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Exhibit 10.4
 
 
XXXX NATIONWIDE LIFE INSURANCE COMPANY OF AMERICA
300 Continental Drive, Newark, DE 19713
(referred to as the Company or the Insurer)
 
 
AMENDED AND RESTATED
SPLIT-DOLLAR COLLATERAL ASSIGNMENT
 
 
Policy Number:                      4,282,668
 
Insureds:                                Joseph W. Packer, Jr. and Diane B.
Packer
 
Owner/Assignors:                   Joseph W. Packer, Jr. and Diane B. Packer
 
Assignee:                                Prudential Savings Bank
 
Effective Date:                        November 19, 2008
 
 
RECITALS
 
WHEREAS, the Assignors previously assigned to the Assignee certain interests in
the Policy as security for certain liabilities of the Assignors to the Assignee
in connection with a split-dollar arrangement regarding the Policy in accordance
with Rev. Rul. 64-328, 1964 C.B. 11, pursuant to a Split-Dollar Collateral
Assignment dated June 22, 1994 (the “Prior Assignment”);
 
WHEREAS, concurrently with the Prior Assignment, the Assignors and the Assignee
entered into a Split-Dollar Agreement dated June 22, 1994 (the “Agreement”);
 
WHEREAS, Section 7 of the Agreement permits either party, with the consent of
the other party, to terminate the Agreement by giving written notice of
termination to the other party;
 
WHEREAS, upon any termination of the Agreement, the Assignors have the right to
purchase the policy from the Assignee and to thereafter obtain the cash
surrender value of the policy;
 
WHEREAS, as a result of the Assignors’ right to obtain the cash surrender value
of the policy upon a termination of the Agreement, the Agreement does not
satisfy the exemption for death benefit only plans under Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”);
 
WHEREAS, the parties are concurrently amending the Agreement in order to
grandfather the Agreement for purposes of Section 409A of the Code (the
“Amendment”), with the amount of the grandfathered cash surrender value to be
determined in accordance with the “proportional allocation method” set forth in
Notice 2007-34 issued by the Internal Revenue Service (the “IRS”);
 
 
 

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WHEREAS, the Agreement is currently deemed to be grandfathered under Treasury
Regulation §1.61-22, which grandfathering treatment under the split dollar
regulations would normally be lost in the event of a material modification of
the Agreement;
 
WHEREAS, Part III.D.2 of IRS Notice 2007-34 expressly states that a modification
of a split-dollar life insurance arrangement necessary to avoid the application
of Section 409A of the Code will not be treated as a material modification of
the arrangement for purposes of Treasury Regulation §1.61-22(j);
 
WHEREAS, the Amendment to the Agreement satisfies the requirements in Part
III.D.2 of IRS Notice 2007-34 for having the Agreement no longer be subject to
Section 409A of the Code, and the Amendment does not materially enhance the
value of the benefits to the Director under the Agreement;
 
WHEREAS, Section 10 of the Agreement permits the parties to amend the Agreement
by a written instrument signed by each of the parties and attached to the
Agreement;
 
WHEREAS, the parties desire to amend and restate the Prior Assignment in order
to make similar changes to have the Collateral Assignment be grandfathered for
purposes of Section 409A of the Code;
 
WHEREAS, the parties do not expect or intend to make any material modifications
to the Collateral Assignment which would result in the grandfathering treatment
being lost under either Treasury Regulation §1.61-22 or Section 409A of the
Code; and
 
WHEREAS, the Assignee, by accepting this Agreement, agrees to the terms and
conditions hereof;
 
NOW, THEREFORE, in consideration of the mutual agreements herein set forth and
such other consideration the sufficiency of which is hereby acknowledged, the
parties hereby amend and restate the Prior Assignment to read in its entirety as
follows:
 
ASSIGNMENT
 
1.           For value received, the Assignors hereby assign, transfer and set
over to the Assignee, and the Assignee’s successors and assigns, certain rights
in and to the Policy hereinafter set forth, subject to all the terms and
conditions of the Policy and to all superior liens, if any, which the Insurer
may have against the Policy.
 
2.           It is expressly agreed that the following specific rights are
included in this Assignment and pass by virtue hereof:
 
 
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(a)           The sole right to surrender the Policy at any time provided by the
terms of the Policy and at such other times as the Insurer may allow, and to
receive that portion of the Total Cash Surrender Value (as hereinafter defined)
equal to the sum of (i) the Assignee’s Aggregate Premiums Paid (as hereinafter
defined), and (ii) the Non-Grandfathered Cash Surrender Value (as hereinafter
defined) of the Policy.
 
(b)           The right to obtain one or more loans or advances on the Policy,
to the extent of the Assignee’s Aggregate Premiums Paid (as hereinafter
defined), either from the Insurer or, at any time, from other persons, and to
pledge or assign the Policy as security for such loans or advances.
 
(c)           The sole right to collect and receive all distributions or share
of surplus, dividend deposits or additions to the Policy now or hereafter made
or apportioned thereto, and to exercise any and all options contained in the
Policy with respect thereto; provided, that unless and until the Assignee shall
notify the Insurer in writing to the contrary, the distributions or shares of
surplus, dividend deposits and additions shall continue on the plan in force at
the time of this Assignment.
 
(d)           The sole right to exercise all nonforfeiture rights permitted by
the terms of the Policy or allowed by the Insurer and to receive all benefits
and advantages derived therefrom.
 
3.           It is expressly agreed that all other rights in the Policy,
including the following specific rights, so long as the Policy has not been
surrendered, are reserved and excluded from this Assignment and do not pass by
virtue hereof:
 
(a)           The right to collect from the Insurer any disability benefit
payable in cash that does not reduce the amount of insurance;
 
(b)           The right to obtain one or more loans or advances on the Policy,
to the extent of any Grandfathered Cash Surrender Value (as hereinafter defined)
in excess of the Assignee’s Aggregate Premiums Paid (as hereinafter defined),
either from the Insurer or, at any time, from other persons, and to pledge or
assign the Policy as security for such loan or advances.
 
(c)           The right to designate and change the beneficiary and to have any
death proceeds in excess of the Assignee’s interest in any death proceeds set
forth above paid to such beneficiary;
 
(d)           The right to elect any optional mode of settlement permitted by
the Policy or allowed by the Insurer; but the reservation of these rights shall
in no way impair the right of the Assignee to surrender the Policy completely
with all its incidents or impair any other right of the Assignee hereunder, and
any designation or change of beneficiary or election of a mode of settlement
shall be made subject to this Assignment and to the rights of the Assignee
hereunder.
 
 
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4.            For purposes of this Assignment:
 
(a)           The Total Cash Surrender Value of the Policy at any time equals at
such time the cash value set forth in the Policy’s table of values, plus the
cash value of any paid-up additions, plus any dividend accumulations and unpaid
dividends, less any policy loans to the Assignee and accrued interest thereon.
 
(b)           The Aggregate Premiums Paid at any time equal the cumulative
premiums paid by the Assignee, reduced by the amount of any policy dividends
paid in cash to the Assignee or used to reduce or offset such premiums, and
further reduced by any policy loans to the Assignee and accrued interest thereon
and by any amount received by the Assignee from the Assignors or the Insured for
the economic benefit under the split-dollar arrangement.
 
(c)           The Grandfathered Cash Surrender Value of the Policy at any time
shall be determined in accordance with the “proportional allocation method”
described in Part III.A.2 of IRS Notice 2007-34 or any successor thereto.  Under
such method, the Grandfathered Cash Surrender Value as of any valuation date
shall equal the greater of (i) the Total Cash Surrender Value of the Policy that
was earned and vested at December 31, 2004, and (ii) an amount equal to the
Total Cash Surrender Value on the valuation date multiplied by a fraction, the
numerator of which is the sum of the grandfathered premiums actually paid on the
Policy and the denominator of which is the sum of all premiums actually paid on
the Policy by the valuation date.  Grandfathered premiums shall include both
premiums actually paid on or before December 31, 2004 that were earned and
vested (as defined in Treas. Reg. §1.409A-6(a)(2)) as of December 31, 2004 and
premiums paid after such date pursuant to a legally binding right that was
earned and vested (as defined in Treas. Reg. §1.409A-6(a)(2)) as of such date.
 
(d)           The Non-Grandfathered Cash Surrender Value of the Policy at any
time shall equal the Total Cash Surrender Value at such time minus the
Grandfathered Cash Surrender Value at such time.
 
5.            The Assignee shall, upon request, if the Policy is in the
possession of the Assignee, forward the Policy to the Insurer for endorsement of
any designation or change of beneficiary and election of optional modes of
settlement, or the exercise of any other right reserved by the Assignors.
 
6.            The Insurer is hereby authorized to recognize the Assignee's
claims to rights hereunder without investigating the reason for any action taken
by the Assignee, or the existence, validity or amount of any liability of the
Assignors to the Assignee, or the existence of any default therein, or the
giving of any notice, or the application to be made by the Assignee of any
amounts to be paid to the Assignee.
 
7.            The Assignee will not exercise the right to surrender the Policy
or (except for the purpose of paying premiums) the right to obtain policy loans
from the Company, until there has been a default in any liability  of the
Assignors to the Assignee or a failure to pay any premium when due, nor until 20
days after the Assignee shall have mailed, by first-class mail, to the Assignors
at the addresses last supplied in writing to the Assignee specifically referring
to this assignment, notice of intention to exercise such right.
 
 
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8.           Payment by the Insurer of all death proceeds shall be a full
discharge and release to the Insurer and shall be binding on all parties
claiming any interest under the Policy.
 
9.           The Insurer provides this form for the convenience of its
policyholders and is not responsible for its validity or effect.
 
10.         All provisions of this Assignment shall be binding on the executors,
administrators, successors or assigns of the Assignors.
 
IN WITNESS WHEREOF, the Assignors and the Assignee have duly executed this
Amended and Restated Split-Dollar Collateral Assignment as of the Effective
Date.
 
 
____________________________________________
____________________________________________________

Witness
Joseph W. Packer, Jr., Assignor

 
 
____________________________________________
____________________________________________________

Witness
Diane B. Packer, Assignor

 
 
 
PRUDENTIAL SAVINGS BANK, Assignee

 
 
____________________________________________
By: _________________________________________________

Witness
Thomas A. Vento, President and

 
        Chief Executive Officer

 
 
 
TYPE OF PLAN:

(Check One)
    X     Employer Pay-All
 
_____  Economic Benefit Offset
         
    _      Uniform Payment
   

 
 

 
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