Exhibit 10.1

EMPLOYMENT AGREEMENT

          This Employment Agreement (“Agreement”), dated as of January 28, 2013,
is by and between Lakeland Bancorp, Inc., a New Jersey corporation (“Lakeland
Bancorp”), Lakeland Bank, a New Jersey state chartered bank (“Lakeland Bank”
and, collectively with Lakeland Bancorp, the “Employer”) and Stewart E. McClure,
Jr., an individual residing at 90 Spring Hill Road, Mendham, New Jersey 07945
(the “Executive”).

RECITALS

          WHEREAS, Lakeland Bancorp and Somerset Hills Bancorp, a New Jersey
corporation (“Somerset”) have entered into that certain Agreement and Plan of
Merger dated as of January 28, 2013 (the “Merger Agreement”) pursuant to which
Somerset shall merge with and into Lakeland Bancorp effective at the “Effective
Time” as defined in such Merger Agreement (the “Merger”); and

          WHEREAS, following the Merger, the Executive, who serves as, among
other things, the President and Chief Executive Officer of Somerset, desires to
be employed by the Employer, and the Employer desires to employ Executive, as
Co-President of Lakeland Bank; and

          WHEREAS, the parties desire to set forth the terms pursuant to which
the Executive will be employed by the Employer as Co-President of Lakeland Bank;

          NOW, THEREFORE, the Employer and the Executive hereby agree as
follows:

          Section 1. Employment. The Employer shall employ the Executive, and
the Executive agrees to be employed by the Employer, upon the terms and
conditions hereinafter provided, for a term commencing upon the closing of the
Merger (the “Effective Date”) and expiring on the second (2nd) anniversary of
the Effective Date (the “Initial Term”). Unless earlier terminated in accordance
with Section 5, this Agreement shall automatically be renewed for successive one
(1) year terms on each anniversary of the Effective Date (each a “Renewal
Term”), unless either party provides written notice to the other party not less
than ninety (90) days before each such anniversary of intent not to renew the
Agreement. The period during which Executive is employed under this Agreement
(including any Renewal Term) will be referred to as the “Term.” The Executive
hereby represents and warrants that the Executive has the legal capacity to
execute and perform this Agreement, that this Agreement is a valid and binding
agreement enforceable against the Executive according to its terms, and that the
execution and performance of this Agreement by the Executive does not violate
the terms of any existing agreement or understanding to which the Executive is a
party. Notwithstanding anything contained herein to the contrary, this Agreement
shall be without any force or effect on any party unless and until the Merger is
effective. In the event that the Merger Agreement is terminated in accordance
with its terms, this Agreement shall terminate concurrently therewith and shall
be without any force or effect on any party as of any date.

          Section 2. Duties. The Executive shall report to the Chief Executive
Officer and President of Lakeland Bancorp and Chief Executive Officer and
current President of Lakeland Bank (the “CEO”), currently Thomas J. Shara, and
shall have the title of Co-President of Lakeland Bank (with the other
Co-President being the Chief Operating Officer of the Employer, Robert A.
Vandenbergh) and shall be responsible for the consumer lending and residential
mortgage lending functions of Lakeland Bank, the cash and wealth management
functional areas, as well as such other functional responsibility as assigned by
the CEO. During the Term, except for vacation in accordance with the provisions
of this Agreement

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and the Employer’s policies or due to illness or incapacity, the Executive shall
devote all of the Executive’s business time, attention, skill and efforts
exclusively to the business and affairs of the Employer and its affiliates.
Notwithstanding the foregoing, to the extent that the following does not impair
the Executive’s ability to perform the Executive’s duties pursuant to this
Agreement, nor violate the terms of the provisions set forth in Section 6
hereof, the Executive may (1) make personal investments in such form or manner
as will neither require the Executive’s services in the operation or affairs of
the business in which such investments are made, (2) serve on the board of
directors of one or more charitable organizations and (3) serve on the board of
directors of other companies with the advance written consent of the Boards of
the Employer in accordance with its Corporate Governance Guidelines and Code of
Ethics.

          Section 3. Compensation. For all services rendered by the Executive in
any capacity required hereunder during the Term, including, without limitation,
services as an officer, director, or member of any committee of the Employer or
any parent, subsidiary, affiliate or division thereof, the Executive shall be
compensated as follows:

          (a) The Employer shall pay the Executive an initial fixed salary
(“Base Salary”) at a rate of $320,000 per annum from the Effective Date. Such
Base Salary shall be subject to periodic review and may be increased by the
Employer in its discretion. The term “Base Salary” as used in this Agreement
shall refer to the Base Salary as it may be increased from time to time. The
Base Salary shall be payable in accordance with the customary payroll practices
of the Employer.

          (b) The Executive shall participate in the executive bonus program as
approved annually by the Lakeland Bancorp Board.

          (c) Except as expressly modified by this Agreement, the Executive
shall be entitled to participate in all employee benefit plans or programs,
including without limitation the Employer’s 401(k) Plan and Profit Sharing Plan,
and to receive all benefits and perquisites, including without limitation an
automobile, which are approved by the CEO and are generally made available by
the Employer to executive officers of the Employer, to the extent permissible
under the general terms and provisions of such plans or programs and in
accordance with the provisions thereof. Notwithstanding the foregoing, nothing
in this Agreement shall require any particular plan or program to be continued
nor preclude the amendment or termination of any such plan or program, provided
that such amendment or termination is applicable generally to the executive
officers of the Employer.

          (d) The Executive shall be entitled to five (5) weeks vacation for
each 12-month period during the Term.

          (e) The Employer shall pay or reimburse Executive for Executive’s
reasonable annual membership dues and business related expenses during the Term
at the Executive’s golf club and the Park Avenue Club.

          Section 4. Business Expenses. The Employer shall pay or reimburse the
Executive for all necessary expenses reasonably incurred by the Executive in
connection with the performance of the Executive’s duties and obligations under
this Agreement, subject to the Executive’s presentation of appropriate vouchers
in accordance with such expense account policies and approval procedures as the
Employer may from time to time reasonably establish for employees (including but
not limited to prior approval of extraordinary expenses); provided, however,
that in no event shall a reimbursement be made later than December 31 of the
year following the year in which the expense was incurred.

          Section 5. Effect of Termination of Employment.

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          (a) Termination Generally. Notwithstanding anything herein to the
contrary, this Agreement may be terminated by either the Employer or the
Executive, at any time, without “Cause” or “Good Reason” (each as defined
below); provided, however, that the party desirous of terminating this Agreement
shall give the other party at least ninety (90) days’ prior written notice of
such termination. The Employer may, in lieu of the notice period, pay the
Executive’s Base Salary for the notice period, provided, however, that the
Employer shall continue the Executive’s e-mail, voice mail and secretarial
support during such ninety (90) day period. The date specified in any notice of
termination as the Executive’s final day of employment shall be referred to
herein as the “Termination Date.”

          (b) Accrued Obligations. Except as set forth in this Section 5, in the
event that Executive’s employment hereunder is terminated for any reason, then
Executive shall be entitled to no compensation or other benefits of any kind
whatsoever, other than (i) payment of Executive’s earned but unpaid Base Salary
under Section 3(a), if any, and earned but unpaid bonus under Section 3(b), if
any, for the preceding year, each in accordance with Employer’s standard payroll
practices, (ii) payment for any unused accrued vacation or unpaid business
expenses, (iii) payment of any other unpaid amounts due and owing under any
benefit, fringe or equity plans, and (iv) the opportunity to continue health
coverage under the Employer’s group health plan in accordance with “COBRA”
(“COBRA Coverage”) (the foregoing payments and benefits are collectively
referred to herein as “Accrued Obligations”).

          (c) Termination Without Cause, Resignation for Good Reason,
Termination Following a Change in Control, Each During the Initial Term.

 

 

 

          (1) In the event that the Employer terminates Executive’s employment
hereunder during the Initial Term without “Cause” (defined below) or the
Executive resigns during the Initial Term for “Good Reason” (defined below),
then the Executive shall be entitled to no compensation or other benefits of any
kind whatsoever, other than: (i) the Accrued Obligations, (ii) the No Change in
Control Severance Amount (defined below) payable in substantially equal
installments over a period of twelve (12) months in accordance with the
Employer’s normal payroll practices, and (iii) all of the Executive’s Restricted
Shares and stock options (to the extent not already vested) shall become fully
vested, and the Executive shall be permitted to exercise any such option for the
period specified in the Plan as in effect at such time.

 

 

 

          (2) Notwithstanding the foregoing, if, during the Term and within
ninety (90) days following a “Change in Control Event” (defined below), the
Executive’s employment is terminated by the Employer without Cause or the
Executive resigns for Good Reason, then, in lieu of the payments and benefits
set forth in Section 5(c)(1) above, the Executive shall receive (i) the Accrued
Obligations, (ii) the “Change in Control Severance Amount” (defined below)
payable within thirty (30) days following the Executive’s Termination Date,
subject to Section 5(f) and Section 20 hereof, and (iii) all of the Executive’s
Restricted Shares and stock options (to the extent not already vested) shall
become fully vested, and the Executive shall be permitted to exercise any such
option for the period specified in the Plan as in effect at such time.

 

 

 

          (3) In addition to any amounts payable pursuant to Section 5(c)(1) or
Section 5(c)(2) above, if the Employer terminates Executive’s employment
hereunder during the Initial Term without Cause or the Executive resigns during
the Initial Term for Good Reason, then the Executive shall be entitled to a lump
sum amount equal to the “Pre-Merger Change in Control Payment Amount” (defined
below). Such lump sum amount shall be paid within thirty (30) days following the
Executive’s Termination Date, subject to Section 5(f) and Section 20 hereof.

          (d) Death or Disability. The Executive’s employment with the Employer
shall terminate upon Executive’s death or “Disability” (defined below), in which
case the Executive (or his estate and

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heirs) shall be entitled to no compensation or other benefits of any kind
whatsoever under this Agreement for any period after the Executive’s date of
termination other than the Accrued Obligations. In addition, the Executive (or
his estate and heirs) shall be permitted to exercise any stock options (to the
extent vested as of the date of Executive’s termination of employment) for up to
twelve (12) months following such date of termination.

          (e) Options. Except as otherwise set forth herein, any options held by
the Executive as of the Termination Date (to the extent vested as of the
Termination Date) shall be exercisable for the period specified in the Plan as
in effect at such time. All unvested Restricted Shares held by the Executive as
of the Termination Date shall be forfeited.

          (f) Release. All payments and benefits under this Section 5 (other
than the Accrued Obligations) shall be contingent upon Executive executing a
general release of claims in favor of the Employer, its subsidiaries and
affiliates, and their respective officers, directors, shareholders, partners,
members, managers, agents or employees, which release shall be provided to the
Executive within five (5) business days following the Termination Date, and
which must be executed by the Executive and become effective within thirty (30)
days thereafter. Severance payments under this Section 5 that are contingent
upon such release shall, subject to Section 20, commence within ten (10) days
after such release becomes effective; provided, however, that if Executive’s
Termination Date occurs on or after November 15 of a calendar year, then
severance payments shall, subject to the effectiveness of such release and
Section 20, commence on the first business day of the following calendar year.

          (g) Termination With Cause. The Employer may terminate this Agreement
immediately for “Cause” by giving written notice to the Executive. In the event
that this Agreement is terminated pursuant to this Section 5(g), the Executive
shall be entitled to no compensation or other benefits of any kind whatsoever
for any period after the Termination Date set forth in the notice given by the
Employer to the Executive, except for the Accrued Obligations. All unexercised
stock options and unvested Restricted Shares held by the Executive as of the
Termination Date shall be forfeited.

          (h) Definitions.

                    (i) “Cause” shall mean: (1) the Executive’s gross negligence
in the performance of the material responsibilities of his office or position;
(2) the Executive’s gross or willful misconduct in the performance of the
material responsibilities of his office or position; (3) material failure or
refusal by the Executive to perform his duties, as such may be reasonably
assigned to him from time to time, other than by reason of his disability, or
other acts or omissions constituting material neglect or dereliction of his
duties; (4) any conviction by a court of law of, or entry of a pleading of
guilty or nolo contendre by Executive with respect to a felony; (5) the
Executive’s embezzlement or intentional misappropriation of any property of the
Employer (other than good faith expense account disputes); (6) the Executive’s
breach of Section 6 of this Agreement; (7) fraud, dishonesty or other acts or
omissions by the Executive that constitute a willful breach of his fiduciary
duty to the Employer; (8) the Executive’s use of alcohol or drugs which
materially interferes with the performance of his duties hereunder; or (9) the
Executive’s use of alcohol or drugs which materially compromises the integrity
and reputation of the Employer, or that of its employees, services or products.
For purposes of this definition, an act or failure to act shall be considered
“willful” only if done or omitted to be done without a good faith reasonable
belief that such act or failure to act was in the best interests of the
Employer. The Executive shall be given notice of the termination of his
employment for Cause. If the Executive shall be terminated pursuant to clause
(1), (2), (3), (6) or (8) above, the Executive shall be given thirty (30) days
to cure the matter (if curable). In all other cases, termination shall be
effective as of the date notice is given.

                    (ii) “Change in Control Event” shall be deemed to have
occurred if any of the

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following events occur:

                         (a) the consummation of any consolidation or merger of
Lakeland Bancorp in which Lakeland Bancorp is not the continuing or surviving
corporation or pursuant to which shares of Common Stock would be converted into
cash, securities or other property, other than a merger of Lakeland Bancorp in
which the holders of the shares of Lakeland Bancorp’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 Lakeland Bancorp, other than to a
subsidiary or affiliate; or

                         (c) any action pursuant to which any person (as such
term is defined in Section 13(d) of the Securities Exchange Act of 1934 (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 on which
this Agreement is first entered into) 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 Lakeland Bancorp (“Voting Securities”) representing
fifty-one (51%) percent or more of the combined voting power of Lakeland
Bancorp’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

                         (d) the individuals (A) who, as of the date on which
this Agreement is first entered into, 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.

          Notwithstanding the foregoing, none of the events described in (a)
through (d) above shall constitute a Change in Control Event unless such event
is considered either a “change in the ownership” of Lakeland Bancorp, a “change
in the effective control” of Lakeland Bancorp or a “change in the ownership of a
substantial portion of the assets” of Lakeland Bancorp within the meaning of
Treasury Regulation Sections 1.409A-3(i)(5)(v), (vi) or (vii), respectively.

                    (iii) “Disability” shall mean that Executive is incapable of
performing his principal duties due to physical or mental incapacity or
impairment for 180 consecutive days, or for 240 non-consecutive days, during any
12 month period.

                    (iv) “Good Reason” shall mean (a) a material adverse
reduction in the Executive’s duties and responsibilities without his consent, or
a reduction in the Executive’s title or positions (other than during any period
of illness or disability); (b) a material breach by the Employer of a material
term of this Agreement, (c) the relocation of the Executive’s principal office
location, without the Executive’s consent, to a location that is anywhere
outside of a 30 mile radius of Employer’s offices, or (d) any reduction, without
the Executive’s consent, of the Executive’s Base Salary. No event described in
clauses (a) through (d) above shall constitute “Good Reason” unless the
Executive provides the Board with written notice of the Executive’s objection to
such event within thirty (30) days after such event first

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occurs, and the Employer is afforded an opportunity to cure within thirty (30)
days after the Board’s receipt of such notice.

                    (v) “Change in Control Severance Amount” shall mean an
amount equal to the excess of (i) two (2) times the sum of (a) an amount equal
to the Executive’s annual Base Salary at the rate in effect as of the
Executive’s Termination Date, plus (b) an amount equal to the average cash
bonuses paid to the Executive by the Employer during the two (2) years prior to
the Executive’s Terminate Date, over (ii) the Pre-Merger Change in Control
Payment Amount.

                    (vi) “No Change in Control Severance Amount” shall mean an
amount equal to the excess of (i) 150% of the annual Base Salary in effect
immediately prior to the Executive’s Termination Date, over (ii) the Pre-Merger
Change in Control Payment Amount.

                    (vii) “Pre-Merger Change in Control Payment Amount” shall
mean the excess of (i) the maximum amount payable under Section 7.7(b) of the
“Prior Employment Agreement” (defined below), over (ii) $837,000, which is the
amount payable to Executive under Section 7.7(b) of the Prior Employment
Agreement in connection with the Merger. For clarity, the maximum amount payable
under Section 7.7(b) of the Prior Employment Agreement is equal to the sum of
three times Executive’s base salary with Somerset in effect immediately before
the Merger and three times the bonus Executive received from Somerset in the
year preceding the Merger, subject to the limitations set forth in the Third
Amendment Agreement, dated January 16, 2009, to the Prior Employment Agreement.

                    (viii) “Prior Employment Agreement” means the Employment
Agreement between Somerset Hills Bancorp and Executive dated March 8, 2001, as
amended May 15, 2003, September 26, 2007 and January 16, 2009 (referenced as
Exhibit 10.5 to the Annual Report on Form 10-K of Somerset for the 2011 fiscal
year).

          (i) No Mitigation. In no event shall the Executive be obligated to
seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement.

          Section 6. Confidentiality and Covenants Against Competition,
Solicitation, Disparagement.

          (a) The Executive agrees that his services hereunder are of a special,
unique, extraordinary and intellectual character, and his position with the
Employer places him in a position of confidence and trust with employees,
customers, and suppliers of the Employer. The Executive further agrees and
acknowledges that in the course of the Executive’s employment with the Employer,
the Executive has been and will be privy to confidential information of the
Employer. The Executive consequently agrees that it is reasonable and necessary
for the protection of the trade secrets, goodwill and business of the Employer
that the Executive make the covenants contained herein. Accordingly, the
Executive agrees that while employed by the Employer and during the “Restrictive
Period” (defined below), the Executive shall not (without the express prior
written consent of the Employer), anywhere in the world, directly or indirectly,

 

 

 

          (i) become Associated With any Competing Business in the Territory; or

 

 

 

          (ii) solicit, sell, call upon or induce others to solicit, sell or
call upon, directly or indirectly, any customer or prospective customer of the
Employer for the purpose of inducing any such customer or prospective customer
to purchase, license or lease a product or service of a Competing Business in
the Territory; or

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          (iii) employ, solicit for employment, or advise or recommend to any
other person that they employ or solicit for employment or retention as a
consultant, any person who is, or was at any time within twelve (12) months
prior to the last day of Executive’s employment with the Employer, an employee
of, or exclusive consultant to, the Employer.

          (b) For purposes of this Section 6, the term:

 

 

 

          (i) “Employer” shall include the Employer, and any of its subsidiaries
or affiliates.

 

 

 

          (ii) “Competing Business” means that portion or segment of the
business of any person, corporation or other entity which, directly or
indirectly, engages in providing financial services or advice or takes deposits
or makes loans.

 

 

 

          (iii) “Associated With” means serving as an owner, officer, employee,
independent contractor, agent or a holder of 5% or more of any class of equity
securities of, director, trustee, member, consultant or partner of any person,
corporation or other entity engaged in a Competing Business.

 

 

 

          (iv) “Restrictive Period” means the twelve (12) month period
commencing from the Executive’s date of termination with the Employer.

 

 

 

          (v) “Territory” means a geographic area equal to 20 miles from any of
the Employer’s branches at the time of Executive’s termination of employment.

          (c) If the Executive commits a breach or is about to commit a breach,
of any of the provisions of this Section 6, the Employer shall have the right to
have the provisions of this Agreement specifically enforced by any court having
equity jurisdiction without being required to post bond or other security and
without having to prove the inadequacy of the available remedies at law, it
being acknowledged and agreed that any such breach or threatened breach will
cause irreparable injury to the Employer and that money damages will not provide
an adequate remedy to the Employer. In addition, the Employer may take all such
other actions and remedies available to it under law or in equity and shall be
entitled to such damages as it can show it has sustained by reason of such
breach.

          (d) Executive shall not make any negative or disparaging comments
regarding the Employer or its subsidiaries or affiliates, or any of their
respective officers, directors, shareholders, partners, members, managers,
agents or employees (collectively, the “Representatives”), including regarding
the performance of the Employer or such subsidiaries or affiliates, or otherwise
take any action that could reasonably be expected to adversely affect the
Employer or its subsidiaries or affiliates or the personal or professional
reputation of any of their respective Representatives; and the Employer and its
Representatives shall not make any negative or disparaging comments regarding
Executive, or otherwise take any action that could reasonably be expected to
adversely affect the personal or professional reputation of Executive.
Disclosure of information required to be disclosed by either party pursuant to
any applicable law, court order, subpoena, compulsory process of law, or
governmental decree shall not constitute a violation or breach of this Section
6(d); provided, that the disclosing party delivers written notice of such
required disclosure to the other parties promptly before making such disclosure
if such notice is not prohibited by applicable law, court order, subpoena,
compulsory process of law, or governmental decree.

          (e) The Executive further agrees that all documents, reports, plans,
proposals, marketing and sales plans, customer lists, or materials principally
relating to the businesses of the Employer or any of its subsidiaries or
affiliates and made by the Executive or that came or come into the Executive’s
possession

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by reason of the Executive’s employment by the Employer are the property of such
entities and shall not be used by the Executive in any way adverse to the
interests of the Employer or any of its subsidiaries or affiliates. The
Executive will not, during the Term and thereafter, deliver, reproduce or in any
way allow such documents or things to be delivered or used by any third party
without specific direction or consent of a duly authorized representative of the
Employer. During or after termination of the Executive’s employment with the
Employer, the Executive will not publish, release or otherwise make available to
any third party any information describing any trade secret or other
confidential information of the Employer without prior specific written
authorization of the Employer.

          (f) During the Term and thereafter, the Executive will regard and
preserve as confidential all trade secrets and other confidential information
pertaining to the business of the Employer that have been or may be obtained by
the Executive by reason of the Executive’s employment by the Employer. The
Executive will not, without written authority from the Employer to do so, use
for the Executive’s own benefit or purposes, nor disclose to others, either
during the Executive’s employment by the Employer or thereafter any trade secret
or other confidential information relating to the business of the Employer,
except as required in the course of the Executive’s employment with the
Employer, or as required by law, or as (and only to the extent) required
pursuant to legal process or by an order of a court having competent
jurisdiction or under subpoena from an appropriate government agency (and then
only after providing the Employer with the opportunity to prevent such
disclosure or to receive confidential treatment for the confidential information
required to be disclosed); and the Executive will not take or retain or copy any
of the information, customer lists, or other documents of the Employer. This
Section 6(f) shall not apply with respect to information which has been
voluntarily disclosed to the public by or with the consent of the Employer,
independently developed and disclosed by others, or otherwise enters the public
domain through lawful means.

          (g) For purposes of this Agreement, the term “trade secret” shall
include, but not be limited to, information encompassed in all plans, proposals,
marketing and sales plans, customer lists, mailing lists, financial information,
costs, pricing information, and all concepts or ideas in or reasonably related
to the businesses of the Employer (whether or not divulged by the Executive or
other employees or agents of the Employer) that have not previously been
publicly released by duly authorized representatives of the Employer.

          (h) Executive acknowledges that the type and periods of restriction
imposed in the provisions of this Section 6 are fair and reasonable and are
reasonably required for the protection of the Employer and the goodwill
associated with the business of the Employer; and that the time, scope,
geographic area and other provisions of this Section 6 have been specifically
negotiated by sophisticated parties and are given as an integral part of this
Agreement. The Executive specifically acknowledges that the restrictions
contemplated by this Agreement will not prevent him from being employed or
earning a livelihood. If any of the covenants in this Section 6, or any part
thereof, is hereafter construed to be invalid or unenforceable, the same shall
not affect the remainder of the covenants, which shall be given full effect,
without regard to the invalid portions. If any of the covenants contained in
this Section 6, or any part thereof, is held to be unenforceable because of the
duration of such provision or the area covered thereby, the parties agree that
the court making such determination shall have the power to reduce the duration
and/or areas of such provision and, in its reduced form, such provision shall
then be enforceable. The parties hereto intend to and hereby confer jurisdiction
to enforce the covenants contained in this Section 6 upon the courts of any
state or other jurisdiction within the geographical scope of such covenants. In
the event that the courts of any one or more of such states or other
jurisdictions shall hold such covenants wholly unenforceable by reason of the
breadth of such scope or otherwise, it is the intention of the parties hereto
that such determination not bar or in any way affect the right of the Employer
to the relief provided above in the courts of any other states or other
jurisdictions within the geographical scope of such covenants, as to breaches of
such covenants in such other respective states or other jurisdictions, the

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above covenants as they relate to each state or other jurisdiction being, for
this purpose, severable into diverse and independent covenants. The existence of
any claim or cause of action by the Executive against the Employer shall not
constitute a defense to the enforcement by the Employer of the foregoing
restrictive covenants, but such claim or cause of action shall be determined
separately.

          (i) The Executive further agrees that a copy of a summons and
complaint seeking the entry of such order may be served upon the Executive by
certified mail, return receipt requested, at the address set forth above or at
any other address which the Executive shall designate in a writing addressed to
the Employer in the manner that notices are to be addressed pursuant to Section
9 of this Agreement.

          Section 7. Assignment of Developments; Works for Hire. If at any time
or times during Executive’s employment with the Employer, the Executive shall
(either alone or with others) make, conceive, discover or reduce to practice any
invention, modification, discovery, design, development, improvement, process,
software program, work-of-authorship, documentation, formula, data, technique,
know-how, secret or intellectual property right whatsoever or any interest
therein (whether or not patentable or registrable under copyright or similar
statutes or subject to analogous protection) (herein called “Developments”) that
(a) relates to the business of the Employer (or any subsidiary or affiliate of
the Employer) or any customer of or supplier to the Employer (or any of its
subsidiaries or affiliates) or any of the products or services being developed,
manufactured, sold or provided by the Employer or which may be used in relation
therewith or (b) results from tasks assigned to the Executive by the Employer,
such Developments and the benefits thereof shall immediately become the sole and
absolute property of the Employer and its assigns, and the Executive shall
promptly disclose to the Employer (or any persons designated by it) each such
Development and hereby assigns any rights the Executive may have or acquire in
the Developments and benefits and/or rights resulting therefrom to the Employer
and its assigns without further compensation and shall communicate, without cost
or delay, and without publishing the same, all available information relating
thereto (with all necessary documentation, plans and models) to the Employer.
Upon disclosure of each Development to the Employer, the Executive will, during
the Term and at any time thereafter, at the request and cost of the Employer,
sign, execute, make and do all such deeds, documents, acts and things as the
Employer and its duly authorized agents may reasonably require:

          (a) to apply for, obtain and vest in the name of the Employer alone
(unless the Employer otherwise directs) letters patent, copyrights, trademarks,
service marks or other analogous protection in any country throughout the world
and when so obtained or vested to renew and restore the same; and

          (b) to defend any opposition proceedings in respect of such
applications and any opposition proceedings or petitions or applications for
revocation of such letters patent, copyrights, trademarks, service marks or
other analogous protection.

          In the event the Employer is unable, after reasonable effort, to
secure the Executive’s signature on any letters patent, copyrights, trademarks,
service marks or other analogous protection relating to a Development, whether
because of the Executive’s physical or mental incapacity or for any other reason
whatsoever, the Executive hereby irrevocably designates and appoints the
Employer and its duly authorized officers and agents as the executive’s agent
and attorney-in-fact, to act for and on his behalf and stead to execute and file
any such application or applications and to do all other lawfully permitted acts
to further the prosecution and issuance of any such letters patent, copyrights,
trademarks, service marks and other analogous protection thereon with the same
legal force and effect as if executed by the Executive.

          Section 8. Withholding Taxes. The Employer may directly or indirectly
withhold from any payments to be made under this Agreement all Federal, state,
city or other taxes and all other deductions

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as shall be required pursuant to any law or governmental regulation or ruling or
pursuant to any contributory benefit plan maintained by the Employer.

          Section 9. Notices. All notices, requests, demands and other
communications required or permitted hereunder shall be given in writing, and
shall be deemed effective upon (a) personal delivery, if delivered by hand, (b)
three (3) days after the date of deposit in the mails, postage prepaid, if
mailed by certified or registered United States mail, or (c) the next business
day, if sent by a prepaid overnight courier service, and in each case addressed
as follows:

 

 

 

(a) To the Employer:

 

 

 

Lakeland Bancorp, Inc. 250 Oak Ridge Road Oak Ridge, New Jersey 07438
Attention: Chief Executive Officer

 

 

 

with a copy in the same manner simultaneously (which shall not be deemed notice)
to:
Office of General Counsel, 250 Oak Ridge Road Oak Ridge, New Jersey 07438

 

 

 

(b) To the Executive:

 

 

 

to the Executive at the Executive’s address listed above.

 

 

 

with a copy (which shall not be deemed notice) to:

 

 

 

Robert Schwartz, Esq.

 

Windels Marx Lane & Mittendorf, LLP

 

120 Albany Street Plaza, New Brunswick, NJ 08901

or to such other address as either party shall have previously specified in
writing to the other.

          Section 10. No Attachment. Except as required by law, no right to
receive payments under this Agreement shall be subject to anticipation,
commutation, alienation, sale, assignment, encumbrance, charge, pledge, or
hypothecation or to execution, attachment, levy or similar process or assignment
by operation of law, and any attempt, voluntary or involuntary, to effect any
such action shall be null, void and of no effect; provided, however, that
nothing in this Section 10 shall preclude the assumption of such rights by
executors, administrators or other legal representatives of the Executive or the
Executive’s estate and their assigning any rights hereunder to the person or
persons entitled thereto.

          Section 11. Binding Agreement; No Assignment. This Agreement shall be
binding upon, and shall inure to the benefit of, the Executive, the Employer and
their respective permitted successors, assigns, heirs, beneficiaries and
representatives. This Agreement is personal to the Executive and may not be
assigned by the Executive without the prior written consent of the Board, as
evidenced by a resolution of the Board. Any attempted assignment in violation of
this Section 11 shall be null and void.

          Section 12. Governing Law; Consent to Jurisdiction; Arbitration. This
Agreement, and all matters arising directly or indirectly from this Agreement,
shall be governed by, and construed and interpreted in accordance with, the laws
of the State of New Jersey, without giving effect to the choice of law
provisions thereof. Any unresolved controversy or claim arising out of or
relating to this Agreement, except (i) as otherwise provided in this Agreement
or (ii) with respect to which a party seeks injunctive or other equitable
relief, shall be submitted to arbitration by one arbitrator pursuant to the
Commercial Arbitration Rules of the American Arbitration Association (the
“AAA”). Judgment upon any award rendered in such arbitration will be binding and
may be entered in any court having jurisdiction thereof.

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The parties agree that the arbitrator in any such matter shall be directed to
award reasonable attorneys’ fees to the prevailing party. The arbitrator shall
also be directed to award the arbitrator’s compensation charges and the
administrative fees of the AAA to the prevailing party. The parties knowingly
and voluntarily agree to this arbitration provision and acknowledge that
arbitration shall be instead of any civil litigation, meaning that the parties
each are waiving any rights to a jury trial. Each of the parties to this
Agreement consents to personal jurisdiction and venue for any equitable action
sought in the United States District Court for the District of New Jersey and
any state court of competent jurisdiction in the State of New Jersey that is
located in Passaic County (and in the appropriate appellate courts from any of
the foregoing). Notwithstanding the foregoing, the Executive and the Employer
agree that, prior to submitting a dispute under this Agreement to arbitration,
the parties shall submit, for a period of sixty (60) days, to voluntary
mediation before a jointly selected neutral third party mediator under the
auspices of JAMS, New York City, New York, Resolution Center (or any successor
location), pursuant to the procedures of JAMS International Mediation Rules
conducted in the State of New York (however, such mediation or obligation to
mediate shall not suspend or otherwise delay any termination or other action of
the Employer or affect any other right of the Employer).

          Section 13. Entire Agreement. This Agreement shall constitute the
entire agreement between the parties with respect to the matters covered hereby
and supersedes all previous written, oral or implied understandings between them
with respect to such matters, including without limitation the Prior Employment
Agreement (except to the extent that reference to the Prior Employment Agreement
is required for the purposes of Section 5(c) hereof).

          Section 14. Amendments. This Agreement may only be amended or
otherwise modified by a writing executed by each of the parties hereto.

          Section 15. Survivorship. The provisions of Sections 5 through 13
hereof and this Section 15 shall survive the termination of this Agreement.

          Section 16. Indemnification. The Employer shall indemnify, defend and
hold the Executive harmless for actions and omissions as an officer and/or
director of the Employer to the extent set forth in the Employer’s By-laws
and/or Certificate of Incorporation, as applicable. The Employer agrees that the
Executive shall be covered by directors and officers insurance coverage during
the Term on the same basis as the Employer maintains such coverage for other
officers and directors of the Employer.

          Section 17. Key Man Life Insurance. If requested by the Employer, the
Executive agrees to cooperate with the Employer in obtaining any key man life
insurance or such other coverage insuring the Executive’s life and to submit to
such physical examinations as may be needed to secure such coverage.

          Section 18. Counterparts. This Agreement may be executed in any number
of counterparts or facsimile copies, each of which when executed shall be deemed
to be an original and all of which together shall be deemed to be one and the
same instrument.

          Section 19. Legal Counsel. The Executive represents that he is
knowledgeable and sophisticated as to business matters, including the subject
matter of this Agreement, that he has read this Agreement and that he
understands its terms. The Executive acknowledges that, prior to assenting to
the terms of this Agreement, he has been given a reasonable period of time to
review it, to consult with counsel of his choice, and to negotiate at
arm’s-length with the Employer as to its contents. The Executive and the
Employer agree that the language used in this Agreement is the language chosen
by the parties to express their mutual intent, and that they have entered into
this Agreement freely and voluntarily and without pressure or coercion from
anyone.

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          Section 20. Section 409A. This Agreement shall be interpreted to avoid
any penalty sanctions under Section 409A of the Code (“Section 409A”) and
regulations promulgated thereunder. Notwithstanding anything contained herein to
the contrary, the Executive shall not be considered to have terminated
employment with the Employer for purposes of the payments and benefit of Section
5 hereof unless he would be considered to have incurred a “termination of
employment” from the Employer within the meaning of Treasury Regulation
§1.409A-1(h)(1)(ii). For purposes of Section 409A, each payment made under this
Agreement shall be treated as a separate payment. In no event may the Executive,
directly or indirectly, designate the calendar year of payment. Notwithstanding
the foregoing, if necessary to comply with the restriction in Section
409A(a)(2)(B) of the Code concerning payments to “specified employees”, any
payment as a result of the termination of the Executive’s employment that would
otherwise be due hereunder within six months after such termination of
employment shall nonetheless be delayed until the first business day of the
seventh month following the Executive’s date of termination and the first such
payment shall include the cumulative amount of any payments that would have been
paid prior to such date if not for such restriction.

          Section 21. Section 280G Limitation. If any payment(s) or benefit(s)
Executive would receive pursuant to this Agreement and/or pursuant to any other
agreement or arrangement would (i) constitute a “parachute payment” within the
meaning of Section 280G of the Code, and (ii) but for this section, be subject
to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then
such payment(s) or benefit(s) (collectively, “Payments”) shall be reduced to the
Reduced Amount. The “Reduced Amount” shall be the largest portion of the
Payments that can be paid or provided without causing any portion of the
Payments being subject to the Excise Tax. If a reduction in payments or benefits
constituting “parachute payments” is necessary so that the Payments equal the
Reduced Amount, reduction shall occur in the following order: (a) first,
severance payments under this Agreement, (b) second, any other cash payments due
under any other agreement between the Company and Executive; (c) third,
cancellation of the acceleration of vesting of any stock options, (d) fourth,
cancellation of the acceleration of vesting of any restricted stock and
restricted stock units; and (e) lastly, other non-cash forms of benefits.
Calculations of the foregoing will be performed at the expense of the Company by
an accounting firm selected by the Company. The determinations of such
accounting firm shall be final, binding and conclusive upon the Company and
Executive.

[Signature Page Follows]

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          IN WITNESS WHEREOF, the Employer has caused this Agreement to be
executed and delivered by its duly authorized officer and the Executive has
signed this Agreement, all as of the first date written above.

 

 

 

 

 

LAKELAND BANCORP, INC.

 

 

 

 

By:

     /s/ Thomas J. Shara

 

 

 

 

 

 

 

 

Thomas J. Shara

 

President and Chief Executive Officer

 

 

 

 

LAKELAND BANK

 

 

 

 

By:

     /s/ Thomas J. Shara

 

 

 

 

 

 

 

 

Thomas J. Shara

 

President and Chief Executive Officer

 

 

 

 

EXECUTIVE:

 

 

 

 

/s/ Stewart E. McClure, Jr.

 

 

 

 

Stewart E. McClure, Jr.

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