Document:

Exhibit 4.2

 

 

FORM OF STANDBY PURCHASE AGREEMENT

 

This STANDBY PURCHASE
AGREEMENT (this “Agreement”) is by and among the undersigned purchaser (the “Standby Purchaser “) and Sussex
Bancorp (the “Company”).

 

WHEREAS, the Company proposes
to distribute, at no charge, to each holder of record of shares of common stock, no par value, of the Company (the “Common
Stock”) on a record date to be set by the Board of Directors of the Company (the “Record Date”) non-transferable
rights to subscribe for and purchase additional shares of Common Stock (the “Rights Offering”); and

 

WHEREAS, in the Rights
Offering, the Company’s shareholders of record as of the Record Date will receive one subscription right for each share of
Common Stock held as of the Record Date, with each subscription right entitling the holder to purchase 0.35 share of Common Stock
(the “Basic Subscription Right”) at a price of $ per share (the “Subscription Price”); and

 

WHEREAS, each holder of
a subscription right who exercises in full its Basic Subscription Right in the Rights Offering will be entitled to subscribe for
additional shares of Common Stock to the extent they are available, at the Subscription Price (the “Over-Subscription Privilege”);
and

 

WHEREAS, in order to facilitate
the Rights Offering, the Company is offering (the “Standby Offering”) to selected accredited investors (collectively,
the “Standby Purchasers”) the opportunity to purchase at the Subscription Price, subject to the terms and conditions
of this Agreement, any shares of Common Stock not subscribed for pursuant to the exercise of Basic Subscription Rights or subscribed
for pursuant to the Over-Subscription Privilege in the Rights Offering (the “Unsubscribed Shares”); and

 

NOW THEREFORE, in consideration
of the foregoing and the mutual covenants herein contained and other good and valuable consideration, the parties hereto, intending
to be legally bound hereby, agree as follows:

 

Section 1.                    Standby
Purchase Commitment.

 

(a)          Standby
Purchase Commitment. If and to the extent there are Unsubscribed Shares following the expiration of the Rights Offering, the
Standby Purchaser hereby agrees to purchase from the Company shares of Common Stock at the Subscription Price for a total up to
the dollar amount indicated on the signature page hereto (the “Commitment Amount”), subject to reduction in accordance
with Section 1(d) of this Agreement and the Company’s right to withdraw or terminate the Rights Offering or the Standby Offering
in accordance with Section 1(g) of this Agreement.

 

(b)          Payment.
Payment shall be made to the Company by the Standby Purchaser, on the Closing Date, against delivery of the Common Stock purchased
by the Standby Purchaser, in United States dollars by means of certified or cashier’s checks, bank drafts, money orders or
wire transfers.

 

    	 

    	 

    

 

(c)          Acceptance
by the Company. The Company in its sole discretion may accept all or any portion of the Commitment Amount set forth on the
signature page hereto and shall have no obligation to accept commitments in the order received. The Company shall be deemed to
have accepted the Commitment Amount upon the execution of this Agreement by the Company’s authorized representative on the
signature page hereto, and the return of this Agreement, as fully executed, or a copy thereof, to the Standby Purchaser. Any commitment
that is rejected by the Company will be marked “Void” and returned along with any unnegotiated check or the cash proceeds
from a negotiated check, without interest or other income, promptly thereafter. Nothing in this subsection shall limit the Company’s
ability, in its sole discretion, to allocate the Unsubscribed Shares among the Standby Purchasers in the Standby Offering in accordance
with Section 1(d) of this Agreement or withdraw or terminate the Rights Offering or the Standby Offering in accordance with Section
1(g) of this Agreement.

 

(d)          Allocation
of Unsubscribed Shares. Promptly following the expiration of the Rights Offering, the Company will determine the amount of
Unsubscribed Shares. The Company, in its sole discretion, may allocate the Unsubscribed Shares among the Standby Purchasers in
the Standby Offering. Upon the Company’s determination of the allocation of the Common Stock to each Standby Purchaser, the
Company promptly will notify the Standby Purchaser in writing of the number of shares of Common Stock to be purchased by such Standby
Purchaser (the “Allocated Shares”), the value of which may be less than the Commitment Amount.

 

(e)          Closing.
On the basis of the representations and warranties and subject to the terms and conditions herein set forth, the closing of the
purchase and sale of the Allocated Shares (the “Closing”) shall take place at the offices of Hogan Lovells US LLP at
10:00 a.m., Eastern Time, on a date no later than five (5) business days after the completion of the Rights Offering, or such other
place, time or date as may be determined by the Company in its sole discretion (the “Closing Date”).

 

(f)          Regulatory
Limitations. The Standby Purchaser will not be permitted, individually or acting in concert, to acquire greater than 9.9% of
the Company’s outstanding shares of Common Stock, after giving effect to the Rights Offering and Standby Offering (the “Regulatory
Limit”), if (i) the Company has not approved such purchase and (ii) in the Company’s opinion, the Standby Purchaser
is required to give prior notice to, obtain prior clearance or approval from or make any commitment to any state or federal bank
regulatory authority to own or control such shares and such notice, clearance, approval or expiration of such waiting period has
not been obtained prior to the Closing Date. In that event, the Company in its sole discretion may (i) reduce the Allocated Shares
or (ii) conduct one or more additional Closings with respect to the amount of the Allocated Shares in excess of such Regulatory
Limit at such time that, in the Company’s opinion, all regulatory requirements have been satisfied.

 

(g)         Withdrawal
and Termination. At any time prior to the Closing Date, the Company may in its sole discretion withdraw or terminate the Rights
Offering or the Standby Offering.

 

Section 2.               Representations
and Warranties of the Company. The Company represents and warrants to the Standby Purchaser as follows:

 

(a)       The
Company is a corporation duly organized, validly existing and in good standing under the laws of the State of New Jersey and has
all requisite corporate power and authority to carry on its business as now conducted.

 

(b)         This
Agreement has been duly and validly authorized, executed and delivered by the Company and constitutes a binding obligation of the
Company enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability,
to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of
whether enforcement is sought in a proceeding at law or in equity).

 

    	 

    	 

    

 

(c)          The
Company has not failed to disclose any material agreement or circumstance that, if disclosed, would reasonably be expected to have
a material effect on the Standby Purchaser’s decision to enter into this Agreement, or that would or will have a material
adverse effect on the Standby Purchaser’s ownership interest in the Company pursuant to the Common Stock, or that would reasonably
be expected to otherwise have a material adverse effect on the rights and interests of the Standby Purchaser in the Company pursuant
to the terms of this Agreement and its ownership of any Unsubscribed Shares.

 

(d)          The
Allocated Shares will be duly authorized and, when issued and paid for pursuant to the terms of this Agreement, will be validly
issued, fully paid and nonassessable, and will have the rights, preferences, and privileges specified in the articles of incorporation
of the Company.

 

(e)          The
Company prior to closing shall have obtained all state and federal regulatory approvals necessary for the Rights Offering, the
Standby Offering and all transactions related thereto.

 

(f)          The
Company’s Board of Directors have approved this Agreement and the transactions contemplated by this Agreement to the extent
required by the laws, regulations and policies of the State of New Jersey and the Nasdaq Capital Market, and such laws, regulations
and policies do not require that the Company’s shareholders approve the Agreement and the transactions contemplated by the
Agreement.

 

Section 3.          Representations
and Warranties of the Standby Purchaser. The Standby Purchaser represents and warrants to the Company as follows:

 

(a)          The
Standby Purchaser is an “Accredited Investor” within the meaning of Rule 501(a) of Regulation D promulgated under the
Securities Act, and the Accredited Investor Questionnaire (the “Questionnaire”) attached as Exhibit A of this
Agreement that the Standby Purchaser has completed and all of the statements, answers and information thereon are true and correct
as of the date hereof and will be true and correct as of the Closing Date.

 

(b)          The
Standby Purchaser is purchasing the Unsubscribed Shares for the Standby Purchaser’s own account, for investment purposes
only and not with a present intention of entering into or making any subsequent sale, assignment, conveyance, pledge, hypothecation
or other transfer thereof.

 

(c)          The
Standby Purchaser has no need for liquidity in the Standby Purchaser’s investment in the Unsubscribed Shares and understands
that there are restrictions on the subsequent resale or other transfer of the Subscribed Shares.

 

(d)          The
Standby Purchaser is familiar with the business in which the Company is engaged, and based upon its knowledge and experience in
financial and business matters, it is familiar with the investments of the type that it is undertaking to purchase; it is fully
aware of the problems and risks involved in making an investment of this type; and it is capable of evaluating the merits and risks
of this investment.

 

    	 

    	 

    

 

(e)          The
Standby Purchaser acknowledges that, prior to executing this Agreement, it has been given access to all books of account, records
and other documents concerning the Company, the Common Stock and the terms and conditions of the Standby Offering and the Rights
Offering. In addition, the Standby Purchaser has had the opportunity to ask questions of, and receive answers from, representatives
of the Company and Sussex Bank, a wholly owned subsidiary of the Company (the “Bank”), about the Company, the Bank,
the Common Stock, the terms and conditions of the Standby Offering and the Rights Offering and any additional information deemed
necessary by the Standby Purchaser to verify the accuracy and adequacy of the written information provided to the Standby Purchaser
by the Company. All questions have been answered to the full satisfaction of the Standby Purchaser.

 

(f)          The
Standby Purchaser understands and acknowledges that the Unsubscribed Shares have not been registered under the Securities Act,
under comparable federal banking regulations, if applicable, or under the securities laws of any state, but have been offered and
sold pursuant to and in reliance upon exemptions from registration thereunder.

 

(g)          The
Standby Purchaser understands that the Unsubscribed Shares purchased by the Standby Purchaser are deemed “restricted securities”
as such term is defined in Rule 144 promulgated under the Securities Act (“Rule 144”), and they may not be sold, assigned,
conveyed, pledged, hypothecated or otherwise transferred by a holder thereof except pursuant to Rule 144 or pursuant to an effective
registration statement registering the Unsubscribed Shares under the Securities Act. Further, the following legends (or similar
language) shall be placed on such certificate(s) representing the shares of Common Stock:

 

THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”), OR ANY STATE SECURITIES LAWS
AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1)
A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) THE COMPANY
RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY,
THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.

 

(h)          The
Standby Purchaser hereby acknowledges and agrees that the Company may decline to issue Common Stock to the Standby Purchaser hereunder
if, in the opinion of the Company, the Standby Purchaser is required to obtain prior clearance or approval of such purchase from
any state or federal bank regulatory authority and if such approval or clearance has not been obtained or if satisfactory evidence
thereof has not been presented to the Company prior to the expiration of the Standby Offering.

 

(i)          If
the Standby Purchaser is:

 

(i)          an
individual, he or she has full power and authority to perform his or her obligations under this Agreement;

 

(ii)         a
corporation, the Standby Purchaser is a corporation duly incorporated, validly existing and in good standing under the laws of
its jurisdiction of incorporation, with corporate power and authority to perform its obligations under this Agreement;

 

    	 

    	 

    

 

(iii)        a
trust, the Trustee has been duly appointed as trustee of the Standby Purchaser with full power and authority to act on behalf of
the Standby Purchaser and to perform the obligations of the Standby Purchaser under this Agreement; or

 

(iv)        a
partnership or limited liability company, the Standby Purchaser is a partnership or limited liability company duly organized, validly
existing and in good standing under the laws of its jurisdiction of incorporation or organization, with full power and authority
to perform its obligations under this Agreement.

 

(j)          
This Agreement has been duly and validly executed and delivered by such Standby Purchaser and constitutes a binding obligation
of the Standby Purchaser enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability,
to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of
whether enforcement is sought in a proceeding at law or in equity).

 

(k)          The
Standby Purchaser is not insolvent and has sufficient cash funds on hand to purchase the Unsubscribed Shares on the terms and conditions
contained in this Agreement and will have such funds on the Closing Date. The Standby Purchaser has simultaneously with the execution
and delivery of this Agreement or prior thereto provided the Company with evidence or substantiated that such Standby Purchaser
has the financial means to satisfy its financial obligations under this Agreement and the foregoing evidence and substantiation
is a true and accurate representation of such means.

 

(l)          No
state, federal or foreign regulatory approvals, permits, licenses or consents or other contractual or legal obligations are required
with respect to the Standby Purchaser in order for the Standby Purchaser to enter into this Agreement or purchase the Unsubscribed
Shares. 

 

Section 4.             
Deliveries
at Closing.

 

(a)          At
the Closing, the Company shall deliver to the Standby Purchaser a certificate or certificates representing the Allocated Shares
issued to the Standby Purchaser pursuant to Section 1 hereof.

 

(b)          At
the Closing, the Standby Purchaser shall deliver to the Company payment in an amount equal to the Subscription Price multiplied
by the number of shares of Common Stock purchased by the Standby Purchaser.

 

Section 5.             
Covenants.

 

(a)          The
Company agrees and covenants with the Standby Purchaser, between the date hereof and the Closing Date, to use commercially reasonable
efforts to effectuate the Rights Offering.

 

(b)          The
Standby Purchaser agrees to furnish to the Company all information with respect to the Standby Purchaser that the Company may reasonably
request and any such information furnished to the Company expressly for inclusion in the Prospectus by the Standby Purchaser shall
not contain any untrue statement of material fact or omit to state a material fact required to be stated in the Prospectus or necessary
in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

    	 

    	 

    

 

(c)          If
the Company or the Standby Purchaser determines a filing is or may be required under applicable law in connection with the transactions
contemplated hereunder, the Company and the Standby Purchaser shall use commercially reasonable efforts to promptly prepare and
file all necessary documentation and to effect all applications that are necessary or advisable under applicable law with respect
to the transactions contemplated hereunder so that any applicable waiting period shall have expired or been terminated as soon
as practicable after the date hereof.

 

Section 6.             
Conditions
to Closing.

 

(a)          The
obligations of the Company and the Standby Purchaser to consummate the transactions contemplated hereunder in connection with the
Standby Offering are subject to the fulfillment, prior to or on the Closing Date, of the following conditions:

 

(i)          the
Rights Offering shall have been consummated;

 

(ii)         no
judgment, injunction, decree, regulatory proceeding or other legal restraint shall prohibit, or have the effect of rendering unachievable,
the consummation of the Standby Offering or the material transactions contemplated by this Agreement; and

 

(iii)        all
required approvals and consents that are required in connection with the consummation of the transactions contemplated by this
Agreement shall have been duly obtained and shall be effective.

 

(b)          The
obligations of the Standby Purchaser to consummate the transactions contemplated hereunder in connection with the Standby Offering
are subject to the fulfillment, prior to or on the Closing Date, of the following conditions:

 

(i)          the
representations and warranties of the Company in Section 2 shall be true and correct in all material respects as of the date hereof
and as of the Closing Date as if made as of such date and the Company shall have performed all of its obligations hereunder; and

 

(ii)         there
shall has been no material adverse change to the financial condition, business, prospects, assets, properties, or operations of
the Company or the Bank since the date of this Agreement.

 

(c)          The
obligations of the Company to consummate the transactions contemplated hereunder in connection with the Standby Offering are subject
to the fulfillment, prior to or on the Closing Date, of the following conditions:

 

(i)          the
representations and warranties of the Standby Purchaser in Section 3 shall be true and correct in all material respects as of the
date hereof and as of the Closing Date as if made as of such date and the Standby Purchaser shall have performed all of its obligations
hereunder; and

 

(ii)         the
Allocated Shares of shares to be purchased by the Standby Purchaser, individually or acting in concert, shall not exceed the Regulatory
Limit, unless all required regulatory notices, clearance, approval and the expiration of any applicable waiting period have been
obtained.

 

    	 

    	 

    

 

Section 7.             
Survival.
The representations and warranties of the Standby Purchaser contained in this Agreement or in any certificate delivered hereunder
shall survive the Closing hereunder.

 

Section 8.              Notices.
All notices, communications and deliveries required or permitted by this Agreement shall be made in writing signed by the
party making the same, shall specify the Section of this Agreement pursuant to which it is given or being made and shall be
deemed given or made (a) on the date delivered if delivered in person, (b) on the third (3rd) Business Day after it is mailed
if mailed by registered or certified mail (return receipt requested) (with postage and other fees prepaid) or (c) on the day
after it is delivered, prepaid, to an overnight express delivery service that confirms to the sender delivery on such day, as
follows:

 

If to the Company:

 

Sussex Bancorp

200 Munsonhurst Rd. (Rt. 517)

Franklin, NJ 07416-0353

Attention: Steven Fusco

Facsimile: (973) 827-0189

Email: sfusco@sussexbank.com

 

With a copy to:

 

Hogan Lovells US LLP

555 Thirteenth Street, N.W.

Washington, DC 20004

Attention: Richard A. Schaberg

Fax: (202) 637-5910

 

If to the Standby Purchaser, as provided on
the signature page hereto.

 

or to such other representative or at such
other address of a party as such party hereto may furnish to the other parties in writing in accordance with this Section 9.

 

Section 9.            Confidentiality
Agreement; Entire Agreement. Except as specifically set forth herein, the Company and the Standby Purchaser mutually agree
to be bound by the terms of the confidentiality agreement (the “Confidentiality Agreement”) previously executed by
the Company and the Standby Purchaser, which Confidentiality Agreement is hereby incorporated herein by reference, and all information
furnished by either party to the other party or its representatives pursuant hereto shall be subject to, and the parties shall
hold such information in confidence in accordance with, the provisions of the Confidentiality Agreement. The Company and the Standby
Purchaser agree that such Confidentiality Agreement shall continue in accordance with their respective terms, notwithstanding the
execution or termination of this Agreement. The Confidentiality Agreement and this Agreement embody the entire agreement and understanding
between the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties,
or undertakings, other than those set forth or referred to herein or in the Confidentiality Agreement, with respect to the Standby
Offering. Other than with respect to matters set forth or referred to in the Confidentiality Agreement, this Agreement supersedes
all prior agreements and understandings between the parties with respect to the subject matter of this Agreement.

 

    	 

    	 

    

 

Section 10.            Indemnification.
To the fullest extent permitted by law, the Standby Purchaser hereby agrees to indemnify and hold harmless the Company, its affiliates,
and their respective directors, officers and authorized agents from and against any and all losses, claims, damages, expenses and
liabilities relating to or arising out of any breach of any representation, warranty, covenant or undertaking made by or on behalf
of the Standby Purchaser in the Confidentiality Agreement or this Agreement.

 

Section 11.            Governing
Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New Jersey (other
than its rules of conflict of laws to the extent the application of the laws of another jurisdiction would be required thereby).

 

Section 12.            Modification.
This Agreement may be modified or amended only with the written consent of the Company and the Standby Purchaser.

 

Section 13.            Severability.
If any provision of this Agreement shall be invalid under the applicable law of any jurisdiction, the remainder of this Agreement
shall not be affected thereby.

 

Section 14.            Miscellaneous.

 

(a)            Notwithstanding any
term to the contrary herein, no person other than the Company or the Standby Purchaser shall be entitled to rely on and/or have
the benefit of, as a third party beneficiary or under any other theory, any of the representations, warranties, agreements, covenants
or other provisions of this Agreement.

 

(b)            The headings in this
Agreement are for purposes of reference only and shall not limit or otherwise affect the meaning of this Agreement.

 

(c)            This Agreement may
be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which, when taken together,
shall constitute one and the same instrument.

 

[Signature page follows]

 

    	 

    	 

    

 

IN WITNESS WHEREOF,
the Standby Purchaser has executed this Agreement on the ____ day of                  ,
2013.

 

FOR COMPLETION BY ALL STANDBY PURCHASERS:

 

Subscriber’s Commitment Amount: $____________.

 

	Mailing Address for Formal Notice:	 	Other Address (home, business or main office):
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	Attention: 	 	 	Attention:	 
	Phone No.:	 	 	Phone No.:	 
	Fax No:	 	 	Fax No:	 
	Email:	 	 	Email:	 

 

FOR COMPLETION BY STANDBY PURCHASERS
WHO ARE NATURAL PERSONS:

 

Standby Purchaser’s Name: ___________________________________

                                                        (print
or type)

 

Standby Purchaser’s Signature: ________________________________

 

FOR COMPLETION BY SUBSCRIBERS WHO ARE
NOT NATURAL PERSONS:

(i.e., corporations, partnerships, limited
liability companies, trusts or other entities)

 

	Subscriber’s Name:	 	 
		(print or type)	 

 

	By:	  	 
	 	(signature of authorized representative)	 
	 	 
	Its:	 	 
	 	(name and title of authorized representative)	 

 

ACCEPTED:

 

SUSSEX BANCORP 

 

	By:	 	 
	Name: 	Steven M. Fusco	 
	Title: 	Executive Vice President and 	 
	 	Chief Financial Officer	 

 

    	 

    	 

    

 

EXHIBIT A

 

ACCREDITED INVESTOR QUESTIONNAIRE

 
This Accredited Investor
Questionnaire is to be completed by persons interested in purchasing shares (the “Securities”) of common
stock, no par value per share (the “Common Stock”) of Sussex Bancorp (the “Company”).
The following information is needed in order to ensure compliance with the requirements of the private placement exemptions from
federal and state securities registration provisions and to determine whether the undersigned is an “accredited investor”
within the meaning of Rule 501 of Regulation D (“Regulation D”) under the Securities Act of 1933, as
amended (the “Securities Act”). The undersigned understands that the information contained herein will
be relied upon by the Company and its counsel for purposes of such determination.

 

The undersigned hereby
represents and warrants that he, she or it is an “accredited investor,” within the meaning of Rule 501(a) of Regulation
D, based upon the fact that he, she or it meets at least one of the following requirements (check all that apply):

 

SECTION I: INDIVIDUALS

 

		1.	I am a natural person whose individual
                                                                net worth, or joint net worth with my spouse, exceeds $1,000,000.
                                                                1/

 

Yes   ̈  No   ̈  (Please check either yes or no).

 

		2.	I am a natural person who had individual
income exceeding $200,000 in each of the last two calendar years and I have a reasonable expectation of reaching the same income
level in the current calendar year. 2/

 

Yes   ̈  No   ̈  (Please check either yes or no).

 

		3.	I am a natural person who had joint
                                                                income with my spouse exceeding $300,000 in each of the last two
                                                                calendar years and I have a reasonable expectation of reaching
                                                                the same income level in the current calendar year, as defined
                                                                above.

 

Yes   ̈  No   ̈  (Please check either yes or no).

 

		4.	I am a director, executive officer
                                                                or general partner of the Company, or a director, executive officer
                                                                or general partner of a general partner of the Company. 3/

 

Yes   ̈  No   ̈  (Please check either yes or no).

 

 

1/        For
purposes of this item, “net worth” means the excess of total assets at fair market value (including personal and real
property, but excluding the estimated fair market value of a person's primary home) over total liabilities. Total liabilities
excludes any mortgage on the primary home in an amount of up to the home's estimated fair market value as long as the mortgage
was incurred more than 60 days before the Securities are purchased, but includes (i) any mortgage amount in excess of the home's
fair market value and (ii) any mortgage amount that was borrowed during the 60-day period before the closing date for the sale
of Securities for the purpose of investing in the Securities.

 

2/        For
purposes of this item, “income” means annual adjusted gross income, as reported for federal income tax purposes, plus
(i) the amount of any tax-exempt interest income received; (ii) the amount of losses claimed as a limited partner in a limited
partnership; (iii) any deduction claimed for depletion; (iv) amounts contributed to an IRA or Keogh retirement plan; (v) alimony
paid; and (vi) any amount by which income from long-term capital gains has been reduced in arriving at adjusted gross income pursuant
to the provisions of Section 1202 of the Internal Revenue Code of 1986, as amended.

 

3/        For
purposes of this item, executive officer means the president; any vice president in charge of a principal business unit, division
or function, such as sales, administration or finance; or any other person or persons who perform(s) similar policymaking functions
for the Company.

 

    	 

    	 

    

 

		5.	I have such knowledge and experience
                                                                in financial and business matters that I am capable of evaluating
                                                                the merits and risks of investing in the Securities.

 

Yes   ̈  No   ̈  (Please check either yes or no).

 

		6.	In addition, please provide the following
                                                                information:

 

	 	a.	Your name:	 

 

	 	b.	The state in which you currently reside:	 

 

	 	c.	Social Security Number:	 

 

SECTION II: ENTITIES AND TRUSTS

 

		7.	I am an institutional investor of
                                                                one or more of the following types. Please check the appropriate
                                                                description which applies to you.

 

	 	        	A bank as defined in Section 3(a)(2) of the Securities
    Act or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Act, whether acting in
    an individual or fiduciary capacity.
	 	 	 
	 	        	A broker or dealer registered pursuant to Section 15 of the Securities
    Exchange Act of 1934, as amended.
	 	 	 
	 	        	An insurance company as defined in Section 2(13) of the Act.
	 	 	 
	 	        	An investment company registered under the Investment Company Act
    of 1940, as amended (the “1940 Act”).
	 	 	 
	 	        	A business development company as defined in Section 2(a)(48) of
    the 1940 Act.
	 	 	 
	 	        	A Small Business Investment Company licensed by the U.S. Small
    Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958, as amended.
	 	 	 
	 	        	A plan established and maintained by a state, its political subdivisions,
    or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, with total assets
    in excess of $5,000,000.
	 	 	 
	 	        	An employee benefit plan within the meaning of the Employment Retirement
    Income Security Act of 1974 (“ERISA”), and either (i) the investment decision with respect
    to this subscription is to be made by a plan fiduciary, as defined in Section 3(21) of ERISA, which is either a bank, savings
    and loan association, an insurance company, or a registered investment adviser, or (ii) the employee benefit plan has total
    assets in excess of $5,000,000, or (iii) if a self-directed plan, investment decisions are made solely by “accredited
    investors” within the meaning of U.S. federal securities laws.
	 	 	 
	 	        	A private business development company as defined in Section 202(a)(22)
    of the Investment Advisers Act of 1940, as amended.

 

    	 

    	 

    

 

	 	        	A corporation, Massachusetts or similar business trust,
    or partnership, or an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, that was
    not formed for the specific purpose of acquiring the Securities, and that has total assets in excess of $5,000,000.
	 	 	 
	 	        	A trust, with total assets in excess of $5,000,000, not formed
    for the specific purpose of acquiring the Securities, which acquisition is directed by a
    sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D promulgated under the Act.
	 	 	 
	 	        	A trust, which has total assets equal to or less than $5,000,000
    and my investment decisions are made by a “bank” or “savings and loan association,” as defined in
    the Securities Act, acting in a fiduciary capacity as trustee thereunder.
	 	 	 
	 	        	A revocable trust, which may be amended or revoked at any time
    by the grantors thereof, and all of the grantors are “accredited investors” as described herein.
	 	 	 
	 	        	An entity not formed for the specific purpose of acquiring the
    Securities and has total assets of at least $5,000,000.
	 	 	 
	 	        	An entity (other than trust) in which all of the equity owners
    are “accredited investors,” as that term is defined in Rule 501(a) under Regulation D of the Securities Act, and
    as described in this questionnaire.  The Company may, in its sole discretion, request information regarding the
    basis on which such equity owners are accredited.

 

		8.	In addition, please provide the following
                                                                information:

 

	 	 	a.	Name of Entity:	 

 

	 	 	b.	State of Formation:	 

 

	 	 	c.	Primary Place of Business 4/: 	 

 

	 	 	d.	Tax I.D. Number:	 	 

 

 

4/        
Please provide the address of your principal place of business (or, if there is more than one place of business, the chief executive
office). With respect to each natural person trustee of a signatory that is a trust, please provide the address of your primary
residence and place of business (or, if there is more than one place of business, the chief executive office). With respect to
each signatory that is a trust with an entity trustee, please provide the information requested of an entity.

 

    	 

    	 

    

 

Signature Page

 

By signing below,
you are representing to the Company that (a) the information you have provided in this Accredited Investor Questionnaire
is complete and accurate on the date set forth below and that the Company may rely upon such information, and (b) you will
notify the Company immediately of any material change in any of such information that occurs prior to the issuance to you of the
Securities.

 

	Full Legal Name of the Investor: ____________________________________________

 

	 	 	 
	Signature of Proposed Investor	 	Signature of Proposed Co-Investor 
	or person signing on its behalf	 	or person signing on its behalf
	 	 	(required if any Securities
    will be jointly held)
	 	 	 
	Dated _______________, _______	 	Dated _______________, _______
	 	 	 
	 	 	 
	Print name and title of the signatory (if any)	 	Print name and title of the signatory (if any)RIGHTS CERTIFICATE #:	NUMBER OF RIGHTS

 

THE TERMS AND CONDITIONS OF THE RIGHTS OFFERING
ARE SET FORTH IN THE COMPANY'S PROSPECTUS

DATED _____ __, 2013 (THE "PROSPECTUS")
AND ARE INCORPORATED HEREIN BY REFERENCE. COPIES OF

THE PROSPECTUS ARE AVAILABLE UPON REQUEST
FROM AST PHOENIX ADVISORS, THE INFORMATION AGENT.

 

SUSSEX BANCORP

Incorporated under the laws of the State
of New Jersey

 

NON - TRANSFERABLE
SUBSCRIPTION RIGHTS CERTIFICATE

 

Evidencing Non - Transferable Subscription Rights
to Purchase Shares of Common Stock of Sussex Bancorp

Subscription Price:$[       ]
per Share

 

THE SUBSCRIPTION
RIGHTS WILL EXPIRE IF NOT EXERCISED ON OR BEFORE 5:00 P.M., NEW YORK CITY TIME,

ON _______ __,
2013, UNLESS EXTENDED BY THE COMPANY

 

REGISTERED

         OWNER:

 

	THIS CERTIFIES THAT the registered
owner whose name is inscribed hereon is the owner of the number of non-transferable subscription rights (“Rights”)
set forth above. Each whole Right entitles the holder thereof to subscribe for and purchase 0.35 share of Common Stock, no par
value per share, of Sussex Bancorp, a New Jersey corporation, at a subscription price of $[     ] per share (the “Basic Subscription
Right”), pursuant to a rights offering (the “Rights Offering”), on the terms and subject to the conditions set
forth in the Prospectus and the “Instructions as to Use of the Sussex Bancorp Subscription Rights Certificates” accompanying
this Subscription Rights Certificate. If any shares of Common Stock available for purchase in the Rights Offering are not purchased
by other holders of Rights pursuant to the exercise of their Basic Subscription Right	 	(the “Excess
    Shares”), any Rights holder that exercises its Basic Subscription Right in full may subscribe for a number of Excess
    Shares pursuant to the terms and conditions of the Rights Offering, subject to proration, as described in the Prospectus (the
    “Over-Subscription Privilege”). The Rights represented by this Subscription Rights Certificate may be exercised
    by completing Section 1 and any other appropriate forms on the reverse side hereof and by retuning the full payment of the
    subscription price for each share of Common Stock in accordance with the “Instructions as to Use of the Sussex
    Bancorp Subscription Rights Certificates” that accompany this Subscription Rights Certificate.		
	 	 	 	 
	This Subscription Rights Certificate is not valid unless countersigned by the subscription agent and registered by the registrar. Witness the seal of Sussex Bancorp and the signatures of its duly authorized officers. 	 
	 	 	 	 
	Dated:	 	 	 

 

	 	 	 
	President	 	Treasurer

 

    	 

    	 

    

 

DELIVERY OPTIONS FOR SUBSCRIPTION RIGHTS
CERTIFICATE

Delivery
to an address other than the address listed below will not constitute valid delivery. Delivery
by facsimile will not constitute valid delivery.

 

By Mail, Hand or Overnight Courier:

American Stock Transfer & Trust Company,
LLC

Operations Center

Attn: Reorganization Department

6201 15th
Avenue

Brooklyn,
NY 11219

Telephone
Number for Confirmation: (718) 921-8317

 

PLEASE PRINT ALL INFORMATION CLEARLY
AND LEGIBLY 

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SECTION 1-EXERCISE OF SUBSCRIPTION RIGHTS

To subscribe for shares of Common Stock
pursuant to an exercise of all or a portion of your Rights, please complete the following and sign under Section 3 below.

 

	(a)
    EXERCISE OF BASIC SUBSCRIPTION RIGHTS:	I
    subscribe for _______________ shares at $________________ each  =   $_________________
	 	                         (No.
    of new shares)                   (Subscription
    price)                  (Amount enclosed)
	(b)
    EXERCISE OF OVER-SUBSCRIPTION PRIVILEGE:	I
    subscribe for _______________ shares at $________________ each  =   $_________________
	NOTE: You may subscribe for
    additional shares pursuant to your Over-subscription Privilege only if you exercised your Basic Subscription Right in full.	                         (No.
    of new shares)                   (Subscription
    price)                  (Amount enclosed)

 

TOTAL AMOUNT ENCLOSED: $                                        

 

METHOD OF PAYMENT (PLEASE INDICATE):

 

	 ̈	CHECK ENCLOSED: Certified check or cashier’s check drawn upon a U.S. bank, or express money order payable to American Stock Transfer & Trust Company, as Subscription Agent.
	 	 
	 ̈	FUNDS WIRED: Wire transfer
    of immediately available funds directly to the account maintained by American Stock Transfer & Trust Company, LLC as Subscription
    Agent, for purposes of the Rights Offering at JPMorgan Chase Bank, ABA #021000021, Account #                  .
    (PLEASE PROVIDE WIRE REFERENCE NUMBER):                              

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SECTION 2-SPECIAL ISSUANCE OR DELIVERY
INSTRUCTIONS

 

To be completed ONLY if the certificate
representing the Common Stock issuable upon exercise of the Rights is to be issued in a name other than that of the registered
holder or is to be delivered to an address different from that shown on the face of this Subscription Rights Certificate. Complete
the following, sign under Section 3 and have your signature guaranteed under Section 4 below.

 

Please issue the certificate representing
the Common Stock in the following name and \or deliver to the following address: 

	 
	Print Full Name and Tax ID or Social Security Number and Address
	 

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SECTION 3-SIGNATURE

 

TO SUBSCRIBE: I acknowledge that I
have received the Prospectus for this Rights Offering and I hereby irrevocably subscribe for the number of shares of Common
Stock indicated above on the terms and conditions specified in the Prospectus.

 

	Signature(s) : 	 	 

 

IMPORTANT: The signature(s) must correspond
with the name(s) as printed on the reverse of this Subscription Rights Certificate in every particular, without alteration or enlargement,
or any change whatsoever.

 

If you are signing in your capacity as
a trustee, executor, administrator, guardian, attorney-in-fact, agent, officer of a corporation or another acting in a fiduciary
or representative capacity, please provide the following information:

 

	Name:	 

 

	Capacity:	 	 Tax ID or Social Security Number:	 

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SECTION 4-SIGNATURE GUARANTEE

 

YOU MUST HAVE YOUR SIGNATURE(S) GUARANTEED
IF YOU HAVE COMPLETED ANY PORTION OF SECTION 2 OR SECTION 3

 

	Signature Guaranteed:	 	 
	(Name of Bank or Firm)	 	 

 

	By:	 	 

(Signature of Officer)

IMPORTANT: Your signature(s) must be guaranteed
by an eligible guarantor institution (for example, a bank, stockbroker, savings & loan association or credit union) with membership
in an approved signature guarantee medallion program pursuant to Rule 17Ad-15 of the Securities Exchange Act of 1934, and amended.

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PLEASE CONSULT THE “INSTRUCTIONS
AS TO THE USE OF THE SUBSCRIPTION RIGHTS CERTIFICATES” ACCOMPANYING THIS SUBSCRIPTION RIGHTS CERTIFICATE. IF YOU HAVE QUESTIONS,
PLEASE CONTACT AST PHOENIX ADVISORS, THE INFORMATION AGENT, AT (877) 478-5038, OR YOUR BANK OR BROKER.

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