exhibit10-4.htm


    
      
        
          

        

      

      EXHIBIT
10.4

    

     

    AMENDED
AND RESTATED

    MALVERN
FEDERAL SAVINGS BANK

    DIRECTOR
RETIREMENT PLAN AGREEMENT

     

               
THIS
AMENDED AND RESTATED DIRECTOR RETIREMENT PLAN AGREEMENT (the “Agreement”)
by and between Malvern Federal Savings Bank (the “Bank”), a federally-chartered
savings bank located in Paoli, Pennsylvania, and CORDINE SCARTOZZI a
non-employee director of the Bank (the “Director”), intending to be legally
bound hereby, is hereby adopted effective as of December 16, 2008.

     

               
WHEREAS,
to encourage the Director to remain in the service of the Bank, the Bank is
willing to provide supplemental retirement benefits to the Director, with the
benefits to be paid by the Bank from its general assets;

     

               
WHEREAS,
the Director entered into a Director Retirement Plan Agreement with the Bank
dated as of October 6, 2004 (the “Prior Agreement”), which Prior Agreement was
amended as of October 3, 2006 for the purpose of bringing the 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 Director and the Bank hereby agree as follows:

     

    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 Director, entitled
      to benefits, if any, upon the death of the Director determined pursuant to
      Article 4.

            
	 
      	 
      
	
              1.2

            	
              “Beneficiary
      Designation Form” means the form established from time to time by
      the Plan Administrator that the Director 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 Director (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
      Director been eligible to participate in such plan). The Director must
      submit proof to the Bank of the carrier’s determination upon the request
      of the Bank.

            
	 
      	 
      
	
              1.7

            	
              “Early
      Termination” means the Director’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 Director’s 83rd
      birthday.

            
	 
      	 
      
	
              1.10

            	
              “Plan
      Administrator” means the plan administrator described in Article
      8.

            
	 
      	 
      
	
              1.11

            	
              “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.

            
	 
      	 
      
	
              1.12

            	
              “Separation
      from Service”
      means a termination of the Director’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 Director reasonably
      anticipated that no further services would be performed after a certain
      date or that the level of bona fide services the Director 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.

            
	 
      	 
      
	
              1.13

            	
              “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 Director attaining the Normal
      Retirement Age while in continuous service on the Bank’s Board of
      Directors, the Bank shall pay to the Director 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 EIGHT
      THOUSAND NINE HUNDRED DOLLARS ($8,900).

            
	 
      	 
      	 
      
	 
      	
              2.1.2

            	
              Payment
      of Benefit. The Bank shall pay the annual benefit to the Director
      in twelve (12) equal monthly installments commencing within ninety (90)
      days following the Director’s Normal Retirement Age, and payable on the
      first of each month thereafter. The annual benefit shall be paid to the
      Director for five (5) years.

            
	 
      	 
      	 
      
	
              2.2

            	
              Early
      Termination Benefit. Upon Early Termination, the Bank shall pay to
      the Director the benefit described in this Section 2.2 in lieu of any
      other benefit under this Article.

            
	 
      	 
      	 
      
	 
      	
              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
      ending immediately prior to the date on which Early Termination occurs.
      This benefit is determined by vesting the Director in one hundred percent
      (100%) of the Accrual Balance shown on Schedule A (hereinafter “Accrual
      Balance”).

            


    


    
      
         


      

      
        2

        
          

        

      

      
         


      

    

     

    
      	 
      	
              2.2.2

            	
              Payment
      of Benefit. Subject to Section 2.5 hereof, if applicable, the Bank
      shall pay the annual benefit to the Director 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 Director for five (5)
      years.

            
	 
      	 
      	 
      
	
              2.3

            	
              Disability
      Benefit. Upon the Director’s Separation from Service due to
      Disability prior to Normal Retirement Age, the Bank shall pay to the
      Director 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 ending
      immediately prior to the date on which the Separation from Service due to
      Disability occurs. This benefit is determined by vesting the Director in
      one hundred percent (100%) of the Accrual
  Balance.

            
	 
      	 
      	 
      
	 
      	
              2.3.2

            	
              Payment
      of Benefit. The Bank shall pay the annual benefit to the Director
      in twelve (12) equal monthly installments commencing within ninety (90)
      days following his Separation from Service due to Disability and payable
      on the first of each month thereafter. The annual benefit shall be paid to
      the Director for five (5) years.

            
	 
      	 
      	 
      
	
              2.4

            	
              Change
      in Control Benefit. Upon a Change in Control followed by the
      Director’s Separation from Service before Normal Retirement Age for any
      reason other than death or Disability, the Bank shall pay to the Director
      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 ending
      immediately prior to the date on which the Separation from Service
      occurs.

            
	 	 	 
	 
      	
              2.4.5

            	
              Payment
      of Benefit. Subject to Section 2.5 hereof, if applicable, the Bank
      shall pay the annual benefit to the Director 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 Director for five (5)
      years.

            
	 
      	 
      	 
      
	
              2.5

            	
              Restriction
      on Timing of Distributions. Notwithstanding any provision of this
      Agreement to the contrary, if the Director 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 Director,
      any distribution which would otherwise be paid to the Director within the
      first six months following the Separation from Service shall be
      accumulated and paid to the Director 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 Director’s income as a result of the
      failure of the Agreement to comply with the requirements of Section 409A
      of the Code, to the extent such tax liability can be covered by the
      Director’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 Director dies while in the active
      service of the Bank before reaching Normal Retirement Age, 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 Director’s death, which is an amount equal to one hundred
      percent (100%) of the Accrual Balance.

            
	 
      	 
      	 
      
	 
      	
              3.1.2

            	
              Payment
      of Benefit. The Bank shall pay the benefit to the Beneficiary in
      the form elected by the Director on the Election Form, attached hereto and
      made a part of this Agreement, commencing within ninety (90) days
      following the Director’s
      death. 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 Director and accepted by the Plan Administrator. If the
      Director 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 Director’s death, plus
      two percent (2%), compounded monthly. Notwithstanding any election by the
      Director 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 Director 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
      Director had the Director survived.

            
	 
      	 
      	 
      
	
              3.3

            	
              Death
      Following Separation from Service But Before Benefits Commence. If
      the Director is entitled to benefits under this Agreement but dies prior
      to the commencement of such benefits, the Bank shall pay to the
      Beneficiary the same benefits, in the same manner, that would have been
      paid to the Director had the Director survived, commencing within ninety
      (90) days following the Director’s
death.

            


    

     

    Article
4

    Beneficiaries

    
      	 
      	 
      
	
              4.1

            	
              Beneficiary
      Designation. The Director 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 Director. 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 Director
      participates.

            
	 
      	 
      
	
              4.2

            	
              Beneficiary
      Designation: Change. The Director shall designate a Beneficiary by
      completing and signing the Beneficiary Designation Form, and delivering it
      to the Plan Administrator or its designated agent. The Director’s
      Beneficiary designation shall be deemed automatically revoked if the
      Beneficiary predeceases the Director or if the Director names a spouse as
      Beneficiary and the marriage is subsequently dissolved. The Director 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 Director and accepted by the Plan
      Administrator prior to the Director’s death.

            
	 
      	 
      
	
              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

        
          

        

      

      
         


      

    

     

    
      	
              4.4

            	
              No
      Beneficiary Designation. If the Director dies without a valid
      Beneficiary designation, or if all designated Beneficiaries predecease the
      Director, then the Director’s spouse shall be the designated Beneficiary.
      If the Director has no surviving spouse, the benefits shall be made to the
      personal representative of the Director’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 Director and the Director’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 Director 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 terminates the Director’s service for Cause. Termination of the
      Director’s service 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 Director’s part shall be considered “willful” unless
      done, or omitted to be done, by the Director not in good faith and without
      reasonable belief that the Director’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 Director 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 Director shall forfeit any unpaid benefits under
      this Agreement if during the term of this Agreement, and before all
      benefits have been paid, the Director, 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):

            


    

     

    
      	 
      	
              (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 Director’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 Director’s Separation from
Service;

            


    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	 
      	
              (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 Director’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 Director or the
      Bank, to the knowledge of the Director, 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 Director’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 Director,
      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
  Director.

            


    

     

    
      	 
      	
              5.4.1

            	
              Judicial
      Remedies. In the event of a breach or threatened breach by the
      Director of any provision of these restrictions, the Director 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 Director
      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 Director from further breaching any of his
      obligations set forth herein. The Director 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 Director. The Director 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 Director’s
      service with the Bank, and (iv) his agreement to observe such restrictions
      forms a material part of the consideration for this
      Agreement.

            


    


    
      
         


      

      
        6

        
          

        

      

      
         


      

    

     

    
      	 
      	
              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.

            
	 
      	 
      	 
      
	 
      	
              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 Director
      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 Director 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. A Director 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 reason 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,
      and

            
	 
      	 
      	 
      
	 
      	
              6.1.3.4

            	
              An
      explanation of the Agreement’s review procedures and the time limits
      applicable to such procedures.

            


    

     

    
      	
              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
      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, and

            
	 
      	 
      	 
      
	 
      	
              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 to the claimant’s claim for
      benefits.

            


    

     

    Article
7

    Amendments
and Termination

    
      	 
      	 
      	 
      
	
              7.1

            	
              Amendments.
      This Agreement may be amended only by a written agreement signed by the
      Bank and the Director. 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 Director’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 Director 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 Director 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 Director
      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 Director under the Agreement are included in the Director’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 Director 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 Director,
      and such other pertinent information as the Plan Administrator may
      reasonably require.

            
	 
      	 
      
	
              8.6

            	
              Annual
      Statement. The Plan Administrator shall provide to the Director,
      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 Director 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 Director as to the subject matter hereof. No rights are
      granted to the Director by virtue of this Agreement other than those
      specifically set forth herein. All prior agreements between the Bank and
      the Director 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 Director may have with the
      Bank.

            
	 
      	 
      
	
              9.5

            	
              No
      Guarantee of Service. This Agreement is not an employment policy or
      contract for services. It does not give the Director the right to remain a
      director of the Bank, nor does it interfere with the Bank’s right to
      discharge the Director. It also does not require the Director to remain a
      director nor interfere with the Director’s right to terminate service 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 Director:

            	
              Cordine
      Scartozzi

            
	 
      	 
      	
              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 Director 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 Director 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 off which
      shall be deemed to be an original but all of which together will
      constitute one and the same instrument.

            
	 
      	 
      
	
              9.18

            	
              Regulatory
      Prohibition. Notwithstanding any other provision of this Agreement
      to the contrary, any payments made to the Director 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.

            


    

     

    [signature
page follows]


    
      
         


      

      
        11

        
          

        

      

      
         


      

    

     

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

    
      	 
      	 
      	 
      	 
      
	
              DIRECTOR:

            	 
      	
              MALVERN
      FEDERAL SAVINGS BANK

            
	 
      	 
      	 
      
	/s/
      Cordine Scartozzi  	 
      	
              By:  
      

            	/s/
      Ronald Anderson  
	
              Cordine
      Scartozzi

            	 
      	 
      	
              Ronald
      Anderson, President and

                      
      Chief
      Executive Officer

            


    


    
      
         


      

      
        12

        
          

        

      

      
         


      

    

     

    
      

       

      
          Director
Retirement Plan-Schedule A 

        
          

        

      

       

      
        Director:
Cordine Scartozzi

      

       

      
        	 	
                Period

                Ending

                Sep
      of

              	 
      	
                Age

              	 
      	
                Accrued

                Liability

              	 
      	
                %
      Vested

                in
      Accrued

                Liability

              	 
      	
                Value

                of
      Vested

                Benefit

              	 
      	
                Value
      as a %

                of
      Potential

                Final
      Value

              	 
      	
                Early
      Termination

                Annual
      Benefit

                (1)

              	 
      	
                Disability

                Annual
      Benefit

                (1)

              	 
      	
                Change
      in Control

                Annual
      Benefit

                (1)
      (3)

              	 
      	
                Preretirement
      Lump

                Sum
      Death Benefit

                (2)

              	 
      
	 	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 	
                2004

              	 
      	
                81

              	 
      	
                $

              	
                5,779

              	 
      	 
      	
                100.00

              	
                %

              	
                $

              	
                5,779

              	 
      	 
      	
                14.99

              	
                %

              	
                $

              	
                1,334

              	 
      	
                $

              	
                1,334

              	 
      	
                $

              	
                8,300

              	 
      	
                $

              	
                5,779

              	 
      
	 	
                2005

              	 
      	
                82

              	 
      	
                $

              	
                17,869

              	 
      	 
      	
                100.00

              	
                %

              	
                $

              	
                17,869

              	 
      	 
      	
                46.35

              	
                %

              	
                $

              	
                4,125

              	 
      	
                $

              	
                4,125

              	 
      	
                $

              	
                8,600

              	 
      	
                $

              	
                17,869

              	 
      
	 	
                2006

              	 
      	
                83

              	 
      	
                $

              	
                30,705

              	 
      	 
      	
                100.00

              	
                %

              	
                $

              	
                30,705

              	 
      	 
      	
                79.64

              	
                %

              	
                $

              	
                7,088

              	 
      	
                $

              	
                7,088

              	 
      	
                $

              	
                8,900

              	 
      	
                $

              	
                30,705

              	 
      
	 	
                04/01/07

              	 
      	
                83

              	 
      	
                $

              	
                38,555

              	 
      	 
      	
                100.00

              	
                %

              	
                $

              	
                38,555

              	 
      	 
      	
                100.00

              	
                %

              	
                $

              	
                8,900

              	 
      	
                $

              	
                8,900

              	 
      	
                $

              	
                8,900

              	 
      	
                $

              	
                38,555

              	 
      


      

       

       

       

      
        	
                Explanation:

              	 
      
	 
      	
                In
      each case, the benefit is based on the year-end amount listed immediately
      prior to date termination of service occurs. The benefits are payable as
      stated below:

              
	 
      	 
      	 
      
	
                (1)

              	 
      	
                Payments
      commence at termination of service and are payable to the director or the
      director’s beneficiary in equal monthly installments for 5
      years.

              
	 
      	 
      	 
      
	
                (2)

              	 
      	
                The
      listed amounts represent the lump sum value at death. Distributions will
      be made as elected by the director (lump sum or annuitized over 60
      months).

              
	 
      	 
      	 
      
	
                (3)

              	 
      	
                Change
      in Control annual benefit is equal to 30% of board fees. Board fees are
      escalated at a
      rate of 4.00% from the current annual fees until
    retirement.

              
	 
      	 
      	 
      
	
                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.