Document:

EXHIBIT 10.2

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

            THIS EMPLOYMENT AGREEMENT was initially made and entered into as of this 28th
day of November, 2000 by and between PennFed Financial Services, Inc. (the "Company") and
Patrick D. McTernan (the "Employee").

            WHEREAS, the Employee serves as the Senior Executive Vice President, General Counsel
and Secretary of the Company and of the Company's wholly-owned subsidiary, Penn Federal
Savings Bank (the "Bank");

            WHEREAS, due to recent changes in Internal Revenue Service guidelines, it is appropriate
to amend this Employment Agreement to conform to current IRS interpretations;

            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 Amended
and Restated Employment Agreement dated November 28, 2004 ("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. § 1817(j) and the Savings and Loan Holding Company Act, 12U.S.C. §1467a, and applicable
regulations thereunder; (2) an event that would be required to be reported in response to Item 5.01
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

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regulations under 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, 2004.

                        (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, General Counsel and Secretary 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, General Counsel and Secretary 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

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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 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
unsatisfactory 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, General
Counsel and Secretary of the Company and as the Senior Executive Vice President, General Counsel
and Secretary 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. 

            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

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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 taxable 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 taxable 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 taxable year
such that the amount to be paid to the Employee in such taxable 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.

            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. 

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                        (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").

                        (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 earned income (within the meaning of § 911(d)(2)(A)
of the Code) 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.   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 the 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).

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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 earned income received by him or to which he is
entitled during the Liquidated Damage Period and the type of health benefits and coverage which
he earns or receives from providing personal services during the Liquidated Damage Period, and
shall provide such documentation of such earned income and such health benefits and coverage as
the Company may request.  In the event of changes to such earned 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.

            		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
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

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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).

                        (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

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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. § 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.

            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

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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.

            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

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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.

            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.

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            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 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/ Claire M. Chadwick

Assistant Secretary	 	/s/ William C. Anderson

By:   William C. Anderson

Its:   Chairman
	 	 	 
	 	 	 
	 	 	Employee
	 	 	 
	 	 	 
	 	 	/s/ Patrick D. McTernan

Patrick D. McTernan

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ENDEXHIBIT 10.3

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

            THIS EMPLOYMENT AGREEMENT was initially made and entered into as of this 28th day of November, 2000 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 Savings Bank (the "Bank");

            WHEREAS, due to recent changes in Internal Revenue Service guidelines, it is appropriate to amend this Employment Agreement
to conform to current IRS interpretations;

            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 Amended and Restated Employment Agreement dated November 28, 2004 ("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. § 1817(j) and the Savings and Loan Holding Company Act, 12U.S.C. §1467a, and applicable regulations thereunder; (2) an event that would be required to be
reported in response to Item 5.01 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

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of securities by an employee benefit plan of the Bank or the Company. In the application of regulations under 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, 2004.

                        (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,

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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 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 unsatisfactory 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.

            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

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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 taxable 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 taxable 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 taxable year such that the amount to be paid to the Employee in such taxable 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.

            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

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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").

                        (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 earned income (within the meaning of § 911(d)(2)(A) of the Code) 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. To the extent the provisions of this
Section 7(b)(1) are applicable and an overpayment has been made to the

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Employee as of the expiration of the 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 earned income received by him or to which he is entitled during the Liquidated Damage Period and the type of health benefits and coverage which he earns or receives from providing
personal services during the Liquidated Damage Period, and shall provide such documentation of such earned income and such health benefits and coverage as the Company may request. In the event of
changes to such earned 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.

                                    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 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

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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).

                        (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).

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                        (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. § 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.

            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.

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            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.

            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.

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                        (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.

            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.

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            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 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/ Patrick D. McTernan
Secretary	 	/s/ William C. Anderson
By:   William C. Anderson
			Its:   Chairman
	 		
	 		
			Employee
	 		
	 		
	 		
			/s/ Jeffrey J. Carfora
Jeffrey J. Carfora

11END

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