EXHIBIT 10(f) 7

                              EMPLOYMENT AGREEMENT
                              --------------------

         THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of this 28th day of November,  2001 by and between PennFed  Financial  Services,
Inc. (the "Company") and Jeffrey J. Carfora (the "Employee").

         WHEREAS, the Employee serves as the Senior Executive Vice President and
Chief  Operating  Officer  of the  Company  and of  the  Company's  wholly-owned
subsidiary, Penn Federal Saving Bank (the "Bank");

         WHEREAS,  the Employee has an existing  employment  agreement  with the
Company entered into as of November 28, 2000 (the "Prior Employment  Agreement")
which he is willing to terminate in  consideration  of this  Agreement  becoming
effective;

         WHEREAS,  the  board  of  directors  of  the  Company  (the  "Board  of
Directors")  believes  it is in the  best  interests  of  the  Company  and  its
subsidiaries  for the Company to enter into this  Agreement with the Employee in
order to assure  continuity of  management of the Company and its  subsidiaries;
and

         WHEREAS,  the  Board of  Directors  has  approved  and  authorized  the
execution of this Agreement with the Employee;

         NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein, it is AGREED as follows:

         1.  Definitions.
             -----------

                  (a) The term "Change in Control" means (1) an acquisition of
securities of the Company or the Bank that is determined by the Board of
Directors to constitute an acquisition of control of the Company or the Bank
within the meaning of the Change in Bank Control Act, 12 U.S.C. ss. 1817(j) and
the Savings and Loan Holding Company Act, 12U.S.C. ss.1467a, and applicable
regulations thereunder; (2) an event that would be required to be reported in
response to Item 1 of the current report on Form 8-K, as in effect on the
Effective Date, pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 (the "Exchange Act"); (3) any person (as the term is used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act) directly or indirectly of
securities of the Company or the Bank representing 25% or more of the combined
voting power of the Company's or the Bank's outstanding securities; (4)
individuals who are members of the Board of Directors on the Effective Date (the
"Incumbent Board") cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent to the
Effective Date whose election was approved by a vote of at least three-quarters
of the directors comprising the Incumbent Board, or whose nomination for
election by the Company's stockholders was approved by a nominating committee
serving under an Incumbent Board, shall be considered a member of the Incumbent
Board; or (5) approval by the Company's stockholders of a plan of
reorganization, merger or consolidation of the Company, sale of all or
substantially all of the assets of the Company, a similar transaction in which
the Company is not the resulting entity; provided that the term "change in
control" shall not include an acquisition of securities by an employee benefit
plan of the Bank or the Company. In the application of regulations under



<PAGE>

the Change in Bank  Control  Act or the Savings and Loan  Holding  Company  Act,
determinations  to be made by the applicable  federal banking regulator shall be
made by the Board of Directors.

                  (b) The term "Consolidated Subsidiaries" means any subsidiary
or subsidiaries of the Company (or its successors) that are part of the
consolidated group of the Company (or its successors) for federal income tax
reporting.

                  (c) The term "Date of Termination" means the date upon which
the Employee's employment with the Company or the Bank or both ceases, as
specified in a notice of termination pursuant to Section 8 of this Agreement.

                  (d)  The term "Effective Date" means November 28, 2001.

                  (e) The term "Involuntary Termination" means the termination
of the employment of Employee (i) by either the Company or the Bank or both
without his express written consent; or (ii) by the Employee by reason of a
material diminution of or interference with his duties, responsibilities or
benefits, including (without limitation) any of the following actions unless
consented to in writing by the Employee: (1) a requirement that the Employee be
based at any place other than West Orange, New Jersey, or within 35 miles
thereof, except for reasonable travel on Company or Bank business; (2) a
material demotion of the Employee; (3) a material reduction in the number or
seniority of personnel reporting to the Employee or a material reduction in the
frequency with which, or in the nature of the matters with respect to which such
personnel are to report to the Employee, other than as part of a Bank- or
Company-wide reduction in staff; (4) a reduction in the Employee's salary or a
material adverse change in the Employee's perquisites, benefits, contingent
benefits or vacation, other than prior to a Change in Control as part of an
overall program applied uniformly and with equitable effect to all members of
the senior management of the Bank or the Company; (5) a material permanent
increase in the required hours of work or the workload of the Employee; or (6)
the failure of the Board of Directors (or a board of directors of a successor of
the Company) to elect him as Senior Executive Vice President and Chief Operating
Officer of the Company (or a successor of the Company) or any action by the
Board of Directors (or a board of directors of a successor of the Company)
removing him from any of such offices, or the failure of the board of directors
of the Bank (or any successor of the Bank) to elect him as Senior Executive Vice
President and Chief Operating Officer of the Bank (or any successor of the Bank)
or any action by such board (or board of a successor of the Bank) removing him
from any of such offices. The term "Involuntary Termination" does not include
Termination for Cause or termination of employment due to death or permanent
disability pursuant to Section 7(g) of this Agreement, or suspension or
temporary or permanent prohibition from participation in the conduct of the
affairs of a depository institution under Section 8 of the Federal Deposit
Insurance Act.

                  (f) The terms "Termination for Cause" and "Terminated for
Cause" mean termination of the employment of the Employee with either the
Company or the Bank, as the case may be, because of the Employee's 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 the Bank) or final cease-and-desist order, or
(except as provided below) material breach of any provision of this Agreement.
No act or failure to act by the Employee shall be considered willful unless the
Employee acted or failed to act with an

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<PAGE>

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 Employee shall not be deemed
to have  been  Terminated  for Cause  unless  and until  there  shall  have been
delivered  to  the  Employee  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 Employee and an  opportunity  for the
Employee,  together with the Employee's  counsel, to be heard before the Board),
stating that in the good faith  opinion of the Board of  Directors  the Employee
has engaged in conduct  described in the preceding  sentence and  specifying the
particulars  thereof in detail.  The  opportunity  of the  Employee  to be heard
before the Board shall not affect the right of the  Employee to  arbitration  as
set forth in paragraph 17.

         2. Term; Termination of Prior Employment Agreement. The term of this
Agreement shall be a period of five years commencing on the Effective Date,
subject to earlier termination as provided herein. On each anniversary of this
Agreement the term shall be extended for a period of one year in addition to the
then-remaining term, provided that the Company has not given notice to the
Employee in writing at least 90 days prior to such anniversary that the term of
this Agreement shall not be extended further, and provided further that the
Employee has not received an un-satisfactory performance review by either the
Board of Directors or the board of directors of the Bank. The Employee's Prior
Employment Agreement shall terminate immediately prior to the Effective Date.

         3. Employment. The Employee is employed as the Senior Executive Vice
President and Chief Operating Officer of the Company and as the Senior Executive
Vice President and Chief Operating Officer of the Bank. As such, the Employee
shall render administrative and management services as are customarily performed
by persons situated in similar executive capacities, and shall have such other
powers and duties as the Board of Directors or the board of directors of the
Bank may prescribe from time to time. The Employee shall also render services to
any subsidiary or subsidiaries of the Company or the Bank as requested by the
Company or the Bank from time to time consistent with his executive position.
The Employee shall devote his best efforts and reasonable time and attention to
the business and affairs of the Company and the Bank to the extent necessary to
discharge his responsibilities hereunder. The Employee may (i) serve on
corporate or charitable boards or committees, and (ii) manage personal
investments, so long as such activities do not interfere materially with
performance of his responsibilities hereunder.


                                       3
<PAGE>


         4.  Cash Compensation.
             -----------------

                  (a) Salary. The Company agrees to pay the Employee during the
term of this Agreement a base salary (the "Company Salary") the annualized
amount of which shall be not less than the annualized aggregate amount of the
Employee's base salary from the Company and any Consolidated Subsidiaries in
effect at the Effective Date; provided that any amounts of salary actually paid
to the Employee by any Consolidated Subsidiaries shall reduce the amount to be
paid by the Company to the Employee. The Company Salary shall be paid no less
frequently than monthly and shall be subject to customary tax withholding. The
amount of the Employee's Company Salary shall be increased (but shall not be
decreased other than prior to a Change in Control as part of an overall program
applied uniformly and with equitable effect to all members of senior management
of the Company or the Bank) from time to time in accordance with the amounts of
salary approved by the Board of Directors or the board of directors of any of
the Consolidated Subsidiaries after the Effective Date.

                  (b) Bonuses. The Employee shall be entitled to participate in
an equitable manner with all other executive officers of the Company and the
Bank in such performance-based and discretionary bonuses, if any, as are
authorized and declared by the Board of Directors for executive officers of the
Company and by the board of directors of the Bank for executive officers of the
Bank.

                  (c) Expenses. The Employee shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Employee in performing
services under this Agreement in accordance with the policies and procedures
applicable to the executive officers of the Company and the Bank, provided that
the Employee accounts for such expenses as required under such policies and
procedures.

                  (d) Deferral of Non-Deductible Compensation. In the event that
the Employee's aggregate compensation (including compensatory benefits which are
deemed remuneration for purposes of Section 162(m) of the Internal Revenue Code
of 1986 as amended (the "Code")) from the Company and the Consolidated
Subsidiaries for any calendar year exceeds the greater of (i) $1,000,000 or (ii)
the maximum amount of compensation deductible by the Company or any of the
Consolidated Subsidiaries in any calendar year under Section 162(m) of the Code
(the "maximum allowable amount"), then any such amount in excess of the maximum
allowable amount shall be mandatorily deferred with interest thereon at 8% per
annum, compounded annually, to a calendar year such that the amount to be paid
to the Employee in such calendar year, including deferred amounts and interest
thereon, does not exceed the maximum allowable amount. Subject to the foregoing,
deferred amounts including interest thereon shall be payable at the earliest
time permissible. All unpaid deferred amounts shall be paid to the Employee not
later than his Date of Termination unless his Date of Termination is on a
December 31st, in which case, the unpaid deferred amounts shall be paid to the
Employee on the first business day of the next succeeding calendar year. The
provisions of this subsection shall survive any termination of the Employee's
employment and any termination of this Agreement.


                                       4
<PAGE>


         5.  Benefits.
             --------

                  (a) Participation in Benefit Plans. The Employee shall be
entitled to participate, to the same extent as executive officers of the Company
and the Bank generally, in all plans of the Company and the Bank relating to
pension, retirement, thrift, profit-sharing, savings, group or other life
insurance, hospitalization, medical and dental coverage, travel and accident
insurance, education, cash bonuses, and other retirement or employee benefits or
combinations thereof. In addition, the Employee shall be entitled to be
considered for benefits under all of the stock and stock option related plans in
which the Company's or the Bank's executive officers are eligible or become
eligible to participate.

                  (b) Fringe Benefits. The Employee shall be eligible to
participate in, and receive benefits under, any other fringe benefit plans or
perquisites which are or may become generally available to the Company's or the
Bank's executive officers, including but not limited to supplemental retirement,
incentive compensation, supplemental medical or life insurance plans, company
cars, club dues, physical examinations, financial planning and tax preparation
services.

         6. Vacations; Leave. The Employee shall be entitled to annual paid
vacation in accordance with the policies established by the Board of Directors
and the board of directors of the Bank for executive officers, in no event less
than four weeks per year, and to voluntary leaves of absence, with or without
pay, from time to time at such times and upon such conditions as the Board of
Directors may determine in its discretion.

         7.  Termination of Employment.
             -------------------------

                  (a) Involuntary Termination. If the Employee experiences an
Involuntary Termination, such termination of employment shall be subject to the
Company's obligations under this Section 7. In the event of the Involuntary
Termination of the Employee, if the Employee has offered to continue to provide
the services contemplated by and on the terms provided in this Agreement and
such offer has been declined, subject to Section 7(b) of this Agreement, the
Company shall, during the lesser period of the remaining term of this Agreement
or three years following the Date of Termination (the "Liquidated Damage
Period"), as liquidated damages (i) pay to the Employee monthly one-twelfth of
the Company Salary at the annual rate in effect immediately prior to the Date of
Termination and one-twelfth of the average annual amount of cash bonus and cash
incentive compensation of the Employee, based on the average amounts of such
compensation earned by the Employee from the Company and the Bank for the two
full fiscal years preceding the Date of Termination; and (ii) maintain
substantially the same group life or key man life insurance, hospitalization,
medical, dental, prescription drug and other health benefits, and long-term
disability insurance (if any) for the benefit of the Employee and his dependents
and beneficiaries who would have been eligible for such benefits if the Employee
had not suffered Involuntary Termination and on terms substantially as favorable
to the Employee including amounts of coverage and deductibles and other costs to
him in effect immediately prior to such Involuntary Termination (the "Employee's
Health Coverage").

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<PAGE>

                 (b)  Reduction of the Company's Obligations Under Section 7(a).
                       ---------------------------------------------------------

                            (1) In the event that the Employee  becomes entitled
to liquidated  damages  pursuant to Section 7(a),  (i) the Company's  obligation
thereunder  with respect to cash  damages  shall be reduced by the amount of the
Employee's cash income,  if any, earned from providing  personal services during
the  Liquidated  Damage  Period;  and (ii) the Company's  obligation to maintain
Health  Coverage  shall be  reduced to the  extent,  if any,  that the  Employee
receives such benefits, on no less favorable terms, from another employer during
the Liquidated Damage Period.  For purposes of this Section 7(b), the term "cash
income" shall include amounts of salary, wages, bonuses,  incentive compensation
and fees paid to the  Employee  in cash but shall not  include  shares of stock,
stock options,  stock appreciation rights or other earned income not paid to the
Employee  in cash.  To the extent the  provisions  of this  Section  7(b)(1) are
applicable and an overpayment has been made to the Employee as of the expiration
of Liquidated  Damage  Period,  the Employee  shall  reimburse the Company in an
amount  equal to the  after  tax  benefit  realized  by the  Employee  from such
overpayment (i.e. amount realized net of all federal,  state, local,  employment
and  medicare  taxes).  In  making  the  reimbursement  calculation  it shall be
presumed that the Employee is subject to the highest  marginal federal and state
income tax rates.

                            (2) The Employee agrees that in the event he becomes
entitled  to  liquidated  damages  pursuant  to  Section  7(a),  throughout  the
Liquidated Damage Period, he shall promptly inform the Company of the nature and
amounts of cash income and the type of health  benefits  and  coverage  which he
earns or receives  from  providing  personal  services,  and shall  provide such
documentation  of such cash income and such health  benefits and coverage as the
Company may request.  In the event of changes to such cash income or such health
benefits or coverage from time to time, the Employee shall inform the Company of
such changes,  in each case within five days after the change occurs,  and shall
provide such documentation concerning the change as the Company may request.

                  (c) Change in Control; Cut Back; and Tax Gross Up. In the
event that the Employee experiences an Involuntary Termination within the 6
months preceding, at the time of, or within 24 months following a Change in
Control, in addition to the Company's obligations under Section 7(a) of this
Agreement, the Company shall pay to the Employee in cash, within 30 days after
the later of the date of such Change in Control or the Date of Termination, an
amount equal to 299% of the Employee's "base amount" as determined under Section
280G of the Code, less the acceleration and lapse value of options granted to
the Employee by the Company that are taken into account in the determination of
"parachute payments" under 280G(b)(2) of the Code by virtue of vesting
acceleration or deemed vesting acceleration in connection with such Change in
Control. In the event the Employee is requested in connection with or at the
time of a Change in Control to continue employment for an interim period and he
shall die while employed during such interim period, then his estate, or such
person as the Employee may have previously designated in writing, shall be
entitled to the full Change in Control payment described in this paragraph.

                            While it is not contemplated  that the Employee will
receive any amounts or benefits that will constitute "excess parachute payments"
under  Section  280G of the Code,  in the event that any  payments  or  benefits
provided or to be  provided  to the  Employee  pursuant  to this  Agreement,  in
combination with payments or benefits,  if any, from other plans or arrangements

                                       6

<PAGE>

maintained by the Company or any of the  Consolidated  Subsidiaries,  constitute
"excess  parachute  payments" under Section 280G of the Code that are subject to
excise tax under Section 4999 of the Code, the Company shall pay to the Employee
in cash an  additional  amount  equal to the amount of the Gross Up Payment  (as
hereinafter  defined).  The "Gross Up  Payment"  shall be the  amount  needed to
ensure that the amount of such payments and the value of such benefits  received
by the Employee (net of such excise tax and any federal,  state and local tax on
the Company's  payment to him attributable to such excise tax) equals the amount
of such  payments and value of such  benefits as he would receive in the absence
of such excise tax and any federal, state and local tax on the Company's payment
to him  attributable  to such  excise tax.  The  Company  shall pay the Gross Up
Payment  within  30  days  after  the  Date  of  Termination.  For  purposes  of
determining  the  amount of the  Gross Up  Payment,  the  value of any  non-cash
benefits and deferred  payments or benefits shall be determined by the Company's
independent auditors in accordance with the principles of Section 280G(d)(3) and
(4) of the Code.  In the event  that,  after the Gross Up Payment  is made,  the
amount of the excise tax is determined to be less than the amount  calculated in
the  determination  of the actual  Gross Up  Payment  made by the  Company,  the
Employee  shall repay to the  Company,  at the time that such  reduction  in the
amount of excise tax is finally determined,  the portion of the Gross Up Payment
attributable to such reduction, plus interest on the amount of such repayment at
the applicable  federal rate under Section 1274 of the Code from the date of the
Gross Up Payment to the date of the  repayment.  The amount of the  reduction of
the Gross Up Payment  shall  reflect any  subsequent  reduction  in excise taxes
resulting from such repayment.  In the event that, after the Gross Up Payment is
made,  the  amount  of the  excise  tax  is  determined  to  exceed  the  amount
anticipated  at the time the Gross Up Payment was made, the Company shall pay to
the Employee,  in immediately  available funds, at the time that such additional
amount of excise tax is finally determined,  an additional payment  ("Additional
Gross Up  Payment")  equal  to such  additional  amount  of  excise  tax and any
federal, state and local taxes thereon, plus all interest and penalties, if any,
owned by the Employee with respect to such additional amount of excise and other
tax. The Company shall have the right to challenge,  on the  Employee's  behalf,
any excise tax  assessment  against him as to which the  Employee is entitled to
(or would be entitled if such  assessment is finally  determined to be proper) a
Gross Up Payment or  Additional  Gross Up Payment,  provided  that all costs and
expenses  incurred  in such a  challenge  shall be borne by the  Company and the
Company  shall  indemnify  the Employee and hold him  harmless,  on an after-tax
basis,  from any excise or other tax  (including  interest  and  penalties  with
respect  thereto)  imposed as a result of such  payment of costs and expenses by
the Company.

                  (d)  Termination  for Cause.  In the event of Termination  for
Cause,  the Company shall have no further  obligation to the Employee under this
Agreement  after the Date of  Termination  other  than  deferred  amounts  under
Section 4(d).

                  (e)  Voluntary  Termination.  The Employee may  terminate  his
employment  voluntarily  at any time by a notice  pursuant  to Section 8 of this
Agreement.  In the event that the Employee voluntarily terminates his employment
other  than  by  reason  of any  of  the  actions  that  constitute  Involuntary
Termination under Section 1(e)(ii) of this Agreement ("Voluntary  Termination"),
the Company  shall be  obligated  to the  Employee for the amount of his Company
Salary and  benefits  only  through  the Date of  Termination,  at the time such
payments  are due,  and the  Company  shall  have no further  obligation  to the
Employee under this Agreement except as provided in Section 4(d).

                                       7

<PAGE>


                  (f)  Death.  In the event of the death of the  Employee  while
employed  under this Agreement and prior to any  termination of employment,  the
Company shall pay to the Employee's  estate,  or such person as the Employee may
have  previously  designated  in writing,  (i) the Company  Salary which was not
previously  paid to the Employee  through the last day of the calendar  month in
which  Employee's  death  occurred  and,  if  applicable,  the Change in Control
payment set forth in the first paragraph of Section 7(c), provided Employee died
within six months prior or 24 months following such change in control;  (ii) the
amounts of any benefits or awards which, pursuant to the terms of any applicable
plan or plans, were earned with respect to the fiscal year in which the Employee
died and which the  Employee  would  have been  entitled  to  receive  if he had
continued to be employed,  and the amount of any bonus or incentive compensation
for such fiscal year which the Employee  would have been  entitled to receive if
he had continued to be employed, pro-rated in accordance with the portion of the
fiscal year prior to his death, provided that such amounts shall be payable when
and as  ordinarily  payable  under the  applicable  plans;  and (iii) the unpaid
deferred amounts under Section 4(d).

                  (g) Permanent Disability.  For purposes of this Agreement, the
term  "permanently  disabled"  means that the  Employee has a mental or physical
infirmity which  permanently  impairs his ability to perform  substantially  his
duties  and  responsibilities  under  this  Agreement  and which  results in (i)
eligibility of the Employee under the long-term  disability  plan of the Company
or the Bank, if any; or (ii) inability of the Employee to perform  substantially
his  duties  and  responsibilities  under  this  Agreement  for a period  of 180
consecutive  days.  Either  the  Company or the Bank or both may  terminate  the
employment  of the  Employee  after  having  established  that the  Employee  is
permanently disabled.

                  (h) Regulatory Action. Notwithstanding any other provisions of
this Agreement:


                           (1) If the  Employee  is removed  and/or  permanently
prohibited  from  participating  in the conduct of the  affairs of a  depository
institution  by an order issued under  Section  8(e)(4) or (g)(1) of the Federal
Deposit  Insurance  Act  ("FDIA"),  12 U.S.C.  ss.  1818(e)(4)  and (g)(1),  all
obligations  of the  Company  under this  Agreement  shall  terminate  as of the
effective date of the order, but vested rights of the contracting  parties shall
not be affected;.

                           (2) If the Bank is in default  (as defined in Section
3(x)(1) of the FDIA),  all obligations of the Company under this Agreement shall
terminate  as of the date of default,  but this  provision  shall not affect any
vested rights of the contracting parties; and

                           (3)  All   obligations  of  the  Company  under  this
Agreement shall be terminated, except to the extent determined that continuation
of this  Agreement is necessary for the continued  operation of the Bank: (i) by
the Director of the Office of Thrift  Supervision (the "Director") or his or her
designee,  at the time the Federal Deposit Insurance  Corporation enters into an
agreement to provide  assistance to or on behalf of the Bank under the authority
contained  in Section  13(c) of the FDIA;  or (ii) by the Director or his or her
designee, at the time the Director or his or her designee approves a supervisory
merger to resolve  problems related to operation of the Bank or when the Bank is
determined by the 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.

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<PAGE>


         8. Notice of Termination. In the event that the Company or the Bank, or
both, desire to terminate the employment of the Employee during the term of this
Agreement, the Company or the Bank, or both, shall deliver to the Employee a
written notice of termination, stating whether such termination constitutes
Termination for Cause or Involuntary Termination, setting forth in reasonable
detail the facts and circumstances that are the basis for the termination, and
specifying the date upon which employment shall terminate, which date shall be
at least 30 days after the date upon which the notice is delivered, except in
the case of Termination for Cause. In the event that the Employee determines in
good faith that he has experienced an Involuntary Termination of his employment,
he shall send a written notice to the Company stating the circumstances that
constitute such Involuntary Termination and the date upon which his employment
shall have ceased due to such Involuntary Termination. In the event that the
Employee desires to effect a Voluntary Termination, he shall deliver a written
notice to the Company, stating the date upon which employment shall terminate,
which date shall be at least 30 days after the date upon which the notice is
delivered, unless the parties agree to a date sooner.

         9. Attorneys Fees. The Company shall pay all legal fees and related
expenses (including the costs of experts, evidence and counsel) incurred by the
Employee as a result of (i) the Employee's contesting or disputing any
termination of employment, or (ii) the Employee's seeking to obtain or enforce
any right or benefit provided by this Agreement or by any other plan or
arrangement maintained by the Company (or its successors) or the Consolidated
Subsidiaries under which the Employee is or may be entitled to receive benefits;
provided that the Company's obligation to pay such fees and expenses is subject
to the Employee's prevailing with respect to the matters in dispute in any
action initiated by the Employee or the Employee's having been determined to
have acted reasonably and in good faith with respect to any action initiated by
the Company or the Bank.


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<PAGE>

         10.  Non-Disclosure and Non-Solicitation.

                  (a)  Non-Disclosure.  The  Employee  acknowledges  that he has
acquired,  and will continue to acquire while employed by the Company and/or any
Consolidated Subsidiary,  special knowledge of the business, affairs, strategies
and plans of the Company and the  Consolidated  Subsidiaries  which has not been
disclosed  to the  public and which  constitutes  confidential  and  proprietary
business  information  owned by the Company and the  Consolidated  Subsidiaries,
including but not limited to,  information about the customers,  customer lists,
software,  data,  formulae,  processes,  inventions,  trade  secrets,  marketing
information  and  plans,  and  business   strategies  of  the  Company  and  the
Consolidated Subsidiaries, and other information about the products and services
offered or developed or planned to be offered or developed by the Company and/or
the Consolidated Subsidiaries ("Confidential Information").  The Employee agrees
that, without the prior written consent of the Company, he shall not, during the
term of his  employment  or at any time  thereafter,  in any manner  directly or
indirectly  disclose any Confidential  Information to any person or entity other
than  the  Company  and  the  Consolidated  Subsidiaries.   Notwithstanding  the
foregoing,  if the Employee is requested or required  (including but not limited
to by oral questions, interrogatories,  requests for information or documents in
legal proceeding, subpoena, civil investigative demand or other similar process)
to disclose any Confidential  Information the Employee shall provide the Company
with  prompt  written  notice of any such  request  or  requirement  so that the
Company  and/or a Consolidated  Subsidiary may seek a protective  order or other
appropriate  remedy and/or waive  compliance with the provisions of this Section
10(a).  If, in the absence of a protective  order or other remedy or the receipt
of a waiver from the Company,  the Employee is nonetheless  legally compelled to
disclose  Confidential  Information  to any  tribunal  or else stand  liable for
contempt or suffer other censure or penalty, the Employee may, without liability
hereunder,  disclose  to such  tribunal  only that  portion of the  Confidential
Information  which  is  legally  required  to be  disclosed,  provided  that the
Employee  exercise  his best  efforts to  preserve  the  confidentiality  of the
Confidential  Information,  including without limitation by cooperating with the
Company  and/or a Consolidated  Subsidiary to obtain an  appropriate  protective
order or other reliable  assurance that confidential  treatment will be accorded
the Confidential  Information by such tribunal. On the Date of Termination,  the
Employee shall promptly  deliver to the Company all copies of documents or other
records  (including  without  limitation   electronic  records)  containing  any
Confidential  Information  that is in his  possession or under his control,  and
shall retain no written or electronic record of any Confidential Information.

                  (b) Non-Solicitation. During the three year period next
following the Date of Termination, the Employee shall not directly or indirectly
solicit, encourage, or induce any person while employed by the Company or any
Consolidated Subsidiary to (i) leave the Company or any Consolidated Subsidiary,
(ii) cease his or her employment with the Company or any Consolidated Subsidiary
or (iii) accept employment with another entity or person.

         The provisions of this Section 10 shall survive any termination of the
Employee's employment and any termination of this Agreement.

                                       10

<PAGE>


         11.  No Assignments.

                  (a) This Agreement is personal to each of the parties  hereto,
and  neither  party may  assign or  delegate  any of its  rights or  obligations
hereunder  without  first  obtaining  the  written  consent of the other  party;
provided,  however,  that the  Company  shall  require any  successor  or assign
(whether direct or indirect, by purchase, merger, consolidation or otherwise) by
an assumption agreement in form and substance  satisfactory to the Employee,  to
expressly  assume and agree to perform this  Agreement in the same manner and to
the same  extent  that the  Company  would be  required to perform it if no such
succession or assignment had taken place.  Failure of the Company to obtain such
an assumption  agreement  prior to the  effectiveness  of any such succession or
assignment shall be a breach of this Agreement and shall entitle the Employee to
compensation  and  benefits  from the Company in the same amount and on the same
terms as provided for an  Involuntary  Termination  under Section 7 hereof.  For
purposes of implementing the provisions of this Section 11(a), the date on which
any such succession becomes effective shall be deemed the Date of Termination.

                  (b) This  Agreement  and all rights of the Employee  hereunder
shall inure to the benefit of and be enforceable by the Employee's  personal and
legal   representatives,    executors,   administrators,    successors,   heirs,
distributees, devisees and legatees.

         12. 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 personally delivered or sent by certified
mail, return receipt requested, postage prepaid, to the Company at its home
office, to the attention of the Board of Directors with a copy to the Secretary
of the Company, or, if to the Employee, to such home or other address as the
Employee has most recently provided in writing to the Company.

         13.  Amendments.  No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein otherwise
provided.

         14.  Headings.  The headings used in this Agreement are included solely
for  convenience  and shall  not  affect,  or be used in  connection  with,  the
interpretation of this Agreement.

         15.  Severability.  The  provisions of this  Agreement  shall be deemed
severable and the  invalidity  or  unenforceability  of any provision  shall not
affect the validity or enforceability of the other provisions hereof.

         16.  Governing Law. This Agreement shall be governed by the laws of the
State of New Jersey.

         17.  Arbitration.  Any  dispute  or  controversy  arising  under  or in
connection  with this Agreement  (other than relating to the  enforcement of the
provisions  of  Section  10) shall be  settled  exclusively  by  arbitration  in
accordance  with  the  rules of the  American  Arbitration  Association  then in
effect.  Judgment may be entered on the  arbitrator's  award in any court having
jurisdiction.

         18. Equitable and Other Judicial  Relief.  In the event of an actual or
threatened  breach by the Employee of any of the  provisions  of Section 10, the
Company shall be entitled to

                                       11

<PAGE>

equitable  relief  in the  form  of an  injunction  from a  court  of  competent
jurisdiction  and such other  equitable  and legal  relief as such  court  deems
appropriate  under the  circumstances.  The parties agree that the Company shall
not be required to post any bond in connection  with the grant or issuance of an
injunction  (preliminary,  temporary  and/or  permanent) by a court of competent
jurisdiction,  and if a bond is nevertheless required, the parties agree that it
shall be in a nominal  amount.  The parties further agree that in the event of a
breach by the Employee of any of the  provisions of Section 10, the Company will
suffer  irreparable  damage  and its  remedy  at law  against  the  Employee  is
inadequate to compensate it for such damage.

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.

             THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY
BE ENFORCED BY THE PARTIES.

Attest:                                     PennFed Financial Services, Inc.


                                            /s/ William C. Anderson
---------------------                       ---------------------------
Secretary                                   By: William C. Anderson
                                            Its: Chairman


                                            Employee


                                            /s/ Jeffrey J. Carfora
                                            ----------------------------
                                            Jeffrey J. Carfora




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