EXHIBIT 10.14
                                  -------------


                            PENN FEDERAL SAVINGS BANK
                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

                             EFFECTIVE MARCH 1, 2003
                 AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2005

                                     Purpose
                                     -------

         The purpose of the Plan is to provide supplemental  retirement benefits
to a select  group of  employees  who  contribute  materially  to the  continued
growth, development and future business success of Penn Federal Savings Bank and
its Affiliates.  The Plan shall be unfunded for tax purposes and for purposes of
Title I of ERISA.

         The Plan has been  amended  and  restated  effective  January  1, 2005,
except where  otherwise  provided herein or required by applicable law. The Plan
is intended to comply with Section 409A of the Internal Revenue Code of 1986, as
amended,  and the  regulations  and  guidance  of general  applicability  issued
thereunder, and shall be administered and operated accordingly.

         The  rights of any person who  terminates  employment  on or before any
amendment to this Plan shall be determined solely under the terms of the Plan in
effect as of the date of his termination of employment, unless such person again
becomes a Participant hereunder, or unless otherwise required by Section 409A of
the Code or other applicable law.

                                    ARTICLE I
                                   Definitions
                                   -----------

         For purposes of the Plan,  unless  otherwise  clearly apparent from the
context,  the  following  phrases or terms  shall have the  following  indicated
meanings:

         "Affiliates"  shall  mean any  entity  that,  directly  or  indirectly,
         ------------
         through one or more intermediaries,  controls,  is controlled by, or is
         under common control with the Company.

         "Annual Benefit" shall mean with respect to any Participant,  an annual
         ----------------
         benefit  equal to the  percentage  of the  Participant's  Final Average
         Compensation   set   forth   in   a   Participant's   Plan   Agreement.
         Notwithstanding  the foregoing,  where the Plan Agreement expresses the
         Annual  Benefit as a unit  benefit,  then the Annual  Benefit  shall be
         equal to the percent of the  Participant's  Final Average  Compensation
         set forth in the  Participant's  Plan Agreement times the number of the
         Participant's  Years of Credited  Service set forth in a  Participant's
         Plan Agreement,  calculated  through the last day of the month in which
         the   Participant   experiences  a   Termination   of   Employment.   A
         Participant's  Annual  Benefit  shall not  exceed  any  maximum  Annual
         Benefit set forth in his Plan  Agreement,  nor be less than any minimum
         Annual Benefit set forth in his Plan Agreement.

                                       32
<page>



         "Beneficiary"  shall  mean  one  or  more  persons,  estates  or  other
         -------------
         entities, designated in accordance with Article 9, that are entitled to
         receive benefits under the Plan upon the death of a Participant.

         "Beneficiary  Designation  Form" shall mean the form  established  from
         --------------------------------
         time to time by the Committee that a Participant  completes,  signs and
         returns to the Committee to designate one or more Beneficiaries.

         "Board" shall mean the board of directors of the Company.
         -------

         "Change  in  Control"  shall  mean a "change  in the  ownership  of the
         ---------------------
         Company",  a "change in the  effective  control of the  Company",  or a
         "change in the  ownership  of a  substantial  portion of the  Company's
         assets", all within the meaning of Section 409A.

         "Claimant" shall have the meaning set forth in Section 13.1.
         ----------

         "Code" shall mean the Internal  Revenue Code 1986, as it may be amended
         ------
         from time to time.

         "Committee" shall mean the committee described in Article 11.
         -----------

         "Company" shall mean Penn Federal Savings Bank.
         ---------

         "Compensation"  shall mean the annual  cash  compensation  relating  to
         --------------
         services  performed by a Participant for the Company and its Affiliates
         during any calendar year,  whether or not paid in such calendar year or
         included on the  Federal  Income Tax Form W-2 for such  calendar  year,
         excluding  bonuses  of any  type  or  nature,  fringe  benefits,  stock
         options,   other  stock  based   compensation,   relocation   expenses,
         non-monetary  awards,  and  automobile and other  allowances  paid to a
         Participant  for  employment  services  rendered  (whether  or not such
         allowances   are   included  in  the   Participant's   gross   income).
         Compensation  shall be calculated  before  reduction  for  compensation
         voluntarily  deferred or contributed by the Participant pursuant to all
         qualified or non-qualified  plans of the Company and its Affiliates and
         shall be  calculated to include  amounts not otherwise  included in the
         Participant's gross income;  provided,  however,  that all such amounts
         will be included in  compensation  only to the extent  that,  had there
         been no such plan,  the amount  would have been  payable in cash to the
         Participant.

         "Early  Retirement  Date" shall mean the later of (i) the date that the
         -------------------------
         Participant  attains  age 55,  and (ii)  the date of the  Participant's
         Termination  of Employment,  which event occurs  pursuant to the Normal
         Retirement Date.

         "Early Retirement Monthly Benefit" shall mean a monthly amount equal to
         ----------------------------------
         the  Participant's  Monthly  Benefit  at his  Normal  Retirement  Date,
         reduced by .16666% (or the appropriate fraction thereof) for each month
         or portion  thereof by which the  Participant's  Early  Retirement Date
         precedes his Normal  Retirement  Date (2 percent  annually).  By way of
         illustration,  if a  Participant  elects to receive his Plan benefit at
         age 55  rather  than age 65,  and his  Monthly  Benefit  at his  Normal
         Retirement Date is 5.83 percent of Compensation (70 percent annually),

                                       33
<page>

         then his Early  Retirement  Monthly  Benefit will be 4.1666  percent of
         Compensation (50 percent annually) ((70% - (2% times 10)/12).

         "Employee"  shall mean a person who is classified as an employee of the
         ----------
         Company or its Affiliates.

         "Equivalent  Actuarial Value" shall mean, unless otherwise specified in
         -----------------------------
         the Plan  Agreement,  a benefit of equivalent  value to another form of
         benefit,  computed on the basis of an interest rate factor of 7 percent
         per annum.  Notwithstanding  the foregoing,  the  Equivalent  Actuarial
         Value of any  payment  made on account of a Change in Control  shall be
         determined by using the discount rate under Treasury Regulation Section
         1.280G-1,  Q&A 32, or the successor  regulation  thereto on the date of
         the payment (i.e., as of the effective date of the Plan, 120 percent of
         the applicable Federal rate as determined under Section 1274(d) and the
         regulations  thereunder,  compounded  semiannually).  For  purposes  of
         Section 3.2 (regarding  death  benefits),  Equivalent  Actuarial  Value
         shall be determined using the applicable  long-term  Federal rate under
         Section   1274(d)   and   the   regulations   thereunder,    compounded
         semiannually, as in effect on the date of the Participant's death.

         "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
         -------
         as it may be amended from time to time.

         "Final  Average  Compensation"  shall  mean the  amount  determined  by
         ------------------------------
         dividing by two the Participant's aggregate Compensation during the two
         Plan Years  (whether or not  consecutive)  in the five Plan Year period
         immediately  prior to his  Termination of Employment (or if Termination
         of Employment  occurs  during the month of December then  including the
                                                                   ---------
         Plan Year in which  Termination  of Employment  occurs) that results in
         the largest total.

         "Holding Company" shall mean PennFed Financial Services, Inc.
         -----------------

         "Monthly  Benefit" shall mean one twelfth  (1/12) of the  Participant's
         ------------------
         Annual Benefit.

         "Normal  Retirement  Date"  shall mean the later of (i) the date of the
         --------------------------
         Participant's  Termination  of  Employment  or (ii)  the  Participant's
         attainment of age sixty-five (65).

         "Participant"   shall  mean  any   Employee  (i)  who  is  selected  to
         -------------
         participate  in the Plan,  (ii) who signs a Plan  Agreement,  and (iii)
         whose signed Plan Agreement is accepted by the  Committee.  A spouse or
         former spouse of a Participant shall not be treated as a Participant in
         the Plan or have an Annual  Benefit  under the Plan,  even if he or she
         has an  interest  in the  Participant's  benefits  under  the Plan as a
         result of applicable law or property  settlements  resulting from legal
         separation or divorce.

         "Payout  Period" shall mean the number of consecutive  months set forth
         ----------------
         as the Payout Period in a Participant's  Plan Agreement,  commencing on
         the first day of the calendar  month next  following the  Participant's
         Normal  Retirement Date,  except as otherwise  provided in Section 3.1.
         Notwithstanding  the  foregoing,  the Payout  Period for Plan  benefits
         commencing on an Early  Retirement  Date shall be extended by one month
         for each full month by which the  Participant's  Early  Retirement Date
         precedes his Normal  Retirement  Date. To illustrate,  if a

                                       34
<page>

         Participant with a Payout Period of 180 months on his Normal Retirement
         Date elects an Early  Retirement Date of age 62, then the Payout Period
         will be 216 months (180, plus 1 times 36 months).

         "Plan" shall mean this  Supplemental  Executive  Retirement Plan, which
         ------
         shall be evidenced by this  instrument and by each Plan  Agreement,  as
         they may be amended from time to time.

         "Plan Agreement" shall mean a written agreement, as may be amended from
         ----------------
         time to time  (which  may not  change  the  Payout  Periods),  which is
         entered into by and between the Company and a Participant. Should there
         be more than one Plan Agreement,  the Plan Agreement bearing the latest
         date of  acceptance  by the Company  shall  supersede all previous Plan
         Agreements  in their  entirety and shall govern such  entitlement.  The
         terms of any Plan Agreement may be different for any  Participant,  and
         any Plan Agreement may limit the benefits  otherwise provided under the
         Plan.

         "Plan  Year"  shall have the same  meaning  as the  fiscal  year of the
         ------------
         Company.

         "Pre-2005 Accrued Benefit" shall mean the Equivalent Actuarial Value of
         --------------------------
         the Participant's  Monthly Benefit as of December 31, 2004,  determined
         as if the Participant experienced a voluntary Termination of Employment
         other than a Termination  of Cause on December 31, 2004, and received a
         payment of the benefits with the maximum value  available from the Plan
         on the earliest  date  possible  under the Plan to receive a payment of
         benefits following his Termination of Employment.  The amount described
         in the  preceding  sentence may be increased to equal the present value
         of the benefit the Participant  actually  becomes entitled to under the
         terms of the Plan as in effect on October 3,  2004,  without  regard to
         any further  services  provided by the  Participant  after December 31,
         2004, or any other events affecting the amount of or the entitlement to
         benefits (other than a Participant  election regarding the time or form
         of an available benefit). The determination of a Participant's Pre-2005
         Accrued Benefit shall be determined in accordance with Section 409A.

         "Section 409A" means Section 409A of the Code and the  regulations  and
         --------------
         guidance of general applicability issued thereunder.

         "Section 409A  Transition Rule Election" shall mean an election made by
         ----------------------------------------
         a Participant,  or an amendment to the Plan, prior to December 31, 2007
         (or such later date as permitted by Section 409A)  regarding  Change in
         Control  payments  under Section 11.2. A Section 409A  Transition  Rule
         Election  made  prior to  December  31,  2006  shall (a) apply  only to
         amounts that would not otherwise be payable under the terms of the Plan
         during 2006,  and (b) not cause any amounts that would not otherwise be
         payable under the Plan after 2006 to be payable in 2006. A Section 409A
         Transition  Rule  Election  made  during  2007  shall (a) apply only to
         amounts that would not otherwise be payable under the terms of the Plan
         during 2007,  and (b) not cause any amounts that would not otherwise be
         payable  under the Plan after 2007 to be payable in 2007. No Transition
         Rule election shall violate any constructive  receipt or other tax rule
         that would result in the acceleration of taxation of Plan payments.

         "Specified  Employee"  shall  mean a key  employee  described  in  Code
         ---------------------
         Section 416(i) (determined  without regard to paragraph (5) thereof) of
         the Company or an Affiliate, provided

                                       35
<page>

         the Company is publicly traded on an established  securities  market or
         otherwise.  For  purposes of  determining  whether a  Participant  is a
         Specified  Employee,  the identification date shall be December 31. The
         determination of whether a Participant is a Specified Employee shall be
         made by the Committee in accordance with Section 409A.

         "Termination  for  Cause" or  "Terminated  for  Cause"  shall  mean the
         -------------------------     ------------------------
         involuntary  termination  of  service  of a  Participant  on account of
         dishonesty,  incompetence,  willful  misconduct,  breach of a fiduciary
         duty involving personal profit,  intentional  failure to perform stated
         duties,  willful  violation of any law, rule, or regulation  (excluding
         violations  which do not have a material adverse affect on the Company)
         or  final  cease-and-desist  order.  No  act or  failure  to act by the
         Participant shall be considered willful unless the Participant acted or
         failed to act with an absence of good  faith and  without a  reasonable
         belief  that his action or failure to act was in the best  interest  of
         the  Company.  The  Participant  shall  not  be  deemed  to  have  been
         Terminated  for Cause unless and until there shall have been  delivered
         to  the  Participant  a  copy  of a  resolution,  duly  adopted  by the
         affirmative  vote of not less than a majority of the entire  membership
         of the Board of  Directors  at a meeting of the Board  duly  called and
         held for such purpose (after  reasonable  notice to the Participant and
         an opportunity  for the  Participant,  together with the  Participant's
         counsel, to be heard before the Board),  stating that in the good faith
         opinion  of the Board of  Directors  the  Participant  has  engaged  in
         conduct  described  in  the  preceding   sentence  and  specifying  the
         particulars thereof in detail.

         "Termination of Employment"  shall mean the severing of employment with
         ---------------------------
         the Company and its Affiliates. Whether a Termination of Employment has
         occurred  will be  determined  based  on the  facts  and  circumstances
         surrounding the termination of the Participant's employment and whether
         the Company and the Participant intended for the Participant to provide
         significant  services for the Company and its Affiliates following such
         termination. A Termination of Employment will not be considered to have
         occurred if:

                  (a)  the  Participant  continues  to  provide  services  as an
                  employee of the Company and its  Affiliates  at an annual rate
                  that is twenty percent (20%) or more of the services rendered,
                  on  average,  during  the  immediately  preceding  three  full
                  calendar years of employment  (or, if employed less than three
                  years,  such lesser  period) and the annual  remuneration  for
                  such  services is twenty  percent (20%) or more of the average
                  annual   remuneration  earned  during  the  final  three  full
                  calendar  years  of  employment  (or,  if  less,  such  lesser
                  period), or

                  (b) the  Participant  continues  to  provide  services  to the
                  Company in a capacity other than as an employee of the Company
                  and its  Affiliates  at an annual  rate that is fifty  percent
                  (50%) or more of the services rendered, on average, during the
                  immediately  preceding three full calendar years of employment
                  (or if employed less than three years, such lesser period) and
                  the annual  remuneration  for such  services is fifty  percent
                  (50%) or more of the average annual remuneration earned during
                  the final three full calendar years of employment (or if less,
                  such lesser period).

                  Notwithstanding   anything   herein   to  the   contrary,   no
                  Participant   shall  be  considered  to  have   experienced  a
                  Termination of Employment unless his termination of employment

                                       36
<page>

                  with  the  Company  and  its  Affiliates  would  constitute  a
                  "separation from service" within the meaning of Section 409A.

         "Trust"  shall mean any trust  established  between the Company and the
         -------
         trustee named therein to provide  benefits  hereunder,  as amended from
         time to time.

         "Years of Credited  Service"  shall mean the total number of Plan Years
         ----------------------------
         (or fraction  thereof  determined on a months basis) taken into account
         under a Participant's  Plan Agreement for purposes of calculating  such
         Participant's Annual Benefit.

                                    ARTICLE 2
                       Selection, Enrollment, Eligibility
                       ----------------------------------

2.1      Selection by Committee. Participation in the Plan shall be limited to a
         ----------------------
         select  group  of  management  and  highly  compensated  Employees,  as
         determined by the Committee in its sole  discretion  from time to time.
         From that group,  the Committee shall select,  in its sole  discretion,
         Employees to participate in the Plan.

2.2      Enrollment Requirements. As a condition to participation, each selected
         -----------------------
         Employee  shall  complete,  execute and return to the  Committee a Plan
         Agreement. In addition, the Committee shall establish from time to time
         such  other  enrollment  requirements  as it  determines  in  its  sole
         discretion are necessary or appropriate.

2.3      Eligibility;   Commencement  of  Participation.  Provided  an  Employee
         ----------------------------------------------
         selected to participate in the Plan has met all enrollment requirements
         set  forth  in  the  Plan  and  required  by the  Committee,  including
         returning all required documents to the Committee,  that Employee shall
         commence  participation  in the Plan on the date his Plan  Agreement is
         executed by the Company.

2.4      Termination of Participation. If the Committee determines in good faith
         ----------------------------
         that a Participant no longer qualifies as a member of a select group of
         management or highly compensated employees, as membership in such group
         is  determined  in  accordance  with  Sections  201(2),  301(a)(3)  and
         401(a)(1) of ERISA,  the  Committee  shall have the right,  in its sole
         discretion  but subject in all respects to Section  409A,  to (i) cease
         further benefit accruals  hereunder and/or (ii) immediately  distribute
         in a single  lump sum the  Equivalent  Actuarial  Value of the  Monthly
         Benefits  for  the  Payout  Period,  determined  as if the  Participant
         experienced   a   Termination   of   Employment,   and   terminate  the
         Participant's participation herein.

                                    ARTICLE 3
                                    Benefits
                                    --------

3.1      Payment of Benefits.  Upon a Participant's  Normal Retirement Date, the
                    --------
         Company shall pay the Monthly  Benefit to him during the Payout Period.
         If the Participant  experiences a Termination from Service prior to the
         Normal Retirement Date but after attaining age 55, he shall immediately
         commence to receive his Early Retirement Monthly Benefit for the Payout
         Period.  If such  Termination  from  Service  occurs  prior to when the
         Participant attains age 55, then upon attaining age 55, the Participant
         shall commence to receive his Early Retirement

                                       37
<page>

         Monthly Benefit for the Payout Period.  Payments under this Section 3.1
         are subject to Section 3.4.

3.2      Death Benefits.
         --------------

                  (a) If the Participant dies before having commenced  receiving
         benefits under Section 3.1, then his Beneficiary shall receive no later
         than 120 days after the  Committee  is  notified  of and  confirms  the
         Participant's  death,  a lump sum cash payment equal to the  Equivalent
         Actuarial  Value  of  the   Participant's   Monthly  Benefit.   If  the
         Participant  dies  after  he has  commenced  receiving  benefits  under
         Section  3.1,  then the  remaining  payments to the  Participant  shall
         continue to be made to the Participant's  Beneficiary commencing on the
         first day of the month in which the Participant's death occurs.

                  (b) In  addition  to the death  benefit  provided  in  Section
         3.2(a),  but subject to, and limited by, all of the  provisions of this
         Plan,  a  Participant's  Beneficiary  shall,  upon  the  death  of  the
         Participant,  receive  a lump sum  death  benefit  equal to  $1,000,000
         reduced by the death  benefit  paid to the  Participant  under the Penn
         Federal  Savings Bank  Supplemental  Executive Death Benefit Plan. This
         benefit  shall  be paid  to the  Participant's  Beneficiary  as soon as
         practicable following the date of the Participant's death.

3.3      Acceleration of Pre-2005 Accrued Benefit.  The Committee may accelerate
         ----------------------------------------
         the payment of the Participant's Pre-2005 Accrued Benefit, at such time
         and in such manner as the  Committee may  determine,  in which case the
         accelerated benefit shall be equal to the Equivalent Actuarial Value of
         such unpaid Pre-2005 Accrued Benefit.

3.4      Delayed Distribution for Specified  Employees.  If the Participant is a
         ---------------------------------------------
         Specified  Employee at the time of his  Termination of Employment,  his
         Monthly Benefit or Early  Retirement  Monthly  Benefit,  as applicable,
         shall  commence  to be  distributed  on the  first  day  of  the  month
         following  the  date  which  is  six  months  after  the  date  of  the
         Participant's Termination of Employment. Payments which are required to
         be deferred in  accordance  with the preceding  sentence  shall be paid
         with the initial payment.

3.5      Tax Withholding from Distributions.  The Company, an Affiliate,  or the
         ----------------------------------
         trustee of the Trust,  if any, shall withhold from any payments made to
         a Participant all federal, state and local income, employment and other
         taxes  required to be withheld by the  Company,  an  Affiliate,  or the
         trustee of the Trust, in connection with such payments,  in amounts and
         in a manner to be determined in the sole discretion of the Company and,
         if applicable, the trustee of the Trust.

                                    ARTICLE 4
                    In-Service Withdrawals and Distributions
                    ----------------------------------------

         No in-service  withdrawals  or  distributions  are permitted  under the
Plan.

                                    ARTICLE 5
                                     Vesting
                                     -------

                                       38
<page>

         Unless  the  Participant's  Plan  Agreement  provides  otherwise,   the
Participant shall be fully vested in his Monthly Benefit after the completion of
10 Years of Service.  For this purpose,  Years of Service  credited prior to the
effective date of this Plan shall be taken into account.

                                    ARTICLE 6
                            Participant Contributions
                            -------------------------

         Participant  contributions are neither permitted nor required under the
Plan.

                                    ARTICLE 7
                                     Funding
                                     -------

7.1      Funding Generally.  The Company's and its Affiliate's obligations under
         -----------------
         the Plan shall be an unfunded and unsecured promise to pay. The Company
         and its Affiliates  shall not be obligated under any  circumstances  to
         fund in advance its  obligations  under the Plan,  and when the benefit
         amount is paid it shall be expensed  out of the  general  assets of the
         Company  and its  Affiliates.  The  Company  may not fund the Plan in a
         manner that would violate Section 409A.

7.2      Option to Fund Informally. Notwithstanding Section 7.1, the Company and
         -------------------------
         its  Affiliates  may, at its sole option,  or by agreement,  informally
         fund its  obligations  under  the  Plan in whole or in part,  provided,
         however,  that in no event shall such informal  funding be construed to
         create  any  trust  fund,  escrow  account  or other  security  for any
         Participant  with respect to the payment of any benefit under the Plan,
         other than as permitted by Internal  Revenue  Service and Department of
         Labor rules and regulations for unfunded supplemental retirement plans.

                                    ARTICLE 8
                              Regulatory Provisions
                              ---------------------

         The  obligations  of the  Company to a  Participant  under the Plan are
subject to the following restrictions:

8.1      Termination  for Cause.  If a  Participant's  service as an Employee is
         ----------------------
         Terminated for Cause,  no benefits shall be paid to him under the Plan.
         If the Participant  has commenced  receiving his Monthly Benefit and it
         is subsequently  determined that he was Terminated for Cause,  then his
         Monthly Benefit shall  immediately  cease and the Participant  shall be
         obligated to return to the Company or the Holding Company, whichever is
         applicable,  the cumulative  amount of the Monthly  Benefit  previously
         paid under the Plan.

8.2      Temporary  Suspension or  Prohibition.  If a  Participant  is suspended
         -------------------------------------
         and/or temporarily  prohibited from participating in the conduct of the
         Company's affairs by a notice served under Section 8(e)(3) or (g)(1) of
         the  Federal  Deposit  Insurance  Act  ("FDIA"),   12  U.S.C.   Section
         1818(e)(3) and (g)(1),  the Company's  obligations to such  Participant
         under the Plan  shall be  suspended  as of the date of  service of such
         notice, unless stayed by appropriate proceedings. If the charges in the
         notice are dismissed,  the Company may in its  discretion  reinstate in
         whole or in part any of its obligations which were suspended.

                                       39
<page>

8.3      Permanent Suspension or Prohibition. If a Participant is removed and/or
         -----------------------------------
         permanently  prohibited  from  participating  in  the  conduct  of  the
         Company's affairs by an order issued under Section 8(e)(4) or (g)(1) of
         the FDIA, 12 U.S.C.  Section  1818(e)(4) and (g)(1), all obligations of
         the Company to such  Participant  under the Plan shall  terminate as of
         the effective date of the order,  but vested rights of the  contracting
         parties shall not be affected.

8.4      Default. If the Company is in default (as defined in Section 3(x)(1) of
         -------
         the  FDIA),   all  obligations  of  the  Company  to  Participants  and
         Beneficiaries under the Plan shall terminate as of the date of default,
         but  this  provision   shall  not  affect  any  vested  rights  of  the
         contracting parties.

8.5      Termination   by  Regulators.   All   obligations  of  the  Company  to
         ----------------------------
         Participants  and  Beneficiaries  under the Plan  shall be  terminated,
         except  to the  extent  determined  that  continuation  of the  Plan is
         necessary  for  the  continued  operation  of the  Company:  (i) by the
         Director of the Office of Thrift  Supervision  (the "OTS  Director") or
         his designee,  at the time the Federal  Deposit  Insurance  Corporation
         enters into an agreement to provide  assistance  to or on behalf of the
         Company under the authority  contained in Section 13(c) of the FDIA; or
         (ii) by the OTS Director or his designee,  at the time the OTS Director
         or his  designee  approves a  supervisory  merger to  resolve  problems
         related to operation  of the Company or when the Company is  determined
         by the OTS Director to be in an unsafe or unsound condition. Any rights
         of the parties that have already vested, however, shall not be affected
         by any such action.

8.6      Other  Regulatory  Restrictions  on Payment.  Notwithstanding  anything
         -------------------------------------------
         herein to the contrary,  (1) any payments made by the Company under the
         Plan shall be subject to and conditioned upon compliance with 12 U.S.C.
         Section  1828(k) and any  regulations  promulgated  thereunder  and (2)
         payments  contemplated  to be made by the Company  under the Plan shall
         not be  immediately  payable to the extent such  payments are barred or
         prohibited  by an  action  or  order  issued  by  the  Federal  Deposit
         Insurance Corporation.

8.7      Time  of  Repayment.  Any  benefit  payment  suspended  or  delayed  in
         -------------------
         accordance  with this  Article  8 shall be paid as soon as  practicable
         after the earliest date on which the Company reasonably determines that
         such payment should be made.

                                    ARTICLE 9
                             Beneficiary Designation
                             -----------------------

9.1      Beneficiary.  Each  Participant  shall have the right,  at any time, to
         -----------
         designate his Beneficiary(ies)  (both primary as well as contingent) to
         receive  any  benefits  payable  under  the Plan  upon the death of the
         Participant.  The Beneficiary designated under the Plan may be the same
         as or different from the Beneficiary designated under any other plan of
         the Company or its Affiliates in which the Participant participates.

9.2      Beneficiary  Designation:  Change; Spousal Consent. A Participant shall
         --------------------------------------------------
         designate his  Beneficiary  by completing  and signing the  Beneficiary
         Designation Form and returning it to the Committee. A Participant shall
         have the right to  change a  Beneficiary  by  completing,  signing  and
         otherwise complying with the terms of the Beneficiary  Designation Form
         and the  Committee's  rules and  procedures,  as in effect from time to
         time.  If the  Participant  names  someone  other  than his spouse as a
         Beneficiary,   a  spousal  consent,  in  the  form  designated

                                       40
<page>

         by the  Committee,  must be signed  by that  Participant's  spouse  and
         returned to the  Committee.  Upon the  acceptance by the Committee of a
         new  Beneficiary   Designation   Form,  all  Beneficiary   designations
         previously filed shall be canceled.  The Committee shall be entitled to
         rely on the last Beneficiary  Designation Form filed by the Participant
         and accepted by the Committee prior to his death.

9.3      Acknowledgment.   No   designation   or  change  in  designation  of  a
         --------------
         Beneficiary  shall be  effective  until  received and  acknowledged  in
         writing by the Committee.

9.4      No  Beneficiary  Designation.  If a  Participant  fails to  designate a
         ----------------------------
         Beneficiary  as provided in Sections  9.1, 9.2 and 9.3 above or, if all
         designated  Beneficiaries  predecease  a  Participant  or die  prior to
         complete   distribution   of  the   Participant's   benefits,   then  a
         Participant's   designated  Beneficiary  shall  be  deemed  to  be  his
         surviving  spouse.  If a  Participant  has  no  surviving  spouse,  the
         benefits  remaining under the Plan to be paid to a Beneficiary shall be
         payable to the Participant's estate.

9.5      Doubt  as to  Beneficiary.  If the  Committee  has any  doubt as to the
         -------------------------
         proper  Beneficiary  to  receive  payments  pursuant  to the Plan,  the
         Committee shall have the right, exercisable in its discretion, to cause
         the Company and its  Affiliates to withhold  such  payments  until this
         matter is resolved to the Committee's satisfaction.

9.6      Discharge of  Obligations.  The payment of benefits under the Plan to a
         -------------------------
         Beneficiary  shall fully and  completely  discharge the Company and its
         Affiliates  and the Committee  from all further  obligations  under the
         Plan with respect to the Participant.

                                   ARTICLE 10
                                Leave of Absence
                                ----------------

         If a Participant is authorized by the Company or its Affiliates for any
reason  to take a leave of  absence  from  employment  with the  Company  or its
Affiliates,  such  Participant  shall continue to be considered  employed by the
Company  during such leave of absence (and  therefore not to have  experienced a
Termination  of  Employment)  and service  during the leave of absence  shall be
credited  for  purposes  of  determining  the  Participant's  Years of  Credited
Service.  This Article 10 shall be applied in a manner  consistent  with Section
409A.

                                   ARTICLE 11
            Termination, Change in Control, Amendment or Modification
            ---------------------------------------------------------

11.1     Termination.  Although the Company anticipates that it will continue as
         -----------
         a sponsor  of the Plan for an  indefinite  period of time,  there is no
         guarantee  that it will  continue  as a sponsor of the Plan or will not
         terminate  its  sponsorship  of the  Plan at any  time  in the  future.
         Accordingly,   the  Company   reserves  the  right  to  terminate   its
         sponsorship  of the Plan at any time with  respect to any or all of its
         Participants,  by action of the Board.  If an Affiliate  terminates its
         sponsorship of the Plan,  then the Plan shall terminate with respect to
         Participants   employed  by  that   Affiliate.   Upon   termination  of
         sponsorship of the Plan by the Company or an Affiliate,  the Annual and
         Monthly Benefit of each affected  Participant shall be determined as if
         he had experienced a

                                       41
<page>

         Termination  of Employment on the date Plan  sponsorship is terminated.
         The Equivalent  Actuarial Value of the  Participant's  Monthly Benefits
         (as  determined  under this  Section  11.1)  shall be paid to  affected
         Participants  in a lump sum. The termination of sponsorship of the Plan
         or  the  termination  of  the  Plan  shall  not  adversely  affect  any
         Participant  who has become  entitled  to the  payment of any  benefits
         under  the  Plan as of the  date of  termination.  Notwithstanding  the
         foregoing, the timing and manner of distributing benefits in connection
         with the Plan termination  must comply with Section 409A.  Accordingly,
         unless Section 409A permits otherwise,  the Plan may be terminated only
         if: (a) all  arrangements  sponsored by the Company and its  Affiliates
         that are required to be  aggregated  with this Plan under  Section 409A
         are  terminated;  (b) no  payments  other than  payments  that would be
         payable  under  the  terms  of the  Plan or an  aggregated  plan if the
         termination  had  not  occurred  are  made  within  12  months  of  the
         termination  of the  arrangements;  (c) all payments are made within 24
         months of the termination of the Plan and related arrangements; and (d)
         the  Company and its  Affiliates  do not adopt a new  arrangement  that
         would be required to be aggregated with this Plan under Section 409A if
         the same  Participant  participated in both  arrangements,  within five
         years of the  termination  of the  Plan.  The Plan  will  automatically
         terminate upon the completion of all  distributions  to Participants in
         accordance with the terms hereof.

11.2     Change in  Control.  Upon a Change in  Control,  the Annual and Monthly
         ------------------
         Benefit of each affected  Participant  shall be determined as if he had
         experienced  a Termination  of Employment on the effective  date of the
         Change in Control. The Equivalent Actuarial Value of each Participant's
         Monthly  Benefit (as determined  under this Section 11.2) shall be paid
         to the  Participant  in a cash lump sum within 10 days of the effective
         time of the  Change  in  Control,  unless  the  terms of the  Change in
         Control provide  otherwise and are consistent with Section 409A, and do
         not give rise to any additional  parachute  payments under Code Section
         280G.  Because the payment of Change in Control  benefits  prior to the
         amendment  of this Plan to comply  with  Section  409A  permitted  such
         payments to be made in monthly  amounts or as a lump sum, the amendment
         of this  Section  11.2 to limit the form of Change in  Control  benefit
         payments to a lump sum shall be  considered  made pursuant to a Section
         409A Transition Rule Election occurring during 2006.

11.3     Amendment.  The Company  may, at any time,  amend or modify the Plan in
         ---------
         whole or in part by action of the  Board;  provided,  however,  that no
         amendment  or  modification  shall be effective to decrease or restrict
         the value of a Participant's  Annual Benefit determined at the time the
         amendment or modification is made, calculated as if the Participant had
         experienced a Termination of Employment as of the effective date of the
         amendment or  modification.  The amendment or  modification of the Plan
         shall not affect any Participant who has become entitled to the payment
         of  benefits  under  the  Plan  as of  the  date  of the  amendment  or
         modification.  No amendment  shall be permitted that causes the Plan to
         violate the requirements of Section 409A.

11.4     Effect of Payment. The full payment of the applicable benefit under the
         -----------------
         Plan shall  completely  discharge all  obligations to a Participant and
         his designated Beneficiaries under the Plan.

                                   ARTICLE 12
                                 Administration
                                 --------------

                                       42
<page>

12.1     Committee  Duties.  The Plan shall be administered by a Committee which
         -----------------
         shall  consist  of the  Board,  or such  committee  as the Board  shall
         appoint.  Members of the Committee may be Participants  under the Plan.
         The Committee shall also have the discretion and authority to (i) make,
         amend, interpret, and enforce all appropriate rules and regulations for
         the  administration  of the Plan and (ii) decide or resolve any and all
         questions  including  interpretations  of the  Plan,  as may  arise  in
         connection  with the Plan.  Any  individual  on the  Committee who is a
         Participant  shall  not vote or act on any  matter  relating  solely to
         himself.  When making a  determination  or  calculation,  the Committee
         shall be entitled to rely on information  furnished by a Participant or
         the Company.

12.2     Agents. In the administration of the Plan, the Committee may, from time
         ------
         to time, 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 Company and its Affiliates.

12.3     Binding  Effect of  Decisions.  The decision or action of the Committee
         -----------------------------
         with respect to any question  arising out of or in connection  with the
         administration,  interpretation  and  application  of the  Plan and the
         rules  and  regulations   promulgated  hereunder  shall  be  final  and
         conclusive  and  binding  upon all persons  having any  interest in the
         Plan.

12.4     Indemnity of Committee.  The Company shall  indemnify and hold harmless
         ----------------------
         the members of the Committee,  and any person to whom the duties of the
         Committee  may be  delegated,  against  any  and  all  claims,  losses,
         damages,  expenses or liabilities arising from any action or failure to
         act with respect to the Plan, except in the case of gross misconduct by
         the Committee or any of its members or any such delegate.

12.5     Information.  To enable the  Committee  to perform its  functions,  the
         -----------
         Company and its Affiliates shall supply full and timely  information to
         the Committee as the Committee may reasonably request.

                                   ARTICLE 13
                          Other Benefits and Agreements
                          -----------------------------

         The benefits  provided for a Participant under the Plan are in addition
to any other  benefits  available  to such  Participant  under any other plan or
program  sponsored by the Company or its Affiliates.  The Plan shall  supplement
and shall not  supersede,  modify or amend any other such plan or program except
as may otherwise be expressly provided therein.

                                   ARTICLE 14
                                Claims Procedures
                                -----------------

14.1     Presentation of Claim. Any Participant (such Participant being referred
         ---------------------
         to below as a "Claimant")  may deliver to the Committee a written claim
         for a determination  with respect to the amounts  distributable to such
         Claimant  from the Plan.  If such a claim  relates to the contents of a
         notice received by the Claimant,  the claim must be made within 60 days
         after such notice was received by the  Claimant.  All other claims must
         be made  within 180 days of the date on


                                       43
<page>

         which the event that caused the claim to arise occurred. The claim must
         state with particularity the determination desired by the Claimant.

14.2     Notification  of Decision.  The Committee  shall  consider a Claimant's
         -------------------------
         claim  within a  reasonable  time,  and shall  notify the  Claimant  in
         writing:

         (a)      that the Claimant's requested determination has been made, and
                  that the claim has been allowed in full; or

         (b)      that the Committee has reached a conclusion contrary, in whole
                  or in part, to the  Claimant's  requested  determination,  and
                  such  notice  must  set  forth in a  manner  calculated  to be
                  understood by the Claimant:

                  (i)      the specific  reason(s)  for the denial of the claim,
                           or any part of it;

                  (ii)     specific  reference(s) to pertinent provisions of the
                           Plan upon which such denial was based;

                  (iii)    a   description   of  any   additional   material  or
                           information necessary for the Claimant to perfect the
                           claim,  and an  explanation  of why such  material or
                           information is necessary; and

                  (iv)     an  explanation  of the claim  review  procedure  set
                           forth in Section 13.3 below.

14.3     Review of a Denied  Claim.  With 60 days after  receiving a notice from
         -------------------------
         the  Committee  that a claim has been  denied,  in whole or in part,  a
         Claimant (or the Claimant's  duly authorized  representative)  may file
         with the Committee a written  request for a review of the denial of the
         claim.  Thereafter,  but  not  later  than  30 days  after  the  review
         procedure  began,  the  Claimant  (or the  Claimant's  duly  authorized
         representative):

         (a)      may review pertinent documents;

         (b)      may submit written comments or other documents; and/or

         (c)      may  request  a  hearing,  which  the  Committee,  in its sole
                  discretion, may grant.

14.4     Decision on Review.  The Committee  shall render its decision on review
         ------------------
         promptly,  and not later  than 60 days  after  the  filing of a written
         request  for  review of the  denial,  unless a hearing is held or other
         special  circumstances  require  additional  time,  in  which  case the
         Committee's  decision must be rendered within 120 days after such date.
         Such decision  must be written in a manner  calculated to be understood
         by the Claimant, and it must contain:

         (a)      specific reasons for the decision;

         (b)      specific  reference(s)  to the pertinent Plan  provisions upon
                  which the decision was based; and

                                       44
<page>

         (c)      such other matters as the Committee deems relevant.

14.5     Legal Action. A Claimant's  compliance with the foregoing provisions of
         ------------
         this Article 14 is a mandatory  prerequisite  to a Claimant's  right to
         commence any legal action with respect to any claim for benefits  under
         the Plan.

                                   ARTICLE 15
                                      Trust
                                      -----

15.1     Establishment of the Trust. The Company or its Affiliates may establish
         --------------------------
         the Trust upon such terms as it deems appropriate.

15.2     Interrelationship  of the Plan and the  Trust.  The  provisions  of the
         ---------------------------------------------
         Plan, including a Participant's Plan Agreement, shall govern the rights
         of such Participant to receive distributions  pursuant to the Plan. The
         provisions  of the Trust shall  govern the rights of the  Company,  its
         Affiliates,  Participants  and the  creditors  of the  Company  and its
         Affiliates to the assets  transferred to the Trust. The Company and its
         Affiliates   shall  at  all  times  remain  liable  to  carry  out  its
         obligations under the Plan.

15.3     Investment  of  Trust  Assets.  The  trustee  of  the  Trust  shall  be
         -----------------------------
         authorized,  upon written  instructions  received from the Committee or
         investment  manager appointed by the Committee,  to invest and reinvest
         the  assets  of the  Trust  in  accordance  with the  applicable  trust
         agreement.

15.4     Distributions   From  the  Trust.   The  Company  and  its  Affiliates'
         --------------------------------
         obligations   under  the  Plan  may  be  satisfied  with  Trust  assets
         distributed   pursuant   to  the  terms  of  the  Trust  and  any  such
         distribution shall reduce the Company's and its Affiliates' obligations
         under the Plan.

                                   ARTICLE 16
                                  Miscellaneous
                                  -------------

16.1     Status of Plan. The Plan is intended to be a plan that is not qualified
         --------------
         within the meaning of Code Section  401(a) and that "is unfunded and is
         maintained  by an  employer  primarily  for the  purpose  of  providing
         deferred  compensation  for a select  group  of  management  or  highly
         compensated  employees"  within the meaning of ERISA  Sections  201(2),
         301(a)(3) and 401(a)(1). The Plan shall be administered and interpreted
         to the extent  possible in a manner  consistent  with that intent.  The
         Plan also is a deferred compensation plan within the meaning of Section
         409A, and as such shall be operated,  interpreted  and  administered in
         accordance therewith.

16.2     Unsecured  General  Creditor.  Participants  and  their  beneficiaries,
         ----------------------------
         heirs,  successors and assigns shall have no legal or equitable rights,
         interests  or claims in any  property  or assets of the  Company or its
         Affiliates. For purposes of the payment of benefits under the Plan, any
         and all assets of the  Company or its  Affiliates  shall be, and remain
         the general,  unpledged  and  unrestricted  assets of such entity.  The
         Company's and its Affiliates' obligation under the Plan shall be merely
         of an unfunded and unsecured promise to pay money in the future.

                                       45
<page>

16.3     Liability.  The Company's or its Affiliates'  liability for the payment
         ---------
         of benefits shall be defined only by the Plan including a Participant's
         Plan Agreement.  The Company or its Affiliates shall have no obligation
         to a  Participant  under the Plan except as  expressly  provided in the
         Plan including such Participant's Plan Agreement.

16.4     Nonassignability. Neither a Participant nor any other person shall have
         ----------------
         any right to  commute,  sell,  assign,  transfer,  pledge,  anticipate,
         mortgage or  otherwise  encumber,  transfer,  hypothecate,  alienate or
         convey in advance  of actual  receipt,  the  amounts,  if any,  payable
         hereunder,  or any part thereof, which are, and all rights to which are
         expressly declared to be, unassignable and non-transferable. No part of
         the  amounts  payable  shall,  prior to actual  payment,  be subject to
         seizure,  attachment,  garnishment or sequestration  for the payment of
         any debts,  judgments,  alimony or  separate  maintenance  allowed by a
         Participant or any other person, be transferable by operation of law in
         the  event of a  Participant's  or any  other  person's  bankruptcy  or
         insolvency  or be  transferable  to a spouse as a result of a  property
         settlement or otherwise.

16.5     Not a Contract of  Employment.  The terms and  conditions  of the Plan,
         -----------------------------
         including  a  Participant's  Plan  Agreement,  shall  not be  deemed to
         constitute  a  contract  of  employment  between  the  Company  or  its
         Affiliates  and a  Participant.  Nothing in the Plan shall be deemed to
         give a  Participant  the right to be  retained  in the  service  of the
         Company or its Affiliates or to interfere with the right of the Company
         or its  Affiliates to discipline or discharge  such  Participant at any
         time.

16.6     Furnishing Information. A Participant will cooperate with the Committee
         ----------------------
         by furnishing  any and all  information  requested by the Committee and
         take such other actions as may be requested in order to facilitate  the
         administration  of the Plan and the  payments  of  benefits  hereunder,
         including but not limited to, taking such physical  examinations as the
         Committee may deem necessary.

16.7     Terms. Whenever any words are used herein in the masculine,  they shall
         -----
         be  construed  as though  they were in the  feminine in all cases where
         they  would so apply;  and  whenever  any words are used  herein in the
         singular or in the plural,  they shall be construed as though they were
         used in the  plural or the  singular,  as the case may be, in all cases
         where they would so apply.

16.8     Captions. The captions of the articles,  sections and paragraphs of the
         --------
         Plan are for  convenience  only and shall  not  control  or affect  the
         meaning or construction of any of its provisions.

16.9     Governing  Law.  Subject to ERISA,  the provisions of the Plan shall be
         --------------
         construed and  interpreted  according to the internal laws of the State
         of New Jersey without regard to its conflicts of laws and principles.

16.10    Notice.  Any notice or filing  required or permitted to be given to the
         ------
         Committee  under  the  Plan  shall  be  sufficient  if in  writing  and
         hand-delivered, or sent by registered or certified mail, to the address
         below.

                                       46
<page>

                  Board of Directors
                  Penn Federal Savings Bank
                  622 Eagle Rock Avenue
                  West Orange, New Jersey   07052-2989

         Such notice  shall be deemed  given as of the date of  delivery  or, if
         delivery is made by mail,  as of the date shown on the  postmark on the
         receipt  for  registration  or  certification.  Any  notice  or  filing
         required or permitted to be given to a Participant under the Plan shall
         be sufficient if in writing and hand-delivered, or sent by mail, to the
         last known address of such Participant.

16.11    Successors.  The  provisions  of the Plan  shall  bind and inure to the
         ----------
         benefit of the  Company or its  Affiliates,  and their  successors  and
         assigns  and  the   Participant   and  the   Participant's   designated
         Beneficiaries.

16.12    Spouse's  Interest.  The interest in the benefits hereunder of a spouse
         ------------------
         of  a  Participant   who  has   predeceased   the   Participant   shall
         automatically  pass to the Participant and shall not be transferable by
         such spouse in any manner including,  but not limited to, such spouse's
         will,  nor  shall  such  interest  pass  under  the  laws of  intestate
         succession.

16.13    Validity. In case any provision of the Plan shall be illegal or invalid
         --------
         for any reason,  said  illegality  or  invalidity  shall not affect the
         remaining parts hereof,  but the Plan shall be constructed and enforced
         as if such illegal or invalid provision had never been inserted herein.

16.14    Incompetent.  If the  Committee  determines  in its  discretion  that a
         -----------
         benefit  under  the  Plan is to be paid to a minor,  a person  declared
         incompetent  or to a person  incapable of handling the  disposition  of
         that  person's  property,  the  Committee  may  direct  payment of such
         benefit to the guardian, legal representative or person having the care
         and  custody  of such  minor,  incompetent  or  incapable  person.  The
         Committee  may require proof of minority,  incompetence,  incapacity 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  Participant,  and shall be a complete  discharge of any  liability
         under the Plan for such payment amount.

16.15    Court Order. The Committee is authorized to make any payments  directed
         -----------
         by court  order in any  action in which the Plan or the  Committee  has
         been named as a party. In addition, if a court determines that a spouse
         or former spouse of a Participant has an interest in the  Participant's
         benefits  under the Plan in  connection  with a property  settlement or
         otherwise,  the Committee, in its sole discretion shall have the right,
         notwithstanding  any election made by the  Participant,  to immediately
         distribute   the   spouse's   or  former   spouse's   interest  in  the
         Participant's benefits under the Plan to that spouse or former spouse.

16.16    Distribution  for FICA  Taxes or on Account of  Inclusion  Pursuant  to
         -----------------------------------------------------------------------
         Section 409A.
         ------------

         (a)      Distributions  may be  made  to a  Participant  prior  to when
                  amounts  are  otherwise  distributable  under  the Plan to the
                  extent  necessary to pay FICA taxes under Code Sections  3101,
                  3121(a) and 3121(v)(2),  as well as the corresponding federal,
                  state,   local  or  foreign  income  and   withholding   taxes
                  associated  with those FICA  taxes. Distributions

                                       47
<page>

                  under this Section 16.16 shall be permitted only to the extent
                  allowed under Section 409A.

         (b)      Upon the  inclusion  of any  portion of the  benefit  into the
                  Participant's  income as a result of the  failure of this Plan
                  to comply with the  requirements  of Section  409A, a lump sum
                  distribution  shall  be made  as  soon as is  administratively
                  practicable  following the discovery of the plan failure of an
                  amount   equal  to  the   lesser  of  (1)  the   Participant's
                  then-vested  benefit,  or (2)  the  amount  includible  in the
                  Participant's income as a result of the failure of the Plan to
                  comply with Section 409A.  In the event the amount  includible
                  in the  Participant's  income  under  Section 409A exceeds the
                  Participant's   then-vested   benefit,  the  excess  shall  be
                  distributed  in  a  lump  sum  as  soon  as   administratively
                  practicable  after the  Participant's  vested  interest in his
                  Plan benefits increases.

16.17    Insurance.  The  Company  or its  Affiliates,  on its own  behalf or on
         ---------
         behalf of the trustee of the Trust,  and, in its sole  discretion,  may
         apply for and procure insurance on the life of any Participant, in such
         amounts  and  in  such  forms  as it may  choose.  The  Company  or its
         Affiliates  or the trustee of the Trust,  as the case may be,  shall be
         the sole owner and  beneficiary of any such  insurance.  No Participant
         shall have any interest whatsoever in any such policy or policies,  and
         a  Participant  shall at the request of the  Company  submit to medical
         examinations  and supply such information and execute such documents as
         may be  required  by the  insurance  company or  companies  to whom the
         Company or its Affiliates has applied for insurance.

16.18    Legal Fees To Enforce  Rights After  Change in Control.  The Company is
         ------------------------------------------------------
         aware that upon the occurrence of a Change in Control, the Board (which
         might then be comprised of new members) or stockholders of the Company,
         its Affiliates,  or of any successor  corporation,  might then cause or
         attempt to cause the  Company,  its  Affiliates,  or such  successor to
         refuse to comply with its obligations under the Plan and might cause or
         attempt to cause the Company or its  Affiliates  to  institute,  or may
         institute,   litigation  seeking  to  deny  Participants  the  benefits
         intended  under the Plan.  In these  circumstances,  the purpose of the
         Plan  could be  frustrated.  Accordingly,  if,  following  a Change  in
         Control,  it should  appear to any  Participant  that the Company,  its
         Affiliates,  or any successor corporation has failed to comply with any
         of its obligations under the Plan or any agreement  thereunder,  or, if
         the Company,  its  Affiliates,  or any other person takes any action to
         declare the Plan void or  unenforceable or institutes any litigation or
         other legal  action  designed to deny,  diminish or to recover from any
         Participant the benefits intended to be provided,  then the Company and
         its  Affiliates  irrevocably  authorizes  such  Participant  to  retain
         counsel of his choice at the expense of the  Company or its  Affiliates
         to represent  such  Participant  in connection  with the  initiation or
         defense of any litigation or other legal action,  whether by or against
         the Company, its Affiliates, or any director,  officer,  stockholder or
         other  Affiliate  of  the  Company  or  any  successor  thereto  in any
         jurisdiction.

                                       48
<page>

         The Company has signed the Plan as of __________, 2006.


                                            PENN FEDERAL SAVINGS BANK



                                            By:
                                                ------------------------------
                                            Name:
                                                  ----------------------------
                                            Title:
                                                   ---------------------------



                                       49