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Employment Agreement

Employment Agreement

Employment Agreement | Document Parties: COLONIAL BANKSHARES, INC You are currently viewing:
This Employment Agreement involves

COLONIAL BANKSHARES, INC

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Title: Employment Agreement
Governing Law: New Jersey     Date: 11/14/2006
Industry: Money Center Banks     Sector: Financial

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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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