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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
This Agreement is made effective as of the 24th day of August,
2006 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 Edward J. Geletka
("Executive").
WHEREAS, Executive is currently employed as the President and
Chief
Executive Officer of the Bank and Colonial Bankshares, Inc., a
federal mid-tier
stock holding company (the "Company"), which owns 100% of the
common stock of
the Bank; and
WHEREAS, the Bank desires to assure itself the continued
services of
Executive pursuant to the terms of this Agreement.
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
President and Chief Executive Officer of the Bank and President
and Chief
Executive Officer of the Company. During the period of his
employment hereunder,
except for periods of absence occasioned by illness, reasonable
vacation
periods, and reasonable leaves of absence, Executive shall
faithfully perform
his duties hereunder and shall perform the administrative and
management
services for the Bank which are customarily performed by persons
in a similar
executive officer capacity. Executive shall be responsible for
the overall
management of the Company and the Bank and shall be responsible
for establishing
the business objectives, policies and strategic plan of the
Company and the
Bank. Executive shall also be responsible for providing
leadership and direction
to all departments or divisions of the Company and the Bank, and
shall be the
primary contact between the Board of Directors and the staff of
the Company and
the Bank. Executive also agrees to serve, if elected, as an
officer and director
of any subsidiary or affiliate of the Bank or the Company.
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
thirty-six (36) full calendar months thereafter. Commencing on
January 1, 2007
and continuing on January 1 of each year thereafter (the
"Anniversary Date"),
this Agreement shall renew for an additional year such that the
remaining term
shall be three (3) 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 disinterested members of the
Board of
Directors of the Bank (the "Board") will conduct a comprehensive
performance
evaluation and review of Executive for purposes of determining
whether to extend
the Agreement, and the results thereof shall be included in the
minutes of the
Board's meeting.
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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
$165,000.00 per year
("Base Salary"). 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 a Committee designated by the
Board, and the
Board 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.
(c) Executive shall be entitled to paid time off in accordance
with the
standard policies 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 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
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list of all organizations for which Executive serves as a
director or in a
similar capacity for purposes of obtaining the Board's approval
of Executive's
service on the boards of 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 his
reasonable
expenses associated therewith, provided such expenses are
consistent with and
reimbursement is made pursuant to the Bank's Expense Policy.
Executive will
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 provide Executive with an automobile
suitable to the
position of President and Chief Executive Officer of the Bank,
and such
automobile may be used by Executive in carrying out his duties
under this
Agreement. The Bank shall reimburse Executive for the cost of
maintenance, use
and servicing of such automobile. 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.
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
full-time
employment hereunder for any reason other than (A) Disability
or
Retirement, as defined in Section 7 below, or (B) Termination
for
Cause as defined in Section 8 hereof; or
(ii) Executive's resignation from the Bank's employ, upon
any:
(A) failure to elect or reelect or to appoint or reappoint
Executive
as President and Chief Executive 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;
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(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) reduction in Executive's annual compensation or benefits
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
upon
sixty (60) days prior written notice given within a reasonable
period
of time not to exceed four (4) calendar months after the
initial
event giving rise to said right to elect. 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.
(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
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
as a
result of any event described in Section 6(a)(ii)(A), (B), (C),
(D)
or (E) above. 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
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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
three (3) 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, or
in the event Section 409A of the Internal Revenue Code (the
"Code") applies, no
later than the first day of the seventh month following the Date
of Termination.
Such payments shall not be reduced in the event Executive
obtains other
employment following termination of employment.
(c) Upon
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