RUMSON-FAIR HAVEN BANK & TRUST COMPANY ... - Liberty Online
RUMSON-FAIR HAVEN BANK & TRUST COMPANY ... - Liberty Online
RUMSON-FAIR HAVEN BANK & TRUST COMPANY ... - Liberty Online
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To Our Stockholders:<br />
<strong>RUMSON</strong>-<strong>FAIR</strong> <strong>HAVEN</strong> <strong>BANK</strong> & <strong>TRUST</strong> <strong>COMPANY</strong><br />
20 Bingham Avenue<br />
Rumson, New Jersey 07760<br />
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS<br />
To Be Held Wednesday, April 27, 2011<br />
The Annual Meeting of Stockholders (the “Annual Meeting”) of Rumson-Fair Haven<br />
Bank & Trust Company (the “Bank”) will be held at the Salt Creek Grille, located at 4 Bingham<br />
Avenue, Rumson, New Jersey, on Wednesday, April 27, 2011 at 6:00 p.m. to consider and act<br />
upon the following matters:<br />
1. The election of the eleven (11) nominees named in the accompanying proxy<br />
statement to serve as directors of the Bank until the next annual meeting of<br />
stockholders and thereafter until their successors are duly elected and qualify;<br />
2. A proposal to approve the adoption of the Rumson-Fair Haven Bank & Trust<br />
Company 2011 Employee Stock Option and Equity Incentive Plan;<br />
3. A proposal to approve the adoption of the Rumson-Fair Haven Bank & Trust<br />
Company 2011 Non-Employee Director Stock Option and Equity Incentive Plan; and<br />
4. Such other business as shall properly come before the Annual Meeting and any<br />
postponement or adjournment thereof.<br />
Stockholders of record at the close of business on March 11, 2011 are entitled to receive<br />
notice of and to vote at the Annual Meeting or any postponement or adjournment thereof.<br />
Whether or not you contemplate attending the Annual Meeting, please execute the enclosed form<br />
of proxy and return it to the Bank in the accompanying postage-prepaid envelope. You may<br />
revoke your proxy at any time prior to its exercise by delivering a later-dated proxy or a written<br />
notice of revocation to the Bank prior to or at the Annual Meeting.<br />
By Order of the Board of Directors<br />
William J. Barrett, Chairman of the Board<br />
March 18, 2011<br />
YOUR VOTE IS IMPORTANT. PLEASE SIGN AND RETURN<br />
THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED
<strong>RUMSON</strong>-<strong>FAIR</strong> <strong>HAVEN</strong> <strong>BANK</strong> & <strong>TRUST</strong> <strong>COMPANY</strong><br />
20 Bingham Avenue<br />
Rumson, New Jersey 07760<br />
PROXY STATEMENT<br />
Dated March 18, 2011<br />
GENERAL PROXY STATEMENT INFORMATION<br />
This proxy statement and the accompanying form of proxy are being furnished in<br />
connection with the solicitation by the Board of Directors (the “Board” or “Board of Directors”)<br />
of Rumson-Fair Haven Bank & Trust Company (the “Bank”) of proxies for use at the Annual<br />
Meeting of Stockholders of the Bank (the “Annual Meeting”), to be held at the Salt Creek Grille,<br />
located at 4 Bingham Avenue, Rumson, New Jersey, on Wednesday, April 27, 2011 at 6:00 p.m.<br />
The business expected to be voted upon at the Annual Meeting is the election of the eleven (11)<br />
nominees named in this proxy statement to serve as directors for the term specified herein, the<br />
proposal to approve the adoption of the Rumson-Fair Haven Bank & Trust Company 2011<br />
Employee Stock Option and Equity Incentive Plan and the Rumson-Fair Haven Bank & Trust<br />
Company 2011 Non-Employee Director Stock Option and Equity Incentive Plan, and such other<br />
business as shall properly come before the Annual Meeting or any postponement or adjournment<br />
thereof.<br />
Outstanding Securities and Voting Rights<br />
The record date for determining stockholders entitled to notice of and to vote at the<br />
Annual Meeting is March 11, 2011 (the “Record Date”). Only stockholders of record as of the<br />
Record Date will be entitled to receive notice of, and to vote at, the Annual Meeting. On the<br />
Record Date, 2,907,647 shares of the Bank’s common stock, par value $2.00 per share<br />
(“Common Stock”), were outstanding and are eligible to be voted at the Annual Meeting. Each<br />
share is entitled to one vote. The presence at the Annual Meeting in person or by proxy of the<br />
holders of shares entitled to cast a majority of the votes of all shares of Common Stock issued<br />
and outstanding as of the Record Date will constitute a quorum; provided, however, that the<br />
approval of the proposals to adopt the two stock option and equity incentive plans being<br />
considered at the Annual Meeting require the affirmative vote of at least two-thirds of the issued<br />
and outstanding Common Stock entitled to be voted at the Annual Meeting.<br />
All shares represented by a valid proxy received pursuant to this solicitation will be voted<br />
(i) “FOR” the eleven (11) nominees for director named in this proxy statement, (ii) “FOR” the<br />
approval of the adoption of the Rumson-Fair Haven Bank & Trust Company 2011 Employee<br />
Stock Option and Equity Incentive Plan and (iii) “FOR” the approval of the adoption of the<br />
Rumson-Fair Haven Bank & Trust Company 2011 Non-Employee Director Stock Option and<br />
Equity Incentive Plan, unless the stockholder specifies a different choice by means of his, her or<br />
its proxy or revokes the proxy prior to the time of the vote. Should any other matters properly<br />
come before the Annual Meeting or any postponement or adjournment thereof, the persons<br />
named as proxies will vote upon such matters according to their discretion unless a stockholder<br />
otherwise specifies in his, her or its proxy.<br />
3
At the Annual Meeting, a judge of election will tabulate ballots cast by stockholders<br />
present and voting in person, and votes cast by proxy. Under applicable state law and the Bank’s<br />
certificate of incorporation and bylaws, abstentions and broker non-votes are counted only for<br />
purposes of establishing a quorum. At the Annual Meeting, and assuming a quorum has been<br />
established, a plurality of the shares voted, in person or by proxy, is required to elect a nominee<br />
for director; and the vote of the holders of at least two-thirds of the issued and outstanding shares<br />
of Common Stock entitled to vote at the Annual Meeting, voting in person or by proxy, is<br />
required to approve the adoption of the Rumson-Fair Haven Bank & Trust Company 2011<br />
Employee Stock Option and Equity Incentive Plan and the Rumson-Fair Haven Bank & Trust<br />
Company 2011 Non-Employee Director Stock Option and Equity Incentive Plan.<br />
This proxy statement and the enclosed form of proxy are being mailed to stockholders on<br />
or about March 18, 2011.<br />
Revocability of Proxies<br />
Any stockholder of record submitting a proxy has the right to attend and to vote at the<br />
Annual Meeting in person. If the stockholder submits a proxy prior to the Annual Meeting, the<br />
proxy may be revoked prior to the Annual Meeting by delivering a later-dated proxy or written<br />
revocation to the Secretary of the Bank, Joseph Castelluci, Esq., at 20 Bingham Avenue,<br />
Rumson, New Jersey 07760. A proxy may be revoked at the Annual Meeting by filing a laterdated<br />
proxy or written revocation with the Secretary of the Annual Meeting prior to the vote of<br />
such proxy. Presence at the Annual Meeting does not, in and of itself, revoke a proxy.<br />
4
STOCK OWNERSHIP of DIRECTORS, EXECUTIVE OFFICERS<br />
and CERTAIN BENEFICIAL OWNERS<br />
The following table sets forth, as of March 11, 2011, information with respect to the<br />
beneficial ownership of the Bank’s outstanding Common Stock held by: (i) each director and<br />
nominee for director; (ii) each executive officer; (iii) all directors, nominees for director and<br />
executive officers of the Bank as a group; and (iv) each person who is known by the Company to<br />
own beneficially more than five percent (5%) of the issued and outstanding Common Stock.<br />
Beneficial Owner<br />
William J. Barrett (3)(4)<br />
Common<br />
Common<br />
Stock<br />
Subject to<br />
Options and<br />
Percentage<br />
Stock (1) Warrants (2) Total Ownership<br />
314,849 75,732 390,581 13.1%<br />
Virginia S. Bauer (5)(6) 1,938 -- 1,938 *<br />
Joseph Castelluci, Esq. (3)(7) 6,613 4,724 11,337 *<br />
Dennis J. Flanagan (3)(8) 28,786 49,103 77,889 2.6%<br />
Herbert M. Gardner (3)(9) 35,159 19,915 55,074 1.9%<br />
Stephen P. Kelleher C.P.A. (3) 375 -- 375 *<br />
Stephen A. Tyler (3)(10) 56,816 34,295 91,111 3.1%<br />
Thomas I. Unterberg (3) 143,558 17,207 160,765 5.5%<br />
R. Van Whisnand (3) 22,546 20,622 43,168 1.5%<br />
William Van Winkle (5) 250 -- 250 *<br />
Jerold L. Zaro, Esq. (5) -- -- -- --<br />
Thomas Sannelli (11) 3,545 13,176 16,721 *<br />
All Directors and Executive<br />
Officers (12 persons)<br />
614,435<br />
234,774 849,209 27.0%<br />
Beneficial Owner of more<br />
Common<br />
Stock<br />
than 5% of the Common Common Subject to<br />
Percentage<br />
Stock<br />
Stock (1) Warrants (2) Total Ownership<br />
KLCC Investments, LLC (12) 419,723 18,143 437,866 15.0%<br />
Steven D. Hovde (13)(14) 183,012 - 183,012 6.3%<br />
Estate of Judith Stanley<br />
Coleman (15)<br />
130,450 37,499 167,949 5.7%<br />
Nancy B. Mulheren (16) 131,533 32,000 163,533 5.6%<br />
* Indicates less than 1%.<br />
(1) In accordance with Rule 13d-3 of the Securities Exchange Act of 1934, as amended, a person is<br />
deemed to be the beneficial owner, for purposes of this table, of any shares of Common Stock if<br />
he or she has voting or investment power with respect to such security. This includes shares<br />
owned by spouses, other immediate family members in trust, shares held in retirement accounts<br />
or funds for the benefit of the named individuals, and other forms of ownership, over which
shares the person named in the table may possess voting and/or investment power. Except as<br />
otherwise noted, all shares are owned of record or beneficially by the named person.<br />
(2) Includes, for purposes of this table, the number of shares of Common Stock subject to currently<br />
exercisable options and options exercisable within sixty (60) days of March 11, 2011, as well as<br />
currently exercisable warrants to purchase Common Stock.<br />
(3) Currently serves as a member of the Bank’s Board of Directors.<br />
(4) Includes 18,018 shares and warrants to acquire 3,409 shares held by Mr. Barrett’s wife, of which<br />
Mr. Barrett disclaims beneficial ownership, and 262,904 shares and warrants to acquire 49,310<br />
shares, held in certain retirement accounts in Mr. Barrett’s name.<br />
(5) Elected as a director by the Board of Directors on February 14, 2011 to fill a vacancy on the<br />
Board.<br />
(6) Shares held by Ms. Bauer’s husband. Ms. Bauer disclaims beneficial ownership of these shares.<br />
(7) Mr. Castelluci currently serves as Executive Vice President, General Counsel and Secretary of the<br />
Bank. Includes 3,210 shares held in Mr. Castelluci’s IRA account.<br />
(8) Mr. Flanagan currently serves as President, Chief Executive Officer and Chief Financial Officer<br />
of the Bank. Includes 731 shares held by Mr. Flanagan’s IRA account and 28,055 shares held<br />
jointly with Mr. Flanagan’s wife.<br />
(9) Includes 2,359 shares and 333 shares subject to warrants held by Mr. Gardner’s wife, of which<br />
Mr. Gardner disclaims beneficial ownership, and 27,749 shares and 4,666 shares subject to<br />
warrants held by Mr. Gardner’s IRA-Roll.<br />
(10) Includes 3,247 shares held by Mr. Tyler’s wife, of which Mr. Tyler disclaims beneficial<br />
ownership.<br />
(11) Mr. Sanelli currently serves as a Senior Vice President of the Bank.<br />
(12) KLCC Investments, LLC maintains a mailing address at 1350 Broadway, Suite 1010, New York,<br />
New York 10018.<br />
(13) Steven D. Hovde maintains a mailing address at c/o Hovde Financial, LLC, 1629 Colonial<br />
Parkway, Inverness, Illinois 60067.<br />
(14) Shares held jointly with Mr. Hovde’s wife.<br />
(15) Ms. Coleman was a former director of the Bank. Her estate maintains a mailing address at 578<br />
Navesink River Road, Red Bank, New Jersey 07701.<br />
(16) Nancy B. Mulheren maintains a mailing address at c/o Rumson Management Company, 95<br />
Avenue of the Two Rivers, Rumson, New Jersey 07760.<br />
6
PROPOSAL 1 - ELECTION OF DIRECTORS<br />
The Bank’s certificate of incorporation and bylaws authorize a minimum of five (5) and a<br />
maximum of twenty-five (25) directors, but leave the exact number to be fixed by resolution of<br />
the Board of Directors. The Board of Directors has fixed the size of the full Board at eleven (11)<br />
directors.<br />
Nomination Process<br />
The Board is responsible for determining the slate of director nominees for election to the<br />
Board of Directors. In determining the candidates who will be nominated for election as<br />
directors, the Board will consider, among other things, a candidate’s connections to the<br />
community in which the Bank operates and ability to serve as an advocate for the Bank in such<br />
community, a candidate’s proximity to the Bank, a candidate’s age as it relates to the candidate’s<br />
mental and physical ability to carry out his or her responsibilities as a director, whether a<br />
candidate serves on the board or as an attorney for a competing institution, a candidate’s<br />
ownership of the Bank’s common stock, and a candidate’s personal and professional<br />
integrity. In addition to these minimum qualifications, the Board seeks to nominate a slate of<br />
candidates with strong backgrounds and experience in business, government, education and<br />
public service. In evaluating the suitability of individual candidates for nomination, the Board<br />
takes into account many factors, including a candidate’s general understanding of marketing,<br />
finance and other disciplines relevant to the success of a publicly traded company in today’s<br />
business environment; understanding of the Bank’s business and technology; educational and<br />
professional background; and personal accomplishment. The Board evaluates each individual in<br />
the context of the Board as a whole, with the objective of recommending a group that can best<br />
perpetuate the success of the Bank’s business and represent stockholder interests through the<br />
exercise of sound judgment, using its members’ diversity of experience. In determining whether<br />
to recommend a director for re-election, the Board considers the director’s past attendance at<br />
meetings and participation in and contributions to the activities of the Board.<br />
The Board of Directors will also consider nominees for director suggested by<br />
stockholders of the Bank applying the same criteria for nominees described above and<br />
considering certain additional information. Any stockholder nominee for director for<br />
consideration by the Board (or a committee of the Board established for that purpose) for the<br />
2012 annual meeting of stockholders must be received by the Bank at its principal executive<br />
offices located at 20 Bingham Avenue, Rumson, New Jersey 07760 no later than December 1,<br />
2011 and must be accompanied by the following information: (1) the name and contact<br />
information for the nominee; (2) a statement of the nominee’s business experience and<br />
educational background; (3) a detailed description describing any relationship between the<br />
nominee and the proposing stockholder; (4) a statement by the stockholder explaining why he,<br />
she or it believes that the nominee is qualified to serve on the Board and how his or her service<br />
would benefit the Bank; and (5) a statement that the nominee is willing to be considered and<br />
willing to serve as a director of the Bank if nominated and elected.
Nominees for Election<br />
The Board of Directors has nominated and recommends the election of each of the<br />
nominees listed below for a one-year term to expire at the 2012 Annual Meeting of Stockholders<br />
of the Bank. If, for any reason, any of the nominees becomes unavailable for election, the proxy<br />
solicited by the Bank may be voted for a substitute nominee selected by the Board of Directors.<br />
The Board of Directors has no reason to believe that any of the named nominees is not available<br />
to serve as a director or will not serve if elected. Pursuant to the banking laws of the state of<br />
New Jersey and the Bank’s bylaws, the directors of the Bank are elected by the stockholders at<br />
each annual meeting of stockholders. Each of the elected directors shall hold office from the<br />
time when a majority of all directors elected at the Annual Meeting shall have qualified, until the<br />
2012 Annual Meeting of Stockholders, and thereafter, until his or her successor has been elected<br />
and qualified.<br />
<strong>RUMSON</strong>-<strong>FAIR</strong> <strong>HAVEN</strong> <strong>BANK</strong> & <strong>TRUST</strong> <strong>COMPANY</strong><br />
Directors<br />
Name Current Position<br />
William J. Barrett Chairman<br />
Dennis J. Flanagan President, Chief Executive Officer, Chief<br />
Financial Officer and Director<br />
Joseph Castelluci, Esq. Executive Vice President, General Counsel,<br />
Secretary and Director<br />
Virginia S. Bauer Director<br />
Herbert M. Gardner Director<br />
Stephen P. Kelleher, C.P.A. Director<br />
Stephen A. Tyler Director<br />
Thomas I. Unterberg Director<br />
William Van Winkle Director<br />
R. Van Whisnand Director<br />
Jerold L. Zaro, Esq. Director<br />
8
Biographical Information:<br />
William J. Barrett has been the President of W.J. Barrett Associates since 2009 and has served<br />
as a director of the Bank since 2000. He served as President of Barrett-Gardner Associates, Inc.,<br />
a private merchant banking firm, since 2004. Prior thereto, he was a Senior Vice President with<br />
Janney Montgomery Scott LLC. Mr. Barrett is a director of Supreme Industries, Inc., a<br />
specialized manufacturer of truck bodies, TGC Industries, Inc., a geophysical services company,<br />
Chase Packaging Corp., a development-stage company and MassMutual Corporate Investors and<br />
MassMutual Participation Investors, closed-end investment trusts. Mr. Barrett received his<br />
Bachelor of Arts degree from DePauw University and his MBA from New York University.<br />
Dennis J. Flanagan was appointed as the President and Chief Executive Officer of the Bank on<br />
January 12, 2011, and has served as the Chief Financial Officer of the Bank since 2000 and as a<br />
director of the Bank since 2003. He began his banking career at Bankers Trust New York<br />
Corporation in 1974 and has worked for various banking organizations in various capacities over<br />
the past 36 years. Mr. Flanagan graduated in 1974 with a Bachelor of Science degree from<br />
Herbert H. Lehman College, obtained his MBA in 1981 from Bernard M. Baruch College and is<br />
a 1986 graduate of the Stonier Graduate School of Banking.<br />
Virginia S. Bauer is the Chief Executive Officer of GTBM Inc., a developer and marketer of<br />
proprietary software solutions and was appointed as a director of the Bank on February 14, 2011.<br />
From 2008 to 2010, Ms. Bauer served as the Senior Vice President of Development for Covenant<br />
House International, the largest privately funded agency in North America that provides shelter<br />
and other services to homeless youth. She currently serves on the Board of Commissioners for<br />
the Port Authority of New York and New Jersey, having been appointed to that position in 2007.<br />
From 2005 to 2008 Ms. Bauer served as Vice Chairperson of the Fort Monmouth Economic<br />
Redevelopment Authority, serving as New Jersey’s lead representative in the revitalization of<br />
Fort Monmouth located in Eatontown, New Jersey. From 2004 to 2007 she served as Commerce<br />
Secretary for the state of New Jersey. Ms. Bauer is a member of the National 9/11 Memorial and<br />
Museum Board, a trustee of Monmouth University located in West Long Branch, New Jersey, a<br />
member of the Economic Club of New York, a member of the Board of the Business School of<br />
Rutgers University and serves on the Foundation Board of Monmouth Medical Center in Long<br />
Branch, New Jersey. She was employed as a financial planner with Merrill Lynch from 1979 to<br />
1985. Ms. Bauer is a graduate of Rosemont College in Rosemont, Pennsylvania.<br />
Joseph Castelluci, Esq. has served as Executive Vice President, General Counsel and Secretary<br />
of the Bank since January 18, 2011, and as a director of the Bank since 2010. Prior to joining the<br />
Bank as an officer, he was a principal of Peluso, Castelluci & Weintraub, P.C., where he<br />
managed the Commercial and Transactional Section of the firm’s Business Planning Group,<br />
since 1999. Mr. Castelluci is a member of the New Jersey, Pennsylvania and Washington, D.C.<br />
Bars, as well as the Monmouth County Bar Association, where he served on the Technology<br />
Committee and the Banking and Commercial Law Committee. He is a former member of the<br />
Commercial Law League of America, Commercial Division. He received his Juris Doctor<br />
degree from Villanova University School of Law and a Bachelor of Science degree in<br />
Accounting from Rider University.
Herbert M. Gardner was most recently Executive Vice President of Barrett-Gardner Associates,<br />
Inc., a private merchant banking firm, and prior thereto, he was a Senior Vice President with<br />
Janney Montgomery Scott LLC. He has served as a director of the Bank since 2000. Mr.<br />
Gardner is Chairman of the Board of Supreme Industries, Inc., a specialized manufacturer of<br />
truck bodies and serves as a director of the following companies: Chase Packaging Corporation,<br />
a development-stage company and TGC Industries, Inc., a geophysical services company. Mr.<br />
Gardner graduated from New York University with a Bachelor of Arts degree, and received his<br />
MBA from the Stern School of Business at New York University.<br />
Stephen P. Kelleher, C.P.A. is the senior principal of Kelleher, Petzold & Co., CPA, LLC, a<br />
public accounting firm he founded in 1986 that services individual and business clients in<br />
Monmouth County and Ocean County, New Jersey, and is a member and advisor of several nonprofit<br />
organizations in those communities. He has served as a director of the Bank since 2010.<br />
Prior to founding his accounting firm, he worked as an accounting manager at Ingersoll Rand<br />
from 1981 to 1986. Mr. Kelleher is a member of the American Institute of Certified Public<br />
Accountants and the New Jersey Society of Public Accountants. Mr. Kelleher graduated from<br />
Seton Hall University in 1981 with a Bachelor of Science degree in Accounting.<br />
Stephen A. Tyler was President and Chief Executive Officer of the Bank from its opening in July<br />
2000 until July 2003, and has served as a director of the Bank since 2000. Formerly, he was<br />
employed by J.P. Morgan & Co. from 1970 until his retirement in 1998. He served in various<br />
capacities at J.P. Morgan & Co., including Division and Managing Director in charge of U.S.<br />
Dollar Interest Rate Management. He is a member of the advisory board of Love, Inc., trustee of<br />
the Community Foundation of New Jersey, and a director and Treasurer of the Park City<br />
Foundation, Park City, Utah. Mr. Tyler received his Bachelor of Arts degree from Cornell<br />
University.<br />
Thomas I. Unterberg has served as the Chairman and the General Partner of Unterberg Capital<br />
LLC since 2008, and as a director of the Bank from 2001 to 2010 and since February 14, 2011.<br />
He previously was a partner of C.E. Unterberg, Towbin. He has been in the investment banking<br />
business since 1956 and has been a director or trustee of a number of public and private<br />
companies and institutions. He is a graduate of Princeton University and received his MBA from<br />
the Wharton School of Business.<br />
R. Van Whisnand has served as a Portfolio Manager at Wilkinson O’Grady & Co. Inc. since<br />
2008, and as a director of the Bank since 2000. Prior to joining Wilkinson O’Grady & Co. Inc.,<br />
he was a Managing Partner of Osprey Partners Investment Management, LLC. Mr. Whisnand<br />
had been a principal in the investment management firm Fox Asset Management, was a founder<br />
and partner in the investment firm Combined Capital Management and began his career with<br />
Stone & Webster, Inc. Mr. Whisnand is a graduate of Brown University and received his MBA<br />
from the Darden School at the University of Virginia.<br />
William Van Winkle is a Certified Financial Planner and is the President of Van Winkle<br />
Associates, a financial services firm located in Tinton Falls, New Jersey which Mr. Van Winkle<br />
founded in 1979. He was appointed as a director of the Bank on February 14, 2011. He has<br />
previously served on the boards of the Visiting Nurse Association of Central New Jersey, the<br />
Monmouth Conservation Foundation, the Riverview Hospital Foundation and the Meridian<br />
10
Health Care Foundation. Mr. Van Winkle has served on various committees of the NYL Agent’s<br />
Advisory Council, of which he was elected Vice President in 1992 and President in 1993. He<br />
served as a Division Vice President of the Million Dollar Round Table (MDRT) and as a<br />
member of the MDRT Foundation’s board. He has previously served as the President of the<br />
Brookdale Community College Foundation and of the Holland Society of New York. Mr. Van<br />
Winkle graduated with two Bachelor of Science degrees from Lehigh University.<br />
Jerold L. Zaro, Esq. is Counsel to the law firm of Sills, Cummis & Gross, P.C., and has served<br />
as a director of the Bank since February 14, 2011. Mr. Zaro previously served as Chief of the<br />
Office of Economic Growth and as a member of the New Jersey Economic Development<br />
Authority in the cabinets of former New Jersey Governor Jon S. Corzine and current New Jersey<br />
Governor Chris Christie. From 1991 to 2001, he served as the Commissioner of the New Jersey<br />
Sports and Exposition Authority (NJSEA), which owns, operates and maintains the<br />
Meadowlands Stadium, Izod Center, Meadowlands Racetrack, Monmouth Park, the Atlantic City<br />
Convention Center and the Camden Aquarium. In 2002, Mr. Zaro was appointed as Chairman of<br />
the New Jersey Highway Authority prior to its merger with the New Jersey Turnpike Authority,<br />
having previously served as Commissioner of the Highway Authority. He has been engaged in<br />
the practice of law for 34 years, first as a member of the law firm of Ansell Zaro Grimm &<br />
Aaron, P.C. and then as Counsel to his current firm, Sills, Cummis & Gross, P.C. Mr. Zaro<br />
previously served as Chairman of Ocean Independent Bank and as a member of the board of<br />
directors of First DeWitt Bank and Commerce Bank Shore, N.A. prior to the acquisition of the<br />
latter by TD Bank, N.A. He is also a member of the board of directors of Denholtz Holdings,<br />
LLC, a fully integrated real estate company, and is a principal in several other real estate<br />
companies. Mr. Zaro graduated with a Bachelor of Arts degree from Boston University in 1973<br />
and received his Juris Doctor degree from the Boston College School of Law in 1976.<br />
RECOMMENDATION ON PROPOSAL 1<br />
THE MEMBERS OF THE <strong>BANK</strong>’S BOARD OF DIRECTORS UNANIMOUSLY<br />
RECOMMEND A VOTE “FOR” ALL OF THE NOMINEES FOR DIRECTOR<br />
INCLUDED IN PROPOSAL 1.<br />
11
PROPOSAL 2 – APPROVAL OF THE ADOPTION OF THE <strong>RUMSON</strong>-<strong>FAIR</strong> <strong>HAVEN</strong><br />
<strong>BANK</strong> & <strong>TRUST</strong> <strong>COMPANY</strong> 2011 EMPLOYEE STOCK OPTION AND EQUITY<br />
INCENTIVE PLAN<br />
Introduction<br />
The Board of Directors has approved and adopted, subject to the approval and ratification<br />
of the Bank’s stockholders, the Rumson-Fair Haven Bank & Trust Company 2011 Employee<br />
Stock Option and Equity Incentive Plan (the “2011 Employee Plan”). The 2011 Employee Plan<br />
is designed to encourage and enable employees of the Bank to acquire or increase their holdings<br />
of Common Stock and other proprietary interests in the Bank. It is intended to promote these<br />
individuals’ interests in the Bank, thereby enhancing the efficiency, soundness, profitability,<br />
growth and stockholder value of the Bank.<br />
Under the 2011 Employee Plan, incentive and nonqualified stock options may be granted<br />
to eligible employees. Participants may also be eligible to receive, under certain conditions,<br />
stock appreciation rights (“SARs”) in the form of related SARs and freestanding SARs.<br />
No awards have been awarded under the 2011 Employee Plan, nor will any awards be<br />
awarded, unless and until the stockholders of the Bank approve the 2011 Employee Plan.<br />
The terms of the 2011 Employee Plan are complex and it is therefore recommended that<br />
stockholders thoroughly read the following description of the 2011 Employee Plan which<br />
describes certain of the provisions of the 2011 Employee Plan in greater detail. On written<br />
request, the Bank will provide without charge to each record or beneficial owner of Common<br />
Stock, a copy of the 2011 Employee Plan. Requests should be addressed to Mr. Joseph<br />
Castelluci, Esq., Secretary, Rumson-Fair Haven Bank & Trust Company, 20 Bingham Avenue,<br />
Rumson, New Jersey 07760.<br />
Administration of the 2011 Employee Plan<br />
The 2011 Employee Plan will be administered by the Board of Directors or the<br />
Compensation Committee of the Board upon delegation of that authority by the Board to the<br />
Compensation Committee (the “Administrator”). Under the terms of the 2011 Employee Plan,<br />
the Administrator is authorized to:<br />
• determine all matters relating to awards, including selection of individuals to receive<br />
awards, the types of awards granted, the number of shares of Common Stock, if any,<br />
subject to an award, and all terms, conditions, restrictions and limitations of an award;<br />
• prescribe the form or forms of award agreements evidencing any awards granted<br />
under the 2011 Employee Plan;<br />
• establish, amend and rescind rules and regulations for the administration of the 2011<br />
Employee Plan;<br />
• construe and interpret the 2011 Employee Plan and any awards and award agreements<br />
made under the 2011 Employee Plan;<br />
12
• interpret rules and regulations for administering the 2011 Employee Plan; and<br />
• make all other determinations deemed necessary or advisable for administering the<br />
2011 Employee Plan.<br />
Effective Date of the 2011 Employee Plan<br />
Pending approval of the 2011 Employee Plan by the stockholders of the Bank, the<br />
effective date of the 2011 Employee Plan will be April 27, 2011, the date of the Annual Meeting.<br />
All eligible participants may receive awards under the 2011 Employee Plan for ten years minus<br />
one day from the date on which the stockholders approve the 2011 Employee Plan.<br />
Shares of Common Stock Available under the 2011 Employee Plan<br />
Twenty-five thousand (25,000) shares of Common Stock have been reserved for issuance<br />
under the 2011 Employee Plan exclusive of shares that may be issued with respect to incentive<br />
stock options, and seventy-five thousand (75,000) shares of Common Stock have been reserved<br />
for issuance under the 2011 Employee Plan solely with respect to incentive stock options.<br />
Subject to applicable law and regulations, the number of shares reserved for issuance under the<br />
2011 Employee Plan are subject to adjustment due to changes in the outstanding shares of<br />
Common Stock due to a merger, consolidation or reorganization of the Bank, stock dividends,<br />
stock splits, combinations or reclassifications of the Common Stock, or other changes in the<br />
capital stock structure of the Bank. The number of shares of Common Stock reserved for<br />
issuance under the 2011 Employee Plan will not be reduced by:<br />
• dividends, including dividends paid in shares of Common Stock;<br />
• awards which by their terms are settled in cash rather than the issuance of shares of<br />
Common Stock;<br />
• any shares subject to an award under the 2011 Employee Plan which award is<br />
forfeited, cancelled or terminated, expires or lapses for any reason; and<br />
• any shares of Common Stock surrendered by a participant or withheld by the Bank to<br />
pay the option price for an award of shares or used to satisfy any tax withholding<br />
requirement in connection with the exercise or vesting of an award if, in accordance<br />
with the terms of the 2011 Employee Plan, a participant pays such option price or<br />
satisfies such tax withholding by either tendering previously owned shares of<br />
Common Stock or having the Bank withhold shares.<br />
Awards Available Under the 2011 Employee Plan:<br />
Stock Options<br />
The Administrator may grant either incentive stock options or nonqualified stock options.<br />
The exercise price of each stock option shall be equal to the “fair market value” (as defined<br />
below) of the Common Stock on the date the award is granted to the participant; provided,<br />
however, that:<br />
13
• with respect to a participant who owns more than 10% of the total combined voting<br />
power of all classes of stock of the Bank, the option price of an incentive stock option<br />
granted to such participant shall not be less than 110% of the fair market value of the<br />
Common Stock on the date the award is granted; and<br />
• in no event shall the option price per share of an incentive stock option or<br />
nonqualified stock option be less than the par value per share of the Common Stock.<br />
For purposes of the exercise price of a stock option, “fair market value” shall mean the<br />
closing sales price for shares of the Common Stock on the New York Stock Exchange or the<br />
American Stock Exchange (as applicable) on the date an award is granted (or under certain<br />
circumstances, a trading date preceding the grant date), or if not so listed, the closing sales price<br />
for shares of the Common Stock as quoted on the NASDAQ Global Select Market, the<br />
NASDAQ Global Market or the NASDAQ Capital Market of the NASDAQ Stock Market or the<br />
OTC Bulletin Board on the date the award is granted (or under certain circumstances, a trading<br />
date preceding the grant date), or if the shares of Common Stock are not listed or reported in any<br />
of the foregoing, then the fair market value shall be determined by the Administrator based on<br />
such valuation measures or other factors as it deems appropriate.<br />
The term of each stock option granted to a participant pursuant to an award shall be<br />
determined by the Administrator; provided, however, that in no case shall a stock option be<br />
exercisable more than 10 years (5 years in the case of an incentive stock option granted to a 10%<br />
stockholder) from the date of the award.<br />
Generally, an employee may only exercise a stock option while an employee of the Bank;<br />
provided, however, that if the employee’s employment is terminated because of disability or<br />
death, the stock option may be exercised up to six months after the employee’s termination date<br />
(subject to the earlier expiration of the option period). The Administrator may in its sole<br />
discretion accelerate the date for exercising all or any part of the deceased or disabled<br />
employee’s stock options which were not otherwise exercisable on the termination date. In the<br />
event of a participant’s death, his or her stock options shall be exercisable by such person or<br />
persons as shall have acquired the right to exercise the stock options by will or by the laws of<br />
intestate succession.<br />
Unless the Administrator determines otherwise, if the employment of a participant is<br />
terminated for any reason other than disability, death or for “cause” (as such term is defined and<br />
used in the 2011 Employee Plan), his or her stock options may be exercised for up to three<br />
months after the termination of his or her employment (subject to the earlier expiration of the<br />
option period) to the extent exercisable on his or her termination date, except that the<br />
Administrator may in its sole discretion accelerate the date for exercising all or any part of the<br />
stock options which were not otherwise exercisable on the termination date. If the employment<br />
of a participant is terminated for “cause,” his or her stock options shall lapse and shall not longer<br />
be exercisable, unless the Administrator determines otherwise.<br />
In no event shall there first become exercisable by an employee in any one calendar year<br />
incentive stock options with respect to shares having an aggregate fair market value (as<br />
determined at the time the incentive stock options are granted) greater than $100,000. To the<br />
14
extent that any incentive stock options are first exercisable by an employee in excess of such<br />
limitation, the excess shall be considered nonqualified stock options.<br />
Except as may be permitted by the Administrator in accordance with applicable laws,<br />
stock options granted under the 2011 Employee Plan shall not be transferable other than by will<br />
or the laws of intestate succession.<br />
Stock Appreciation Rights<br />
A SAR is an award entitling the recipient to receive payment in cash determined in whole<br />
or in part by reference to appreciation in the value of a share or shares of Common Stock from<br />
the date the SAR is granted to the date it is exercised. The base price per share of a SAR shall be<br />
no less than 100% of the fair market value of a share of Common Stock on the date the SAR is<br />
granted. A SAR granted in tandem with a stock option will be exercisable only at such times and<br />
to the extent that the related stock option is exercisable (a related SAR). A related SAR granted<br />
in tandem with an incentive stock option may be exercised only when the fair market value of<br />
the shares of Common Stock subject to the incentive stock option exceeds the exercise price of<br />
the incentive stock option, and the SAR may be for no more than 100% of the difference<br />
between the exercise price of the underlying incentive stock option and the fair market value of<br />
the Common Stock subject to the underlying incentive stock option at the time the SAR is<br />
exercised.<br />
A related SAR may be granted concurrently with the grant of a stock option or, if the<br />
option is a nonqualified stock option, at any time thereafter prior to the complete exercise,<br />
termination, expiration or cancellation of such stock option. The base price of these related<br />
SARs shall be equal to the option price of the stock option. A related SAR shall be exercisable<br />
only at the time and to the extent that the stock option to which it related is exercisable and may<br />
be subject to such additional limitations on exercisability as the Administrator may provide in the<br />
award agreement, and in no event after the complete termination of full exercise of the stock<br />
option.<br />
A SAR may also be granted without relationship to a stock option (a freestanding SAR)<br />
and, in such case, will be exercisable upon such terms and subject to such conditions as may be<br />
determined by the Administrator, subject to the terms of the 2011 Employee Plan.<br />
Each participant’s award agreement shall set forth the extent to which the participant<br />
shall have the right to exercise a SAR following termination of the participant’s employment<br />
with the Bank. Notwithstanding the foregoing, the Administrator in its sole discretion may limit,<br />
in any manner, the amount payable with respect to a SAR. SARs shall not be transferable<br />
(including by sale, assignment, pledge or hypothecation) other than by will or the laws of<br />
intestate succession, and may be exercised during the participant’s lifetime only by the<br />
participant or the participant’s guardian or legal representative.<br />
Amendment and Termination of the 2011 Employee Plan<br />
The 2011 Employee Plan may be amended, altered and/or terminated at any time by the<br />
Board; provided, however, that: (1) approval of an amendment to the 2011 Employee Plan by the<br />
stockholders of the Bank shall be required to the extent, if any, that stockholder approval of such<br />
15
amendment is required by applicable law, rule or regulation; and (2) except for the adjustments<br />
described below, the option price for any outstanding stock option or base price of any<br />
outstanding SAR may not be decreased after the date of grant, nor may any outstanding option or<br />
SAR be surrendered to the Bank as consideration for the grant of a new stock option or SAR<br />
with a lower option price or base price than the original stock option or SAR, as the case may be,<br />
without stockholder approval of any such action.<br />
The Administrator may amend, alter or terminate any award granted under the 2011<br />
Employee Plan, prospectively or retroactively, but such amendment, alteration or termination of<br />
an award shall not, without the consent of the recipient of an outstanding award, materially<br />
adversely affect the rights of the recipient with respect to the award.<br />
Notwithstanding the foregoing, the Administrator shall have the unilateral authority (1) to<br />
amend the 2011 Employee Plan and any award granted thereunder, without the approval of the<br />
stockholders and/or the consent of the participant, to the extent necessary to comply with<br />
applicable laws, rules and regulations, and (2) to make adjustments to the terms and conditions<br />
of awards in recognition of unusual or nonrecurring events affecting the Bank, the financial<br />
statements of the Bank or changes in accounting principles if the Administrator determines that<br />
such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or<br />
potential benefits intended to be made available under the 2011 Employee Plan or necessary to<br />
comply with applicable accounting principles.<br />
Change in Control<br />
All stock options and SARs outstanding as of the date of a “change in control” (as such<br />
term is defined and used in the 2011 Employee Plan) shall become fully exercisable, whether or<br />
not then otherwise exercisable.<br />
Notwithstanding the foregoing, in the event of a merger, share exchange, reorganization,<br />
sale of all or substantially all of the assets of the Bank or other similar transaction or event<br />
affecting the Bank or its stockholders, the Administrator may, in its sole and absolute discretion,<br />
determine that any or all awards granted pursuant to the 2011 Employee Plan shall not vest or<br />
become exercisable on an accelerated basis, if the Bank or the surviving or acquiring<br />
corporation, as the case may be, shall have taken such action, including, but not limited to, the<br />
assumption of awards granted under the 2011 Employee Plan or the grant of substitute awards<br />
(in either case, with substantially similar terms or equivalent economic benefits as awards<br />
granted under the 2011 Employee Plan), as the Administrator determines to be equitable or<br />
appropriate to protect the rights and interests of participants under the 2011 Employee Plan. If<br />
the Compensation Committee is acting as the Administrator authorized to make the<br />
determinations provided for above, such determination must also be approved by the Board prior<br />
to such determination being placed into effect.<br />
Unfunded 2011 Employee Plan<br />
The 2011 Employee Plan shall be unfunded, and the Bank shall not be required to create<br />
a trust or segregate any assets that may at any time be represented by awards under the 2011<br />
16
Employee Plan. The 2011 Employee Plan shall not establish any fiduciary relationship between<br />
the Bank and any participant or other person.<br />
Neither a participant nor any other person shall, by reason of the 2011 Employee Plan,<br />
acquire any right in or title to any assets, funds or property of the Bank, including, without<br />
limitation, any specific funds, assets or other property which the Bank may set aside in<br />
anticipation of a liability under the 2011 Employee Plan. A participant shall have only a<br />
contractual right to the Common Stock or other amounts, if any, payable under the 2011<br />
Employee Plan, unsecured by any assets of the Bank. Nothing contained in the 2011 Employee<br />
Plan shall constitute a guarantee that the assets of such entities shall be sufficient to pay any<br />
benefits to any person.<br />
Compliance with Code Section 409A<br />
Notwithstanding any other provision in the 2011 Employee Plan or an award to the<br />
contrary, if and to the extent that Section 409A (“Section 409A”) of the Internal Revenue Code<br />
of 1986, as amended (the “Code”), is deemed to apply to the 2011 Employee Plan or any award<br />
granted under the 2011 Employee Plan, it is the general intention of the Bank that the 2011<br />
Employee Plan and all such awards shall comply with Section 409A, related regulations or other<br />
guidance, and the 2011 Employee Plan and any such award shall, to the extent practicable, be<br />
construed in accordance therewith. Deferrals of shares issuable pursuant to a stock option or any<br />
other award otherwise exempt from Section 409A in a manner that would cause Section 409A to<br />
apply shall not be permitted. Without in any way limiting the effect of the foregoing, in the<br />
event that Section 409A, related regulations or other guidance require that any special terms,<br />
provisions or conditions be included in the 2011 Employee Plan or any award, then such terms,<br />
provisions and conditions shall, to the extent practicable, be deemed to be made a part of the<br />
2011 Employee Plan or award, as applicable. Further, in the event that the 2011 Employee Plan<br />
or any award shall be deemed not to comply with Section 409A or any related regulations or<br />
other guidance, then neither the Bank, the Administrator nor its or their designees or agents shall<br />
be liable to any participant or other person for actions, decisions or determinations made in good<br />
faith.<br />
Federal Income Tax Consequences<br />
Stock Options: The grant of an incentive stock option or a nonqualified stock option does<br />
not result in income for the grantee or in a deduction for the Bank.<br />
The exercise of a nonqualified stock option results in ordinary income for the grantee and<br />
a business deduction for the Bank measured by the difference between the option’s exercise price<br />
and the fair market value of the shares of Common Stock received at the time of exercise;<br />
provided, however, that the Bank will not be able to deduct compensation to a Named Executive<br />
Officer of the Bank to the extent such compensation exceeds $1 million in any tax year unless<br />
such compensation qualifies as performance-based compensation under Section 162(m) of the<br />
Internal Revenue Code of 1986, as amended (the “Code”), and the regulations related thereto. If<br />
the Bank is required to withhold income taxes in connection with the exercise of a nonqualified<br />
stock option, the Administrator may, in its discretion, permit such withholding obligation to be<br />
17
satisfied by the delivery of shares of Common Stock held by the grantee or to be delivered to the<br />
grantee upon exercise of the stock option.<br />
The exercise of an incentive stock option does not result in income for the grantee or in a<br />
business deduction for the Bank; provided, that the employee does not dispose of the shares of<br />
Common Stock acquired upon exercise within two years after the date of grant of the option and<br />
one year after the transfer of the shares of Common Stock upon exercise, and provided further<br />
that, the employee is employed by the Bank or a subsidiary of the Bank from the date of grant<br />
until three months before the date of exercise. If these requirements are met, the employee's<br />
basis in the shares of Common Stock would be the exercise price. Any gain related to the<br />
subsequent disposition of shares of Common Stock will be taxed to the employee as a long-term<br />
capital gain and the Bank will not be entitled to any deduction. The excess of the fair market<br />
value of the Common Stock on the date of exercise over the exercise price is an item of tax<br />
preference for the employee, potentially subject to the alternative minimum tax.<br />
If an employee should dispose of the shares of Common Stock acquired pursuant to the<br />
exercise of an incentive stock option prior to the expiration of either of the designated holding<br />
periods, the employee recognizes ordinary income and the Bank is entitled to a business<br />
deduction in an amount equal to the lesser of the fair market value of the shares of Common<br />
Stock on the date of exercise minus the stock option exercise price or the amount realized on<br />
disposition of the shares of Common Stock minus the stock option exercise price. Any gain in<br />
excess of the ordinary income recognized by the employee is taxable as long-term or short-term<br />
capital gain, depending on the holding period. If a stock option, intended to be an incentive<br />
stock option, does not satisfy all of the requirements of an incentive stock option pursuant to<br />
Section 422 of the Code when granted, the employee recognizes ordinary income upon exercise<br />
of the option and the Bank is entitled to a business deduction in an amount equal to the fair<br />
market value of the shares of Common Stock on the exercise date minus the stock option<br />
exercise price. Income tax withholding would be required. In the event a stock option intended<br />
to be an incentive stock option does not qualify as such when granted to or exercised by an<br />
officer covered by Section 162(m) of the Code, the $1 million per capita limitation on<br />
compensation to such officer imposed by Section 162(m) of the Code may apply unless such<br />
compensation qualifies as performance-based compensation under 162(m) of the Code and the<br />
regulations related thereto.<br />
SARS: The grant of a SAR does not result in income for the grantee or in a business<br />
deduction for the Bank for federal income tax purposes. Upon the exercise of a SAR, the grantee<br />
recognizes ordinary income and the Bank is entitled to a business deduction measured by the fair<br />
market value of the shares of Common Stock and/or cash received; provided, however, that, if<br />
the grantee is a an officer covered by Section 162(m) of the Code, the $1 million per capita<br />
limitation on compensation to such officer imposed by Section 162(m) of the Code may apply<br />
unless such compensation qualifies as performance-based compensation under 162(m) of the<br />
Code and the regulations related thereto. Income tax withholding would be required for<br />
employees of the Bank and its subsidiaries.<br />
18
Vote Required<br />
Approval of Proposal 2 requires the affirmative vote, either in person or by proxy, of the<br />
holders of at least two-thirds of the Bank’s outstanding Common Stock entitled to vote on the<br />
proposal. Abstentions and broker “non-votes” will have the same effect as voting “AGAINST”<br />
the adoption of Proposal 2 because the required vote is based on the number of shares<br />
outstanding rather than the number of votes cast.<br />
RECOMMENDATION ON PROPOSAL 2<br />
THE MEMBERS OF THE <strong>BANK</strong>’S BOARD OF DIRECTORS UNANIMOUSLY<br />
RECOMMEND A VOTE “FOR” THE PROPOSAL TO APPROVE THE ADOPTION OF<br />
THE <strong>RUMSON</strong>-<strong>FAIR</strong> <strong>HAVEN</strong> <strong>BANK</strong> & <strong>TRUST</strong> <strong>COMPANY</strong> 2011 EMPLOYEE STOCK<br />
OPTION AND EQUITY INCENTIVE PLAN.<br />
19
PROPOSAL 3 – APPROVAL OF THE ADOPTION OF THE <strong>RUMSON</strong>-<strong>FAIR</strong> <strong>HAVEN</strong><br />
<strong>BANK</strong> & <strong>TRUST</strong> <strong>COMPANY</strong> 2011 NON-EMPLOYEE DIRECTOR STOCK OPTION<br />
AND EQUITY INCENTIVE PLAN<br />
Introduction<br />
The Board of Directors has approved and adopted, subject to the approval and ratification<br />
of the Bank’s stockholders, the Rumson-Fair Haven Bank & Trust Company 2011 Non-<br />
Employee Director Stock Option and Equity Incentive Plan (the “2011 Director Plan”). The<br />
2011 Director Plan is designed to encourage and enable non-employee directors of the Bank to<br />
acquire or increase their holdings of Common Stock and other proprietary interests in the Bank.<br />
It is intended to promote these individuals’ interests in the Bank, thereby enhancing the<br />
efficiency, soundness, profitability, growth and stockholder value of the Bank.<br />
Under the 2011 Director Plan, nonqualified stock options may be granted to eligible nonemployee<br />
directors of the Bank. Participants may also be eligible to receive, under certain<br />
conditions, SARs in the form of related SARs and freestanding SARs.<br />
No awards have been awarded under the 2011 Director Plan, nor will any awards be<br />
awarded, unless and until the stockholders of the Bank approve the 2011 Director Plan.<br />
The terms of the 2011 Director Plan are complex and it is therefore recommended that<br />
stockholders thoroughly read the following description of the 2011 Director Plan which<br />
describes certain of the provisions of the 2011 Director Plan in greater detail. On written request,<br />
the Bank will provide without charge to each record or beneficial owner of Common Stock, a<br />
copy of the 2011 Director Plan. Requests should be addressed to Mr. Joseph Castelluci, Esq.,<br />
Secretary, Rumson-Fair Haven Bank & Trust Company, 20 Bingham Avenue, Rumson, New<br />
Jersey 07760.<br />
Administration of the 2011 Director Plan<br />
The 2011 Director Plan will be administered by the Administrator. Under the terms of<br />
the 2011 Director Plan, the Administrator is authorized to:<br />
• determine all matters relating to awards, including selection of individuals to receive<br />
awards, the types of awards granted, the number of shares of Common Stock, if any,<br />
subject to an award, and all terms, conditions, restrictions and limitations of an award;<br />
• prescribe the form or forms of award agreements evidencing any awards granted<br />
under the 2011 Director Plan;<br />
• establish, amend and rescind rules and regulations for the administration of the 2011<br />
Director Plan;<br />
• construe and interpret the 2011 Director Plan and any awards and award agreements<br />
made under the 2011 Director Plan;<br />
• interpret rules and regulations for administering the 2011 Director Plan; and
• make all other determinations deemed necessary or advisable for administering the<br />
2011 Director Plan.<br />
Effective Date of the 2011 Director Plan<br />
Pending approval of the 2011 Director Plan by the stockholders of the Bank, the effective<br />
date of the 2011 Director Plan will be April 27, 2011, the date of the Annual Meeting. All<br />
eligible participants may receive awards under the 2011 Director Plan for ten years minus one<br />
day from the date on which the stockholders approve the 2011 Director Plan.<br />
Shares of Common Stock Available under the 2011 Director Plan<br />
Seventy-five thousand (75,000) shares of Common Stock have been reserved for issuance<br />
under the 2011 Director Plan. Subject to applicable law and regulations, the number of shares<br />
reserved for issuance under the 2011 Director Plan are subject to adjustment due to changes in<br />
the outstanding shares of Common Stock due to a merger, consolidation or reorganization of the<br />
Bank, stock dividends, stock splits, combinations or reclassifications of the Common Stock, or<br />
other changes in the capital stock structure of the Bank. The number of shares of Common Stock<br />
reserved for issuance under the 2011 Director Plan will not be reduced by:<br />
• dividends, including dividends paid in shares of Common Stock;<br />
• awards which by their terms are settled in cash rather than the issuance of shares of<br />
Common Stock;<br />
• any shares subject to an award under the 2011 Director Plan which award is forfeited,<br />
cancelled or terminated, expires or lapses for any reason; and<br />
• any shares of Common Stock surrendered by a participant or withheld by the Bank to<br />
pay the option price for an award of shares or used to satisfy any tax withholding<br />
requirement in connection with the exercise or vesting of an award if, in accordance<br />
with the terms of the 2011 Director Plan, a participant pays such option price or<br />
satisfies such tax withholding by either tendering previously owned shares of<br />
Common Stock or having the Bank withhold shares.<br />
Awards Available Under the 2011 Director Plan<br />
Stock Options<br />
The Administrator may grant nonqualified stock options. The exercise price of each<br />
stock option shall be equal to the “fair market value” (as defined below) of the Common Stock<br />
on the date the award is granted to the participant; provided, however, that in no event shall the<br />
option price per share of s stock option be less than the par value per share of the Common<br />
Stock.<br />
For purposes of the exercise price of a stock option, “fair market value” shall mean the<br />
closing sales price for shares of the Common Stock on the New York Stock Exchange or the<br />
American Stock Exchange (as applicable) on the date an award is granted (or under certain<br />
21
circumstances, a trading date preceding the grant date), or if not so listed, the closing sales price<br />
for shares of the Common Stock as quoted on the NASDAQ Global Select Market, the<br />
NASDAQ Global Market or the NASDAQ Capital Market of the NASDAQ Stock Market or the<br />
OTC Bulletin Board on the date the award is granted (or under certain circumstances, a trading<br />
date preceding the grant date), or if the shares of Common Stock are not listed or reported in any<br />
of the foregoing, then the fair market value shall be determined by the Administrator based on<br />
such valuation measures or other factors as it deems appropriate.<br />
The term of each stock option granted to a participant pursuant to an award shall be<br />
determined by the Administrator; provided, however, that in no case shall a stock option be<br />
exercisable more than 10 years from the date of the award.<br />
Unless the Administrator determines otherwise, a stock option granted to a non-employee<br />
director completely vests at the time of grant and must be exercised, if at all, prior to the first to<br />
occur of the following, as applicable: (i) the close of the 30 day period following the termination<br />
of the non-employee director’s service as a member of the Board (or such other period stated in<br />
the award agreement) or, in the event of the death or disability of the non-employee director, the<br />
close of the 180 day period following the termination of the non-employee director’s<br />
directorship; or (ii) the close of the 10 year option period.<br />
Except as may be permitted by the Administrator in accordance with applicable laws,<br />
stock options granted under the 2011 Director Plan shall not be transferable other than by will or<br />
the laws of intestate succession.<br />
Stock Appreciation Rights<br />
The base price per share of a SAR shall be no less than 100% of the fair market value of a<br />
share of Common Stock on the date the SAR is granted. A related SAR granted in tandem with a<br />
stock option will be exercisable only at such times and to the extent that the related stock option<br />
is exercisable.<br />
A related SAR may be granted concurrently with the grant of a stock option or at any<br />
time thereafter prior to the complete exercise, termination, expiration or cancellation of such<br />
stock option. The base price of these related SARs shall be equal to the option price of the stock<br />
option. A related SAR shall be exercisable only at the time and to the extent that the stock<br />
option to which it related is exercisable and may be subject to such additional limitations on<br />
exercisability as the Administrator may provide in the award agreement, and in no event after the<br />
complete termination of full exercise of the stock option.<br />
A SAR may also be granted without relationship to a stock option (a freestanding SAR)<br />
and, in such case, will be exercisable upon such terms and subject to such conditions as may be<br />
determined by the Administrator, subject to the terms of the 2011 Director Plan.<br />
Each participant’s award agreement shall set forth the extent to which the participant<br />
shall have the right to exercise a SAR following termination of the participant’s service as a<br />
member of the Board. Notwithstanding the foregoing, the Administrator in its sole discretion<br />
may limit, in any manner, the amount payable with respect to a SAR. SARs shall not be<br />
transferable (including by sale, assignment, pledge or hypothecation) other than by will or the<br />
22
laws of intestate succession, and may be exercised during the participant’s lifetime only by the<br />
participant or the participant’s guardian or legal representative.<br />
Amendment and Termination of the 2011 Director Plan<br />
The 2011 Director Plan may be amended, altered and/or terminated at any time by the<br />
Board; provided, however, that: (1) approval of an amendment to the 2011 Director Plan by the<br />
stockholders of the Bank shall be required to the extent, if any, that stockholder approval of such<br />
amendment is required by applicable law, rule or regulation; and (2) except for the adjustments<br />
described below, the option price for any outstanding stock option or base price of any<br />
outstanding SAR may not be decreased after the date of grant, nor may any outstanding option or<br />
SAR be surrendered to the Bank as consideration for the grant of a new stock option or SAR<br />
with a lower option price or base price than the original stock option or SAR, as the case may be,<br />
without stockholder approval of any such action.<br />
The Administrator may amend, alter or terminate any award granted under the 2011<br />
Director Plan, prospectively or retroactively, but such amendment, alteration or termination of an<br />
award shall not, without the consent of the recipient of an outstanding award, materially<br />
adversely affect the rights of the recipient with respect to the award.<br />
Notwithstanding the foregoing, the Administrator shall have the unilateral authority (1) to<br />
amend the 2011 Director Plan and any award granted thereunder, without the approval of the<br />
stockholders and/or the consent of the participant, to the extent necessary to comply with<br />
applicable laws, rules and regulations and (2) to make adjustments to the terms and conditions of<br />
awards in recognition of unusual or nonrecurring events affecting the Bank, the financial<br />
statements of the Bank or changes in accounting principles if the Administrator determines that<br />
such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or<br />
potential benefits intended to be made available under the 2011 Director Plan or necessary to<br />
comply with applicable accounting principles.<br />
Change in Control<br />
All stock options and SARs outstanding as of the date of a “change in control” (as such<br />
term is defined and used in the 2011 Director Plan) shall become fully exercisable, whether or<br />
not then otherwise exercisable.<br />
Notwithstanding the foregoing, in the event of a merger, share exchange, reorganization,<br />
sale of all or substantially all of the assets of the Bank or other similar transaction or event<br />
affecting the Bank or its stockholders, the Administrator may, in its sole and absolute discretion,<br />
determine that any or all awards granted pursuant to the 2011 Director Plan shall not vest or<br />
become exercisable on an accelerated basis, if the Bank or the surviving or acquiring<br />
corporation, as the case may be, shall have taken such action, including but not limited to the<br />
assumption of awards granted under the 2011 Director Plan or the grant of substitute awards (in<br />
either case, with substantially similar terms or equivalent economic benefits as awards granted<br />
under the 2011 Director Plan), as the Administrator determines to be equitable or appropriate to<br />
protect the rights and interests of participants under the 2011 Director Plan. If the Compensation<br />
Committee is acting as the Administrator authorized to make the determinations provided for<br />
23
above, such determination must also be approved by the Board prior to such determination being<br />
placed into effect.<br />
Unfunded 2011 Director Plan<br />
The 2011 Director Plan shall be unfunded, and the Bank shall not be required to create a<br />
trust or segregate any assets that may at any time be represented by awards under the 2011<br />
Director Plan. The 2011 Director Plan shall not establish any fiduciary relationship between the<br />
Bank and any participant or other person.<br />
Neither a participant nor any other person shall, by reason of the 2011 Director Plan,<br />
acquire any right in or title to any assets, funds or property of the Bank, including, without<br />
limitation, any specific funds, assets or other property which the Bank may set aside in<br />
anticipation of a liability under the 2011 Director Plan. A participant shall have only a<br />
contractual right to the Common Stock or other amounts, if any, payable under the 2011 Director<br />
Plan, unsecured by any assets of the Bank. Nothing contained in the 2011 Director Plan shall<br />
constitute a guarantee that the assets of such entities shall be sufficient to pay any benefits to any<br />
person.<br />
Compliance with Code Section 409A<br />
Notwithstanding any other provision in the 2011 Director Plan or an award to the<br />
contrary, if and to the extent that Section 409A is deemed to apply to the 2011 Director Plan or<br />
any award granted under the 2011 Director Plan, it is the general intention of the Bank that the<br />
2011 Director Plan and all such awards shall comply with Section 409A, related regulations or<br />
other guidance, and the 2011 Director Plan and any such award shall, to the extent practicable,<br />
be construed in accordance therewith. Deferrals of shares issuable pursuant to a stock option or<br />
any other award otherwise exempt from Section 409A in a manner that would cause Section<br />
409A to apply shall not be permitted. Without in any way limiting the effect of the foregoing, in<br />
the event that Section 409A, related regulations or other guidance require that any special terms,<br />
provisions or conditions be included in the 2011 Director Plan or any award, then such terms,<br />
provisions and conditions shall, to the extent practicable, be deemed to be made a part of the<br />
2011 Director Plan or award, as applicable. Further, in the event that the 2011 Director Plan or<br />
any award shall be deemed not to comply with Section 409A or any related regulations or other<br />
guidance, then neither the Bank, the Administrator nor its or their designees or agents shall be<br />
liable to any participant or other person for actions, decisions or determinations made in good<br />
faith.<br />
Federal Income Tax Consequences<br />
Stock Options: The grant of a nonqualified stock option does not result in income for the<br />
grantee or in a deduction for the Bank.<br />
The exercise of a nonqualified stock option results in ordinary income for the grantee and<br />
a business deduction for the Bank measured by the difference between the option’s exercise price<br />
and the fair market value of the shares of Common Stock received at the time of exercise. If the<br />
Bank is required to withhold income taxes in connection with the exercise of a nonqualified<br />
stock option, the Administrator may, in its discretion, permit such withholding obligation to be<br />
24
satisfied by the delivery of shares of Common Stock held by the grantee or to be delivered to the<br />
grantee upon exercise of the stock option.<br />
SARS: The grant of a SAR does not result in income for the grantee or in a business<br />
deduction for the Bank for federal income tax purposes. Upon the exercise of a SAR, the grantee<br />
recognizes ordinary income and the Bank is entitled to a business deduction measured by the<br />
amount of cash received.<br />
Vote Required<br />
Approval of Proposal 3 requires the affirmative vote, either in person or by proxy, of the<br />
holders of at least two-thirds of the Bank’s outstanding Common Stock entitled to vote on the<br />
proposal. Abstentions and broker “non-votes” will have the same effect as voting “AGAINST”<br />
the adoption of Proposal 3 because the required vote is based on the number of shares<br />
outstanding rather than the number of votes cast.<br />
RECOMMENDATION ON PROPOSAL 3<br />
THE MEMBERS OF THE <strong>BANK</strong>’S BOARD OF DIRECTORS UNANIMOUSLY<br />
RECOMMEND A VOTE “FOR” THE PROPOSAL TO APPROVE THE ADOPTION OF<br />
THE <strong>RUMSON</strong>-<strong>FAIR</strong> <strong>HAVEN</strong> <strong>BANK</strong> & <strong>TRUST</strong> <strong>COMPANY</strong> 2011 NON-EMPLOYEE<br />
DIRECTOR STOCK OPTION AND EQUITY INCENTIVE PLAN.<br />
25
MANAGEMENT<br />
<strong>RUMSON</strong>-<strong>FAIR</strong> <strong>HAVEN</strong> <strong>BANK</strong> & <strong>TRUST</strong> <strong>COMPANY</strong><br />
Executive Officers<br />
Name Position<br />
Dennis J. Flanagan President, Chief Executive Officer, Chief<br />
Financial Officer and Director<br />
Joseph Castelluci, Esq. Executive Vice President, General Counsel,<br />
Secretary and Director<br />
Thomas Sannelli Senior Vice President<br />
Dennis J. Flanagan, see “Proposal 1 – Election of Directors.”<br />
Joseph Castelluci, Esq., see “Proposal 1 – Election of Directors.”<br />
Thomas Sannelli has served as Senior Vice President of the Bank since 2006. He previously<br />
served as Vice President with Shrewsbury State Bank from 2000 to 2005. He began his banking<br />
career in 1976, serving in many capacities as a local Monmouth County community banker. Mr.<br />
Sannelli currently serves on the boards of the Monmouth Council of Boy Scouts of America,<br />
Westside Christian Academy, C.A.S.A. of Monmouth and Chairman of the Board of All Saints<br />
Historic Landmark Trust Incorporated. He is a graduate of Christian Brothers Academy,<br />
Brookdale Community College and the American Institute of Banking.<br />
Executive Compensation<br />
The following table sets forth information concerning the annual and long-term<br />
compensation for services in all capacities to the Bank for the years ended December 31, 2010<br />
and 2009 of the President and Chief Executive Officer of the Bank and the other executive<br />
officers of the Bank whose annual salary and bonus compensation exceeded $100,000:<br />
Name and Position Year<br />
Robert E. Davis, Jr., Former<br />
President and Chief Executive<br />
Officer (2)<br />
Dennis J. Flanagan, Executive Vice<br />
President and Chief Financial<br />
Officer (3)<br />
Thomas Sannelli, Senior Vice<br />
President<br />
2010<br />
2009<br />
2010<br />
2009<br />
2010<br />
2009<br />
Salary and<br />
Bonus<br />
$ 209,700<br />
196,000<br />
$ 173,500<br />
170,000<br />
$ 117,600<br />
112,500<br />
Other Annual<br />
Compensation (1)<br />
$ 16,000<br />
15,800<br />
$ 12,739<br />
12,600<br />
$ 4,200<br />
4,100<br />
(1) Represents transportation allowances and 401(k) matching contributions.<br />
Total<br />
$ 225,700<br />
211,800<br />
$ 186,239<br />
182,600<br />
$ 121,800<br />
116,600<br />
(2) Mr. Davis’ employment as President and Chief Executive Officer of the Bank ended effective<br />
January 7, 2011.
(3) Effective January 12, 2011, Dennis J. Flanagan was appointed President and Chief Executive<br />
Officer of the Bank. During 2010, he served as Executive Vice President, Chief Financial Officer<br />
and Secretary of the Bank.<br />
Employment Agreements<br />
On February 9, 2010, Dennis J. Flanagan entered into an employment agreement with the<br />
Bank which provided for a two-year term. Upon the expiration of the initial two-year term, the<br />
agreement will automatically renew for successive one-year periods. The employment<br />
agreement provides for a base compensation for Mr. Flanagan of $153,500 per year and provides<br />
that Mr. Flanagan is eligible to participate in the Bank’s bonus program, under which he may<br />
receive a bonus of up to thirty-three percent (33%) of Mr. Flanagan’s then current base salary.<br />
Bonus compensation is based on, among other things, Mr. Flanagan’s performance and the<br />
Bank’s loan and deposit growth and overall profitability. The Personnel and Compensation<br />
Committee of the Bank’s Board of Directors will determine the amount of any such bonuses. In<br />
the event the Bank terminates Mr. Flanagan’s employment agreement without cause, Mr.<br />
Flanagan is entitled to (i) a severance payment equal to the greater of (a) the value of the<br />
remaining time left in the agreement term based on current salary or (b) twelve (12) months’<br />
current salary, plus (ii) a pro-rata share of any annual bonus for the year of termination, (iii) the<br />
pro-rata value of all employee-related benefits and the automobile allowance calculated on the<br />
same basis as the severance payment and (iv) payment for any accrued yet unused vacation time.<br />
In addition, all unvested stock options previously awarded shall fully vest and be immediately<br />
exercisable. In the event that Mr. Flanagan’s duties and responsibilities or his total annual<br />
compensation and/or benefits are substantially diminished in connection with a change of control<br />
of the Bank (as such term is defined in the agreement), Mr. Flanagan will have the option to<br />
terminate the employment agreement and receive the severance payments described above for a<br />
period of eighteen (18) months.<br />
On January 7, 2008, Mr. Thomas Sannelli entered into a change of control agreement<br />
with the Bank for a one-year term. The term of the agreement is to continue in full force and<br />
effect for one year so long as Mr. Sannelli is employed by the Bank. In the event the Bank<br />
terminates Mr. Sannelli without cause in connection with a change in control of the Bank (as<br />
such term is defined in the agreement), he will be entitled to a severance payment in an amount<br />
equal to (i) his monthly salary then in effect multiplied by twelve, plus (ii) an amount equal to<br />
the largest annual cash bonus payment made to him for services provided in any of the three<br />
years ended December 31 of the year preceding the year in which the change of control event<br />
occurs, plus (iii) an amount equal to the product of the cash equivalent of the monthly benefits<br />
provided to him by the Bank at the time of the change of control event multiplied by twelve.<br />
During the agreement term and for a period of six months following termination by Mr. Sannelli<br />
of the change of control agreement for any reason, he may not commence employment with or<br />
render service to any other bank or banking institution within the state of New Jersey.<br />
Director Compensation<br />
In 2010 the Board of Directors, excluding employee directors, were paid fees for<br />
attending board and committee meetings. Payment of such fees was in the form of newly-issued<br />
shares of the Bank’s Common Stock, as previously approved by the stockholders. For all of<br />
27
2010, a total of 6,690 shares of Common Stock were issued, in the aggregate, to nine nonemployee<br />
directors. The expense associated with the issuance of these common shares amounted<br />
to $41,750. There were no other forms of compensation paid to the directors.<br />
Meetings of the Board of Directors<br />
The Board of Directors holds regularly-scheduled meetings and special meetings are<br />
held, as circumstances require. During 2010 the Board of Directors held ten meetings, with all<br />
directors attending seventy-five percent (75%) or more of such meetings with the exception of<br />
Judith Stanley Coleman, who passed away in August 2010, Stephen P. Kelleher, who was<br />
elected as a director on June 21, 2010, and Thomas I. Unterberg, who resigned from the Board<br />
on May 10, 2010 before being re-elected as a director on February 14, 2011.<br />
Committees of the Board of Directors<br />
Executive Committee<br />
The Executive Committee of the Board of Directors, to the extent permitted by applicable<br />
law, sometimes acts on behalf of the full Board of Directors in its absence and has the authority<br />
to address corporate matters between meetings of the full Board. All significant actions of the<br />
Executive Committee must be ratified by the full Board of Directors. For the year ended<br />
December 31, 2010, the Board of Directors did not appoint an Executive Committee.<br />
Audit Committee<br />
The Bank has a standing Audit Committee comprised of three (3) members of the Board<br />
of Directors. The Audit Committee arranges for the Bank’s examination through its independent<br />
accountants. The Audit Committee, currently consisting of R. Van Whisnand, Stephen P.<br />
Kelleher and Herbert M. Gardner, who serves as the Chairperson, held four meetings during<br />
2010, with all directors attending seventy-five percent (75%) or more of such meetings.<br />
Personnel and Compensation Committee<br />
The Personnel and Compensation Committee of the Board of Directors is responsible for<br />
determining whether the compensation and benefits packages offered by the Bank are suitable<br />
and do not provide excessive benefits or result in material financial loss to the Bank. The<br />
Personnel and Compensation Committee is also responsible for approving or recommending to<br />
the Board compensation packages and plans for senior management and directors. These<br />
compensation packages include salaries, bonuses, vacations, termination benefits, profit-sharing<br />
plans, contributions to employee pension plans, stock option and stock purchase plans,<br />
indemnification agreements and employment/change of control contracts.<br />
For the year ended December 31, 2010, the Personnel and Compensation Committee<br />
consisted of directors Joseph Castelluci, Esq., Thomas I. Unterberg and Judith Stanley Coleman,<br />
with Mr. Unterberg having served as the Chair of the Personnel and Compensation<br />
Committee. Each member of the Personnel and Compensation Committee qualified as an<br />
independent director in accordance with the NASDAQ Listing Rules. The members of the<br />
28
Personnel and Compensation Committee met once during 2010, in addition to holding informal<br />
discussions regarding compensation matters during 2010.<br />
Code of Conduct/Ethics Policy<br />
Officers, employees and directors of the Bank are held to the highest standards of honest<br />
and ethical conduct when conducting the affairs of the Bank. All such individuals must act<br />
ethically at all times in accordance with the policies contained in the Bank’s Code of<br />
Conduct/Ethics Policy.<br />
Related Party Transactions<br />
The directors and officers of the Bank and their associates are customers of the Bank and<br />
accordingly, conduct banking activities with the Bank, including loan and deposit transactions.<br />
Loans to directors, officers and their associates are made in the ordinary course of the Bank’s<br />
business, in accordance with applicable laws, and on substantially the same terms, including<br />
interest rates and collateral, as those prevailing at the time for comparable transactions with<br />
unaffiliated persons, and do not involve more than the normal risk of collectibility or present<br />
other features that would be unfavorable to the Bank.<br />
The Bank entered into a lease agreement for a branch office with JNM Holdings, Inc. of<br />
which a former director of the Bank is the owner. The negotiations with respect to this lease<br />
were conducted at arm’s length and the Board of Directors of the Bank believes, based on an<br />
opinion of an independent appraiser, that the terms and conditions of the lease are comparable to<br />
terms that would have been available to the Bank from an unaffiliated third party.<br />
W.J. Barrett Associates, of which director William J. Barrett is President, leases space in<br />
the Bank’s Fair Haven branch. The Board of Directors of the Bank believes that the terms and<br />
conditions of the lease are comparable to terms that would have been provided by the Bank to an<br />
unaffiliated third party.<br />
The law firm of Peluso Castelluci & Weintraub, P.C. was retained by the Bank during<br />
2010 to provide legal services, for which the law firm was paid $48,000 by the Bank. Joseph<br />
Castelluci, Esq., Executive Vice President, General Counsel, Secretary and a director of the<br />
Bank, was a member of Peluso Castelluci & Weintraub, P.C. during 2010, but resigned from his<br />
position at the law firm as of January 18, 2011 in connection with his appointment as Executive<br />
Vice President, General Counsel and Secretary of the Bank.<br />
During 2010 and prior to his election as a member of the Board, William Van Winkle<br />
was employed by NYLEX Benefits, a subsidiary of New York Life Insurance Company, from<br />
which the Bank purchased a Bank Owned Life Insurance (BOLI) policy during 2010. Mr. Van<br />
Winkle and his son, who was also employed by NYLEX Benefits in 2010, each received a onetime<br />
commission equal to approximately $40,000 from NYLEX Benefits in connection with this<br />
transaction. The commissions paid to Mr. Van Winkle and his son are amortized over the life of<br />
the BOLI policy.<br />
29
ANNUAL REPORT<br />
The annual report to stockholders for the year ended December 31, 2010 accompanies<br />
this proxy statement. ParenteBeard LLC has audited the Bank’s consolidated financial<br />
statements for the years ended December 31, 2010 and 2009, which statements are contained in<br />
the annual report to stockholders. Such annual report, including the audited consolidated<br />
financial statements contained therein, is not incorporated in this proxy statement and is not to be<br />
deemed a part of the proxy soliciting material.<br />
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS<br />
Selection of the independent public accountants for the Bank is made by the Audit<br />
Committee of the Board of Directors. ParenteBeard LLC was the Bank’s independent public<br />
accountants for the years ended December 31, 2010 and 2009.<br />
SOLICITATION OF PROXIES<br />
The proxy solicitation is being made by the Board of Directors and the cost of the<br />
solicitation will be borne by the Bank. In addition to the use of the mails, officers, directors and<br />
employees of the Bank who will not be specially compensated for such solicitation activities,<br />
may solicit proxies personally, by telephone or by facsimile transmission. Arrangements may be<br />
made with brokerage houses and other custodians, nominees and fiduciaries for forwarding<br />
solicitation materials to beneficial owners of shares held of record by such persons, and the Bank<br />
will reimburse such parties for their reasonable expenses incurred in that connection.<br />
STOCKHOLDER PROPOSALS<br />
Proposals of stockholders to be included in the Bank’s 2012 proxy material must be<br />
received by the Secretary of the Bank no later than December 1, 2011.<br />
OTHER MATTERS<br />
The Board of Directors is not aware of any other matters that may come before the<br />
Annual Meeting. However, in the event such other matters come before the Annual Meeting, it<br />
is the intention of the persons named in the proxy to vote on any such matters in accordance with<br />
the recommendation of the Board of Directors.<br />
Stockholders are urged to sign and date the enclosed proxy, which is solicited on behalf<br />
of the Board of Directors, and return it in the enclosed prepaid envelope.<br />
March 18, 2011<br />
By Order of the Board of Directors<br />
William J. Barrett<br />
Chairman of the Board<br />
Rumson, New Jersey