ex10-12.htm


    
      

    

    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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      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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