**Exhibit 10**

 

**SUPERVISORY AGREEMENT**

OTS Docket No: 02966

 

ThisSupervisory Agreement (“Agreement”) is made as of this 2nd day of August, 2005(the “Effective Date”), by and between Third Federal Bank, Newtown,Pennsylvania, a federally-chartered savings bank (“Bank”), and the Office ofThrift Supervision (“OTS”), an office within the United States Department ofthe Treasury, acting through its Northeast Regional Director or his dulyauthorized designee (“Regional Director”).

 

WHEREAS,the OTS is the primary federal regulator of the Bank; and

 

WHEREAS,in connection with its supervision of the Bank, OTS has issued a Report ofExamination concerning its Information Technology examination of the Bankcommenced on January 3, 2005 (“Report of Examination”); and

 

WHEREAS,based on the information in the Report of Examination, OTS is of the opinionthat the Bank has engaged in acts and practices relating to its InformationTechnology (“IT”) activities that OTS considers to be unsafe and unsound; and

 

WHEREAS,the OTS is of the opinion that grounds exist for the initiation of anadministrative proceeding against the Bank; and

 

WHEREAS,the OTS is of the view that it is appropriate to take measures intended toensure that the Bank will conduct its IT activities in a safe and sound mannerand comply with all applicable laws and regulations; and

 

WHEREAS,the Bank, acting through its Board of Directors (“Board”), and withoutadmitting or denying that it has engaged in unsafe and unsound acts andpractices relating to its IT activities, has determined to cooperate with theOTS and to evidence the Bank’s intent to operate in a safe and sound manner bycreating, implementing, and updating the Third Federal IT Remediation ProjectPlan (“ITRPP”).

 

NOWTHEREFORE, in consideration of the above premises and the mutual undertakingsset forth herein, the parties agree as follows:

 

1.                                       **Compliance With Laws and Regulations**

 

TheBank, its directors, officers, employees, and agents shall take all stepsnecessary (including the provision of required resources) to ensure that theBank complies and remains in compliance at all times with

 

(a) 12C.F.R. Part 570, Appendix A, Subsections II(A) and II(B) (InteragencyGuidelines Establishing Standards for Safety and Soundness – Operational andManagerial Standards – Internal Controls and Information Systems and InternalAudit System);

 

(b) 12C.F.R. Part 570, Appendix B (Interagency Guidelines Establishing Standardsfor Safeguarding Customer Information); and

 

(c) TheGuidelines set forth in the Federal Financial Institutions Examination Council(“FFIEC”) Information Technology Examination Handbook (Revised Edition).

 

2.                                       **ITRPP**

 

TheBank shall implement the ITRPP.  Toclarify the contents of the ITRPP and to facilitate its ongoing implementation,the parties agree as follows:

 

(a) TheITRPP shall be deemed to include each task set forth in the ITRPP spreadsheetsgenerated periodically by the Bank, including under the dates of April 8and 28, 2005;

 

(b) TheITRPP shall also be deemed to include each “Start Date,” “Target CompletionDate,” “Revised Completion Date,” “% Complete” entry, “Actual Completion Date,”and “Responsible Person/Party” set forth in the ITRPP spreadsheets generatedperiodically by the Bank, including under the dates of April 8 and 28,2005;

 

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(c) Alltasks included within the ITRPP shall be satisfactorily completed by no laterthan March 31, 2006; and

 

(d) Duringthe term of this Agreement, the ITRPP shall not be amended or rescinded withoutthe prior written approval of the Regional Director.

 

3.                                       **Compliance With Agreement**

 

(a) TheBoard and officers of the Bank shall take immediate action to cause the Bank tocomply with the terms of this Agreement and shall take all actions necessaryand appropriate thereafter to cause the Bank to continue to carry out theprovisions of this Agreement.

 

(b) Within15 days of the Effective Date, the Board shall appoint a committee (the “ComplianceCommittee”) comprised of 3 or more directors, the majority of whom shall beoutside directors, to monitor and coordinate the Bank’s compliance with theprovisions of this Agreement.

 

(c) Within20 days after the end of each calendar quarter following the Effective Date,Management shall update the ITRPP spreadsheets used to describe and monitorimplementation of the ITRPP, and shall submit the same to the ComplianceCommittee.

 

(d) Within10 days of its receipt of the updated ITRPP spreadsheets, the ComplianceCommittee shall submit a written progress report to the Board detailing theactions taken to comply with each provision of this Agreement and the resultsof those actions.

 

(e) Within15 days after its receipt of a quarterly progress report from the ComplianceCommittee, the Board shall forward a copy thereof, together with any additionalcomments made by the Board, to the Regional Director and shall certify inwriting that each Director has reviewed the report.

 

4.                                       **Submission of Required Documents to OTS**

 

Whenthis Agreement requires the submission of documents to the OTS, the Bank shallsubmit them as follows:

 
| The  original to:                       |   | copy  to:                               |
|-----------------------------------------|--------|-----------------------------------------|
|                                    |   |                                    |
| Mr. Robert  C. Albanese            |   | Mr. Thomas  J. Donahue             |
| Regional  Director                      |   | Information  Tech. Examinations Mgr.    |
| Office  of Thrift Supervision           |   | Office  of Thrift Supervision           |
| Harborside  Financial Center Plaza Five |   | Harborside  Financial Center Plaza Five |
| Suite 1600                         |   | Suite 1600                         |
| Jersey  City, New Jersey 07311          |   | Jersey  City, New Jersey 07311          |

 

5.                                       **Integration Clause**

 

ThisAgreement represents, as of the Effective Date, the final written agreement ofthe parties with respect to the subject matter hereof and constitutes the soleagreement of the parties, as of the Effective Date.

 

6.                                       **Definitions**

 

Alltechnical words or terms used in this Agreement for which meanings are notspecified or otherwise provided by the provisions of this Agreement shall,insofar as applicable, have meanings as defined in Chapter V of Title 12 of theCode of Federal Regulations, the Home Owners’ Loan Act (“HOLA”), the FederalDeposit Insurance Act (“FDI Act”), and OTS Memoranda.  Any such technical words or terms used inthis Agreement and undefined in said Code of Federal Regulations, HOLA, FDIAct, and OTS Memoranda shall have meanings that accord with the best custom andusage in the savings and loan and information technology industries.

 

7.                                       **Successor Statutes, Regulations, Guidance, Amendments**

 

Referencein this Agreement to provisions of statutes, regulations, and OTS Memorandashall be deemed to include references to all amendments to such provisions thathave been made as of the Effective Date and references to successor

 

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provisionsas they become applicable.

 

8.                                       **Time Limits**

 

Timelimitations for compliance with the terms of this Agreement run from the EffectiveDate unless otherwise noted.

 

9.                                       **Rules of Interpretation**

 

(a) Nothingin this Agreement shall be construed as permitting the Bank to violate any law,rule, regulation, or policy statement to which it is subject.

 

(b) Theparagraph headings herein are for convenience only and shall not affect theconstruction hereof.

 

(c) Incase any provision in this Agreement is determined to be invalid, illegal, orunenforceable by the decision of any court of competent jurisdiction, thevalidity, legality, and enforceability of the remaining provisions hereof shallnot in any way be affected or impaired thereby, unless the Regional Director inhis sole discretion determines otherwise.

 

10.                                 **Successors In Interest/Benefit**

 

Theterms and provisions of this Agreement shall be binding upon, and inure to thebenefit of, the parties hereto and their respective successors ininterest.  Nothing in this Agreement,express or implied, shall give to any person or entity, other than the partieshereto, the Federal Deposit Insurance Corporation, and their successorshereunder, any benefit or any legal or equitable right, remedy, or claim underthis Agreement.

 

11.                                 **Enforceability of Agreement; Director Attestation**

 

TheBank represents and warrants that this Agreement has been duly authorized,executed, and delivered, and constitutes, in accordance with its terms, a validand binding agreement of the Bank.  Eachdirector signing Addendum A attached to this Agreement attests, by such act,that she or he, as the case may be, voted in favor of the Board resolutions(copies submitted to the OTS herewith) authorizing the execution of thisAgreement by the Bank.

 

12.                                 **Effective Date; Duration; Termination or Suspension ofAgreement**

 

ThisAgreement shall be effective and enforceable as of the date the OTS’ RegionalDirector executes this Agreement, which date is the Effective Date hereof, asindicated on the first page hereof. This Agreement shall remain in effect until terminated, modified, orsuspended in writing by the OTS, acting through its Director or the RegionalDirector.  The Regional Director, in hissole discretion and by written notice, may suspend any or all provisions ofthis Agreement.

 

13.                                 **No Bar or Estoppel**

 

Theprovisions of this Agreement shall not bar, estop, or otherwise prevent the OTSfrom taking any other action (including, without limitation, any type ofsupervisory, enforcement, or resolution action) affecting the Bank or any ofits current or former institution-affiliated parties.

 

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14.                                 **Section 8 Agreement**

 

ThisAgreement is a “written agreement” for the purposes of section 8 of theFDI Act, 12 U.S.C. § 1818.

 

INWITNESS WHEREOF, the parties hereto hereby execute this Agreement.

 

 
| THIRD  FEDERAL BANK | OFFICE  OF THRIFT SUPERVISION                 |
|---------------------|-----------------------------------------------|
|                |                                          |   |   |
|                |                                          |   |   |
| By:                 | /s/  Kent C. Lufkin                           |   | By: | /s/  Robert C. Albanese |   |
|                | Kent  C. Lufkin                               |   | Robert  C. Albanese |
|                | President &  Chief Executive Officer |   | Regional  Director |
|                | Date:  August 2, 2005                    |   | Date:  August 2, 2005 |
|                     |                                               |  |  |  |  |

 

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