SOUTH JERSEY FINANCIAL CORP INC, DEFS14A, 2000-01-04

SOUTH JERSEY FINANCIAL CORP INC
DEFS14A, 2000-01-04
SAVINGS INSTITUTIONS, NOT FEDERALLY CHARTERED

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<PAGE>

SCHEDULE 14-A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. ____)

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12

South Jersey Financial Corporation, Inc.
--------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)

Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11

1) Title of each class of securities to which transaction applies:

......................................................................
2) Aggregate number of securities to which transaction applies:

......................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):

......................................................................
4) Proposed maximum aggregate value of transaction:

......................................................................
5) Total fee paid:

......................................................................
<PAGE>

South Jersey Financial Corporation, Inc.
4651 Route 42
Turnersville, New Jersey 08012
(856) 629-6000

January 4, 2000

Dear Shareholders:

You are cordially invited to attend the special meeting of shareholders
(the "Special Meeting") of South Jersey Financial Corporation, Inc. (the
"Company"), the holding company for South Jersey Savings and Loan Association
(the "Association"), Turnersville, New Jersey, in order to consider the approval
of the South Jersey Financial Corporation, Inc. 2000 Stock Option Plan (the
"Stock Option Plan"), the approval of the South Jersey Financial Corporation,
Inc. 2000 Restricted Stock Plan (the "Restricted Stock Plan") and the
ratification of the appointment of Deloitte & Touche LLP as independent auditors
of the Company for the year ending December 31, 2000, which meeting will be held
on February 16, 2000 at 11:00 a.m., Eastern Time, at the Renaissance Room, 194
Fries Mill Road, Turnersville, New Jersey.

The attached Notice of the Special Meeting and the Proxy Statement describe
the business to be transacted at the Special Meeting. Directors and officers of
the Company, as well as a representative of Deloitte & Touche LLP, the Company's
independent auditors, will be present at the Special Meeting to respond to your
questions.

The Board of Directors of the Company has determined that the matters to be
considered at the Special Meeting are in the best interests of the Company and
its shareholders. FOR THE REASONS SET FORTH IN THE PROXY STATEMENT, THE BOARD
OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL 1, THE APPROVAL
OF THE STOCK OPTION PLAN, "FOR" PROPOSAL 2, THE APPROVAL OF THE RESTRICTED STOCK
PLAN AND "FOR" PROPOSAL 3, THE RATIFICATION OF AUDITORS.

PLEASE PROMPTLY SIGN AND RETURN THE ENCLOSED PROXY CARD. YOUR COOPERATION
IS APPRECIATED SINCE A MAJORITY OF THE COMMON STOCK MUST BE REPRESENTED, EITHER
IN PERSON OR BY PROXY, TO CONSTITUTE A QUORUM FOR THE CONDUCT OF BUSINESS AT THE
SPECIAL MEETING.

On behalf of the Board of Directors and all of the employees of the Company
and the Association, I thank you for your continued interest and support.

Sincerely yours,

/s/ Robert J. Colacicco

Robert J. Colacicco
President and Chief Executive Officer
<PAGE>

South Jersey Financial Corporation, Inc.
4651 Route 42
Turnersville, New Jersey 08012
__________________________________

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held on February 16, 2000
__________________________________

NOTICE IS HEREBY GIVEN that the special meeting of shareholders (the
"Special Meeting") of South Jersey Financial Corporation, Inc. (the "Company"),
the holding company for South Jersey Savings and Loan Association (the
"Association"), will be held on February 16, 2000 at 11:00 a.m., Eastern Time,
at the Renaissance Room, 194 Fries Mill Road, Turnersville, New Jersey.

The purpose of the Special Meeting is to consider and vote upon the
following matters:

1. The approval of the South Jersey Financial Corporation, Inc. 2000 Stock
Option Plan;
2. The approval of the South Jersey Financial Corporation, Inc. 2000
Restricted Stock Plan;
3. The ratification of the appointment of Deloitte & Touche LLP as
independent auditors of the Company for the year ending December 31,
2000; and
4. Such other matters as may properly come before the meeting and at any
adjournments thereof, including whether or not to adjourn the meeting.

The Board of Directors has established December 23, 1999 as the record date
for the determination of shareholders entitled to receive notice of and to vote
at the Special Meeting and at any adjournments thereof. Only record holders of
the common stock of the Company as of the close of business on such record date
will be entitled to vote at the Special Meeting or at any adjournments thereof.
In the event there are not sufficient votes for a quorum or to approve the
foregoing proposals at the time of the Special Meeting, the Special Meeting may
be adjourned in order to permit further solicitation of proxies by the Company.
A list of shareholders entitled to vote at the Special Meeting will be available
at South Jersey Financial Corporation, Inc., 4651 Route 42, Turnersville, New
Jersey 08012, for a period of ten days prior to the Special Meeting and will
also be available at the Special Meeting itself.

By Order of the Board of Directors

/s/ Joseph M. Sidebotham

Joseph M. Sidebotham
Corporate Secretary

Turnersville, New Jersey
January 4, 2000
<PAGE>

South Jersey Financial Corporation, Inc.

_______________________

PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
February 16, 2000

_______________________

Solicitation and Voting of Proxies

This Proxy Statement is being furnished to shareholders of South Jersey
Financial Corporation, Inc. (the "Company") in connection with the solicitation
by the Board of Directors ("Board of Directors" or "Board") of proxies to be
used at the special meeting of shareholders (the "Special Meeting"), to be held
on February 16, 2000, at 11:00 a.m., Eastern Time, at the Renaissance Room, 194
Fries Mill Road, Turnersville, New Jersey, and at any adjournments thereof. The
accompanying Notice of Special Meeting and this Proxy Statement are first being
mailed to record holders on or about January 4, 2000.

Regardless of the number of shares of common stock owned, it is important
that record holders of a majority of the shares be represented by proxy or in
person at the Special Meeting. Shareholders are requested to vote by completing
the enclosed proxy card and returning it signed and dated in the enclosed
postage-paid envelope. Shareholders are urged to indicate their vote in the
spaces provided on the proxy card. PROXIES SOLICITED BY THE BOARD OF DIRECTORS
OF THE COMPANY WILL BE VOTED BY THE BOARD OF DIRECTORS IN ACCORDANCE WITH THE
DIRECTIONS GIVEN THEREIN. WHERE NO INSTRUCTIONS ARE INDICATED, SIGNED PROXY
CARDS WILL BE VOTED "FOR" THE APPROVAL OF THE SOUTH JERSEY FINANCIAL
CORPORATION, INC. 2000 STOCK OPTION PLAN (THE "STOCK OPTION PLAN"), "FOR" THE
APPROVAL OF THE SOUTH JERSEY FINANCIAL CORPORATION, INC. 2000 RESTRICTED STOCK
PLAN (THE "RESTRICTED STOCK PLAN") AND "FOR" THE RATIFICATION OF DELOITTE &
TOUCHE LLP AS INDEPENDENT AUDITORS OF THE COMPANY FOR THE YEAR ENDING DECEMBER
31, 2000.

Other than the matters listed on the attached Notice of Special Meeting of
Shareholders, the Board of Directors knows of no additional matters that will be
presented for consideration at the Special Meeting. EXECUTION OF A PROXY,
HOWEVER, CONFERS ON THE DESIGNATED PROXY HOLDERS DISCRETIONARY AUTHORITY TO VOTE
THE SHARES IN ACCORDANCE WITH THEIR BEST JUDGMENT ON SUCH OTHER BUSINESS, IF
ANY, THAT MAY PROPERLY COME BEFORE THE SPECIAL MEETING AND AT ANY ADJOURNMENTS
THEREOF, INCLUDING WHETHER OR NOT TO ADJOURN THE SPECIAL MEETING.

A proxy may be revoked at any time prior to its exercise by filing a
written notice of revocation with the Corporate Secretary of the Company, by
delivering to the Company a duly executed proxy bearing a later date, or by
attending the Special Meeting and voting in person. HOWEVER, IF YOU ARE A
SHAREHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED
APPROPRIATE DOCUMENTATION FROM YOUR RECORD HOLDER TO ATTEND THE SPECIAL MEETING
AND VOTE PERSONALLY AT THE SPECIAL MEETING.

The cost of solicitation of proxies on behalf of management will be borne
by the Company. Proxies may also be solicited personally or by telephone by
directors, officers and other employees of the Company and its subsidiary, South
Jersey Savings and Loan Association (the "Association"), without additional
compensation therefor. The Company will also request persons, firms and
corporations holding shares in their names, or in the name of their nominees,
which are beneficially
<PAGE>

owned by others, to send proxy material to, and obtain proxies from, such
beneficial owners, and will reimburse such holders for their reasonable expenses
in doing so.

Voting Securities

The securities which may be voted at the Special Meeting consist of shares
of common stock of the Company ("Common Stock"), with each share entitling its
owner to one vote on all matters to be voted on at the Special Meeting, except
as described below.

The close of business on December 23, 1999, has been fixed by the Board of
Directors as the record date (the "Record Date") for the determination of
shareholders of record entitled to notice of, and to vote at, the Special
Meeting and at any adjournments thereof. The total number of shares of Common
Stock outstanding on the Record Date was 3,603,759 shares.

As provided in the Company's Certificate of Incorporation, in no event
shall any record owner of the Company's common stock which is beneficially
owned, either directly or indirectly, by a person who beneficially owns in
excess of 10% of the Company's outstanding shares (the "Limit"), be entitled to
vote in respect of the shares held in excess of the 10% Limit. A person or
entity is deemed to beneficially own shares owned by an affiliate of, as well
as, by persons acting in concert with, such person or entity.

The presence, in person or by proxy, of the holders of at least a majority
of the total number of shares of Common Stock entitled to vote (after
subtracting any shares in excess of the Limit pursuant to the Company's
Certificate of Incorporation) is necessary to constitute a quorum at the Special
Meeting. In the event that there are not sufficient votes for a quorum or to
approve or ratify any proposal at the time of the Special Meeting, the Special
Meeting may be adjourned in order to permit the further solicitation of proxies.

As to the approval of the South Jersey Financial Corporation, Inc. 2000
Stock Option Plan (Proposal 1), the approval of the South Jersey Financial
Corporation, Inc. 2000 Restricted Stock Plan (Proposal 2), and as to the
ratification of Deloitte & Touche LLP as independent auditors of the Company
(Proposal 3) and all other matters that may properly come before the Special
Meeting, by checking the appropriate box, a shareholder may (i) vote "FOR" the
item, (ii) vote "AGAINST" the item, or (iii) "ABSTAIN" from voting on such item.

Under the Company's Bylaws and Delaware law, an affirmative vote of the
holders of a majority of the votes present and entitled to vote on a proposal at
the Special Meeting is required to constitute shareholder approval of each of
Proposals 1, 2 and 3. Shares underlying broker non-votes or in excess of the
Limit will not be counted as present and entitled to vote or as votes cast and
will have no effect on the vote. Shares underlying broker non-votes, however,
will count for determining whether a quorum is present at the Special Meeting.

Proxies solicited hereby are to be returned to the Company's Transfer
Agent, Registrar and Transfer Company ("RTC"). The Board of Directors has
designated RTC to act as the inspector of election and tabulate the votes at the
Special Meeting. RTC is not otherwise employed by, or a director of, the
Company or any of its affiliates. After the final adjournment of the Special
Meeting, the proxies will be returned to the Company.

2
<PAGE>

Security Ownership of Certain Beneficial Owners

The following table sets forth information as to those persons believed by
management to be beneficial owners of more than 5% of the Company's outstanding
shares of Common Stock on the Record Date or as disclosed in certain reports
received to date regarding such ownership filed by such persons with the Company
and with the Securities and Exchange Commission (the "SEC"), in accordance with
Sections 13(d) and 13(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Other than those persons listed below, the Company is not
aware of any person, as such term is defined in the Exchange Act, that owns more
than 5% of the Company's Common Stock as of the Record Date.

<TABLE>
<CAPTION>
Amount and
Nature of
Name and Address of Beneficial
Title of Class Beneficial Owner Ownership Percent of Class
- -------------- -------------------------------------- ----------- ----------------
<S> <C> <C> <C>
Common Stock Seidman and Associates, L.L.C., 328,100(1) 9.1%
Seidman and Associates II, L.L.C.,
Seidman Investment Partnership, L.P.,
Seidman Investment Partnership II, L.P.,
Lawrence B. Seidman, Kerrimatt, L.P.,
Federal Holdings, L.L.C., Benchmark
Partners, L.P., Richard Whitman,
Lorraine DiPaolo
100 Misty Lane
Parsippany, New Jersey 07054

Common Stock South Jersey Savings and Loan Association 303,474(2) 8.4%
Employee Stock Ownership Plan (the "ESOP")
4651 Route 42
Turnersville, New Jersey 08012

Common Stock The South Jersey Savings Charitable 280,995(3) 7.8%
Foundation
(the "Foundation")
4651 Route 42
Turnersville, New Jersey 08012
</TABLE>

__________________
(1) Based on information disclosed by the group of reporting persons set forth
herein in a Schedule 13D filed with the SEC and most recently amended on
July 19, 1999.
(2) Shares of Common Stock were acquired by the ESOP in the Association's
conversion. The ESOP Committee administers the ESOP. The ESOP Trustee
votes all allocated shares held in the ESOP in accordance with the
instructions of the participants. Under the ESOP, unallocated shares and
allocated shares as to which voting instructions are not given by
participants are to be voted by the ESOP Trustee in a manner calculated to
most accurately reflect the instructions received from participants
regarding the allocated stock so long as such vote is in accordance with the
provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"). As of December 23, 1999, no shares had been allocated to
ESOP participants. However, for the sole purpose of providing the ESOP
Trustee with voting instructions each participant shall be deemed to have
one share allocated to his account and the ESOP Trustee, subject to its
fiduciary obligations, will vote all shares in accordance with the
instructions received from the participants.
(3) The Foundation was established and funded by the Company in connection with
the Association's conversion with an amount of the Company's Common Stock
equal to 8.0% of the total amount of Common Stock sold in the conversion.
The Foundation is a Delaware non-stock corporation and is dedicated to the
promotion of charitable purposes within the communities in which the
Association operates. The Foundation is governed by a board of directors
with four members, three of whom are directors or officers of the Company or
the Association. Pursuant to the terms of the contribution of Common Stock,
as mandated by the Office of Thrift Supervision ("OTS"), all shares of
Common Stock held by the Foundation must be voted in the same ratio as all
other shares of the Company's Common Stock on all proposals considered by
shareholders of the Company.

3
<PAGE>

Security Ownership of Management

The following table sets forth information as of the Record Date as to
shares of Common Stock beneficially owned by each director, each Named Executive
Officer and all directors and executive officers as a group. Ownership
information is based upon information furnished by the respective individuals.

<TABLE>
<CAPTION>
Amount and
Nature of Percent
Beneficial of
Name of Beneficial Owner Position with the Company Ownership(1) Class(2)
- ------------------------ -------------------------------------- ----------- --------
DIRECTORS
<S> <C> <C> <C>
Richard Baer Director 1,000 *

Robert J. Colacicco President, Chief Executive Officer and 15,200 *
Director

Richard W. Culbertson, Jr. Director and Chairman of the Board 5,700 *

Gregory M. DiPaolo Executive Vice President, Treasurer, Chief 34,800 *
Operating Officer and Director

John V. Field Director 20,000 *

Richard G. Mohrfeld Director 15,000 *

Lawrence B. Seidman (3) Director 328,100 9.1%

Ronald L. Woods Director 28,600 *

NAMED EXECUTIVE OFFICERS
(Who are not Directors)

Jane E. Brode Senior Vice President, South Jersey 11,900 *
Savings and Loan Association

Joseph M. Sidebotham Corporate Secretary and Chief Accounting 6,400 *
Officer

All directors and executive
officers as a group
(11 persons)............... 472,235 13.1%
</TABLE>
__________________
* Does not exceed 1.0% of the Company's voting securities.
(1) Each person effectively exercises sole (or shares with spouse or other
immediate family members) voting or dispositive power as to shares
reported.
(2) As of the Record Date, there were 3,603,759 shares of Common Stock
outstanding.
(3) For further information concerning shares beneficially held by Mr. Seidman,
see "Security Ownership of Certain Beneficial Owners."

In August 1999, the Company entered into an agreement with Mr. Seidman
and certain related individuals and entities (referred to as the "Seidman
Group") in connection with Mr. Seidman and Mr. Baer becoming members of the
Company's Board of Directors. Under the Agreement, the Seidman Group agreed to
vote all of its shares of stock in favor of the Stock Option Plan and Restricted
Stock Plan.

4
<PAGE>

Interest of Certain Persons in Matters to be Acted Upon

Upon obtaining shareholder approval, the Company and the Association intend
to make option and award grants to non-employee directors and employees of the
Company and the Association at levels consistent with other recently converted
thrift institutions under the plans being presented for approval in Proposal 1
and Proposal 2.

Directors' Compensation

Directors' Fees. All non-employee directors of the Association receive an
annual retainer of $7,000 a year, except that the Chairman of the Board receives
an annual retainer of $8,000. All non-employee directors of the Association
also receive $450 for each Board meeting attended and $250 for each Committee
meeting attended. Non-employee directors of the Company receive an annual
retainer of $3,500 and do not receive additional fees for meetings of the Board
of Directors of the Company.

Consulting Agreement. On August 12, 1999, the Company entered into a
consulting agreement with Mr. Seidman. The agreement, which is for a one-year
term, commenced on August 12, 1999 and provides that Mr. Seidman be paid an
amount of $45,000 for consulting services to the Company.

Stock Option Plan and Restricted Stock Plan. For information regarding
option and restricted stock awards to be granted to directors pursuant to the
Stock Option Plan and Restricted Stock Plan, subject to stockholder approval of
such plans, see "Proposal 1. Approval of the South Jersey Financial
Corporation, Inc. 2000 Stock Option Plan" and "Proposal 2. Approval of the
South Jersey Financial Corporation, Inc. 2000 Restricted Stock Plan."

5
<PAGE>

Executive Compensation

Summary Compensation Table. The following table sets forth the
compensation paid by the Association for services rendered in all capacities
during the years ended December 31, 1999, 1998, and 1997, to the Chief Executive
Officer and to executive officers of the Company and the Association who
received salary and bonus in excess of $100,000 ("Named Executive Officers").

Long-Term Compensation/(2)/
---------------------------------------
Annual Compensation/(1)/ Awards Payouts
--------------------------------------- ------------------------ ------------
Other Restricted Securities
Name and Annual Stock Underlying LTIP All Other
Principal Positions Year Salary Bonus Compensation/(2)/ Awards Options/SARs Payouts Compensation/(3)/
- ------------------- ----- ------ ----- ---------------- --------- ----------- ------ ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert J. Colacicco 1999 $170,435 (1) -- -- -- -- $33,033
President and Chief 1998 153,331 $32,599 -- -- -- -- 44,884
Executive Officer 1997 141,107 31,044 -- -- -- -- 39,821

Gregory M. DiPaolo 1999 $142,730 $ 2,000(1) -- -- -- -- $30,434
Executive Vice President, 1998 128,410 25,201 -- -- -- -- 27,851
Treasurer and 1997 118,102 25,982 -- -- -- -- 25,231
Chief Operating Officer

Jane E. Brode 1999 $ 94,328 (1) -- -- -- -- $16,987
Senior Vice President

Joseph M. Sidebotham 1999 $ 87,422 $10,000(1) -- -- -- -- $16,932
Corporate Secretary and
Chief Accounting Officer
</TABLE>

______________________________
(1) Under Annual Compensation, the column titled "Bonus" consists of Board
approved discretionary bonuses. During 1999, Messrs. DiPaolo and Sidebotham
received Board approved discretionary bonuses of $2,000 and $10,000,
respectively, for their efforts in connection with the Association's mutual
to stock conversion transaction. In addition, a Board-approved
discretionary cash bonus for all Named Executive Officers for the year ended
December 31, 1999 will be determined and paid in 2000. It is expected that
the Board approved discretionary annual bonuses for 1999 for Ms. Brode and
Mr. Sidebotham will exceed $5,672 and $2,578, respectively, thus designating
them both to be Named Executive Officers.
(2) The aggregate amount of perquisites and other personal benefits was less
than the lesser of $50,000 or 10% of the total annual salary and bonus
reported. For 1999, 1998 and 1997, the Company had no stock-related plans
in existence.
(3) For 1999, other compensation consists of employer contributions of $30,000,
$29,429, $16,728 and $16,391 to the Association's money purchase pension
plan on behalf of Messrs. Colacicco, DiPaolo and Sidebotham and Ms. Brode,
respectively. For 1999, other compensation also includes the value of life
insurance premiums of $3,033, $1,005, $204 and $596 paid by the Association
on behalf of Messrs. Colacicco, DiPaolo and Sidebotham and Ms. Brode,
respectively. For 1999, other compensation does not reflect accruals for
Messrs. Colacicco and DiPaolo under the South Jersey Savings and Loan
Association Supplemental Executive Retirement Plan, since those amounts are
not determinable as of the date of this Proxy Statement.

Employment Agreements

Effective as of February 12, 1999, each of the Named Executive Officers
(individually, the "Executive" and, collectively, the "Executives") entered into
an employment agreement with the Association (collectively, the "Association
Employment Agreements"), and each of the Executives, other than Ms. Brode,
entered into an employment agreement with the Company (collectively, the
"Company Employment Agreements"). The employment agreements are intended to
ensure that the Association's and the Company's management base remains stable.
The continued success of the Association and the Company depends to a
significant degree on the skills and competence of the Executives.

The Association Employment Agreements provide for a three-year term for
Messrs. Colacicco and DiPaolo and a two-year term for Mr. Sidebotham and Ms.
Brode. Each Association Employment Agreement provides that commencing on the
first anniversary date of the agreement and continuing each anniversary date
thereafter the Board of Directors may extend the agreement

6
<PAGE>

for an additional year so that the remaining term shall be three years, in the
case of Messrs. Colacicco and DiPaolo, and two years, in the case of Mr.
Sidebotham and Ms. Brode. The Company Employment Agreements provide for a three-
year term for Messrs. Colacicco and DiPaolo and a two-year term for Mr.
Sidebotham. The term of each Company Employment Agreement automatically extends
on a daily basis, unless written notice of non-renewal is given by the Board of
Directors of the Company or the Executive. The Association and Company
Employment Agreements set forth the Executives' annual base salaries and provide
that the Executive's base salary will be reviewed annually. The base salaries
initially effective for Messrs. Colacicco, DiPaolo, Sidebotham and Ms. Brode are
$170,430, $142,731, $87,403 and $94,316, respectively. In addition to the base
salary, the employment agreements provide for, among other things, participation
in various employee benefit plans and stock-based compensation programs, as well
as furnishing fringe benefits available to similarly-situated executive
personnel. The employment agreements provide for termination of the Executive by
the Association or the Company for cause (as described in the agreements) at any
time. In the event the Association or the Company chooses to terminate the
Executive's employment for reasons other than for cause or, in the event of the
Executive's resignation from the Association or the Company, as the case may be,
upon: (i) the failure to re-elect or re-appoint the Executive to his current
office; (ii) a material change in the Executive's functions, duties or
responsibilities; (iii) a relocation of the Executive's principal place of
employment by more than 25 miles; (iv) the liquidation or dissolution of the
Association or the Company; or (v) a breach of the employment agreement by the
Association or the Company (collectively referred to as an "Event of
Termination"), the Executive or, in the event of the Executive's death, the
Executive's beneficiary, would be entitled to receive an amount generally equal
to the base salary and bonus payments that would have been paid to the Executive
during the remaining term of the Employment Agreements had the Executives'
employment not terminated. In addition, the Executive would receive a payment
attributable to the contributions that would have been made on the Executive's
behalf to any employee benefit plans of the Association or the Company during
the remaining term of the employment agreements, together with the value of
stock-based incentives previously awarded to the Executive. The Association and
the Company would also continue or pay for the continuance of the Executive's
life, health and disability coverage for the remaining term of the employment
agreement. Upon the occurrence of an Event of Termination, the Executive is
subject to a covenant not to compete with the Company or the Association for one
year.

Under the employment agreements, if involuntary termination or voluntary
termination of the Executive's employment follows a change in control of the
Association or the Company, the Executive or, in the event of the Executive's
death, the Executive's beneficiary, would receive an amount generally equal to
the greater of: (i) the payments due for the remaining term of the agreement,
including the value of stock-based incentives previously awarded to the
Executive; or (ii) three times the average of the five preceding taxable years'
annual compensation. The Association and the Company would also continue the
Executive's life, health, and disability coverage for thirty-six months, in the
case of Messrs. Colacicco and DiPaolo, and twenty-four months in the case of Mr.
Sidebotham and Ms. Brode. Notwithstanding that both the Company and Association
agreements provide for a severance payment in the event of a change in control,
the Executive may not receive duplicative payments under the agreements.

Payments to the Executive under the Association Employment Agreements are
guaranteed by the Company in the event that payments or benefits are not paid by
the Association. Payments

7
<PAGE>

under the Company Employment Agreements would be made by the Company. All
reasonable costs and legal fees paid or incurred by the Executive pursuant to
any dispute or question of interpretation relating to the employment agreements
will be paid by the Company or the Association, if the Executive is successful
on the merits pursuant to a legal judgment, arbitration or settlement. The
employment agreements also provide that the Association and Company shall
indemnify the Executive to the fullest extent allowable under federal, New
Jersey and Delaware law, respectively.

Transactions With Certain Related Persons

Federal regulations require that all loans or extensions of credit to
executive officers and directors must be made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with the general public and must not involve more than
the normal risk of repayment or present other unfavorable features. In
addition, loans made to a director or executive officer in excess of the greater
of $25,000 or 5% of the Association's capital and surplus (up to a maximum of
$500,000) must be approved in advance by a majority of the disinterested members
of the Board of Directors.

The Association currently makes loans to its executive officers and
directors on the same terms and conditions offered to the general public. The
Association's policy provides that all loans made by the Association to its
executive officers and directors be made in the ordinary course of business, on
substantially the same terms, including collateral, as those prevailing at the
time for comparable transactions with other persons and may not involve more
than the normal risk of collectibility or present other unfavorable features.
As of December 31, 1999, one of the Association's directors, Mr. Mohrfeld, had a
residential first mortgage loan with the Association which had an outstanding
balance totalling $208,339. In addition, one of the Association's directors,
Mr. Woods, is the executor of an estate which has a residential first mortgage
loan with the Association which had an outstanding balance totalling $69,270, at
December 31, 1999. Such loans were made by the Association in the ordinary
course of business, with no favorable terms and such loans do not involve more
than the normal risk of collectibility or present unfavorable features.

The Company intends that all transactions in the future between the Company
and its executive officers, directors, holders of 10% or more of the shares of
any class of its common stock and affiliates thereof, will contain terms no less
favorable to the Company than could have been obtained by it in arm's length
negotiations with unaffiliated persons and will be approved by a majority of
independent outside directors of the Company not having any interest in the
transaction.

Other Transactions With Affiliates

The Company and the Association utilize the services of the law offices of
John V. Field, PA, of which Mr. Field, a director of the Company and the
Association, is the sole shareholder, for a variety of legal work, relating to
the ordinary course of the Company's and Association's business. During 1999,
the Company and the Bank made payments to Mr. Field's firm for legal services
totalling $34,000.

8
<PAGE>

PROPOSALS TO BE VOTED ON AT THE SPECIAL MEETING

PROPOSAL 1. APPROVAL OF THE
SOUTH JERSEY FINANCIAL CORPORATION, INC.
2000 STOCK OPTION PLAN

The Board of Directors of the Company is presenting for shareholder
approval the South Jersey Financial Corporation, Inc. 2000 Stock Option Plan
(the "Stock Option Plan"), in the form attached hereto as Appendix A. The
purpose of the Stock Option Plan is to attract and retain qualified personnel in
key positions, provide officers, employees and non-employee directors ("Outside
Directors") of the Company and any of its affiliates, including the Association,
with a proprietary interest in the Company as an incentive to contribute to the
success of the Company, promote the attention of management to other
stockholder's concerns, and reward employees for outstanding performance. The
following is a summary of the material terms of the Stock Option Plan which is
qualified in its entirety by the complete provisions of the Stock Option Plan
attached hereto as Appendix A.

Summary of the Plan

Type of Stock Option Grants. The Stock Option Plan provides for the grant
of incentive stock options ("ISOs"), within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended ("Code"), and Non-Statutory Stock
Options ("NSOs").

Administration. The Stock Option Plan will be administered by a Committee
appointed by the Company's Board of Directors. Subject to the terms of the
Stock Option Plan and resolutions of the Committee, the Committee interprets the
Stock Option Plan and is authorized to make all determinations and decisions
thereunder. The Committee also determines the participants to whom stock
options will be granted, the type and amount of stock options that will be
granted and the terms and conditions applicable to such grants.

Participants. All employees and outside directors of the Company and its
subsidiaries, are eligible to participate in the Stock Option Plan.

Number of Shares of Common Stock Available. The Company has reserved
379,343 shares of Common Stock for issuance under the Plan in connection with
the exercise of options. Shares of Common Stock reserved under the Stock Option
Plan may be either authorized but unissued shares, or reacquired shares held by
the Company in its treasury. Any shares subject to an option which expires or
otherwise terminates unexercised will again be available for issuance under the
Stock Option Plan.

Stock Option Grants. The exercise price of each ISO or NSO will not be
less than the fair market value of the Common Stock on the date the ISO or NSO
is granted.

Under generally accepted accounting principles, compensation expense will
generally not be recognized with respect to the award of stock options to
employees and directors of the Company and its subsidiaries.

9
<PAGE>

The exercise price of an option may be paid in cash, Common Stock or other
property, by the surrender of all or part of the option being exercised, by the
immediate sale through a broker of the number of shares being acquired
sufficient to pay the purchase price, or by a combination of these methods, as
and to the extent permitted by the Board.

Under the Plan, the Board may permit participants to transfer NSOs to
eligible transferees (as such eligibility is determined by the Committee). Each
option may be exercised during the holder's lifetime, only by the holder or the
holder's guardian or legal representative, and after death only by the holder's
beneficiary or, absent a beneficiary, by the estate or by a person who acquired
the right to exercise the option by will or the laws of descent and
distribution. Options may become exercisable in full at the time of grant or at
such other times and in such installments as the Committee determines or as may
be specified in the Stock Option Plan. Options may be exercised during periods
before and after the participant terminates employment, as the case may be, to
the extent authorized by the Committee or specified in the Stock Option Plan.
However, no option may be exercised after the tenth anniversary of the date the
option was granted. The Committee may, at any time and without additional
consideration, accelerate the date on which an option becomes exercisable.

Effect of a Change in Control. In the event of a change in control (as
defined in the Stock Option Plan) of the Company or the Association, each
outstanding stock option grant will immediately become fully vested and
exercisable. In addition, in the event of a change in control, the Plan
provides for the cash settlement of any outstanding stock option if provision is
not made for the assumption of the options in connection with the change in
control.

Term of the Plan. The Stock Option Plan will be effective on February 16,
2000 but only if the Stock Option Plan is approved by the stockholders of the
Company on that date. The Stock Option Plan will expire on the tenth anniversary
of the effective date, unless terminated sooner by the Board.

Amendment of the Plan. The Stock Option Plan allows the Board to amend the
Plan without stockholder approval, unless such approval is required to comply
with a tax law or regulatory requirement.

Certain Federal Income Tax Consequences. The following brief description
of the tax consequences of stock option grants under the Stock Option Plan is
based on federal income tax laws currently in effect and does not purport to be
a complete description of such federal income tax consequences.

There are no federal income tax consequences either to the optionee or to
the Company upon the grant of an ISO or and NSO. On the exercise of an ISO
during employment or within three months thereafter, the optionee will not
recognize any income and the Company will not be entitled to any deduction,
although the excess of the fair market value of the shares on the date of
exercise over the option price is includable in the optionee's alternative
minimum taxable income, which may give rise to alternative minimum tax liability
for the optionee. Generally, if the optionee disposes of shares acquired upon
exercise of an ISO within two years of the date of grant or one year of the date
of exercise, the optionee will recognize ordinary income, and the Company will
be entitled to a deduction, equal to the excess of the fair market value of the
shares on the date of exercise over

10
<PAGE>

the option price (limited generally to the gain on the sale). The balance of any
gain or loss will be treated as a capital gain or loss to the optionee. If the
shares are disposed of after the two year and one year periods mentioned above,
the Company will not be entitled to any deduction, and the entire gain or loss
for the optionee will be treated as a capital gain or loss.

On exercise of an NSO, the excess of the date-of-exercise fair market value
of the shares acquired over the option price will generally be taxable to the
optionee as ordinary income and deductible by the Company, provided the Company
properly withholds taxes in respect of the exercise. The disposition of shares
acquired upon the exercise of a NSO will generally result in a capital gain or
loss for the optionee, but will have no tax consequences for the Company.

New Plan Benefits

The Company anticipates that option grants will be made to non-employee
directors and employees on or after the effective date of the Stock Option Plan
at levels consistent with other recently converted thrift institutions.
However, no specific determinations have been made regarding the size of
individual awards.

UNLESS MARKED TO THE CONTRARY, THE SHARES REPRESENTED BY THE ENCLOSED PROXY
CARD, IF EXECUTED AND RETURNED, WILL BE VOTED "FOR" THE APPROVAL OF THE SOUTH
JERSEY FINANCIAL CORPORATION, INC. 2000 STOCK OPTION PLAN.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF THE
SOUTH JERSEY FINANCIAL CORPORATION, INC. 2000 STOCK OPTION PLAN.

PROPOSAL 2. APPROVAL OF THE
SOUTH JERSEY FINANCIAL CORPORATION, INC.
2000 RESTRICTED STOCK PLAN

The Board of Directors of the Company is presenting for stockholder
approval the South Jersey Financial Corporation, Inc. 2000 Restricted Stock Plan
(the "Restricted Stock Plan"), in the form attached hereto as Appendix B. The
purpose of the Restricted Stock Plan is to attract and retain qualified
personnel in key positions, provide officers, employees and non-employee
directors of the Company and any of its affiliates, including the Association,
with a proprietary interest in the Company as an incentive to contribute to the
success of the Company, promote the attention of management to other
stockholder's concerns, and reward employees for outstanding performance. The
following is a summary of the material terms of the Restricted Stock Plan, which
is qualified in its entirety by the complete provisions of the Restricted Stock
Plan attached hereto as Appendix B.

Summary of the Restricted Stock Plan

Type of Stock Awards. The Restricted Stock Plan provides for the award of
Common Stock in the form of restricted stock awards which are subject to the
restrictions specified in the Restricted Stock Plan or as determined by the
Committee.

11
<PAGE>

Administration. The Restricted Stock Plan is administered by the Committee
appointed by the Company's Board of Directors. Subject to the terms of the
Restricted Stock Plan and resolutions of the Committee, the Committee interprets
the Restricted Stock Plan and is authorized to make all determinations and
decisions thereunder. The Committee also determines the participants to whom
restricted stock awards will be made, the number of shares of Common Stock
covered by each award and the terms and conditions applicable to such award.

Participants. All employees and outside directors employed by or in
service with the Company and its subsidiaries, as of August 12, 1999, are
eligible to participate in the Restricted Stock Plan.

Number of Shares of Common Stock Available. The Company will reserve a
number of shares of Common Stock for issuance under the Restricted Stock Plan in
the form of restricted stock in accordance with a formula set forth in the
Restricted Stock Plan. The formula provides that the number of shares reserved
for grant under the plan will equal 1,517,372 divided by the lesser of the fair
market value of the common stock on (i) August 12, 1999 or (ii) the effective
date of the plan. Shares of Common Stock to be issued under the Restricted Stock
Plan may be either authorized but unissued shares, or reacquired shares held by
the Company in its treasury. Alternatively, the Company may establish a trust
in which to hold reserved shares. Any shares subject to an award which is
forfeited or is terminated will again be available for grant under the
Restricted Stock Plan. Based on the closing price $13.9375 for the common stock
on August 12, 1999, 108,869 shares of common stock would be reserved for stock
awards under the Restrictive Stock Plan. This number reflects the minimum
number of shares that will be reserved for use under the Restrictive Stock Plan.
If the fair market value of the common stock is less than $13.9375 per share on
the effective date (February 16, 2000) the number of shares will increase
accordingly. The number of shares may vary as the price of the common stock
changes prior to the effective date.

Restricted Stock Awards. Awards under the Restricted Stock Plan will be
made in the form of restricted shares of Common Stock that are subject to
restrictions on transfer of ownership. It is anticipated that the initial
awards under the Restricted Stock Plan will vest in equal installments over a
three- to five-year period beginning on the first anniversary of the date of
grant. Compensation expense in the amount of the fair market value of the
Common Stock at the date of the grant to the officer or director will be
recognized during the period over which the shares vest. If a recipient
terminates employment or service with the Company or its subsidiaries for
reasons other than death or disability, or, at the discretion of the Committee,
retirement, the recipient forfeits all rights to shares under restriction. If
such termination is caused by death, disability or, if applicable, retirement,
all restrictions expire and all shares allocated become unrestricted. A
recipient will be entitled to voting and other stockholder rights with respect
to the shares while restricted. Dividends paid during the period of
restriction will, at the Committee's discretion, be distributed to the recipient
when paid or held in escrow or trust for the benefit of the recipient until the
shares to which the dividends relate are vested.

Effect of a Change in Control. In the event of a change in control (as
defined in the Restricted Stock Plan) of the Company, all outstanding awards
under the Restricted Stock Plan will immediately become fully vested.

12
<PAGE>

Term of the Restricted Stock Plan. The Restricted Stock Plan will be
effective on February 16, 2000 but only if the Restricted Stock Plan is approved
by the stockholders of the Company on that date. The Restricted Stock Plan will
expire on the tenth anniversary of the effective date, unless sooner terminated
by the Board.

Amendment of the Restricted Stock Plan. The Restricted Stock Plan allows
the Board to amend the Restricted Stock Plan without stockholder approval,
unless such approval is required to comply with a tax law or regulatory
requirement.

Certain Federal Income Tax Consequences. The following brief description
of the tax consequences of awards of restricted stock under the Restricted Stock
Plan is based on federal income tax laws currently in effect and does not
purport to be a complete description of such federal income tax consequences.

A participant who has been awarded restricted stock under the Restricted
Stock Plan and does not make an election under Section 83(b) of the Code will
not recognize taxable income at the time of the award. At the time any transfer
or forfeiture restrictions applicable to the restricted stock award lapse, the
recipient will recognize ordinary income and the Company will be entitled to a
corresponding deduction equal to the excess of the fair market value of such
stock at such time over the amount paid, if any, therefor. Any dividend paid to
the recipient on the restricted stock at or prior to such time will be ordinary
compensation income to the recipient and deductible as such by the Company.

A recipient of a restricted stock award who makes an election under Section
83(b) of the Code will recognize ordinary income at the time of the award and
the Company will be entitled to a corresponding deduction equal to the fair
market value of such stock at such time over the amount paid, if any, therefor.
Any dividends subsequently paid to the recipient on the restricted stock will be
dividend income to the recipient and not deductible by the Company. If the
recipient makes a Section 83(b) election, there are no federal income tax
consequences either to the recipient or the Company at the time any transfer or
forfeiture restrictions applicable to the restricted stock award lapse.

New Plan Benefits

The Company anticipates that stock awards will be made to eligible non-
employee directors and employees on or after the effective date of the
Restricted Stock Plan at levels consistent with other recently converted thrift
institutions. However, the no specific determinations have been made regarding
the size of individual awards.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF THE
SOUTH JERSEY FINANCIAL CORPORATION, INC. 2000 RESTRICTED STOCK PLAN.

13
<PAGE>

PROPOSAL 3. RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS

The Company's independent auditors for the year ended December 31, 1999
were Deloitte & Touche LLP. The Company's Board of Directors has reappointed
Deloitte & Touche LLP to continue as independent auditors for the Association
and the Company for the year ending December 31, 2000, subject to ratification
of such appointment by the shareholders.

Representatives of Deloitte & Touche LLP will be present at the Special
Meeting. They will be given an opportunity to make a statement if they desire
to do so and will be available to respond to appropriate questions from
shareholders present at the Special Meeting.

UNLESS MARKED TO THE CONTRARY, THE SHARES REPRESENTED BY THE ENCLOSED
PROXY CARD WILL BE VOTED "FOR" RATIFICATION OF THE APPOINTMENT OF DELOITTE &
TOUCHE LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY.

ADDITIONAL INFORMATION

Shareholder Proposals

To be considered for inclusion in the Company's proxy statement and form of
proxy relating to the 2000 Annual Meeting of Shareholders, a shareholder
proposal must be received by the Secretary of the Company at the address set
forth on the Notice of Special Meeting of Shareholders not later than March 20,
2000. Any such proposal will be subject to 17 C.F.R. (S) 240.14a-8 of the Rules
and Regulations under the Exchange Act.

Notice of Business to be Conducted at a Special or Annual Meeting

The Bylaws of the Company set forth the procedures by which a shareholder
may properly bring business before a meeting of shareholders. Pursuant to the
Bylaws, only business brought by or at the direction of the Board of Directors
may be conducted at a special meeting. The Bylaws of the Company provide an
advance notice procedure for a shareholder to properly bring business before an
annual meeting. The shareholder must give written advance notice to the
Secretary of the Company not less than ninety (90) days before the date
originally fixed for such meeting; provided, however, that in the event that
less than one hundred (100) days notice or prior public disclosure of the date
of the meeting is given or made to shareholders, notice by the shareholder to be
timely must be received not later than the close of business on the tenth day
following the date on which the Company's notice to shareholders of the annual
meeting date was mailed or such public disclosure was made. In order for the
notice of a stockholder proposal for consideration at the Company's 2000 Annual
Meeting of Stockholders to be timely, the Company would have to receive such
notice no

14
<PAGE>

later than May 22, 2000 assuming the 2000 annual meeting is held on
August 18, 2000 and that the Company provides at least 100 days notice or public
disclosure of the date of the meeting. The advance notice by shareholders must
include the shareholder's name and address, as they appear on the Company's
record of shareholders, a brief description of the proposed business, the reason
for conducting such business at the annual meeting, the class and number of
shares of the Company's capital stock that are beneficially owned by such
shareholder and any material interest of such shareholder in the proposed
business. In the case of nominations to the Board of Directors, certain
information regarding the nominee must be provided. Nothing in this paragraph
shall be deemed to require the Company to include in its proxy statement or the
proxy relating to any Annual Meeting any shareholder proposal which does not
meet all of the requirements for inclusion established by the SEC in effect at
the time such proposal is received.

Other Matters Which May Properly Come Before the Meeting

The Board of Directors knows of no business which will be presented for
consideration at the Special Meeting other than as stated in the Notice of
Special Meeting of Shareholders. If, however, other matters are properly
brought before the Special Meeting, it is the intention of the persons named in
the accompanying proxy to vote the shares represented thereby on such matters in
accordance with their best judgment.

15
<PAGE>

Whether or not you intend to be present at the Special Meeting, you are
urged to promptly sign your proxy card and return it in the enclosed self-
addressed envelope. If you are then present at the Special Meeting and wish to
vote your shares in person, your original proxy may be revoked by voting at the
Special Meeting. However, if you are a shareholder whose shares are not
registered in your own name, you will need appropriate documentation from your
recordholder to vote personally at the Special Meeting.

By Order of the Board of Directors

/s/ Joseph M. Sidebotham

Joseph M. Sidebotham
Corporate Secretary

Turnersville, New Jersey
January 4, 2000

YOU ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING IN
PERSON. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL
MEETING, YOU ARE REQUESTED TO SIGN, DATE AND PROMPTLY
RETURN THE ACCOMPANYING PROXY CARD IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.

16
<PAGE>

APPENDIX A
PROPOSED
SOUTH JERSEY FINANCIAL CORPORATION, INC.
2000 STOCK OPTION PLAN

1. DEFINITIONS.
-----------

(a) "Affiliate" means any "parent corporation" or "subsidiary corporation"
of the Holding Company, as such terms are defined in Sections 424(e) and 424(f)
of the Code.

(b) "Association" means South Jersey Savings and Loan Association,
Turnersville, New Jersey.

(c) "Award" means, individually or collectively, a grant under the Plan of
Non-Statutory Stock Options and Incentive Stock Options.

(d) "Award Agreement" means an agreement evidencing and setting forth the
terms of an Award.

(e) "Board of Directors" means the board of directors of the Holding
Company.

(f) "Change in Control" of the Holding Company or the Association shall
mean an event of a nature that (i) would be required to be reported in response
to Item 1(a) of the current report on Form 8-K, as in effect on the date hereof,
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"); or (ii) results in a Change in Control of the Association or
the Holding Company within the meaning of the Home Owners' Loan Act of 1933, as
amended, the Federal Deposit Insurance Act, and the Rules and Regulations
promulgated by the Office of Thrift Supervision (or its predecessor agency), as
in effect on the date hereof (provided, that in applying the definition of
change in control as set forth under the rules and regulations of the OTS, the
Board shall substitute its judgment for that of the OTS); or (iii) without
limitation such a Change in Control shall be deemed to have occurred at such
time as (A) any "person" (as the term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of voting securities of the
Association or the Holding Company representing 20% or more of the Association's
or the Holding Company's outstanding voting securities or right to acquire such
securities except for any voting securities of the Association purchased by the
Holding Company and any voting securities purchased by any employee benefit plan
of the Holding Company or its Subsidiaries, or (B) individuals who constitute
the Board on the date hereof (the "Incumbent Board") cease for any reason to
constitute at least a majority thereof, provided that any person becoming a
director subsequent to the date hereof whose election was approved by a vote of
at least three-quarters of the directors comprising the Incumbent Board, or
whose nomination for election by the Company's stockholders was approved by a
Nominating Committee solely composed of members which are Incumbent Board
members, shall be, for purposes of this clause (B), considered as though he were
a member of the Incumbent Board, or (C) a plan of reorganization, merger,
consolidation, sale of all or substantially all the assets of the Association or
the Holding Company or similar transaction occurs or is effectuated in which the
Association or Holding Company is not the resulting entity; provided, however,
that such an event listed above will be deemed to have occurred or to have been
effectuated upon the receipt of all required federal regulatory approvals not
including the lapse of any statutory waiting periods, or (D) a proxy statement
has been distributed soliciting proxies from stockholders of the Holding
Company, by someone other than the current management of the Holding Company,
seeking stockholder approval of a plan of reorganization, merger or
consolidation of the Holding Company or Association with one or more
corporations as a result of which the outstanding shares of the class of
securities then subject to such plan or transaction are exchanged for or
converted into cash or property or securities not issued by the Association or
the Holding Company shall be distributed, or (E) a tender offer is made for 20%
or more of the voting securities of the Institution or Holding Company then
outstanding.

(g) "Code" means the Internal Revenue Code of 1986, as amended.
<PAGE>

(h) "Committee" means the committee designated by the Board of Directors,
pursuant to Section 2 of the Plan, to administer the Plan.

(i) "Common Stock" means the Common Stock of the Holding Company, par
value, $.01 per share.

(j) "Date of Grant" means the effective date of an Award.

(k) "Disability" means any mental or physical condition with respect to
which the Participant qualifies for and receives benefits for under a long-term
disability plan of the Holding Company or an Affiliate, or in the absence of
such a long-term disability plan or coverage under such a plan, "Disability"
shall mean a physical or mental condition which, in the sole discretion of the
Committee, is reasonably expected to be of indefinite duration and to
substantially prevent the Participant from fulfilling his duties or
responsibilities to the Holding Company or an Affiliate.

(l) "Effective Date" means the date the Plan is approved by shareholders of
the Holding Company.

(m) "Employee" means any person employed by the Holding Company or an
Affiliate. Directors who are employed by the Holding Company or an Affiliate
shall be considered Employees under the Plan.

(n) "Exchange Act" means the Securities Exchange Act of 1934, as amended.

(o) "Exercise Price" means the price at which a Participant may purchase a
share of Common Stock pursuant to an Option.

(p) "Fair Market Value" means the market price of Common Stock, determined
by the Committee as follows:

(i) If the Common Stock was traded on the date in question on The
Nasdaq Stock Market then the Fair Market Value shall be equal to
the closing price reported for such date;

(ii) If the Common Stock was traded on a stock exchange on the date
in question, then the Fair Market Value shall be equal to the
closing price reported by the applicable composite transactions
report for such date; and

(iii) If neither of the foregoing provisions is applicable, then the
Fair Market Value shall be determined by the Committee in good
faith on such basis as it deems appropriate.

Whenever possible, the determination of Fair Market Value by the Committee
shall be based on the prices reported in The Wall Street Journal. The
-----------------------
Committee's determination of Fair Market Value shall be conclusive and binding
on all persons.

(q) "Holding Company" means South Jersey Financial Corporation, Inc.

(r) "Incentive Stock Option" means a stock option granted to a Participant,
pursuant to Section 7 of the Plan, that is intended to meet the requirements of
Section 422 of the Code.

(s) "Non-Statutory Stock Option" means a stock option granted to a
Participant pursuant to the terms of the Plan but which is not intended to be
and is not identified as an Incentive Stock Option or a stock option granted
under the Plan which is intended to be and is identified as an Incentive Stock
Option but which does not meet the requirements of Section 422 of the Code.

(t) "Option" means an Incentive Stock Option or Non-Statutory Stock Option.

A-2
<PAGE>

(u) "Outside Director" means a member of the board(s) of directors of the
Holding Company or an Affiliate who is not also an Employee of the Holding
Company or an Affiliate.

(v) "Participant" means any person who holds an outstanding Award.

(w) "Performance Award" means an Award granted to a Participant pursuant
to Section 8 of the Plan.

(x) "Plan" means this South Jersey Financial Corporation, Inc. 2000 Stock-
Option Plan.

(y) "Retirement" means retirement from employment with the Holding Company
or an Affiliate in accordance with the then current retirement policies of the
Holding Company or Affiliate, as applicable. Notwithstanding the foregoing
"Retirement" shall include termination of employment (other than Termination for
Cause) under which the Participant would qualify for normal or early retirement
under the money purchase pension plan sponsored by the Association, as in effect
on the Effective Date. "Retirement" with respect to an Outside Director means
the termination of service from the board(s) of directors of the Holding Company
and any Affiliate following written notice to such board(s) of directors of the
Outside Director's intention to retire.

(z) "Termination for Cause" shall mean termination because of a
Participant's personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or material breach of any provision of any
employment agreement between the Holding Company and/or any subsidiary of the
Holding Company and a Participant.

(aa) "Trust" means a trust established by the Board of Directors in
connection with this Plan to hold Common Stock or other property for the
purposes set forth in the Plan.

(bb) "Trustee" means any person or entity approved by the Board of
Directors or its designee(s) to hold any of the Trust assets.

2. ADMINISTRATION.
--------------

(a) The Committee shall administer the Plan. The Committee shall consist
of two or more disinterested directors of the Holding Company, who shall be
appointed by the Board of Directors. A member of the Board of Directors shall
be deemed to be "disinterested" only if he satisfies (i) such requirements as
the Securities and Exchange Commission may establish for non-employee directors
administering plans intended to qualify for exemption under Rule 16b-3 (or its
successor) under the Exchange Act and (ii) such requirements as the Internal
Revenue Service may establish for outside directors acting under plans intended
to qualify for exemption under Section 162(m)(4)(C) of the Code. The Board of
Directors may also appoint one or more separate committees of the Board of
Directors, each composed of one or more directors of the Holding Company or an
Affiliate who need not be disinterested, that may grant Awards and administer
the Plan with respect to Employees and Outside Directors who are not considered
officers or directors of the Holding Company under Section 16 of the Exchange
Act or for whom Awards are not intended to satisfy the provisions of Section
162(m) of the Code.

(b) The Committee shall (i) select the Employees and Outside Directors who
are to receive Awards under the Plan, (ii) determine the type, number, vesting
requirements and other features and conditions of such Awards, (iii) interpret
the Plan and Award Agreements in all respects and (iv) make all other decisions
relating to the operation of the Plan. The Committee may adopt such rules or
guidelines as it deems appropriate to implement the Plan. The Committee's
determinations under the Plan shall be final and binding on all persons.

A-3
<PAGE>

upon acceptance of an Award Agreement, shall be bound by the terms and
restrictions of the Plan and the Award Agreement. The terms of each Award
Agreement shall be in accordance with the Plan, but each Award Agreement may
include any additional provisions and restrictions determined by the Committee,
in its discretion, provided that such additional provisions and restrictions are
not inconsistent with the terms of the Plan. In particular and at a minimum, the
Committee shall set forth in each Award Agreement: (i) the type of Award
granted; (ii) the Exercise Price of any Option; (iii) the number of shares
subject to the Award; (iv) the expiration date of the Award; (v) the manner,
time, and rate (cumulative or otherwise) of exercise or vesting of such Award;
and (vi) the restrictions, if any, placed upon such Award, or upon shares which
may be issued upon exercise of such Award. The Chairman of the Committee and
such other directors and officers as shall be designated by the Committee is
hereby authorized to execute Award Agreements on behalf of the Company or an
Affiliate and to cause them to be delivered to the recipients of Awards.

(d) The Committee may delegate all authority for: (i) the determination of
forms of payment to be made by or received by the Plan and (ii) the execution of
any Award Agreement. The Committee may rely on the descriptions,
representations, reports and estimates provided to it by the management of the
Holding Company or an Affiliate for determinations to be made pursuant to the
Plan, including the satisfaction of any conditions of a Performance Award.
However, only the Committee or a portion of the Committee may certify the
attainment of any conditions of a Performance Award intended to satisfy the
requirements of Section 162(m) of the Code.

3. TYPES OF AWARDS AND RELATED RIGHTS.
----------------------------------

The following Awards may be granted under the Plan:

(a) Non-Statutory Stock Options.
(b) Incentive Stock Options.

4. STOCK SUBJECT TO THE PLAN.
-------------------------

Subject to adjustment as provided in Section 13 of the Plan, the number of
shares reserved for Options under the Plan is 379,343. The shares of Common
Stock issued under the Plan may be either authorized but unissued shares or
authorized shares previously issued and acquired or reacquired by the Trustee or
the Holding Company, respectively. To the extent that Options are granted under
the Plan, the shares underlying such Awards will be unavailable for any other
use including future grants under the Plan except that, to the extent that
Options terminate, expire or are forfeited without having vested or without
having been exercised, new Awards may be made with respect to these shares. No
Employee may be granted an Option under this Plan to purchase more than 25% of
all shares of Common Stock available under this Plan. No outside Director may
be granted an Option under this Plan to purchase more than 5% of all shares of
Common Stock available under this Plan.

5. ELIGIBILITY.
-----------

Subject to the terms of the Plan, all Employees and Outside Directors shall
be eligible to receive Awards under the Plan.

6. NON-STATUTORY STOCK OPTIONS.
---------------------------

The Committee may, subject to the limitations of this Plan and the
availability of shares of Common Stock reserved but not previously awarded under
the Plan, grant Non-Statutory Stock Options to eligible individuals upon such
terms and conditions as it may determine to the extent such terms and conditions
are consistent with the following provisions:

A-4
<PAGE>

(a) Exercise Price. The Committee shall determine the Exercise Price of
--------------
each Non-Statutory Stock Option. However, the Exercise Price shall not be less
than 100% of the Fair Market Value of the Common Stock on the Date of Grant.

(b) Terms of Non-statutory Stock Options. The Committee shall determine
------------------------------------
the term during which a Participant may exercise a Non-Statutory Stock Option,
but in no event may a Participant exercise a Non-Statutory Stock Option, in
whole or in part, more than ten (10) years from the Date of Grant. The
Committee shall also determine the date on which each Non-Statutory Stock
Option, or any part thereof, first becomes exercisable and any terms or
conditions a Participant must satisfy in order to exercise each Non-Statutory
Stock Option. The shares of Common Stock underlying each Non-Statutory Stock
Option may be purchased in whole or in part by the Participant at any time
during the term of such Non-Statutory Stock Option, or any portion thereof, once
the Non-Statutory Stock Option becomes exercisable.

(c) Non-Transferability. Unless otherwise determined by the Committee in
-------------------
accordance with this Section 6(c), a Participant may not transfer, assign,
hypothecate, or dispose of in any manner, other than by will or the laws of
intestate succession, a Non-Statutory Stock Option. The Committee may, however,
in its sole discretion, permit transferability or assignment of a Non-Statutory
Stock Option if such transfer or assignment is, in its sole determination, for
valid estate planning purposes and such transfer or assignment is permitted
under the Code and Rule 16b-3 under the Exchange Act. For purposes of this
Section 6(c), a transfer for valid estate planning purposes includes, but is not
limited to: (a) a transfer to a revocable intervivos trust as to which the
Participant is both the settlor and trustee, (b) a transfer for no consideration
to: (i) any member of the Participant's Immediate Family, (ii) any trust solely
for the benefit of members of the Participant's Immediate Family, (iii) any
partnership whose only partners are members of the Participant's Immediate
Family, and (iv) any limited liability corporation or corporate entity whose
only members or equity owners are members of the Participant's Immediate Family,
or (c) a transfer to the South Jersey Savings Charitable Foundation. For
purposes of this Section 6(c), "Immediate Family" includes, but is not
necessarily limited to, a Participant's parents, grandparents, spouse, children,
grandchildren, siblings (including half bothers and sisters), and individuals
who are family members by adoption. Nothing contained in this Section 6(c)
shall be construed to require the Committee to give its approval to any transfer
or assignment of any Non-Statutory Stock Option or portion thereof, and approval
to transfer or assign any Non-Statutory Stock Option or portion thereof does not
mean that such approval will be given with respect to any other Non-Statutory
Stock Option or portion thereof. The transferee or assignee of any Non-
Statutory Stock Option shall be subject to all of the terms and conditions
applicable to such Non-Statutory Stock Option immediately prior to the transfer
or assignment and shall be subject to any other conditions prescribed by the
Committee with respect to such Non-Statutory Stock Option.

(d) Termination of Employment or Service (General). Unless otherwise
----------------------------------------------
determined by the Committee, upon the termination of a Participant's employment
or other service for any reason other than Retirement, Disability, death, or as
a result of a Termination for Cause, the Participant may exercise only those
Non-Statutory Stock Options that were immediately exercisable by the Participant
at the date of such termination and only for a period of three (3) months
following the date of such termination.

(e) Termination of Employment or Service (Retirement). In the event of a
-------------------------------------------------
Participant's Retirement, all Non-Statutory Stock Options held by the
Participant at the date of Retirement shall immediately become exercisable and
remain exercisable for a period of five (5) years following the date of
Retirement.

(f) Termination of Employment or Service (Disability or death). In the
----------------------------------------------------------
event of the termination of a Participant's employment or other service due to
Disability or death, all Non-Statutory Stock Options held by such Participant
shall immediately become exercisable and remain exercisable for a period one (1)
year following the date of such termination.

(g) Termination of Employment or Service (Termination for Cause). Unless
------------------------------------------------------------
otherwise determined by the Committee, in the event of a Participant's
Termination for Cause, all rights with respect to the Participant's Non-
Statutory Stock Options shall expire immediately upon the effective date of such
Termination for Cause.

A-5
<PAGE>

(h) Termination of Employment or Service (Change in Control). In the event
--------------------------------------------------------
of a Change in Control, all Non-Statutory Stock Options held by a Participant as
of the date of the Change in Control shall immediately become exercisable and
shall remain exercisable until the expiration of the term of the Non-Statutory
Stock Option, regardless of whether or when the Option holder terminates
employment or service.

(i) Payment. Payment due to a Participant upon the exercise of a Non-
-------
Statutory Stock Option shall be made in the form of shares of Common Stock.

7. INCENTIVE STOCK OPTIONS.
-----------------------

The Committee may, subject to the limitations of the Plan and the
availability of shares of Common Stock reserved but unawarded under this Plan,
grant Incentive Stock Options to an Employee upon such terms and conditions as
it may determine to the extent such terms and conditions are consistent with the
following provisions:

(a) Exercise Price. The Committee shall determine the Exercise Price of
--------------
each Incentive Stock Option. However, the Exercise Price shall not be less than
100% of the Fair Market Value of the Common Stock on the Date of Grant;
provided, however, that if at the time an Incentive Stock Option is granted, the
Employee owns or is treated as owning, for purposes of Section 422 of the Code,
Common Stock representing more than 10% of the total combined voting securities
of the Holding Company ("10% Owner"), the Exercise Price shall not be less than
110% of the Fair Market Value of the Common Stock on the Date of Grant.

(b) Amounts of Incentive Stock Options. To the extent the aggregate Fair
----------------------------------
Market Value of shares of Common Stock with respect to which Incentive Stock
Options that are exercisable for the first time by an Employee during any
calendar year under the Plan and any other stock option plan of the Holding
Company or an Affiliate exceeds $100,000, or such higher value as may be
permitted under Section 422 of the Code, such Options in excess of such limit
shall be treated as Non-Statutory Stock Options. Fair Market Value shall be
determined as of the Date of Grant with respect to each such Incentive Stock
Option.

(c) Terms of Incentive Stock Options. The Committee shall determine the
--------------------------------
term during which a Participant may exercise an Incentive Stock Option, but in
no event may a Participant exercise an Incentive Stock Option, in whole or in
part, more than ten (10) years from the Date of Grant; provided, however, that
if at the time an Incentive Stock Option is granted to an Employee who is a 10%
Owner, the Incentive Stock Option granted to such Employee shall not be
exercisable after the expiration of five (5) years from the Date of Grant. The
Committee shall also determine the date on which each Incentive Stock Option, or
any part thereof, first becomes exercisable and any terms or conditions a
Participant must satisfy in order to exercise each Incentive Stock Option. The
shares of Common Stock underlying each Incentive Stock Option may be purchased
in whole or in part at any time during the term of such Incentive Stock Option
after such Option becomes exercisable.

(d) Non-Transferability. No Incentive Stock Option shall be transferable
-------------------
except by will or the laws of descent and distribution and is exercisable,
during his lifetime, only by the Employee to whom the Committee grants the
Incentive Stock Option. The designation of a beneficiary does not constitute a
transfer of an Incentive Stock Option.

(e) Termination of Employment (General). Unless otherwise determined by
-----------------------------------
the Committee, upon the termination of a Participant's employment or other
service for any reason other than Retirement, Disability, death, or as a result
of a Termination for Cause, the Participant may exercise only those Incentive
Stock Options that were immediately exercisable by the Participant at the date
of such termination and only for a period of three (3) months following the date
of such termination.

A-6
<PAGE>

(f) Termination of Employment (Retirement). In the event of a Participant's
--------------------------------------
Retirement, all Incentive Stock Options held by the Participant at the date of
Retirement shall immediately become exercisable and shall remain exercisable for
a period of five (5) years following the date of Retirement. Any Option
originally designated as an Incentive Stock Option shall be treated as a Non-
Statutory Stock Option to the extent the Participant exercises such Option more
than three (3) months following the Date of the Participant's Retirement.

(g) Termination of Employment (Disability or Death). In the event of the
-----------------------------------------------
termination of a Participant's employment or other service due to Disability or
death, all Incentive Stock Options held by such Participant shall immediately
become exercisable and remain exercisable for a period one (1) year following
the date of such termination.

(h) Termination of Employment (Termination for Cause). Unless otherwise
-------------------------------------------------
determined by the Committee, in the event of an Employee's Termination for
Cause, all rights under such Employee's Incentive Stock Options shall expire
immediately upon the effective date of such Termination for Cause.

(i) Change in Control In the event of a Change in Control, all Incentive
-----------------
Stock Options held by a Participant as of the date of the Change in Control
shall immediately become exercisable and shall remain exercisable until the
expiration of the term of the Incentive Stock Option, regardless of whether or
when the Option holder terminates employment or service. Any Option originally
designated as an Incentive Stock Option shall be treated as a Non-Statutory
Stock Options to the extent the Participant exercises such Option more than
three (3) months following the Date of the Participant's Retirement.

(j) Payment. Payment due to a Participant upon the exercise of an
-------
Incentive Stock Option shall be made in the form of shares of Common Stock.

(k) Disqualifying Dispositions. Each Award Agreement with respect to an
--------------------------
Incentive Stock Option shall require the Participant to notify the Committee of
any disposition of shares of Common Stock issued pursuant to the exercise of
such Option under the circumstances described in Section 421(b) of the Code
(relating to certain disqualifying dispositions), within 10 days of such
disposition.

8. PERFORMANCE AWARDS.
------------------

The Committee may determine to make any Award under the Plan contingent
upon the satisfaction of any conditions related to the performance of the
Holding Company, an Affiliate or the Participant. Each Performance Award shall
be evidenced in the Award Agreement, which shall set forth the applicable
conditions, the maximum amounts payable and such other terms and conditions as
are applicable to the Performance Award.

9. DEFERRED PAYMENTS.
-----------------

The Committee, in its discretion, may permit a Participant to elect to
defer receipt of all or any part of any cash or stock payment under the Plan, or
the Committee may determine to defer receipt by some or all Participants, of all
or part of any such payment. The Committee shall determine the terms and
conditions of any such deferral, including the period of deferral, the manner of
deferral, and the method for measuring appreciation on deferred amounts until
their payout.

10. METHOD OF EXERCISE OF OPTIONS.
-----------------------------

Subject to any applicable Award Agreement, any Option may be exercised by
the Participant in whole or in part at such time or times, and the Participant
may make payment of the Exercise Price in such form or forms permitted by the
Committee, including, without limitation, payment by delivery of cash, Common
Stock or other consideration (including, where permitted by law and the
Committee, Awards) having a Fair Market Value on the day immediately preceding
the exercise date equal to the total Exercise Price, or by any combination of
cash, shares

A-7
<PAGE>

of Common Stock and other consideration, including exercise by means of a
cashless exercise arrangement with a qualifying broker-dealer, as the Committee
may specify in the applicable Award Agreement.

11. RIGHTS OF PARTICIPANTS.
----------------------

No Participant shall have any rights as a shareholder with respect to any
shares of Common Stock covered by an Option until the date of issuance of a
stock certificate for such Common Stock. Nothing contained in this Plan or in
any Award Agreement confers on any person any right to continue in the employ or
service of the Holding Company or an Affiliate or interferes in any way with the
right of the Holding Company or an Affiliate to terminate a Participant's
services.

12. DESIGNATION OF BENEFICIARY.
--------------------------

A Participant may, with the consent of the Committee, designate a person or
persons to receive, in the event of death, any Award to which the Participant
would then be entitled. Such designation will be made upon forms supplied by
and delivered to the Committee and may be revoked in writing. If a Participant
fails effectively to designate a beneficiary, then the Participant's estate will
be deemed to be the beneficiary.

13. DILUTION AND OTHER ADJUSTMENTS.
------------------------------

In the event of any change in the outstanding shares of Common Stock by
reason of any stock dividend or split, recapitalization, merger, consolidation,
spin-off, reorganization, combination or exchange of shares, or other similar
corporate change, or other increase or decrease in such shares without receipt
or payment of consideration by the Holding Company, or in the event an
extraordinary capital distribution is made, the Committee may make such
adjustments to previously granted Awards, to prevent dilution, diminution, or
enlargement of the rights of the Participant, including any or all of the
following:

(a) adjustments in the aggregate number or kind of shares of Common Stock
or other securities that may underlie future Awards under the Plan;

(b) adjustments in the aggregate number or kind of shares of Common Stock
or other securities underlying Awards already made under the Plan;

14. TAXES.
-----

(a) Whenever under this Plan, cash or shares of Common Stock are to be
delivered upon exercise or payment of an Award or any other event with respect
to rights and benefits hereunder, the Committee shall be entitled to require as
a condition of delivery (i) that the Participant remit an amount sufficient to
satisfy all federal, state, and local tax withholding requirements related
thereto, (ii) that the withholding of such sums come from compensation otherwise
due to the Participant or from any shares of Common Stock due to the Participant
under this Plan or (iii) any combination of the foregoing provided, however,
that no amount shall be withheld from any cash payment or shares of Common Stock
relating to an Award which was transferred by the Participant in accordance with
this Plan. Furthermore, Participants may direct the Committee to instruct the
Trustee to sell shares of Common Stock to be delivered upon the payment of an
Award to satisfy tax obligations.

A-8
<PAGE>

(b) If any disqualifying disposition described in Section 7(l) is made with
respect to shares of Common Stock acquired under an Incentive Stock Option
granted pursuant to this Plan, or any transfer described in Section 6(c) is
made, or any election described in Section 16 is made, then the person making
such disqualifying disposition, transfer, or election shall remit to the Holding
Company or its Affiliates an amount sufficient to satisfy all federal, state,
and local withholding taxes thereby incurred; provided that, in lieu of or in
addition to the foregoing, the Holding Company or its Affiliates shall have the
right to withhold such sums from compensation otherwise due to the Participant,
or, except in the case of any transfer pursuant to Section 6(c), from any shares
of Common Stock due to the Participant under this Plan.

15. NOTIFICATION UNDER SECTION 83(b).
--------------------------------

The Committee may, on the Date of Grant or any later date, prohibit a
Participant from making the election described below. If the Committee has not
prohibited such Participant from making such election, and the Participant
shall, in connection with the exercise of any Option, or the grant of any Stock
Award, make the election permitted under Section 83(b) of the Code, such
Participant shall notify the Committee of such election within 10 days of filing
notice of the election with the Internal Revenue Service, in addition to any
filing and notification required pursuant to regulations issued under the
authority of Section 83(b) of the Code.

16. AMENDMENT OF THE PLAN AND AWARDS.
--------------------------------

(a) The Board of Directors may at any time, and from time to time, modify
or amend the Plan in any respect, prospectively or retroactively; provided
however, that provisions governing grants of Incentive Stock Options shall be
submitted for shareholder approval to the extent required by such law,
regulation or otherwise. Failure to ratify or approve amendments or
modifications by shareholders shall be effective only as to the specific
amendment or modification requiring such ratification. Other provisions of this
Plan will remain in full force and effect. No such termination, modification or
amendment may adversely affect the rights of a Participant under an outstanding
Award without the written permission of such Participant.

(b) The Committee may amend any Award Agreement, prospectively or
retroactively; provided, however, that no such amendment shall adversely affect
the rights of any Participant under an outstanding Award without the written
consent of such Participant.

17. EFFECTIVE DATE OF PLAN.
----------------------

The Plan shall become effective upon approval by the Holding Company's
shareholders. The failure to obtain shareholder approval will not effect the
validity of the Plan and any Awards made under the Plan; provided, however, that
if the Plan is not approved by stockholders in accordance with IRS regulations,
the Plan shall remain in full force and effect, and any Incentive Stock Options
granted under the Plan shall be deemed to be Non-Statutory Stock Options and any
Award intended to comply with Section 162(m) of the Code shall not comply with
Section 162(m) of the Code.

18. TERMINATION OF THE PLAN.
-----------------------

The right to grant Awards under the Plan will terminate upon the earlier
of: (i) ten (10) years after the Effective Date; (ii) the issuance of a number
of shares of Common Stock pursuant to the exercise of Options is equivalent to
the maximum number of shares reserved under the Plan as set forth in Section 4
of the Plan. The Board of Directors has the right to suspend or terminate the
Plan at any time, provided that no such action will, without the consent of a
Participant or except as provided for in Section 16(c) of the Plan, adversely
affect a Participant's vested rights under a previously granted Award.

A-9
<PAGE>

19. APPLICABLE LAW.
--------------

The Plan will be administered in accordance with the laws of the state of
Delaware to the extent not pre-empted by applicable federal law.

20. TREATMENT OF AWARDS UPON A CHANGE IN CONTROL.
--------------------------------------------

In the event of a Change in Control where the Holding Company or the
Association is not the surviving entity, the Board of Directors of the Holding
Company and/or the Association, as applicable, shall require that the successor
entity take one of the following actions with respect to all Awards held by
Participants at the date of the Change in Control:

(i) Assume the Awards with the same terms and conditions as granted to
the Participant under this Plan; or

(ii) Replace the Awards with comparable Awards, subject to the same or
more favorable terms and conditions as the Award granted to the
Participant under this Plan, whereby the Participant will be granted
common stock or the option to purchase common stock of the successor
entity; or, only if the Committee determines that neither of the
alternatives set forth in clauses (i) or (ii) are legally available;
or

(iii) Replace the Awards with a cash payment under an incentive plan,
program, or other arrangement of the successor entity that preserves
the economic value of the Awards and makes any such cash payment
subject to the same vesting or exercisability schedule applicable to
such Awards.

(b) The determination of comparability of Awards offered by a successor
entity under clause (ii) of paragraph (a) above shall be made by the Committee,
and the Committee's determination shall be conclusive and binding.

A-10
<PAGE>

APPENDIX B

PROPOSED
SOUTH JERSEY FINANCIAL CORPORATION, INC.
2000 RESTRICTED STOCK PLAN

1. DEFINITIONS.
-----------

(a) "Affiliate" means any "parent corporation" or "subsidiary
corporation" of the Holding Company, as such terms are defined in Sections
424(e) and 424(f) of the Code.

(b) "Association" means South Jersey Savings and Loan Association,
Turnersville, New Jersey.

(d) "Award Agreement" means an agreement evidencing and setting forth the
terms of an Award.

(e) "Board of Directors" means the board of directors of the Holding
Company.

(g) "Code" means the Internal Revenue Code of 1986, as amended.

(h) "Committee" means the committee designated by the Board of Directors,
pursuant to Section 2 of the Plan, to administer the Plan.
<PAGE>

(i) "Common Stock" means the Common Stock of the Holding Company, par
value, $.01 per share.

(j) "Date of Grant" means the effective date of an Award.

(l) "Effective Date" means the date the Plan is approved by shareholders
of the Holding Company.

(m) "Employee" means any person employed by the Holding Company or an
Affiliate. Directors who are employed by the Holding Company or an Affiliate
shall be considered Employees under the Plan.

(n) "Exchange Act" means the Securities Exchange Act of 1934, as amended.

(o) "Fair Market Value" means the market price of Common Stock,
determined by the Committee as follows:

(i) If the Common Stock was traded on the date in question on The
Nasdaq Stock Market then the Fair Market Value shall be equal
to the closing price reported for such date;

(iii) If neither of the foregoing provisions is applicable, then the
Fair Market Value shall be determined by the Committee in good
faith on such basis as it deems appropriate.

(p) "Holding Company" means South Jersey Financial Corporation, Inc.

(q) "Outside Director" means a member of the board(s) of directors of the
Holding Company or an Affiliate who is not also an Employee of the Holding
Company or an Affiliate.

(r) "Participant" means any person who holds an outstanding Award.

(s) "Performance Award" means an Award granted to a Participant pursuant
to Section 7 of the Plan.

(t) "Plan" means this South Jersey Financial Corporation, Inc. 2000
Restricted Stock Plan.

(u) "Retirement" means retirement from employment with the Holding
Company or an Affiliate in accordance with the then current retirement policies
of the Holding Company or Affiliate, as applicable. Notwithstanding the
foregoing "Retirement" shall include termination of employment (other than
Termination for Cause) under which the Participant would qualify for normal or
early retirement under the money purchase pension plan sponsored by the
Association, as in effect on the Effective Date. "Retirement" with respect to an
Outside

B-2
<PAGE>

Director means the termination of service from the board(s) of directors of the
Holding Company and any Affiliate following written notice to such board(s) of
directors of the Outside Director's intention to retire.

(v) "Stock Award" means an Award granted to a Participant pursuant to
Section 6 of the Plan.

(w) "Termination for Cause" shall mean termination because of
Participant's personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or material breach of any provision of any
employment agreement between the Holding Company and/or any subsidiary of the
Holding Company and a Participant.

(x) "Trust" means a trust established by the Board of Directors in
connection with this Plan to hold Common Stock or other property for the
purposes set forth in the Plan.

(y) "Trustee" means any person or entity approved by the Board of
Directors or its designee(s) to hold any of the Trust assets.

2. ADMINISTRATION.
--------------

(a) The Committee shall administer the Plan. The Committee shall consist
of two or more disinterested directors of the Holding Company, who shall be
appointed by the Board of Directors. A member of the Board of Directors shall be
deemed to be "disinterested" only if he satisfies (i) such requirements as the
Securities and Exchange Commission may establish for non-employee directors
administering plans intended to qualify for exemption under Rule 16b-3 (or its
successor) under the Exchange Act and (ii) such requirements as the Internal
Revenue Service may establish for outside directors acting under plans intended
to qualify for exemption under Section 162(m)(4)(C) of the Code. The Board of
Directors may also appoint one or more separate committees of the Board of
Directors, each composed of one or more directors of the Holding Company or an
Affiliate who need not be disinterested and who may grant Awards and administer
the Plan with respect to Employees and Outside Directors who are not considered
officers or directors of the Holding Company under Section 16 of the Exchange
Act or for whom Awards are not intended to satisfy the provisions of Section
162(m) of the Code.

(b) The Committee shall (i) select the Employees and Outside Directors
who are to receive Awards under the Plan, (ii) determine the type, number,
vesting requirements and other features and conditions of such Awards, (iii)
interpret the Plan and Award Agreements in all respects and (iv) make all other
decisions relating to the operation of the Plan. The Committee may adopt such
rules or guidelines as it deems appropriate to implement the Plan. The
Committee's determinations under the Plan shall be final and binding on all
persons.

(c) Each Award shall be evidenced by a written agreement ("Award
Agreement") containing such provisions as may be required by the Plan and
otherwise approved by the Committee. Each Award Agreement shall constitute a
binding contract between the Holding Company or an Affiliate and the
Participant, and every Participant, upon acceptance of an Award Agreement, shall
be bound by the terms and restrictions of the Plan and the Award Agreement. The
terms of each Award Agreement shall be in accordance with the Plan, but each
Award Agreement may include any additional provisions and restrictions
determined by the Committee, in its discretion, provided that such additional
provisions and restrictions are not inconsistent with the terms of the Plan. In
particular and at a minimum, the Committee shall set forth in each Award
Agreement: (i) the number of shares subject to the Award; (ii) the expiration
date of the Award; (iii) the manner, time, and rate (cumulative or otherwise) of
vesting of such Award; and (iv) the restrictions, if any, placed upon such
Award. The Chairman of the Committee and such other directors and officers as
shall be designated by the Committee is hereby authorized to execute Award
Agreements on behalf of the Company or an Affiliate and to cause them to be
delivered to the recipients of Awards.

B-3
<PAGE>

descriptions, representations, reports and estimates provided to it by the
management of the Holding Company or an Affiliate for determinations to be made
pursuant to the Plan, including the satisfaction of any conditions of a
Performance Award. However, only the Committee or a portion of the Committee may
certify the attainment of any conditions of a Performance Award intended to
satisfy the requirements of Section 162(m) of the Code.

3. TYPES OF AWARDS AND RELATED RIGHTS.
----------------------------------

Only Stock Awards may be granted under the Plan.

4. STOCK SUBJECT TO THE PLAN.
-------------------------

Subject to adjustment as provided in Section 11 of the Plan, the number of
shares reserved for Awards under the Plan shall be fixed as of the Effective
Date and shall be determined by dividing 1,517,372 by the lesser of the Fair
Market Value of the Common Stock on (i) August 12, 1999, or (ii) the Effective
Date. The shares of Common Stock issued under the Plan may be either authorized
but unissued shares or authorized shares previously issued and acquired or
reacquired by the Trustee or the Holding Company, respectively. To the extent
that Stock Awards are granted under the Plan, the shares underlying such Awards
will be unavailable for any other use including future grants under the Plan
except that, to the extent that Stock Awards terminate, expire or are forfeited
without having vested, new Awards may be made with respect to these shares. No
Employee may be granted Stock Awards under this Plan covering more than 25% of
the shares of Common Stock available under this Plan. No outside Director may be
granted Stock Awards under this Plan covering more than 5% of the shares of
Common Stock available under this Plan.

5. ELIGIBILITY.
-----------

Subject to the terms of the Plan, Outside Directors in service with the
Holding Company or Association as of August 12, 1999, and all Employees employed
by the Holding Company or the Association shall be eligible to receive Awards
under the Plan.

6. STOCK AWARDS.
------------

The Committee may make grants of Stock Awards, which shall consist of the
grant of some number of shares of Common Stock, to a Participant upon such terms
and conditions as it may determine to the extent such terms and conditions are
consistent with the following provisions:

(a) Grants of the Stock Awards. Stock Awards may only be made in whole
---------------------------
shares of Common Stock. Stock Awards may only be granted from shares reserved
under the Plan and available for award at the time the Stock Award is made to
the Participant.

(b) Terms of the Stock Awards. The Committee shall determine the dates
-------------------------
on which Stock Awards granted to a Participant shall vest and any terms or
conditions which must be satisfied prior to the vesting of any Stock Award or
portion thereof. Any such terms or conditions shall be determined by the
Committee as of the Date of Grant.

(c) Termination of Employment or Service (General). Unless otherwise
----------------------------------------------
determined by the Committee, upon the termination of a Participant's employment
or service for any reason other than Retirement, Disability or death, or as a
result of a Termination for Cause, any Stock Awards in which the Participant has
not become vested as of the date of such termination shall be forfeited and any
rights the Participant had to such Stock Awards shall become null and void.

(d) Termination of Employment or Service (Retirement). In the event of a
-------------------------------------------------
Participant's Retirement, all unvested Stock Awards held by a Participant shall
immediately vest.

B-4
<PAGE>

(e) Termination of Employment or Service (Disability or death). In the
----------------------------------------------------------
event of a termination of the Participant's service due to Disability or death
all unvested Stock Awards held by such Participant shall immediately vest as of
the date of such termination.

(f) Termination of Employment or Service (Termination for Cause). Unless
------------------------------------------------------------
otherwise determined by the Committee, or in the event of the Participant's
Termination for Cause, all Stock Awards in which the Participant had not become
vested as of the effective date of such Termination for Cause shall be forfeited
and any rights such Participant had to such unvested Stock Awards shall become
null and void.

(g) Change in Control. In the event of a Change in Control all unvested
-----------------
Stock Awards held by a Participant shall immediately vest.

(h) Issuance of Certificates. Unless otherwise held in Trust and
------------------------
registered in the name of the Trustee, reasonably promptly after the Date of
Grant with respect to shares of Common Stock pursuant to a Stock Award, the
Holding Company shall cause to be issued a stock certificate, registered in the
name of the Participant to whom such Stock Award was granted, evidencing such
shares; provided, that the Holding Company shall not cause such a stock
certificate to be issued unless it has received a stock power duly endorsed in
blank with respect to such shares. Each such stock certificate shall bear the
following legend:

"The transferability of this certificate and the shares of stock
represented hereby are subject to the restrictions, terms and
conditions (including forfeiture provisions and restrictions against
transfer) contained in the South Jersey Financial Corporation, Inc.
2000 Restricted Stock Plan and Award Agreement entered into between
the registered owner of such shares and South Jersey Financial
Corporation, Inc. or its Affiliates. A copy of the Plan and Award
Agreement is on file in the office of the Corporate Secretary of
South Jersey Financial Corporation, Inc. located at 4651 Route 42,
Turnersville, New Jersey.

Such legend shall not be removed until the Participant becomes vested in such
shares pursuant to the terms of the Plan and Award Agreement. Each certificate
issued pursuant to this Section 8(i), in connection with a Stock Award, shall be
held by the Holding Company or its Affiliates, unless the Committee determines
otherwise.

(i) Non-Transferability. Except to the extent permitted by the Code, the
-------------------
rules promulgated under Section 16(b) of the Exchange Act or any successor
statutes or rules:

(i) The recipient of a Stock Award shall not sell, transfer,
assign, pledge, or otherwise encumber shares subject to the
Stock Award until full vesting of such shares has occurred.
For purposes of this section, the separation of beneficial
ownership and legal title through the use of any "swap"
transaction is deemed to be a prohibited encumbrance.

(ii) Unless determined otherwise by the Committee and except in the
event of the Participant's death or pursuant to a domestic
relations order, a Stock Award is not transferable and may be
earned in his lifetime only by the Participant to whom it is
granted. Upon the death of a Participant, a Stock Award is
transferable by will or the laws of descent and distribution.
The designation of a beneficiary shall not constitute a
transfer.

(iii) If a recipient of a Stock Award is subject to the provisions
of Section 16 of the Exchange Act, shares of Common Stock
subject to such Stock Award may not, without the written
consent of the Committee (which consent may be given in the
Award Agreement), be sold or otherwise disposed of within six
(6) months following the date of grant of the Stock Award.

B-5
<PAGE>

(j) Accrual of Dividends. To the extent Stock Awards are held in Trust
--------------------
and registered in the name of the Trustee, unless otherwise specified by the
Trust Agreement whenever shares of Common Stock underlying a Stock Award are
distributed to a Participant or beneficiary thereof under the Plan, such
Participant or beneficiary shall also be entitled to receive, with respect to
each such share distributed, a payment equal to any cash dividends and the
number of shares of Common Stock equal to any stock dividends, declared and paid
with respect to a share of the Common Stock if the record date for determining
shareholders entitled to receive such dividends falls between the date the
relevant Stock Award was granted and the date the relevant Stock Award or
installment thereof is issued. There shall also be distributed an appropriate
amount of net earnings, if any, of the Trust with respect to any dividends paid
out on the shares related to the Stock Award.

(k) Voting of Stock Awards. After a Stock Award has been granted but for
----------------------
which the shares covered by such Stock Award have not yet been vested, earned
and distributed to the Participant pursuant to the Plan, the Participant shall
be entitled to vote or to direct the Trustee to vote, as the case may be, such
shares of Common Stock which the Stock Award covers subject to the rules and
procedures adopted by the Committee for this purpose and in a manner consistent
with the Trust agreement.

(l) Payment. Payment due to a Participant upon the redemption of a Stock
-------
Award shall be made in the form of shares of Common Stock.

7. PERFORMANCE AWARDS.
------------------

(a) The Committee may determine to make any Award under the Plan
contingent upon the satisfaction of any conditions related to the performance of
the Holding Company, an Affiliate or the Participant in addition to or in lieu
of the mere passage of time. Each Performance Award shall be evidenced in the
Award Agreement, which shall set forth the applicable conditions, the maximum
amounts payable and such other terms and conditions as are applicable to the
Performance Award. Unless otherwise determined by the Committee, each
Performance Award shall be granted and administered to comply with the
requirements of Section 162(m) of the Code and subject to the following
provisions:

(b) Any Performance Award shall be made not later than 90 days after the
start of the period for which the Performance Award relates and shall be made
prior to the completion of 25% of such period. All determinations regarding the
achievement of any applicable conditions will be made by the Committee. The
Committee may not increase during a year the amount of a Performance Award that
would otherwise be payable upon satisfaction of the conditions but may reduce or
eliminate the payments as provided for in the Award Agreement.

(c) Nothing contained in the Plan will be deemed in any way to limit or
restrict the Committee from making any Award or payment to any person under any
other plan, arrangement or understanding, whether now existing or hereafter in
effect.

(d) A Participant who receives a Performance Award payable in Common
Stock shall have no rights as a shareholder until the Company Stock is issued
pursuant to the terms of the Award Agreement. The Common Stock may be issued
without cash consideration.

(e) A Participant's interest in a Performance Award may not be sold,
assigned, transferred, pledged, hypothecated, or otherwise encumbered.

(f) No Award or portion thereof that is subject to the satisfaction of
any condition shall be distributed or considered to be earned or vested until
the Committee certifies in writing that the conditions to which the
distribution, earning or vesting of such Award is subject have been achieved.

B-6
<PAGE>

8. DEFERRED PAYMENTS.
-----------------

9. RIGHTS OF PARTICIPANTS.
----------------------

Except as otherwise specifically provided for in this Plan or an Award
Agreement, no Participant shall have any rights as a shareholder with respect to
any shares of Common Stock covered by a Stock Award until the date of issuance
of a stock certificate for such Common Stock and, upon issuance of a
certificate, the Participant's rights shall be limited to the extent of any
applicable restrictions. Nothing contained in this Plan or in any Award
Agreement confers on any person any right to continue in the employ or service
of the Holding Company or an Affiliate or interferes in any way with the right
of the Holding Company or an Affiliate to terminate a Participant's services.

10. DESIGNATION OF BENEFICIARY.
--------------------------

A Participant may, with the consent of the Committee, designate a person or
persons to receive, in the event of death, any Award to which the Participant
would then be entitled. Such designation will be made upon forms supplied by and
delivered to the Committee and may be revoked in writing. If a Participant fails
effectively to designate a beneficiary, then the Participant's estate will be
deemed to be the beneficiary.

11. DILUTION AND OTHER ADJUSTMENTS.
------------------------------

(a) adjustments in the aggregate number or kind of shares of Common Stock
or other securities that may underlie future Awards under the Plan;
or

(b) adjustments in the aggregate number or kind of shares of Common Stock
or other securities underlying Awards already made under the Plan.

No such adjustments may, however, materially change the value of benefits
available to a Participant under a previously granted Award. All Awards under
this Plan shall be binding upon any successors or assigns of the Holding
Company. Notwithstanding the above, in the event of an extraordinary capital
distribution, any adjustment under this Section 11 shall be subject to required
approval by the Office of Thrift Supervision.

12. TAXES.
-----

Whenever under this Plan, cash or shares of Common Stock are to be
delivered upon payment of an Award or any other event with respect to rights and
benefits hereunder, the Committee shall be entitled to require as a condition of
delivery (i) that the Participant remit an amount sufficient to satisfy all
federal, state, and local tax withholding tax requirements related thereto, (ii)
that the withholding of such sums come from compensation otherwise due to the
Participant or from any shares of Common Stock due to the Participant under this
Plan or (iii) any combination of the foregoing provided, however, that no amount
shall be withheld from any cash payment or shares

B-7
<PAGE>

of Common Stock relating to an Award which was transferred by the Participant in
accordance with this Plan. Furthermore, Participants may direct the Committee to
instruct the Trustee to sell shares of Common Stock to be delivered upon the
payment of an Award to satisfy tax obligations.

13. NOTIFICATION UNDER SECTION 83(b).
--------------------------------

14. AMENDMENT OF THE PLAN AND AWARDS.
--------------------------------

(a) The Board of Directors may at any time, and from time to time, modify
or amend the Plan in any respect, prospectively or retroactively. No such
termination, modification or amendment may adversely affect the rights of a
Participant under an outstanding Award without the written permission of such
Participant.

15. EFFECTIVE DATE OF PLAN.
----------------------

16. TERMINATION OF THE PLAN.
-----------------------

The right to grant Awards under the Plan will terminate upon the earlier
of: (i) ten (10) years after the Effective Date; (ii) the issuance of a number
of shares of Common Stock pursuant to the distribution of Stock Awards is
equivalent to the maximum number of shares reserved under the Plan as set forth
in Section 4 of the Plan. The Board of Directors has the right to suspend or
terminate the Plan at any time, provided that no such action will, without the
consent of a Participant, adversely affect a Participant's vested rights under a
previously granted Award.

17. APPLICABLE LAW.
--------------

The Plan will be administered in accordance with the laws of the state of
Delaware to the extent not pre-empted by applicable federal law.

B-8
<PAGE>

SOUTH JERSEY FINANCIAL CORPORATION, INC.
SPECIAL MEETING OF SHAREHOLDERS

February 16, 2000
11:00 a.m. Eastern Time
_______________________________

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints the official proxy committee of the Board
of Directors of South Jersey Financial Corporation, Inc. (the "Company"), each
with full power of substitution, to act as proxy for the undersigned, and to
vote all shares of common stock of the Company which the undersigned is entitled
to vote only at the Special Meeting of Shareholders, to be held on February 16,
2000, at 11:00 a.m. Eastern Time, at the Renaissance Room, 194 Fries Mill Road,
Turnersville, New Jersey and at any and all adjournments thereof, with all of
the powers the undersigned would possess if personally present at such meeting
as follows:

1. The approval of the South Jersey Financial Corporation, Inc. 2000
Stock Option Plan.

FOR AGAINST ABSTAIN
--- ------- -------

[_] [_] [_]

2. The approval of the South Jersey Financial Corporation, Inc. 2000
Restricted Stock Plan.

FOR AGAINST ABSTAIN
--- ------- -------

[_] [_] [_]

3. The ratification of the appointment of Deloitte & Touche LLP as
independent auditors of South Jersey Financial Corporation, Inc. for
the year ending December 31, 2000.

FOR AGAINST ABSTAIN
--- ------- -------

[_] [_] [_]

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
EACH OF THE LISTED PROPOSALS.
<PAGE>

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.

This proxy is revocable and will be voted as directed, but if no
instructions are specified, this proxy will be voted "FOR" each of the proposals
listed. If any other business is presented at the Special Meeting, including
whether or not to adjourn the meeting, this proxy will be voted by the proxies
in their best judgment. At the present time, the Board of Directors knows of no
other business to be presented at the Special Meeting.

The above-signed acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Special Meeting of Shareholders and of a
Proxy Statement dated January 4, 2000.

Please sign exactly as your name appears on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder may sign but only one signature
is required.

Dated:___________________________

________________________________
SIGNATURE OF SHAREHOLDER

_____________________________

PLEASE COMPLETE, DATE, SIGN AND PROMPTLY MAIL THIS PROXY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.