--------------------------------------------------------------------------------

EXHIBIT 10.9
 
AMENDED AND RESTATED
MALVERN FEDERAL SAVINGS BANK
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AGREEMENT

 
              THIS AMENDED AND RESTATED SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
AGREEMENT (the “Agreement”) by and between Malvern Federal Savings Bank (the
“Bank”), a federally-chartered savings bank located in Paoli, Pennsylvania, and
GERARD M. MCTEAR, JR. (the “Executive”), intending to be legally bound hereby,
is adopted effective as of December 16, 2008.
 
              WHEREAS, the purpose of this Agreement is to provide specified
benefits to the Executive, a member of a select group of management or highly
compensated employees who contribute materially to the continued growth,
development and future business success of the Bank. This Agreement shall be
unfunded for tax purposes and for purposes of Title I of the Employee Retirement
Income Security Act of 1974 (“ERISA”), as amended from time to time. The Bank
will pay the benefits from its general assets;
 
              WHEREAS, the Executive entered into a Supplemental Executive
Retirement Plan Agreement with the Bank dated as of October 5, 2004 (the “Prior
Agreement”), which Prior Agreement was amended as of September 29, 2006 for the
purpose of bringing the Prior Agreement into compliance with the proposed
regulations issued under Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”); and
 
              WHEREAS, the Bank wishes to amend and restate the Prior Agreement
in order to comply with the final regulations issued under Section 409A of the
Code in April 2007.
 
              NOW, THEREFORE, in consideration of the foregoing premises and
other good and valuable consideration, the receipt and acceptance of which are
hereby acknowledged, the Executive and the Bank hereby agree as follows:
 
AGREEMENT
Article 1
Definitions
 
            Whenever used in this Agreement, the following words and phrases
shall have the meanings specified:

   
1.1
“Beneficiary” means each designated person, or the estate of the deceased
Executive, entitled to benefits, if any, upon the death of the Executive
determined pursuant to Article 4.
   
1.2
“Beneficiary Designation Form” means the form established from time to time by
the Plan Administrator that the Executive completes, signs and returns to the
Plan Administrator to designate one or more Beneficiaries.
   
1.3
“Change in Control” means a change in the ownership of the Company or the Bank,
a change in the effective control of the Company or the Bank, or a change in the
ownership of a substantial portion of the assets of the Company or the Bank, in
each case as provided under Section 409A of the Code and the regulations
thereunder, provided, however, that neither any second-step conversion and
reorganization in which Malvern Federal Mutual Holding Company (the “MHC”)
ceases to exist nor any increase in the ownership of the Company by the MHC
shall be deemed to be a Change in Control.
   
1.4
“Code” means the Internal Revenue Code of 1986, as amended.
   
1.5
“Company” means Malvern Federal Bancorp, Inc., the mid-tier stock holding
company of the Bank.
   
1.6
“Disability” means the 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 can be expected to last
for a continuous period of not less than twelve (12) months, or (ii) is, by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than 12 months, 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 would have been had the Executive been eligible to
participate in such plan).

 
 

--------------------------------------------------------------------------------

 
 
1.7
“Early Termination” means the Executive’s Separation from Service before Normal
Retirement Age for any reason other than death, Disability, Termination for
Cause or following a Change in Control.
   
1.8
“Effective Date” means April 1, 2004.
   
1.9
“Normal Retirement Age” means the Executive’s 65th birthday.
   
1.10
“Normal Retirement Date” means the later of the Normal Retirement Age or a
Separation from Service after reaching Normal Retirement Age.
   
1.11
“Plan Administrator” means the plan administrator described in Article 8.
   
1.12
“Plan Year” means each consecutive twelve (12) month period commencing on
October 1 and ending the following September 30. The initial Plan Year shall
commence on the Effective Date and end on September 30, 2004.
   
1.13
“Separation from Service” means a termination of the Executive’s services
(whether as an employee or as an independent contractor) to the Bank (including
companies which are deemed to be part of a controlled group of corporations with
the Bank for purposes of Treas. Reg. §1.409A-1(h)) for any reason. Whether a
Separation from Service has occurred shall be determined in accordance with the
requirements of Section 409A of the Code based on whether the facts and
circumstances indicate that the Bank and the Executive reasonably anticipated
that no further services would be performed after a certain date or that the
level of bona fide services the Executive would perform after such date (whether
as an employee or as an independent contractor) would permanently decrease to no
more than twenty percent (20%) of the average level of bona fide services
performed (whether as an employee or an independent contractor) over the
immediately preceding thirty-six (36) month period.
   
1.14
“Specified Employee” means a key employee as defined in Section 416(i) of the
Code (without regard to Section 416(i)(5) of the Code) and as otherwise defined
in Section 409A of the Code and the regulations thereunder.

 
Article 2
Benefits During Lifetime

     
2.1
Normal Retirement Benefit. Upon the Executive’s Separation from Service on or
after the Normal Retirement Age for any reason other than death, the Bank shall
pay to the Executive the benefit described in this Section 2.1 in lieu of any
other benefit under this Article.
       
2.1.1
Amount of Benefit. The annual benefit under this Section 2.1 is FIFTY NINE
THOUSAND DOLLARS ($59,000). If the Executive continues in the employ of the Bank
beyond Normal Retirement Age, the amount above shall be increased 3.5% for each
completed twelve-month period between Normal Retirement Age and the earlier of
(i) age seventy (70) or (ii) the Separation from Service.
       
2.1.2
Payment of Benefit. Subject to Section 2.5 hereof, if applicable, the Bank shall
pay the annual benefit to the Executive in twelve (12) equal monthly
installments commencing within ninety (90) days following the Executive’s Normal
Retirement Date, and payable on the first of each month thereafter. The annual
benefit shall be paid to the Executive for fifteen (15) years.
   
2.2
Early Termination Benefit. Upon Early Termination, the Bank shall pay to the
Executive the benefit described in this Section 2.2 in lieu of any other benefit
under this Article.

 
2

--------------------------------------------------------------------------------

 
 

 
2.2.1
Amount of Benefit. The annual benefit under this Section 2.2 is the Early
Termination Annual Benefit set forth on Schedule A for the Plan Year ended
immediately prior to the date on which Early Termination occurs. This benefit is
determined by vesting the Executive in one hundred percent (100%) of the Accrual
Balance shown on Schedule A (hereinafter “Accrual Balance”).
       
2.2.2
Payment of Benefit. Subject to Section 2.5 hereof, if applicable, the Bank shall
pay the annual benefit to the Executive in twelve (12) equal monthly
installments commencing within ninety (90) days following the Early Termination,
and payable on the first of each month thereafter. The annual benefit shall be
paid to the Executive for fifteen (15) years.
     
2.3
Disability Benefit. Upon the Executive’s Separation from Service due to
Disability prior to Normal Retirement Age, the Bank shall pay to the Executive
the benefit described in this Section 2.3 in lieu of any other benefit under
this Article.
       
2.3.1
Amount of Benefit. The annual benefit under this Section 2.3 is the Disability
Annual Benefit set forth on Schedule A for the Plan Year ended immediately prior
to the date on which the Separation from Service due to Disability occurs. This
benefit is determined by vesting the Executive in one hundred percent (100%) of
the Accrual Balance.
       
2.3.2
Payment of Benefit. The Bank shall pay the annual benefit to the Executive in
twelve (12) equal monthly installments commencing with the month following
Normal Retirement Age and payable on the first of each month thereafter. The
annual benefit shall be paid to the Executive for fifteen (15) years.
   
2.4
Change in Control Benefit. Upon a Change in Control followed by the Executive’s
Separation from Service before Normal Retirement Age for any reason other than
death or Disability, the Bank shall pay to the Executive the benefit described
in this Section 2.4 in lieu of any other benefit under this Article.
       
2.4.1
Amount of Benefit. The annual benefit under this Section 2.4 is the Change in
Control Annual Benefit set forth on Schedule A for the Plan Year ended
immediately prior to the date on which the Separation from Service occurs.
       
2.4.2
Payment of Benefit. Subject to Section 2.5 hereof, if applicable, the Bank shall
pay the annual benefit to the Executive in twelve (12) equal monthly
installments commencing within ninety (90) days following the Separation from
Service, and payable on the first of each month thereafter. The annual benefit
shall be paid to the Executive for fifteen (15) years.
   
2.5
Restriction on Timing of Distributions. Notwithstanding any provision of this
Agreement to the contrary, if the Executive is considered a Specified Employee
at the time of Separation from Service (for any reason other than death or
Disability) under such procedures as established by the Bank in accordance with
Section 409A of the Code, benefit distributions that are made as a result of the
Separation from Service may not commence earlier than six (6) months after the
date of such Separation from Service. Therefore, in the event this Section 2.5
is applicable to the Executive, any distribution which would otherwise be paid
to the Executive within the first six months following the Separation from
Service shall be accumulated and paid to the Executive in a lump sum on the
first day of the seventh month following the Separation from Service. All
subsequent distributions shall be paid in the manner specified.
   
2.6
Distributions Upon Income Inclusion Under Section 409A of the Code. Upon the
inclusion of any amount into the Executive’s income as a result of the failure
of this Agreement to comply with the requirements of Section 409A of the Code,
to the extent such tax liability can be covered by the Executive’s accrual
balance, a distribution shall be made as soon as is administratively practicable
following the discovery of the plan failure, provided, however, that the amount
of the distribution shall not exceed the amount required to be included in
income as a result of the failure to comply with the requirements of Section
409A of the Code and the regulations issued thereunder.

 
3

--------------------------------------------------------------------------------

 
Article 3
Death Benefits

     
3.1
Death During Active Service. If the Executive dies while in the active service
of the Bank, the Bank shall pay to the Beneficiary the benefit described in this
Section 3.1. This benefit shall be paid in lieu of the benefits under Article 2.
       
3.1.1
Amount of Benefit. The benefit under this Section 3.1 is the Death Benefit set
forth on Schedule A for the Plan Year ending immediately prior to the date of
the Executive’s death.
       
3.1.2
Payment of Benefit. The Bank shall pay the benefit to the Beneficiary in the
form elected by the Executive on the Election Form, attached hereto and made a
part of this Agreement, commencing within ninety (90) days following receipt by
the Bank of the Executive’s death certificate. Any change in the form or timing
of the payment upon death shall not take effect until at least 12 months after
the Election Form is submitted by the Executive and accepted by the Plan
Administrator. If the Executive elects installment payments, during the
applicable installment period the Bank shall credit interest on the unpaid
Accrual Balance at an annual rate equal to the yield on a 10-year U.S. Treasury
Note, measured as of the end of the month prior to the date of the Executive’s
death, plus two percent (2%), compounded monthly. Notwithstanding any election
by the Executive to the contrary, if the benefit under this Section 3.1 is less
than fifty thousand dollars ($50,000), the Bank shall pay the benefit in a lump
sum.
     
3.2
Death During Benefit Period. If the Executive dies after the benefit payments
have commenced under this Agreement but before receiving all such payments, the
Bank shall pay the remaining benefits to the Beneficiary at the same time and in
the same amounts they would have been paid to the Executive had the Executive
survived.
     
3.3
Death Following Separation from Service But Before Benefits Commence. If the
Executive is entitled to benefits under this Agreement but dies prior to the
commencement of said benefits, the Bank shall pay to the Beneficiary the same
benefits, in the same manner, that would have been paid to the Executive had the
Executive survived; however, said benefit payments will commence within ninety
(90) days of the Executive’s death.

 
Article 4
Beneficiaries

   
4.1
Beneficiary Designation. The Executive shall have the right, at any time, to
designate a Beneficiary(ies) to receive any benefits payable under this
Agreement upon the death of the Executive. The Beneficiary designated under this
Agreement may be the same as or different from the beneficiary designated under
any other benefit plan of the Bank in which the Executive participates.
   
4.2
Beneficiary Designation: Change. The Executive shall designate a Beneficiary by
completing and signing the Beneficiary Designation Form, and delivering it to
the Plan Administrator or its designated agent. The Executive’s Beneficiary
designation shall be deemed automatically revoked if the Beneficiary predeceases
the Executive or if the Executive names a spouse as Beneficiary and the marriage
is subsequently dissolved. The Executive shall have the right to change a
Beneficiary by completing, signing and otherwise complying with the terms of the
Beneficiary Designation Form and the Plan Administrator’s rules and procedures,
as in effect from time to time. Upon the acceptance by the Plan Administrator of
a new Beneficiary Designation Form, all Beneficiary designations previously
filed shall be cancelled. The Plan Administrator shall be entitled to rely on
the last Beneficiary Designation Form filed by the Executive and accepted by the
Plan Administrator prior to the Executive’s death.

 
4

--------------------------------------------------------------------------------

 
 
4.3
Acknowledgment. No designation or change in designation of a Beneficiary shall
be effective until received, accepted and acknowledged in writing by the Plan
Administrator or its designated agent.
   
4.4
No Beneficiary Designation. If the Executive dies without a valid Beneficiary
designation, or if all designated Beneficiaries predecease the Executive, then
the Executive’s spouse shall be the designated Beneficiary. If the Executive has
no surviving spouse, the benefits shall be made to the personal representative
of the Executive’s estate.
   
4.5
Facility of Payment. If the Plan Administrator determines in its discretion that
a benefit is to be paid to a minor, to a person declared incompetent, or to a
person incapable of handling the disposition of that person’s property, the Plan
Administrator may direct payment of such benefit to the guardian, legal
representative or person having the care or custody of such minor, incompetent
person or incapable person. The Plan Administrator may require proof of
incompetence, minority or guardianship as it may deem appropriate prior to
distribution of the benefit. Any payment of a benefit shall be a payment for the
account of the Executive and the Executive’s Beneficiary, as the case may be,
and shall be a complete discharge of any liability under the Agreement for such
payment amount.

 
Article 5
General Limitations

   
5.1
Excess Parachute or Golden Parachute Payment. If the payments pursuant to this
Agreement, either alone or together with other payments and benefits which the
Executive has the right to receive from the Bank and the Company, would
constitute a “parachute payment” under Section 280G of the Code, or would be a
prohibited golden parachute payment pursuant to 12 C.F.R. §359.2 and for which
the appropriate federal banking agency has not given written consent to pay
pursuant to 12 C.F.R. §359.4, the amount of each of the payments pursuant to
this Agreement shall be reduced by the minimum amount necessary to result in (i)
no portion of the payments under this Agreement being non-deductible to the Bank
or the Company pursuant to Section 280G of the Code and subject to the excise
tax imposed under Section 4999 of the Code, and (ii) no adverse consequence to
the Bank or the Company under or pursuant to such banking regulations. All
amounts payable under this Agreement shall also be subject to limitations or
prohibitions imposed by subsequent changes or amendments to the cited laws and
regulations except to the extent that any amounts payable under this Agreement
are grandfathered or otherwise exempt or excluded from the change or amendment.
   
5.2
Termination for Cause. Notwithstanding any provision of this Agreement to the
contrary, the Bank shall not pay any benefit under this Agreement if the Bank
terminate the Executive’s employment for Cause. Termination of the Executive’s
employment for “Cause” shall mean termination because of personal dishonesty,
willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any law, rule
or regulation (other than traffic violations or similar offenses) or final
cease-and-desist order or material breach of any provision of the Agreement. For
purposes of this paragraph, no act or failure to act on the Executive’s part
shall be considered “willful” unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that the Executive’s
action or omission was in the best interest of the Bank.
   
5.3
Removal. Notwithstanding any provision of this Agreement to the contrary, the
Bank shall not pay any benefit under this Agreement if the Executive is subject
to a final removal or prohibition order issued by an appropriate federal banking
agency pursuant to Section 8(e) of the Federal Deposit Insurance Act (“FDIA”).
   
5.4
Non-compete Provision. The Executive shall forfeit any unpaid benefits under
this Agreement if during the term of this Agreement, and for a period of five
years after payment of benefits has commenced, the Executive, directly or
indirectly, either as an individual or as a proprietor, stockholder, partner,
officer, director, employee, agent, consultant or independent contractor of any
individual, partnership, corporation or other entity (excluding an ownership
interest of three percent (3%) or less in the stock of a publicly-traded
company):

 
5

--------------------------------------------------------------------------------

 
 

 
(i)
becomes employed by, participates in, or becomes connected in any manner with
the ownership, management, operation or control of any bank, savings and loan or
other similar financial institution if the Executive’s responsibilities will
include providing banking or other financial services within the twenty-five
(25) miles of any office maintained by the Bank as of the date of the
Executive’s Separation from Service;
       
(ii)
participates in any way in hiring or otherwise engaging, or assisting any other
person or entity in hiring or otherwise engaging, on a temporary, part-time or
permanent basis, any individual who was employed by the Bank as of the date of
the Executive’s Separation from Service;
       
(iii)
assists, advises, or serves in any capacity, representative or otherwise, any
third party in any action against the Bank or transaction involving the Bank;
       
(iv)
sells, offers to sell, provides banking or other financial services, assists any
other person in selling or providing banking or other financial services, or
solicits or otherwise competes for, either directly or indirectly, any orders,
contract, or accounts for services of a kind or nature like or substantially
similar to the financial services performed or financial products sold by the
Bank (the preceding hereinafter referred to as “Services”), to or from any
person or entity from whom the Executive or the Bank, to the knowledge of the
Executive, provided banking or other financial services, sold, offered to sell
or solicited orders, contracts or accounts for Services during the three (3)
year period immediately prior to the Executive’s Separation from Service;
       
(v)
divulges, discloses, or communicates to others in any manner whatsoever, any
confidential information of the Bank, to the knowledge of the Executive,
including, but not limited to, the names and addresses of customers or
prospective customers of the Bank, as they may have existed from time to time,
of work performed or services rendered for any customer, any method and/or
procedures relating to projects or other work developed for the Bank, earnings
or other information concerning the Bank. The restrictions contained in this
subparagraph (v) apply to all information regarding the Bank, regardless of the
source who provided or compiled such information. Notwithstanding anything to
the contrary, all information referred to herein shall not be disclosed unless
and until it becomes known to the general public from sources other than the
Executive.
       
5.4.1
Judicial Remedies. In the event of a breach or threatened breach by the
Executive of any provision of these restrictions, the Executive recognizes the
substantial and immediate harm that a breach or threatened breach will impose
upon the Bank, and further recognizes that in such event monetary damages may be
inadequate to fully protect the Bank. Accordingly, in the event of a breach or
threatened breach of these restrictions, the Executive consents to the Bank’s
entitlement to such ex parte, preliminary, interlocutory, temporary or permanent
injunctive, or any other equitable relief, protecting and fully enforcing the
Bank’s rights hereunder and preventing the Executive from further breaching any
of his obligations set forth herein. The Executive expressly waives any
requirement, based on any statute, rule of procedure, or other source, that the
Bank post a bond as a condition of obtaining any of the above-described
remedies. Nothing herein shall be construed as prohibiting the Bank from
pursuing any other remedies available to the Bank at law or in equity for such
breach or threatened breach, including the recovery of damages from the
Executive. The Executive expressly acknowledges and agrees that: (i) the
restrictions set forth in Section 5.4 hereof are reasonable, in terms of scope,
duration, geographic area, and otherwise, (ii) the protections afforded the Bank
in Section 5.4 hereof are necessary to protect its legitimate business interest,
(iii) the restrictions set forth in Section 5.4 hereof will not be materially
adverse to the Executive’s employment with the Bank, and (iv) his agreement to
observe such restrictions forms a material part of the consideration for this
Agreement.
       
5.4.2
Overbreadth of Restrictive Covenant. It is the intention of the parties that if
any restrictive covenant in this Agreement is determined by a court of competent
jurisdiction to be overly broad, then the court should enforce such restrictive
covenant to the maximum extent permitted under the law as to area, breadth and
duration.

 
6

--------------------------------------------------------------------------------

 
 

 
5.4.3
Change in Control. The non-compete provision detailed in Section 5.4 hereof
shall not be enforceable or applicable following a Change in Control.
     
5.5
Suicide or Misstatement. No benefits shall be payable if the Executive commits
suicide within two years after the date of the Prior Agreement, or if the
insurance company denies coverage (i) for material misstatements of fact made by
the Executive on any application for life insurance purchased by the Bank, or
(ii) for any other reason.

 
Article 6
Claims and Review Procedures

       
6.1
Claims Procedure. An Executive or Beneficiary (“claimant”) who has not received
benefits under the Agreement that he or she believes should be paid shall make a
claim for such benefits as follows:
       
6.1.1
Initiation - Written Claim. The claimant initiates a claim by submitting to the
Plan Administrator a written claim for the benefits.
       
6.1.2
Timing of Bank Response. The Plan Administrator shall respond to such claimant
within 90 days after receiving the claim. If the Plan Administrator determines
that special circumstances require additional time for processing the claim, the
Plan Administrator can extend the response period by an additional 90 days by
notifying the claimant in writing, prior to the end of the initial 90-day
period, that an additional period is required. The notice of extension must set
forth the special circumstances and the date by which the Plan Administrator
expects to render its decision.
       
6.1.3
Notice of Decision. If the Plan Administrator denies part or all of the claim,
the Plan Administrator shall notify the claimant in writing of such denial. The
Plan Administrator shall write the notification in a manner calculated to be
understood by the claimant. The notification shall set forth:
           
6.1.3.1
The specific reasons for the denial,
           
6.1.3.2
A reference to the specific provisions of the Agreement on which the denial is
based,
           
6.1.3.3
A description of any additional information or material necessary for the
claimant to perfect the claim and an explanation of why it is needed,
           
6.1.3.4
An explanation of the Agreement’s review procedures and the time limits
applicable to such procedures, and
           
6.1.3.5
A statement of the claimant’s right to bring a civil action under ERISA Section
502(a) following an adverse benefit determination on review.
   
6.2
Review Procedure. If the Plan Administrator denies part or all of the claim, the
claimant shall have the opportunity for a full and fair review by the Plan
Administrator of the denial, as follows:
         
6.2.1
Initiation - Written Request. To initiate the review, the claimant, within 60
days after receiving the Plan Administrator’s notice of denial, must file with
the Plan Administrator a written request for review.          
6.2.2
Additional Submissions - Information Access. The claimant shall then have the
opportunity to submit written comments, documents, records and other information
relating to the claim. The Plan Administrator shall also provide the claimant,
upon request and free of charge, reasonable access to, and copies of, all
documents, records and other information relevant (as defined in applicable
ERISA regulations) to the claimant’s claim for benefits.

 
7

--------------------------------------------------------------------------------

 
 

 
6.2.3
Considerations on Review. In considering the review, the Plan Administrator
shall take into account all materials and information the claimant submits
relating to the claim, without regard to whether such information was submitted
or considered in the initial benefit determination.
         
6.2.4
Timing of Plan Administrator Response. The Plan Administrator shall respond in
writing to such claimant within 60 days after receiving the request for review.
If the Plan Administrator determines that special circumstances require
additional time for processing the claim, the Plan Administrator can extend the
response period by an additional 60 days by notifying the claimant in writing,
prior to the end of the initial 60-day period, that an additional period is
required. The notice of extension must set forth the special circumstances and
the date by which the Plan Administrator expects to render its decision.
         
6.2.5
Notice of Decision. The Plan Administrator shall notify the claimant in writing
of its decision on review. The Plan Administrator shall write the notification
in a manner calculated to be understood by the claimant. If the Plan
Administrator denies part or all of the claim, the notification shall set forth:
           
6.2.5.1
The specific reasons for the denial,
           
6.2.5.2
A reference to the specific provisions of the Agreement on which the denial is
based,
           
6.2.5.3
A statement that the claimant is entitled to receive, upon request and free of
charge, reasonable access to, and copies of, all documents, records and other
information relevant (as defined in applicable ERISA regulations) to the
claimant’s claim for benefits, and
           
6.2.5.4
A statement of the claimant’s right to bring a civil action under ERISA Section
502(a).

 
Article 7
Amendments and Termination

     
7.1
Amendments. This Agreement may be amended only by a written agreement signed by
the Bank and the Executive. However, the Bank may unilaterally amend this
Agreement to conform with written directives to the Bank from its banking
regulators or to comply with legislative changes or tax law, including without
limitation Section 409A of the Code and any and all Treasury regulations and
guidance promulgated thereunder.
   
7.2
Plan Termination Generally. The Bank may unilaterally terminate this Agreement
at any time. Except as provided in Section 7.3, the termination of this
Agreement shall not cause a distribution of benefits under this Agreement.
Rather, upon such termination benefit distributions will be made at the earliest
distribution event permitted under Article 2 or Article 3.
   
7.3
Plan Terminations Under Section 409A. Under no circumstances may the Agreement
permit the acceleration of the time or form of any payment under the Agreement
prior to the payment events specified herein, except as provided in this Section
7.3. The Bank may, in its discretion, elect to terminate the Agreement in any of
the following three circumstances and accelerate the payment of the entire
unpaid balance of the Executive’s vested benefits as of the date of such payment
in accordance with Section 409A of the Code, provided that in each case the
action taken complies with the applicable requirements set forth in Treasury
Regulation §1.409A-3(j)(4)(ix):
     
(a)
the Agreement is irrevocably terminated within the 30 days preceding a Change in
Control and (1) all arrangements sponsored by the Company and the Bank and any
successors immediately following the Change in Control that would be aggregated
with the Agreement under Treasury Regulation §1.409A-1(c)(2) are terminated with
respect to each participant that experienced the Change in Control event, and
(2) the Executive and all participants under the other aggregated arrangements
receive all of their benefits under the terminated arrangements within 12 months
of the date that all necessary action to irrevocably terminate the Agreement and
the other aggregated arrangements is taken;

 
8

--------------------------------------------------------------------------------

 
 

 
(b)
the Agreement is irrevocably terminated at a time that is not proximate to a
downturn in the financial health of the Company or the Bank and (1) all
arrangements sponsored by the Company and the Bank that would be aggregated with
the Agreement under Treasury Regulation §1.409A-1(c) if the Executive
participated in such arrangements are terminated, (2) no payments are made
within 12 months of the date the Company and the Bank take all necessary action
to irrevocably terminate the arrangements, other than payments that would be
payable under the terms of the arrangements if the termination had not occurred;
(3) all payments are made within 24 months of the date the Company and the Bank
take all necessary action to irrevocably terminate the arrangements; and (4)
neither the Company nor the Bank adopts a new arrangement that would be
aggregated with the Agreement under Treasury Regulation §1.409A-1(c) if the
Executive participated in both arrangements, at any time within three years
following the date the Company and the Bank take all necessary action to
irrevocably terminate the Agreement; or
       
(c)
the Agreement is terminated within 12 months of a corporate dissolution taxed
under Section 331 of the Code, or with the approval of a bankruptcy court
pursuant to 11 U.S.C. §503(b)(1)(A), provided that the amounts deferred by the
Executive under the Agreement are included in the Executive’s gross income in
the later of (1) the calendar year in which the termination of the Agreement
occurs, or (2) the first calendar year in which the payment is administratively
practicable.
 
Article 8
Administration

 

   
8.1
Plan Administrator Duties. This Agreement shall be administered by a Plan
Administrator which shall consist of the Bank’s Board of Directors, or such
committee or person(s) as the Board of Directors shall appoint. The Executive
may be a member of the Plan Administrator. The Plan Administrator shall also
have the discretion and authority to (i) make, amend, interpret and enforce all
appropriate rules and regulations for the administration of this Agreement and
(ii) decide or resolve any and all questions, including interpretations of this
Agreement, as may arise in connection with the Agreement. Any acts under this
section shall be restricted to actions which do not violate Section 409A of the
Code.
   
8.2
Agents. In the administration of this Agreement, the Plan Administrator may
employ agents and delegate to them such administrative duties as it sees fit
(including acting through a duly appointed representative), and may from time to
time consult with counsel who may be counsel to the Bank.
   
8.3
Binding Effect of Decisions. The decision or action of the Plan Administrator
with respect to any question arising out of or in connection with the
administration, interpretation and application of the Agreement and the rules
and regulations promulgated hereunder shall be final and conclusive and binding
upon all persons having any interest in the Agreement.
   
8.4
Indemnity of Plan Administrator. The Bank shall indemnify and hold harmless the
members of the Plan Administrator against any and all claims, losses, damages,
expenses or liabilities arising from any action or failure to act with respect
to this Agreement, except in the case of willful misconduct by the Plan
Administrator or any of its members.
   
8.5
Bank Information. To enable the Plan Administrator to perform its functions, the
Bank shall supply full and timely information to the Plan Administrator on all
matters relating to the date and circumstances of the retirement, Disability,
death, or Separation from Service of the Executive, and such other pertinent
information as the Plan Administrator may reasonably require.
   
8.6
Annual Statement. The Plan Administrator shall provide to the Executive, within
120 days after the end of each Plan Year, a statement setting forth the benefits
payable under this Agreement.

 
9

--------------------------------------------------------------------------------

 
 
Article 9
Miscellaneous

 
9.1
Applicable Law. The Agreement and all rights hereunder shall be governed by the
laws of the Commonwealth of Pennsylvania, except to the extent preempted by the
laws of the United States of America.
   
9.2
Binding Effect. This Agreement shall bind the Executive and the Bank, and their
beneficiaries, survivors, executors, successors, administrators and transferees.
   
9.3
Entire Agreement. This Agreement constitutes the entire agreement between the
Bank and the Executive as to the subject matter hereof. No rights are granted to
the Executive by virtue of this Agreement other than those specifically set
forth herein. All prior agreements between the Bank and the Executive with
respect to the matters agreed to herein are hereby superseded and shall have no
force or effect, including but not limited to the Prior Agreement.
   
9.4
Right of Offset. The Bank shall have the right to offset the benefits against
any unpaid obligation the Executive may have with the Bank.
   
9.5
No Guarantee of Employment. This Agreement is not an employment policy or
contract. It does not give the Executive the right to remain an employee of the
Bank, nor does it interfere with the Bank’s right to discharge the Executive. It
also does not require the Executive to remain an employee nor interfere with the
Executive’s right to terminate employment at any time.
   
9.6
Non-Transferability. Benefits under this Agreement cannot be sold, transferred,
assigned, pledged, attached or encumbered in any manner.
   
9.7
Notice. For the purposes of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by certified or registered mail, return
receipt requested, postage prepaid, addressed to the respective addresses set
forth below:

 

 
To the Bank:
Secretary
   
Malvern Federal Savings Bank
   
42 E. Lancaster Avenue
   
PO Box 485
   
Paoli, Pennsylvania 19301
       
To the Executive:
Gerard M. McTear, Jr.
   
At the address last appearing on the
   
personnel records of the Bank

 
9.8
Reorganization. The Bank shall not merge or consolidate into or with another
company, or reorganize, or sell substantially all of its assets to another
company, firm or person unless such succeeding or continuing company, firm or
person agrees to assume and discharge the obligations of the Bank hereunder.
   
9.9
Tax Withholding. The Bank shall withhold any taxes that, in its reasonable
judgment, are required to be withheld from the benefits provided under this
Agreement. The Executive acknowledges that the Bank’s sole liability regarding
taxes is to forward any amounts withheld to the appropriate taxing
authority(ies).
   
9.10
Nature of Obligations. Nothing contained herein shall create or require the Bank
to create a trust of any kind to fund any benefits which may be payable
hereunder, and to the extent that the Executive acquires a right to receive
benefits from the Bank hereunder, such right shall be no greater than the right
of any unsecured general creditor of the Bank.

 
10

--------------------------------------------------------------------------------

 
 
9.11
Headings. The section headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
   
9.12
Validity. The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provisions of this
Agreement, which shall remain in full force and effect.
   
9.13
Waiver. No waiver by any party hereto at any time of any breach by any other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
   
9.14
Counterparts. This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
   
9.15
Regulatory Prohibition. Notwithstanding any other provision of this Agreement to
the contrary, any payments made to the Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon their compliance with Section
18(k) of the FDIA(12 U.S.C. §1828(k)) and any regulations promulgated
thereunder, including 12 C.F.R. Part 359.
   
9.16
Compliance with Section 409A. This Agreement shall at all times be administered
and the provisions of this Agreement shall be interpreted consistent with the
requirements of Section 409A of the Code and any and all regulations thereunder,
including such regulations as may be promulgated after the Effective Date of
this Agreement.
   
9.17
Rescission. Any modification to the terms of this Agreement that would
inadvertently result in an additional tax liability on the part of the Executive
shall have no effect, provided the change in the terms of the Agreement is
rescinded by the earlier of a date before the right is exercised (if the change
grants a discretionary right) and the last day of the calendar year during which
such change occurred.

 
[signature page follows]

 
11

--------------------------------------------------------------------------------

 
 
          IN WITNESS WHEREOF, the Executive and a duly authorized officer of the
Bank have signed this Agreement as of the date first written above.

   
EXECUTIVE:
 
MALVERN FEDERAL SAVINGS BANK
      /s/ Gerard M. McTear, Jr.   
By:  
/s/ Ronald Anderson   
Gerard M. McTear, Jr.
 
         Ronald Anderson, President and
   
                   Chief Executive Officer

 
 
12

--------------------------------------------------------------------------------

 
 
CLARK LOGO [img001.jpg]
 
Supplemental Executive Retirement Plan-Schedule A 

--------------------------------------------------------------------------------

 
Executive: Gerard McTear, Jr.
 

 
Period
Ending
Sep of
 
Age
   
Accrued
Liability
   
% Vested
in Accrued
Liability
   
Value
of Vested
Benefit
   
Value as a %
of Potential
Final Value
   
Termination
For Cause
   
Early Termination
Annual Benefit
(1)
   
Disability
Annual Benefit
 (2)
   
Change in Control
Annual Benefit
(3)
   
Preretirement Lump
Sum Death Benefit
 (4)
                                                                   
4/2004
  41     $ 0     100.00 %   $ 0     0.00 %   $ 0     $ 0     $ 0     $ 23,244  
  $ 230,689    
2004
 
41
    $ 5,659     100.00 %   $ 5,659     0.97 %   $ 0     $ 570     $ 2,293     $
23,704     $ 235,257    
2005
 
42
 
  $ 17,499     100.00 %   $ 17,499     2.99 %   $ 0     $ 1,763     $ 6,678    
$ 24,652     $ 244,667    
2006
 
43
    $ 30,068     100.00 %   $ 30,068     5.14 %   $ 0     $ 3,030     $ 10,808  
  $ 25,639     $ 254,454    
2007
 
44
 
  $ 43,413     100.00 %   $ 43,413     7.41 %   $ 0     $ 4,374     $ 14,698    
$ 26,664     $ 264,632    
2008
 
45
    $ 57,581     100.00 %   $ 57,581     9.83 %   $ 0     $ 5,802     $ 18,362  
  $ 27,731     $ 275,218    
2009
 
46
    $ 72,623     100.00 %   $ 72,623     12.40 %   $ 0     $ 7,317     $ 21,814
    $ 28,840     $ 286,226    
2010
 
47
 
  $ 88,593     100.00 %   $ 88,593     15.13 %   $ 0     $ 8,927     $ 25,064  
  $ 29,993     $ 297,675    
2011
 
48
    $ 105,548     100.00 %   $ 105,548     18.03 %   $ 0     $ 10,635     $
28,126     $ 31,193     $ 309,582    
2012
 
49
    $ 123,548     100.00 %   $ 123,548     21.10 %   $ 0     $ 12,449     $
31,011     $ 32,441     $ 321,966    
2013
 
50
    $ 142,659     100.00 %   $ 142,659     24.36 %   $ 0     $ 14,374     $
33,727     $ 33,739     $ 334,844    
2014
 
51
    $ 162,948     100.00 %   $ 162,948     27.83 %   $ 0     $ 16,418     $
36,286     $ 35,088     $ 348,238    
2015
 
52
    $ 184,489     100.00 %   $ 184,489     31.51 %   $ 0     $ 18,589     $
38,696     $ 36,492     $ 362,168    
2016
 
53
    $ 207,358     100.00 %   $ 207,358     35.41 %   $ 0     $ 20,893     $
40,966     $ 37,951     $ 376,654    
2017
 
54
    $ 231,638     100.00 %   $ 231,638     39.56 %   $ 0     $ 23,340     $
43,104     $ 39,469     $ 391,721    
2018
 
55
    $ 257,415     100.00 %   $ 257,415     43.96 %   $ 0     $ 25,937     $
45,118     $ 41,048     $ 407,389    
2019
 
56
    $ 284,782     100.00 %   $ 284,782     48.63 %   $ 0     $ 28,694     $
47,015     $ 42,690     $ 423,685    
2020
 
57
 
  $ 313,837     100.00 %   $ 313,837     53.60 %   $ 0     $ 31,622     $ 48,802
    $ 44,398     $ 440,632    
2021
 
58
    $ 344,685     100.00 %   $ 344,685     58.86 %   $ 0     $ 34,730     $
50,485     $ 46,174     $ 458,258    
2022
 
59
    $ 377,435     100.00 %   $ 377,435     64.46 %   $ 0     $ 38,030     $
52,070     $ 48,021     $ 476,588    
2023
 
60
 
  $ 412,204     100.00 %   $ 412,204     70.40 %   $ 0     $ 41,533     $ 53,563
    $ 49,941     $ 495,651    
2024
 
61
    $ 449,119     100.00 %   $ 449,119     76.70 %   $ 0     $ 45,253     $
54,969     $ 51,939     $ 515,477    
2025
 
62
    $ 488,310     100.00 %   $ 488,310     83.39 %   $ 0     $ 49,202     $
56,294     $ 54,017     $ 536,097    
2026
 
63
    $ 529,918     100.00 %   $ 529,918     90.50 %   $ 0     $ 53,394     $
57,542     $ 56,177     $ 557,540    
2027
 
64
    $ 574,093     100.00 %   $ 574,093     98.04 %   $ 0     $ 57,845     $
58,717     $ 58,424     $ 579,842    
12/2027
  65     $ 585,555     100.00 %   $ 585,555     100.00 %   $ 0     $ 59,000    
$ 59,000     $ 59,000     $ 585,555    
12/2028
 
66
    $ 606,050     100.00 %   $ 606,050     103.50 %   $ 0     $ 61,065     $
61,065     $ 61,065     $ 606,050    
12/2029
 
67
    $ 627,262     100.00 %   $ 627,262     107.12 %   $ 0     $ 63,202     $
63,202     $ 63,202     $ 627,262    
12/2030
 
68
    $ 649,216     100.00 %   $ 649,216     110.87 %   $ 0     $ 65,414     $
65,414     $ 65,414     $ 649,216    
12/2031
 
69
    $ 671,938     100.00 %   $ 671,938     114.75 %   $ 0     $ 67,704     $
67,704     $ 67,704     $ 671,938    
12/2032
 
70
    $ 695,456     100.00 %   $ 695,456     118.77 %   $ 0     $ 70,073     $
70,073     $ 70,073     $ 695,456  

 
 
 
Explanation:
In each case, the benefit is based on the year-end amount listed immediately
prior to date termination of employment occurs. The benefits are payable as
stated below:
     
(1)
 
Payments commence at termination of employment and are payable to the officer or
the officer’s beneficiary in equal monthly installments for 15 years.
     
(2)
 
Payments commence at normal retirement age and are payable to the officer or the
officer’s beneficiary in equal monthly installments for 15 years.
     
(3)
 
Payments commence at termination of employment and are payable to the officer or
the officer’s beneficiary in equal monthly installments for 15 years.
         
The amounts are computed by determining the present value of the projected
annual retirement benefit using a 4.00% discount rate. 4.00% was used since this
is the rate used to project salary increases.
     
(4)
 
The listed amounts represent the lump sum value at death. Distributions will be
made as elected by the officer (lump sum or annuitized over 60, 120, or 180
months).
         
The amounts are computed by determining the present value of the total projected
annual retirement benefits using a 4.00% discount rate. 4 00% was used since
this is the rate used to project salary increases.
     
Note:
 
The Accrued Liability balance is based on the accruals required under Generally
Accepted Accounting Principles (GAAP). It is based on a plan commencement date
of April 1, 2004, the interest method of accounting, and a 6.00% discount rate,
compounded monthly. In event the officer works for the company beyond the age of
65, the annual SERP benefit will be increased by 3.50% per year from age 66
through age 70.