Document:

ex10_1.htm

Exhibit 10.1

Quarterly Incentive Plan

PURPOSE

The purpose of this Quarterly Incentive Plan (the “QIP” or “Plan”), effective January 1, 2012, is to motivate executives and other key employees of USEC Inc. (the “Company”) to make extraordinary efforts to achieve short-term target goals that are crucial to the Company.  The Plan provides the Company’s Board and the Chief Executive Officer (the “CEO”) with the flexibility to establish one or more specific performance targets based on critical financial and business performance measures (“Goals”) aimed at achieving the Company’s significant short-term objectives.  The Plan arises under and is subject to the terms of the USEC
Inc. 2009 Equity Incentive Plan, as may be amended and/or restated from time to time (the “Equity Incentive Plan”).  If not otherwise defined herein, capitalized terms within this Plan shall have the same meaning as provided under the Equity Incentive Plan.

OVERVIEW

Awards are earned based on performance during a three-month performance period (“Quarterly Period”) in the form of cash paid after the end of the Quarterly Period, provided the Goals have been attained.

PLAN OPERATION

Eligibility for Participation - The QIP participants will be executives in selected key corporate management positions nominated by the CEO and approved by the Compensation Committee within the first 15 days of the start of each Quarterly Period.  A new employee that is eligible for participation will not be allowed to participate in the QIP for a particular Quarterly Period if that employee joins USEC more than 30 days after the beginning of the performance period (e.g., no later than June 30, 2012 for the performance period June 1, 2012 through September 30, 2012).

Performance Goals – At the beginning of each Quarterly Period, the Compensation Committee shall determine, after consultation with and based on the recommendation of the CEO,  one or more Goals for the Quarterly Period.  The Goals will reflect corporate needs to be accomplished in the Quarterly Period to ensure achievement of the Company’s short-term strategic objectives and to maximize enterprise value.  Each goal will be given a percentage weight, with the sum of goals for each Quarterly Period totaling 100% of the participant’s Target Award (as defined below).  The Goals may vary from one performance
period to another, but they will not vary based on individual performance.

To the extent the Company wishes to satisfy the requirements of the “performance-based” exception to the deduction limit for compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) the individuals eligible to participate and the Goals with respect to a Quarterly Period will be established in writing by the Compensation Committee from the goals approved by shareholders under the Equity Incentive Plan after not more than 25% of the Quarterly Period has elapsed, and the Compensation Committee will certify the satisfaction of the performance measures prior to payment of any Target Award earned.

Notwithstanding the foregoing, for the first calendar quarter of 2012, participants may be designated and Goals may be established after the end of the quarter, but no later than after the expiration of 25% of the second calendar quarter of 2012.

Quarterly Performance Periods - Target Awards (as defined below) attributable to a Goal will be earned, if at all, based on satisfaction of the Goal within a Quarterly Period.  For each Goal that is satisfied, the participant will be credited with the percentage of the Target Award attributable to that Goal in the Quarterly Period in which the Goal is first established (“Grant Date Quarterly Period”).  If a Goal is not satisfied during the Grant Date Quarterly Period, the opportunity to earn the portion of the Target Award attributable to that Goal for that Quarterly Period will remain open for subsequent Quarterly Periods in the
same calendar year.  For avoidance of doubt, the opportunity to satisfy a Goal for which the Grant Date Quarterly Period is the fourth quarter of a year will not remain open for any subsequent Quarterly Period.  The portion of the Target Award attributable to a Goal shall be paid, if at all, following the end of the Quarterly Period in which the Goal is achieved.  If a Goal has not been achieved by the last day of the calendar year, the portion of the Target Award attributable to that Goal will be forfeited.  Notwithstanding the foregoing, while it is contemplated that Goals will be such that they will be achieved or not achieved during a Quarterly Period, following the completion of the calendar year, for any Goals that have not been fully achieved by the last day of the calendar year but for which significant progress has been made, the
Committee in its discretion may provide for positive adjustment to performance and award a partial Target Award payable with respect to any Goal (i.e., from 0% to 100% of the Target Award with respect to any Goal).  In addition, the Compensation Committee may exercise negative discretion to reduce the amount of any Target Award payable with respect to any Goal or any Quarterly Period. A new Quarterly Period will start every calendar quarter.

Target Awards – A participant’s award under the Plan for a Quarterly Period (the “Target Award”) is equal to a specified dollar amount.  The value of the Target Award for a participant in the Plan for each Quarterly Period is a percentage of base salary as in effect on the first day of the Quarterly Period.  The applicable target percentage of base salary varies by level within USEC as follows:

	
Level / Title

	
Value of the Quarterly Target Award

(as a percentage of base salary)

	
President / CEO

	
25%

	
Senior Vice President

	
17.5%

	
Vice President

	
9% - 15%

	
Key Manager

	
7.5% - 9%

The applicable Target Award for any Vice President or other key manager shall be within the range listed above and will be determined by the Compensation Committee on the recommendation of the Chief Executive Officer when the participant is first approved to participate in the Plan.

If, due to special circumstances, an employee of USEC who is not at one of the levels set forth above and who is not subject to Section 16 of the Securities Exchange Act of 1934 becomes eligible to participate in the Plan, the applicable target percentage of base salary for such individual will be determined by the CEO, but will not exceed the maximum target percentage for the Vice President level listed in the table above.

Each Goal for a Quarterly Period will be ascribed a value and the sum of the values of a participant’s Goals for a Quarterly Period will equal the participant’s Target Award.

If an employee becomes eligible for participation in the QIP after the commencement of a Quarterly Period, the employee’s Target Award for his or her first Quarterly Period of participation will be pro-rated by multiplying the value of the quarterly Target Award (from the chart above) that would otherwise be applicable by a fraction (the “Pro-ration Fraction”), the numerator of which is the number of days the employee was a participant employed during the performance period and the denominator of which is the total number of days in the applicable performance period.

Payment of Awards –The portion of a Target Award attributable to a given Goal, if not earlier forfeited, will be paid as soon as practical following the end of the Quarterly Period in which the applicable Goal has been achieved.  Except as otherwise provided herein, the portion of a Target Award attributable to a given Goal will be forfeited if the participant has a termination of employment prior to the date it is actually paid.  Following the completion of each Quarterly Period, the CEO will review the achievement of the Goals during that Quarterly Period and will rate the performance and make a recommendation to the Compensation
Committee as to whether Goals have been attained.  The Compensation Committee will determine which, if any, Goals have been attained.  The Compensation Committee may exercise negative discretion to reduce the amount of any Target Award payable with respect to any Goal or any Quarterly Period.

Form of Payment – Target Awards will be paid only following the Compensation Committee’s determination of which, if any, Goals have been achieved in the prior Quarterly Period.  Target Awards, when earned, will be paid in cash in a lump sum, subject to applicable withholding and subject to Section 19.1 of the Equity Incentive Plan, including any compensation recovery or “clawback” policy the Company may have in effect at the time the Target Award is paid.  Payment will be made as soon as possible after the Compensation Committee’s determination that the Target Award with respect to specified Goals has been earned
for the Quarterly Period, but no later than March 15 of the following calendar year.

Effect of Termination of Service

	
·  

	
Death or Disability.  If a participant’s employment is terminated due to death or Disability prior to payment of a Target Award, the participant (or beneficiary, in the case of death) will be entitled to payment of a pro rated portion of the participant’s outstanding Target Award(s), within 60 days of such termination, without regard to actual performance (i.e., as though the Goals had been attained) as of the last day of the Quarterly Period in which termination occurs, as provided below:

	
o  

	
Grant Date Quarterly Period.  If termination occurs in the Grant Date Quarterly Period, for Goals first established for such Quarterly Period, the amount paid will be the participant’s Target Award for such Quarterly Period, multiplied by the Pro-ration Fraction.

	
o  

	
Other Quarterly Period.  If termination occurs in a year after the end of the Grant Date Quarterly Period, for any Goals not attained in the Grant Date Quarterly Period, the amount paid will be the portion of the participant’s Target Award(s) attributable to a Goal granted in the year multiplied, for each Goal by a fraction (the “Second Pro-ration Fraction”), the numerator of which is the number of days from the beginning of the Grant Date Quarterly Period to the date of termination of employment, and the denominator of which is the number of days from the beginning of the Grant Date Quarterly Period to the last day of the Quarterly
Period in which termination occurs.

	
o  

	
Example.  Assume a participant with a quarterly Target Award of $12,000.  Assume in each Quarterly Period there are three Goals, weighted 30%, 30%, and 40%, respectively.  Assume the 40% Goal for the first Quarterly Period of the year is not achieved in the Grant Date Quarterly Period and carries forward to the second and third Quarterly Periods.  Assume all the Goals for the second Quarterly Period are attained in the second Quarterly Period.  Assume the participant terminates employment on the 30th day of the third Quarterly
Period.  Assume, for convenience, that each Quarterly Period consists of 90 days.  The amount of the Target Awards payable would be as follows:

	
 

Amounts for outstanding Goals

	
Amount of Target Award payable on death or disability

	
First Quarterly Period: $4,800

	
($4,800*210/270) = $3,733

	
Second Quarterly Period: $12,000

	
(previously paid) $0

	
Third Quarterly Period: $12,000

	
($12,000*30/90) = $4,000

	
·  

	
Termination without Cause.  If a participant’s employment is terminated due to involuntary separation from service by the Company other than for Cause prior to the payment of a Target Award, then, except as provided below in connection with a Change in Control, the participant will be entitled to payment of a pro-rated portion of the participant’s outstanding Target Award(s) based on actual performance through the end of the Quarterly Period in which the termination of employment occurs based on the attainment of Goals for the Quarterly Period in which such termination occurs, and, if applicable, the attainment during such Quarterly Period of Goals
established in preceding Quarterly Periods in the year of termination, as follows:

	
o  

	
Grant Date Quarterly Period.  If termination occurs in the Grant Date Quarterly Period, then to the extent the Goals for the Quarterly Period in which termination occurred have been attained, the amount paid will be the participant’s Target Award for such Quarterly Period multiplied by the Pro-ration Fraction.  To the extent the Goals for the Grant Date Quarterly Period have not been attained by the end of the Grant Date Quarterly Period, the Target Award for such period will be forfeited.

	
o  

	
Other Quarterly Period.  If the termination occurs after the Grant Date Quarterly Period with respect to certain Goals, then, to the extent such Goals are attained in the Quarterly Period in which the termination occurs, the amount paid will be the participant’s Target Award for the Quarterly Period in which such Goals were established, multiplied by the Second Pro-ration Fraction.  For any Goals that have not been attained by the end of the Quarterly Period in which such termination occurs, the Target Award attributable to such Goals will be forfeited.

	
·  

	
Other Termination of Employment.  If the participant incurs a termination of employment for any other reason (not set forth above), including a voluntary termination of employment or retirement after the end of a Quarterly Period but prior to a Target Award being paid for such Quarterly Period,  all unpaid Target Awards will be forfeited.

	
·  

	
Change in Control.  Notwithstanding anything herein to the contrary, if a participant’s employment is involuntarily terminated by the Company other than for Cause or is terminated by the participant for Good Reason (as defined below), in either case coincident with or following a Change in Control under circumstances entitling the participant to benefits or payments under such participant’s change in control agreement with the Company that would not otherwise be payable absent a Change in Control (or, in the case of a participant who is not a party to a change in control agreement with the Company, upon a termination of employment by the Company other
than for Cause or by the participant for Good Reason coincident with or within one year following a Change in Control), the Compensation Committee will immediately vest and pay out all outstanding awards for the Quarterly Period in which the termination of employment occurs.  Such awards shall be calculated assuming achievement of all applicable Goals. For purposes of this QIP, “Good Reason” has the same meaning defined for that term in the participant’s change of control agreement with the Company, or if the participant does not have a change of control agreement with the Company, “Good Reason” shall mean, without the participant’s express written consent, any of the following, unless such act or failure to act is corrected prior to the date of termination specified in the notice of termination given in respect thereof: (1) the
participant is removed from the participant’s position (with the Company or a material subsidiary) as in effect immediately prior to the Change in Control for any reason other than (A) by reason of death, Disability or Retirement or (B) for Cause; provided that such action results in a material diminution of participant’s authority, duties or responsibilities with the Company and its subsidiaries, taken as a whole; (2) the participant is assigned any duties inconsistent in a material respect with the participant’s position (including status, offices, titles and reporting relationships with the Company or any material subsidiary), authority, duties or responsibilities as in effect immediately prior to the Change in Control (or thereafter if increased) if such assignment results in a material diminution of such participant’s authority, duties or responsibilities
with the Company and its subsidiaries, taken as a whole; (3) the Company materially breaches any agreement under which the participant provides services; (4) the participant’s annual base salary, annual bonus opportunity, or quarterly bonus opportunity (determined on an aggregate basis for the Company and its subsidiaries) as in effect immediately prior to the Change in Control (or thereafter if higher) is materially reduced (except for across-the-board reductions similarly affecting all USEC employees participating in the Equity Incentive Plan, or any successor plan, and all similarly situated employees of any person in control of the Company); provided such reduction is a material diminution of participant’s base compensation or a material breach of any agreement under which the participant provides services; (5) the failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this QIP; (6) any relocation of the participant’s principal place of business from its location as of the date immediately preceding a Change in Control, by more than fifty (50) miles; or (7) any purported termination of the participant’s employment that is not effected pursuant to at least 10 day’s advance written notice of termination indicating the specific reason for termination and setting forth in reasonable detail the facts and circumstances claimed to provide a basis for termination, which termination for purposes of this QIP shall be ineffective.  Notwithstanding the foregoing, a termination shall not be treated as a termination for Good Reason unless the participant shall have delivered a written notice of termination stating that the participant intends to terminate employment for Good
Reason within ninety (90) days, and such termination must occur within two years, of the participant’s having actual knowledge of the initial occurrence of one or more of such events, provided, in each such event, the Company fails to cure within thirty (30) days of receipt of such notice of termination. For purposes of this QIP, any good faith determination of “Good Reason” or good faith determination of the Company’s failure to cure within the thirty (30) day period made by the participant shall be conclusive.

Administrative Matters

	
·  

	
Amendment and Termination.  Notwithstanding anything herein to the contrary, the Compensation Committee may amend, alter, suspend, discontinue or terminate the Plan or any portion thereof at any time, subject to the terms of the Equity Incentive Plan, and the Compensation Committee may amend or adjust awards under the Plan as provided in Section 16 of the Equity Incentive Plan.

	
·  

	
409A Matters.  Awards payable under this plan are intended not to be deferred compensation within the meaning of Section 409A of the Code, and the QIP will be administered and interpreted to be consistent with that intention.  Awards that are earned will in no event be paid more than 2-1/2 months after the end of the calendar year in which they are earned.

	
·  

	
Awards under QIP Not Taken into Account for Other Benefits.  Amounts payable to any participant under the Plan shall not be taken into account in computing the amount of compensation of the person for purposes of determining any pension, retirement, death or other benefit under (a) any pension, retirement, profit-sharing, bonus, insurance or other employee benefit plan of the Company, except as such other plan shall otherwise expressly provide, or (b) any agreement between the Company and the person, except as such agreement shall otherwise expressly provide.ex101.htm

 

Exhibit 10.1

PRUDENTIAL BANCORP, INC. OF PENNSYLVANIA

PRUDENTIAL SAVINGS BANK

PRUDENTIAL MUTUAL HOLDING COMPANY

PSB DELAWARE, INC.

TRANSITION AGREEMENT

 

This Transition Agreement (the “Agreement”) by and among Prudential Bancorp, Inc. of Pennsylvania (the “Company”), Prudential Savings Bank (the “Bank”), Prudential Mutual Holding Company (the “MHC”), PSB Delaware, Inc. (“PSB”) and collectively with the Company, the Bank and the MHC, “Prudential”) and Joseph W. Packer, Jr. is entered into as of April 18, 2012.

 

WHEREAS, Mr. Packer currently serves as a member of the Board and as Chairman of the Board of Directors of each of the Company, the Bank and the MHC;

 

WHEREAS, the Bank has adopted a Board and Management Succession Plan addressing not only senior executive management succession planning but succession planning as well with respect to the membership of the Board of Directors;

 

WHEREAS, Mr. Packer and the Board of Directors of each of the Company, the Bank and the MHC believe it is the best interests of the MHC, the Company and the Bank to provide for a smooth transition of  the Chairmanship of the Boards as part of Prudential’s Board succession planning process;

 

WHEREAS, Mr. Packer previously entered into as of November 19, 2008 an Amended and Restated Retirement Agreement (the “Retirement Agreement”) providing certain specified retirement benefits upon his retirement as President and Chief Executive Officer of the Bank;

 

WHEREAS, Mr. Packer also has previously entered into a Split-Dollar Agreement with the Bank dated June 22, 1994, as amended November 19, 2008 and June 15, 2011 (the “Split-Dollar Agreement”), providing for certain benefits with respect to split-dollar insurance maintained by the Bank for his benefit;

 

WHEREAS, Mr. Packer, in addition, previously entered into two Amended and Restated Split-Dollar Collateral Assignments, each dated as of November 19, 2008 (the “Collateral Assignments”), addressing the assignment of certain interests of Mr. Packer in split-dollar insurance policies to the Bank (the Retirement Agreement, the Split-Dollar Agreement and the Collateral Assignments are collectively referred to hereinafter as the “Prior Agreements”);

 

WHEREAS, Mr. Packer has provided valuable services to the Bank for more than sixty one (61) years and to the Company and the MHC since their formation in 2004;

 

WHEREAS, Mr. Packer desires to retire from his position as a member of the Boards of Directors of the Company, the Bank and the MHC and as Chairman of the Board of Directors of each of the Company, the Bank and the MHC, effective as of December 31, 2012, and to provide services under the terms set forth herein to the Company, the Bank and PSB on a part-time basis; and

 

  

  

  

 

WHEREAS, Prudential desires to have Mr. Packer undertake, and Mr. Packer is willing to undertake, certain consulting obligations on the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the mutual covenants set forth herein and other good and valuable consideration, the parties hereto agree as follows:

 

	
1.  

	
Effective Date.  The “Effective Date” of the Agreement is March 21, 2012.

 

	
2.  

	
Service on the Boards; Chairman Emeritus; Service to the MHC.

 

     (a)        Mr. Packer will continue to serve as a member of and as Chairman of the Board of Directors of each of the Company, the Bank and the MHC from the Effective Date through December 31, 2012 (“Continued Service Period”).  Mr. Packer shall be entitled during the Continued Service Period to receive the same level of compensation for his service as a director and as Chairman of the Board of the Boards of Directors of Prudential as in effect as of the Effective Date.  Effective December 31, 2012, Mr. Packer shall resign from the Boards of Directors of each of the Company, the Bank and the MHC and from all positions held thereon including the Chairmanship thereof.  In addition, effective December 31, 2012, Mr. Packer shall cease providing investment advisory services to the MHC.

 

     (b)        Effective January 1, 2013, Mr. Packer shall be appointed as Chairman Emeritus of both the Company and the Bank and will continue to serve in such capacity, until December 31, 2015, subject to the terms of this Agreement.

 

3.        Consulting Period.  The Company and the Bank hereby agree to engage Mr. Packer, and Mr. Packer hereby agrees to provide services to the Company, the Bank and PSB, the Bank’s wholly owned subsidiary, subject to the terms and conditions of this Agreement, for the period commencing on the January 1, 2013 and ending on December 31, 2015 (the “Consulting Period”).  Notwithstanding anything to the contrary herein, the parties hereto can extend the Consulting Period beyond December 31, 2015 upon the determination of mutually acceptable terms.

 

4.        Consulting Services.

 

     (a)        Duties.  During the Consulting Period, Mr. Packer shall advise the Boards of Directors of the Company and the Bank and shall confer with and report to the Chairman of the Board of the Company and the Bank with respect to the matters that are the subject of this Agreement.  During the Consulting Period, Mr. Packer shall (i) provide his personal advice and counsel to the Company and the Bank regarding their respective operations, customer relationships, growth and expansion opportunities; (ii) serve as a liaison to the communities served by the Company, the Bank and the MHC; (iii) assist Thomas A. Vento in his transition to Chairman of the Boards of the Company, the Bank and the MHC; (iv) attend industry functions as a representative of the Company and the Bank; (v) provide investment advice to PSB; and (vi) provide such other consultative services that may arise in connection with the business and operations of the Company and its subsidiaries in the Commonwealth of Pennsylvania and in the States of Delaware and New Jersey as may be reasonably requested by the Chairman of the Board of the Company and/or the Bank or his designee from time to time (collectively, the “Consulting Services”).  Except as set forth below, the Consulting Services will include, without limitation, monthly meetings or teleconferences between Mr. Packer and the Chairman of the Board of the Company and/or the Bank or with respect to the Consulting Services being rendered to PSB, meetings with the Board of Directors of PSB or the Investment Committee thereof; efforts by Mr. Packer to enhance the business activities of the Company and its subsidiaries in the Commonwealth of Pennsylvania or the States of Delaware or New Jersey, including without limitation meeting with existing and potential customers of the Company and its subsidiaries located in each such jurisdiction; attendance at certain public functions in the Commonwealth of Pennsylvania on behalf of the Company and its subsidiaries; attendance at meetings of the Boards of Directors of the Company and the Bank to report on the business activities of the Company and its subsidiaries in the Commonwealth of Pennsylvania or the States of Delaware or New Jersey and attendance at certain functions of the Company and its subsidiaries. Consulting Services may be provided in person, telephonically, electronically or by correspondence to the extent appropriate under the circumstances.

 

  

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(b)         Geographic Location.  Mr. Packer shall provide the Consulting Services in the Commonwealth of Pennsylvania, including without limitation the market areas of the Company and the Bank, except to the extent such services rendered to PSB may need to be rendered in the State of Delaware.

 

5.           Compensation.

 

(a)          Monthly Payments.  In consideration of the obligations and commitments of Mr. Packer under this Agreement, including but not limited to Sections 3 and 9 hereof, the Company and/or the Bank agrees to pay to Mr. Packer an amount equal to $4,167 per month on the first business day of each month during the Consulting Period, commencing January 1, 2013 through and including December 1, 2015 (the “Monthly Fee”). In addition, PSB agrees to pay Mr. Packer during the Consulting Period $2,083 per month on a basis consistent with the Monthly Fee for his investment advisory services provided thereto (“PSB Fee” and collectively with the Monthly Fee, the “Consulting Fees”).  During the Consulting Period, Mr. Packer shall be treated as an independent contractor and shall not be deemed to be an employee of the Company or any affiliate or subsidiary of the Company.

 

     (b)          Prior Agreements.  The Prior Agreements shall remain in full force and effect and Mr. Packer’s rights and privileges thereunder shall not be affected by or be subject to the provisions of this Agreement.

 

     (c)          Existing Stock Options and Restricted Stock Awards; New Plans.  The 16,962 vested stock options held by Mr. Packer as of the Effective Date of this Agreement to purchase shares of common stock of the Company shall remain outstanding and exercisable in accordance with their terms.  The options covering 11,306 shares of common stock of the Company and the restricted stock awards covering 4,522 shares which remain unvested as of the Effective Date will continue to vest in accordance with the terms of their grant so long as Mr. Packer continues to serve as a director emeritus of the Company and/or the Bank.  To the extent that the Company adopts new stock benefit plans during the Consulting Period pursuant to the terms of which directors emeritus are eligible to participate, Mr. Packer shall be eligible to participate in such new plans as the Chairman Emeritus.

 

  

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(d)           Expenses.  The Company and/or the Bank shall reimburse Mr. Packer or otherwise provide for or pay for all reasonable expenses incurred by Mr. Packer at the request of the Company, the Bank or PSB, subject to such reasonable documentation as may be requested by the Company, the Bank or PSB.  If such expenses are paid in the first instance by Mr. Packer, the Company and/or the Bank (or as applicable, PSB) shall reimburse Mr. Packer therefor upon receipt of such reasonable documentation as may be requested by the Company.  Such reimbursements or payments shall be made promptly by the Company, the Bank or PSB, as applicable, and, in any event, no later than March 15th of the year immediately following the year in which such expenses were incurred.

 

(e)           Proration.  Mr. Packer’s Monthly Fee, benefits and expenses shall be paid by the Company and the Bank in the same proportion as the time and services actually expended by Mr. Packer on behalf of the Company and the Bank.  The PSB Fee and related expenses shall be paid by PSB.

 

6.           Termination of Consulting Services.

 

(a)          Death or Disability.  Mr. Packer’s services shall terminate automatically upon his death during the Consulting Period.  If Mr. Packer becomes disabled during the Consulting Period (pursuant to the definition of Disability set forth below), the Company and/or the Bank may give to Mr. Packer written notice in accordance with Section 12 of this Agreement of its intention to terminate Mr. Packer’s services.  In such event, Mr. Packer’s services with the Company, the Bank and PSB shall terminate effective on the 60th day after receipt of such notice by Mr. Packer (the “Disability Effective Date”), provided that, within the sixty (60) days after such receipt, Mr. Packer shall not have returned to perform his duties.  For purposes of this Agreement, “Disability” shall mean Mr. Packer 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, as determined by a physician selected by the Company or its insurers and reasonably acceptable to Mr. Packer or Mr. Packer’s legal representative.

 

(b)         Cause.  The Company and the Bank may terminate Mr. Packer’s services during the Consulting Period for Cause.  For purposes of this Agreement, “Cause” shall mean:

 

(i)           the continued failure of Mr. Packer to perform substantially his duties with the Company or one of its affiliates (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to Mr. Packer by the Board of Directors of the Company and/or the Bank which specifically identifies the manner in which the Board of Directors believes that Mr. Packer has not substantially performed his duties and after Mr. Packer has been given a 15 day period to cure such failure; or

 

 

  

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(ii)           the willful engagement by Mr. Packer in illegal conduct or gross misconduct which violates any written code of conduct of the Company and/or the Bank or which is otherwise materially and demonstrably injurious to the Company and/or the Bank; or

 

(iii)           conviction of a felony or a guilty or nolo contendere plea by Mr. Packer with respect thereto.

 

For purposes of this provision, no act or failure to act, on the part of Mr. Packer, shall be considered “willful” unless it is done, or omitted to be done, by him in bad faith or without reasonable belief that his action or omission was in the best interests of the Company and/or the Bank.  Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board of Directors of either the Company or the Bank or upon the instructions of the Chairman of the Board or a senior officer of the Company and/or the Bank or based upon the advice of counsel for the Company and/or the Bank shall be conclusively presumed to be done, or omitted to be done, by Mr. Packer in good faith and in the best interests of the Company and the Bank.  The cessation of the services of Mr. Packer for conduct described in subparagraph (i) or (ii) above shall not be deemed to be for Cause unless and until there shall have been delivered to him a copy of a resolution duly adopted by the affirmative vote of a majority of the entire membership of the Board of Directors of the Company and/or the Bank at a meeting of the Board of Directors called and held for such purpose (after not less than ten (10) days advance notice is provided to Mr. Packer and he is given an opportunity, together with counsel chosen by him, to be heard before the Board of Directors), finding that, in the good faith opinion of the Board, Mr. Packer is guilty of the conduct described in subparagraph (i) or (ii) above, and specifying the particulars thereof in detail.  The Company and/or the Bank may suspend Mr. Packer’s authority (with a continuation of the Consulting Fees during such period of suspension) after the provision of a notice of intention to terminate his services for conduct described in subparagraph (i) or (ii) above and prior to the time he is given an opportunity to meet with the Board of Directors, and any such suspension shall not constitute “Good Reason” as defined in Section 5(c) below.

 

(c)           Good Reason.  Mr. Packer’s services may be terminated by him for Good Reason.  For purposes of this Agreement, “Good Reason” shall mean, in the absence of a written consent of Mr. Packer, any material breach of this Agreement by the Company and/or the Bank, including without limitation any of the following: (A) a material reduction in the Monthly Fee or PSB Fee payable to Mr. Packer; or (B) a material diminution in the authority, duties or responsibilities of the individual to whom Mr. Packer is required to report; provided, however, that prior to any termination of service for Good Reason, Mr. Packer must first provide written notice to the Company and the Bank within ninety (90) days of the initial existence of the condition, describing the existence of such condition, and the Company and the Bank shall thereafter have the right to remedy the condition within thirty (30) days of the date the Company and the Bank received the written notice from Mr. Packer.  If the Company and the Bank remedy 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 Company and the Bank do not remedy the condition within such thirty (30) day cure period, then Mr. Packer may deliver a Notice of Termination for Good Reason at any time within sixty (60) days following the expiration of such cure period.

 

 

 

 

  

5

  

(d)           Notice of Termination.  Any termination by the Company and/or the Bank for Cause, or by Mr. Packer for Good Reason, shall be communicated by a written Notice of Termination to the other party hereto given in accordance with Section 12 of this Agreement.  For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Mr. Packer’s services under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty (30) days after the giving of such notice).  The failure by Mr. Packer or the Company and/or the Bank to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of Mr. Packer or the Company and/or the Bank, respectively, hereunder or preclude him or the Company and/or the Bank, respectively, from asserting such fact or circumstance in enforcing his or the Company’s or the Bank’s rights hereunder.

 

(e)           Date of Termination.  “Date of Termination” means (i) if Mr. Packer’s services are terminated by the Company and/or the Bank for Cause, or by Mr. Packer for Good Reason, the date on which the Notice of Termination is given, or any later date specified therein within thirty (30) days of delivery of such notice, as the case may be, or (ii) if Mr. Packer’s services are terminated for any other reason, the Date of Termination shall be the date specified in such Notice of Termination.

 

7.           Obligations of the Company and the Bank upon Termination of Consulting Services.  If Mr. Packer’s services are terminated for any reason during the Consulting Period, the Company and/or the Bank and/or PSB, to the extent applicable, shall pay him in a lump sum in cash within thirty (30) days after the Date of Termination any accrued but unpaid Consulting Fees earned by Mr. Packer through the Date of Termination.

 

8.           Full Settlement.  The obligations of the Company, the Bank and/or PSB to make the payments provided for in this Agreement and otherwise to perform its respective obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company and/or the Bank may have against Mr. Packer or others.  In no event shall Mr. Packer be obligated to seek other services or take any other action by way of mitigation of the amounts payable to him under any of the provisions of this Agreement, and such amounts shall not be reduced whether or not he obtains other consulting services.

 

9.           Confidentiality.

 

(a)           Except as required by law or regulation (including without limitation in connection with any judicial or administrative process or proceeding), Mr. Packer shall keep secret and confidential and shall not disclose to any third party (other than the MHC, the Company or any of its direct or indirect subsidiaries or any persons employed or engaged by such entities) in any fashion or for any purpose whatsoever any information regarding the MHC, the Company or any of its direct or indirect subsidiaries which is not available to the general public to which Mr. Packer had access at any time during the course of Mr. Packer’s service to the MHC, the Company or any of its subsidiaries, including, without limitation, any such information relating to:  business or operations; plans, strategies, prospects or objectives; products, technology, processes or specifications; research and development operations or plans; customers and customer lists; distribution, sales, service, support and marketing practices and operations; financial condition, results of operations and prospects; operational strengths and weaknesses; and personnel and compensation policies and procedures.

 

 

 

  

6

  

(b)           Mr. Packer agrees that damages at law will be an insufficient remedy to the Company, the Bank and the MHC in the event he violates any of the provisions of paragraph (a) of this Section 9, and that the Company, the Bank and/or the MHC may apply for and, upon the requisite showing, have injunctive relief in any court of competent jurisdiction to restrain the breach or threatened or attempted breach of or otherwise to specifically enforce any of the covenants contained in paragraph (a) of this Section 9.  Mr. Packer hereby consents to any injunction (temporary or otherwise) which may be issued against him and to any other court order which may be issued against him from violating, or directing Mr. Packer to comply with, any of the covenants in paragraph (a) of this Section 9.  Mr. Packer also agrees that such remedies shall be in addition to any and all remedies, including damages, available to the Company, the Bank and/or the MHC against him for such breaches or threatened or attempted breaches.

 

(c)           Notwithstanding anything to the contrary herein, the violation of the terms and conditions of paragraph (a) of this Section 9 by Mr. Packer will not affect his rights and privileges under the Prior Agreements.

 

10.          Representations and Warranties.  Each party hereto represents and warrants to each other that they have carefully read this Agreement and consulted with respect thereto, to the extent deemed appropriate, with their respective counsel and that each of them fully understands the content of this Agreement and its legal effect.  Each party hereto also represents and warrants that this Agreement is a legal, valid and binding obligation of such party which is enforceable against it in accordance with its terms.

 

11.          Successors and Assigns.  This Agreement will inure to the benefit of and be binding upon Mr. Packer and his assigns and upon the Company, the Bank and the MHC, including any successor to the Company, the Bank or the MHC by merger or consolidation or any other change in form or any other person or firm or corporation to which all or substantially all of the assets and business of the Company, the Bank or the MHC may be sold or otherwise transferred.  Any successor to the Company, the Bank or the MHC by merger, consolidation or other change in form shall expressly in writing assume all obligations of the Company, the Bank and the MHC hereunder as fully as if it had been originally made a party hereto, and this Agreement shall continue in effect following any change in control of the Company and/or the Bank and/or the MHC.  This Agreement may not be assigned by any party hereto without the written consent of the other parties hereto.

 

12.          Notices.  Any communication to a party required or permitted under this Agreement, including any notice, direction, designation, consent, instruction, objection or waiver, shall be in writing and shall be deemed to have been given at such time as it is delivered personally, or five days after mailing if mailed, postage prepaid, by registered or certified mail, return receipt requested, addressed to such party at the address listed below or at such other address as one such party may by written notice specify to the other party or parties, as applicable:

 

 

 

  

7

  

If to Mr. Packer:

 

Joseph W. Packer, Jr.

At the address last appearing on the

personnel records of the Bank

 

If to the Company, the Bank and the MHC:

 

Prudential Bancorp, Inc. of Pennsylvania

Prudential Savings Bank

Prudential Mutual Holding Company

1834 Oregon Avenue

Philadelphia, Pennsylvania  19145

Attention: Chairman of the Board

 

13.          Withholding.  The Company, the Bank and/or PSB may withhold from any amounts payable under this Agreement such federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

 

14.          Entire Agreement; Severability.

 

(a)           This Agreement incorporates the entire understanding between the parties relating to the subject matter hereof, recites the sole consideration for the promises exchanged and supersedes any prior agreements between the Company, the Bank and/or the MHC and Mr. Packer with respect to the subject matter hereof.  In reaching this Agreement, no party has relied upon any representation or promise except those set forth herein.

 

(b)           Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction.  If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.  In all such cases, the parties shall use their reasonable best efforts to substitute a valid, legal and enforceable provision which, insofar as practicable, implements the original purposes and intents of this Agreement.

 

 

 

 

 

 

 

 

 

  

8

  

15.           Amendment; Waiver.

 

(a)            This Agreement may not be amended, supplemented or modified except by an instrument in writing signed by each party hereto; provided, however, that notwithstanding anything in this Agreement to the contrary, the Company, the Bank and the MHC may amend in good faith any terms of this Agreement, including retroactively, in order to comply with Section 409A of the Internal Revenue Code of 1986, as amended.

 

(b)            Failure to insist upon strict compliance with any of the terms, covenants or conditions hereof shall not be deemed a waiver of such term, covenant or condition.  A waiver of any provision of this Agreement must be made in writing, designated as a waiver and signed by the party against whom its enforcement is sought.  Any waiver or relinquishment of any right or power hereunder at any one or more times shall not be deemed a waiver or relinquishment of such right or power at any other time or times.

 

16.           Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same Agreement.

 

17.           Governing Law.  This Agreement shall be governed by and construed and enforced in accordance with the laws of the Commonwealth of Pennsylvania applicable to agreements made and entirely to be performed within such jurisdiction.

 

18.           Headings.  The headings of sections in this Agreement are for convenience of reference only and are not intended to qualify the meaning of any section.  Any reference to a section number shall refer to a section of this Agreement, unless otherwise stated.

 

19.           Regulatory Provisions.  Notwithstanding anything to the contrary contained in this Agreement, any payments to Mr. Packer by the Company, the Bank and/or the MHC, whether pursuant to this Agreement or otherwise, are subject to and conditioned upon their compliance with, to the extent applicable, Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and the regulations promulgated thereunder in 12 C.F.R. Part 359.

 

 

 

[The next page is the signature page.]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

9

  

 

IN WITNESS WHEREOF, Mr. Packer has hereunto set his hand and the Company, the Bank, the MHC and PSB have caused this Agreement to be executed by their duly authorized officers, all as of the day and year first written above.

 

 

	
ATTEST:

	  	  
	  	  	  
	
By:

	
/s/ A.J. Fanelli

	  	
/s/ Joseph W. Packer, Jr.

	
Name:   A.J. Fanelli

	  	
Name: Joseph W. Packer, Jr.

	
Title:      Director

	  	  

 

	  	  	
PRUDENTIAL BANCORP, INC. OF

  PENNSYLVANIA

	  	  	  
	  	  	
By:

	
/s/ Thomas A. Vento

	  	  	
Name:

	
Thomas A. Vento

	  	  	
Title:

	
President and Chief Executive

  Officer

 

 

	  	  	
PRUDENTIAL SAVINGS BANK

	  	  	  
	  	  	
By:

	
/s/ Thomas A. Vento

	  	  	
Name:

	
Thomas A. Vento

	  	  	
Title:

	
President and Chief Executive

  Officer

 

 

	  	  	
PRUDENTIAL MUTUAL HOLDING 

  COMPANY

	  	  	  
	  	  	
By:

	
/s/ Thomas A. Vento

	  	  	
Name:

	
Thomas A. Vento

	  	  	
Title:

	
President and Chief Executive

  Officer

 

 

	  	  	
PSB DELAWARE, INC.

	  	  	  
	  	  	
By:

	
/s/ Thomas A. Vento

	  	  	
Name:

	
Thomas A. Vento

	  	  	
Title:

	
President 

 

 

 

 

10

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