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                          AGREEMENT AND PLAN OF MERGER

                           DATED AS OF MARCH 15, 2000



                                  BY AND AMONG

                        RICHMOND COUNTY FINANCIAL CORP.,

                        RICHMOND COUNTY ACQUISITION, INC.




                                       AND

                    SOUTH JERSEY FINANCIAL CORPORATION, INC.








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                                TABLE OF CONTENTS

                                                                        PAGE NO.

Introductory Statement........................................................1

ARTICLE I

      THE MERGER..............................................................1
      ----------
      Section 1.1. Structure of the Merger....................................1
                   -----------------------
      Section 1.2. Effect on Shares of South Jersey Common Stock..............2
                   ---------------------------------------------
      Section 1.3. Payment Procedures.........................................2
                   ------------------
      Section 1.4. Stock Options..............................................4
                   -------------
      Section 1.5. Effect on Shares of Acquisition Sub Stock..................5
                   -----------------------------------------
      Section 1.6. Certificate of Incorporation and Bylaws of the
                   ----------------------------------------------
                   Surviving Corporation......................................5
                   ---------------------
      Section 1.7. Directors and Officers of the Surviving Corporation........5
                   ---------------------------------------------------
      Section 1.8. Bank Merger................................................5
                   -----------
      Section 1.9. Alternative Structure......................................6
                   ---------------------
      Section 1.10. Dissenters' Rights........................................6
                    ------------------

ARTICLE II
      REPRESENTATIONS AND WARRANTIES..........................................7
      ------------------------------
      Section 2.1. Disclosure Letters; Standards..............................7
                   -----------------------------
      Section 2.2. Representations and Warranties of South Jersey.............7
                   ----------------------------------------------
      Section 2.3. Representations and Warranties of Richmond County.........24
                   -------------------------------------------------

ARTICLE III
      CONDUCT PENDING THE MERGER.............................................28
      --------------------------
      Section 3.1. Conduct of South Jersey's Business Prior to the
                   -----------------------------------------------
                   Effective Time............................................28
                  --------------
      Section 3.2. Forbearance by South Jersey...............................29
                   ---------------------------
      Section 3.3. Conduct of Richmond County's Business Prior to the
                   --------------------------------------------------
                   Effective Time............................................32
                   --------------

ARTICLE IV
      COVENANTS..............................................................32
      ---------
      Section 4.1. Acquisition Proposals.....................................32
                   ---------------------
      Section 4.2. Certain Policies and Actions of South Jersey..............34
                   --------------------------------------------
      Section 4.3. Access and Information....................................35
                   ----------------------
      Section 4.4. Certain Filings, Consents and Arrangements................37
                   ------------------------------------------
      Section 4.5. Antitakeover Provisions...................................37
                   -----------------------
      Section 4.6. Additional Agreements.....................................37
                   ---------------------
      Section 4.7. Publicity.................................................38
                   ---------
      Section 4.8. Stockholder Meeting.......................................38
                   -------------------
      Section 4.9. Proxy Statement...........................................38
                   ---------------
      Section 4.10.Notification of Certain Matters...........................39
                   -------------------------------
      Section 4.11.Employees, Directors and Officers.........................39
                   ---------------------------------
      Section 4.12.Indemnification...........................................41
                   ---------------
      Section 4.13.South Jersey Savings Charitable Foundation................43
                   ------------------------------------------

                                       ii

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ARTICLE V

      CONDITIONS TO CONSUMMATION.............................................43
       --------------------------
      Section 5.1. Conditions to Each Party's Obligations....................43
                   --------------------------------------
      Section 5.2. Conditions to the Obligations of Richmond County..........44
                   ------------------------------------------------
      Section 5.3. Conditions to the Obligations of South Jersey.............45
                   ---------------------------------------------

ARTICLE VI
      TERMINATION............................................................45
      -----------
      Section 6.1. Termination...............................................45
                   -----------
      Section 6.2. Effect of Termination.....................................46
                   ---------------------

ARTICLE VII
      CLOSING, EFFECTIVE DATE AND EFFECTIVE TIME.............................47
      ------------------------------------------
      Section 7.1. Effective Date and Effective Time.........................47
                   ---------------------------------
      Section 7.2. Deliveries at the Closing.................................47
                   -------------------------

ARTICLE VIII
      CERTAIN OTHER MATTERS..................................................47
      ---------------------
      Section 8.1. Certain Definitions; Interpretation.......................47
                   -----------------------------------
      Section 8.2. Survival..................................................48
                   --------
      Section 8.3. Waiver; Amendment.........................................48
                   -----------------
      Section 8.4. Counterparts..............................................48
                   ------------
      Section 8.5. Governing Law.............................................48
                   -------------
      Section 8.6. Expenses..................................................48
                   --------
      Section 8.7. Notices...................................................48
                   -------
      Section 8.8. Entire Agreement; etc.....................................49
                   ---------------------
      Section 8.9. Successors and Assigns; Assignment........................50
                   ----------------------------------

Exhibit A - Stock Option Agreement
Exhibit B - Bank Merger Agreement

Exhibit C - Form of Consulting and Noncompetition Agreement

                                       iii

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                          AGREEMENT AND PLAN OF MERGER

                          ----------------------------

     This is an  AGREEMENT  AND  PLAN OF  MERGER,  dated  as of the  15th day of
March,2000  ("AGREEMENT"),  by and among  Richmond  County  Financial  Corp.,  a
Delaware corporation ("RICHMOND COUNTY"),  Richmond County Acquisition,  Inc., a
Delaware   corporation   ("ACQUISITION   SUB"),   and  South  Jersey   Financial
Corporation, Inc., a Delaware corporation ("SOUTH JERSEY").

                             INTRODUCTORY STATEMENT

     The Board of Directors of each of Richmond  County and South Jersey (i) has
determined  that  this  Agreement  and  the  business  combination  and  related
transactions  contemplated  hereby are in the best interests of Richmond  County
and South Jersey,  respectively,  and in the best interests of their  respective
stockholders  and (ii) has  approved,  at  meetings  of each of such  Boards  of
Directors, this Agreement.

     Concurrently  with the  execution  and delivery of this  Agreement and as a
condition  to  Richmond  County's  willingness  to enter  into  this  Agreement,
Richmond County and South Jersey have entered into a Stock Option Agreement (the
"OPTION AGREEMENT") in the form attached hereto as Exhibit A.
                                                   ---------

     Richmond  County and South Jersey  desire to make certain  representations,
warranties  and  agreements  in  connection  with the business  combination  and
related transactions  provided for herein and to prescribe various conditions to
such transactions.

     Acquisition Sub has been organized as a wholly-owned subsidiary of Richmond
County to facilitate the business combination contemplated by this Agreement.

     In  consideration of their mutual promises and obligations  hereunder,  the
parties  hereto  adopt  and make  this  Agreement  and  prescribe  the terms and
conditions  hereof and the manner and basis of  carrying it into  effect,  which
shall be as follows:

                                    ARTICLE I

                                   THE MERGER

                                   ----------

            Section 1.1. Structure of the Merger. On the Effective Date (as
                         -----------------------
defined in SECTION 7.1),  Acquisition  Sub will merge with and into South Jersey
("MERGER"),  pursuant to the provisions of, and with the effect provided in, the
Delaware General Corporation Law ("DGCL").  Upon consummation of the Merger, the
separate corporate  existence of Acquisition Sub shall cease. South Jersey shall
be the surviving corporation (hereinafter sometimes referred to in such capacity
as the "SURVIVING  CORPORATION") in the Merger and shall continue to be governed
by the DGCL,  and its  separate  corporate  existence,  with all of its  rights,
privileges,  immunities, powers and franchises, shall continue unaffected by the
Merger. The name of South

                                        1

<PAGE> 5

Jersey,  as the  Surviving  Corporation  in the  Merger,  shall be South  Jersey
Financial  Corporation,  Inc. From and after the  Effective  Time (as defined in
SECTION 7.1), South Jersey shall possess all of the properties and rights and be
subject to all of the  liabilities  and  obligations of Acquisition  Sub, all as
more fully described in the DGCL.

            Section 1.2. Effect on Shares of South Jersey Common Stock.
                         ---------------------------------------------

            (a) By virtue of the Merger, automatically and without any action on
the part of the holder thereof,  each share of common stock,  par value $.01 per
share,  of South  Jersey  ("SOUTH  JERSEY  COMMON  STOCK")  that is  issued  and
outstanding  at the  Effective  Time,  other than  Excluded  Shares (as  defined
below), shall cease to be outstanding and shall be converted into and become the
right to receive  (subject to  adjustment  as described  below)  $20.00 in cash,
without interest (the "MERGER CONSIDERATION").

                  "EXCLUDED SHARES" shall consist of (i) Dissenters  Shares' (as
defined in SECTION  1.10);  (ii) shares held  directly or indirectly by Richmond
County (other than shares held in a fiduciary  capacity or in  satisfaction of a
debt  previously  contracted)  and (iii) shares held by South Jersey as treasury
stock.

            (b) As of the  Effective  Time,  each  Excluded  Share,  other  than
Dissenters' Shares,  shall be canceled and retired and shall cease to exist, and
no exchange or payment  shall be made with  respect  thereto.  In  addition,  no
Dissenters' Shares shall be converted into the Merger Consideration  pursuant to
this SECTION 1.2 but instead shall be treated in accordance  with the procedures
set forth in SECTION 1.10 of this Agreement.

            Section 1.3. Payment Procedures.
                         ------------------

            (a)  Appropriate  transmittal  materials  ("LETTER OF  TRANSMITTAL")
shall be mailed as soon as reasonably  practicable  after the Effective  Time to
each holder of record of South Jersey Common Stock as of the  Effective  Time. A
Letter of Transmittal shall be deemed properly  completed only if accompanied by
certificates  representing  all  shares  of  South  Jersey  Common  Stock  to be
converted thereby.

            (b) At and after the Effective Time, each certificate ("SOUTH JERSEY
CERTIFICATE")  previously  representing  shares  of South  Jersey  Common  Stock
(except as specifically set forth in SECTION 1.2) shall represent only the right
to receive the Merger Consideration  multiplied by the number of shares of South
Jersey Common Stock previously represented by the South Jersey Certificate.

            (c) Prior to the Effective Time,  Richmond County shall deposit,  or
shall  cause  to be  deposited,  in a  segregated  account  with a bank or trust
company  selected by Richmond County and reasonably  acceptable to South Jersey,
which shall act as paying agent ("PAYING  AGENT") for the benefit of the holders
of shares of South Jersey Common Stock, for payment in

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accordance  with this  SECTION  1.3,  an amount  of cash  sufficient  to pay the
aggregate Merger Consideration to be paid pursuant to SECTION 1.2.

            (d) The Letter of Transmittal  shall (i) specify that delivery shall
be effected,  and risk of loss and title to the South Jersey  Certificates shall
pass,  only upon delivery of the South Jersey  Certificates to the Paying Agent,
(ii) be in a form and  contain  any other  provisions  as  Richmond  County  may
reasonably  determine  and (iii) include  instructions  for use in effecting the
surrender  of  the  South  Jersey   Certificates  in  exchange  for  the  Merger
Consideration. Upon the proper surrender of the South Jersey Certificates to the
Paying  Agent,  together with a properly  completed and duly executed  Letter of
Transmittal,  the holder of such South Jersey  Certificates shall be entitled to
receive in exchange  therefor a check in the amount  equal to the cash that such
holder  has  the  right  to  receive  pursuant  to  SECTION  1.2.  South  Jersey
Certificates so surrendered shall forthwith be canceled.  As soon as practicable
following  receipt  of the  properly  completed  Letter of  Transmittal  and any
necessary  accompanying  documentation,  the Paying Agent shall issue a check as
provided  herein.  If there is a transfer  of  ownership  of any shares of South
Jersey Common Stock not registered in the transfer records of South Jersey,  the
Merger  Consideration  shall be issued to the  transferee  thereof  if the South
Jersey Certificates representing such South Jersey Common Stock are presented to
the Paying Agent,  accompanied  by all  documents  required,  in the  reasonable
judgment of Richmond  County and the Paying  Agent,  (x) to evidence  and effect
such transfer and (y) to evidence that any applicable  stock transfer taxes have
been paid.

            (e) From and after the Effective Time there shall be no transfers on
the stock transfer  records of South Jersey of any shares of South Jersey Common
Stock. If, after the Effective Time, South Jersey  Certificates are presented to
Richmond   County,   they  shall  be  canceled  and  exchanged  for  the  Merger
Consideration  deliverable  in respect  thereof  pursuant to this  Agreement  in
accordance with the procedures set forth in this SECTION 1.3.

            (f) Any portion of the aggregate  amount of cash to be paid pursuant
to SECTION 1.2 that remains  unclaimed by the  stockholders  of South Jersey for
six months  after the  Effective  Time  shall be repaid by the  Paying  Agent to
Richmond County upon the written request of Richmond County.  After such request
is made, any stockholders of South Jersey who have not theretofore complied with
this SECTION 1.3 shall look only to Richmond County for the Merger Consideration
deliverable  in  respect  of each  share  of  South  Jersey  Common  Stock  such
stockholder  holds,  as  determined  pursuant to SECTION 1.2 of this  Agreement,
without any interest thereon.  If outstanding South Jersey  Certificates are not
surrendered  prior to the date on which such payments would otherwise escheat to
or become the property of any governmental  unit or agency,  the unclaimed items
shall,  to the extent  permitted  by any  abandoned  property,  escheat or other
applicable laws,  become the property of Richmond County (and, to the extent not
in its  possession,  shall be paid over to it),  free and clear of all claims or
interest of any person previously  entitled to such claims.  Notwithstanding the
foregoing,  neither  the Paying  Agent nor any party to this  Agreement  (or any
affiliate thereof) shall be liable to any former holder of South

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Jersey Common Stock for any amount  delivered to a public  official  pursuant to
applicable abandoned property, escheat or similar laws.

            (g)  Richmond  County and the Paying Agent shall be entitled to rely
upon South  Jersey's  stock  transfer  books to establish  the identity of those
persons  entitled  to receive  the Merger  Consideration,  which  books shall be
conclusive  with  respect  thereto.  In the event of a dispute  with  respect to
ownership of stock represented by any South Jersey Certificate,  Richmond County
and the Paying  Agent  shall be  entitled  to deposit  any Merger  Consideration
represented  thereby in escrow with an independent third party and thereafter be
relieved with respect to any claims thereto.

            (h) If any South Jersey  Certificate shall have been lost, stolen or
destroyed,  upon the making of an affidavit of that fact by the person  claiming
such South Jersey  Certificate to be lost,  stolen or destroyed and, if required
by the Paying Agent,  the posting by such person of a bond in such amount as the
Paying Agent may direct as indemnity  against any claim that may be made against
it with respect to such South Jersey Certificate, the Paying Agent will issue in
exchange for such lost, stolen or destroyed South Jersey  Certificate the Merger
Consideration deliverable in respect thereof pursuant to SECTION 1.2.

            Section 1.4. Stock Options.
                         -------------

            (a) Except as provided in SECTION  1.4(B),  at the  Effective  Time,
each option to acquire  shares of South  Jersey  Common  Stock (a "SOUTH  JERSEY
OPTION") granted pursuant to the South Jersey Financial  Corporation,  Inc. 2000
Stock Option Plan (the "SOUTH JERSEY OPTION PLAN") that is then  outstanding and
unexercised,  whether or not then vested, shall be canceled, and in lieu thereof
the holders of such options shall be paid in cash an amount equal to the product
of (i) the number of shares of South Jersey  Common Stock subject to such option
at the  Effective  Time and (ii) the  amount by which the  Merger  Consideration
exceeds the exercise price per share of such option,  net of any cash which must
be withheld under federal and state income and employment tax  requirements.  In
the event that the exercise  price of a South Jersey  Option is greater than the
Merger Consideration,  then at the Effective Time such South Jersey Option shall
be canceled without any payment made in exchange therefor. At the Effective Time
the South Jersey Option Plan shall be deemed terminated.

            (b) Robert J. Colacicco,  Gregory M. DiPaolo,  Jane E. Brode, Joseph
M.  Sidebotham  and Paul D.  Wampler or any one or more of them may,  by written
notice to Richmond County received by Richmond County not less than the day that
is two  business  days prior to the Closing  Date (as  defined in SECTION  7.1),
elect to convert all or any  portion of the South  Jersey  Options  held by them
into options ("RICHMOND COUNTY OPTIONS") to purchase shares of Richmond County's
common stock,  par value $.01 per share  ("RICHMOND  COUNTY COMMON STOCK").  Any
such  election  shall  identify  the South Jersey  Options to be converted  into
Richmond  County Options and shall become  irrevocable  upon receipt by Richmond
County of the notice of election. Any conversion pursuant to this SECTION 1.4(B)
shall be effected by

                                        4

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issuing to the  electing  individual  Richmond  County  Options to purchase  the
number of shares of Richmond County Common Stock equal to the product of (i) the
number  of shares of South  Jersey  Common  Stock  subject  to the South  Jersey
Options being converted,  and (ii) a fraction, the numerator of which is the per
share Merger  Consideration  and the  denominator of which is the average of the
daily  closing  sales  prices of a share of Richmond  County  Common  Stock,  as
reported on the National  Market System of the Nasdaq Stock  Market,  for the 15
consecutive  trading days ending with the last trading day before the  Effective
Date (as defined in SECTION 7.1). The exercise price per share for each share of
Richmond  County Common Stock  subject to a Richmond  County Option issued under
this  SECTION  1.4(B)  shall be equal to the  product of the per share  exercise
price of the South  Jersey  Option being  converted  into such  Richmond  County
Options  multiplied  by the  reciprocal  of the  fraction  described  in SECTION
1.4(B)(II)  above. Each such Richmond County Option (i) shall be exercisable and
shall vest at the same time and on the same terms as the  related  South  Jersey
Options,  except that the period during which the individual provides consulting
services  shall be deemed to be equivalent to continued  employment for purposes
of such Richmond  County  Options (and upon the  completion  of such  consulting
services,  such  Richmond  County  Options  shall  continue  to vest and  become
exercisable  over the period that they would have vested and become  exercisable
if the individual had continued consulting services for a full five years), (ii)
shall  not be  subject  to any  condition,  except  as  may  be  required  under
applicable  securities  laws,  including,   without  limitation,  the  continued
retention by Richmond  County of the holder  thereof as a consultant,  and (iii)
shall  be  evidenced  by a  Richmond  County  Option  Agreement  in a form to be
provided by Richmond County that is reasonably  acceptable to South Jersey,  and
that shall provide for reasonable  registration rights. No payment shall be made
pursuant to SECTION  1.4(A) with respect to any portion of a South Jersey Option
that is converted into a Richmond County Option as described in this paragraph.

            Section 1.5. Effect on Shares of Acquisition Sub Stock. Each share
                         -----------------------------------------
of common stock of Acquisition  Sub that is issued and  outstanding  immediately
prior to the Effective  Time shall be converted into and exchanged for one share
of the Surviving Corporation.

            Section 1.6. Certificate of Incorporation and Bylaws of the
                         ----------------------------------------------
Surviving Corporation. The certificate of incorporation and bylaws of South
---------------------
Jersey  in  effect  immediately  prior  to  the  Effective  Time  shall  be  the
certificate of  incorporation  and bylaws of the Surviving  Corporation from and
after the Effective Time until amended as provided by law.

            Section 1.7. Directors and Officers of the Surviving Corporation.
                         ---------------------------------------------------
From and after the  Effective  Time,  the directors and officers of South Jersey
shall  consist  of  the  directors  and  officers  of  Acquisition  Sub  serving
immediately  prior to the Effective Time, each to hold office in accordance with
the certificate of incorporation  and bylaws of the Surviving  Corporation until
their respective successors are duly elected or appointed and qualified.

            Section 1.8.  Bank Merger. Concurrently with or as soon as
                          -----------
practicable after the execution and delivery of this Agreement, Richmond County
Savings Bank ("RICHMOND

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<PAGE> 9

COUNTY SAVINGS"), a wholly owned subsidiary of Richmond County, and South Jersey
Savings and Loan Association ("SOUTH JERSEY SAVINGS"), a wholly owned subsidiary
of South Jersey,  shall enter into the Plan of Bank Merger, in the form attached
hereto as Exhibit B, pursuant to which South Jersey Savings will merge with and

          ---------
into Richmond County Savings (the "BANK MERGER"). The parties hereto intend that
the Bank Merger shall become effective on the Effective Date.

            Section 1.9. Alternative Structure. Notwithstanding anything to the
                         ---------------------
contrary  contained in this  Agreement,  prior to the Effective  Time,  Richmond
County may specify that the structure of the  transactions  contemplated by this
Agreement  be  revised  and  the  parties  shall  enter  into  such  alternative
transactions  as Richmond  County may  determine  to effect the purposes of this
Agreement; PROVIDED, HOWEVER, that such revised structure shall not (i) alter or
change the amount or kind of the Merger  Consideration or (ii) materially impede
or  delay  the  receipt  of any  regulatory  approval  referred  to  in,  or the
consummation of the transactions contemplated by, this Agreement. This Agreement
and any related documents shall be appropriately amended in order to reflect any
such revised structure.

            Section 1.10.  Dissenters' Rights. Notwithstanding any other
                           ------------------
provision of this Agreement to the contrary, shares of South Jersey Common Stock
that are outstanding  immediately  prior to the Effective Time and that are held
by  stockholders  who shall have not voted in favor of the  Merger or  consented
thereto in writing  and who  properly  shall have  delivered  to South  Jersey a
written demand for appraisal of the fair value of such shares in accordance with
the DGCL (collectively, the "DISSENTERS' SHARES") shall not be converted into or
represent  the right to receive  the  Merger  Consideration.  Such  stockholders
instead  shall be entitled  to receive  payment of the fair value of such shares
held by them in  accordance  with the  provisions  of the DGCL,  except that all
Dissenters'  Shares held by stockholders who shall have failed to perfect or who
effectively  shall have  withdrawn or otherwise  lost their  dissenters'  rights
under the DGCL shall thereupon be deemed to have been converted into and to have
become exchangeable, as of the Effective Time, for the right to receive, without
any interest  thereon,  the Merger  Consideration  upon  surrender in the manner
provided  in  SECTION  1.3,  of the South  Jersey  Certificate  or South  Jersey
Certificates  that,  immediately  prior to the Effective  Time,  evidenced  such
shares. South Jersey shall give Richmond County (i) prompt notice of any written
demands for  appraisal  of the fair value of any shares of South  Jersey  Common
Stock,  attempted  withdrawals of such demands and any other instruments  served
pursuant to the DGCL and  received  by South  Jersey  relating to  stockholders'
rights of appraisal,  and (ii) the  opportunity to direct all  negotiations  and
proceedings  with respect to demands for appraisal under the DGCL.  South Jersey
shall not, except with the prior written consent of Richmond County, voluntarily
make any payment with respect to, or settle or offer to settle,  any such demand
for appraisal.

                                        6

<PAGE> 10

                                   ARTICLE II

                         REPRESENTATIONS AND WARRANTIES

                         ------------------------------

            Section 2.1.  Disclosure Letters; Standards.
                          -----------------------------

            (a) On or prior to the  execution  and  delivery of this  Agreement,
South Jersey and Richmond County each shall have delivered to the other a letter
(each,  its  "DISCLOSURE  LETTER")  setting  forth,  among other things,  facts,
circumstances  and events the  disclosure of which is required or appropriate in
relation to any or all of their respective  representations  and warranties (and
making specific reference to the Section of this Agreement to which they relate)
; PROVIDED,  that (a) no such fact,  circumstance or event is required to be set
forth in the Disclosure  Letter as an exception to a representation  or warranty
if its absence is not reasonably likely to result in the related  representation
or warranty being deemed untrue or incorrect under the standards  established by
SECTION 2.1(B), and (b) the mere inclusion of a fact, circumstance or event is a
Disclosure  Letter  shall not be deemed an  admission  by a party that such item
represents a material exception or that such item is reasonably likely to result
in a Material Adverse Effect (as defined in SECTION 8.1).

            (b) No representation or warranty of South Jersey or Richmond County
contained  in  SECTION  2.2 or 2.3,  respectively,  shall be  deemed  untrue  or
incorrect, and no party hereto shall be deemed to have breached a representation
or warranty,  on account of the  existence of any fact,  circumstance  or event,
unless, as a direct or indirect consequence of such fact, circumstance or event,
individually  or taken  together with all other facts,  circumstances  or events
inconsistent with any paragraph of SECTIONS 2.2 or 2.3, as applicable,  there is
reasonably   likely  to  exist  a  Material   Adverse  Effect.   South  Jersey's
representations,  warranties and covenants contained in this Agreement shall not
be deemed to be untrue or  breached as a result of effects  arising  solely from
actions taken in compliance with a written request of Richmond County.

            Section 2.2. Representations and Warranties of South Jersey. South
                         ----------------------------------------------
Jersey represents and warrants to Richmond County that:

            (a)   Organization.
                  ------------

                  (i) South  Jersey is a  corporation  duly  organized,  validly
existing  and in good  standing  under the laws of the State of Delaware  and is
registered  as a savings and loan  holding  company  under the Home Owners' Loan
Act, as amended ("HOLA").

                  (ii) South  Jersey  Savings is a savings and loan  association
duly  organized and validly  existing under the laws of the State of New Jersey.
The  deposits of South  Jersey  Savings  are insured by the Savings  Association
Insurance  Fund of the Federal  Deposit  Insurance  Corporation  ("FDIC") to the
extent provided in the Federal Deposit Insurance Act, as amended ("FDIA"). South
Jersey Savings is a member of the Federal Home Loan Bank of New York ("FHLBNY").

                                        7

<PAGE> 11

                  (iii)  South  Jersey  and South  Jersey  Savings  each has all
requisite corporate power and authority to own, lease and operate its properties
and to conduct the business  currently  being  conducted by it. South Jersey and
South  Jersey  Savings  are  each  duly  qualified  or  licensed  as  a  foreign
corporation to transact  business and are in good standing in each  jurisdiction
in which the character of the properties  owned or leased by it or the nature of
the business  conducted by it makes such  qualification or licensing  necessary,
each of which  jurisdictions  is listed  in South  Jersey's  Disclosure  Letter,
except where the failure to be so  qualified  or licensed  and in good  standing
would not have a Material Adverse Effect on South Jersey.

            (b)   Subsidiaries.
                  ------------

                  (i) South  Jersey  does not,  directly or  indirectly,  own an
equity  interest  representing  5% or more of any class of the capital  stock or
other equity interests in any corporation,  partnership,  joint venture or other
entity other than South Jersey Savings.

                  (ii)  South  Jersey  owns of record and  beneficially  all the
capital  stock of South  Jersey  Savings  free and clear of any  claims,  liens,
encumbrances or restrictions and there are no agreements or understandings  with
respect to the voting or disposition of any such shares.  The outstanding shares
of capital stock of South Jersey  Savings have been validly  authorized  and are
validly issued, fully paid and nonassessable.

                  (iii)  South  Jersey  Savings  does not hold any shares of its
capital stock in its treasury,  and there are not, and on the Closing Date there
will not be, outstanding (A) any options,  warrants or other rights with respect
to the capital stock of South Jersey  Savings,  (B) any  securities  convertible
into or  exchangeable  for  shares of such  capital  stock or any other  debt or
equity security of South Jersey Savings or (C) any other commitments of any kind
for the issuance of  additional  shares of capital stock or other debt or equity
security  of South  Jersey  Savings or options,  warrants  or other  rights with
respect to such securities.

            (c)   Capital Structure.
                  -----------------

                  (i) The authorized  capital stock of South Jersey  consists of
14,000,000  shares  of South  Jersey  Common  Stock,  and  1,000,000  shares  of
preferred stock, par value $0.01 per share ("SOUTH JERSEY PREFERRED STOCK").

                  (ii)  As of the date of this Agreement:

                        (A)   3,423,571  shares of South Jersey Common Stock are
                              issued and  outstanding,  all of which are validly
                              issued, fully paid and nonassessable;

                                        8

<PAGE> 12

                        (B)   379,343  shares of South  Jersey  Common Stock are
                              reserved  for  issuance  pursuant  to  outstanding
                              South Jersey Options under the South Jersey Option
                              Plan;

                        (C)   369,859 shares of South Jersey Common Stock are
                              held by South Jersey in its treasury; and

                        (D)   no  shares  of South  Jersey  Preferred  Stock are
                              outstanding or reserved for issuance.

                  (iii)  Set  forth in South  Jersey's  Disclosure  Letter  is a
complete and accurate  list of all  outstanding  South Jersey  Options that have
been granted by South  Jersey,  including the names of the  optionees,  dates of
grant,  exercise  prices,  dates of  vesting,  dates of  termination  and shares
subject to each grant.  Following the Effective  Time, no holder of South Jersey
Options will have any right to receive shares of common stock of Richmond County
upon the exercise of South Jersey Options except as provided in SECTION 1.4.

                  (iv) No bonds, debentures,  notes or other indebtedness having
the right to vote on any matters on which  stockholders of South Jersey may vote
are issued or outstanding.

                  (v) Except as set forth in this SECTION 2.2(C), as of the date
of this Agreement,  (A) no shares of capital stock or other voting securities of
South Jersey are issued,  reserved for issuance or  outstanding  and (B) neither
South  Jersey  nor  South  Jersey  Savings  has or is bound  by any  outstanding
subscriptions,   options,   warrants,  calls,  rights,  convertible  securities,
commitments  or  agreements of any  character  obligating  South Jersey or South
Jersey  Savings to issue,  deliver or sell, or cause to be issued,  delivered or
sold, any additional shares of capital stock of South Jersey or obligating South
Jersey or South Jersey  Savings to grant,  extend or enter into any such option,
warrant, call, right,  convertible security,  commitment or agreement. As of the
date hereof, there are no outstanding contractual obligations of South Jersey or
South Jersey  Savings to repurchase,  redeem or otherwise  acquire any shares of
capital stock of South Jersey or South Jersey Savings.

            (d)   Authority.
                  ---------

                  (i)  South  Jersey  has  all  requisite  corporate  power  and
authority to enter into this Agreement, to perform its obligations hereunder and
to consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
by this Agreement have been duly authorized by all necessary  corporate  actions
on the part of the Board of Directors of South  Jersey,  and no other  corporate
proceedings  on the  part of  South  Jersey  are  necessary  to  authorize  this
Agreement or to consummate the transactions contemplated by this Agreement other
than the approval and adoption of this Agreement by the affirmative  vote of the
holders of a majority of the outstanding  shares of South Jersey Common Stock at
South Jersey's Stockholder Meeting (as

                                        9

<PAGE> 13

defined in SECTION 4.8).  This Agreement has been duly and validly  executed and
delivered  by South Jersey and  constitutes  a valid and binding  obligation  of
South Jersey,  enforceable in accordance  with its terms,  subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights and remedies
generally and subject,  as to  enforceability,  to general principles of equity,
whether applied in a court of law or a court of equity.

                  (ii) South Jersey  Savings has all requisite  corporate  power
and  authority  to enter  into the Plan of Bank  Merger  and to  consummate  the
transactions  contemplated  thereby.  The  execution and delivery of the Plan of
Bank Merger and the consummation of the transactions  contemplated  thereby have
been duly  authorized  by the Board of  Directors  of South  Jersey  Savings and
approved by South Jersey as the sole  stockholder of South Jersey  Savings.  The
Plan of Bank Merger,  upon execution and delivery by South Jersey Savings,  will
be duly and validly  executed and  delivered  by South  Jersey  Savings and will
constitute a valid and binding  obligation of South Jersey Savings,  enforceable
in accordance with its terms, subject to applicable  bankruptcy,  insolvency and
similar laws affecting  creditors' rights and remedies generally and subject, as
to enforceability,  to general principles of equity,  whether applied in a court
of law or a court of equity.

            (e)   Fairness Opinion.  South Jersey has received the written
                  ----------------
opinion of Sandler O'Neill & Partners,  L.P., to the effect that, as of the date
hereof, the Merger  Consideration to be received by South Jersey's  stockholders
is fair, from a financial point of view, to such stockholders.

            (f)   No Violations; Consents.
                  -----------------------

                  (i) The execution,  delivery and performance of this Agreement
by South Jersey do not, and the consummation of the transactions contemplated by
this Agreement will not, (A) assuming the consents and approvals  referred to in
SECTION  2.2(F)(II)  are  obtained,  violate any law,  rule or regulation or any
judgment, decree, order, governmental permit or license to which South Jersey or
South Jersey Savings (or any of their  respective  properties)  is subject,  (B)
violate  the  certificate  of  incorporation  or bylaws  of South  Jersey or the
similar  organizational  documents of South Jersey  Savings or (C)  constitute a
breach or violation of, or a default  under (or an event which,  with due notice
or lapse of time or both,  would  constitute a default under),  or result in the
termination  of,  accelerate  the  performance  required  by,  or  result in the
creation of any lien,  pledge,  security  interest,  charge or other encumbrance
upon any of the  properties  or assets of South Jersey or South  Jersey  Savings
under, any of the terms,  conditions or provisions of any note, bond, indenture,
deed of trust,  loan agreement or other  agreement,  instrument or obligation to
which South Jersey or South Jersey Savings is a party,  or to which any of their
respective properties or assets may be subject,  except, in the case of (C), for
any such breaches, violations or defaults that would not, individually or in the
aggregate, have a Material Adverse Effect on South Jersey.

                                       10

<PAGE> 14

                  (ii)  Except  for (A) the  filing of an  application  with the
Office of  Thrift  Supervision  (the  "OTS")  under  HOLA and  approval  of such
application,  (B) the filing of the Proxy  Statement (as defined in SECTION 4.9)
with the  Securities  and  Exchange  Commission  ("SEC"),  (C) the  filing  of a
certificate of merger with the Delaware Secretary of State pursuant to the DGCL,
(D) the filing of any necessary notice or approval of the New Jersey  Department
of Banking and Insurance  (the  "NJBD"),  and (E) the approval of the FDIC under
the FDIA,  no con sents or  approvals  of or filings or  registrations  with any
court,  administrative  agency or commission or other governmental  authority or
instrumentality  (each a  "GOVERNMENTAL  ENTITY")  or with any  third  party are
necessary in connection  with the execution and delivery by South Jersey of this
Agreement or the  consummation  by South Jersey and South Jersey  Savings of the
Merger,  the  Bank  Merger  and  the  other  transactions  contemplated  by this
Agreement,  including the Bank Merger. As of the date hereof, South Jersey knows
of no reason pertaining to South Jersey why any of the approvals  referred to in
this  SECTION  2.2(F)  should not be  obtained  without  the  imposition  of any
material condition or restriction described in SECTION 5.1(B).

            (g)   Reports and Financial Statements.
                  --------------------------------

                  (i) South  Jersey and South  Jersey  Savings  have each timely
filed  all  material  reports,  forms,  registration  statements  and  proxy  or
information  statements,  together with any amendments  required to be made with
respect  thereto,  that they were required to file since  December 31, 1997 with
(A) the  FDIC,  (B) the OTS,  (C) the  NJBD,  (D) the  National  Association  of
Securities  Dealers,  Inc.,  and  (E)  the SEC  (collectively,  "SOUTH  JERSEY'S
REPORTS") and have paid all fees and  assessments  due and payable in connection
therewith.  As of  their  respective  dates,  none  of  South  Jersey's  Reports
contained any untrue statement of a material fact or omitted to state a material
fact  required to be stated  therein or  necessary to make the  statements  made
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading.  All of South  Jersey's  Reports  filed with the SEC complied in all
material  respects with the applicable  requirements of the Securities  Exchange
Act of 1934, as amended  ("EXCHANGE  ACT"), and the rules and regulations of the
SEC promulgated thereunder.

                  (ii) Each of the financial statements of South Jersey included
in South  Jersey's  Reports  filed with the SEC complied as to form, as of their
respective  dates  of  filing  with  the  SEC,  in all  material  respects  with
applicable accounting  requirements and with the published rules and regulations
of the SEC with respect  thereto.  The  financial  statements  included in South
Jersey's  Reports were  prepared  from the books and records of South Jersey and
South Jersey  Savings,  fairly present the  consolidated  financial  position of
South  Jersey  and  South  Jersey  Savings  in each  case at and as of the dates
indicated and the consolidated results of operations, retained earnings and cash
flows of South Jersey and South Jersey Savings for the periods  indicated,  and,
except as otherwise set forth in the notes thereto,  were prepared in accordance
with generally accepted  accounting  principles  ("GAAP")  consistently  applied
throughout the periods covered thereby;  PROVIDED,  HOWEVER,  that the unaudited
financial  statements  for  interim  periods  are  subject  to  normal  year-end
adjustments  (which will not be material  individually  or in the aggregate) and
lack a statement of cash flows and footnotes.

                                       11

<PAGE> 15

            (h) Absence of Certain Changes or Events. Except as disclosed in
                ------------------------------------
South Jersey's  Reports filed with the SEC prior to the date of this  Agreement,
since  December  31, 1998,  (i) South  Jersey and South Jersey  Savings have not
incurred  any  liability,  except  in the  ordinary  course  of  their  business
consistent  with past practice,  (ii) South Jersey and South Jersey Savings have
conducted their  respective  businesses only in the ordinary and usual course of
such businesses  consistent with their past practices,  (iii) there has not been
any event or occurrence that has had a Material  Adverse Effect on South Jersey,
(iv) there has been no increase in the  salary,  compensation,  pension or other
benefits payable or to become payable by South Jersey or South Jersey Savings to
any of  their  respective  directors,  officers  or  employees,  other  than  in
conformity  with the  policies  and  practices  of such  entity in the usual and
ordinary course of its business and other than the award of stock options and/or
restricted  stock, (v) neither South Jersey nor South Jersey Savings has paid or
made any accrual or arrangement  for payment of bonuses or special  compensation
of any kind or any  severance  or  termination  pay to any of  their  directors,
officers  or  employees,  and (vi)  there has been no  change in any  accounting
principles,  practices or methods of South Jersey or South Jersey  Savings other
than as required by GAAP.

            (i)  Absence of Claims. No litigation, controversy, claim, action,
                 -----------------
suit or other legal,  administrative or arbitration proceeding before any court,
governmental  agency  or  arbitrator,  other  than in  connection  with  routine
foreclosure and collection  claims against  borrowers,  is pending against South
Jersey or South Jersey  Savings and, to the knowledge of South  Jersey,  no such
litigation,  controversy, claim, action, suit or proceeding has been threatened.
To the  knowledge  of South  Jersey,  there are no  investigations,  reviews  or
inquiries by any court or  governmental  agency  pending or  threatened  against
South  Jersey  or  South  Jersey  Savings.  There  are  no  judgments,  decrees,
injunctions,   orders  or  rules  of  any  Governmental   Entity  or  arbitrator
outstanding against South Jersey or South Jersey Savings.

            (j)  Absence of Regulatory Actions. Since December 31, 1996, neither
                 -----------------------------
South Jersey nor South  Jersey  Savings has been a party to any cease and desist
order,  written agreement or memorandum of understanding with, or any commitment
letter or similar undertaking to, or has been subject to any action, proceeding,
order or directive by, or has been a recipient of any extraordinary  supervisory
letter  from  any  federal  or state  governmental  authority  charged  with the
supervision or regulation of depository  institutions or depository  institution
holding  companies  or engaged in the  insurance of bank  deposits  ("GOVERNMENT
REGULATORS"),  or has  adopted  any  board  resolutions  at the  request  of any
Government Regulator, or has been advised by any Government Regulator that it is
contemplating  issuing or requesting (or is considering the  appropriateness  of
issuing or requesting) any such action,  proceeding,  order, directive,  written
agreement,  memorandum  of  understanding,   extraordinary  supervisory  letter,
commitment letter, board resolutions or similar undertaking.

            (k) Taxes. All federal, state, local and foreign tax returns
                -----
required  to be filed by or on behalf of South  Jersey or South  Jersey  Savings
have been timely filed or requests for extensions have been timely filed and any
such extension shall have been granted and not have expired,  and all such filed
returns are complete and accurate in all material respects. All taxes

                                       12

<PAGE> 16

shown on such  returns,  all taxes  required  to be shown on  returns  for which
extensions  have been  granted and all other taxes  required to be paid by South
Jersey or South Jersey Savings have been paid in full or adequate  provision has
been made for any such taxes on South Jersey's balance sheet (in accordance with
GAAP).  For purposes of this SECTION 2.2(K),  the term "TAXES" shall include all
income,  franchise,  gross receipts,  real and personal property,  real property
transfer and gains, wage and employment taxes. As of the date of this Agreement,
there is no audit  examination,  deficiency  assessment,  tax  investigation  or
refund  litigation  with  respect to any taxes of South  Jersey or South  Jersey
Savings,  and no claim has been made by any  authority in a  jurisdiction  where
South Jersey or South  Jersey  Savings do not file tax returns that South Jersey
or South Jersey Savings is subject to taxation in that jurisdiction.  All taxes,
interest,  additions  and  penalties  due with respect to completed  and settled
examinations  or concluded  litigation  relating to South Jersey or South Jersey
Savings have been paid in full or adequate  provision has been made for any such
taxes on South Jersey's  balance sheet (in accordance with GAAP).  Neither South
Jersey nor South  Jersey  Savings  has  executed an  extension  or waiver of any
statute of  limitations  on the assessment or collection of any material tax due
that is currently in effect. South Jersey and South Jersey Savings have withheld
and paid all taxes  required to have been withheld and paid in  connection  with
amounts  paid  or  owing  to any  employee,  independent  contractor,  creditor,
stockholder or other third party, and South Jersey and South Jersey Savings have
timely complied with all applicable  information  reporting  requirements  under
Part III,  Subchapter A of Chapter 61 of the Internal  Revenue Code of 1986,  as
amended ("IRC"),  and similar  applicable state and local information  reporting
requirements.  Neither  South  Jersey nor South  Jersey  Savings (i) has made an
election  under  Section  341(f) of the IRC,  or (ii) has issued or assumed  any
obligation  under Section 279 of the IRC, any high yield discount  obligation as
described in Section 163(i) of the IRC or any  registration-required  obligation
within the  meaning of Section  163(f)(2)  of the IRC that is not in  registered
form.

            (l)   Agreements.
                  ----------

                  (i) Except for this Agreement and the Option Agreement,  South
Jersey and South  Jersey  Savings  are not bound by any  material  contract  (as
defined in Item  601(b)(10) of  Regulation  S-K  promulgated  by the SEC), to be
performed  after the date hereof that has not been filed with or incorporated by
reference in South Jersey's Reports.

                  (ii) South  Jersey's  Disclosure  Letter  lists any  contract,
arrangement,  commitment  or  understanding  (whether  written or oral) to which
South Jersey or South Jersey Savings is a party or is bound:

                        (A)   with any executive officer or other key employee
of South Jersey or South Jersey Savings the benefits of which are contingent, or
the terms of which are materially altered,  upon the occurrence of a transaction
involving  South Jersey or South Jersey  Savings of the nature  contemplated  by
this Agreement;

                                       13

<PAGE> 17

                        (B) with respect to the employment of any directors,
officers employees or consultants;

                        (C) (including any stock option plan, phantom stock or
stock  appreciation  rights plan,  restricted stock plan or stock purchase plan)
any of the benefits of which will be increased, or the vesting or payment of the
benefits  of  which  will  be  accelerated,  by  the  occurrence  of  any of the
transactions  contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement;

                        (D) containing covenants that limit the ability of South
Jersey or South  Jersey  Savings to compete in any line of  business or with any
person,  or that involve any  restriction  on the geographic  area in which,  or
method by which,  South Jersey (including any successor thereof) or South Jersey
Savings may carry on its  business  (other than as may be required by law or any
regulatory agency);

                        (E) pursuant to which South Jersey or South Jersey
Savings may become obligated to invest in or contribute capital to any entity;

                        (F) not fully disclosed in the South Jersey's Reports
that relates to borrowings of money (or  guarantees  thereof) by South Jersey or
South Jersey Savings, other than in the ordinary course of business; or

                        (G) which is a lease or license with respect to any
property, real or personal,  whether as landlord,  tenant, licensor or licensee,
involving a liability or obligation as obligor in excess of $25,000 on an annual
basis.

      To the  knowledge  of  South  Jersey,  each of the  agreements  and  other
documents referenced in South Jersey's Disclosure Letter is a valid, binding and
enforceable  obligation of the parties  sought to be bound  thereby,  subject to
applicable  bankruptcy,  insolvency and similar laws affecting creditors' rights
and remedies generally and subject, as to enforceability,  to general principles
of equity,  whether applied in a court of law or a court of equity. South Jersey
has  previously  made available to Richmond  County true and complete  copies of
each  agreement  and other  documents  referenced in South  Jersey's  Disclosure
Letter.

                  (iii)  Neither  South  Jersey nor South  Jersey  Savings is in
default under (and no event has occurred which, with due notice or lapse of time
or both,  would  constitute a default under) or is in violation of any provision
of any note, bond, indenture,  mortgage, deed of trust, loan agreement, lease or
other  agreement  to which it is a party or by which it is bound or to which any
of its respective properties or assets is subject and, to the knowledge of South
Jersey, no other party to any such agreement (excluding any loan or extension of
credit  made by South  Jersey or South  Jersey  Savings)  is in  default  in any
respect thereunder.

                                       14

<PAGE> 18

                  (iv) Each of South  Jersey and South  Jersey  Savings  owns or
possesses valid and binding licenses and other rights to use without payment all
patents,  copyrights,  trade secrets,  trade names, service marks and trademarks
used in its  businesses,  and neither South Jersey nor South Jersey  Savings has
received any notice of conflict  with respect  thereto that asserts the right of
others.  Each of South Jersey and South  Jersey  Savings has  performed  all the
obligations  required  to be  performed  by it and are not in default  under any
contract, agreement, arrangement or commitment relating to any of the foregoing.

            (m)  Labor Matters. South Jersey and South Jersey Savings are in
                 -------------
material compliance with all applicable laws respecting employment, retention of
independent  contractors  and  employment  practices,  terms and  conditions  of
employment  and  wages  and  hours,  and are not  engaged  in any  unfair  labor
practice.  Neither  South Jersey nor South Jersey  Savings is or has ever been a
party to, or is or has ever been bound by, any collective  bargaining agreement,
contract  or  other  agreement  or  understanding  with a labor  union  or labor
organization with respect to its employees,  nor is South Jersey or South Jersey
Savings the subject of any proceeding  asserting that it has committed an unfair
labor practice or seeking to compel it to bargain with any labor organization as
to wages and conditions of employment nor, to the knowledge of South Jersey, has
any such  proceeding  been  threatened,  nor is there any  strike,  other  labor
dispute or organizational  effort involving South Jersey or South Jersey Savings
pending or threatened.

            (n)   Employee Benefit Plans.
                  ----------------------

                  (i) South Jersey's  Disclosure  Letter contains a complete and
accurate list of all pension,  retirement,  stock option, stock purchase,  stock
ownership,   savings,   stock  appreciation  right,  profit  sharing,   deferred
compensation,  consulting,  bonus, group insurance,  severance and other benefit
plans, contracts,  agreements and arrangements,  including,  but not limited to,
"employee benefit plans," as defined in Section 3(3) of the Employee  Retirement
Income  Security  Act of 1974,  as  amended  ("ERISA"),  incentive  and  welfare
policies,  contracts,  plans and arrangements  and all trust agreements  related
thereto  with  respect to any  present or former  directors,  officers  or other
employees  of South  Jersey or South  Jersey  Savings  (hereinafter  referred to
collectively  as  the  "SOUTH  JERSEY  EMPLOYEE  PLANS").   There  has  been  no
announcement  or commitment by South Jersey or South Jersey Savings to create an
additional  South Jersey  Employee  Plan, or to amend any South Jersey  Employee
Plan,  except for amendments  required by applicable law which do not materially
increase the cost of such South Jersey Employee Plan. With respect to each South
Jersey  Employee Plan,  South Jersey has  previously  made available to Richmond
County a true and correct copy of (A) the annual report on the  applicable  form
of the Form 5500 series filed with the Internal  Revenue Service ("IRS") for the
most recent  three plan years,  if required to be filed,  (B) such South  Jersey
Employee Plan, including amendments thereto, (C) each trust agreement, insurance
contract or other  funding  arrangement  relating to such South Jersey  Employee
Plan, including amendments thereto, (D) the most recent summary plan description
and summary of material  modifications  thereto for such South  Jersey  Employee
Plan, to the extent available, if the South Jersey Employee Plan is subject

                                       15

<PAGE> 19

to Title I of ERISA,  (E) the most recent  actuarial report or valuation if such
South Jersey Employee Plan is a South Jersey Pension Plan (as defined below) and
any subsequent  changes to the actuarial  assumptions  contained therein and (F)
the most  recent  determination  letter  issued by the IRS if such South  Jersey
Employee Plan is a South Jersey Qualified Plan (as defined below).

                  (ii)   There  is  no   pending   or   threatened   litigation,
administrative  action or proceeding relating to any South Jersey Employee Plan.
All of the South Jersey Employee Plans comply in all material  respects with all
applicable  requirements of ERISA,  the IRC and other applicable laws. There has
occurred  no  "prohibited  transaction"  (as  defined in Section 406 of ERISA or
Section 4975 of the IRC) with respect to the South Jersey  Employee  Plans which
is likely to result in the  imposition  of any  penalties  or taxes  upon  South
Jersey or South Jersey  Savings under Section 502(i) of ERISA or Section 4975 of
the IRC.

                  (iii) No liability to the Pension Benefit Guaranty Corporation
has been or is expected by South Jersey or South  Jersey  Savings to be incurred
with respect to any South Jersey  Employee  Plan which is subject to Title IV of
ERISA ("SOUTH JERSEY  PENSION  PLAN"),  or with respect to any  "single-employer
plan" (as defined in Section 4001(a) of ERISA) currently or formerly  maintained
by South Jersey or any entity which is considered one employer with South Jersey
under  Section  4001(b)(1)  of  ERISA  or  Section  414 of the  IRC  (an  "ERISA
AFFILIATE").   No  South  Jersey  Pension  Plan  had  an  "accumulated   funding
deficiency" (as defined in Section 302 of ERISA),  whether or not waived,  as of
the last day of the end of the most recent  plan year  ending  prior to the date
hereof;  the fair market value of the assets of each South  Jersey  Pension Plan
exceeds the present  value of the "benefit  liabilities"  (as defined in Section
4001(a)(16)  of ERISA) under such South Jersey Pension Plan as of the end of the
most recent plan year with respect to the  respective  South Jersey Pension Plan
ending  prior to the  date  hereof,  calculated  on the  basis of the  actuarial
assumptions  used in the most recent  actuarial  valuation for such South Jersey
Pension Plan as of the date hereof;  and no notice of a  "reportable  event" (as
defined in Section 4043 of ERISA) for which the 30-day reporting requirement has
not been waived has been required to be filed for any South Jersey  Pension Plan
within the 12-month  period ending on the date hereof.  Neither South Jersey nor
South Jersey  Savings has provided,  or is required to provide,  security to any
South Jersey Pension Plan or to any  single-employer  plan of an ERISA Affiliate
pursuant to Section  401(a)(29) of the IRC.  Neither South Jersey,  South Jersey
Savings, nor any ERISA Affiliate has contributed to any "multiemployer plan," as
defined in Section 3(37) of ERISA, on or after September 26, 1980.

                  (iv) Each  South  Jersey  Employee  Plan that is an  "employee
pension  benefit  plan" (as  defined  in  Section  3(2) of  ERISA)  and which is
intended  to be  qualified  under  Section  401(a) of the IRC (a  "SOUTH  JERSEY
QUALIFIED PLAN") has received a favorable determination letter from the IRS, and
South Jersey and South Jersey Savings are not aware of any circumstances  likely
to result in revocation of any such favorable  determination  letter. Each South
Jersey  Qualified Plan that is an "employee stock ownership plan" (as defined in
Section 4975(e)(7) of the IRC) has satisfied all of the applicable  requirements
of Sections 409 and 4975(e)(7) of the IRC and the regulations  thereunder in all
respects and any assets of any such

                                       16

<PAGE> 20

South Jersey Qualified Plan that are not allocated to  participants'  individual
accounts  are  pledged as  security  for,  and may be applied  to  satisfy,  any
securities acquisition indebtedness.

                  (v)  Neither  South  Jersey nor South  Jersey  Savings has any
obligations  for  post-retirement  or  post-employment  benefits under any South
Jersey  Employee Plan that cannot be amended or terminated  upon 60 days' notice
or less without incurring any liability thereunder, except for coverage required
by Part 6 of Title I of ERISA or  Section  4980B of the IRC,  or  similar  state
laws,  the cost of which is borne by the insured  individuals.  With  respect to
South Jersey or South Jersey Savings, for the South Jersey Employee Plans listed
in  South  Jersey's  Disclosure  Letter,  the  execution  and  delivery  of this
Agreement and the consummation of the transactions  contemplated hereby will not
result in any  payment or series of  payments  by South  Jersey or South  Jersey
Savings to any person  which is an "excess  parachute  payment"  (as  defined in
Section  280G of the  IRC),  increase  or  secure  (by way of a trust  or  other
vehicle) any benefits payable under any South Jersey Employee Plan or accelerate
the time of payment or vesting of any such benefit.

            (o)  Title to Assets. South Jersey's Disclosure Letter contains a
                 ---------------
complete and accurate list of all real property  owned or leased by South Jersey
or South  Jersey  Savings,  including  all  properties  of South Jersey or South
Jersey Savings classified as "Real Estate Owned" or words of similar import (the
"REAL  PROPERTY").  Each of South Jersey and South  Jersey  Savings has good and
marketable  title to its  properties  and  assets  (including  any  intellectual
property asset such as any trademark, service mark, trade name or copyright) and
property  acquired in a judicial  foreclosure  proceeding or by way of a deed in
lieu of foreclosure or similar  transfer  whether real or personal,  tangible or
intangible,  in each  case  free and  clear of any  liens,  security  interests,
encumbrances,  mortgages, pledges, restrictions,  charges or rights or interests
of others,  except  pledges to secure  deposits and other liens  incurred in the
ordinary course of business.  Each lease pursuant to which South Jersey or South
Jersey  Savings  is lessee or lessor is valid and in full  force and  effect and
neither  South Jersey nor South Jersey  Savings,  nor, to the knowledge of South
Jersey,  any other party to any such lease is in default or in  violation of any
provisions of any such lease. All material  tangible  properties of South Jersey
and South Jersey Savings are in a good state of maintenance and repair,  conform
with all applicable  ordinances,  regulations and zoning laws and are considered
by South  Jersey to be  adequate  for the current  business of South  Jersey and
South Jersey Savings.  To the knowledge of South Jersey,  none of the buildings,
structures or other improvements located on the Real Property encroaches upon or
over any adjoining parcel or real estate or any easement or right-of-way.

            (p)  Compliance with Laws. Each of South Jersey and South Jersey
                 --------------------
Savings  has all  permits,  licenses,  certificates  of  authority,  orders  and
approvals of, and has made all filings, applications and registrations with, all
Governmental  Entities  that are  required in order to permit it to carry on its
business as it is presently conducted; all such permits, licenses,  certificates
of  authority,  orders  and  approvals  are in full  force  and  effect,  and no
suspension or cancellation  of any of them is threatened.  Since the date of its
incorporation, the corporate affairs

                                       17

<PAGE> 21

of South Jersey have not been  conducted  in  violation  of any law,  ordinance,
regulation,  order,  writ, rule, decree or approval of any Governmental  Entity.
Neither  South  Jersey nor South Jersey  Savings is in violation  of, is, to the
knowledge of South Jersey, under investigation with respect to any violation of,
or has been  given  notice  or been  charged  with any  violation  of,  any law,
ordinance, regulation, order, writ, rule, decree or condition to approval of any
Governmental Entity which, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect on South Jersey.

            (q) Fees. Other than financial advisory services performed for South
                ----
Jersey by Sandler  O'Neill &  Partners,  L.P.  pursuant  to an  agreement  dated
February  28,  2000,  a true  and  complete  copy of which  has been  previously
delivered to Richmond County, neither South Jersey nor South Jersey Savings, nor
any of their respective officers,  directors,  employees or agents, has employed
any broker or finder or incurred any liability for any financial  advisory fees,
brokerage fees,  commissions or finder's fees, and no broker or finder has acted
directly or  indirectly  for South Jersey or South Jersey  Savings in connection
with this Agreement or the transactions contemplated hereby.

            (r)   Environmental Matters.
                  ---------------------

                  (i)   With respect to South Jersey and South Jersey Savings:

                        (A)   Each of South Jersey and South Jersey Savings, the
Participation  Facilities  (as defined  below),  and, to the  knowledge of South
Jersey,  the  Loan  Properties  (as  defined  below)  are,  and  have  been,  in
substantial  compliance with, and are not liable under, all  Environmental  Laws
(as defined below);

                        (B) There is no suit, claim, action, demand, executive
or administrative order,  directive,  investigation or proceeding pending or, to
the knowledge of South Jersey, threatened, before any court, governmental agency
or board or other forum  against  South  Jersey or South  Jersey  Savings or any
Participation   Facility  (1)  for  alleged  noncompliance   (including  by  any
predecessor)  with, or liability under, any Environmental Law or (2) relating to
the presence of or release into the  environment  of any Hazardous  Material (as
defined  below),  whether  or not  occurring  at or on a site  owned,  leased or
operated by South Jersey or South Jersey Savings or any Participation Facility;

                        (C) To the knowledge of South Jersey, there is no suit,
claim,   action,   demand,   executive  or  administrative   order,   directive,
investigation or proceeding pending or threatened before any court, governmental
agency or board or other  forum  relating to or against  any Loan  Property  (or
South  Jersey or South  Jersey  Savings in respect  of such Loan  Property)  (1)
relating  to alleged  noncompliance  (including  by any  predecessor)  with,  or
liability  under,  any  Environmental  Law or (2) relating to the presence of or
release into the environment of any Hazardous Material, whether or not occurring
at a Loan Property;

                                       18

<PAGE> 22

                        (D) To the knowledge of South Jersey, the properties
currently owned or operated by South Jersey or South Jersey Savings  (including,
without  limitation,  soil,  groundwater  or  surface  water  on  or  under  the
properties,  and  buildings  thereon)  are  not  contaminated  with  and  do not
otherwise  contain  any  Hazardous   Material  other  than  as  permitted  under
applicable Environmental Law;

                        (E) Neither South Jersey nor South Jersey Savings has
received any notice, demand letter, executive or administrative order, directive
or request  for  information  from any  Governmental  Entity or any third  party
indicating  that it may be in violation of, or liable under,  any  Environmental
Law;

                        (F) To the knowledge of South Jersey, there are no
underground  storage tanks on, in or under any  properties  owned or operated by
South  Jersey or South  Jersey  Savings  or any  Participation  Facility  and no
underground  storage tanks have been closed or removed from any properties owned
or  operated  by South  Jersey  or South  Jersey  Savings  or any  Participation
Facility; and

                        (G) To the knowledge of South Jersey, during the period
of (1) South Jersey's or South Jersey Savings'  ownership or operation of any of
their  respective  current  properties  or (2) South  Jersey's  or South  Jersey
Savings'  participation in the management of any Participation  Facility,  there
has been no contamination by or release of Hazardous  Materials in, on, under or
affecting such properties. To the knowledge of South Jersey, prior to the period
of (1) South Jersey's or South Jersey Savings'  ownership or operation of any of
their  respective  current  properties  or (2) South  Jersey's  or South  Jersey
Savings'  participation in the management of any Participation  Facility,  there
was no  contamination  by or  release of  Hazardous  Material  in, on,  under or
affecting such properties.

                  (ii) The following definitions apply for purposes of this
SECTION 2.2(R):

                  "LOAN  PROPERTY"  means any  property in which the  applicable
party (or a subsidiary of it) holds a security  interest and,  where required by
the  context,  includes  the owner or operator of such  property,  but only with
respect to such property.

                  "PARTICIPATION  FACILITY"  means  any  facility  in which  the
applicable  party  (or a  subsidiary  of  it)  participates  in  the  management
(including all property held as trustee or in any other fiduciary capacity) and,
where required by the context,  includes the owner or operator of such property,
but only with respect to such property.

                  "ENVIRONMENTAL LAW" means (i) any federal, state or local law,
statute,  ordinance,  rule, regulation,  code, license,  permit,  authorization,
approval, consent, legal doctrine, order, directive, executive or administrative
order,  judgment,  decree,  injunction,  legal requirement or agreement with any
Governmental Entity relating to (A) the protection,  preservation or restoration
of the environment (which includes, without limitation, air, water

                                       19

<PAGE> 23

vapor,  surface water,  groundwater,  drinking water supply,  structures,  soil,
surface  land,  subsurface  land,  plant and  animal  life or any other  natural
resource), or to human health or safety as it relates to Hazardous Materials, or
(B) the  exposure to, or the use,  storage,  recycling,  treatment,  generation,
transportation,  processing, handling, labeling, production, release or disposal
of, Hazardous Materials,  in each case as amended and as now in effect. The term
Environmental Law includes all federal, state and local laws, rules, regulations
or  requirements  relating to the  protection of the  environment  or health and
safety,   including,   without   limitation,   (i)  the  Federal   Comprehensive
Environmental  Response,  Compensation  and Liability Act of 1980, the Superfund
Amendments and  Reauthorization Act of 1986, the Federal Water Pollution Control
Act of 1972, the Federal Clean Air Act, the Federal Clean Water Act, the Federal
Resource  Conservation and Recovery Act of 1976 (including,  but not limited to,
the  Hazardous  and Solid Waste  Amendments  thereto and  Subtitle I relating to
underground  storage  tanks),  the Federal Solid Waste  Disposal and the Federal
Toxic Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide
Act,  the  Federal  Occupational  Safety and Health Act of 1970 as it relates to
Hazardous Materials,  the Federal Hazardous  Substances  Transportation Act, the
Emergency Planning and Community Right-To-Know Act, the Safe Drinking Water Act,
the Endangered  Species Act, the National  Environmental  Policy Act, the Rivers
and Harbors  Appropriation Act or any so-called  "Superfund" or "Superlien" law,
each as  amended  and as now in effect,  and (ii) any  common  law or  equitable
doctrine  (including,  without limitation,  injunctive relief and tort doctrines
such as negligence,  nuisance,  trespass and strict  liability)  that may impose
liability  or  obligations  for injuries or damages due to, or  threatened  as a
result of, the presence of or exposure to any Hazardous Material.

                  "HAZARDOUS  MATERIAL"  means  any  substance  (whether  solid,
liquid or gas) which is or could be  detrimental to human health or safety or to
the  environment,   currently  or  hereafter  listed,  defined,   designated  or
classified  as  hazardous,   toxic,   radioactive  or  dangerous,  or  otherwise
regulated,  under  any  Environmental  Law,  whether  by  type  or by  quantity,
including any substance containing any such substance as a component.  Hazardous
Material includes, without limitation, any toxic waste, pollutant,  contaminant,
hazardous substance, toxic substance, hazardous waste, special waste, industrial
substance,  oil or petroleum,  or any derivative or by-product  thereof,  radon,
radioactive material, asbestos,  asbestos-containing material, urea formaldehyde
foam insulation, lead and polychlorinated biphenyl.

            (s)   Loan Portfolio; Allowance; Asset Quality.
                  ----------------------------------------

                  (i)  With  respect  to  each  loan,  lease,  advance,   credit
enhancement,    guarantee,   other   extension   of   credit,   commitment   and
interest-bearing  asset of South Jersey and South Jersey Savings  (collectively,
"LOANS") owned by South Jersey or South Jersey Savings in whole or in part:

                        (A) to the knowledge of South Jersey, the note and the
related security documents are each legal, valid and binding  obligations of the
maker  or  obligor  thereof,  enforceable  against  such  maker  or  obligor  in
accordance with their terms;

                                       20

<PAGE> 24

                        (B) neither South Jersey nor South Jersey Savings, nor,
to the knowledge of South Jersey,  any prior holder of a Loan,  has modified the
note  or any of the  related  security  documents  in any  material  respect  or
satisfied,  canceled or  subordinated  the note or any of the  related  security
documents  except as otherwise  disclosed by  documents in the  applicable  loan
file;

                        (C) South Jersey or South Jersey Savings is the sole
holder of legal and  beneficial  title to each Loan (or South  Jersey's or South
Jersey Savings' applicable  participation  interest,  as applicable),  except as
otherwise  referenced  on the books and records of South  Jersey or South Jersey
Savings;

                        (D) the note and the related security documents, copies
of which are  included  in the Loan files,  are true and  correct  copies of the
documents  they purport to be and have not been  suspended,  amended,  modified,
canceled or otherwise changed except as otherwise  disclosed by documents in the
applicable Loan file;

                        (E) to the knowledge of South Jersey, there is no
litigation  or proceeding  pending or  threatened  relating to the property that
serves as security for a Loan that would have a Material Adverse Effect upon the
related Loan; and

                        (F) with respect to a Loan held in the form of a
participation,  the  participation  documentation is legal,  valid,  binding and
enforceable in accordance with its terms.

                  (ii) The allowance for possible loan losses reflected in South
Jersey's  audited  balance sheet at December 31, 1998 was, and the allowance for
possible  losses  shown on the  balance  sheets in South  Jersey's  Reports  for
periods  ending after  December 31, 1998, in the opinion of  management,  was or
will be adequate, as of the dates thereof, under GAAP.

                  (iii) South Jersey's  Disclosure  Letter sets forth a true and
complete listing, as of December 31, 1999, of:

                        (A) all Loans that have been classified (whether
regulatory or internal) as "Special Mention," "Substandard,"  "Doubtful," "Loss"
or words of similar import listed by category, including the amounts thereof;

                        (B) Loans (1) that are contractually past due 90 days or
more in the payment of principal and/or interest,  (2) that are on a non-accrual
status,  (3) where the interest rate terms have been reduced and/or the maturity
dates have been extended  subsequent  to the agreement  under which the Loan was
originally  created due to concerns  regarding the borrower's  ability to pay in
accordance with such initial terms, or (4) where a specific  reserve  allocation
exists in  connection  therewith,  listed by  category,  including  the  amounts
thereof; and

                                       21

<PAGE> 25

                        (C) Loans with any director, executive officer or five
percent or greater  stockholder  of South Jersey or South Jersey  Savings or any
person,  corporation  or enterprise  controlling,  controlled by or under common
control with any of the foregoing, including the amounts thereof.

                  (iv) To the  knowledge of South  Jersey,  neither South Jersey
nor South Jersey Savings is a party to any Loan that is in violation of any law,
regulation  or rule of any  Governmental  Entity.  Any asset of South  Jersey or
South Jersey  Savings  that is  classified  as "Real  Estate  Owned" or words of
similar import that is included in any non-performing  assets of South Jersey or
South  Jersey  Savings  is listed in South  Jersey's  Disclosure  Letter  and is
carried  net of  reserves  at the lower of cost or fair  value,  less  estimated
selling costs, based on current independent appraisals or evaluations or current
management  appraisals or evaluations;  PROVIDED,  HOWEVER, that "current" shall
mean within the past 12 months.

            (t)   Deposits.   None of the deposits of South Jersey or South
                  --------
Jersey Savings is a "brokered" deposit.

            (u)  Anti-takeover Provisions Inapplicable. South Jersey and South
                 -------------------------------------
Jersey  Savings  have taken all  actions  required  to exempt  Richmond  County,
Acquisition Sub, the Agreement,  the Merger,  the Plan of Bank Merger,  the Bank
Merger and the Option  Agreement from any provisions of an  antitakeover  nature
contained in their organizational  documents,  and the provisions of any federal
or  state   "anti-takeover,"   "fair  price,"   "moratorium,"   "control   share
acquisition" or similar laws or regulations.

            (v) Material Interests of Certain Persons. No officer or director of
                -------------------------------------
South Jersey,  or any  "associate"  (as such term is defined in Rule 12b-2 under
the Exchange Act) of any such officer or director,  has any material interest in
any material  contract or property  (real or personal),  tangible or intangible,
used in or pertaining to the business of South Jersey or South Jersey Savings.

            (w) Insurance. In the opinion of management, South Jersey and South
                ---------
Jersey Savings are presently insured for amounts deemed reasonable by management
against  such  risks as  companies  engaged  in a  similar  business  would,  in
accordance  with good  business  practice,  customarily  be insured.  All of the
insurance policies and bonds maintained by South Jersey and South Jersey Savings
are in full force and effect,  South Jersey and South Jersey  Savings are not in
default thereunder and all material claims thereunder have been filed in due and
timely fashion.

            (x)   Investment Securities; Derivatives.
                  ----------------------------------

                  (i)  South Jersey's Disclosure Letter sets forth the book and
market value as of December 31, 1999 of the investment securities, mortgage
backed securities and securities held for sale of South Jersey and South Jersey
Savings. South Jersey's Disclosure

                                       22

<PAGE> 26

Letter sets forth, with respect to such securities,  descriptions thereof, CUSIP
numbers, pool face values and coupon rates.

                  (ii)  Except  for  Federal  Home Loan Bank  stock,  pledges to
secure  Federal  Home Loan  Bank  borrowings  and  restrictions  that  exist for
securities  to be  classified  as "held  to  maturity,"  none of the  investment
securities  held by South  Jersey or South  Jersey  Savings  is  subject  to any
restriction  (contractual or statutory) that would materially impair the ability
of the entity holding such  investment  freely to dispose of such  investment at
any time.

                  (iii) Neither South Jersey nor South Jersey Savings is a party
to or has agreed to enter into an  exchange-traded or  over-the-counter  equity,
interest rate, foreign exchange or other swap,  forward,  future,  option,  cap,
floor or collar or any other contract that is a derivative  contract  (including
various  combinations  thereof)  or owns  securities  that (A) are  referred  to
generically as  "structured  notes," "high risk mortgage  derivatives,"  "capped
floating rate notes" or "capped  floating rate mortgage  derivatives" or (B) are
likely to have changes in value as a result of interest or exchange rate changes
that  significantly  exceed normal changes in value  attributable to interest or
exchange rate changes.

            (y) Indemnification. Except as provided in the certificate of
                ---------------
incorporation or bylaws of South Jersey and the similar  governing  documents of
South Jersey  Savings,  neither South Jersey nor South Jersey Savings is a party
to any agreement that provides for the  indemnification of any of its present or
former directors, officers, or employees or other persons who serve or served as
a director,  officer or employee of another  corporation,  partnership  or other
enterprise at the request of South Jersey and, to the knowledge of South Jersey,
there  are  no  claims  for  which  any  such   person   would  be  entitled  to
indemnification under the certificate of incorporation or bylaws of South Jersey
or the similar governing documents of South Jersey Savings, under any applicable
law or regulation or under any indemnification agreement.

            (z)  Books and Records. The books and records of South Jersey and
                 -----------------
South  Jersey  Savings  on a  consolidated  basis  have  been,  and  are  being,
maintained in accordance with applicable  legal and accounting  requirements and
reflect in all material  respects the substance of events and transactions  that
should be included therein.

            (aa)  Corporate Documents. South Jersey has previously furnished or
                  -------------------
made available to Richmond County a complete and correct copy of the certificate
of  incorporation,  bylaws and similar  governing  documents of South Jersey and
South Jersey  Savings,  as in effect as of the date of this  Agreement.  Neither
South Jersey nor South Jersey  Savings is in  violation  of its  certificate  of
incorporation,  bylaws or similar governing documents. The minute books of South
Jersey and South Jersey Savings  constitute a complete and correct record of all
actions  taken by their  respective  boards of  directors  (and  each  committee
thereof) and their stockholders.

            (bb)  Proxy Statement. The information regarding South Jersey and
                  ---------------
South Jersey Savings to be included in the Proxy Statement filed by South Jersey
with the SEC under

                                       23

<PAGE> 27

the  Exchange Act will not contain any untrue  statement  of a material  fact or
omit to state any material  fact  required to be stated  therein or necessary in
order to make the statements  therein, in light of the circumstances under which
they are made, not misleading.

            (cc)  Community Reinvestment Act Compliance.  South Jersey Savings
                  -------------------------------------
is in  material  compliance  with the  applicable  provisions  of the  Community
Reinvestment Act ("CRA") and the regulations promulgated  thereunder,  and South
Jersey  Savings  currently has a CRA rating of  satisfactory  or better.  To the
knowledge of South Jersey,  there is no fact or  circumstance or set of facts or
circumstances  that would cause South Jersey Savings to fail to comply with such
provisions  or cause  the CRA  rating  of South  Jersey  Savings  to fall  below
satisfactory.

            (dd)  Undisclosed Liabilities. As of the date hereof, neither South
                  -----------------------
Jersey nor South Jersey  Savings has incurred any debt,  liability or obligation
of any nature whatsoever (whether accrued, contingent, absolute or otherwise and
whether  due or to  become  due)  except  for (i)  liabilities  reflected  on or
reserved against in the consolidated  financial statements of South Jersey as of
December 31, 1998,  (ii)  liabilities  incurred  since  December 31, 1998 in the
ordinary course of business  consistent with past practice that, either alone or
when  combined  with  all  similar  liabilities,  have not had,  and  would  not
reasonably  be expected to have, a Material  Adverse  Effect on South Jersey and
(iii) liabilities  incurred for legal,  accounting,  financial advising fees and
out-of-pocket  expenses in  connection  with a proposed  sale or merger of South
Jersey.

            (ee)  Year 2000 Matters. South Jersey and South Jersey Savings have
                  -----------------
not experienced any data  processing or other computer  malfunctions  related to
processing  date  information on and after January 1, 2000 and none of the third
party  service  providers or  customers of South Jersey or South Jersey  Savings
have  reported  year  2000  data  processing  problems  to  South  Jersey  that,
individually or in the aggregate,  would have a Material Adverse Effect on South
Jersey.

            (ff)  Liquidation Account. Neither the Merger nor the Bank Merger
                  -------------------
will  result in any  payment  or  distribution  payable  out of the  liquidation
account of South Jersey  Savings  established  in  connection  with South Jersey
Savings' conversion from mutual to stock form.

            Section 2.3. Representations and Warranties of Richmond County.
                         -------------------------------------------------
Richmond County represents and warrants to South Jersey that:

            (a)   Organization.
                  ------------

                  (i) Richmond County is a corporation  duly organized,  validly
existing  and in good  standing  under the laws of the State of Delaware  and is
registered as a savings and loan holding company under HOLA.

                                       24

<PAGE> 28

                  (ii) Richmond  County Savings is a savings bank duly organized
and validly  existing  under the laws of the State of New York.  The deposits of
Richmond  County  Savings are insured by the Bank Insurance Fund of the FDIC and
the  Savings  Association  Fund of the FDIC to the extent  provided in the FDIA.
Richmond County Savings is a member of the FHLBNY.

                  (iii) Each of Richmond  County and Richmond County Savings has
all  requisite  corporate  power and  authority  to own,  lease and  operate its
properties and to conduct the business  currently being conducted by it. Each of
Richmond  County and Richmond  County Savings is duly qualified or licensed as a
foreign  corporation  to  transact  business  and is in  good  standing  in each
jurisdiction  in which the character of the properties  owned or leased by it or
the nature of the business conducted by it makes such qualification or licensing
necessary,  except  where the failure to be so qualified or licensed and in good
standing would not have a Material Adverse Effect on Richmond County.

                  (iv) Acquisition Sub is a corporation, duly organized, validly
existing and in good standing under the laws of Delaware, all of the outstanding
capital  stock  of which  is,  or prior to the  Effective  Time  will be,  owned
directly or indirectly by Richmond County free and clear of any lien,  charge or
other encumbrance. From and after its incorporation, Acquisition Sub has not and
will  not  engage  in  any  activities  other  than  in  connection  with  or as
contemplated by this Agreement.

            (b)   Authority.
                  ---------

                  (i)  Each  of  Richmond  County  and  Acquisition  Sub has all
requisite corporate power and authority to enter into this Agreement, to perform
its  obligations  hereunder and to consummate the  transactions  contemplated by
this   Agreement.   The  execution  and  delivery  of  this  Agreement  and  the
consummation of the  transactions  contemplated by this Agreement have been duly
authorized  by all  necessary  corporate  actions of the Boards of  Directors of
Richmond County and  Acquisition  Sub and no other corporate  proceedings on the
part of Richmond  County or  Acquisition  Sub are  necessary to  authorize  this
Agreement or to  consummate  the  transactions  contemplated  by this  Agreement
except for the approval of this  Agreement and the Merger by Richmond  County as
the sole  stockholder  of  Acquisition  Sub.  This  Agreement  has been duly and
validly  executed and delivered by each of Richmond  County and  Acquisition Sub
and  constitutes a valid and binding  obligation of each of Richmond  County and
Acquisition Sub, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights and remedies
generally and subject,  as to  enforceability,  to general principles of equity,
whether applied in a court of law or a court of equity.

                  (ii) Richmond County Savings has all requisite corporate power
and  authority  to enter  into the Plan of Bank  Merger  and to  consummate  the
transactions  contemplated  thereby.  The  execution and delivery of the Plan of
Bank Merger and the consummation of the

                                       25

<PAGE> 29

transactions  contemplated  thereby  have been duly  authorized  by the Board of
Directors of Richmond County Savings and approved by Richmond County as the sole
stockholder of Richmond County Savings.  The Plan of Bank Merger, upon execution
and delivery by Richmond County Savings,  will be duly and validly  executed and
delivered  by Richmond  County  Savings and will  constitute a valid and binding
obligation of Richmond County Savings, enforceable in accordance with its terms,
subject  to  applicable  bankruptcy,   insolvency  and  similar  laws  affecting
creditors' rights and remedies generally and subject,  as to enforceability,  to
general  principles of equity,  whether  applied in a court of law or a court of
equity.

            (c)   No Violations; Consents.
                  -----------------------

                  (i) The execution,  delivery and performance of this Agreement
by Richmond County do not, and the consummation of the transactions contemplated
hereby will not,  constitute (A) assuming the consents and approvals referred to
in SECTION  2.3(C)(II) are obtained,  a violation of any law, rule or regulation
or any judgment, decree, order, governmental permit or license to which Richmond
County or any of its subsidiaries (or any of their properties) is subject; (B) a
violation of the  certificate of  incorporation  or bylaws of Richmond County or
any of its subsidiaries; or (C) a breach or violation of, or a default under (or
an event  which,  with due notice or lapse of time or both,  would  constitute a
default  under),  or result in the  termination  of,  accelerate the performance
required by, or result in the creation of any lien,  pledge,  security interest,
charge or other  encumbrance  upon any of the  properties  or assets of Richmond
County under,  any of the terms,  conditions  or  provisions of any note,  bond,
indenture,  deed of trust,  loan  agreement or other  agreement,  instrument  or
obligation  to  which  Richmond  County  is a  party,  or to  which  any  of its
properties  or assets may be subject,  except,  in the case of (C), for any such
breaches,  violations  or  defaults  that  wold  not,  individually  or  in  the
aggregate, have a Material Adverse Effect on Richmond County.

                  (ii) Except for (A) the filing of an application with the OTS,
under HOLA,  and approval of such  application,  (B) the approval of the Banking
Board of the State of New York  ("BANKING  BOARD")  under  Section  143-b of the
Banking  Law of the  State of New York  ("BANKING  LAW"),  the  approval  of the
Superintendent  of Banks of the State of New York (the  "SUPERINTENDENT")  under
Section 601 of the Banking Law, and any other  requirement  of the Banking Board
or the Superintendent, (C) the filing of any necessary notice or approval of the
NJBD,  (D) the  approval  of the FDIC  under the FDIA,  and (E) the  filing of a
certificate of merger with the Delaware Secretary of State pursuant to the DGCL,
no consents or approvals of or filings or  registrations  with any  Governmental
Entity or with any third party are  necessary in  connection  with the execution
and delivery by Richmond  County and  Acquisition  Sub of this  Agreement or the
consummation by Richmond County,  Richmond County Savings and Acquisition Sub of
the Merger and the other transactions contemplated by this Agreement,  including
the Bank  Merger.  As of the date  hereof,  the  executive  officers of Richmond
County know of no reason  pertaining to Richmond County why any of the approvals
referred to in this SECTION 2.3(C) should not be obtained without the imposition
of any material condition or restriction described in SECTION 5.1(B).

                                       26

<PAGE> 30

            (d)  Absence of Claims. No litigation, proceeding, controversy,
                 -----------------
claim, action or suit or other legal,  administrative or arbitration  proceeding
before  any  court,  governmental  agency or  arbitrator  is pending or has been
threatened  against Richmond County or its subsidiaries that would reasonably be
expected to prevent,  delay or adversely  affect  Richmond  County's or Richmond
County  Savings'  ability  to  consummate,   or  which  seeks  to  prohibit  the
consummation of, the transactions contemplated by this Agreement.

            (e)  Absence of Regulatory Actions. Since December 31, 1996, neither
                 -----------------------------
Richmond  County nor any of its  subsidiaries  has been a party to any cease and
desist order,  written  agreement or memorandum  of  understanding  with, or any
commitment letter or similar  undertaking to, or has been subject to any action,
proceeding,  order or directive by, or has been a recipient of any extraordinary
supervisory  letter  from any  Government  Regulator,  or has  adopted any board
resolutions at the request of any Government  Regulator,  or has been advised by
any Government  Regulator that it is contemplating  issuing or requesting (or is
considering  the  appropriateness  of issuing or  requesting)  any such  action,
proceeding,  order, directive,  written agreement,  memorandum of understanding,
extraordinary  supervisory  letter,  commitment  letter,  board  resolutions  or
similar undertaking.

            (f) Proxy Statement. The information regarding Richmond County to be
                ---------------
supplied  by  Richmond  County for  inclusion  in the Proxy  Statement  will not
contain any untrue  statement  of a material  fact or omit to state any material
fact required to be stated  therein or necessary in order to make the statements
therein,  in  light  of  the  circumstances  under  which  they  are  made,  not
misleading.

            (g)  Community Reinvestment Act Compliance. Richmond County Savings
                 -------------------------------------
is in material  compliance  with the  applicable  provisions  of the CRA and the
regulations promulgated thereunder,  and Richmond County Savings currently has a
CRA rating of  satisfactory  or better.  To the  knowledge  of  Richmond  County
Savings,  there is no fact or circumstance or set of facts or circumstances that
would cause Richmond  County  Savings to fail to comply with such  provisions or
cause the CRA rating of Richmond County Savings to fall below satisfactory.

            (h)  Financing. Richmond County will have available to it, at the
                 ---------
Effective  Time,  immediately  available  funds  necessary to pay the  aggregate
Merger  Consideration  and will use such funds for such  purpose  subject to the
conditions of this Agreement.

            (i)   Reports and Financial Statements.
                  --------------------------------

                  (i) Richmond  County has timely  filed all  material  reports,
together with any amendments required to be made with respect thereto, that they
were required to file since June 30, 1999 with the SEC (collectively,  "RICHMOND
COUNTY'S  REPORTS").  As of their respective  dates,  none of Richmond  County's
Reports  contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make

                                       27

<PAGE> 31

the statements made therein, in light of the circumstances under which they were
made, not misleading.  All of Richmond County's Reports complied in all material
respects with the applicable  requirements of the Exchange Act and the rules and
regulations of the SEC promulgated thereunder.

                  (ii)  Each of the  financial  statements  of  Richmond  County
included in Richmond County's Reports filed with the SEC complied as to form, as
of their respective dates of filing with the SEC, in all material  respects with
applicable accounting  requirements and with the published rules and regulations
of the SEC with respect thereto.  The financial  statements included in Richmond
County's Reports were prepared from the books and records of Richmond County and
its subsidiaries, fairly present the consolidated financial position of Richmond
County and its  subsidiaries  in each case at and as of the dates  indicated and
the  consolidated  results of  operations,  retained  earnings and cash flows of
Richmond County and its subsidiaries for the periods  indicated,  and, except as
otherwise set forth in the notes thereto,  were prepared in accordance with GAAP
consistently applied throughout the periods covered thereby; PROVIDED,  HOWEVER,
that the  unaudited  financial  statements  for  interim  periods are subject to
normal year-end  adjustments (which will not be material  individually or in the
aggregate) and lack a statement of cash flows and footnotes.

            (j) Undisclosed Liabilities. As of the date hereof, neither Richmond
                -----------------------
County  nor  any of  its  subsidiaries  has  incurred  any  debt,  liability  or
obligation of any nature whatsoever  (whether accrued,  contingent,  absolute or
otherwise  and whether due or to become due) that is not  reflected  in Richmond
County's  Reports  and that,  either  alone or when  combined  with all  similar
liabilities,  would  reasonably  be  expected  to prevent  Richmond  County from
consummating the transactions contemplated by this Agreement.

                                   ARTICLE III

                           CONDUCT PENDING THE MERGER

                           --------------------------

            Section 3.1. Conduct of South Jersey's Business Prior to the
                         -----------------------------------------------
Effective Time.  Except as expressly provided in this Agreement, during the
--------------
period from the date of this  Agreement  to the  Effective  Time,  South  Jersey
shall,  and shall cause  South  Jersey  Savings to, use its best  efforts to (i)
conduct its business in the regular,  ordinary and usual course  consistent with
past  practice,  (ii)  maintain and preserve  intact its business  organization,
properties, leases, employees and advantageous business relationships and retain
the services of its officers and key employees, (iii) take no action which would
adversely  affect or delay the  ability of South  Jersey or  Richmond  County to
perform their  respective  covenants and agreements on a timely basis under this
Agreement, (iv) take no action which would adversely affect or delay the ability
of South  Jersey,  South  Jersey  Savings,  Richmond  County or Richmond  County
Savings  to  obtain  any  necessary  approvals,   consents  or  waivers  of  any
Governmental  Entity required for the transactions  contemplated hereby or which
would  reasonably  be  expected  to result in any such  approvals,  consents  or
waivers  containing any material  condition or  restriction,  (v) take no action
that results in or is  reasonably  likely to have a Material  Adverse  Effect on
South Jersey or South

                                       28

<PAGE> 32

Jersey Savings,  (vi) maintain  insurance in such amounts and against such risks
and losses as are customary for companies engaged in a similar  business,  (vii)
confer on a regular  and  frequent  basis  with one or more  representatives  of
Richmond  County to discuss,  subject to applicable  law,  material  operational
matters and the general  status of the ongoing  operations  of South  Jersey and
South Jersey  Savings,  (viii)  promptly  notify Richmond County of any material
change in its business,  properties,  assets, condition (financial or otherwise)
or results of operations,  and (ix) promptly provide Richmond County with copies
of all filings made by South  Jersey or South  Jersey  Savings with any state or
federal court, administrative agency, commission or other Governmental Entity in
connection with this Agreement and the transactions contemplated hereby.

            Section 3.2.  Forbearance by South Jersey. Without limiting the
                          ---------------------------
covenants set forth in SECTION 3.1 hereof,  except as otherwise provided in this
Agreement or the Option  Agreement  and except to the extent  required by law or
regulation or any Governmental  Entity,  during the period from the date of this
Agreement to the  Effective  Time,  South Jersey shall not, and shall not permit
South  Jersey  Savings to,  without the prior  consent of Richmond  County which
consent shall not be unreasonably withheld:

            (a) other than in the ordinary  course of business  consistent  with
past practice,  incur any  indebtedness for borrowed money,  assume,  guarantee,
endorse or otherwise as an accommodation  become responsible for the obligations
of any  other  individual,  corporation  or  other  entity,  or make any loan or
advance (it being  understood and agreed that  incurrence of indebtedness in the
ordinary course of business shall include,  without limitation,  the creation of
deposit liabilities, purchases of Federal funds, advances from the FHLBNY, sales
of certificates of deposit and entering into repurchase agreements);

            (b)   (i)   adjust, split, combine or reclassify any capital stock;

                  (ii)  make,  declare  or pay any  dividend,  or make any other
                        distribution  on,  or  directly  or  indirectly  redeem,
                        purchase or otherwise acquire, any shares of its capital
                        stock  or  any  securities  or  obligations  convertible
                        (whether currently convertible or convertible only after
                        the passage of time or the occurrence of certain events)
                        into or  exchangeable  for  any  shares  of its  capital
                        stock.  Notwithstanding the foregoing,  South Jersey may
                        pay  to its  shareholders  a cash  dividend  during  the
                        second calendar  quarter of 2000 at a rate not in excess
                        of $0.09 per share of South Jersey Common Stock.  In the
                        event  the  Effective  Date  does not occur on or before
                        August  15,  2000,  South  Jersey  may  also  pay to its
                        shareholders  a cash dividend  during the third calendar
                        quarter  of 2000 at a rate not in  excess  of $0.09  per
                        share of South Jersey Common Stock and, in the event the
                        Effective  Date does not occur on or before  October 31,
                        2000,  South Jersey may also pay to its  shareholders  a
                        cash

                                       29

<PAGE> 33

                        dividend during the fourth calendar quarter of 2000 at a
                        rate not in excess  of $0.09  per share of South  Jersey
                        Common Stock;

                  (iii) grant any stock options or stock appreciation  rights or
                        grant any  individual,  corporation  or other entity any
                        right to acquire any shares of its capital stock; or

                  (iv)  issue  any  additional  shares of  capital  stock or any
                        securities or  obligations  convertible or excisable for
                        any shares of its capital  stock except  pursuant to (A)
                        the exercise of South Jersey  Options  outstanding as of
                        the date hereof or (B) the Option Agreement;

            (c) sell, transfer,  mortgage,  encumber or otherwise dispose of any
of its material  properties or assets to any  individual,  corporation  or other
entity  other  than  South  Jersey  Savings,  or  cancel,  release or assign any
indebtedness to any such person or any claims held by any such person, except in
the ordinary  course of business or pursuant to contracts or agreements in force
at the date of this Agreement;

            (d) except  pursuant to contracts or agreements in force at the date
hereof or as permitted by this Agreement, make any equity investment,  either by
purchase of stock or securities,  contributions to capital,  property transfers,
or purchase of any property or assets of any other  individual,  corporation  or
entity other than the FHLBNY;

            (e) enter into, renew, amend or terminate any contract or agreement,
or make any change in any of its leases or contracts, other than with respect to
those  involving  aggregate  payments of less than, or the provision of goods or
services  with a market  value of less  than,  $20,000  per annum and other than
contracts or agreements covered by SECTION 3.2(F);

            (f) make, renegotiate,  renew, increase,  extend, modify or purchase
any loan,  lease  (credit  equivalent),  advance,  credit  enhancement  or other
extension of credit,  or make any commitment in respect of any of the foregoing,
except (i) in  conformity  with  existing  lending  practices  in amounts not to
exceed an aggregate of $300,000 with respect to any individual  borrower or (ii)
loans or advances as to which South Jersey has a binding obligation to make such
loan or advances as of the date hereof;

            (g) except for loans or extensions of credit made on terms generally
available to the public, make or increase any loan or other extension of credit,
or commit to make or  increase  any such loan or  extension  of  credit,  to any
director or executive  officer of South Jersey or South Jersey  Savings,  or any
entity controlled,  directly or indirectly, by any of the foregoing,  other than
renewals of existing loans or commitments to loan;

            (h)   (i)   increase in any manner the compensation or fringe
                        benefits of any of its employees or directors other than
                        in the ordinary course of

                                       30

<PAGE> 34

                        business  consistent  with past practice and pursuant to
                        policies   currently  in  effect  or  pay  any  pension,
                        retirement allowance or contribution not required by any
                        existing  plan or  agreement  to any such  employees  or
                        directors;

                  (ii)  become  a  party  to,  amend  or  commit  itself  to any
                        pension,  retirement,  profit-sharing or welfare benefit
                        plan or agreement or  employment  agreement  with or for
                        the benefit of any employee or director;

                  (iii) voluntarily accelerate the vesting of, or the lapsing of
                        restrictions with respect to, any stock options or other
                        stock-based compensation; or

                  (iv)  elect to any senior  executive  office any person who is
                        not a member of the  senior  executive  officer  team of
                        South  Jersey as of the date of this  Agreement or elect
                        to the Board of Directors of South Jersey any person who
                        is not a  member  of the  Board  of  Directors  of South
                        Jersey  as of the  date of this  Agreement,  or hire any
                        employee with annual compensation in excess of $50,000;

            (i) settle any claim,  action or proceeding  involving money damages
in excess of  $50,000  or the  imposition  of any  material  restriction  on the
operations of South Jersey or South Jersey Savings;

            (j)   amend its certificate of incorporation or its bylaws;

            (k)  restructure  or  materially  change its  investment  securities
portfolio or its gap position,  through  purchases,  sales or otherwise,  or the
manner in which the portfolio is classified or reported;

            (l)   make any investment in any debt security, including mortgage-
backed and mortgage-related securities, other than U.S. government and U.S.
government agency securities with final maturities not greater than five years;

            (m) make any capital expenditures other than expenditures  necessary
to  maintain  existing  assets in good  repair or to make  payment of  necessary
taxes;

            (n)  establish or commit to the  establishment  of any new branch or
other office  facilities  or file any  application  to relocate or terminate the
operation of any banking office;

            (o) take any action that is intended or expected to result in any of
its representations and warranties set forth in this Agreement being or becoming
untrue in any

                                       31

<PAGE> 35

material  respect  at any time  prior to the  Effective  Time,  or in any of the
conditions  to the  Merger set forth in  Article V not being  satisfied  or in a
violation of any provision of this Agreement;

            (p) engage in any transaction that is not in the usual and ordinary
course of business and consistent with past practices;

            (q) implement or adopt any change in its accounting principles,
practices or methods, other than as may be required by GAAP or regulatory
guidelines; or

            (r)  agree  to take,  make any  commitment  to  take,  or adopt  any
resolutions  of its  board  of  directors  in  support  of,  any of the  actions
prohibited by this SECTION 3.2.

      Any request by South Jersey or response  thereto by Richmond  County shall
be made in accordance  with the notice  provisions of SECTION 8.7 and shall note
that it is a request pursuant to this SECTION 3.2.

            Section 3.3.  Conduct of Richmond County's Business Prior to the
                          --------------------------------------------------
Effective Time. Except as expressly provided in this Agreement, during the
--------------
period from the date of this Agreement to the Effective  Time,  Richmond  County
shall  use its  best  efforts  to (i)  take no  action  which  would  materially
adversely  affect or delay the  ability of South  Jersey or  Richmond  County to
perform their  respective  covenants and agreements on a timely basis under this
Agreement, (ii) take no action which would adversely affect or delay the ability
of South  Jersey,  South  Jersey  Savings,  Richmond  County or Richmond  County
Savings  to  obtain  any  necessary  approvals,   consents  or  waivers  of  any
Governmental  Entity required for the transactions  contemplated hereby or which
would  reasonably  be  expected  to result in any such  approvals,  consents  or
waivers  containing  any  material  condition or  restriction  and (iii) take no
action that is intended or expected to result in any of its  representations and
warranties set forth in this Agreement  being or becoming untrue in any material
respect at any time prior to the Effective  Time, or in any of the conditions to
the Merger set forth in Article V not being  satisfied  or in  violation of this
Agreement.

                                   ARTICLE IV

                                    COVENANTS

                                    ---------

            Section 4.1. Acquisition Proposals.
                         ---------------------

            (a) From and after the date  hereof  until the  termination  of this
Agreement, neither South Jersey nor any of its officers,  directors,  employees,
representatives,  agents  or  affiliates  (including,  without  limitation,  any
investment  banker,  attorney or  accountant  retained by South  Jersey or South
Jersey Savings),  will, directly or indirectly,  initiate,  solicit or knowingly
encourage (including by way of furnishing non-public information or assistance),
or  facilitate  knowingly,  any  inquiries  or the making of any  proposal  that
constitutes,  or may reasonably be expected to lead to, any Acquisition Proposal
(as defined below), or enter into or

                                       32

<PAGE> 36

maintain  or  continue  discussions  or  negotiate  with any person or entity in
furtherance of such  inquiries or to obtain an Acquisition  Proposal or agree to
or endorse any Acquisition Proposal, or authorize or permit any of its officers,
directors  or  employees  or South  Jersey  Savings  or any  investment  banker,
financial  advisor,  attorney,  accountant or other  representative  retained by
South Jersey Savings to take any such action;  PROVIDED,  HOWEVER,  that nothing
contained  in this  SECTION  4.1  shall  prohibit  South  Jersey or the Board of
Directors of South Jersey from:

                  (i)   furnishing  information to, or entering into discussions
                        or negotiations with, any person or entity that makes an
                        unsolicited written, bona fide proposal to acquire South
                        Jersey  pursuant  to  a  merger,  consolidation,   share
                        exchange, business combination, tender or exchange offer
                        or other similar transaction, if, and only to the extent
                        that;

                        (A)   the  Board of  Directors  of South  Jersey,  after
                              consultation   with  its   independent   financial
                              advisor,  determines  that  such  proposal  may be
                              superior   to  the   Merger   from   a   financial
                              point-of-view to South Jersey's stockholders;

                        (B)   the Board of Directors of South Jersey, after
                              consultation with and based upon the advice of
                              independent legal counsel, determines in good
                              faith that such action is necessary for the Board
                              of Directors of South Jersey to comply with its
                              fiduciary duties to stockholders under applicable
                              law (such proposal that satisfies (A) and (B)
                              being referred to herein as a "SUPERIOR
                              PROPOSAL"); and

                        (C)   prior  to  furnishing  such   information  to,  or
                              entering into  discussions or  negotiations  with,
                              such person or entity, South Jersey:

                              (1)   provides prompt notice to Richmond County to
                                    the effect that it is furnishing information
                                    to,  or   entering   into   discussions   or
                                    negotiations  with,  such  person or entity;
                                    and

                              (2)   receives from such person or entity an
                                    executed confidentiality agreement in
                                    reasonably customary form;

                  (ii)  complying with Rule 14e-2 promulgated under the Exchange
                        Act with regard to a tender or exchange offer; or

                                       33

<PAGE> 37

                  (iii) failing  to  make  or   withdrawing   or  modifying  its
                        recommendation  and entering into a Superior Proposal if
                        there  exists  a  Superior  Proposal  and the  Board  of
                        Directors  of  South  Jersey,  after  consultation  with
                        independent legal counsel, determines in good faith that
                        such action is  necessary  for the Board of Directors of
                        South  Jersey to  comply  with its  fiduciary  duties to
                        stockholders under applicable law.

South  Jersey  shall  notify  Richmond  County  orally  and  in  writing  of any
Acquisition Proposal (including, without limitation, the terms and conditions of
any such  Acquisition  Proposal  and the  identity  of the  person  making  such
Acquisition  Proposal) as promptly as practicable  (but, in any event,  no later
than 24 hours) after the receipt thereof and shall keep Richmond County informed
of the status and details of any such Acquisition Proposal.

            (b) For purposes of this  Agreement,  "ACQUISITION  PROPOSAL"  shall
mean any of the following (other than the transactions  contemplated  hereunder)
involving South Jersey or South Jersey Savings:

                  (i)   any merger, consolidation, share exchange, business
                        combination, or other similar transaction;

                  (ii)  any sale, lease, exchange, mortgage, pledge, transfer or
                        other  disposition of 25% or more of the assets of South
                        Jersey or South Jersey  Savings,  taken as a whole, in a
                        single transaction or series of transactions;

                  (iii) any tender  offer or  exchange  offer for 25% or more of
                        the outstanding  shares of capital stock of South Jersey
                        or the  filing  of a  registration  statement  under the
                        Securities  Act  of  1933,  as  amended,  in  connection
                        therewith; or

                  (iv)  any public announcement of a proposal, plan or intention
                        to do any of the foregoing or any agreement to engage in
                        any of the foregoing.

            Section 4.2.  Certain Policies and Actions of South Jersey. At the
                          --------------------------------------------
request of Richmond  County,  South Jersey  shall cause South Jersey  Savings to
modify and change its loan,  litigation and real estate  valuation  policies and
practices (including loan classifications and levels of reserves) and investment
and  asset/liability  management  policies and practices after the date on which
all regulatory and stockholder approvals required to consummate the transactions
contemplated hereby are received, and after receipt of written confirmation from
Richmond  County  that it is not aware of any fact or  circumstance  that  would
prevent  completion of the Merger,  and prior to the Effective  Time;  PROVIDED,
HOWEVER, that South Jersey shall not be

                                       34

<PAGE> 38

required to take such action more than 10 days prior to the Effective  Date; and
PROVIDED,  FURTHER, that such policies and procedures are not prohibited by GAAP
or  any  applicable  laws  and  regulations.   South  Jersey's  representations,
warranties and covenants  contained in this Agreement  shall not be deemed to be
untrue or  breached  in any  respect  for any  purpose as a  consequence  of any
modifications or changes undertaken solely on account of SECTION 4.2.

            Section 4.3. Access and Information.
                         ----------------------

            (a) Upon  reasonable  notice,  South  Jersey  shall (and shall cause
South  Jersey  Savings  to)  afford  Richmond  County  and  its  representatives
(including,  without limitation,  directors,  officers and employees of Richmond
County and its  affiliates  and  counsel,  accountants  and other  professionals
retained by Richmond County) such reasonable access during normal business hours
throughout  the  period  prior  to the  Effective  Time  to the  books,  records
(including,  without  limitation,  tax returns  and work  papers of  independent
auditors),  contracts,  properties,  personnel  and to  such  other  information
relating  to South  Jersey  and South  Jersey  Savings  as  Richmond  County may
reasonably request;  PROVIDED,  HOWEVER, that no investigation  pursuant to this
SECTION 4.3 shall affect or be deemed to modify any  representation  or warranty
made by South Jersey in this Agreement. In furtherance, and not in limitation of
the  foregoing,  South  Jersey  shall  make  available  to  Richmond  County all
information necessary and appropriate for the preparation and filing of all real
property and real estate transfer tax returns and reports  required by reason of
the Merger or the Bank Merger.

            (b) South Jersey shall provide  Richmond  County with true,  correct
and  complete  copies of all  financial  and other  information  relating to the
business or operations of South Jersey or South Jersey  Savings that is provided
to  directors  of South  Jersey  and South  Jersey  Savings in  connection  with
meetings of their Boards of Directors or committees thereof; PROVIDED,  HOWEVER,
that not  withstanding  the  foregoing,  South  Jersey  shall not be required to
provide Richmond County with any information  regarding an Acquisition  Proposal
except as required by SECTION 4.1.

            (c) As soon as  reasonably  available,  but in no event more than 45
days after the end of each fiscal quarter (and 90 days in the case of the fourth
fiscal quarter), South Jersey shall deliver to Richmond County its Quarterly and
Annual Reports, as filed with the SEC under the Exchange Act. South Jersey shall
deliver to Richmond County any Current Reports on Form 8-K promptly after filing
such reports with the SEC and shall provide  Richmond  County with a copy of any
press release promptly after such release is made available to the public.

            (d) Richmond County will not, and will cause its representatives not
to, use any  information  obtained  pursuant to this SECTION 4.3 for any purpose
unrelated  to  the  consummation  of  the  transactions   contemplated  by  this
Agreement.  Subject to the requirements of applicable law,  Richmond County will
keep confidential,  and will cause its representatives to keep confidential, all
information  and  documents  obtained  pursuant to this  SECTION 4.3 unless such
information (i) was already known to Richmond County or an affiliate of Richmond

                                       35

<PAGE> 39

County, other than pursuant to a confidentiality agreement or other confidential
relationship,  (ii)  becomes  available  to Richmond  County or an  affiliate of
Richmond  County  from  other  sources  not known by such party to be bound by a
confidentiality  agreement or other  obligation  of secrecy,  (iii) is disclosed
with the prior  written  approval of South Jersey or (iv) is or becomes  readily
ascertainable from published information or trade sources.

            (e)  During  the  period of time  beginning  on the day  application
materials  to obtain  the  requisite  regulatory  approvals  for the  Merger are
initially  filed and continuing to the Effective  Time,  including  weekends and
holidays,  South  Jersey shall cause South  Jersey  Savings to provide  Richmond
County  and   Richmond   County   Savings  and  their   authorized   agents  and
representatives  full  access  to South  Jersey  Savings  offices  after  normal
business hours for the purpose of installing  necessary  wiring and equipment to
be utilized by Richmond County Savings after the Effective Time; PROVIDED, that:

                  (i)   reasonable  advance  notice of each entry shall be given
                        to  South  Jersey   Savings  and  South  Jersey  Savings
                        approves  of each  entry,  which  approval  shall not be
                        unreasonably withheld;

                  (ii)  South  Jersey  Savings  shall have the right to have its
                        employees  or  contractors  present to inspect  the work
                        being done;

                  (iii) to the extent practicable,  such work shall be done in a
                        matter  that  will  not  interfere   with  South  Jersey
                        Savings'  business  conducted  at  any  affected  branch
                        offices;

                  (iv)  all  such  work  shall  be done in  compliance  with all
                        applicable laws and government regulations, and Richmond
                        County Savings shall be responsible for the procurement,
                        at Richmond  County  Savings'  expense,  of all required
                        governmental or administrative permits and approvals;

                  (v)   Richmond  County  Savings  shall  maintain   appropriate
                        insurance   satisfactory  to  South  Jersey  Savings  in
                        connection   with  any  work  done  by  Richmond  County
                        Savings'  agents and  representatives  pursuant  to this
                        SECTION 4.3;

                  (vi)  Richmond  County  Savings shall  reimburse  South Jersey
                        Savings for any material out-of-pocket costs or expenses
                        reasonably   incurred   by  South   Jersey   Savings  in
                        connection with this undertaking; and

                  (vii) in the event this  Agreement is terminated in accordance
                        with Article VI hereof,  Richmond County Savings, within
                        a reasonable

                                       36

<PAGE> 40

                        time  period  and at its  sole  cost and  expense,  will
                        restore  such  offices to their  condition  prior to the
                        commencement of any such installation.

            Section 4.4. Certain Filings, Consents and Arrangements.
                         ------------------------------------------

            (a) As soon as practicable  after the date hereof,  Richmond  County
shall  use its  reasonable  best  efforts  to  prepare  and file  all  necessary
applications, notices and filings to obtain all permits, consents, approvals and
authorizations  of all Governmental  Entities that are necessary or advisable to
consummate the transactions  contemplated by this Agreement,  including the Bank
Merger.  South Jersey shall,  upon  request,  furnish  Richmond  County with all
information  concerning South Jersey,  South Jersey Savings,  and South Jersey's
directors, officers and stockholders and such other matters as may be reasonably
necessary or advisable in connection with any application, notice or filing made
by or on behalf of Richmond County to any Governmental Entity in connection with
the transactions contemplated by this Agreement and the Plan of Bank Merger.

            (b) As soon as practicable after the date hereof, South Jersey shall
file an  application  with the NJBD,  and shall  take all  other  necessary  and
appropriate actions, to convert South Jersey Savings from a New Jersey chartered
savings and loan association to a New Jersey chartered savings bank prior to the
Effective  Time;  PROVIDED,  HOWEVER,  that South  Jersey  Savings  shall not be
required  to  complete  such  charter  conversion  until  after  receipt  of the
stockholder  approval  pursuant to SECTION 5.1(A) and all  regulatory  approvals
pursuant to SECTION 5.1(B).

            (c) As  soon as  practicable  after  the  date  hereof,  each of the
parties hereto shall, and they shall cause their respective subsidiaries to, use
its best efforts to obtain any consent,  authorization  or approval of any third
party that is required to be obtained in connection with the Merger and the Bank
Merger.

            Section 4.5. Antitakeover Provisions. South Jersey and South Jersey
                         -----------------------
Savings  shall take all steps  required by any relevant  federal or state law or
regulation  or under  any  relevant  agreement  or other  document  to exempt or
continue to exempt Richmond  County,  Richmond County Savings,  Acquisition Sub,
the Agreement,  the Plan of Bank Merger, the Merger and the Bank Merger from any
provisions of an antitakeover nature contained in South Jersey's or South Jersey
Savings'   certificates  of  incorporation  and  bylaws,  or  similar  governing
documents, and the provisions of any federal or state antitakeover laws.

            Section 4.6. Additional Agreements. Subject to the terms and
                         ---------------------
conditions  herein  provided,  each  of the  parties  hereto  agrees  to use all
reasonable efforts to take promptly, or cause to be taken promptly,  all actions
and to do promptly, or cause to be done promptly,  all things necessary,  proper
or advisable  under  applicable  laws and  regulations  to  consummate  and make
effective the transactions contemplated by this Agreement,  including the Merger
(and if the Plan of Bank Merger is executed,  the Bank Merger), as expeditiously
as possible, including using

                                       37

<PAGE> 41

efforts to obtain all necessary  actions or  non-actions,  extensions,  waivers,
consents and approvals from all applicable Governmental Entities,  effecting all
necessary   registrations,   applications   and  filings   (including,   without
limitation,  filings under any applicable  state  securities laws) and obtaining
any required contractual consents and regulatory approvals.

            Section 4.7. Publicity. The initial press release announcing this
                         ---------
Agreement  shall be a joint  press  release  and  thereafter  South  Jersey  and
Richmond  County shall consult with each other in issuing any press  releases or
otherwise  making  public  statements  with  respect to the Merger and any other
transaction  contemplated hereby and in making any filings with any governmental
entity or with any national securities exchange with respect thereto.

            Section 4.8. Stockholder Meeting. South Jersey shall take all action
                         -------------------
necessary,   in  accordance   with   applicable  law  and  its   certificate  of
incorporation and bylaws, to convene a meeting of its stockholders ("STOCKHOLDER
MEETING") as promptly as practicable  for the purpose of considering  and voting
on  approval  and  adoption  of  this  Agreement,   the  Merger  and  the  other
transactions  provided  for in this  Agreement.  Except  to the  extent  legally
required for the discharge by the Board of Directors of its fiduciary  duties as
advised by such  Board's  counsel,  the Board of Directors of South Jersey shall
(i) recommend at the Stockholder  Meeting that the stockholders vote in favor of
and approve the  transactions  provided for in this  Agreement  and (ii) use its
reasonable best efforts to solicit such approvals.

            Section 4.9. Proxy Statement.
                         ---------------

            (a) For the  purposes  of holding  the  Stockholder  Meeting,  South
Jersey shall prepare and file with the SEC as soon as practicable after the date
hereof, a proxy statement satisfying all applicable requirements of the Exchange
Act and the rules and regulations  thereunder  (such proxy statement in the form
mailed by South Jersey to the South Jersey stockholders, the "PROXY STATEMENT").
Richmond County shall,  upon request,  furnish South Jersey with all information
concerning  Richmond  County  and  its  subsidiaries,  directors,  officers  and
stockholders  as South  Jersey may  reasonably  require in  connection  with the
preparation of the Proxy Statement.  South Jersey shall give Richmond County and
its counsel the  opportunity to review and comment on the Proxy  Statement prior
to its being filed with the SEC.  South  Jersey  shall  notify  Richmond  County
promptly  of the receipt of any  comments  of the SEC with  respect to the Proxy
Statement and of any requests by the SEC for any amendment or supplement thereto
or for  additional  information  and shall provide  promptly to Richmond  County
copies of all correspondence between South Jersey or any representative of South
Jersey and the SEC. South Jersey shall give Richmond  County and its counsel the
opportunity to review and comment on all amendments and supplements to the Proxy
Statement and all responses to requests for additional  information  and replies
to comments  prior to their being filed with, or sent to, the SEC.  South Jersey
agrees to use all reasonable efforts to respond promptly to all such comments of
and requests by the SEC, to have the Proxy Statement cleared by the staff of the
SEC as promptly as practicable and to cause the Proxy Statement and all required
amendments and

                                       38

<PAGE> 42

supplements  thereto to be mailed to the holders of South  Jersey  Common  Stock
entitled to vote at the Stockholder Meeting at the earliest practicable time.

            (b) South Jersey and Richmond County shall promptly notify the other
party if at any time it becomes  aware  that the Proxy  Statement  contains  any
untrue  statement of a material  fact or omits to state a material fact required
to be stated therein or necessary to make the statements  contained therein,  in
light of the circumstances  under which they were made, not misleading.  In such
event,  South Jersey and Richmond  County shall cooperate with each other in the
preparation of a supplement or amendment to such Proxy  Statement which corrects
such  misstatement  or omission  and South  Jersey  shall mail an amended  Proxy
Statement to South Jersey's stockholders.

            Section 4.10. Notification of Certain Matters. South Jersey shall
                          -------------------------------
give prompt  notice to Richmond  County of: (i) any event or notice of, or other
communication relating to, a default or event that, with notice or lapse of time
or both,  would  become a  default,  received  by South  Jersey or South  Jersey
Savings  subsequent  to the date of this  Agreement  and prior to the  Effective
Time,  under any  contract  material  to the  financial  condition,  properties,
businesses  or results of  operations  of South Jersey and South Jersey  Savings
taken as a whole to which South Jersey or South Jersey  Savings is a party or is
subject; and (ii) any event, condition,  change or occurrence which individually
or in the aggregate  has, or which,  so far as reasonably can be foreseen at the
time of its  occurrence,  is reasonably  likely to result in a Material  Adverse
Effect  with  respect to South  Jersey or which  would have been  required to be
disclosed  by South  Jersey on a  schedule  to this  Agreement  had such  event,
condition,  change or occurrence been known at the time such party delivered its
disclosure  schedules;  PROVIDED,  HOWEVER,  that no notice provided pursuant to
this  SECTION  4.10 shall  affect or be deemed to modify any  representation  or
warranty made herein. Each of South Jersey and Richmond County shall give prompt
notice to the other  party of any (i)  notice  or other  communication  from any
third party  alleging that the consent of such third party is or may be required
in connection  with any of the  transactions  contemplated by this Agreement and
(ii) the  occurrence  or  non-occurrence  of any fact or  event  which  would be
reasonably  likely to cause any  representation  or warranty  contained  in this
Agreement  to be untrue or  inaccurate  in any respect at any time from the date
hereof to the Effective  Time or to cause any  covenant,  condition or agreement
under this  Agreement  not to be  complied  with or  satisfied  in all  material
respects.

            Section 4.11. Employees, Directors and Officers.
                          ---------------------------------

            (a)  All  persons  who  are   employees  of  South  Jersey   Savings
immediately prior to the Effective Time and whose employment is not specifically
terminated at or prior to the Effective Time (a "CONTINUING EMPLOYEE") shall, at
the Effective  Time,  become  employees of Richmond  County  Savings;  PROVIDED,
HOWEVER,  that in no event shall any of South Jersey's  employees be officers of
Richmond  County  Savings,  or have or exercise any power or duty conferred upon
such an officer,  unless and until duly elected or appointed to such position in
accordance  with the bylaws of Richmond  County  Savings.  All of the Continuing
Employees

                                       39

<PAGE> 43

shall be  employed  at the will of Richmond  County  Savings and no  contractual
right to employment shall inure to such employees because of this Agreement.

            (b) For purposes of participation and vesting in the Richmond County
Savings Bank Employee Stock Ownership  Plan,  each Continuing  Employee shall be
treated  as a new  employee  of  Richmond  County.  As soon as  administratively
practicable  following the Effective  Time,  each  Continuing  Employee shall be
eligible to  participate  in the Richmond  County  Savings Bank 401(k) Plan with
full credit for prior  service with South  Jersey and South  Jersey  Savings for
purposes of eligibility and vesting.  As of the Effective Time,  Richmond County
shall make available employer-provided health and other employee welfare benefit
plans to each Continuing Employee on the same basis as it provides such coverage
to Richmond County employees except that any pre-existing condition, eligibility
waiting period or other  limitations or exclusions  otherwise  applicable  under
such plans to new  employees  shall not apply to a Continuing  Employee or their
covered  dependents  who were covered  under a similar  South Jersey plan on the
Effective Date of the Merger.

            (c) Except as otherwise provided in this Agreement,  Richmond County
agrees  to  honor  in  accordance   with  their  terms  all  plans,   contracts,
arrangements,   commitments  or  understandings   disclosed  in  South  Jersey's
Disclosure  Letter,  including  with  respect  to  benefits  which  vest  or are
otherwise accrued or payable as a result of the consummation of the transactions
contemplated by this Agreement. Set forth in South Jersey's Disclosure Letter in
reasonable  detail are  estimates  of the  payments and benefits due under South
Jersey's employment agreements, change in control agreements and severance plan.
It is intended  by Richmond  County and South  Jersey  that the  procedures  and
methodologies  used in preparing such estimates shall be followed in determining
the actual payments or benefits due under such agreements.

            (d) The South Jersey  Savings and Loan  Association  Employee  Stock
Ownership Plan ("SOUTH JERSEY ESOP") shall be terminated as of, or prior to, the
Effective  Time. As of the Effective  Time,  all shares held by the South Jersey
ESOP shall be converted in to the right to receive the Merger Consideration.  As
soon  as  administratively   practicable   following  the  Effective  Time,  all
outstanding  indebtedness  of the South  Jersey ESOP shall be repaid in full and
the balance remaining with respect to unallocated  shares previously held by the
South  Jersey  ESOP shall be  allocated  and  distributed  to South  Jersey ESOP
participants  as  provided  in the South  Jersey  ESOP,  subject to receipt of a
favorable  determination  letter from the IRS and unless  otherwise  required by
applicable  law. The South Jersey  Savings and Loan  Association  Money Purchase
Pension Plan ("SOUTH  JERSEY  PENSION PLAN") shall be terminated as of, or prior
to, the  Effective  Time and,  subject to receipt of a  favorable  determination
letter from the IRS,  distributions shall be made to participants as provided in
the plan.  Notwithstanding  anything in this  SECTION  4.11(D) to the  contrary,
distributions  may be made to  terminated  employees  of South  Jersey  or South
Jersey Savings as soon as  administratively  practicable after the determination
of final allocations and prior to the receipt of a determination letter from the
IRS.

                                       40

<PAGE> 44

            (e) South  Jersey  shall use its best  efforts  to obtain  from each
holder of a South Jersey  Option and to deliver to Richmond  County at or before
the Closing (as defined in SECTION 7.1) an agreement to the cancellation of such
holder's  South  Jersey  Options in exchange  for a cash payment as described in
SECTION 1.4.

            (f) At the Effective Time, Messrs. Colacicco, DiPaolo, Sidebotham
and Wampler and Ms. Brode shall each execute a consulting and/or noncompetition
agreement in the form attached hereto as Exhibit C containing such terms for
                                         ---------
each individual as are set forth in South Jersey's Disclosure Letter.

            (g) The employees of South Jersey  Savings shall be paid bonuses for
2000  pursuant to South  Jersey's  existing  bonus  program equal to the amounts
payable to each such employee as a bonus for 1999 multiplied by a fraction,  the
numerator  of which is the  number of days in 2000  through  and  including  the
Closing Date and the denominator of which is 366, and such bonuses shall be paid
at least  five  business  days  prior to the  Closing  Date.  Set forth in South
Jersey's Disclosure Letter is a list of bonuses paid by South Jersey Savings for
1999.

            (h)  Employees of South Jersey  Savings shall be entitled to receive
payment for accrued but unused  vacation  days in  accordance  with South Jersey
Savings' past  practices,  and any accrued but unused vacation days of employees
of South Jersey Savings as of the Closing Date shall, at the employee's  option,
either be paid  immediately  prior to the Closing Date or taken as vacation time
as soon as practicable  following the Closing Date. Richmond County acknowledges
and agrees that such vacation days shall include days that would  otherwise have
been  accrued by South  Jersey or South  Jersey  Savings on  December  31,  2000
prorated for the portion of the calendar year 2000 through the  Effective  Date.
South Jersey's  Disclosure  Letter sets forth, as of January 1, 2000, the number
of earned but unused  vacation  days for each  employee,  the dollar amount that
would be paid therefor,  and the number of vacation days that each such employee
is expected to accrue during 2000.

            (i)  Richmond  County  agrees  that South  Jersey  Savings  may make
contributions to the South Jersey ESOP and the South Jersey Savings Pension Plan
prorated for the portion of the year 2000 through the Closing Date.

            Section 4.12. Indemnification.
                          ---------------

            (a) From and after the Effective Time through the sixth  anniversary
of the Effective Date,  Richmond County (and any successor)  agrees to indemnify
and hold harmless  each present and former  director and officer of South Jersey
and South Jersey  Savings and each officer or employee of South Jersey and South
Jersey Savings that is serving or has served as a director or trustee of another
entity  expressly at South Jersey's  request or direction (each, an "INDEMNIFIED
PARTY"),  against any costs or expenses (including  reasonable attorneys' fees),
judgments,  fines,  amounts  paid in  settlement,  losses,  claims,  damages  or
liabilities  (collectively,  "COSTS")  incurred  in  connection  with any claim,
action, suit, proceeding or investigation, whether

                                       41

<PAGE> 45

civil,  criminal,  administrative  or  investigative,  arising  out  of  matters
existing  or  occurring  at or  prior  to  the  Effective  Time  (including  the
transactions contemplated by this Agreement),  whether asserted or claimed prior
to,  at or after the  Effective  Time,  and to  advance  any such  Costs to each
Indemnified  Party as they are from time to time  incurred,  in each case to the
fullest  extent  such  Indemnified   Party  would  have  been  permitted  to  be
indemnified as a director,  officer or employee of South Jersey and South Jersey
Savings and under the DGCL (as in effect on the Effective Date).

            (b) Any  Indemnified  Party wishing to claim  indemnification  under
SECTION 4.12(A),  upon learning of any such claim, action,  suit,  proceeding or
investigation, shall promptly notify Richmond County thereof, but the failure to
so notify  shall  not  relieve  Richmond  County  of any  liability  it may have
hereunder to such  Indemnified  Party if such failure  does not  materially  and
substantially prejudice Richmond County. In the event of any such claim, action,
suit,  proceeding or investigation:  (i) Richmond County shall have the right to
assume the defense thereof with counsel reasonably acceptable to the Indemnified
Party and Richmond County shall not be liable to such Indemnified  Party for any
legal expenses of other counsel subsequently  incurred by such Indemnified Party
in connection with the defense thereof,  except that if Richmond County does not
elect to  assume  such  defense  within a  reasonable  time or  counsel  for the
Indemnified  Party at any  time  advises  that  there  are  issues  which  raise
conflicts of interest  between  Richmond County and the  Indemnified  Party (and
counsel for Richmond County does not disagree), the Indemnified Party may retain
counsel satisfactory to such Indemnified Party, and Richmond County shall remain
responsible  for the  reasonable  fees and expenses of such counsel as set forth
above,  to be paid  promptly as  statements  therefor  are  received;  PROVIDED,
HOWEVER,  that Richmond County shall be obligated pursuant to this paragraph (b)
to pay for only one  firm of  counsel  for all  Indemnified  Parties  in any one
jurisdiction  with  respect to any given  claim,  action,  suit,  proceeding  or
investigation  unless the use of one counsel for such Indemnified  Parties would
present such counsel with a conflict of  interest;  (ii) the  Indemnified  Party
will reasonably  cooperate in the defense of any such matter; and (iii) Richmond
County shall not be liable for any settlement  effected by an Indemnified  Party
without its prior written consent, which consent may not be withheld unless such
settlement is unreasonable in light of such claims, actions, suits,  proceedings
or investigations against, or defenses available to, such Indemnified Party.

            (c)  Richmond  County  shall  pay all  reasonable  Costs,  including
attorneys'  fees, that may be incurred by any Indemnified  Party in successfully
enforcing the indemnity and other obligations  provided for in this SECTION 4.12
to the fullest  extent  permitted by law. The rights of each  Indemnified  Party
hereunder  shall be in addition to any other rights such  Indemnified  Party may
have under applicable law.

            (d) Richmond County shall maintain South Jersey's existing directors
and  officers'  insurance  policy  (or  provide  a policy  providing  comparable
coverage and amounts on terms no less favorable to the persons currently covered
by South Jersey's existing policy,  including  Richmond County's existing policy
if its meets the foregoing standard) covering

                                       42

<PAGE> 46

persons who are currently  covered by such insurance for a period of three years
after the Effective Date; PROVIDED,  HOWEVER,  that Richmond County shall not be
required to expend annually for such insurance  amounts in excess of 150% of the
per annum  premiums  paid by South Jersey for the policy year that  includes the
date of this Agreement,  and PROVIDED  FURTHER,  that if the annual premiums for
such insurance exceed such 150% amount,  then Richmond County shall be obligated
to obtain the most advantageous  coverage of directors' and officers'  insurance
obtainable  for a cost not  exceeding  such 150% amount,  and provided  that the
officers and directors of South Jersey may be required to make  applications and
provide customary  representations and warranties to Richmond County's insurance
carrier for the purpose of obtaining such insurance.

            (e) In the event Richmond County or any of its successors or assigns
(i) consolidates with or merges into any other person or entity and shall not be
the  continuing  or surviving  corporation  or entity of such  consolidation  or
merger or (ii) transfers or conveys all or  substantially  all of its properties
and assets to any person or entity,  then,  and in each such case, to the extent
necessary,  proper provision shall be made so that the successors and assigns of
Richmond County assume the obligations set forth in this SECTION 4.12.

            (f) The  provisions  of this SECTION 4.12 are intended to be for the
benefit of, and shall be enforceable by, each  Indemnified  Party and his or her
representatives.

            Section 4.13.  South Jersey Savings Charitable Foundation. South
                           ------------------------------------------
Jersey  shall  request  the  Board of  Directors  of the  South  Jersey  Savings
Charitable  Foundation (the  "FOUNDATION") to amend the Bylaws of the Foundation
to  increase  the Board of  Directors  of the  Foundation  by two members and to
appoint,  as of the  Effective  Time,  two members of the Board of  Directors of
Richmond County to fill the newly created vacancies.

                                    ARTICLE V

                           CONDITIONS TO CONSUMMATION

                           --------------------------

            Section 5.1. Conditions to Each Party's Obligations. The respective
                         --------------------------------------
obligations  of each party to effect the  Merger,  the Bank Merger and any other
transactions contemplated by this Agreement shall be subject to the satisfaction
of the following conditions:

            (a)   Stockholder Approval.  This Agreement shall have been approved
                  --------------------
by the  requisite  vote  of  South  Jersey's  stockholders  in  accordance  with
applicable laws and regulations.

            (b)  Regulatory Approvals. All approvals, consents or waivers of any
                 --------------------
Governmental   Entity  required  to  permit  consummation  of  the  transactions
contemplated by this Agreement shall have been obtained and shall remain in full
force  and  effect,  and all  statutory  waiting  periods  shall  have  expired;
PROVIDED,  HOWEVER,  that none of such  approvals,  consents  or  waivers  shall
contain any  condition or  requirement  that would so  materially  and adversely
impact the economic or business  benefits to Richmond County of the transactions
contemplated hereby

                                       43

<PAGE> 47

that, had such condition or requirement  been known,  Richmond County would not,
in its reasonable judgment, have entered into this Agreement.

            (c) No Injunctions or Restraints; Illegality. No party hereto shall
                ----------------------------------------
be subject to any order,  decree or injunction of a court or agency of competent
jurisdiction  that enjoins or prohibits  the  consummation  of the Merger or the
Bank Merger and no Governmental  Entity shall have instituted any proceeding for
the purpose of enjoining or prohibiting the consummation of the Merger, the Bank
Merger, or any transactions  contemplated by this Agreement. No statute, rule or
regulation  shall have been  enacted,  entered,  promulgated  or enforced by any
Governmental Entity which prohibits,  restricts or makes illegal consummation of
the Merger or the Bank Merger.

            Section 5.2. Conditions to the Obligations of Richmond County. The
                         ------------------------------------------------
obligations  of Richmond  County to effect the  Merger,  the Bank Merger and any
other  transactions  contemplated  by this Agreement shall be further subject to
the satisfaction of the following additional conditions:

            (a) Representations and Warranties; Performance of Obligations. Each
                ----------------------------------------------------------
of the obligations of South Jersey required to be performed by it at or prior to
the  Closing  pursuant  to the  terms of this  Agreement  shall  have  been duly
performed and complied with in all material respects and the representations and
warranties  of  South  Jersey  contained  in this  Agreement  shall  be true and
correct,  subject to SECTION 2.1, as of the date of this Agreement and as of the
Effective  Time as though made at and as of the Effective Time (except as to any
representation or warranty which  specifically  relates to an earlier date), and
Richmond County shall have received a certificate to the foregoing effect signed
by the chief executive  officer and the chief financial or principal  accounting
officer of South Jersey.

            (b) Third Party Consents. South Jersey shall have obtained the
                --------------------
consent or approval of each person  (other than the  governmental  approvals  or
consents  referred to in SECTION  5.1(B))  whose  consent or  approval  shall be
required in order to permit the succession by Richmond County to any obligation,
right or  interest of South  Jersey  under any loan or credit  agreement,  note,
mortgage,  indenture,  lease,  license or other agreement or instrument to which
South Jersey or South Jersey  Savings is a party or is otherwise  bound,  except
those for which  failure  to obtain  such  consents  and  approvals  would  not,
individually  or in the  aggregate,  have a Material  Adverse Effect on Richmond
County or upon the consummation of the transactions contemplated hereby.

            (c)   Dissenters's Shares.  On the Closing Date, Dissenters' Shares
                  -------------------
shall not  constitute  more than 15% of the  outstanding  shares of South Jersey
Common Stock.

            (d)  Charter Conversion. Prior to the Effective Time, South Jersey
                 ------------------
Savings  shall have  converted  from a New  Jersey  chartered  savings  and loan
association to a New Jersey chartered savings bank.

                                       44

<PAGE> 48

            (e) Good Standing and Other Certificates. Richmond County shall have
                ------------------------------------
received  certificates  (such  certificates  to be dated as of a day as close as
practicable  to  the  Closing  Date)  from  appropriate  authorities  as to  the
corporate  existence  of South  Jersey and South  Jersey  Savings and such other
documents and  certificates to evidence  fulfillment of the conditions set forth
in SECTIONS 5.1 and 5.2 as Richmond County may reasonably require.

            Section 5.3. Conditions to the Obligations of South Jersey. The
                         ---------------------------------------------
obligations of South Jersey to effect the Merger,  the Bank Merger and any other
transactions  contemplated  by this  Agreement  shall be further  subject to the
satisfaction of the following additional conditions:

            (a) Representations and Warranties; Performance of Obligations. Each
                ----------------------------------------------------------
of the obligations of Richmond County required to be performed by it at or prior
to the  Closing  pursuant  to the terms of this  Agreement  shall have been duly
performed and complied with in all material respects and the representations and
warranties  of Richmond  County  contained in this  Agreement  shall be true and
correct,  subject to SECTION 2.1, as of the date of this Agreement and as of the
Effective  Time as though made at and as of the Effective Time (except as to any
representation or warranty which  specifically  relates to an earlier date), and
South Jersey shall have received a certificate to the foregoing effect signed by
the chief  executive  officer and the chief  financial or  principal  accounting
officer of Richmond County.

            (b) Deposit of Merger Consideration. Richmond County shall have
                -------------------------------
deposited  with the Paying Agent  sufficient  cash to pay the  aggregate  Merger
Consideration and South Jersey shall have received a certificate from the Paying
Agent to such effect.

            (c)  Good Standing and Other Certificates. South Jersey shall have
                 ------------------------------------
received  certificates  (such  certificates  to be dated as of a day as close as
practicable  to  the  Closing  Date)  from  appropriate  authorities  as to  the
corporate existence of Richmond County and such other documents and certificates
to evidence  fulfillment  of the conditions set forth in SECTIONS 5.1 and 5.3 as
South Jersey may reasonably require.

                                   ARTICLE VI

                                   TERMINATION

                                   -----------

            Section 6.1. Termination. This Agreement may be terminated, and the
                         -----------
Merger abandoned,  at or prior to the Effective Date, either before or after any
requisite stockholder approval:

            (a) by the mutual  consent of Richmond  County and South Jersey in a
written instrument, if the Board of Directors of each so determines by vote of a
majority of the members of its entire Board; or

            (b) by either Richmond  County or South Jersey,  in the event of the
failure of the  stockholders  of South  Jersey to approve the  Agreement  at the
Stockholder Meeting; PROVIDED,

                                       45

<PAGE> 49

HOWEVER,  that South Jersey shall only be entitled to  terminate  the  Agreement
pursuant to this clause if it has  complied in all  material  respects  with its
obligations under SECTION 4.8 and SECTION 4.9; or

            (c) by either  Richmond  County or South  Jersey,  if either (i) any
approval,  consent  or  waiver  of a  governmental  agency  required  to  permit
consummation of the transactions  contemplated  hereby shall have been denied or
(ii) any governmental  authority of competent  jurisdiction  shall have issued a
final, unappealable order enjoining or otherwise prohibiting consummation of the
transactions contemplated by this Agreement; or

            (d) by either Richmond County or South Jersey, in the event that the
Merger is not  consummated  by  December  31,  2000,  unless  the  failure to so
consummate by such time is due to the breach of any representation,  warranty or
covenant contained in this Agreement by the party seeking to terminate; or

            (e) by either  Richmond  County or South Jersey  (provided  that the
party seeking  termination is not then in material breach of any representation,
warranty,  covenant or other agreement  contained herein), in the event of (i) a
failure to perform or comply by the other party with any  covenant or  agreement
of such other party contained in this Agreement, which failure or non-compliance
is material in the context of the  transactions  contemplated by this Agreement,
or  (ii)  any  inaccuracies,   omissions  or  breach  in  the   representations,
warranties,  covenants  or  agreements  of the  other  party  contained  in this
Agreement the circumstances as to which either  individually or in the aggregate
have, or reasonably could be expected to have, a Material Adverse Effect on such
other  party;  in either  case  which has not been or cannot be cured  within 30
calendar  days after  written  notice  thereof is given by the party  seeking to
terminate to such other party; or

            (f) by Richmond  County,  if the Board of  Directors of South Jersey
does not publicly recommend in the Proxy Statement that stockholders approve and
adopt this  Agreement  and the  Merger or if,  after  recommending  in the Proxy
Statement that stockholders approve and adopt this Agreement and the Merger, the
Board of Directors of South  Jersey shall have  withdrawn,  qualified or revised
such recommendation in any respect materially adverse to Richmond County.

            Section 6.2. Effect of Termination. In the event of termination of
                         ---------------------
this  Agreement  by  either  Richmond  County  or  South  Jersey  prior  to  the
consummation  of the Merger as provided in SECTION  6.1,  this  Agreement  shall
forthwith  become  void and have no effect  except  (i) the  obligations  of the
parties  under  SECTIONS 4.3 (with  respect to  confidentiality),  and 8.6 shall
survive any termination of this Agreement and (ii) that notwithstanding anything
to the  contrary  contained  in this  Agreement,  no party  shall be relieved or
released from any  liabilities  or damages  arising out of its willful breach of
any provision of this Agreement.

                                       46

<PAGE> 50

                                   ARTICLE VII

                   CLOSING, EFFECTIVE DATE AND EFFECTIVE TIME
                   ------------------------------------------

            Section 7.1. Effective Date and Effective Time. The closing of the
                         ---------------------------------
transactions  contemplated hereby ("CLOSING") shall take place at the offices of
Muldoon,  Murphy & Faucette LLP, 5101 Wisconsin  Avenue,  N.W.,  Washington,  DC
20016, unless another place is agreed to by Richmond County and South Jersey, on
a date designated by Richmond County  ("CLOSING  DATE") that is no later than 14
days following the date on which the expiration of the last  applicable  waiting
period in connection with notices to and approvals of  governmental  authorities
shall  occur  and all  conditions  to the  consummation  of this  Agreement  are
satisfied or waived  (excluding  conditions  that,  by their  nature,  cannot be
satisfied  until the Closing Date), or on such other date as may be agreed to by
the parties.  Prior to the Closing Date,  Acquisition Sub and South Jersey shall
execute a  certificate  of  merger  in  accordance  with all  appropriate  legal
requirements,  which shall be filed as required by law on the Closing Date,  and
the Merger  provided for therein shall become  effective  upon such filing or on
such date as may be specified in such  certificate  of merger.  The date of such
filing or such later effective date as specified in the certificate of merger is
herein referred to as the "EFFECTIVE  DATE." The "EFFECTIVE  TIME" of the Merger
shall be as set forth in the certificate of merger.

            Section 7.2. Deliveries at the Closing. Subject to the provisions of
                         -------------------------
Articles V and VI, on the  Closing  Date there  shall be  delivered  to Richmond
County and South Jersey the documents and  instruments  required to be delivered
under Article V.

                                  ARTICLE VIII

                              CERTAIN OTHER MATTERS

                              ---------------------

            Section 8.1. Certain Definitions; Interpretation.   As used in this
                         -----------------------------------
 Agreement, the following terms shall have the meanings indicated:

            "MATERIAL" means material to Richmond County or South Jersey (as the
      case may be) and its respective subsidiaries, taken as a whole.

            "MATERIAL  ADVERSE  EFFECT"  means an effect  which is material  and
      adverse to the business,  financial  condition or results of operations of
      South Jersey and South Jersey Savings taken as a whole or Richmond  County
      and its  subsidiaries  taken  as a whole,  as the  case may be;  PROVIDED,
      HOWEVER,  that any such  effect  resulting  from any (i)  changes in laws,
      rules or  regulations  or GAAP or regulatory  accounting  requirements  or
      interpretations  thereof  that  apply to South  Jersey  and  South  Jersey
      Savings or Richmond County and Richmond  County  Savings,  as the case may
      be, or to similarly situated  financial and/or depository  institutions or
      (ii)  changes in  economic  conditions  affecting  financial  institutions
      generally,  including but not limited to,  changes in the general level of
      market interest rates shall not be considered in determining if a Material
      Adverse Effect has occurred.

                                       47

<PAGE> 51

            "KNOWLEDGE"  shall  mean,  with  respect to a party  hereto,  actual
      knowledge of any of the members of the Board of Directors of that party or
      any officer of that party with the title ranking not less than senior vice
      president.

            "PERSON"  includes an  individual,  corporation,  limited  liability
      company, partnership, association, trust or unincorporated organization.

            When a reference is made in this  Agreement to Sections or Exhibits,
such reference  shall be to a Section of, or Exhibit to, this  Agreement  unless
otherwise  indicated.  The table of  contents  and  headings  contained  in this
Agreement  are for ease of  reference  only and shall not affect the  meaning or
interpretation  of this Agreement.  Whenever the words "include,"  "includes" or
"including"  are used in this  Agreement,  they shall be deemed  followed by the
words "without  limitation." Any singular term in this Agreement shall be deemed
to include the plural, and any plural term the singular. Any reference to gender
in this Agreement shall be deemed to include any other gender.

            Section 8.2. Survival. Only those agreements and covenants of the
                         --------
parties  that are by their  terms  applicable  in  whole  or in part  after  the
Effective Time,  including SECTIONS 4.3, 4.11 and 4.12 of this Agreement,  shall
survive the Effective Time. All other  representations,  warranties,  agreements
and  covenants  shall be deemed to be  conditions of the Agreement and shall not
survive the Effective Time.

            Section 8.3. Waiver; Amendment. Prior to the Effective Time, any
                         -----------------
provision of this Agreement may be (i) waived in writing by the party benefitted
by the  provision  or (ii)  amended  or  modified  at any  time  (including  the
structure of the  transaction)  by an  agreement in writing  between the parties
hereto  except that,  after the vote by the  stockholders  of South  Jersey,  no
amendment or  modification  may be made that would reduce the amount or alter or
change the kind of  consideration  to be  received  by  holders of South  Jersey
Common Stock or contravene any provision of the DGCL or the New Jersey, New York
and federal banking laws, rules and regulations.

            Section 8.4. Counterparts. This Agreement may be executed in
                         ------------
counterparts each of which shall be deemed to constitute an original, but all of
which together shall constitute one and the same instrument.

            Section 8.5. Governing Law. This Agreement shall be governed by, and
                         -------------
interpreted  in  accordance  with,  the laws of the State of  Delaware,  without
regard to conflicts of laws principles.

            Section 8.6. Expenses. Each party hereto will bear all expenses
                         --------
incurred by it in connection with this Agreement and the transactions
contemplated hereby.

            Section 8.7. Notices. All notices, requests, acknowledgments and
                         -------
other  communications  hereunder  to a party  shall be in  writing  and shall be
deemed to have been duly  given when  delivered  by hand,  overnight  courier or
facsimile transmission (confirmed in writing)

                                       48

<PAGE>  52

to such party at its address or  facsimile  number set forth below or such other
address  or  facsimile  transmission  as such  party may  specify  by notice (in
accordance with this provision) to the other party hereto.

            If to South Jersey, to:

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

                            Attn: Robert J. Colacicco

                            Facsimile: (856) 629-3095

            With copies to:

                        Douglas J. McClintock, Esq.
                        Thacher Proffitt & Wood
                        Two Wold Trade Center
                        39th Floor
                        New York, New York 10048
                        Facsimile: (212) 432-2898

            If to Richmond County, to:

                         Richmond County Financial Corp.

                        1214 Castleton Avenue

                          Staten Island, New York 10310

                            Attn: Michael F. Manzulli

                            Facsimile: (718) 390-0224

            With copies to:

                        Douglas P. Faucette, Esq.
                        Eric S. Kracov, Esq.
                        Muldoon, Murphy & Faucette LLP
                        5101 Wisconsin Avenue, N.W.
                        Washington, D.C.  20016
                        Facsimile:  (202) 966-9409

            Section 8.8. Entire Agreement; etc. This Agreement, together with
                         ----------------------
the Plan of Bank Merger,  the Exhibits and  Disclosure  Letters,  represents the
entire  understanding  of the parties hereto with reference to the  transactions
contemplated  hereby and supersedes any and all other oral or written agreements
heretofore  made. All terms and  provisions of this  Agreement  shall be binding
upon and shall inure to the benefit of the parties  hereto and their  respective
successors and assigns.  Except for SECTIONS 4.11 and 4.12,  which confer rights
on the parties described

                                       49

<PAGE> 53

therein,  nothing in this  Agreement is intended to confer upon any other person
any  rights or  remedies  of any  nature  whatsoever  under or by reason of this
Agreement.

            Section 8.9. Successors and Assigns; Assignment. This Agreement
                         ----------------------------------
shall be binding  upon and inure to the benefit of the parties  hereto and their
respective  successors and assigns;  PROVIDED,  HOWEVER, that this Agreement may
not be assigned by either party hereto without the written  consent of the other
party.

                                       50

<PAGE> 54

            IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be  executed  by their  duly  authorized  officers  as of the date  first  above
written.

                                    RICHMOND COUNTY FINANCIAL CORP.

                                    By:   /s/ Michael F. Manzulli
                                          --------------------------------------
                                          Michael F. Manzulli
                                          Chairman and Chief Executive Officer

                                    RICHMOND COUNTY ACQUISITION, INC.

                                    By:   /s/ Anthony E. Burke
                                          --------------------------------------
                                          Anthony E. Burke
                                          President and Chief Operating Officer

                                    SOUTH JERSEY FINANCIAL CORPORATION, INC.

                                    By:   /s/ Robert J. Colacicco
                                          --------------------------------------
                                          Robert J. Colacicco
                                          President and Chief Executive Officer


                                       51