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EXHIBIT 10.12
 

 
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
 
This Amended and Restated Employment Agreement (the “Agreement”) is made
effective as of the 18th day of December, 2008 (the “Effective Date”) by and
between Colonial Bank, F.S.B. (the “Bank”), a federally chartered stock savings
bank, with its principal administrative office at 85 West Broad Street,
Bridgeton, New Jersey 08302, and William F. Whelan (“Executive”).  Any reference
to the “Company” shall mean Colonial Bankshares, Inc., a federal mid-tier stock
holding company, which owns 100% of the common stock of the Bank.
 
WHEREAS, Executive is currently employed with the Bank and the Company pursuant
to an employment agreement entered into on September 20, 2006 (the “Original
Agreement”); and
 
WHEREAS, the Bank desires to amend and restate the Original Agreement in order
to make changes to comply with the final regulations issued under Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code) in April 2007; and
 
WHEREAS, Executive is willing to serve the Bank on the terms and conditions
hereinafter set forth and has agreed to such changes; and
 
WHEREAS, the Board of Directors of the Bank and Executive believe it is in the
best interests of the Bank to enter into this Agreement in order to reinforce
and reward Executive for his service and dedication to the continued success of
the Bank and incorporate the changes required by the final regulations issued
under Code Section 409A.
 
NOW, THEREFORE, in consideration of the mutual covenants herein contained, and
upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:
 
1.    POSITION AND RESPONSIBILITIES
 
During the period of his employment hereunder, Executive agrees to serve as
Executive Vice President and Operations Officer of the Bank and Executive Vice
President and Operations Officer of the Company.  During the period of his
employment hereunder, except for periods of absence, Executive shall faithfully
perform his duties hereunder and shall perform the administrative and management
services for the Bank that are customarily performed by persons in a similar
executive officer capacity.  Executive shall be responsible for the overall
administration of the Bank and shall develop and implement operating policies
and procedures for the Bank and shall monitor the operations of the Bank
including data processing, technical services, branch administration and
personnel services.  Executive also agrees to serve, if elected, as a director
of the Company or the Bank, and as an officer and director of any subsidiary or
affiliate of the Bank.
 
 
 

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2.    TERM OF EMPLOYMENT
 
The term of this Agreement and the period of Executive’s employment hereunder
shall begin as of the date first above written and shall continue for
twenty-four (24) full calendar months thereafter, provided that all changes
intended to comply with Code Section 409A shall be retroactively effective to
September 20, 2006; and provided further that no retroactive change shall affect
the compensation or benefits previously provided to Executive..  Commencing on
the Effective Dave and continuing on each anniversary date thereafter (the
“Anniversary Date”), this Agreement shall renew for an additional year such that
the remaining term shall be two (2) years unless written notice of non-renewal
(“Non-Renewal Notice”) is provided to Executive at least thirty (30) days and
not more than sixty (60) days prior to any such Anniversary Date.  At least
thirty (30) days prior to each Anniversary Date, the President of the Bank or
the Compensation Committee of the Board of Directors (the “Board”) will conduct
a comprehensive performance evaluation and review of Executive for purposes of
determining whether to renew this Agreement and shall make a recommendation to
the Board, and the results thereof and the Board’s decision shall be included in
the minutes of the Board’s meeting.
 
3.    COMPENSATION AND REIMBURSEMENT
 
(a)    The compensation specified under this Agreement shall constitute the
salary and benefits paid for the duties described in Section 1.  The Bank shall
pay Executive as compensation a salary of not less than $125,298 per year (“Base
Salary”).  Such Base Salary shall be payable weekly.  During the period of this
Agreement, Executive’s Base Salary shall be reviewed at least annually; the
first such review will be made no later than January 31 of each year during the
term of this Agreement and shall be effective from the first day of said month
through the end of the calendar year.  Such review shall be conducted by the
President or a committee designated by the President, and the President or the
committee may increase, but not decrease, Executive’s Base Salary (any increase
in Base Salary shall become the “Base Salary” for purposes of this
Agreement).  In addition to the Base Salary provided in this Section 3(a), the
Bank shall provide Executive with all such other benefits as are provided
uniformly to permanent full-time employees of the Bank. on the same basis
(including cost) as such benefits are provided to other officers of the Bank.
 
(b)    In addition to Base Salary provided for in Section 3(a) above, the Bank
will provide Executive with employee benefit plans, arrangements and perquisites
substantially equivalent to those in which Executive was participating or
otherwise deriving benefit from immediately prior to the beginning of the term
of this Agreement, and the Bank will not, without Executive’s prior written
consent, make any changes in such plans, arrangements or perquisites which would
adversely affect Executive’s rights or benefits thereunder.  Without limiting
the generality of the foregoing provisions of this Section 3(b), Executive will
be entitled to participate in or receive benefits under any employee benefit
plans including but not limited to, retirement plans, supplemental retirement
plans, pension plans, profit-sharing plans, employee stock ownership plans,
stock plans, health-and-accident plans, medical coverage or any other employee
benefit plan or arrangement made available by the Bank in the future to its
senior executives and key management employees, subject to and on a basis
consistent with the terms, conditions and overall administration of such plans
and arrangements.  Executive will be entitled to incentive compensation and
bonuses as provided in any plan of the Bank in which Executive is eligible to
participate (and he shall be entitled to a pro rata distribution under any
incentive compensation or bonus plan as to any year in which a termination of
employment occurs, other than Termination for Cause).  Nothing paid to Executive
under any such plan or arrangement will be deemed to be in lieu of other
compensation to which Executive is entitled under this Agreement.
 
 
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(c)    Executive shall be entitled to paid time off in accordance with the
standard polices of the Bank for senior officers, but in no event less than
thirty (30) days paid time off during each year of employment.  Executive shall
receive his Base Salary and other benefits during periods of paid time
off.  Executive shall also be entitled to paid legal holidays in accordance with
the policies of the Bank.  Executive shall also be entitled to sick leave in
accordance with the policies of the Bank, but in no event less than the number
of days of sick leave per year to which Executive was entitled at the Effective
Date of this Agreement.
 
4.    OUTSIDE ACTIVITIES
 
Executive may serve as an officer or a member of the board of directors of
business, community and charitable organizations subject in each case to the
prior approval of the Board, provided that in each case such service shall not
materially interfere with the performance of his duties under this Agreement or
present any conflict of interest.  Executive shall provide to the Board annually
a list of all organizations for which Executive serves as a director, officer or
in a similar capacity, for purposes of obtaining the Board’s approval of
Executive’s service to such organizations.  Such service to and participation in
outside organizations shall be presumed for these purposes to be for the benefit
of the Bank, and the Bank shall reimburse Executive for his reasonable expenses
associated therewith, provided such expenses are consistent with and
reimbursement is made pursuant to the Bank’s expense policy, and is paid as soon
as practicable but not later than March 15 of the year immediately following the
year in which the expense was incurred.  Executive shall provide to the Chairman
of the Bank or a committee of the Board of Directors of the Bank at least
quarterly a list of expenses incurred by Executive pursuant to this Section 4,
for purposes of determining the reasonableness of such expenses.
 
5.    WORKING FACILITIES AND EXPENSES
 
Executive’s principal place of employment shall be at the Bank’s principal
executive offices.  The Bank shall provide Executive, at his principal place of
employment, with a private office, stenographic services and other support
services and facilities suitable to his position with the Bank and necessary or
appropriate in connection with the performance of his duties under this
Agreement.  The Bank shall reimburse Executive for his ordinary and necessary
business expenses incurred in connection with the performance of his duties
under this Agreement, including, without limitation, fees for memberships in
such clubs and organizations that Executive and the Board mutually agree are
necessary and appropriate to further the business of the Bank, and travel and
reasonable entertainment expenses, provided such expenses are consistent with
and reimbursement is made pursuant to the Bank’s expense policy.  All
reimbursements under this Section 5 shall be paid as soon as practicable by the
Bank; provided, however, that no payment shall be made later than March 15 of
the year immediately following the year in which the expense was incurred.
 
 
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6.    PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION
 
(a)    The provisions of this Section 6 shall apply upon the occurrence of an
Event of Termination (as herein defined) during Executive’s term of employment
under this Agreement.  As used in this Agreement, an “Event of Termination”
shall mean and include any one or more of the following:
 

 
(i)
the termination by the Bank or the Company of Executive’s employment hereunder
for any reason other than (A) Disability, as defined in Section 7(b) below, or
Retirement, as defined in Section 7(a) below, or (B) Termination for Cause as
defined in Section 8 hereof; or
 
 
   
(ii)
Executive’s resignation from the Bank’s employ for Good Reason.  Good Reason
shall mean any of the following events:
 
 
   
 
(A)
failure to elect or reelect or to appoint or reappoint Executive as Executive
Vice President and Operations Officer;
 
 
     
 
(B)
material change in Executive’s function, duties, or responsibilities, which
change would cause Executive’s position to become one of lesser responsibility,
importance, or scope from the position and attributes thereof described in
Section 1, above;
 
 
     
 
(C)
liquidation or dissolution of the Bank or Company other than liquidations or
dissolutions that are caused by reorganizations that do not affect the status of
Executive;
 
 
     
 
(D)
material reduction in Executive’s Base Salary or relocation of Executive’s
principal place of employment by more than 25 miles from its location as of the
date of this Agreement; or
 
 
     
 
(E)
material breach of this Agreement by the Bank.
 
 
     
 
Upon the occurrence of any event described in clauses (ii) (A), (B), (C), (D) or
(E), above, Executive shall have the right to elect to terminate his employment
under this Agreement by resignation within ninety (90) days after the initial
event giving rise to said right to elect.  The Bank shall have at least thirty
(30) days to remedy any event set forth in clauses (ii)(A) through (E) above;
provided, however, that the Bank shall be entitled to waive such period and make
an immediate payment hereunder.  If the Bank remedies the event within such
thirty (30) day cure period, then no Good Reason shall be deemed to exist with
respect to such event.  If the Bank does not remedy the event within such thirty
(30) days cure period, then Executive may deliver a Notice of Termination, as
defined in Section 9(a) below, for Good Reason at any time within thirty (30)
days following the expiration of such cure period.  Notwithstanding the
preceding sentence, in the event of a continuing breach of this Agreement by the
Bank, Executive, after giving due notice within the prescribed time frame of an
initial event specified above, shall not waive any of his rights solely under
this Agreement and this Section 6 by virtue of the fact that Executive has
submitted his resignation but has remained in the employment of the Bank and is
engaged in good faith discussions to resolve any occurrence of an event
described in clauses (A), (B), (C) ,(D) or (E) above.

 
 
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(iii)
Executive’s involuntary termination by the Bank or the Company on the effective
date of, or at any time following, a Change in Control, or (B)  Executive’s
resignation from employment with the Bank or the Company following a Change in
Control as a result of the Bank’s or the Company’s (or any successor thereto)
failure to renew or extend this Agreement, or (C) Executive’s resignation from
employment with the Bank or the Company (or any successor thereto) following a
Change in Control for Good Reason.  For these purposes, a Change in Control of
the Bank or the Company shall mean a change in control of a nature that: (i)
would be required to be reported in response to Item 5.01 of the current report
on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 (the “Exchange Act”); or (ii) without
limitation such a Change in Control shall be deemed to have occurred at such
time as (a) any “person” (as the term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of Company’s outstanding
securities, except for any securities purchased by the Bank’s employee stock
ownership plan or trust; or (b) individuals who constitute the Board on the date
hereof (the “Incumbent Board”) cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director subsequent to the
date hereof whose election was approved by a vote of at least three-quarters of
the directors comprising the Incumbent Board, or whose nomination for election
by the Company’s stockholders was approved by the same Nominating Committee
serving under an Incumbent Board, shall be, for purposes of this clause (b),
considered as though he were a member of the Incumbent Board; or (c) a plan of
reorganization, merger, consolidation, sale of all or substantially all the
assets of the Bank or the Company or similar transaction in which the Bank or
Company is not the surviving institution occurs or is effected; or (d) a tender
offer is made for 25% or more of the voting securities of the Company and the
shareholders owning beneficially or of record 25% or more of the outstanding
securities of the Company have tendered or offered to sell their shares pursuant
to such tender offer and such tendered shares have been accepted by the tender
offeror.  Notwithstanding anything in this subsection to the contrary, a Change
in Control shall not be deemed to have occurred upon the conversion of the
Company’s mutual holding company parent to stock form, or in connection with any
reorganization used to effect such a conversion.

 
(b)           Upon the occurrence of an Event of Termination, as defined in
Section 6(a)(i), (ii) or (iii), on the Date of Termination, as defined in
Section 9(b), the Bank shall pay Executive, or, in the event of his subsequent
death, his beneficiary or beneficiaries, or his estate, as the case may be, as
severance pay or liquidated damages, or both, his earned but unpaid salary as of
the Date of Termination of employment with the Bank and a sum equal to two (2)
times the sum of (i)  Executive’s Base Salary and (ii) the highest rate of bonus
awarded to Executive during the prior three years.  Any payments hereunder shall
be made in a lump sum, within thirty (30) days after the Date of Termination;
provided, however, if Executive is a “Specified Employee,” as defined in
Treasury Regulation 1.409A-1(i), then, solely to the extent required to avoid
penalties under Code Section 409A, such payment shall be delayed until the first
day of the seventh month following the Executive’s Date of Termination.  Such
payments shall not be reduced in the event Executive obtains other employment
following termination of employment.
 
 
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(c)           Upon the occurrence of an Event of Termination, the Bank will
cause to be continued life insurance and non-taxable medical, dental and
disability coverage substantially identical to the coverage maintained by the
Bank for Executive prior to his termination.  Such coverage shall continue at
the Bank’s expense for twenty-four (24) months from the Date of Termination.
 
(d)           Notwithstanding the preceding paragraphs of this Section, in the
event that the aggregate payments or benefits to be made or afforded to
Executive under this Section (the “Termination Benefits”) would be deemed to
include an “excess parachute payment” under Section 280G of the Code or any
successor thereto, then the cash severance payable under this Section 6 shall be
reduced by the minimum amount necessary to result in no portion of the payments
and benefits payable by the Bank under Section 6 being non-deductible pursuant
to Code Section 280G and subject to excise tax imposed under Code Section 4999.
 
(e)           For purposes of Section 6, “Event of Termination” as used herein
shall mean “Separation from Service” as defined in Code Section 409A and the
regulations promulgated thereunder, such that the Bank and Executive reasonably
anticipate that the level of bona fide services Executive would perform after
termination would permanently decrease to a level that is less than 50% of the
average level of bona fide services performed (whether as an employee or an
independent contractor) over the immediately preceding 36-month period.
 
7.    TERMINATION UPON RETIREMENT, DISABILITY OR DEATH
 
(a)           For purposes of this Agreement, termination by the Bank of
Executive’s employment based on “Retirement” shall mean termination of
Executive’s employment by the Board of Directors of the Bank and the Board of
Directors of the Company upon Executive’s attainment of age 65, or such later
date as determined by the Board of Directors of the Bank.  Upon termination of
Executive’s employment because of Retirement, Executive shall be entitled to all
benefits under any retirement plan of the Bank and other plans to which
Executive is a party, but Executive shall not be entitled to the Termination
Benefits specified in Sections 6(b) and 6(c) hereof.
 
(b)           In the event Executive suffers a Disability, the Executive
may  receive the benefits provided under any disability program sponsored by the
Company or the Bank.  To the extent such benefits are less than Executive’s Base
Salary as defined in Section 3(a) hereof on the Date of Termination, the Bank
shall: (i) continue to pay Executive the difference between (x) the benefits
provided under any disability program sponsored by the Company or the Bank and
(y) his Base Salary, as defined in Section 3(a), for a period of one (1) year
following the Date of Termination by reason of Disability in accordance with the
regular payroll practices of the Bank; and (ii) cause to be continued life
insurance and non-taxable medical and dental coverage substantially comparable,
as reasonably or customarily available, to the coverage maintained by the Bank
for Executive prior to the Date of Termination due to Executive’s Disability
(except to the extent such coverage may be changed in its application to all
Bank employees or is not available on an individual basis to an employee
terminated for Disability), for the remaining term of the Agreement or one (1)
year, whichever is the longer period of time.  For purposes of this Section
7(b), termination of Executive’s employment based on “Disability” shall be
construed to comply with Code Section 409A and shall be deemed to have occurred
if Executive (i) is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can be
expected to result in death, or last for a continuous period of not less than 12
months; (ii) by reason of any medically determinable physical or mental
impairment which can be expected to result in death, or last for a continuous
period of not less than 12 months, Executive is receiving income replacement
benefits for a period of not less than three months under an accident and health
plan covering employees of the Bank or Company; or (iii) is determined to be
totally disabled by the Social Security Administration.
 
 
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(c)           In the event of Executive’s death during the term of the
Agreement, his estate, legal representatives or named beneficiaries (as directed
by Executive in writing) shall be paid Executive’s Base Salary, as defined in
Paragraph 3(a), at the rate in effect at the time Executive’s death for a period
of one (1) year from the date of Executive’s death, and the Bank will continue
to provide non-taxable medical, dental and other insurance benefits normally
provided to Executive’s family for one (1) year after Executive’s death.
 
8.    TERMINATION FOR CAUSE
 
(a)           The term “Termination for Cause” shall mean termination because of
Executive’s personal dishonesty, incompetence, willful misconduct, any breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule, or regulation (other than minor
traffic violations or similar offenses) or final cease-and-desist order, or
material breach of any provision of this Agreement.  In determining
incompetence, the acts or omissions shall be measured against standards
generally prevailing in the savings institutions industry.
 
(b)           The Bank may not terminate Executive for Cause unless and until
there shall have been delivered to him a Notice of Termination which shall
include a copy of a resolution duly adopted by the affirmative vote of not less
than a majority of the Board, finding that in the good faith opinion of the
Board, Executive was guilty of conduct justifying Termination for Cause and
specifying the particulars thereof in detail.  Notwithstanding anything in this
Agreement to the contrary, Executive shall not have the right to receive
compensation or other benefits for any period after Termination for Cause.  Any
stock options granted to Executive under any stock option plan of the Bank, the
Company or any subsidiary or affiliate thereof, shall become null and void
effective upon Executive’s receipt of Notice of Termination for Cause pursuant
to Section 9 hereof, and shall not be exercisable by Executive at any time
subsequent to such Termination for Cause.  Any unvested stock awards granted to
Executive under any stock incentive plan of the Bank or the Company shall be
forfeited.  In the event of Executive’s Termination for Cause, if Executive is a
director of the Company, the Bank of any affiliate thereof, Executive shall
resign as director of each such entity effective upon the date of Termination
for Cause.
 
 
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9.    NOTICE
 
(a)           Any termination by the Bank or by Executive shall be communicated
by Notice of Termination to the other party hereto.  For purposes of this
Agreement, a “Notice of Termination” shall mean a written notice which shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive’s employment under the provision so
indicated.
 
(b)           “Date of Termination” shall mean (A) if Executive’s employment is
terminated for Disability, thirty (30) days after a Notice of Termination is
given (provided that he shall not have returned to the performance of his duties
on a full-time basis during such thirty (30) day period), and (B) if his
employment is terminated for any other reason, the date specified in the Notice
of Termination.
 
(c)           If the party receiving a Notice of Termination desires to dispute
or contest the basis or reasons for termination, the party receiving the Notice
of Termination must notify the other party within thirty (30) days after
receiving the Notice of Termination that such a dispute exists, and shall pursue
the resolution of such dispute in good faith and with reasonable diligence
pursuant to Section 20 of this Agreement.  During the pendency of any such
dispute, neither the Company nor the Bank shall be obligated to pay Executive
compensation or other payments beyond the Date of Termination.  Any amounts paid
to Executive upon resolution of such dispute under this Section shall be offset
against or reduce any other amounts due under this Agreement.
 
10.   POST-TERMINATION OBLIGATIONS
 
(a)           All payments and benefits to Executive under this Agreement shall
be subject to Executive’s compliance with paragraph (b) of this Section during
the term of this Agreement and for one (1) full year after the expiration or
termination hereof.
 
(b)           Executive shall, upon reasonable notice, furnish such information
and assistance to the Bank as may reasonably be required by the Bank in
connection with any litigation in which it or any of its subsidiaries or
affiliates is, or may become, a party.
 
11.   NON-COMPETITION
 
(a)           Upon any termination of Executive’s employment hereunder, other
than a termination, (whether by resignation, voluntary or involuntary) in
connection with a Change in Control, as a result of which the Bank is paying
Executive benefits under Section 6 of this Agreement, Executive agrees not to
compete with the Bank and/or the Company for a period of one (1) year following
such termination within twenty-five (25) miles of any existing branch of the
Bank or any subsidiary of the Company or within twenty-five (25) miles of any
office for which the Bank, the Company or a Bank subsidiary of the Company has
filed an application for regulatory  approval to establish an office, determined
as of the effective date of such termination, except as agreed to pursuant to a
resolution duly adopted by the Board.  Executive agrees that during such period
and within said area, cities, towns and counties, Executive shall not work for
or advise, consult or otherwise serve with, directly or indirectly, any entity
whose business materially competes with the depository, lending or other
business activities of the Bank and/or the Company.  The parties hereto,
recognizing that irreparable injury will result to the Bank and/or the Company,
its business and property in the event of Executive’s breach of this
Subsection 11(a) agree that in the event of any such breach by Executive, the
Bank and/or the Company will be entitled, in addition to any other remedies and
damages available, to an injunction to restrain the violation hereof by
Executive, Executive’s partners, agents, servants, employers, employees and all
persons acting for or with Executive.  Executive represents and admits that
Executive’s experience and capabilities are such that Executive can obtain
employment in a business engaged in other lines and/or of a different nature
than the Bank and/or the Company, and that the enforcement of a remedy by way of
injunction will not prevent Executive from earning a livelihood.  Nothing herein
will be construed as prohibiting the Bank and/or the Company from pursuing any
other remedies available to the Bank and/or the Company for such breach or
threatened breach, including the recovery of damages from Executive.
 
 
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(b)           Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Bank and affiliates
thereof, as it may exist from time to time, is a valuable, special and unique
asset of the business of the Bank.  Executive will not, during or after the term
of his employment, disclose any knowledge of the past, present, planned or
considered business activities of the Bank or affiliates thereof to any person,
firm, corporation, or other entity for any reason or purpose whatsoever (except
for such disclosure as may be required to be provided to any federal banking
agency with jurisdiction over the Bank or Executive).  Notwithstanding the
foregoing, Executive may disclose any knowledge of banking, financial and/or
economic principles, concepts or ideas which are not solely and exclusively
derived from the business plans and activities of the Bank, and Executive may
disclose any information regarding the Bank or the Company which is otherwise
publicly available.  In the event of a breach or threatened breach by Executive
of the provisions of this Section, the Bank will be entitled to an injunction
restraining Executive from disclosing, in whole or in part, the knowledge of the
past, present, planned or considered business activities of the Bank or
affiliates thereof, or from rendering any services to any person, firm,
corporation, other entity to whom such knowledge, in whole or in part, has been
disclosed or is threatened to be disclosed.  Nothing herein will be construed as
prohibiting the Bank from pursuing any other remedies available to the Bank for
such breach or threatened breach, including the recovery of damages from
Executive.
 
12.   SOURCE OF PAYMENTS
 
(a)           All payments provided in this Agreement shall be timely paid in
cash or check from the general funds of the Bank.  The Company, however,
guarantees payment and provision of all amounts and benefits due hereunder to
Executive and, if such amounts and benefits due from the Bank are not timely
paid or provided by the Bank, such amounts and benefits shall be paid or
provided by the Company.
 
(b)           Notwithstanding any provision herein to the contrary, to the
extent that payments and benefits, as provided by this Agreement, are paid to or
received by Executive under an Employment Agreement with the Company, if any,
such compensation payments and benefits paid the Company will be subtracted from
any amounts due simultaneously to Executive under similar provisions of this
Agreement.  Payments pursuant to this Agreement and a Company Employment
Agreement, if any, shall be allocated in proportion to the level of activity and
the time expended on such activities by Executive as determined by the Company
and the Bank on a quarterly basis.
 
 
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13.   EFFECT ON EMPLOYEE BENEFITS PLANS OR PROGRAMS
 
The Bank’s or the Company’s Board of Directors may terminate Executive’s
employment at any time, but any termination of Executive’s employment, other
than a Termination for Cause, shall have no effect on or prejudice the vested
rights of Executive under the Company’s or the Bank’s qualified or non-qualified
retirement, pension, savings, thrift, profit-sharing or stock bonus plans, group
life, health (including hospitalization, medical and major medical), dental,
accident and long term disability insurance plans or other employee benefit
plans or programs, or compensation plans or programs in which Executive was a
participant.  Executive shall not have the right to receive any compensation or
other benefits for any period after Termination for Cause as defined in
Section 8 hereinabove, except as otherwise required by applicable law.
 
14.   REQUIRED REGULATORY PROVISIONS
 
(a)           If Executive is suspended from office and/or temporarily
prohibited from participating in the conduct of the Bank’s affairs by a notice
served under Section 8(e)(3) (12 U.S.C. §1818(e)(3)) or 8(g)(1) (12 U.S.C.
§1818(g)(1)) of the Federal Deposit Insurance Act (“FDIA”), as amended by the
Financial Institutions Reform, Recovery and Enforcement Act of 1989, the Bank’s
obligations under this Agreement shall be suspended as of the date of service,
unless stayed by appropriate proceedings.  If the charges in the notice are
dismissed, the Bank may in its discretion (i) pay Executive all or part of the
compensation withheld while its contract obligations were suspended and (ii)
reinstate (in whole or in part) any of its obligations which were suspended.
 
(b)           If Executive is removed and/or permanently prohibited from
participating in the conduct of the Bank’s affairs by an order issued under
Section 8(e)(4) (12 U.S.C. §1818(e)(4)) or 8(g)(1) (12 U.S.C. §1818(g)(1)) of
FDIA, all obligations of the Bank under this Agreement shall terminate as of the
effective date of the order, but vested rights of the contracting parties shall
not be affected.
 
(c)           If the Bank is in default as defined in Section 3(x)(1) (12 U.S.C.
§1813(x)(1)) of FDIA, all obligations under this Agreement shall terminate as of
the date of default, but this paragraph shall not affect any vested rights of
the contracting parties.
 
(d)           All obligations under this Agreement shall be terminated, except
to the extent determined that continuation of this Agreement is necessary for
the continued operation of the Bank: (i) by the Director of OTS or his or her
designee, at the time the FDIC enters into an agreement to provide assistance to
or on behalf of the Bank under the authority contained in Section 13(c) (12
U.S.C. §1823(c)) of FDIA; or (ii) by the Director of OTS or his or her designee
at the time the Director of OTS or his or her designee approves a supervisory
merger to resolve problems related to operations of the Bank or when the Bank is
determined by the Director of OTS or his or her designee to be in an unsafe or
unsound condition.  Any rights of the parties that have already vested, however,
shall not be affected by such action.
 
 
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(e)           Notwithstanding anything herein contained to the contrary, any
payments to Executive by the Company, whether pursuant to this Agreement or
otherwise, are subject to and conditioned upon their compliance with Section
18(k) of FDIA, 12 U.S.C. Section 1828(k), and the regulations promulgated
thereunder in 12 C.F.R. Part 359.
 
15.   NO ATTACHMENT
 
(a)           Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
 
(b)           This Agreement shall be binding upon, and inure to the benefit of,
Executive, the Bank and the Company and their respective successors and assigns.
 
16.   ENTIRE AGREEMENT; MODIFICATION AND WAIVER
 
(a)           This instrument contains the entire agreement of the parties
relating to the subject matter hereof, and supercedes in its entirety any and
all prior agreements, understandings or representations relating to the subject
matter hereof, except that the parties acknowledge that this Agreement shall not
affect any of the rights and obligations of the parties under any agreement or
plan entered into with or by the Bank or the Company pursuant to which the
Executive may receive compensation or benefits except as set forth in
Section 12(b) hereof.
 
(b)           This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
 
(c)           No term or condition of this Agreement shall be deemed to have
been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel.  No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
 
17.   SEVERABILITY
 
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
 
 
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18.   HEADINGS FOR REFERENCE ONLY
 
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
 
19.   GOVERNING LAW
 
This Agreement shall be governed by the laws of the State of New Jersey but only
to the extent not superseded by federal law.
 
20.   ARBITRATION
 
Any dispute or controversy arising under or in connection with this Agreement
shall be settled exclusively by arbitration, conducted by one arbitrator
mutually agreed upon by the Executive and the Bank.  The arbitration shall occur
in a location in a location Cumberland County, New Jersey, in accordance with
the American Arbitration Association’s National Rules for the Resolution of
Employment Disputes then in effect.  Judgment may be entered on the arbitrator’s
award in any court having jurisdiction.
 
21.   PAYMENT OF LEGAL FEES
 
All reasonable legal fees paid or incurred by Executive pursuant to any dispute
or question of interpretation relating to this Agreement shall be paid or
reimbursed by the Bank, provided that the dispute or interpretation has been
settled by Executive and the Bank or resolved in Executive’s favor, and that
such reimbursement shall occur as soon as practicable but not later than two and
one-half months after the dispute is settled or resolved in Executive’s favor.
 
22.   INDEMNIFICATION
 
During the term of this Agreement and for a period of six (6) years thereafter,
the Bank or the Company shall provide Executive (including his heirs, executors
and administrators) with coverage under a standard directors and officers
liability insurance policy at its expense.  Subject to 12 C.F.R. §545.121, the
Bank or the Company shall indemnify Executive (and his heirs, executors and
administrators) to the fullest extent permitted under federal law against all
expenses and liabilities reasonably incurred by him in connection with or
arising out of any action, suit or proceeding in which he may be involved by
reason of his having been a director or officer of the Bank or the Company
(whether or not he continues to be a director or officer at the time of
incurring such expenses or liabilities), such expenses and liabilities to
include, but not be limited to, judgments, court costs and attorneys fees and
the cost of reasonable settlements (such settlements must be approved by the
Board of Directors of the Bank or the Company).  If such action, suit or
proceeding is brought against Executive in his capacity as an officer or
director of the Bank, however, such indemnification shall not extend to matters
as to which Executive is finally adjudged to be liable for willful misconduct in
the performance of his duties.
 
 
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23.   SUCCESSOR AND ASSIGNS
 
The Bank shall require any successor or assignee, whether direct or indirect, by
purchase, merger, consolidation or otherwise, to all or substantially all the
business or assets of the Bank or the Company, expressly and unconditionally to
assume and agree to perform the Bank’s and the Company’s obligations under this
Agreement, in the same manner and to the same extent that the Bank and/or the
Company would be required to perform if no such succession or assignment had
taken place.
 
 
 
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