Exhibit 10
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SUSSEX BANCORP
2004 EQUITY INCENTIVE PLAN
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1. Purpose
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The purpose of this 2004 Equity Incentive Plan (the "Plan") of Sussex
Bancorp, a New Jersey corporation (the "Company"), is to advance the interests
of the Company's stockholders by enhancing the Company's ability to attract,
retain and motivate persons who make (or are expected to make) important
contributions to the Company by providing such persons with equity ownership
opportunities and performance-based incentives and thereby better aligning the
interests of such persons with those of the Company's stockholders. Except where
the context otherwise requires, the term "Company" shall include any of the
Company's present or future parent or subsidiary corporations as defined in
Sections 424(e) or (f) of the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder (the "Code") and any other business venture
(including, without limitation, joint venture or limited liability company) in
which the Company has a controlling interest, as determined by the Board of
Directors of the Company (the "Board").
2. Eligibility
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All of the Company's employees, officers, directors, consultants and
advisors are eligible to be granted options or restricted stock awards (each, an
"Award") under the Plan. Each person who has been granted an Award under the
Plan shall be deemed a "Participant".
3. Administration
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The Plan will be administered by the Board. The Board shall have authority
to grant Awards, set the terms of such Awards (subject to the terms and
conditions of this Plan) and to adopt, amend and repeal such administrative
rules, guidelines and practices relating to the Plan as it shall deem advisable.
The Board may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it shall
deem expedient to carry the Plan into effect and it shall be the sole and final
judge of such expediency. All decisions by the Board shall be made in the
Board's sole discretion and shall be final and binding on all persons having or
claiming any interest in the Plan or in any Award. No director or person acting
pursuant to the authority delegated by the Board shall be liable for any action
or determination relating to or under the Plan made in good faith.
4. Stock Available for Awards
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Subject to adjustment under Section 7, Awards may be made under the Plan
for up to 200,000 shares of common stock, without par value, of the Company (the
"Common Stock"). If any Award expires or is terminated, surrendered or canceled
without having been
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fully exercised or is forfeited in whole or in part or results in any Common
Stock not being issued, the unused Common Stock covered by such Award shall
again be available for the grant of Awards under the Plan. Shares issued under
the Plan may consist in whole or in part of authorized but unissued shares or
treasury shares.
5. Stock Options
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(a) General. The Board may grant options to purchase Common Stock (each, an
"Option") and, subject to the terms hereof, determine the number of shares of
Common Stock to be covered by each Option, the exercise price of each Option and
the conditions and limitations applicable to the exercise of each Option,
including any vesting period and any conditions relating to applicable federal
or state securities laws, as it considers necessary or advisable. An Option
which is not intended to be an Incentive Stock Option (as hereinafter defined)
shall be designated a "Nonstatutory Stock Option".
(b) Incentive Stock Options. An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of the Company, and any other
entities the employees of which are eligible to receive Incentive Stock Options
under the Code, and shall be subject to and shall be construed consistently with
the requirements of Section 422 of the Code. The Company shall have no liability
to a Participant, or any other party, if an Option (or any part thereof) that is
intended to be an Incentive Stock Option is not an Incentive Stock Option.
(c) Exercise Price. The Board shall establish the exercise price at the
time each Option is granted and specify it in the applicable option agreement;
provided, however that the exercise price for an Incentive Stock Option shall be
100% of the "fair market value" of the Common Stock on the date of grant. The
exercise price of any Incentive Stock Option granted to a person owning more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company ("Ten Percent Shareholder") shall not be less than one
hundred ten percent (110%) of the Fair Market Value of the Shares on the date of
the grant. The exercise price for any Non-Statutory Stock Option shall be
determined in good faith by the Board. For purposes hereof, Fair Market Value
shall mean the fair market value of the Common Stock as determined by Board from
time to time in good faith. As long as the stock is traded on the American Stock
Exchange, the Fair Market Value shall be the closing price on the last trading
day prior to the date of determination as reported by the Exchange
(d) Duration of Options. Each Option shall be exercisable at such times and
subject to such terms and conditions (including any vesting requirements) as the
Board may specify in the applicable option agreement provided, however, that no
Option will be granted for a term in excess of 10 years and provided further
that no Incentive Stock Option granted to a Ten Percent Shareholder may have a
term greater than five (5) years.
(e) Exercise of Option. Options may be exercised by delivery to the Company
of a written notice of exercise signed by the proper person or by any other form
of notice (including electronic notice) approved by the Board together with
payment in full as specified in Section 5(f) for the number of shares for which
the Option is exercised.
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(f) Payment Upon Exercise. Common Stock purchased upon the exercise of an
Option granted under the Plan shall be paid for as follows:
(1) in cash or by check, payable to the order of the Company;
(2) except as the Board may, in its sole discretion, otherwise
provide in an option agreement, by (i) delivery of an
irrevocable and unconditional undertaking by a creditworthy
broker to deliver promptly to the Company sufficient funds
to pay the exercise price and any required tax withholding
or (ii) delivery by the Participant to the Company of a copy
of irrevocable and unconditional instructions to a
creditworthy broker to deliver promptly to the Company cash
or a check sufficient to pay the exercise price and any
required tax withholding;
(3) except as the Board may, in its sole discretion, otherwise
provide in an option agreement, by delivery of shares of
Common Stock owned by the Participant valued at their Fair
Market Value, provided (i) such method of payment is then
permitted under applicable law and (ii) such Common Stock,
if acquired directly from the Company was owned by the
Participant at least six months prior to such delivery;
(4) to the extent permitted by applicable law and by the Board,
in its sole discretion by such other lawful consideration as
the Board may determine;
(5) or by any combination of the above permitted forms of
payment.
(g) Substitute Options. In connection with a merger or consolidation of an
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entity with the Company or the acquisition by the Company of property or stock
of an entity, the Board may grant Options in substitution for any options or
other stock or stock-based awards granted by such entity or an affiliate
thereof. Substitute Options may be granted on such terms as the Board deems
appropriate in the circumstances, notwithstanding any limitations on Options
contained in the other sections of this Section 5 or in Section 2.
(h) Limitations on Incentive Stock Options. The aggregate Fair Market Value
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(determined as of the time an Option is granted) of stock with respect to which
Incentive Stock Options are exercisable for the first time by a Participant
during any calendar year (under this Plan or under any other incentive stock
option plan of the Company) shall not exceed one hundred thousand dollars
($100,000). If the Fair Market Value of stock with respect to which Incentive
Stock Options are exercisable for the first time by a Participant during any
calendar year exceeds $100,000, the Options for the first $100,000 worth of
stock to become exercisable in such year shall be Incentive Stock Options and
the Options for the amount in excess of $100,000 that become exercisable in that
year shall be Non-Statutory Options. In the event that the Code or the
regulations promulgated thereunder are amended after the effective date of this
Plan to provide for a different limit on the Fair Market Value of Shares
permitted to be subject to Incentive Stock Options, such different limit shall
be incorporated herein and shall apply to any Options granted after the
effective date of such amendment.
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(i) Transferability of Options. Incentive Stock Options granted under this
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Plan, and any interest therein, shall not be transferable or assignable by the
Participant, and may not be made subject to any execution, attachment or similar
process, otherwise than by will or by the laws of descent and distribution and
shall be exercisable during the lifetime of the Participant only by the
Participant or any permitted transferee. Non-Statutory Options granted under
this Plan shall also generally not be transferable or assignable, provided,
however, that any Non-Statutory Option granted hereunder may be transferred by a
Participant to members of the Participant's immediate family, or to any trust or
benefit plan established for the benefit of such Participant or immediate family
member, or pursuant to the laws of descent and distribution.
6. Restricted Stock
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(a) Grants. The Board may grant Awards entitling recipients to acquire
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shares of Common Stock, subject to the right of the Company to require
forfeiture of such shares from the recipient in the event that conditions
specified by the Board in the applicable Award are not satisfied prior to the
end of the applicable restriction period or periods established by the Board for
such Award (each, a "Restricted Stock Award"). During the Restricted Period,
shares constituting a Restricted Stock Award may not be transferred, although a
Participant shall be entitled to exercise other indicia of ownership, including
the right to vote such shares and receive any dividends declared on such shares.
(b) Terms and Conditions. The Board shall determine the terms and
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conditions of any such Restricted Stock Award, including the conditions for
forfeiture.
(c) Stock Certificates. The Company may cause shares issues as part of a
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Restricted Stock Award to be issued in either book entry form of certificated
form. Shares issued in book entry form will be maintained in an account at the
Company's transfer agent, and only released to a Participant upon satisfaction
of any required restrictions. Any stock certificates issued in respect of a
Restricted Stock Award shall be registered in the name of the Participant and,
unless otherwise determined by the Board, deposited by the Participant, together
with a stock power endorsed in blank, with the Company (or its designee). At the
expiration of the applicable restriction periods, the Company (or such designee)
shall deliver the certificates no longer subject to such restrictions to the
Participant or if the Participant has died, to the beneficiary designated, in a
manner determined by the Board, by a Participant to receive amounts due or
exercise rights of the Participant in the event of the Participant's death (the
"Designated Beneficiary"). In the absence of an effective designation by a
Participant, Designated Beneficiary shall mean the Participant's estate.
7. Adjustments for Changes in Common Stock and Certain Other Events
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(a) Changes in Capitalization. In the event of any stock split, reverse
stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in capitalization
or event, or any distribution to holders of Common Stock other than an ordinary
cash dividend, (i) the number and class of securities available under this Plan,
and (ii) the number and class of securities and exercise price per share subject
to each
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outstanding Option shall be appropriately adjusted by the Company (or
substituted Awards may be made, if applicable) to the extent the Board shall
determine, in good faith, that such an adjustment (or substitution) is necessary
and appropriate. If this Section 7(a) applies and Section 7(c) also applies to
any event, Section 7(c) shall be applicable to such event, and this Section 7(a)
shall not be applicable.
(b) Liquidation or Dissolution. In the event of a proposed liquidation or
dissolution of the Company, the Board shall upon written notice to the
Participants provide that all then unexercised Options will (i) become
exercisable in full as of a specified time at least 10 business days prior to
the effective date of such liquidation or dissolution and (ii) terminate
effective upon such liquidation or dissolution, except to the extent exercised
before such effective date. The Board may specify the effect of a liquidation or
dissolution on any Restricted Stock Award granted under the Plan at the time of
the grant.
(c) Change in Control Event
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(1) Definitions
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A "Change in Control Event" shall mean:
a. a reorganization, merger, consolidation or sale of all or
substantially all of the assets of the Company, or a similar
transaction in which shareholders owning a majority of the
voting securities of the Company prior to such transaction
fail to own a majority of the voting securities of the
Company after such transaction;
b. individuals who constitute the Incumbent Board (as herein
defined) of the Company cease for any reason to constitute a
majority thereof;
c. an event of a nature that would be required to be reported
in response to Item I of the current report on Form 8-K, as
in effect on the date hereof, pursuant to Section 13 or
15(d) of the Exchange Act; or
d. 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 Employer 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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e. A proxy statement soliciting proxies from stockholders of
the Company is disseminated by someone other than the
current management of the Company, seeking stockholder
approval of a plan of reorganization, merger or
consolidation of the Company or similar transaction with one
or more corporations as a result of which the outstanding
shares of the class of securities then subject to the plan
or transaction are exchanged or converted into cash or
property or securities not issued by the Company, and such
transaction is approved by a majority of the Company's
voting securities;
f. A tender offer is made for 25% or more of the voting
securities of the Company and the shareholder 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.
For these purposes, "Incumbent Board" means the Board of Directors on the
date hereof, provided that any person becoming a director subsequent to the date
hereof whose election was approved by a voting 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.
(2) Effect on Options
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In the event of a consolidation, reorganization, merger or sale of all
or substantially all of the assets of the Company, in each case in which
outstanding shares of Common Stock are exchanged for securities, cash or
other property of any other corporation or business entity or in the event
of a liquidation of the Company, the Board shall provide for any one or
more of the following actions, as to outstanding Options: (i) provide that
such Options shall be assumed, or equivalent options shall be substituted,
by the acquiring or succeeding corporation (or an affiliate thereof), (ii)
in the event of a merger under the terms of which holders of the Common
Stock will receive upon consummation thereof a cash payment for each share
surrendered in the merger (the "Merger Price"), make or provide for a cash
payment to the Participants equal to the difference between (A) the Merger
Price times the number of shares of Common Stock subject to such
outstanding Options (to the extent then exercisable at prices not in excess
of the Merger Price) and (B) the aggregate exercise price of all such
outstanding Stock Options in exchange for the termination of such Stock
Options, and (iii) provide that all or any outstanding Stock Options shall
become exercisable in full immediately prior to such event.
(3) Effect on Restricted Stock Awards
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(a) Upon the occurrence of a Change in Control Event, except to
the extent specifically provided to the contrary in the
instrument evidencing any Restricted Stock Award or any
other agreement between a Participant and the Company, the
vesting schedule of all Restricted Stock Awards shall be
accelerated so all shares still subject to conditions or
restrictions shall immediately become free from such
conditions or restrictions.
(d) Documentation. Each Award shall be evidenced in such form (written,
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electronic or otherwise) as the Board shall determine. Each Award may contain
terms and conditions in addition to those set forth in the Plan.
(e) Board Discretion. Except as otherwise provided by the Plan, each Award
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may be made alone or in addition or in relation to any other Award. The terms of
each Award need not be identical, and the Board need not treat Participants
uniformly.
(f) Termination of Status. The Board shall determine the effect on an Award
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of the disability, death, retirement, authorized leave of absence or other
change in the employment or other status of a Participant and the extent to
which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the Award. Such determination shall be reflected in the grant
agreement evidencing each such Award.
(g) Withholding. Each Participant shall pay to the Company, or make
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provision satisfactory to the Board for payment of, any taxes required by law to
be withheld in connection with Awards to such Participant no later than the date
of the event creating the tax liability. Except as the Board may otherwise
provide in an Award, Participants may satisfy such tax obligations in whole or
in part by delivery of shares of Common Stock, including shares retained from
the Award creating the tax obligation, valued at their Fair Market Value;
provided, however, that the total tax withholding where stock is being used to
satisfy such tax obligations cannot exceed the Company's minimum statutory
withholding obligations (based on minimum statutory withholding rates for
federal and state tax purposes, including payroll taxes, that are applicable to
such supplemental taxable income). The Company may, to the extent permitted by
law, deduct any such tax obligations from any payment of any kind otherwise due
to a Participant.
(h) Amendment of Award. The Board may amend, modify or terminate any
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outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.
(i) Conditions on Delivery of Stock. The Company will not be obligated to
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deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or
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removed to the satisfaction of the Company, (ii) in the opinion of the Company's
counsel, all other legal matters in connection with the issuance and delivery of
such shares have been satisfied, including any applicable securities laws and
any applicable stock exchange or stock market rules and regulations, and (iii)
the Participant has executed and delivered to the Company such representations
or agreements as the Company may consider appropriate to satisfy the
requirements of any applicable laws, rules or regulations.
(j) Acceleration. The Board may at any time provide that any Award shall
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become immediately exercisable in full or in part, free of some or all
restrictions or conditions, or otherwise realizable in full or in part, as the
case may be.
(k) Miscellaneous. No Right To Employment or Other Status. No person shall
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have any claim or right to be granted an Award, and the grant of an Award shall
not be construed as giving a Participant the right to continued employment or
any other relationship with the Company. The Company expressly reserves the
right at any time to dismiss or otherwise terminate its relationship with a
Participant free from any liability or claim under the Plan, except as expressly
provided in the applicable Award.
(l) No Rights As Stockholder. Subject to the provisions of the applicable
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Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Option until becoming the record holder of such shares.
Notwithstanding the foregoing, in the event the Company effects a split of the
Common Stock by means of a stock dividend and the exercise price of and the
number of shares subject to such Option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who exercises an Option between the record date and
the distribution date for such stock dividend shall be entitled to receive, on
the distribution date, the stock dividend with respect to the shares of Common
Stock acquired upon such Option exercise, notwithstanding the fact that such
shares were not outstanding as of the close of business on the record date for
such stock dividend.
(m) Effective Date and Term of Plan. The Plan shall become effective on the
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date on which it is approved by the Company's stockholders, although Awards may
be made by the Board subject to such approval. No Awards shall be granted under
the Plan after the completion of ten years from the earlier of (i) the date on
which the Plan was adopted by the Board or (ii) the date the Plan was approved
by the Company's stockholders, but Awards previously granted may extend beyond
that date.
(n) Amendment of Plan. The Board may amend, suspend or terminate the Plan
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or any portion thereof at any time.
(o) Governing Law. The provisions of the Plan and all Awards made hereunder
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shall be governed by and interpreted in accordance with the laws of the State of
New Jersey, without regard to any applicable conflicts of law.