South Jersey Financial Corporation, Inc.
August 12, 1999
Committee to Preserve Shareholder Value
c/o Xxxxxxxx X. Xxxxxxx, Esq.
000 Xxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Dear Committee:
The purpose of this letter is to set forth the terms of an agreement
between South Jersey Financial Corporation, Inc. (the "Company") and you and
other members of the South Jersey Financial Corporation, Inc. Committee to
Preserve Shareholder Value (the "Committee") as to the matters set forth herein.
The Committee consists of: Xxxxxxx and Associates, L.L.C.; Xxxxxxx and
Associates II, L.L.C.; Xxxxxxx Investment Partnership, L.P.; Xxxxxxx Investment
Partnership II, L.P.; Xxxxxxxxx LP; Federal Holdings L.L.C.; Xxxxxxxx X.
Xxxxxxx; Benchmark Partners, LP; Xxxxxxx Xxxxxxx; and Xxxxxxxx XxXxxxx.
The Company agrees to cease its active solicitation encouraging
shareholders not to vote for Xxxxxxxx X. Xxxxxxx and Xxxxxxx Xxxx.
In addition, following the 1999 Annual Meeting, the Company will take such
action as may be necessary to add Xxxxxxx as a director of South Jersey Savings
and Loan Association (the "Bank") for a term to expire in 2002.
It is further agreed:
(i) That as indicated in the Committee's proxy statement for the 1999
Annual Meeting, the Committee will vote all of the Company's stock
owned by the Committee as of the July 9, 1999 record date for the 1999
Annual Meeting of Stockholders in favor of the election of Xxxxxxx X.
XxXxxxx to the Board of Directors of the Company at the 1999 Annual
Meeting of Shareholders, as well as in favor of Xxxxxxx and Xxxx.
(ii) The Board of Directors of the Company will propose at a Special
Meeting of the Company, which shall be held on or about February 13,
2000, ("Special Meeting") two stock-based compensation plans -- a
stock option plan and a restricted stock plan ("RRP") (collectively,
the "Plans"), generally as described in the prospectus for the
Company's initial public offering. Such Plans will provide for
accelerated vesting of the benefits allocated under the Plans in the
event of a control change or retirement. For purposes of this
paragraph, retirement shall mean ceasing to be a director, employee or
officer of the Company or the Bank, other than removal for cause. The
South Jersey Financial Corporation, Inc.
August 12, 1999
Page 2
Committee will vote all shares of stock of the Company beneficially
owned by any of them as of the record date for the Special Meeting in
favor of the Plans. All employees and members of the Board of the
Company and Bank, including Xxxxxxx and Xxxx, will be permitted to
participate in the stock option plan; however, participation in the
RRP will be limited to all employees and all directors of the Company
and Bank as of the date of this Agreement. Allocations to any one
officer will be limited to a maximum of 25% of each of the two
respective plans and director allocations may be made in amounts not
to exceed 5% per director of each of the respective Plans. The number
of shares that may be allocated under the RRP shall be determined by
dividing the lesser of the per share closing price of the Company's
Common Stock on the date hereof or on the date shareholders approve
the RRP with and into $1,517,372.
(iii) Prior to the conduct of the Special Meeting referred to in
paragraph (ii) above, (provided such meeting is conducted before any
annual meeting of stockholders held after the 1999 annual meeting
scheduled to be held on August 18, 1999), the Committee will not
engage in a solicitation in opposition to management of the Company or
submit any of their own proposals for stockholder approval without
prior Board approval. Nothing contained in this paragraph shall be
interpreted to prohibit Xxxxxxx from voting, as a director, in such
manner as he deems appropriate on any matter which may come before the
Board of Directors or any committee of the Company or the Bank, nor
shall the same prohibit him from including in any disclosure by the
Company under the Securities Exchange Act of 1934, any statement
explaining his vote if he is required to include such an explanation
in such disclosure.
(iv) The Committee concurs that, subject to whatever fiduciary duties
may exist as required by the Employee Retirement Income Security Act,
as amended, unallocated ESOP shares and unallocated RRP shares may be
voted in accordance with the terms of the plans, which generally
provide, or will provide, that unallocated shares will be voted pro
rata in the same percentage as the votes cast by the holders of
allocated shares who exercise their right to direct the voting of
allocated shares.
(v) The Committee will not take any action indirectly, or induce any
other person or entity to take any action which, if taken directly by
the member of the Committee, would be in violation of this Agreement,
nor will the Committee take any action which would reasonably be
anticipated to thwart any of the provisions of this Agreement. All the
members of the Committee individually shall be personally bound by the
provisions of this Agreement which by their terms are applicable to
the Committee. The members of the Committee agree not to seek to use
the press or other public pronouncements to publicly air disputes with
the Company through and including February 28, 2000.
(vi) The Committee acknowledges that all of the members of the
Committee and anyone acting in concert with or affiliated with any
member of the Committee are set
South Jersey Financial Corporation, Inc.
August 12, 1999
Page 3
forth in the first paragraph of this Agreement.
(xxx) Xxxxxxx hereby agrees and warrants that he has the authority to
bind all of the members of the Committee, other than those who have
signed below, to this Agreement and that by his signature below he
binds himself and all of such other members of the Committee.
(viii) Xxxxxx Xxxxxxxxx warrants that he has been authorized to enter
into this agreement by the Board of Directors of the Company.
(ix) The Company and each member of its Board of Directors and each
of the members of the Committee (each, a "Released Party") agree to
irrevocably and unconditionally release each Released Party from any
claims any Released Party may have against another Released Party
arising out of the proxy solicitations that the Company and the
Committee pursued in connection with the Company's 1999 Annual Meeting
of Stockholders.
Very truly yours,
South Jersey Financial Corporation, Inc.
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxxxx
President and Chief Executive Officer
Xxxxxxxx X. Xxxxxxx, personally and as agent
for the persons and entities who are members of
the Committee as named in paragraph 1 of this
Agreement, other than those for whom separate
signatures are provided below.
/s/ Xxxxxxx Xxxxxxx
--------------------------
Xxxxxxx Xxxxxxx, personally and on
behalf of Benchmark Partners, LP
/s/ Xxxxxxxx Xx Xxxxx
--------------------------
Xxxxxxxx Xx Xxxxx
