Document:

Exhibit 10-h-4

 

ROCKWELL COLLINS 2005

NON-QUALIFIED PENSION PLAN

 

The purpose of this Plan is to provide
benefits in excess of the Benefit Limitation (as defined below) to a group of
employees and to provide benefits in excess of the Compensation Limit (as
defined below) to a select group of management and highly compensated employees
of Rockwell Collins, Inc. and its affiliates.  This Plan also provides benefits in excess of
the benefits provided under the Company Pension Plan (as defined below) to a
select group of highly compensated employees consisting of Corporate Pilots and
to a select group of management or highly compensated employees who deferred
compensation under the Rockwell Collins Deferred Compensation Plan prior to
2005.  This Plan is unfunded for tax
purposes and for purposes of Title I of ERISA.

 

This Plan is established effective as of January 1,
2005 for accrued benefits that were earned and vested after December 31,
2004 under the Rockwell Collins Non-Qualified Pension Plan (“Pre-2005 Plan”)
through September 30, 2006, the date the Pre-2005 Plan was frozen.

 

ARTICLE
I

DEFINITIONS

 

1.005      Affiliate
means:

 

(a)                                  any
company incorporated under the laws of one of the United States of America of
which the Company owns, directly or indirectly, eighty percent (80%)
or more of the combined voting power of all classes of stock or eighty
percent (80%) or more of the total value of the shares of all classes
of stock (all within the meaning of Code Section 1563);

 

(b)                                 any
partnership or other business entity organized under such laws, of which the
Company owns, directly or indirectly, eighty percent (80%) or more of the
voting power or eighty percent (80%) or more of the total value (all
within the meaning of Code Section 414(c)); and

 

(c)                                  any
other company deemed to be an Affiliate by the Board of Directors.

 

1.010                 Benefit Limitation means the
limitations on benefits payable from Defined Benefit Plans which are imposed by
Section 415 of the Code.

 

1.020                 Board of Directors means the
Company’s Board of Directors.

 

1.030                 Change of Control  means any of
the following:

 

 

(a)                                  The
acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or
Section 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) (a “Person”) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either
(1) the then outstanding shares of common stock of the Company (the “Outstanding
Company Common Stock”) or (2) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company Voting Securities”); provided,
however, that for purposes of this subsection (a), the following acquisitions shall
not constitute a Change of Control:  (w) any
acquisition directly from the Company, (x) any acquisition by the Company,
(y) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company or (z) any acquisition pursuant to a transaction which complies
with clauses (1), (2) and (3) of subsection (c) of this Section 1.030;
or

 

(b)                                 Individuals
who, as of the date hereof, constitute the Board of Directors of the Company
(the “Incumbent Board”) cease for any reason to constitute at least a majority
of the Board of Directors; provided, however, that any individual becoming a
director subsequent to that date whose election, or nomination for election by
the Company’s shareowners, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board of Directors; or

 

(c)                                  Consummation
of a reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of the Company or the acquisition of
assets of another entity (a “Company Transaction”), in each case, unless, following
such Company Transaction, (1) all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately
prior to such Company Transaction beneficially own, directly or indirectly,
more than 50% of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may be, of the
corporation resulting from such Company Transaction (including, without
limitation, a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company’s assets either directly or through
one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Company Transaction of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the case may
be, (2) no Person (excluding any employee benefit plan (or related trust)
of the Company or of such corporation resulting from such Company Transaction)
beneficially owns, directly or indirectly, 20% or more of, respectively, the
then 

 

2

 

outstanding shares of
common stock of the corporation resulting from such Company Transaction or the
combined voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to the
Company Transaction and (3) at least a majority of the members of the
board of directors of the corporation resulting from such Company Transaction
were members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board of Directors, providing for such
Company Transaction; or

 

(d)                                 Approval
by the Company’s shareowners of a complete liquidation or dissolution of the
Company.

 

1.040                 Code means the Internal Revenue
Code of 1986, as amended.

 

1.050                 Committee means the Compensation
Committee of the Board of Directors.

 

1.060                 Company means Rockwell Collins, Inc.,
a Delaware corporation.

 

1.070                 Company Officer  means an
employee who, effective January 1, 2005, has been elected by the Board of
Directors as an officer of the Company pursuant to the Company’s by-laws.

 

1.080                 Company Pension Plan means the
Rockwell Collins Pension Plan.

 

1.090                 Compensation Limit means the
limitation imposed by Section 401(a)(17) of the Code on the amount of
compensation which can be considered in determining the amount of a participant’s
benefit under the Company Pension Plan.

 

1.095                 Corporate Pilot
means any Participant in the Company Pension Plan whose principal duty as an
employee is the operation of aircraft as a pilot or co-pilot for at least one
year immediately preceding Retirement.

 

1.100                 Defined Benefit Plan  has the same meaning given that term in Section 3(35)
of ERISA.

 

1.150                 Delinkage Date
means January 1, 2009 or such other date as is permitted under Section 409A
and is approved by the Chief Executive Officer, Chief Financial Officer, Senior
Vice President, Human Resources or General Counsel of the Company.

 

1.110                 Employee means any person who is
employed by the Company or by an Affiliate, including, to the extent permitted
by Section 406 of the Code, any United States citizen regularly employed
by a foreign Affiliate of the Company.

 

1.120                 ERISA means the Employee
Retirement Income Security Act of 1974, as amended.

 

1.130                 409A Change of Control means a “Change
of Control Event” as defined in Treasury Regulation Section 1.409A-3(i)(5)(i) and
as set forth in Treasury Regulation Section 1.409A-3(i)(5)(v)-(vii),
applying the default rules and percentages set forth in such Treasury
Regulations.

 

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1.140                 Highly Compensated Employee
means a participant in or retiree under the Company Pension Plan whose
compensation would otherwise be considered under such Plan in determining his
benefits thereunder in excess of the Compensation Limit.

 

1.150                 Interest Rate
means the average 30-Year Treasury Rate as published by the Internal Revenue
Service in the October preceding the year of the Participant’s annuity
starting date.

 

1.160                 Mortality Assumptions
means the FAS 87 mortality assumptions used for the Company’s Net Periodic
Benefit Costs in the year of the Participant’s annuity starting date.

 

1.170                 Participant means any
participant in the Company Pension Plan whose benefits payable therefrom are
restricted by the Benefit Limitation or the Compensation Limit.  Employees who were hired on or before September 30,
2006 who (1) are Corporate Pilots, (2) are Company Officers hired on
or after January 1, 1993 but eligible for the pre-1993 formula under the
Company Pension Plan, or (3) are participants in the Company Pension Plan
who deferred compensation under the Rockwell Collins Deferred Compensation Plan
and attained 85 points under the Rule of 85 after December 31, 2004,
are also eligible to participate in this Plan. 
Notwithstanding any other provision of this Plan or the Company Pension
Plan to the contrary, no Employee or other person, individual or entity shall
become a Participant in this Plan after the earlier of (a) September 30,
2006 or (b) the day on which a Change of Control occurs.

 

1.180                 Plan means this Rockwell Collins
2005 Non-Qualified Pension Plan.

 

1.190                 Plan Administrator means the
person from time to time so designated by name or corporate office by the Board
of Directors.

 

1.200                 Pre-2005 Plan  means the Rockwell
Collins Non-Qualified Pension Plan and its predecessor, the Rockwell
International Corporation Non-Qualified Pension Plan.

 

1.210                 Retirement
means “separation from service” from the Company and all of its Affiliates,
within the meaning of Section 409A, on or after attainment of age 55 other
than for reason of death.

 

1.220                 Rule of 85
means, with respect to a Participant in the Collins Salaried Employees’ or
Certain Salaried Employees’ sub-plans of the Company Pension Plan attainment of
at least age 55 but not more than age 62 with a sum of age (in years and
months) and Credited Service (as defined in the Company Pension Plan) (in years
and months) total 85 or more on or before the date of Separation from Service
or Retirement.  For purposes of
determining eligibility, years and months of service with the Company after September 30,
2006 shall also be considered.

 

1.230                 Section 409A means Section 409A
of the Code and any regulations or other guidance issued thereunder.

 

1.240                 Securities Exchange Act  means the Securities Exchange Act of 1934, as amended.

 

4

 

1.250                 Separation from Service means a “separation
from service” from the Company and all of its Affiliates, within the meaning of
Section 409A, other than for reasons of Retirement or death.

 

1.260                 Specified Employee  has the
meaning set forth in Section 409A, as determined each year in accordance
with procedures established by the Company.

 

1.270                 Third Party
Administrator  means an independent third party selected by the
Trustee and approved by the individual who, immediately prior to a Change of
Control, was the Company’s Chief Executive Officer or, if not so identified,
the Company’s highest ranking officer (the “Ex-CEO”).

 

1.280                 Trust
means the master trust established by agreement between the Company and the
Trustee, which will be a grantor trust.

 

1.290                 Trustee
means Wells Fargo Bank, N.A., or any successor trustee of the Trust described
in Section 1.280 of this Plan.

 

Terms not otherwise defined in
this Article I shall have meanings set forth in the Company Pension Plan
document.

 

ARTICLE
II

DETERMINATION OF BENEFITS

 

2.005                 Effective as
of the close of business on September 30, 2006, and notwithstanding any
other provision in this Plan (or in the Company Pension Plan) to the contrary,
individuals who first become Employees after September 30, 2006 will not
be eligible to become Participants in this Plan.   No benefits shall be accrued under this Plan
after September 30, 2006, except pursuant to the Rule of 85.

 

2.010                 This Plan has been established by the
Company as a non-qualified pension plan for benefits earned and vested on and
after January 1, 2005 for those employees of the Company and its
Affiliates whose retirement benefits under the Company Pension Plan are, in the
determination of those benefits, reduced by reason of application of the
Compensation Limit and/or the Benefit Limitation for benefits earned and vested
on and after January 1, 2005.  This
Plan also provides enhanced benefits to (a) Corporate Pilots, (b) Company
Officers hired on or after January 1, 1993 but eligible for the pre-1993
formula under the Company Pension Plan, and (c) participants in the
Company Pension Plan who deferred compensation under the Rockwell Collins
Deferred Compensation Plan and attained 85 points under the Rule of 85
after December 31, 2004.  The
Company shall pay from its general assets or from the Trust, as the case may
be, to each Participant, or to the beneficiary, surviving spouse or joint
annuitant of the Participant, a benefit which is equal to the amount of such
reduction or enhancement and reduction or enhancement for benefits payable
under the Pre-2005 Plan.  Notwithstanding
any other provision of this Plan to the contrary, all non-qualified pension
benefits for Corporate 

 

5

 

Pilots are considered earned and therefore
payable under this Plan and not the Pre-2005 Plan.

 

2.020                 If the monthly
benefit for which a Participant would have been otherwise eligible at
retirement under the Company Pension Plan is reduced because of application of
the Compensation Limit, for purposes of determining the benefit payable under
this Plan, a Participant’s Average Annual Earnings shall mean the highest
amount that can be determined by averaging the Participant’s Earnings (as
defined in the Company Pension Plan) for any five (5) calendar years
within the ten (10) calendar years (or lesser period, if applicable) of
active employment which immediately precede the earliest of the dates on which
the Participant retires, dies, terminates or commences an approved absence for
disability or the date of the Company Pension Plan freeze (September 30,
2006) in accordance with the Company Pension Plan.  In determining Average Annual Earnings (as
defined in the Company Pension Plan), any calendar year in which the
Participant has less than a full year of Credited Service (as defined in the
Company Pension Plan) may be disregarded.

 

2.025                 In the case
of a Participant who first becomes an Employee on or after January 1, 1993
and, prior to the earlier of his retirement from the Company or September 30,
2006 becomes a Company Officer, the monthly benefit payable to such Participant
from this Plan shall be calculated pursuant to the same formula as is set forth
in Section 5.010(a) of the Certain Salaried or Collins Salaried
Employees sub-plans of the Company Pension Plan for participants in that plan
who were first employed by the Company prior to January 1, 1993.

 

2.030                 Subject to the provisions of Section 2.050,
for Retirement distributions that commence prior to the Delinkage Date, any
benefit payable under this Plan shall be paid to or in respect of the
Participant in the same manner and at the same time and form that benefits
become payable under the Company Pension Plan.

 

2.040                 For
distributions that commence on and after the Delinkage Date, the distribution
provisions of the Company Pension Plan shall have no application to this
Plan.  Effective for distributions that
commence on and after the Delinkage Date, distribution to a Participant of his
or her accrued benefit hereunder shall only be made upon the earliest of the
Participant’s Separation from Service, Retirement, death or, subject to the
terms and conditions set forth in Section 2.050, 409A Change of
Control.  All such distributions to
Participants, as well as distributions made to beneficiaries hereunder, shall
be made in the form of lump sum payments, subject to the following:

 

(a)                                  For
purposes of calculating any lump sum distribution under this Plan, the Plan shall
use the Interest Rate and Mortality Assumptions.  For benefits commencing upon Retirement, the
calculation of such lump sum distribution will reflect the immediate benefit
payable.  For benefits commencing upon
Separation from Service, the lump sum calculation will reflect the normal age
65 retirement benefit (as defined in the Company Pension Plan).

 

6

 

(b)                                 Effective
for distributions commencing on or after the Delinkage Date, a Participant may
make a one-time, irrevocable election to have his or her accrued benefit under
this Plan paid in (1) no more than ten (10) equal annual installments
commencing upon Retirement, such installments to be the amounts that are
actuarially equivalent to the present value of the Participant’s accrued
benefit under this Plan, or (2) the form of an annuity described in Exhibit A
to this Plan.  Such election shall only
apply to accrued benefits commencing upon Retirement and only if the actuarial
present value of the Participant’s accrued benefit upon Retirement is greater
than the amount specified under Section 402(g)(1)(B) of the Code
($15,500 for 2008).  A Participant may
elect any of the forms of annuities or installments without the consent of such
election by the Participant’s spouse. 
Any such election to receive installments or an annuity shall be made no
later than December 31st immediately preceding the Delinkage Date or December 31st
of the calendar year immediately preceding the calendar year any additional
benefit is accrued after the Delinkage Date under the Rule of 85.  Except as otherwise provided in Section 6.020,
such election shall be irrevocable.

 

2.050                 Effective as of the Delinkage Date,
notwithstanding any other provision of this Plan to the contrary, a Participant
(including, for purposes of this Section 2.050, a retiree who is currently
receiving benefits under this Plan) may elect to have the present value of the
benefits due hereunder paid in a lump sum in the event of the occurrence of a
409A Change of Control, subject to the following:

 

(a)                                  To
be effective, the election of a Participant pursuant to this Section must
be made in writing and filed with the Committee prior to December 31st of
the calendar year immediately preceding the year in which such benefit was
accrued.  Notwithstanding the foregoing,
a Participant may elect to make the election described in this Section 2.050
with respect to his interest in and to accrued benefit hereunder that were
earned prior to the Delinkage Date no later than the December 31st
immediately preceding the Delinkage Date.

 

(b)                                 Subject
to Section 6.020, such election shall be irrevocable.

 

(c)                                  Lump
sum payments to be made under this Section 2.050 to Participants or, in
the case of the Participant’s death, to the Participant’s beneficiary shall be
made within forty-five (45) days following the 409A Change of Control.

 

(d)                                 Notwithstanding
the foregoing, if the Participant does not file a timely written or electronic
election in accordance with Section 2.050(a) to receive or not
receive his or her accrued benefit under the Plan in a lump sum upon a 409A
Change of Control, then such Participant’s accrued benefit under the Plan will
automatically be paid in a lump sum upon a 409A Change of Control.

 

2.060                 Effective as of
the Delinkage Date, with respect to distributions which are payable to a
Participant or, in the event of the Participant’s death, to his beneficiary:

 

7

 

(a)                                  Subject
to Section 6.030, any lump sum payments shall be paid within the sixty
(60) day period following the close of the calendar year which includes the
Participant’s Separation from Service, Retirement or, if applicable, death.

 

(b)                                 Subject
to Section 6.030, each annual installment payable shall be paid within the
sixty (60) day period following the close of each calendar year during the
payment period, commencing with the calendar year following the year which
includes the Participant’s Retirement or, if applicable, death.

 

2.070                 Effective as of
the Delinkage Date, notwithstanding any other provision of this Plan to the
contrary, in the event that a Participant dies prior to commencement of
distribution of his accrued benefit under the Plan, the Participant’s accrued
benefit under this Plan shall be paid in a lump sum to his designated
beneficiary within the sixty (60) day period following the close of the
calendar year which includes the Participant’s death.  For purposes of this Section 2.070, the
Participant’s accrued benefit shall be the present value of the accrued benefit
payable in the form of a pre-retirement death benefit under the Company Pension
Plan without regard to the Benefit Limitation and Compensation Limit, reduced
by the present value of the accrued benefit payable in the form of the pre-retirement
death benefit pursuant to the Pre-2005 Plan. 
The beneficiary of such pre-retirement death benefit shall be designated
as follows:

 

(a)                                  A
Participant who is unmarried on the date of such beneficiary designation may
designate any person or persons as his beneficiary or beneficiaries (both
principal as well as contingent) to whom distribution under this Plan shall be
made in the event of his death prior to distribution of his accrued benefit
under the Plan.  In the absence of such
designation, the succession of beneficiaries, as specified in Section 8.020
of the Company Pension Plan shall be controlling.

 

(b)                                 Notwithstanding
any other provision of this Plan, in the event that a Participant is married on
the date of his death and the Participant dies prior to commencement of
distribution of benefits under this Plan, the Participant’s surviving spouse
shall be the beneficiary of the Participant’s benefit under this Plan.

 

2.080                 Notwithstanding
any other provision of this Plan to the contrary, if the Participant dies after
commencement of distribution of his accrued benefit under the Plan, such
benefit will be paid in the form elected pursuant to Section 2.040.

 

2.090                 Notwithstanding
any other provision of this Plan to the contrary, in the event that a Participant
Separates from Service prior to the Delinkage Date and prior to distribution of
benefits under the Plan, any benefit payable under this Plan shall be paid to
or in respect of the Participant in a lump sum within the sixty (60) day period
following the close of the calendar year immediately preceding the Delinkage
Date.

 

8

 

ARTICLE
III

CLAIMS PROCEDURE

 

3.010                 Any person claiming a right to
participate in this Plan, claiming a benefit under this Plan or requesting
information under this Plan shall present the claim or request in writing to
the Committee, who shall respond in writing within ninety (90) days following
the receipt of the request.

 

3.020                 If the claim or request is denied, the
written notice of denial shall state:

 

(a)                                  the
reasons for denial;

 

(b)                                 a
description of any additional material or information required and an
explanation of why it is necessary; and

 

(c)                                  an
explanation of this Plan’s claim review procedure.

 

3.030                 Any person whose claim or request is
denied may make a request for review by notice given in writing to the
Committee.

 

3.040                 A decision on a request for review
shall normally be made within ninety (90) days after the date of such
request.  If an extension of time is
required for a hearing or other special circumstances, the claimant shall be
notified and the time limit shall be extended by an additional sixty (60) days
from the date of such request.  The
decision shall be in writing and shall be final and binding on all parties
concerned.

 

ARTICLE
IV

AMENDMENT AND TERMINATION; MISCELLANEOUS PROVISIONS

 

4.010                 The Board of Directors shall have the
power to amend, suspend or terminate this Plan at any time, except that no such
action shall adversely affect rights with respect to any benefit without the
consent of the person affected. 
Notwithstanding the foregoing, except as otherwise permitted by Section 409A,
in the event of any termination of the Plan, any benefit payable under the Plan
shall continue to be paid in accordance with the terms of the Plan in effect on
the date of Plan termination.

 

4.020                 This Plan shall be interpreted and
administered by the Committee; provided, that interpretations by the Plan
Administrator of those provisions of the Company Pension Plan which are also
applicable to this Plan shall be binding on the Committee.

 

Notwithstanding any other provision of this Plan to the contrary, upon
and after the occurrence of a Change of Control, the Plan will be administered
by the Third-Party Administrator.  The
Third-Party Administrator will have the discretionary power to determine all
questions arising in connection with the administration of the Plan and the
interpretation of the Plan and Trust including, but not limited, to benefit
entitlement 

 

9

 

determinations; provided, however, upon and after the occurrence of a
Change of Control, such administrator will have no power to direct the
investment of Plan or Trust assets or select any investment manager or
custodial firm for the Plan or Trust.

 

Upon and after the occurrence of a Change of Control, the Company will
be required to:

 

(a)                                  pay
all reasonable administrative expenses and fees of the Third-Party
Administrator;

 

(b)                                 indemnify
the Third-Party Administrator against any costs, expenses and liabilities
including, without limitation, attorney’s fees and expenses arising in
connection with the performance of such administrator hereunder, except with
respect to matters resulting from the gross negligence or willful misconduct of
the said administrator or its employees or agents;

 

(c)                                  supply
full and timely information to the Third-Party Administrator on all matters
relating to the Plan, the Trust, the Participants and any surviving spouses and
contingent annuitants, the benefits of the Participants, the date of
circumstances of the Retirement, death or Separation from Service of the Participants,
and such other pertinent information as the Third-Party Administrator may
reasonably require; and

 

(d)                                 upon
and after a Change of Control, the Third-Party Administrator may not be
terminated by the Company and may only be terminated (and a replacement
appointed) by the Trustee, but only with the approval of the Ex-CEO (as defined
in Section 1.270).

 

4.030                 This Plan is an unfunded employee
benefit plan primarily for providing benefits to an identified group of
management or highly compensated employees of the Company and is also an excess
benefit plan (as defined by Section 3(36) of ERISA).  This Plan is intended to be unfunded for tax
purposes and for purposes of Title I of ERISA. 
Participants and their beneficiaries, estates, heirs, successors and
assigns shall have no legal or equitable rights, interest or claims in any
property or assets of the Company or its Affiliates.  Any and all of the assets of the Company and
its Affiliates shall be, and remain, the general, unpledged, unrestricted assets
of the Company and its Affiliates.  The
Company’s and any Affiliate’s sole obligation under this Plan shall be merely
that of an unfunded and unsecured promise of the Company or such Affiliate to
pay money in the future.

 

4.040                 Neither a Participant nor any other
person shall have any right to commute, sell, assign, transfer, pledge,
anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey, in
advance of actual receipt, any interest he may have hereunder.  A Participant’s rights to benefits described
herein are and shall be nonassignable and nontransferable prior to actual
distribution as provided by this Plan. 
Any such attempted assignment or transfer shall be ineffective with
respect to the Company and with respect to any Affiliate, and the Company’s and
any Affiliate’s sole obligation shall be to distribute benefits to
Participants, their beneficiaries or estates as appropriate.  No part of any Participant’s benefits
hereunder shall, prior to actual payment as provided by this Plan, be
subject to 

 

10

 

seizure or sequestration for the payment of any debts, judgments,
alimony or separate maintenance owed by a Participant or any other person, nor
shall any such benefits be transferable by operation of law in the event of a
Participant’s or any other persons bankruptcy or insolvency, except as
otherwise required by law.

 

4.050                 This Plan shall not be deemed to
constitute a contract of employment between the Company or any of its
Affiliates and any Participant, and no Participant, beneficiary or estate shall
have any right or claim against the Company or any of its Affiliate under this
Plan except as may otherwise be specifically provided in this Plan.  Nothing in this Plan shall be deemed to give
a Participant the right to be retained in the service of the Company or any
Affiliate or to interfere with the right of the Company or any Affiliate to
discipline, discharge or change the status of a Participant at any time.

 

4.060                 A Participant will cooperate with the
Committee by furnishing any and all information requested by the Committee or
its delegates in order to facilitate proper administration (including
distributions to and in respect of Participants) of this Plan and by taking
such other action as may be reasonably requested by the Committee or its
delegate.

 

4.070                 Subject to ERISA, the provisions of
this Plan shall be construed and interpreted according to the laws of the State
of Iowa.  In the event that any provision
of this Plan shall be held illegal or invalid for any reason, said illegality
or invalidity shall not affect the remaining provisions of this Plan, which
shall be construed and enforced as if such illegal or invalid provision were
not included in this Plan.  The
provisions of this Plan shall bind and obligate the Company and its Affiliates
and their successors, including, but not limited to, any corporate or other
business entity which shall, whether by merger, consolidation, purchase or
otherwise, acquire all or substantially all of the business and assets of the
Company or its Affiliates and their successors of any such company or other
business entity.

 

4.080                 All words used in this Plan in the
masculine gender shall be construed as if used in the feminine gender where
appropriate.  All words used in this Plan
in the singular or plural shall be construed as if used in the plural or
singular where appropriate.

 

ARTICLE
V

TRUST

 

5.010                 Establishment
of the Trust. The Company shall establish the Trust (which may be
referred to herein as a “Rabbi Trust”). 
The Trust shall become irrevocable upon a Change of Control (to the
extent not then irrevocable). 
Notwithstanding any other provision of this Plan to the contrary, the
Trust shall not become irrevocable or funded with respect to this Plan upon the
occurrence of an event described in Section 1.030(d).  After the Trust has become irrevocable with
respect to the Plan, except as otherwise provided in Section 12 of the
Trust, the Trust shall remain irrevocable with respect to the Plan until all
benefits due under this Plan and benefits and account balances due to any
participants and beneficiaries under any other plan covered by the Trust have
been paid in full.  Upon 

 

11

 

establishment of the Trust, the Company shall provide for funding of the
Trust in accordance with the terms of the Trust.

 

5.020                 Interrelationship of the
Plan and the Trust.  The
provisions of the Plan and any Participant’s Participation Agreement Form will
govern the rights of a Participant to receive distributions pursuant to the
Plan.  The provisions of the Trust will
govern the rights of the Company and its Affiliates, Participants and the
creditors of the Company and its Affiliates to the assets transferred to the
Trust.  The Company and each of its
Affiliates employing any Participant will at all times remain liable to carry
out their obligations under the Plan.

 

5.030                 Distributions From the
Trust.  The Company’s and
each of its Affiliate’s obligations under the Plan may be satisfied with Trust
assets distributed pursuant to the terms of the Trust, and any such
distribution will reduce their obligations under this Plan.

 

5.040                 Rabbi Trust.  The Rabbi Trust shall:

 

(a)                                  be
a non-qualified grantor trust which satisfies in all material respects the
requirement of Revenue Procedure 92-64, 1992-2 CB 122 (or any successor Revenue
Procedure or other applicable authority);

 

(b)                                 be
irrevocable upon a Change of Control, to the extent not then irrevocable (other
than an event described in Section 1.030(d)); and

 

(c)                                  provide
that any successor trustee shall be a bank trust department or other party that
may be granted corporate trustee powers under state law.

 

ARTICLE VI

SECTION 409A

 

6.010                 Section 409A
Generally.  This Plan is intended
to comply with Section 409A. 
Notwithstanding any other provision of this Plan to the contrary, the Company makes no representation that this Plan or
any benefit payable under this Plan will be exempt from or comply with Section 409A
and makes no undertaking to preclude Section 409A from applying to this
Plan.

 

6.020                 Changes in Elections. 
Effective as of the Delinkage Date, notwithstanding any other
provision of this Plan to the contrary, once an election is made pursuant to
this Plan it shall be irrevocable unless all of the following conditions are
met:

 

(a)                                  the
election to change the time or form of payment will not become effective until
the date that is one year after the date on which the election to make the
change is made;

 

(b)                                 except
with respect to any payment to be made upon the death of a Participant, the
form of payment, as changed, will defer payment of the Participant’s accrued
benefit until at least five (5) years later than the date that payment of
such 

 

12

 

Participant’s
accrued benefit would otherwise have been made under this Plan; and

 

(c)                                  with
respect to a payment that is to be made upon a fixed date or schedule of dates,
the election to change the form of payment is made no less than twelve (12)
months before the date that payment of the accrued benefit was otherwise
scheduled to be paid.

 

For purposes of Section 6.020(b) and
(c), all payments scheduled to be made in the form of installments that are
attributable to a particular Plan Year will be treated as scheduled to be made
on the date that the first installment of such series of payments is otherwise
scheduled to be made (that is, the installments will be treated as an
entitlement to a single payment for purposes of Section 409A).

 

Once a change in
election is made and recorded pursuant to the Plan, such election will be
irrevocable unless all of the conditions of this Section 6.020 are
met.  Notwithstanding any other provision
of this Plan to the contrary, a Participant will be permitted to make only one
change in election pursuant to this Section 6.020 with respect to the
accrued benefit to which such election relates.

 

With respect to
election made by a married Participant whose marriage terminates due to death
or divorce after the Delinkage Date, but prior to the distribution of benefits
payable under the Plan, such election made by the Participant for a joint
annuity as described in Exhibit A, will be defaulted to a single life
annuity without resulting in a change of election as described in this Section 6.020.

 

6.030                 Six Month Wait for Specified
Employees.  Effective as of the Delinkage Date,
notwithstanding any other provision of this Plan to the contrary, to the extent
that any accrued benefit payable under the Plan constitute an amount payable
upon Separation from Service or Retirement to any Participant under the Plan
who is deemed to be a Specified Employee, then such amount will not be paid
during the six (6) month period following such Separation from Service or
Retirement.  If the provisions of this Section 6.030
apply to a Participant who incurs a Separation from Service or Retirement,
within the first six (6) months of the calendar year, then such amount
will be paid within the first sixty (60) days following the close of the
calendar year which includes the Participant’s Separation from Service or
Retirement.  If the provisions of this Section 6.030
apply to a Participant who incurs a Separation from Service or Retirement
within the last six (6) months of the calendar year, then such amount will
be paid within the first sixty (60) days after June 30th of the calendar
year following the year in which includes the Participant’s Separation from
Service or Retirement.

 

13

 

Exhibit A

 

Annuity Options

 

Annuity
Options:

 

(a)                                  Participants Without a Spouse.  The form of annuity payable to
a Participant who does not have a spouse, and who does not otherwise elect
shall be paid in the form of a single life annuity with monthly installments
for the Participant’s life.

 

(b)                                 Participants
With a Spouse.  The forms of
annuities available to participant who is married on his annuity starting date
will be a single life annuity with monthly installments for the Participant’s
life and joint annuities with 60%, 75% or 100% continuation options.  The monthly payments to a Participant shall
be reduced by five percent (5%) if the Participant selects the (60%)
continuation option, by percent (10%) if the Participant selects the
seventy-five percent (75%) continuation option, or by fifteen percent (15%) if
the Participant selects the one hundred percent (100%) continuation
option.   The amount of the monthly
benefit payable to such surviving spouse shall equal the percentage selected of
the reduced monthly benefit payable to such Participant.exh101.htm

     

    
      

      

    

    Exhibit 10.1

     

     

    
      PRUDENTIAL
SAVINGS BANK

      AMENDED
AND RESTATED EMPLOYMENT AGREEMENT

       

       

      THIS AMENDED AND
RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) between Prudential
Savings Bank, a Pennsylvania-chartered, stock-form savings bank (the “Bank” or
the “Employer”), and Thomas A. Vento (the “Executive”), is hereby amended and
restated effective as of November 19, 2008.

       

      WHEREAS, the
Executive is presently employed as the President and Chief Executive Officer of
the Bank pursuant to an employment agreement between the Bank and the Executive
entered into as of March 29, 2005 (the “Prior Agreement”);

       

      WHEREAS, the
Bank desires to amend and restate the Prior Agreement in order to comply with
Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”);

       

      WHEREAS, the
Employer desires to be ensured of the Executive's continued active participation
in the business of the Employer; and

       

      WHEREAS, the
Executive is willing to serve the Bank on the terms and conditions hereinafter
set forth.

       

      NOW
THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereby agree as follows:

       

      1.           
Definitions.  The
following words and terms shall have the meanings set forth below for the
purposes of this Agreement:

       

      (a)           Average Annual
Compensation.  The Executive’s “Average Annual Compensation”
for purposes of this Agreement shall be deemed to mean the average amount of
Base Salary and cash bonus received by the Executive from the Employer or any
subsidiary thereof (excluding any deferred amounts) during the most recent five
calendar years immediately preceding the Date of Termination (or such shorter
period as the Executive was employed).

       

      (b)           Base
Salary.  “Base Salary” shall have the meaning set forth in
Section 3(a) hereof.

       

      (c)           Cause.
Termination of the Executive’s employment for “Cause” shall mean termination
because of personal dishonesty, incompetence, 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, willful conduct
which is materially detrimental (monetarily or otherwise) to the Employer or
material breach of any provision of this Agreement.

       

      (d)    Change in
Control.  “Change in Control” shall mean a change in the
ownership of the Corporation or the Bank, a change in the effective control of
the Corporation or the Bank or a change in the ownership of a substantial
portion of the assets of the Corporation 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 the
MHC ceases to exist nor any increase in the ownership of the Corporation by the
MHC shall be deemed to constitute a Change in Control.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (e)          Code.  “Code”
shall mean the Internal Revenue Code of 1986, as amended.

       

      (f)           Corporation.  “Corporation”
shall mean Prudential Bancorp, Inc. of Pennsylvania, the “mid-tier” holding
company for the Bank, or any successor thereto.

       

      (g)           Date of
Termination.  “Date of Termination” shall mean (i) if the
Executive’s employment is terminated for Cause, the date on which the Notice of
Termination is given, and (ii) if the Executive’s employment is terminated for
any other reason, the date specified in such Notice of
Termination.

       

      (h)    Disability.
“Disability” shall mean the Executive (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 twelve (12) months, receiving income replacement benefits for a
period of not less than three (3) months under an accident and health plan
covering employees of the Bank.

       

      (i)    Good
Reason.  “Good Reason” means the occurrence of any of the
following events:

       

      
        	
                   

              	
                     (i)    any
      material breach of this Agreement by the Employer, including without
      limitation any of the following: (A) a material diminution in the
      Executive’s base compensation, (B) a material diminution in the
      Executive’s authority, duties or responsibilities, or (C) any requirement
      that the Executive report to a corporate officer or employee of the
      Employer instead of reporting directly to the Board of Directors of the
      Employer, or

              

      

       

      
        	
                   

              	
                     (ii)    any
      material change in the geographic location at which the Executive must
      perform his services under this
  Agreement;

              

      

       

      provided,
however, that prior to any termination of employment for Good Reason, the
Executive must first provide written notice to the Employer within ninety (90)
days of the initial existence of the condition, describing the existence of such
condition, and the Employer shall thereafter have the right to remedy the
condition within thirty (30) days of the date the Employer received the written
notice from the Executive.  If the Employer remedies the condition
within such thirty (30) day cure period, then no Good Reason shall be deemed to
exist with respect to such condition.  If the Employer does not remedy
the condition within such thirty (30) day cure period, then the Executive may
deliver a Notice of Termination for Good Reason at any time within sixty (60)
days following the expiration of such cure period.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      (j)           MHC.  “MHC”
shall mean Prudential Mutual Holding Company, the parent mutual holding company
for the Corporation and the Bank.

       

      (k)          Notice of
Termination.  Any purported termination of the Executive’s
employment by the Employer for any reason, including without limitation for
Cause, Disability or Retirement, or by the Executive for any reason, including
without limitation for Good Reason, shall be communicated by a written “Notice
of Termination” to the other party hereto.  For purposes of this
Agreement, a “Notice of Termination” shall mean a dated notice which (i)
indicates the specific termination provision in this Agreement relied upon, (ii)
sets forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive’s employment under the provision so
indicated, (iii) specifies a Date of Termination, which shall be not less than
thirty (30) nor more than ninety (90) days after such Notice of Termination is
given, except in the case of the Employer’s termination of the Executive’s
employment for Cause, which shall be effective immediately; and (iv) is given in
the manner specified in Section 10 hereof.

       

      (l)           Retirement.  “Retirement”
shall mean voluntary termination by the Executive in accordance with the
Employer’s retirement policies, including early retirement, generally applicable
to the Employer’s salaried employees.

       

      2.           Term
of Employment.

       

      (a)           The
Employer hereby employs the Executive as President and Chief Executive Officer,
and the Executive hereby accepts said employment and agrees to render such
services to the Employer on the terms and conditions set forth in this
Agreement. Subject to the terms hereof, this Agreement shall terminate three (3)
years after December 31, 2008.  Beginning on December 31, 2009 and on
each December 31st
thereafter, the term of this Agreement shall be extended for a period of one
additional year, provided that the Employer has not given notice to the
Executive in writing at least 30 days prior to such day that the term of this
Agreement shall not be extended further and/or the Executive has not given
notice to the Employer of his election not to extend the term at least thirty
(30) days prior to any such December 31st.  If
any party gives timely notice that the term will not be extended as of any
December 31st, then
this Agreement shall terminate at the conclusion of its remaining
term.  References herein to the term of this Agreement shall refer
both to the initial term and successive terms.

       

      (b)           During
the term of this Agreement, the Executive shall perform such executive services
for the Employer as is consistent with his title of President and Chief
Executive Officer and from time to time assigned to him by the Employer’s Board
of Directors.

       

      3.           
Compensation and Benefits.

       

      (a)           The
Employer shall compensate and pay the Executive for his services during the term
of this Agreement at a minimum base salary of $270,300 per year (“Base Salary”),
which may be increased from time to time in such amounts as may be determined by
the Board of Directors of the Employer and may not be decreased without the
Executive’s express written consent.  In addition to his Base Salary,
the Executive shall be entitled to receive during the term of this Agreement
such bonus payments as may be determined by the Board of Directors of the
Employer.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      (b)           During
the term of this Agreement, the Executive shall be entitled to participate in
and receive the benefits of any pension or other retirement benefit plan, profit
sharing, stock option, restricted stock, employee stock ownership, or other
plans, benefits and privileges given to employees and executives of the
Employer, to the extent commensurate with his then duties and responsibilities,
as fixed by the Board of Directors of the Employer.  The Employer
shall not make any changes in such plans, benefits or privileges which would
adversely affect the Executive’s rights or benefits thereunder, unless such
change occurs pursuant to a program applicable to all executive officers of the
Employer and does not result in a proportionately greater adverse change in the
rights of or benefits to the Executive as compared with any other executive
officer of the Employer.  Nothing paid to the Executive under any plan
or arrangement presently in effect or made available in the future shall be
deemed to be in lieu of the salary payable to the Executive pursuant to Section
3(a) hereof.

       

      (c)           During
the term of this Agreement, the Executive shall be entitled to paid annual
vacation in accordance with the policies as established from time to time by the
Board of Directors of the Employer.  The Executive shall not be
entitled to receive any additional compensation from the Employer for failure to
take a vacation, nor shall the Executive be able to accumulate unused vacation
time from one year to the next, except to the extent authorized by the Board of
Directors of the Employer.

       

      4.           Expenses.  The
Employer shall reimburse the Executive or otherwise provide for or pay for all
reasonable expenses incurred by the Executive in furtherance of or in connection
with the business of the Employer, including, but not by way of limitation,
automobile and traveling expenses, subject to such reasonable documentation and
other limitations as may be established by the Board of Directors of the
Employer.  If such expenses are paid in the first instance by the
Executive, the Employer shall reimburse the Executive therefor.  Such
reimbursement shall be made promptly by the Bank and, in any event, no later
than March 15th of the
year immediately following the year in which such expenses were
incurred.

       

      5.           
Termination.

       

      (a)           The
Employer shall have the right, at any time upon prior Notice of Termination, to
terminate the Executive’s employment hereunder for any reason, including without
limitation termination for Cause, Disability or Retirement, and the Executive
shall have the right, upon prior Notice of Termination, to terminate his
employment hereunder for any reason.

       

      (b)           In
the event that (i) the Executive’s employment is terminated by the Employer for
Cause, or (ii) the Executive terminates his employment hereunder other than
for Good Reason, the Executive shall have no right pursuant to this Agreement to
compensation or other benefits for any period after the applicable Date of
Termination.

       

      (c)           In
the event that the Executive’s employment is terminated as a result of
Disability, Retirement or the Executive’s death during the term of this
Agreement, the Executive shall have no right pursuant to this Agreement to
compensation or other benefits for any period after the applicable Date of
Termination.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      (d)           In
the event that prior to a Change in Control (i) the Executive’s employment is
terminated by the Employer for other than Cause, Disability, Retirement or the
Executive’s death or (ii) such employment is terminated by the Executive for
Good Reason, then the Employer shall:

       

      
        
          	
                   

                	
                         
      (A)    pay to the
      Executive, in a lump sum within five (5) business days following the Date
      of Termination, a cash severance amount equal to two (2) times the
      Executive’s Average Annual
Compensation;

                

        

      

       

        (B)           maintain
and provide for a period ending at the earlier of (i) two (2) years subsequent
to the Date of Termination or (ii) the date of the Executive’s full-time
employment by another employer (provided that the Executive is entitled under
the terms of such employment to benefits substantially similar to those
described in this subparagraph (B)), at no cost to the Executive, the
Executive’s continued participation in all group insurance, life insurance,
health and accident insurance, and disability insurance offered by the Employer
in which the Executive was participating immediately prior to the Date of
Termination; provided that any insurance premiums payable by the Employer
or any successors pursuant to this Section 5(d)(B) shall be payable at such
times and in such amounts (except that the Employer shall also pay any employee
portion of the premiums) as if the Executive was still an employee of the
Employer, subject to any increases in such amounts imposed by the insurance
company or COBRA, and the amount of insurance premiums required to be paid by
the Employer in any taxable year shall not affect the amount of insurance
premiums required to be paid by the Employer in any other taxable year; and
provided further that if the Executive’s participation in any group insurance
plan is barred, the Employer shall either arrange to provide the Executive with
insurance benefits substantially similar to those which the Executive was
entitled to receive under such group insurance plan or, if such coverage cannot
be obtained, pay a lump sum cash equivalency amount within thirty (30) days
following the Date of Termination based on the annualized rate of premiums being
paid by the Employer as of the Date of Termination; and

       

      (C)    pay to the
Executive, in a lump sum within five (5) business days following the Date of
Termination, a cash amount equal to the projected cost to the Employer of
providing benefits to the Executive for a period of twenty-four (24) months
pursuant to any other employee benefit plans, programs or arrangements offered
by the Employer in which the Executive was entitled to participate immediately
prior to the Date of Termination (other than stock option plans, restricted
stock plans or retirement plans of the Employer or the Corporation), with the
projected cost to the Employer to be based on the costs incurred for the
calendar year immediately preceding the year in which the Date of Termination
occurs, and with any automobile-related costs to exclude any depreciation on
Bank-owned automobiles.

       

      (e)           In the
event that concurrently with or subsequent to a Change in Control (i) the
Executive’s employment is terminated by the Bank for other than Cause,
Disability, Retirement or the Executive’s death or (ii) by the Executive for Good
Reason, then the Employer shall, subject to the provisions of Section 6 hereof,
if applicable:

       

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	
                     
      (A)    pay to the
      Executive, in a single lump sum within five (5) business days following
      the Date of Termination, a cash severance amount equal to three (3) times
      the Executive’s Average Annual
Compensation;

              

      

       

      (B)           maintain
and provide for a period ending at the earlier of (i) three (3) years subsequent
to the Date of Termination or (ii) the date of the Executive’s full-time
employment by another employer (provided that the Executive is entitled under
the terms of such employment to benefits substantially similar to those
described in this subparagraph (B)), at no cost to the Executive, the
Executive’s continued participation in all group insurance, life insurance,
health and accident insurance, and disability insurance offered by the Employer
in which the Executive was participating immediately prior to the Date of
Termination; provided that any insurance premiums payable by the Employer
or any successors pursuant to this Section 5(e)(B) shall be payable at such
times and in such amounts (except that the Employer shall also pay any employee
portion of the premiums) as if the Executive was still an employee of the
Employer, subject to any increases in such amounts imposed by the insurance
company or COBRA, and the amount of insurance premiums required to be paid by
the Employer in any taxable year shall not affect the amount of insurance
premiums required to be paid by the Employer in any other taxable year; and
provided further that if the Executive’s participation in any group insurance
plan is barred, the Employer shall either arrange to provide the Executive with
insurance benefits substantially similar to those which the Executive was
entitled to receive under such group insurance plan or, if such coverage cannot
be obtained, pay a lump sum cash equivalency amount within thirty (30) days
following the Date of Termination based on the annualized rate of premiums being
paid by the Employer as of the Date of Termination; and

       

      (C)    pay to the
Executive, in a lump sum within five (5) business days following the Date of
Termination, a cash amount equal to the projected cost to the Employer of
providing benefits to the Executive for a period of thirty-six (36) months
pursuant to any other employee benefit plans, programs or arrangements offered
by the Employer in which the Executive was entitled to participate immediately
prior to the Date of Termination (other than stock option plans, restricted
stock plans or retirement plans of the Employer or the Corporation), with the
projected cost to the Employer to be based on the costs incurred for the
calendar year immediately preceding the year in which the Date of Termination
occurs, and with any automobile-related costs to exclude any depreciation on
Bank-owned automobiles.

       

      6.           Limitation of
Benefits under Certain Circumstances.  If the payments and
benefits pursuant to Section 5 hereof, either alone or together with other
payments and benefits which the Executive has the right to receive from the
Employer and the Corporation, would constitute a “parachute payment” under
Section 280G of the Code, then the payments and benefits payable by the Employer
pursuant to Section 5 hereof shall be reduced by the minimum amount necessary to
result in no portion of the payments and benefits payable by the Employer under
Section 5 being non-deductible to the Employer pursuant to Section 280G of the
Code and subject to the excise tax imposed under Section 4999 of the
Code.  If the payments and benefits under Section 5 are required to be
reduced, the cash severance shall be reduced first, followed by a reduction in
the fringe benefits.  The determination of any reduction in the
payments and benefits to be made pursuant to Section 5 shall be based upon the
opinion of independent tax counsel selected by the Employer and paid by the
Employer.  Such counsel shall promptly prepare the foregoing opinion,
but in no event later than thirty (30) days from the Date of Termination, and
may use such actuaries as such counsel deems necessary or advisable for the
purpose.  Nothing contained in this Section 6 shall result in a
reduction of any payments or benefits to which the Executive may be entitled
upon termination of employment under any circumstances other than as specified
in this Section 6, or a reduction in the payments and benefits specified in
Section 5 below zero.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      7.           
Mitigation; Exclusivity of Benefits.

       

      (a)           The
Executive shall not be required to mitigate the amount of any benefits hereunder
by seeking other employment or otherwise, nor shall the amount of any such
benefits be reduced by any compensation earned by the Executive as a result of
employment by another employer after the Date of Termination or otherwise,
except as set forth in Sections 5(d)(B)(ii) and 5(e)(B)(ii)
above.

       

      (b)           The
specific arrangements referred to herein are not intended to exclude any other
benefits which may be available to the Executive upon a termination of
employment with the Employer pursuant to employee benefit plans of the Employer
or otherwise.

       

      8.           
Withholding.  All
payments required to be made by the Employer hereunder to the Executive shall be
subject to the withholding of such amounts, if any, relating to tax and other
payroll deductions as the Employer may reasonably determine should be withheld
pursuant to any applicable law or regulation.

       

      9.           
Assignability.  The
Employer may assign this Agreement and its rights and obligations hereunder in
whole, but not in part, to any corporation, bank or other entity with or into
which the Employer may hereafter merge or consolidate or to which the Employer
may transfer all or substantially all of its assets, if in any such case said
corporation, bank or other entity shall by operation of law or expressly in
writing assume all obligations of the Employer hereunder as fully as if it had
been originally made a party hereto, but may not otherwise assign this Agreement
or its rights and obligations hereunder.  The Executive may not assign
or transfer this Agreement or any rights or obligations
hereunder.

       

      10.           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 Employer:

              	
                Board
      of Directors

              
	 	Prudential Savings Bank
	 	1834 Oregon Avenue
	 	Philadelphia, Pennsylvania
  19145

      

       

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      To the
Executive:          Thomas A.
Vento

      At the
address last appearing on the

      personnel records of the Employer

       

       

      11.           Amendment;
Waiver.  No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer or officers as may be
specifically designated by the Board of Directors of the Employer to sign on its
behalf.  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.  In addition, notwithstanding anything in this
Agreement to the contrary, the Employer may amend in good faith any terms of
this Agreement, including retroactively, in order to comply with Section 409A of
the Code.

       

      12.           Governing
Law.  The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the United States
where applicable and otherwise by the substantive laws of the Commonwealth of
Pennsylvania.

       

      13.           Nature of
Obligations.  Nothing contained herein shall create or require
the Employer to create a trust of any kind to fund any benefits which may be
payable hereunder, and to the extent that the Executive acquires a right to
receive benefits from the Employer hereunder, such right shall be no greater
than the right of any unsecured general creditor of the
Employer.

       

      14.           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.

       

      15.           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.

       

      16.           Changes in Statutes
or Regulations. If any statutory or regulatory provision referenced
herein is subsequently changed or re-numbered, or is replaced by a separate
provision, then the references in this Agreement to such statutory or regulatory
provision shall be deemed to be a reference to such section as amended,
re-numbered or replaced.

       

      17.           Counterparts.  This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original but all of which together will constitute one and the
same instrument.

       

      18.           Regulatory
Prohibition.  Notwithstanding any other provision of this
Agreement to the contrary, any payments made to the Executive 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 the regulations
promulgated thereunder, including 12 C.F.R. Part 359.  In the event of
the Executive’s termination of employment with the Bank for Cause, all
employment relationships and managerial duties with the Bank shall immediately
cease regardless of whether the Executive is in the employ of the Corporation
following such termination.  Furthermore, following such termination
for Cause, the Executive will not, directly or indirectly, influence or
participate in the affairs or the operations of the Bank.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      19.           Payment of Costs and
Legal Fees and Reinstatement of Benefits.  In the event any
dispute or controversy arising under or in connection with the Executive’s
termination is resolved in favor of the Executive, whether by judgment,
arbitration or settlement, the Executive shall be entitled to the payment of (a)
all legal fees incurred by the Executive in resolving such dispute or
controversy, and (b) any back-pay, including Base Salary, bonuses and any other
cash compensation, fringe benefits and any compensation and benefits due to the
Executive under this Agreement.

       

      20.           Entire
Agreement.  This Agreement embodies the entire agreement
between the Employer and the Executive with respect to the matters agreed to
herein.  All prior agreements between the Employer and the Executive
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.

       

      [signature
page follows]

       

       

       

       

       

       

       

       

       

       

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

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

       

       

      
         

        
          	ATTEST: 	 	PRUDENTIAL SAVINGS
      BANK
	 	 	 	 
	 	 	 	 
	By:
      /s/
      Regina Wilson                        	 	By:  /s/
      Joseph W. Packer, Jr.                    
	Name:  Regina Wilson 	 	       Joseph W. Packer,
      Jr.
	Title:  Vice
    President/Secretary  	 	       Chairman of the
      Board
	 	 	 
	 	 	 
	 	 	 
	 	 	EXECUTIVE
	 	 	 
	 	 	 
	 	 	

                  By: /s/
      Thomas A. Vento                        

                
	 	 	    Thomas A.
Vento

        

         

      

       

       

       

       

       

      
        
          
          

        

        
          10

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