of January 1, 2000 whereby he
serves as the President and Chief Executive Officer of Lakeland. The initial
term of the Employment Agreement is three years, and is automatically renewable
for one year on each anniversary date thereof unless a majority of the directors
of Lakeland vote not to extend the term. The Employment Agreement provides that
Mr. Bosma will receive an annual base salary of $250,000 and stock options by
December 31, 2000 having a value equal to at least one year's base salary. Mr.
Bosma is also entitled to use of a Lakeland Bank-supplied automobile, Lakeland
Bank paid membership in a country club approved by the Board and supplemental
life insurance equal to two times base salary. If Mr. Bosma's employment is
terminated by Lakeland other than for cause (as defined in the Employment
Agreement), and a change in control (as defined in the Employment Agreement) has
not occurred, he will receive his then current base salary, an annual bonus
equal to the average annual bonus paid him during the three most recent fiscal
years preceding his termination, and applicable perquisites and benefits for the
balance of the term. The Employment Agreement contains confidentiality and non-
compete covenants from Mr. Bosma in favor of Lakeland.
In the event of a change in control, the term of the Employment
Agreement becomes fixed for a period of three years from the date of such event.
During such period, Mr. Bosma is to be employed as President and Chief Executive
Officer of Lakeland and is entitled to a base salary that is no less than the
salary in effect as of the change in control, an annual bonus equal to the
average annual bonus paid him during the three most recent fiscal years prior to
the change in control, and continuation of other benefits and perquisites in
effect as of the change in control. If following a change in control, Mr.
Bosma's employment is terminated without cause, or he resigns within 90 days for
good reason (as defined in the Employment Agreement) or after such 90 day period
for any reason, he will be entitled to continued life and health insurance
benefits for three years and a lump sum cash payment equal to three times the
sum of his pre-change in control salary and the average annual bonus paid him
during the three most recent fiscal years prior to the change in control. To
the extent that the amount payable to Mr. Bosma on account of a change in
control is subject to an excise tax under Section 4999 of the Code, Mr. Bosma
will also receive an additional payment equal to 10% of such amount; provided,
however, that if the net amount retained by Mr. Bosma after payment of such
excise tax is less than the maximum amount which could be paid him without
triggering the excise tax, then the amount and benefits otherwise payable or to
be provided to Mr. Bosma will be reduced to such maximum amount. For purposes
of the Employment Agreement, the term "change in control" has the same meaning
as under the Stock Option Plan. See Proposal Two.
On October 1, 1996, High Point Financial Corp. entered into change of
control agreements with Michael A. Dickerson and Robert A. Vandenbergh.
Lakeland acknowledged that the merger of Lakeland
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<PAGE>
and High Point, which was effected on July 15, 1999, constituted a change in
control for Mr. Dickerson and that if he terminated his employment within six
months of the merger he would be entitled to receive a payment pursuant to his
change of control agreement. Mr. Dickerson retired on December 31, 1999, and,
accordingly, he received a lump sum payment on that date of $608,074. Mr.
Vandenbergh remained as an officer of NBSC after the merger and is now an
executive officer of Lakeland. Accordingly, his change of control agreement was
not triggered by the merger.
During 1996, NBSC entered into a salary continuation agreement with
each of Messrs. Dickerson and Vandenbergh. These agreements entitle them to
certain payments upon their retirement. As part of the Lakeland/High Point
merger, Lakeland placed in trusts amounts equal to the present value of the
amounts that would be owed to Messrs. Dickerson and Vandenbergh upon their
retirement. These amounts are $722,000 and $381,000 for Mr. Dickerson and Mr.
Vandenbergh, respectively. Lakeland has no further obligation to pay additional
amounts pursuant to these agreements. In January 2000, Mr. Dickerson began
receiving a monthly annuity of $6,490 pursuant to this agreement.
In connection with Lakeland's acquisition of Metropolitan State Bank
in 1998, Lakeland agreed to (1) provide to Mr. Lubertazzi an additional annuity
comparable to the annuity provided to him by Metropolitan at a cost to Lakeland
of $278,000 and (2) provide to Mr. Lubertazzi certain retiree medical benefits
at a cost to Lakeland of $45,000. Mr. Lubertazzi retired on January 31, 2000.
He is expected to receive an annual distribution of $35,000 for 15 years
pursuant to this annuity, provided that Lakeland is not required to incur any
additional costs to fund this obligation.
Mr. Lubertazzi previously entered into a separate agreement with
Metropolitan State Bank which was assumed by Lakeland. Pursuant to that
agreement, Lakeland is required to pay Mr. Lubertazzi or his beneficiary an
aggregate of $525,000 payable in 15 annual installments beginning on his
retirement date (January 31, 2000) or date of death. In order to fund this
obligation, Metropolitan obtained a variable life insurance policy, which had a
cash surrender value of approximately $230,000 as of December 31, 1999.
Although no assurance can be given, Lakeland does not expect to expend
additional significant amounts to fund this obligation.
Board Committees and Directors' Compensation
During 1999, the Lakeland's Board of Directors held nine meetings.
During the fourth quarter of 1999, Lakeland's Board of Directors formed several
committees. The Audit Committee, consisting of George Guptill, Jr., Michael
Dickerson, Mark Fredericks, and John Pier, which is expected to meet quarterly,
is responsible for reviewing the reports submitted by Lakeland's independent
accountants and internal auditor and for reporting to the Board on significant
audit and accounting principles, policies, and practices related to Lakeland.
The Audit Committee met once in 1999.
The Nominating Committee, consisting of Robert Nicholson, John Pier,
and Mary Ann Deacon, which is expected to meet at least once a year, is
responsible for interviewing potential candidates for election to the Board and
for nominating individuals each year for election to the Board. The Nominating
Committee did not meet in 1999.
The Compensation Committee, consisting of Robert Nicholson, Mary Ann
Deacon, and Paul Lubertazzi, which is expected to meet at least two times a
year, makes compensation decisions for Lakeland's staff. The Compensation
Committee met once in 1999. The Compensation Committee will not administer the
Stock Option Plan, which is administered by the full Board.
The Asset Liability Committee, consisting of Joseph O'Dowd, Bruce
Bohuny, Charles Tice, and Paul Lubertazzi, which is expected to meet quarterly,
is responsible for the general supervision of the affairs of the subsidiary
banks, including interest rate risk and liquidity management. The Asset
Liability Committee did not meet in 1999.
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<PAGE>
Each director currently receives a fee of $625 for each meeting of
Lakeland's Board that he or she attends. In addition, beginning with the year
2000, each director of Lakeland will receive a $5,500 retainer (other than Roger
Bosma and Arthur L. Zande) and $150 per committee meeting attended. Each member
of Lakeland's Board was present for 75% or more of the aggregate of the total
meetings of the Board and committees on which he or she served.
Each director of Lakeland Bank received a $5,500 retainer in 1999
(other than Roger Bosma, Arthur L. Zande and Paul P. Lubertazzi). Each director
of Lakeland Bank also received $625 per board meeting attended and $150 per
committee meeting attended. Each director of Lakeland Investment Corp., a
subsidiary of Lakeland Bank, received $625 per board meeting attended in 1999
and will receive $650 per board meeting attended in 2000.
Each director of Metropolitan State Bank received $350 per board
meeting attended, $200 per loan committee meeting attended and $50 for each
other committee meeting attended.
Each director of NBSC received a $5,500 retainer in 1999. Each
director of NBSC also received $250 per board meeting attended and $200 per
committee meeting attended. The chairman of the board of NBSC received an
additional $3,000 in 1999.
The Board of Directors adopted a plan, effective January 1, 1996,
which provides that any director having attained age 72 (75 for directors active
as of the date of plan inception) and having completed ten years of service may
retire and continue to be paid for a period of ten years at a rate of $5,000,
$7,500, $10,000 or $12,500 per annum, depending upon years of credited service.
This plan is unfunded.
Compensation Committee Interlocks and Insider Participation
During the fourth quarter of 1999, Lakeland established a Compensation
Committee, which is currently comprised of Robert B. Nicholson, Mary Ann Deacon
and Paul P. Lubertazzi. Mr. Lubertazzi retired as President and CEO of
Metropolitan State Bank on January 31, 2000. Mr. Nicholson currently serves as
Vice Chairman of Lakeland and Lakeland Bank.
Compensation decisions for 1999 were made by the entire Board. During
the year ended December 31, 1999, the following individuals served as members of
the Board of Directors: Bruce G. Bohuny, Mary Ann Deacon, John W. Fredericks,
Mark J. Fredericks, Paul P. Lubertazzi, Robert B. Nicholson, Joseph P. O'Dowd,
John Pier, Jr., Arthur L. Zande, Michael A. Dickerson, Charles L. Tice, George
H. Guptill, Jr. and Roger Bosma. Of the persons named, Messrs. Bosma, Bohuny,
Lubertazzi, Nicholson, John Fredericks, Zande and Dickerson were employees of
Lakeland or its subsidiaries. None of these individuals participated in any
determination with respect to his or her own salary. Mr. Lubertazzi and Mr.
Dickerson resigned as employees of Lakeland or its subsidiaries on January 31,
2000 and December 31, 1999, respectively.
Mr. John Fredericks and Mr. Nicholson are two of the three partners in
a joint venture which owns certain property in Newton, New Jersey. Lakeland
rents space, pursuant to a lease expiring October 1, 2000 in the building
located on this property for a branch office, at an annual rent of $58,359. Mr.
John Fredericks and Mr. Nicholson are the Chairman and Vice Chairman of
Lakeland, respectively.
Lakeland's subsidiary banks have had, and expect to have in the
future, transactions in the ordinary course of business with directors,
officers, principal stockholders, and their associates, on the same terms,
including interest rates and collateral, as those prevailing at the same time
for comparable transactions with others, and that do not involve more than the
normal risk of collectability or other unfavorable features.
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<PAGE>
Board Report on Executive Compensation
Lakeland's Board of Directors established a Compensation Committee in
the fourth quarter of 1999. Accordingly, compensation decisions for executive
officers (other than stock option grants) beginning with the year 2000 will be
made by that committee, subject to Board approval. In 1999, decisions
concerning compensation were made by the full Board of Directors. Lakeland's
current compensation program focuses upon the salaries of executive officers and
is designed to provide appropriate reimbursement for services rendered.
Compensation amounts take into account the individual performance for each
executive officer. Salaries are determined annually, and each executive
officer's performance is reviewed on a yearly basis. Traditionally, the
salaries of executive officers have been set at levels which are perceived to be
comparable to the salaries of executive officers of other banks which the Board
considers to be comparable to Lakeland.
Executive officers are also provided with standard benefits, including
various health and life insurance benefits. Lakeland also makes contributions
to the Lakeland Bank profit sharing plan on behalf of executive officers, as
well as all other employees. The Board of Directors authorized a total
contribution to the Lakeland Bank Profit Sharing Plan of $250,000 in 1999.
On February 9, 2000, Lakeland's Board of Directors adopted the 2000
Equity Compensation Program (the "Stock Option Plan"). The full Board currently
administers the Stock Option Plan. See Proposal Two. Incentive stock options
granted to executive officers of Lakeland will be granted at an exercise price
equal to fair market value on the date of grant. Accordingly, these options
will gain appreciable value only if the market price of Lakeland's Common Stock
increases. The Board believes that the issuance of stock options at fair market
value provides incentives to employees to maximize Lakeland's performance and
encourage continued affiliation with Lakeland. The Stock Option Plan also
provides for automatic option grants to non-employee directors. The Board
believes that this feature of the Stock Option Plan will encourage qualified
non-employee directors to serve on Lakeland's Board.
Lakeland's Board believes that an appropriate compensation program can
help foster Lakeland's growth. The Board seeks to reflect an appropriate
balance between providing rewards to executive officers while at the same time
effectively controlling cash compensation costs. The Board intends to continue
monitoring Lakeland's compensation program so that this balance is appropriately
maintained.
Submitted by the members of the Board of Directors:
Roger Bosma Joseph P. O'Dowd
Paul P. Lubertazzi John Pier, Jr.
Bruce G. Bohuny Arthur L. Zande
Mary Ann Deacon Michael A. Dickerson
John W. Fredericks Charles L. Tice
Mark J. Fredericks George H. Guptill, Jr.
Robert B. Nicholson
Performance Graph
The following chart compares Lakeland's cumulative total shareholder
return (on a dividend reinvested basis) over the past five years with the Nasdaq
Market Index and the Peer Group Index. The Peer Group Index is comprised of
Media General Financial Services' Regional Northeast Bank Group which consists
of approximately 115 financial institutions.
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<PAGE>
[GRAPH APPEARS HERE]
COMPARISON OF CUMULATIVE TOTAL RETURN
OF LAKELAND, NASDAQ MARKET, INDEX AND MG GROUP INDEX
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
COMPANY/INDEX/MARKET 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C>
Lakeland Bancorp, Inc. 100.00 127.29 167.47 202.49 228.07 160.60
MG Group Index 100.00 152.03 202.24 348.83 364.13 335.06
NASDAQ Market Index 100.00 129.71 161.18 197.16 278.08 490.46
</TABLE>
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<PAGE>
PROPOSAL TWO
ADOPTION OF THE
LAKELAND BANCORP, INC.
2000 EQUITY COMPENSATION PROGRAM
--------------------------------
On February 9, 2000, Lakeland's Board of Directors adopted, subject to
shareholder approval, the Lakeland Bancorp, Inc. 2000 Equity Compensation
Program (the "Stock Option Plan") and granted certain stock options under the
Stock Option Plan (the "Initial Option Grants"). The Board recommends that the
shareholders approve the Stock Option Plan. The purpose of the Stock Option
Plan is to enable Lakeland to attract and retain qualified directors, officers
and employees, to facilitate performance-based compensation for employees and to
provide incentives for the participants in the Stock Option Plan to enhance the
value of Lakeland Common Stock. Directors, officers and other employees of
Lakeland and its subsidiaries are eligible to participate in the Stock Option
Plan. The Stock Option Plan authorizes the granting of incentive stock options
and supplemental stock options. The principal aspects of the Stock Option Plan
are summarized below.
Administration
The Stock Option Plan provides that it will be administered by the Board of
Directors or any duly created committee appointed by the Board and charged with
the administration of the Stock Option Plan (the "Program Administrator"). The
full Board of Directors currently administers the Stock Option Plan and serves
as the Program Administrator.
Eligibility
All directors, officers and employees of Lakeland and its subsidiaries
(approximately 365 persons as of December 31, 1999) are eligible to receive
options under the Stock Option Plan. Other than automatic grants to non-
employee directors, grants under the Compensation Plan are discretionary, and
Lakeland is unable, at the present time, to determine the identity or number of
directors, officers and other employees who may be granted options under the
Stock Option Plan in the future.
Types of Options
The Program Administrator may designate any option granted as either an
incentive stock option or a supplemental stock option, or the Program
Administrator may designate a portion of the option as an incentive stock option
and the remaining portion as a supplemental stock option. Any portion of an
option that is not designated as an incentive stock option will be a
supplemental stock option.
The Stock Option Plan also provides for automatic option grants to
directors who are not otherwise employed by Lakeland or its subsidiaries. Upon
commencement of service, a non-employee director will receive a supplemental
stock option to purchase 25,000 shares of Common Stock. Existing non-employee
directors who were serving as directors at the time the Stock Option Plan was
approved by the Board also received, a supplemental stock option to purchase
25,000 shares of Common Stock.
Exercise Period
Subject to modification by the Program Administrator, options granted to
employees are generally exercisable in 25% annual installments beginning on the
first anniversary of the date of grant and continuing for each of the next three
anniversaries thereafter. Options granted to non-employee directors are
exercisable in 20% annual installments beginning on the date of grant and
continuing for each of the four anniversaries of the grant date thereafter. The
Program Administrator may accelerate the vesting of any option granted under the
Stock Option Plan.
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<PAGE>
Unless previously terminated by the Board of Directors, the Stock Option
Plan will terminate on February 8, 2010. Such termination will have no impact
upon options granted prior to the termination date. The maximum term of all
options granted under the Stock Option Plan is 10 years, provided, however, that
any incentive stock option granted to a person who is the beneficial owner of
more than 10% of the combined voting power of Lakeland's capital stock shall
cease to be exercisable five years after the date such option is granted.
Exercise Price
Options granted under the Stock Option Plan will have an exercise or
payment price as established by the Program Administrator, provided that the
exercise price of incentive stock options may not be less than the fair market
value of the underlying shares on the date of grant and the exercise price of
stock options granted to non-employee directors will be equal to the fair market
value of the underlying shares on the date of grant. If incentive stock options
are granted to a person who is the beneficial owner of more than 10% of the
combined voting power of Lakeland's capital stock, such options shall be granted
at a price of not less than 110% of the fair market value of the shares covered
by the option. If on the date of grant the Common Stock is listed on a stock
exchange or is quoted on the automated quotation system of Nasdaq, the fair
market value shall be the closing sale price (or if such price is unavailable,
the average of the high bid price and the low asked price) on such date. If no
such prices are available, the fair market value shall be determined in good
faith by the Program Administrator in accordance with generally accepted
valuation principles and such other factors as the Program Administrator deems
relevant. On March 24, 2000, the closing sale price of a share of Lakeland
Common Stock on the Nasdaq National Market was $10.25.
Payment
Upon exercise of an option granted under the Compensation Plan, the
participant will be required to provide the payment price in full by certified
or bank cashier's check or, if permitted by the Program Administrator, in shares
of Common Stock valued at fair market value on the date of exercise, or by a
combination of checks and shares. The Program Administrator may, in its sole
discretion, permit an optionee to make "cashless exercise" arrangements. In
connection with any exercise of options, Lakeland will have the right to collect
or withhold from any payments under the Stock Option Plan all taxes required to
be withheld under applicable law.
Transferability
Options granted under the Stock Option Plan generally will be
nontransferable, except by will or by the laws of descent and distribution.
During the lifetime of a participant, an option generally may be exercised only
by the participant and after the participant's death only by the participant's
executor, administrator or personal representative.
Termination of Employment
If a participant ceases to be employed by Lakeland or any subsidiary for
cause, then all options shall terminate immediately. In all other termination
circumstances (except death or disability), options may be exercised, to the
extent exercisable on the date of termination, until 30 days after the date of
termination (provided, however, that the Program Administrator may, in its
discretion, allow such options to be exercised, to the extent exercisable on the
date of termination, at any time within 90 days after termination).
Notwithstanding the foregoing, in the event an employee of Lakeland or any
subsidiary retires on or after age 62, and provided that such employee has at
least five years of continuous service with Lakeland or any subsidiary at the
time of such retirement, then all options exercisable on the date of retirement
as well as all options that would otherwise vest within one year following the
date of retirement may be exercised until 30 days after the date of retirement
or, at the discretion of the Program Administrator, until 90 days after the date
of retirement.
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<PAGE>
If a participant dies or becomes disabled while employed by or while
rendering consulting services to Lakeland or any subsidiary, then all options
may be exercised, to the extent exercisable on the date of death or termination
due to disability, at any time within one year after the date of death or such
termination (or to such greater extent as shall be determined by the Program
Administrator before or after the date of termination).
Amendment and Termination
The Stock Option Plan may be amended or terminated at any time by the Board
of Directors, except that no amendment may be made without shareholder approval
if such approval is required by Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended, or other applicable law, and no amendment or
revision may alter or impair an outstanding option without the consent of the
holder thereof. The Stock Option Plan will terminate on February 8, 2010,
unless earlier terminated by the Board of Directors. No options may be granted
after termination, although such termination will not affect the status of any
option outstanding on the date of termination.
Shares Subject to the Plan
A total of 950,000 shares of Common Stock (subject to adjustment as
described below) may be issued under the Stock Option Plan. Any shares
delivered pursuant to the Stock Option Plan may be authorized and unissued
shares or treasury shares.
Adjustments
The number of shares available for option grants and the shares covered by
options shall be adjusted equitably for stock splits, stock dividends,
recapitalizations, mergers and other changes in Lakeland's capital stock.
Comparable changes shall be made to the exercise price of outstanding options.
If any option should terminate for any reason without having been exercised in
full, the unpurchased shares will again become available for option grants.
Change In Control
The Stock Option Plan provides that all outstanding stock options will
become immediately exercisable upon the occurrence of a "change in control
event". The Stock Option Plan provides in general that a "change in control
event" shall be deemed to have occurred if any of the following events occur:
(a) the consummation of any merger of Lakeland in which Lakeland is not the
surviving corporation; (b) the consummation of any sale, lease, exchange or
other transfer of all or substantially all of the assets of Lakeland; (c)
approval by the shareholders of Lakeland of a plan of liquidation or dissolution
of Lakeland; (d) any action pursuant to which any person (as defined in Section
13(d) of the Securities Exchange Act of 1934) shall become the beneficial owner
of 51% or more of Lakeland's outstanding voting securities or (e) the
individuals who were members of Lakeland's Board of Directors on February 9,
2000 (the date on which the Stock Option Plan was adopted by the Board) and who
are thereafter elected to the Board and whose election was approved by at least
two-thirds of the members of the Board on February 9, 2000 cease to constitute a
majority of the members of Lakeland's Board.
Additional Limitation
No participant may receive incentive stock options that first become
exercisable in any calendar year in an amount exceeding $100,000. In addition,
no one person may receive options for more than 300,000 shares of Common Stock
in any calendar year.
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<PAGE>
Federal Income Tax Consequences
BECAUSE OF THE COMPLEXITY OF THE FEDERAL INCOME TAX LAWS AND THE
APPLICATION OF VARIOUS STATE INCOME TAX LAWS, THE FOLLOWING DISCUSSION OF TAX
CONSEQUENCES IS GENERAL IN NATURE AND RELATES SOLELY TO FEDERAL INCOME TAX
MATTERS. PARTICIPANTS ARE ADVISED TO CONSULT THEIR PERSONAL TAX ADVISORS BEFORE
EXERCISING AN OPTION OR DISPOSING OF ANY STOCK RECEIVED PURSUANT TO THE EXERCISE
OF ANY SUCH OPTION. IN ADDITION, THE FOLLOWING SUMMARY IS BASED UPON AN
ANALYSIS OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, AS CURRENTLY IN
EFFECT, EXISTING LAWS, JUDICIAL DECISIONS, ADMINISTRATIVE RULINGS, REGULATIONS
AND PROPOSED REGULATIONS, ALL OF WHICH ARE SUBJECT TO CHANGE.
The Internal Revenue Code of 1986, as amended (the "Code"), treats
incentive stock options and supplemental stock options, also known as non-
qualified options, differently. A participant's individual consequences will
depend upon the nature of the option received. However, as to both types of
options, no income will be recognized to the optionee at the time of the grant
of an option, nor will Lakeland be entitled to a tax deduction at that time.
Upon the exercise of a supplemental stock option, the optionee will
recognize ordinary income tax on the excess of the fair market value of the
stock on the exercise date over the exercise price, if any. Lakeland generally
will be entitled to a tax deduction in an amount equal to the ordinary income
recognized by the optionee. If shares acquired upon such exercise are held for
more than one year before disposition, any gain on disposition of such shares
will be treated as long-term capital gain.
An optionee will not recognize any federal income tax in respect of
incentive stock options at the time of exercise. However, the excess of the
fair market value of the stock on the date of exercise over the exercise price
will be taken into account in determining whether the "alternative minimum tax"
will apply for the year of exercise. If the shares acquired upon the exercise
are not disposed of within two years from the date the options were granted nor
within one year after the shares are transferred, any gain or loss upon the sale
of such shares will be treated as long-term capital gain or loss (measured by
the difference between the sales price of the stock and the exercise price). If
the two-year and one-year holding period requirements are not met (a
"disqualifying disposition"), an optionee will recognize ordinary income in the
year of disposition in an amount equal to the lesser of (i) the fair market
value of the stock on the date of exercise minus the exercise price or (ii) the
amount realized on disposition minus the exercise price. The remainder of the
gain will be treated as long-term or short-term capital gain, depending upon
whether the stock has been held for more than one year. If an optionee makes a
disqualifying disposition, Lakeland will be entitled to a tax deduction equal to
the amount of ordinary income recognized by the optionee.
In general, if an optionee in exercising an option tenders shares of Common
Stock in partial or full payment of the option price, no gain or loss will be
recognized on the tender. However, if the tendered shares were previously
acquired upon the exercise of an incentive stock option and the tender is within
two years from the date the option was granted or one year after the date of
exercise of the other option, the tender will be a disqualifying disposition of
the tendered shares.
As noted above, the exercise of an incentive stock option could subject the
optionee to the alternative minimum tax. The application of the alternative
minimum tax to any particular optionee depends upon the particular facts and
circumstances which exist with respect to the optionee in the year of exercise.
However, as a general rule, the amount by which the fair market value of the
Common Stock on the date of exercise of an option exceeds the exercise price of
the option will constitute an item of "adjustment" for purposes of determining
the alternative minimum tax that may be imposed. As such, this item will enter
into the tax base on which the alternative minimum tax is computed, and may
therefore cause the alternative minimum tax to become applicable in a given
year.
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<PAGE>
Initial Option Grants
In conjunction with its approval of the Stock Option Plan on February 9,
2000, the Board of Directors granted stock options to purchase an aggregate of
352,100 shares of Common Stock. The recipients of the Initial Option Grants
were certain Lakeland officers and employees. In addition, each non-employee
director of Lakeland was awarded an option to purchase 25,000 shares of Common
Stock. The Initial Option Grants were made subject to shareholder approval of
the Stock Option Plan. Each of the Initial Option Grants has an exercise price
of $9 3/8 per share (the fair market value on the date of grant) and expires on
February 8, 2010. The options granted to officers and other employees of
Lakeland are exercisable in 25% annual installments beginning on the first
anniversary of the date of grant and continuing for each of the next three
anniversaries thereafter. The options granted to non-employee directors are
exercisable in 20% annual installments beginning on the date of grant and
continuing for each of the four anniversaries thereafter. Lakeland did not and
will not receive any consideration for making the Initial Option Grants.
The following table sets forth the amount of Initial Option Grants made on
February 9, 2000 to: (a) the Named Officers (showing principal positions held in
1999), (b) all current executive officers as a group, (c) all current directors
(including nominees) who are not executive officers as a group, (d) each nominee
for election as a director, and (e) all employees, including all current
officers who are not executive officers, as a group.
No. of
Name Options
- ---- -------
Roger Bosma..................................................... 20,000
President and CEO
Arthur L. Zande................................................. 5,000
Executive Vice President and CEO
Paul P. Lubertazzi.............................................. 25,000
President and CEO of Metropolitan State Bank
Robert A. Vandenbergh........................................... 5,000
Executive Vice President and Chief Lending Officer
Louis E. Luddecke............................................... 5,000
Executive Vice President and Chief Operations Officer
Bruce G. Bohuny................................................. 25,000
Mary Ann Deacon................................................. 25,000
Joseph O'Dowd................................................... 25,000
Michael A. Dickerson............................................ 25,000
All current executive officers as a group, (8 persons).......... 95,000
All current directors who are not executive officers as a
group, including nominees (9 persons).......................... 225,000
All employees, including all current officers who are not
executive officers, as a group (71 persons).................... 32,100
The affirmative vote of a majority of the votes cast at the Annual Meeting
is required to approve the proposal to adopt the Stock Option Plan.
The Board of Directors recommends a vote FOR the proposal to adopt the
Lakeland Bancorp, Inc. 2000 Equity Compensation Program.
INDEPENDENT PUBLIC ACCOUNTANTS
--------------------------------
Changes in Certifying Accountants. On December 14, 1998, Lakeland's Board
of Directors
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<PAGE>
dismissed its independent public accountants, Radics & Co., LLC. Radics was
replaced as the independent public accountants of Lakeland upon completion of
their audit of Lakeland's 1998 financial statements and preparation of
Lakeland's 1998 tax returns.
The Lakeland Board of Directors solicited bids for the performance of
auditing services for 1999. Bids were received by three accounting firms,
including Radics. Based on a review of the competing bids, the Lakeland Board
of Directors believed that the selection of Grant Thornton LLP would be in the
best interests of Lakeland.
Radics' reports on the financial statements of Lakeland for fiscal years
ended December 31, 1998 and 1997 for which such reports have been issued do not
contain an adverse opinion or a disclaimer of opinion and were not qualified or
modified as to uncertainty, audit scope or accounting principles. During
Lakeland's two most recent fiscal years ended December 31, 1998, and to date,
there have been no disagreements between Lakeland and Radics on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreement, if not resolved to the satisfaction of
Radics would have caused them to make a reference to the subject matter of the
disagreement in connection with their reports. During Lakeland's two most
recent fiscal years ended December 31, 1998, and to date, Lakeland has not been
advised of any matters described in Item 304(a)(1)(v)(A) through (D) of
Regulation S-K promulgated by the SEC.
Radics has addressed a letter to the SEC stating their agreement with the
foregoing statements.
On December 14, 1998, Lakeland engaged Grant Thornton LLP as its
independent public accountants to audit Lakeland's financial statements
beginning with the financial statements for the year ended December 31, 1999.
During Lakeland's two most recent fiscal years ended December 31, 1998, and to
date, neither Lakeland nor someone on its behalf consulted with Grant Thornton
regarding any of the matters listed in Item 304(a)(2)(i) and (ii) of Regulation
S-K.
Relationship with Independent Public Accountants. Grant Thornton began
auditing Lakeland beginning with the financial statements for the quarter ending
March 31, 1999 and has been selected by the Board of Directors to examine and
report on Lakeland's financial statements for the year ending December 31, 2000.
It is anticipated that a representative of Grant Thornton will be present at the
Annual Meeting and will be available to answer questions.
OTHER MATTERS
--------------
Management is not aware of any other business to be brought up at the
meeting for action by stockholders at such meeting other than the matters
described in the notice. However, the enclosed Proxy will confer discretionary
authority with respect to matters which are not known to management at the time
of printing hereof and which may come properly before the meeting.
SHAREHOLDER PROPOSALS
----------------------
If a Lakeland stockholder intends to present a proposal at Lakeland's 2001
annual meeting of stockholders, the proposal must be received by Lakeland at its
principal executive offices not later than December 1, 2000 in order for that
proposal to be included in the proxy statement and form of proxy relating to
that meeting, and by February 13, 2001 in order for the proposal to be
considered at Lakeland's 2001 annual meeting of stockholders (but not included
the proxy statement or form of proxy for such meeting). Any stockholder
proposal which is received after those dates or which otherwise fails to meet
the requirements for stockholder proposals established by regulations of the SEC
will neither be included in the proxy statement or form of proxy, nor be
considered at the meeting.
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<PAGE>
A copy of Lakeland's annual report for the year ended December 31, 1999,
including financial statements, accompanies this Proxy Statement. The annual
report is not to be regarded as proxy soliciting material or as a communication
by means of which any solicitation is to be made.
A copy of Lakeland Bancorp, Inc.'s Annual Report on Form 10-K for the year
ended December 31, 1999, filed with the Securities and Exchange Commission, is
available (excluding exhibits) without cost to shareholders upon written request
made to Bruce G. Bohuny, Lakeland Bancorp, Inc., 250 Oak Ridge Road, Oak Ridge,
New Jersey 07438.
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<PAGE>
LAKELAND BANCORP, INC.
2000 EQUITY COMPENSATION PROGRAM
1. Purposes. This Equity Compensation Program (the "Program") is
--------
intended to secure for Lakeland Bancorp, Inc. (the "Corporation"), its direct
and indirect present and future subsidiaries, including without limitation any
entity which the Corporation reasonably expects to become a subsidiary (the
"Subsidiaries"), and its shareholders, the benefits arising from ownership of
the Corporation's common stock ("Common Stock") by those selected directors,
officers and key employees of the Corporation and the Subsidiaries who are most
responsible for future growth. The Program is designed to help attract and
retain superior individuals for positions of substantial responsibility with the
Corporation and the Subsidiaries and to provide these persons with an additional
incentive to contribute to the success of the Corporation and the Subsidiaries.
2. Elements of the Program. In order to maintain flexibility in the
-----------------------
award of benefits, the Program is comprised of three parts -- the Incentive
Stock Option Plan ("Incentive Plan"), the Supplemental Stock Option Plan
("Supplemental Plan"), and the Independent Director Plan ("Independent Director
Plan"). Copies of the Incentive Plan, Supplemental Plan, and Independent
Director Plan are attached hereto as Parts I, II, and III, respectively. Each
such plan is referred to herein as a "Plan" and all such plans are collectively
referred to herein as the "Plans." The grant of an option under one of the
Plans shall not be construed to prohibit the grant of an option under any of the
other Plans.
3. Applicability of General Provisions. Unless any Plan specifically
-----------------------------------
indicates to the contrary, all Plans shall be subject to the general provisions
of the Program set forth below under the heading "General Provisions of the
Equity Compensation Program" (the "General Provisions").
<PAGE>
GENERAL PROVISIONS OF THE EQUITY COMPENSATION PROGRAM
Article 1. Administration. The Program shall be administered by the
--------------
Board of Directors of the Corporation (the "Board" or the "Board of Directors")
or any duly created committee appointed by the Board and charged with the
administration of the Program. To the extent required in order to satisfy the
requirements of Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), such committee shall consist solely of "Outside Directors" (as
defined herein). The Board, or any duly appointed committee, when acting to
administer the Program, is referred to as the "Program Administrator". Any
action of the Program Administrator shall be taken by majority vote at a meeting
or by unanimous written consent of all members without a meeting. No Program
Administrator or member of the Board of the Corporation shall be liable for any
action or determination made in good faith with respect to the Program or with
respect to any option granted pursuant to the Program. For purposes of the
Program, the term "Outside Director" shall mean a director who (a) is not a
current employee of the Corporation or the Subsidiaries; (b) is not a former
employee of the Corporation or the Subsidiaries who receives compensation for
prior services (other than benefits under a tax-qualified retirement plan)
during the then current taxable year; (c) has not been an officer of the
Corporation or the Subsidiaries; and (d) does not receive remuneration (which
shall be deemed to include any payment in exchange for goods or services) from
the Corporation or the Subsidiaries, either directly or indirectly, in any
capacity other than as a director, except as otherwise permitted under Code
Section 162(m) and the regulations thereunder.
Article 2. Authority of Program Administrator. Subject to the other
----------------------------------
provisions of this Program, and with a view to effecting its purpose, the
Program Administrator shall have the authority: (a) to construe and interpret
the Program; (b) to define the terms used herein; (c) to prescribe, amend and
rescind rules and regulations relating to the Program; (d) to determine the
persons to whom options shall be granted under the Program; (e) to determine the
time or times at which options shall be granted under the Program; (f) to
determine the number of shares subject to any discretionary option under the
Program as well as the option price, and the duration of each option and any
other terms and conditions of options; and (g) to make any other determinations
necessary or advisable for the administration of the Program and to do
everything necessary or appropriate to administer the Program. All decisions,
determinations and interpretations made by the Program Administrator shall be
binding and conclusive on all participants in the Program and on their legal
representatives, heirs and beneficiaries.
Article 3. Maximum Number of Shares Subject to the Program. The
-----------------------------------------------
maximum aggregate number of shares of Common Stock issuable pursuant to the
Program shall be 950,000 shares. No one person participating in the Program may
receive options for more than 300,000 shares of Common Stock in any calendar
year. All such shares may be issued under any Plan which is part of the
Program. If any of the options (including incentive stock options) granted
under the Program expire or terminate for any reason before they have been
exercised in full, the unissued shares subject to those expired or terminated
options shall again be available for purposes of the Program. Any shares of
Common Stock delivered pursuant to the Program may consist, in whole or in part,
of authorized and unissued shares or treasury shares.
-2-
<PAGE>
Article 4. Eligibility and Participation. All directors, officers
-----------------------------
and employees of the Corporation and the Subsidiaries shall be eligible to
participate in the Program. The term "employee" shall include any person who
has agreed to become an employee.
Article 5. Effective Date and Term of Program. The Program shall
----------------------------------
become effective immediately upon approval of the Program by the Board of
Directors of the Corporation, subject to approval of the Program by the
shareholders of the Corporation within twelve months after the date of approval
of the Program by the Board of Directors. The Program shall continue in effect
for a term of ten years from the date that the Program is adopted by the Board
of Directors, unless sooner terminated by the Board of Directors of the
Corporation.
Article 6. Adjustments. In the event that the outstanding shares of
-----------
Common Stock of the Corporation are hereafter increased, decreased, changed into
or exchanged for a different number or kind of shares or securities through
merger, consolidation, combination, exchange of shares, other reorganization,
recapitalization, reclassification, stock dividend, stock split or reverse stock
split (an "Adjustment Event"), an appropriate and proportionate adjustment shall
be made by the Program Administrator in the maximum number and kind of shares as
to which options may be granted under the Program. A corresponding adjustment
changing the number or kind of shares allocated to unexercised options which
shall have been granted prior to any such Adjustment Event shall likewise be
made. Any such adjustment in outstanding options shall be made without change
in the aggregate purchase price applicable to the unexercised portion of the
option but with a corresponding adjustment in the price for each share or other
unit of any security covered by the option. In making any adjustment pursuant
to this Article 6, any fractional shares shall be disregarded.
Article 7. Termination and Amendment of Program and Awards. No
-----------------------------------------------
options shall be granted under the Program after the termination of the Program.
The Program Administrator may at any time amend or revise the terms of the
Program or of any outstanding option issued under the Program, provided,
however, that (a) any shareholder approval required by applicable law or
regulation shall be obtained and (b) no amendment, suspension or termination of
the Program or of any outstanding option shall, without the consent of the
person who has received an option, impair any of that person's rights or
obligations under such option.
Article 8. Privileges of Stock Ownership. Notwithstanding the
-----------------------------
exercise of any option granted pursuant to the terms of the Program, no person
shall have any of the rights or privileges of a stockholder of the Corporation
in respect of any shares of stock issuable upon the exercise of his or her
option until certificates representing the shares of Common Stock covered
thereby have been issued and delivered. No adjustment shall be made for
dividends or any other distributions for which the record date is prior to the
date on which any stock certificate is issued pursuant to the Program.
Article 9. Reservation of Shares of Common Stock. During the term of
-------------------------------------
the Program, the Corporation will at all times reserve and keep available such
number of shares of its Common Stock as shall be sufficient to satisfy the
requirements of the Program.
-3-
<PAGE>
Article 10. Tax Withholding. The exercise of any option under the
---------------
Program is subject to the condition that, if at any time the Corporation shall
determine, in its discretion, that the satisfaction of withholding tax or other
withholding liabilities under any state or federal law is necessary or desirable
as a condition of, or in any connection with, such exercise, then, in such
event, the exercise of the option shall not be effective unless such withholding
tax or other withholding liabilities shall have been satisfied in a manner
acceptable to the Corporation.
Article 11. Employment; Service as a Director. Nothing in the
---------------------------------
Program gives to any person any right to continued employment by the Corporation
or the Subsidiaries or to continued service as a director of the Corporation or
the Subsidiaries or limits in any way the right of the Corporation or the
Subsidiaries at any time to terminate or alter the terms of that employment or
service.
Article 12. Investment Letter; Lock-Up Agreement; Restrictions on
-----------------------------------------------------
Obligation of the Corporation to Issue Securities; Restrictive Legend. Any
- ---------------------------------------------------------------------
person acquiring or receiving Common Stock or other securities of the
Corporation pursuant to the Program, as a condition precedent to receiving the
shares of Common Stock or other securities, may be required by the Program
Administrator to submit a letter to the Corporation (a) stating that the shares
of Common Stock or other securities are being acquired for investment and not
with a view to the distribution thereof and (b) providing other assurances
determined by the Corporation to be necessary or appropriate in order to assure
that the issuance of such shares is exempt from any applicable securities
registration requirements. The Corporation shall not be obligated to sell or
issue any shares of Common Stock or other securities pursuant to the Program
unless, on the date of sale and issuance thereof, the shares of Common Stock or
other securities are either registered under the Securities Act of 1933, as
amended, and all applicable state securities laws, or exempt from registration
thereunder.
Article 13. Rights Upon Termination of Employment or Service as a
-----------------------------------------------------
Director. Notwithstanding any other provision of the Program, any benefit
- --------
granted to an individual who has agreed to become an employee of the Corporation
or any Subsidiary or to become an employee of any entity which the Corporation
reasonably expects to become a Subsidiary, shall immediately terminate if the
Program Administrator determines, in its sole discretion, that such person will
not become an employee of the Corporation or any Subsidiary. If a recipient
ceases to be employed by or to provide services as a director to the Corporation
or any Subsidiary, or a corporation or a parent or subsidiary of such
corporation issuing or assuming a stock option in a transaction to which Section
424(a) of the Code applies, for any reason other than death, disability or
retirement (subject to satisfaction of the criteria set forth in the following
sentence), then, unless any other provision of the Program provides for earlier
termination, all options shall terminate immediately in the event the
recipient's employment or services as a director are terminated for cause and in
all other circumstances may be exercised, to the extent exercisable on the date
of termination, until 30 days after the date of termination, provided, however,
that the Program Administrator may, in its discretion, allow such options to be
exercised (to the extent exercisable on the date of termination) at any time
within 90 days after the date of termination. Notwithstanding the foregoing, in
the event an employee of the Corporation or any Subsidiary retires on or after
attaining the age of 62, and provided such employee has at least five years of
-4-
<PAGE>
continuous service with the Corporation or any Subsidiary at the time of such
retirement, then all options exercisable on the date of retirement as well as
all options that would otherwise vest within one year following the date of
retirement may be exercised until 30 days after the date of retirement or, at
the discretion of the Program Administrator, until 90 days after the date of
retirement.
Article 14. Rights Upon Disability. If a recipient becomes disabled
----------------------
within the meaning of Section 22(e)(3) of the Code while employed by or while
rendering services as a director to the Corporation or any Subsidiary (or a
corporation or a parent or subsidiary of such corporation issuing or assuming a
stock option in a transaction to which Section 424(a) of the Code applies),
then, unless any other provision of the Program provides for earlier
termination, all options may be exercised, to the extent exercisable on the date
of termination (or to such greater extent as shall be determined by the Plan
Administrator before or after the date of termination), at any time within one
year after the date of termination due to disability.
Article 15. Rights Upon Death. If a recipient dies while employed by
-----------------
or while rendering services as a director to the Corporation or any Subsidiary
(or a corporation or a parent or subsidiary of such corporation issuing or
assuming a stock option in a transaction to which Section 424(a) of the Code
applies), then, unless any other provision of the Program provides for earlier
termination, all options may be exercised by the person or persons to whom the
recipient's rights shall pass by will or by the laws of descent and
distribution, to the extent exercisable on the date of death (or to such greater
extent as shall be determined by the Plan Administrator before or after the date
of termination), at any time within one year after the date of death unless any
other provision of the Program provides for earlier termination.
Article 16. Non-Transferability. Options granted under the Program
-------------------
may not be sold, pledged, assigned or transferred in any manner by the recipient
otherwise than by will or by the laws of descent and distribution and shall be
exercisable (a) during the recipient's lifetime only by the recipient and (b)
after the recipient's death only by the recipient's executor, administrator or
personal representative, provided, however that the Program Administrator may
permit the recipient of an option granted pursuant to Part II of the Program to
transfer options to a family member or a trust or partnership created for the
benefit of family members. In the case of such a transfer, the transferee's
rights and obligations with respect to the applicable options shall be
determined by reference to the recipient and the recipient's rights and
obligations with respect to the applicable options had no transfer been made.
The recipient shall remain obligated pursuant to Articles 10 and 12 hereunder if
required by applicable law.
Article 17. Change in Control. All options granted pursuant to the
-----------------
Program shall become fully exercisable upon the occurrence of a Change in
Control Event. As used in the Program, a "Change in Control Event" shall be
deemed to have occurred if any of the following events occur:
(a) the consummation of any consolidation or merger of the Corporation
in which the Corporation is not the continuing or surviving corporation or
pursuant to which shares of Common Stock would be converted into cash,
securities or other property,
-5-
<PAGE>
other than a merger of the Corporation in which the holders of the shares of the
Corporation's Common Stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation immediately
after the merger; or
(b) the consummation of any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all, or
substantially all, of the assets of the Corporation, other than to a subsidiary
or affiliate; or
(c) an approval by the shareholders of the Corporation of any plan or
proposal for the liquidation or dissolution of the Corporation; or
(d) any action pursuant to which any person (as such term is defined
in Section 13(d) of the Exchange Act), corporation or other entity (other than
any person who owns more than ten percent (10%) of the outstanding Common Stock
on the date of adoption of this Program by the Board of Directors, the
Corporation or any benefit plan sponsored by the Corporation or any of its
subsidiaries) shall become the "beneficial owner" (as such term is defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of shares of capital
stock entitled to vote generally for the election of directors of the
Corporation ("Voting Securities") representing fifty-one (51%) percent or more
of the combined voting power of the Corporation's then outstanding Voting
Securities (calculated as provided in Rule 13d-3(d) in the case of rights to
acquire any such securities), unless, prior to such person so becoming such
beneficial owner, the Board shall determine that such person so becoming such
beneficial owner shall not constitute a Change in Control; or
(e) the individuals (A) who, as of the date on which the Program is
first adopted by the Board of Directors, constitute the Board (the "Original
Directors") and (B) who thereafter are elected to the Board and whose election,
or nomination for election, to the Board was approved by a vote of at least two
thirds of the Original Directors then still in office (such Directors being
called "Additional Original Directors") and (C) who thereafter are elected to
the Board and whose election or nomination for election to the Board was
approved by a vote of at least two thirds of the Original Directors and
Additional Original Directors then still in office, cease for any reason to
constitute a majority of the members of the Board.
Article 18. Merger or Asset Sale. For purposes of the Program, a
--------------------
merger or consolidation which would constitute a Change in Control Event
pursuant to Article 17 and a sale of assets which would constitute a Change in
Control Event pursuant to Article 17 are hereinafter referred to as "Article 18
Events". In the event of an Article 18 Event, each outstanding option shall be
assumed or an equivalent benefit shall be substituted by the entity determined
by the Board of Directors of the Corporation to be the successor corporation.
However, in the event that any such successor corporation does not agree in
writing, at least 15 days prior to the anticipated date of consummation of such
Article 18 Event, to assume or so substitute each such option, then each option
not so assumed or substituted shall be deemed to be fully vested and
exercisable. If an option becomes fully vested and exercisable pursuant to the
terms of this Article 18, the Program Administrator shall notify the holder
thereof in writing or electronically that (a) such holder's option shall be
fully exercisable until immediately prior to
-6-
<PAGE>
the consummation of such Article 18 Event and (b) such holder's option shall
terminate upon the consummation of such Article 18 Event. For purposes of this
Article 18, an option shall be considered assumed if, following consummation of
the applicable Article 18 Event, the option confers the right to purchase or
receive, for each share of Common Stock subject to the option immediately prior
to the consummation of such Article 18 Event, the consideration (whether stock,
cash or other securities or property) received in such Article 18 Event by
holders of Common Stock for each share of Common Stock held on the effective
date of such Article 18 Event (and, if holders of Common Stock are offered a
choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding shares of Common Stock); provided, however, that if
such consideration received in such Article 18 Event is not solely common stock
of such successor, the Program Administrator may, with the consent of such
successor corporation, provide for the consideration to be received in
connection with such option to be solely common stock of such successor equal in
fair market value to the per share consideration received by holders of Common
Stock in the Article 18 Event.
Article 19. Method of Exercise. Any optionee may exercise his or her
------------------
option from time to time by giving written notice thereof to the Corporation at
its principal office together with payment in full for the shares of Common
Stock to be purchased. The date of such exercise shall be the date on which the
Corporation receives such notice. Such notice shall state the number of shares
to be purchased. The purchase price of any shares purchased upon the exercise
of any option granted pursuant to the Program shall be paid in full at the time
of exercise of the option by certified or bank cashier's check payable to the
order of the Corporation or, if permitted by the Program Administrator, by
shares of Common Stock, or by a combination of checks and shares of Common
Stock. The Program Administrator may, in its sole discretion, permit an
optionee to make "cashless exercise" arrangements, to the extent permitted by
applicable law, and may require optionees to utilize the services of a single
broker selected by the Program Administrator in connection with any cashless
exercise. No option may be exercised for a fraction of a share of Common Stock.
If any portion of the purchase price is paid in shares of Common Stock, those
shares shall be valued at their then Fair Market Value as determined by the
Program Administrator in accordance with Section 4 of the Incentive Plan.
Article 20. Ten-Year Limitations. Notwithstanding any other
--------------------
provision of the Program, (a) no option may be granted pursuant to the Program
more than ten years after the date on which the Program was adopted by the Board
of Directors and (b) any option granted under the Program shall, by its terms,
not be exercisable more than ten years after the date of grant.
Article 21. Sunday or Holiday. In the event that the time for the
-----------------
performance of any action or the giving of any notice is called for under the
Program within a period of time which ends or falls on a Sunday or legal
holiday, such period shall be deemed to end or fall on the next day following
such Sunday or legal holiday which is not a Sunday or legal holiday.
Article 22. Governing Law. The Program shall be governed by and
-------------
construed in accordance with the laws of the State of New Jersey.
-7-
<PAGE>
Article 23. Pooling Transactions. Notwithstanding anything
--------------------
contained in the Program to the contrary, in the event of a Change in Control
which is also intended to constitute a Pooling Transaction (as defined herein),
the Program Administrator shall take such actions, if any, which are
specifically recommended by an independent accounting firm retained by the
Corporation to the extent reasonably necessary in order to assure that the
Pooling Transaction will qualify as such, including but not limited to (a)
deferring the vesting, exercise, payment or settlement with respect to any
benefit granted under the Program, (b) providing that the payment or settlement
in respect of any such benefit be made in the form of cash, shares of common
stock or other assets or securities of a successor or acquirer of the
Corporation, or a combination of the foregoing and (c) providing for the
extension of the term of any such benefit to the extent necessary to accommodate
the foregoing, but not beyond the maximum term permitted for any such benefit.
For purposes of the Program, the term "Pooling Transaction" shall mean an
acquisition of the Corporation in a transaction which is intended to be treated
as a "pooling of interests" under generally accepted accounting principles.
Article 24. Covenant Against Competition. The Program Administrator
----------------------------
shall have the right to condition the award to an employee of the Corporation or
the Subsidiaries of any option under the Program upon the recipient's execution
and delivery to the Corporation of an agreement not to compete with the
Corporation and the Subsidiaries during the recipient's employment and for such
period thereafter as shall be determined by the Program Administrator. Such
covenant against competition shall be in a form satisfactory to the Program
Administrator.
-8-
<PAGE>
PART I
INCENTIVE STOCK OPTION PLAN
The following provisions shall apply with respect to options granted
by the Program Administrator pursuant to Part I of the Program:
Section 1. General. This Incentive Stock Option Plan ("Incentive
-------
Plan") is Part I of the Corporation's Program. The Corporation intends that
options granted pursuant to the provisions of the Incentive Plan will qualify
and will be identified as "incentive stock options" within the meaning of
Section 422 of the Code. Unless any provision herein indicates to the contrary,
this Incentive Plan shall be subject to the General Provisions of the Program.
Section 2. Terms and Conditions. The Program Administrator may grant
--------------------
incentive stock options to purchase Common Stock to any employee of the
Corporation or its Subsidiaries. The terms and conditions of options granted
under the Incentive Plan may differ from one another as the Program
Administrator shall, in its discretion, determine, as long as all options
granted under the Incentive Plan satisfy the requirements of the Incentive Plan.
Section 3. Duration of Options. Each option and all rights
-------------------
thereunder granted pursuant to the terms of the Incentive Plan shall expire on
the date determined by the Program Administrator, but in no event shall any
option granted under the Incentive Plan expire later than ten years from the
date on which the option is granted. Notwithstanding the foregoing, any option
granted under the Incentive Plan to any person who owns more than 10% of the
combined voting power of all classes of stock of the Corporation or any
Subsidiary shall expire no later than five years from the date on which the
option is granted.
Section 4. Purchase Price. The option price with respect to any
--------------
option granted pursuant to the Incentive Plan shall not be less than the Fair
Market Value of the shares on the date of the grant of the option; except that
the option price with respect to any option granted pursuant to the Incentive
Plan to any person who owns more than 10% of the combined voting power of all
classes of stock of the Corporation shall not be less than 110% of the Fair
Market Value of the shares on the date the option is granted. For purposes of
the Program, the phrase "Fair Market Value" shall mean the fair market value of
the Common Stock on the date of grant or other relevant date. If on such date
the Common Stock is listed on a stock exchange or is quoted on the automated
quotation system of NASDAQ, the Fair Market Value shall be the closing sale
price (or if such price is unavailable, the average of the high bid price and
the low asked price) of a share of Common Stock on such date. If no such
closing sale price or bid and asked prices are available, the Fair Market Value
shall be determined in good faith by the Program Administrator in accordance
with generally accepted valuation principles and such other factors as the
Program Administrator reasonably deems relevant.
Section 5. Maximum Amount of Options in Any Calendar Year. The
----------------------------------------------
aggregate Fair Market Value (determined as of the time the option is granted) of
the Common Stock with respect to which incentive stock options are exercisable
for the first time by any employee during
-9-
<PAGE>
any calendar year (under the terms of the Incentive Plan and all incentive stock
option plans of the Corporation and the Subsidiaries) shall not exceed $100,000.
Section 6. Exercise of Options. Unless otherwise provided by the
-------------------
Program Administrator at the time of grant or unless the installment provisions
set forth herein are subsequently accelerated pursuant to the General Provisions
of the Program or otherwise by the Program Administrator with respect to any one
or more previously granted options, incentive stock options may only be
exercised to the following extent during the following periods of time:
Maximum Percentage of
Shares Covered by
Option Which May be
During Purchased
------ --------------------------------
First 12 months after grant 0
First 24 months after grant 25%
First 36 months after grant 50%
First 48 months after grant 75%
Beyond 48 months after grant 100%
Section 7. Failure to Satisfy Applicable Requirements. In the event
------------------------------------------
that an option is intended to be granted pursuant to the provisions of this
Incentive Plan but fails to satisfy one or more requirements of this Incentive
Plan, such option shall be deemed to have been granted pursuant to the
Supplemental Plan set forth as Part II of the Program, provided that such option
satisfies the requirements of the Supplemental Plan.
-10-
<PAGE>
PART II
SUPPLEMENTAL STOCK OPTION PLAN
The following provisions shall apply with respect to options granted
by the Program Administrator pursuant to Part II of the Program:
Section 1. General. This Supplemental Stock Option Plan
-------
("Supplemental Plan") is Part II of the Corporation's Program. Any option
granted pursuant to this Supplemental Plan shall not be an incentive stock
option as defined in Section 422 of the Code. Unless any provision herein
indicates to the contrary, this Supplemental Plan shall be subject to the
General Provisions of the Program.
Section 2. Terms and Conditions. The Program Administrator may grant
--------------------
supplemental stock options to any person eligible under Article 4 of the General
Provisions. The terms and conditions of options granted under this Supplemental
Plan may differ from one another as the Program Administrator shall, in its
discretion, determine as long as all options granted under this Supplemental
Plan satisfy the requirements of this Supplemental Plan.
Section 3. Duration of Options. Each option and all rights
-------------------
thereunder granted pursuant to the terms of this Supplemental Plan shall expire
on the date determined by the Program Administrator, but in no event shall any
option granted under this Supplemental Plan expire later than ten years from the
date on which the option is granted.
Section 4. Purchase Price. The option price with respect to any
--------------
option granted pursuant to this Supplemental Plan shall be determined by the
Program Administrator at the time of grant.
Section 5. Exercise of Options. Unless otherwise provided by the
-------------------
Program Administrator at the time of grant or unless the installment provisions
set forth herein are subsequently accelerated pursuant to the General Provisions
of the Program or otherwise by the Program Administrator with respect to any one
or more previously granted options, supplemental stock options may only be
exercised to the following extent during the following periods of time:
Maximum Percentage of
Shares Covered by
Option Which May be
During Purchased
------ -------------------------------
First 12 months after grant 0
First 24 months after grant 25%
First 36 months after grant 50%
First 48 months after grant 75%
Beyond 48 months after grant 100%
-11-
<PAGE>
PART III
INDEPENDENT DIRECTOR PLAN
The following provisions shall apply with respect to options granted
by the Program Administrator pursuant to Part III of the Program:
Section 1. General. This Independent Director Plan ("Independent
-------
Director Plan") is Part III of the Corporation's Program. Any option granted
pursuant to this Independent Director Plan shall not be an incentive stock
option as defined in Section 422 of the Code. Unless any provision herein
indicates to the contrary, this Independent Director Plan shall be subject to
the General Provisions of the Program.
Section 2. Definitions. As used in this Independent Director Plan,
-----------
the following definitions shall apply.
(a) "Employee" shall mean any person employed on a full-time basis by
the Corporation or any present or future Subsidiary of the Corporation.
(b) "Existing Independent Director" shall mean each member of the
Corporation's Board of Directors on the date the Program is first adopted by
such Board of Directors who did not serve as an Employee during the preceding 12
months.
(c) "Fair Market Value" shall have the meaning set forth in Section 4
of the Incentive Plan.
(d) "Independent Director" shall mean any member of the Corporation's
Board of Directors who, on the date such person is to receive a grant of an
Option pursuant to the Independent Director Plan, shall not be an Employee.
(e) "New Independent Director" shall have the meaning set forth in
Section 4(a) of this Independent Director Plan.
(f) "Option" shall mean the right, granted pursuant to Section 4 of
this Independent Director Plan, to purchase one or more shares of Common Stock.
(g) "Subsidiary" shall mean any present or future corporation which
would be a "subsidiary corporation" as defined in Subsections 424(f) and (g) of
the Code.
Section 3. Eligibility. The only persons eligible to receive Options
-----------
under the Independent Director Plan shall be persons who, on the date such
Options are to be granted hereunder, constitute Independent Directors.
Section 4. Option Grants.
-------------
-12-
<PAGE>
(a) Automatic Grants to New Independent Directors. The Corporation
---------------------------------------------
shall grant to each Independent Director who first becomes a director of the
Corporation during the term of the Independent Director Plan (a "New Independent
Director") an Option to purchase 25,000 shares of Common Stock on the date of
his first appointment or election as a director of the Corporation.
(b) Automatic Grants to Existing Independent Directors. On the date
--------------------------------------------------
that the Program is first adopted by the Corporation's Board of Directors, the
Corporation shall grant to each Existing Independent Director an Option to
purchase 25,000 shares of Common Stock.
Section 5. Option Price. The exercise price per share of the Common
------------
Stock covered by each Option granted under the Independent Director Plan shall
be the Fair Market Value of a share of the Common Stock on the date the Option
is granted.
Section 6. Term of Options. Subject to the General Provisions of the
---------------
Program, each Option granted pursuant to the Independent Director Plan shall
expire ten years after the date of grant.
Section 7. Exercise of Options. Each Option granted pursuant to the
-------------------
Independent Director Plan shall be exercisable as follows:
Maximum Percentage of Shares Covered by
During Option Which May be Purchased
------ -----------------------------
First 12 months after grant 20%
First 24 months after grant 40%
First 36 months after grant 60%
First 48 months after grant 80%
Beyond 48 months after grant 100%
-13-
<PAGE>
PROXY
OF
LAKELAND BANCORP, INC.
The undersigned hereby appoints Roger Bosma, John W. Fredericks and Robert
B. Nicholson, and each of them, with full power of substitution, to vote for and
on behalf of the undersigned at the annual meeting of stockholders of Lakeland
Bancorp, Inc. to be held on May 3, 2000, and any adjournment thereof, upon
matters properly coming before the meeting, as set forth in the related Notice
of Meeting and Proxy Statement, both of which have been received by the
undersigned. Without otherwise limiting the general authorization given hereby,
said attorneys and proxies are instructed to vote on the following issues as
follows:
1. Election of directors:
Nominees:
For 3 Years: Bruce G. Bohuny
Mary Ann Deacon
Michael A. Dickerson
Joseph P. O'Dowd
2. Adoption of Lakeland Bancorp, Inc. 2000 Equity Compensation Program.
3. Transaction of such other business as may properly come before the meeting
and any adjournment thereof.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE URGED TO EXECUTE AND
RETURN THIS PROXY, WHICH MAY BE REVOKED AT ANY TIME PRIOR TO ITS USE.
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THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF THIS PROXY IS EXECUTED BUT NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED "FOR" EACH OF THE BOARD'S NOMINEES FOR DIRECTOR AND
"FOR" THE ADOPTION OF THE 2000 EQUITY COMPENSATION PROGRAM.
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<S> <C>
1. Election of Directors: FOR WITHHELD AGAINST ALL
ALL NOMINEES NOMINEES ABSTAIN
(The Board recommends a vote "For")
Instruction: to withhold authority to vote, [ ] [ ] [ ]
for any individual nominee, write that name
in the space provided below: Nominees: Bruce G. Bohuny
________________________________ Mary Ann Deacon
Michael A. Dickerson
Joseph P. O'Dowd
2. Adoption of Lakeland Bancorp, Inc. 2000 Equity FOR AGAINST ABSTAIN
Compensation Program: [ ] [ ] [ ]
(The Board recommends a vote "For")
IMPORTANT
PLEASE SIGN AND DATE AND RETURN PROMPTLY
Note: Please sign exactly as your name appears hereon. Give full title
if Attorney, Executor, Administrator, Trustee, Guardian, etc.
_________________________________________________________
_________________________________________________________
SIGNATURE(S) DATE
[ ] Please stop mailing an Annual Report. I have more than one account.
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