SUSSEX BANCORP GRANT AGREEMENT NON-PLAN OPTION
EXHIBIT
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NON-PLAN
OPTION
This
Non-Plan Option Grant Agreement (this "Agreement") is made as of this
1st
day of
August, 2003 by and between Sussex Bancorp, a New Jersey corporation having
its
principal place of business at 000
Xxxxx
Xxxxxxx 00, Xxxxxxxx, Xxx Xxxxxx 00000 and Xxxxxx X. Xxxxxxxx, an individual
residing at 0000 Xxxxxxx Xxx Xxxx, Xxxxxxxxxxxx Xxxxxx, Xxxxxxxx 00000
("Optionee").
1.
Grant
of Option.
The
Company hereby grants to Optionee an option (this “Option”) to purchase 50,000
shares (the “Shares”) of common stock, no par value of the Company (the “Common
Stock”) at an exercise price per share of $14.38, which the parties agree is the
fair market value of the Shares on the date hereof (the “Exercise Price”),
subject to all of the terms and conditions of this Agreement. The Option granted
herein is not intended to qualify as an "incentive stock option” within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
“Code”).
2.
Vesting
Period of Option.
a. Vesting
Schedule.
The
Option granted hereunder is exercisable during the time period or periods,
and
as to the number of Shares, as follows:
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i.
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Options
to purchase 10,000 Shares, or any part thereof, may be exercised
at any
time or times, commencing on August 1, 2004 up until and including
July
31, 2023 (the "Expiration Date");
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ii.
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Options
to purchase an additional 10,000 Shares, or any part thereof, may
be
exercised at any time or times, commencing on August 1, 2005, 2005
up
until and including the Expiration
Date;
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iii.
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Options
to purchase an additional 10,000 Shares, or any part thereof, may
be
exercised at any time or times, commencing on August 1, 2006 up until
and
including the Expiration Date;
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iv.
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Options
to purchase an additional 10,000 Shares, or any part thereof, may
be
exercised at any time or times, commencing on August 1, 2007 up until
and
including the Expiration Date;
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v.
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Options
to purchase the remaining 10,000 Shares, or any part thereof, may
be
exercised at any time or times, commencing on August 1, 2008 up until
and
including the Expiration Date.
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b. Changes
in Vesting Schedule.
Notwithstanding the above:
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i.
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this
Option shall expire on the Expiration Date and must be exercised,
if at
all, on or before the Expiration Date. The portion of Shares as to
which
the Option is exercisable in accordance with the above schedule as
of the
applicable dates shall be deemed “Vested Options”;
and
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ii.
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if
the Company is subject to Change in Control (as defined below) before
the
Option is fully vested, then the Option will accelerate and automatically
become 100% vested and immediately exercisable for all Shares. For
the
purposes hereof, a "Change in Control" shall
mean:
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a.
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a
reorganization, merger, consolidation or sale of all or substantially
all
of the assets of the Company, or a similar transaction in which the
shareholders of the Company prior to such transaction fail to hold
a
majority o the voting power of the resulting entity;
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b.
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individuals
who constitute the Incumbent Board (as herein defined) of the Company
cease for any reason to constitute a majority
thereof;
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c.
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Without
limitation, a Change in Control shall be deemed to have occurred
at such
time as (i) any "person" (as the term is used in Section 13(d) and
14(d)
of the Exchange Act) other than the Company or the trustees or any
administration of any employee stock ownership plan and trust, or
any
other employee benefit plans, established by Company from time-to-time,
is
or becomes a "beneficial owner" (as defined in Rule 13-d under the
Exchange Act) directly or indirectly, of securities of the Company
representing 25% or more of the Company's outstanding securities
ordinarily having the right to vote at the election of directors;
or
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d.
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A
tender offer is made for 25% or more of the voting securities of
the
Company and shareholders owning beneficially or of record 25% or
more of
the outstanding securities of the Company have tendered or offered
to sell
their shares pursuant to such tender and such tendered shares have
been
accepted by the tender offeror.
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For
these
purposes, "Incumbent Board" means the Board of Directors of the Company on
the
date hereof, provided that any person becoming a director subsequent to the
date
hereof whose election was approved by a vote of at least three-quarters of
the
directors comprising the Incumbent Board, or whose nomination for election
by
members or stockholders was approved by the same nominating committee serving
under an Incumbent Board, shall be considered as though he were a member of
the
Incumbent Board.
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3. Restriction
on Exercise.
This
Option may not be exercised unless such exercise is in compliance with the
Securities Act of 1933, as amended, and all applicable state securities laws,
as
they are in effect on the date of exercise, and the requirements of any stock
exchange or over-the-counter market on which the Company’s Common Stock may be
listed or quoted at the time of exercise.
4. Termination
of
Option.
Except
as provided below in this Section 4, this Option shall terminate and may not
be
exercised if Optionee ceases to be employed by the Company or by a Parent
Subsidiary or Affiliate of the Company (as those terms are defined below).
Optionee shall be considered to be employed by the Company for all purposes
under this Section 4 if Optionee is a full-time employee of the Company or
any
Parent, Subsidiary or Affiliate of the Company. The Board of Directors of the
Company shall have discretion to determine whether Optionee has ceased to be
employed by the Company or any Parent, Subsidiary or Affiliate of the Company
and the effective date on which such employment terminated (the “Termination
Date”). For purposes of this Agreement, the term "Parent" shall mean any
corporation other than the Company in an unbroken chain of corporations ending
with the Company, if each of the corporations other than the Company owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the corporations in such a chain. The term "Subsidiary" means
any corporation in an unbroken chain of corporations beginning with the Company
if each of the corporations other than the last corporation in the unbroken
chain owns stock possessing 50% or more of the total combined voting power
of
all classes of stock in one of the other corporations in such a chain. The
term
"Affiliate" means any corporation that directly or indirectly through one or
more intermediary's controls, is controlled by or is under common control with
another corporation. "Control" shall mean the possession, directly or
indirectly, of the power to cause the direction of the management and policies
of the corporation, whether through ownership or voting securities, contract
or
otherwise.
a. Termination
Generally.
If
Optionee ceases to be employed by the Company and all Parents, Subsidiaries
or
Affiliates of the Company for any reason except death, disability, or "cause"
(as defined below), this Option, to the extent (and only to the extent) that
it
would have been exercisable by Optionee on the Termination Date, may be
exercised by Optionee, but only within thirty (30) days after the Termination
Date; provided that this Option may not be exercised in any event after the
Expiration Date.
b. Death
or Disability.
(i) If
Optionee’s employment with the Company and all Parents, Subsidiaries and
Affiliates of the Company is terminated because of the death of Optionee or
the
permanent and total disability of Optionee within the meaning of Section 22(e)
(3) of the Code, this Option, to the extent (and only to the extent) that it
would have been exercisable by Optionee on the Termination Date, may be
exercised by Optionee (or Optionee’s legal representative), but only within
twelve (12) months after the Termination Date, provided that this Option may
not
be exercised in any event later than the Expiration Date.
(ii) If
Optionee’s employment with the Company and all Parents, Subsidiaries and
Affiliates of the Company is terminated because of disability of Optionee
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which
is
not permanent and total disability within the meaning of Section 22(e) (3)
of
the Code, this Option, to the extent (and only to the extent) that it would
have
been exercisable by Optionee on the Termination Date, may be exercised by
Optionee (or Optionee’s legal representative), but only within six (6) months
after the Termination Date, provided that this Option may not be exercised
in
any event later than the Expiration Date.
c. Cause.
Notwithstanding any other provisions set forth herein, if the Optionee's
employment is terminated for cause under the terms of that certain Employment
Agreement dated the date hereof between Optionee and Sussex Bank (the
Employment
Agreement"), any unexercised portion of the Option, whether or not vested,
shall
terminate immediately and become null and void.
d. No
Right to Service.
Nothing
in or this Agreement shall confer on Optionee any right to continue in the
employ of, or other relationship with, the Company or any Parent, Subsidiary
or
Affiliate of the Company or limit in any way the right of the Company or any
Parent, Subsidiary or Affiliate of the Company to terminate Optionee’s
employment or other relationship at any time, with or without
cause.
5. Manner
of Exercise.
a. Exercise
Agreement.
This
Option shall be exercisable by delivery to the Company of an executed written
Stock Option Exercise Agreement in the form attached hereto as Exhibit
1,
or in
such other form as may be approved by the Company, which shall set forth
Optionee’s election to exercise some or all of this Option, the number of Shares
being purchased, any restrictions imposed on the Shares and such other
representations and agreements as may be required by the Company to comply
with
applicable securities laws.
b. Exercise
Price.
Such
notice shall be accompanied by full payment of the Exercise Price for the Shares
being purchased. Payment for the Shares may be made in cash (by check), or,
where permitted by law, by any other method approved by the Board of Directors
of the Company at the time of such exercise.
c. Withholding
Taxes.
Prior
to the issuance of the Shares upon exercise of this Option, Optionee must pay
or
make adequate provision for any applicable federal or state withholding
obligations of the Company. Subject to Board approval at its discretion, the
Optionee may provide for payment of Optionee’s minimum statutory withholding
taxes upon exercise of the Option by requesting that the Company retain Shares
with a fair market value equal to the minimum amount of taxes required to be
withheld. In such case, the Company shall issue the net number of Shares to
the
Optionee by deducting the Shares retained from the Shares
exercised.
d. Issuance
of Shares.
Provided that such notice and payment are in form and substance satisfactory
to
counsel for the Company, the Company shall cause the Shares to be issued in
the
name of Optionee or Optionee’s legal representative.
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6. Nontransferability
of Option.
This
Option may not be transferred in any manner other than
by
will or by the law of descent and distribution and may be exercised during
the
lifetime of Optionee only by Optionee or other permitted transferee. The terms
of this Option shall be binding upon the executors, administrators, successors
and assigns of the Optionee.
7. Privileges
of Stock Ownership.
Optionee shall not have any of the rights of a shareholder with respect to
any
Shares subject to this Option until this Option is properly exercised. No
adjustment shall be made for dividends or distributions or other rights for
which the record date is prior to such date, except as provided below.
8. Adjustment
for Changes in Capital Structure.
In the
event that the number of outstanding shares of Common Stock is changed by a
stock dividend, stock split, reverse stock split, combination, reclassification
or similar change in the capital structure of the Company without consideration,
or if a substantial portion of the assets of the Company are distributed,
without consideration in a spin-off or similar transaction, to the shareholders
of the Company, the number of Shares subject to this Option and the exercise
price per share of such Options shall be proportionately adjusted, subject
to
any required action by the Board or shareholders of the Company and compliance
with applicable securities laws; provided, however, that a fractional share
shall not be issued upon exercise of any Option and any fractions of a Share
that would have resulted shall either be cashed out at fair market value or
the
number of Shares issuable under the Option shall be rounded up to the nearest
whole number, as determined by the Board.
9. Interpretation.
Any
dispute regarding the interpretation of this Agreement shall be submitted by
Optionee or the Company to the Company’s Board of Directors, which shall review
such dispute at its next regular meeting. The resolution of such a dispute
by
the Board shall be final and binding on the Company and an
Optionee.
10. Entire
Agreement.
This
Agreement and the Stock Option Exercise Agreement constitute the entire
agreement of the parties hereto and supersede all prior undertakings and
agreements with respect to the subject matter hereof.
[Remainder
of Page Intentionally Blank]
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By:
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Name:
Xxxxxx X. Xxxxxx
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Title:
President/Chairman/CEO
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ACCEPTANCE
Optionee
hereby accepts this Option subject to all the terms and conditions of this
Stock
Option Grant Agreement. Optionee acknowledges that there may be adverse tax
consequences upon exercise of this Option or disposition of the Shares and
that
Optionee should consult a tax adviser prior to such exercise or
disposition.
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OPTIONEE
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Signature
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Xxxxxx
X. Xxxxxxxx
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Print
Name
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EXHIBIT
1
TO
STOCK OPTION GRANT
STOCK
OPTION EXERCISE AGREEMENT
This
Agreement is made this ________
day of
________________,
20 ____
between Sussex Bancorp (the “Company”), and the Optionee named below
(“Optionee”).
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Optionee:
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Xxxxxx
X. Xxxxxxxx
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Social
Security Number:
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Address:
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Number
of Shares Purchased:
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Price
Per Share:
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Aggregate
Purchase Price:
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Date
of Option Grant:
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The
Company and Optionee hereby agree as follows:
1.
Purchase
of Shares.
On this
date and subject to the terms and conditions of this Agreement, Optionee hereby
exercises the Stock Option Grant between the Company and Optionee dated as
of
the Date of Option Grant set forth above (the “Grant”), with respect to the
Number of Shares Purchased set forth above of the Company’s Common Stock (the
“Shares”) at an aggregate purchase price equal to the Aggregate Purchase Price
set forth above (the “Purchase Price”) and the Price per Share set forth above
(the “Purchase Price Per Share”). The term “Shares” refers to the Shares
purchased under this Agreement and includes all securities received (a) in
replacement of the Shares, and (b) as a result of stock dividends or stock
splits in respect of the Shares. Capitalized terms used herein that are not
defined herein have the definitions ascribed to them in the Grant
Agreement.
2. Representations
of Purchaser.
Optionee represents and warrants to the Company that
the
Shares are subject to the terms, conditions and restrictions of the
GrantAgreement and this Agreement and that no other terms, conditions or
restrictions, whether oral or written, shall govern.
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3. Compliance
with Securities Laws.
Optionee understands and acknowledges that the exercise of any rights to
purchase any Shares is expressly conditioned upon compliance with the Securities
Act of 1933 (the “1933 Act”) and all applicable state securities laws. Optionee
agrees to cooperate with the Company to ensure compliance with such laws.
4. Entire
Agreement. The
Grant
Agreement is incorporated herein by reference. This Agreement and the Grant
Agreement constitute the entire agreement of the parties and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee
with
respect to the subject matter hereof, and are governed by New Jersey law except
for that body of law pertaining to conflict of laws.
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SUBMITTED
BY:
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OPTIONEE
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[Print
Name]
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[Signature]
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DATED:
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ADDRESS:
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ACCEPTED
BY:
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By:
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Name:
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Title:
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