PENN FEDERAL SAVINGS BANK
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
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PENN FEDERAL SAVINGS BANK
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
EFFECTIVE MARCH 1, 2003
Purpose
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The purpose of the Plan is to provide supplemental retirement benefits to a
select group of employees who contribute materially to the continued growth,
development and future business success of Penn Federal Savings Bank and its
Affiliates. The Plan shall be unfunded for tax purposes and for purposes of
Title I of ERISA.
ARTICLE I
Definitions
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For purposes of the Plan, unless otherwise clearly apparent from the
context, the following phrases or terms shall have the following indicated
meanings:
"Affiliates" shall mean any entity that, directly or indirectly,
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through one or more intermediaries, controls, is controlled by, or is
under common control with the Company.
"Annual Benefit" shall mean with respect to any Participant, an annual
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benefit equal to the percentage of the Participant's Final Average
Compensation set forth in a Participant's Plan Agreement.
Notwithstanding the foregoing, where the Plan Agreement expresses the
Annual Benefit as a unit benefit, then the Annual Benefit shall be
equal to the percent of the Participant's Final Average Compensation
set forth in the Participant's Plan Agreement times the number of the
Participant's Years of Credited Service set forth in a Participant's
Plan Agreement, calculated through the last day of the month in which
the Participant experiences a Termination of Employment. A
Participant's Annual Benefit shall not exceed any maximum Annual
Benefit set forth in his Plan Agreement, nor be less than any minimum
Annual Benefit set forth in his Plan Agreement.
"Beneficiary" shall mean one or more persons, estates or other
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entities, designated in accordance with Article 9, that are entitled
to receive benefits under the Plan upon the death of a Participant.
"Beneficiary Designation Form" shall mean the form established from
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time to time by the Committee that a Participant completes, signs and
returns to the Committee to designate one or more Beneficiaries.
"Board" shall mean the board of directors of the Company.
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"Change in Control" shall have the same meaning as set forth in
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Participant's employment contract as currently in effect. If the
Participant does not have an employment contract, or the employment
contract does not include a definition of Change of Control, then the
term Change in Control shall have the same meaning as under Section
280G of the Code and the regulations thereunder.
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"Claimant" shall have the meaning set forth in Section 13.1.
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"Code" shall mean the Internal Revenue Code 1986, as it may be amended
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from time to time.
"Committee" shall mean the committee described in Article12.
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"Company" shall mean Penn Federal Savings Bank.
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"Compensation" shall mean the annual cash compensation relating to
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services performed by a Participant for the Company and its Affiliates
during any calendar year, whether or not paid in such calendar year or
included on the Federal Income Tax Form W-2 for such calendar year,
excluding bonuses of any type or nature, fringe benefits, stock
options, other stock based compensation, relocation expenses,
non-monetary awards, and automobile and other allowances paid to a
Participant for employment services rendered (whether or not such
allowances are included in the Participant's gross income).
Compensation shall be calculated before reduction for compensation
voluntarily deferred or contributed by the Participant pursuant to all
qualified or non-qualified plans of the Company and its Affiliates and
shall be calculated to include amounts not otherwise included in the
Participant's gross income; provided, however, that all such amounts
will be included in compensation only to the extent that, had there
been no such plan, the amount would have been payable in cash to the
Participant.
"Early Retirement Date" shall mean the later of (i) the date that the
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Participant elects in his Plan Agreement to have his Monthly Benefit
commence under this Plan, which date is prior to the Participant's
Normal Retirement Date and no earlier than the date the Participant
will attain age 55, and (ii) the date of the Participant's Termination
of Employment.
"Early Retirement Monthly Benefit" shall mean a monthly amount equal
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to the Participant's Monthly Benefit at his Normal Retirement Date,
reduced by .16666% (or the appropriate fraction thereof) for each
month or portion thereof by which the Participant's Early Retirement
Date precedes his Normal Retirement Date (2 percent annually). By way
of illustration, if a Participant elects to receive his Plan benefit
at age 55 rather than age 65, and his Monthly Benefit at his Normal
Retirement Date is 5.83 percent of Compensation (70 percent annually),
then his Early Retirement Monthly Benefit will be 4.1666 percent of
Compensation (50 percent annually) ((70% - (2% times 10)/12).
"Employee" shall mean a person who is classified as an employee of the
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Company or its Affiliates.
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"Equivalent Actuarial Value" shall mean, unless otherwise specified in
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the Plan Agreement, a benefit of equivalent value to another form of
benefit, computed on the basis of an interest rate factor of 7 percent
per annum. Notwithstanding the foregoing, the Equivalent Actuarial
Value of any payment made on account of a Change in Control shall be
determined by using the discount rate under Proposed Treasury
Regulation Section 1.280G-1, Q&A 32, or the successor regulation
thereto on the date of the payment (i.e., as of the effective date of
the Plan, 120 percent of the applicable Federal rate as determined
under Section 1274(d) and the regulations thereunder, compounded
semiannually). For purposes of Section 3.2 (regarding death benefits),
Equivalent Actuarial Value shall be determined using the applicable
long-term Federal rate under Section 1274(d) and the regulations
thereunder, compounded semiannually, as in effect on the date of the
Participant's death.
"ERISA" shall mean the Employee Retirement Income Security Act of
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1974, as it may be amended from time to time.
"Final Average Compensation" shall mean the amount determined by
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dividing by two the Participant's aggregate Compensation during the
two Plan Years (whether or not consecutive) in the five Plan Year
period immediately prior to his Termination of Employment (or if
Termination of Employment occurs during the month of December then
including the Plan Year in which Termination of Employment occurs)
that results in the largest total.
"Holding Company shall mean PennFed Financial Services, Inc.
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"Monthly Benefit" shall mean one twelfth (1/12) of the Participant's
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Annual Benefit.
"Normal Retirement Date" shall mean the later of (i) the date of the
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Participant's Termination of Employment or (ii) the Participant's
attainment of age sixty-five (65).
"Participant" shall mean any Employee (i) who is selected to
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participate in the Plan, (ii) who signs a Plan Agreement, and (iii)
whose signed Plan Agreement is accepted by the Committee. A spouse or
former spouse of a Participant shall not be treated as a Participant
in the Plan or have an Annual Benefit under the Plan, even if he or
she has an interest in the Participant's benefits under the Plan as a
result of applicable law or property settlements resulting from legal
separation or divorce.
"Payout Period" shall mean the number of consecutive months set forth
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as the Payout Period in a Participant's Plan Agreement, commencing on
the first day of the calendar month next following the Participant's
Normal Retirement Date, except as otherwise provided in Section
3.2(a). Notwithstanding the foregoing, the Payout Period for Plan
benefits commencing on an Early Retirement Date shall be extended by
one month for each full month by which the Participant's Early
Retirement Date precedes his Normal Retirement Date. To illustrate, if
a Participant with a Payout Period of 180 months on his Normal
Retirement Date elects an Early Retirement Date of age 62, then the
Payout Period will be 216 months (180, plus 1 times 36 months).
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"Plan" shall mean this Supplemental Executive Retirement Plan, which
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shall be evidenced by this instrument and by each Plan Agreement, as
they may be amended from time to time.
"Plan Agreement" shall mean a written agreement, as may be amended
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from time to time, which is entered into by and between the Company
and a Participant. Should there be more than one Plan Agreement, the
Plan Agreement bearing the latest date of acceptance by the Company
shall supersede all previous Plan Agreements in their entirety and
shall govern such entitlement. The terms of any Plan Agreement may be
different for any Participant, and any Plan Agreement may limit the
benefits otherwise provided under the Plan.
"Plan Year" shall have the same meaning as the fiscal year of the
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Company.
"Termination for Cause" or "Terminated for Cause" shall mean the
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involuntary termination of service of a Participant on account of
dishonesty, incompetence, willful misconduct, breach of a fiduciary
duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule, or regulation (excluding
violations which do not have a material adverse affect on the Company)
or final cease-and-desist order. No act or failure to act by the
Participant shall be considered willful unless the Participant 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 Participant shall not be deemed to have
been Terminated for Cause unless and until there shall have been
delivered to the Participant 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
Participant and an opportunity for the Participant, together with the
Participant's counsel, to be heard before the Board), stating that in
the good faith opinion of the Board of Directors the Participant has
engaged in conduct described in the preceding sentence and specifying
the particulars thereof in detail.
"Termination of Employment" shall mean the severing of employment with
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the Company and its Affiliates.
"Trust" shall mean any trust established between the Company and the
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trustee named therein to provide benefits hereunder, as amended from
time to time.
"Years of Credited Service" shall mean the total number of Plan Years
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(or fraction thereof determined on a months basis) taken into account
under a Participant's Plan Agreement for purposes of calculating such
Participant's Annual Benefit.
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ARTICLE 2
Selection, Enrollment, Eligibility
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2.1 Selection by Committee. Participation in the Plan shall be limited to a
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select group of management and highly compensated Employees, as determined
by the Committee in its sole discretion from time to time. From that group,
the Committee shall select, in its sole discretion, Employees to
participate in the Plan.
2.2 Enrollment Requirements. As a condition to participation, each selected
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Employee shall complete, execute and return to the Committee a Plan
Agreement. In addition, the Committee shall establish from time to time
such other enrollment requirements as it determines in its sole discretion
are necessary or appropriate.
2.3 Eligibility; Commencement of Participation. Provided an Employee selected
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to participate in the Plan has met all enrollment requirements set forth in
the Plan and required by the Committee, including returning all required
documents to the Committee, that Employee shall commence participation in
the Plan on the date his Plan Agreement is executed by the Company.
2.4 Termination of Participation. If the Committee determines in good faith
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that a Participant no longer qualifies as a member of a select group of
management or highly compensated employees, as membership in such group is
determined in accordance with Sections 201(2), 301(a)(3) and 401(a)(1) of
ERISA, the Committee shall have the right, in its sole discretion, to (i)
cease further benefit accruals hereunder and/or (ii) immediately distribute
in a single lump sum the Equivalent Actuarial Value of the Monthly Benefits
for the Payout Period, determined as if the Participant experienced a
Termination of Employment, and terminate the Participant's participation
herein.
ARTICLE 3
Benefits
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3.1 Retirement Benefits. Upon a Participant's Normal Retirement Date, the
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Company shall pay the Monthly Benefit to him during the Payout Period. Upon
a Participant's Early Retirement Date, the Company shall pay the Early
Retirement Monthly Benefit to him during the Payout Period.
3.2 Death Benefits.
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(a) If the Participant dies before having commenced receiving benefits
under Section 3.1, then his Beneficiary shall receive no later than 120
days after the Committee is notified of and confirms the Participant's
death, a lump sum cash payment equal to the Equivalent Actuarial Value of
the Participant's Monthly Benefit. If the Participant dies after he has
commenced receiving benefits under Section 3.1, then the remaining payments
to the Participant shall continue to be made to the Participant's
Beneficiary commencing on the first day of the month in which the
Participant's death occurs.
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(b) In addition to the death benefit provided in Section 3.2(a), but
subject to, and limited by, all of the provisions of this Plan, a
Participant's Beneficiary shall, upon the death of the Participant, receive
a lump sum death benefit equal to $600,000. This benefit shall be paid to
the Participant's Beneficiary as soon as practicable following the date of
the Participant's death.
3.3 Acceleration of Benefits; Lump Sum Payments. The Committee may accelerate
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the payment of a Participant's Monthly Benefits at such time and in such
manner as the Committee may determine, in which case the accelerated
benefit shall be equal to the Equivalent Actuarial Value of such unpaid
Monthly Benefits.
3.4 Tax Withholding from Distributions. The Company, an Affiliate, or the
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trustee of the Trust, if any, shall withhold from any payments made to a
Participant all federal, state and local income, employment and other taxes
required to be withheld by the Company, an Affiliate, or the trustee of the
Trust, in connection with such payments, in amounts and in a manner to be
determined in the sole discretion of the Company and, if applicable, the
trustee of the Trust.
ARTICLE 4
In-Service Withdrawals and Distributions
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No in-service withdrawals or distributions are permitted under the Plan.
ARTICLE 5
Vesting
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Unless the Participant's Plan Agreement provides otherwise, the Participant
shall be fully vested in his Monthly Benefit after the completion of 10 Years of
Service. For this purpose, Years of Service credited prior to the effective date
of this Plan shall be taken into account.
ARTICLE 6
Participant Contributions
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Participant contributions are neither permitted nor required under the Plan.
ARTICLE 7
Funding
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7.1 Funding Generally. The Company's and its Affiliate's obligations under the
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Plan shall be an unfunded and unsecured promise to pay. The Company and its
Affiliates shall not be obligated under any circumstances to fund in
advance its obligations under the Plan, and when the benefit amount is paid
it shall be expensed out of the general assets of the Company and its
Affiliates.
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7.2 Option to Fund Informally. Notwithstanding Section 7.1, the Company and its
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Affiliates may, at its sole option, or by agreement, informally fund its
obligations under the Plan in whole or in part, provided, however, that in
no event shall such informal funding be construed to create any trust fund,
escrow account or other security for any Participant with respect to the
payment of any benefit under the Plan, other than as permitted by Internal
Revenue Service and Department of Labor rules and regulations for unfunded
supplemental retirement plans.
ARTICLE 8
Regulatory Provisions
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The obligations of the Company to a Participant under the Plan are subject
to the following restrictions:
8.1 Termination for Cause. If a Participant's service as an Employee is
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Terminated for Cause, no benefits shall be paid to him under the Plan. If
the Participant has commenced receiving his Monthly Benefit and it is
subsequently determined that he was Terminated for Cause, then his Monthly
Benefit shall immediately cease and the Participant shall be obligated to
return to the Company or the Holding Company, whichever is applicable, the
cumulative amount of the Monthly Benefit previously paid under the Plan.
8.2 Temporary Suspension or Prohibition. If a Participant is suspended and/or
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temporarily prohibited from participating in the conduct of the Company's
affairs by a notice served under Section 8(e)(3) or (g)(1) of the Federal
Deposit Insurance Act ("FDIA"), 12 U.S.C. ss.1818(e)(3) and (g)(1), the
Company's obligations to such Participant under the Plan shall be suspended
as of the date of service of such notice, unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the Company may in
its discretion reinstate in whole or in part any of its obligations which
were suspended.
8.3 Permanent Suspension or Prohibition. If a Participant is removed and/or
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permanently prohibited from participating in the conduct of the Company's
affairs by an order issued under Section 8(e)(4) or (g)(1) of the FDIA, 12
U.S.C. ss.1818(e)(4) and (g)(1), all obligations of the Company to such
Participant under the Plan shall terminate as of the effective date of the
order, but vested rights of the contracting parties shall not be affected.
8.4 Default. If the Company is in default (as defined in Section 3(x)(1) of the
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FDIA), all obligations of the Company to Participants and Beneficiaries
under the Plan shall terminate as of the date of default, but this
provision shall not affect any vested rights of the contracting parties.
8.5 Termination by Regulators. All obligations of the Company to Participants
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and Beneficiaries under the Plan shall be terminated, except to the extent
determined that continuation of the Plan is necessary for the continued
operation of the Company: (i) by the Director of the Office of Thrift
Supervision (the "OTS Director") or his designee, at the time the Federal
Deposit Insurance Corporation enters into an agreement to provide
assistance to or on behalf of the Company under the authority contained in
Section 13(c) of the FDIA; or (ii) by the OTS Director or his designee, at
the time the OTS Director or his designee approves a supervisory merger to
resolve problems related to operation of the Company or when the Company is
determined by the OTS Director to be in an unsafe or unsound condition. Any
rights of the parties that have already vested, however, shall not be
affected by any such action.
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8.6 Other Regulatory Restrictions on Payment. Notwithstanding anything herein
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to the contrary, (1) any payments made by the Company under the Plan shall
be subject to and conditioned upon compliance with 12 U.S.C. ss.1828(k) and
any regulations promulgated thereunder and (2) payments contemplated to be
made by the Company under the Plan shall not be immediately payable to the
extent such payments are barred or prohibited by an action or order issued
by the Federal Deposit Insurance Corporation.
ARTICLE 9
Beneficiary Designation
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9.1 Beneficiary. Each Participant shall have the right, at any time, to
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designate his Beneficiary(ies) (both primary as well as contingent) to
receive any benefits payable under the Plan upon the death of the
Participant. The Beneficiary designated under the Plan may be the same as
or different from the Beneficiary designated under any other plan of the
Company or its Affiliates in which the Participant participates.
9.2 Beneficiary Designation: Change; Spousal Consent. A Participant shall
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designate his Beneficiary by completing and signing the Beneficiary
Designation Form and returning it to the Committee. A Participant shall
have the right to change a Beneficiary by completing, signing and otherwise
complying with the terms of the Beneficiary Designation Form and the
Committee's rules and procedures, as in effect from time to time. If the
Participant names someone other than his spouse as a Beneficiary, a spousal
consent, in the form designated by the Committee, must be signed by that
Participant's spouse and returned to the Committee. Upon the acceptance by
the Committee of a new Beneficiary Designation Form, all Beneficiary
designations previously filed shall be canceled. The Committee shall be
entitled to rely on the last Beneficiary Designation Form filed by the
Participant and accepted by the Committee prior to his death.
9.3 Acknowledgment. No designation or change in designation of a Beneficiary
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shall be effective until received and acknowledged in writing by the
Committee.
9.4 No Beneficiary Designation. If a Participant fails to designate a
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Beneficiary as provided in Sections 9.1, 9.2 and 9.3 above or, if all
designated Beneficiaries predecease a Participant or die prior to complete
distribution of the Participant's benefits, then a Participant's designated
Beneficiary shall be deemed to be his surviving spouse. If a Participant
has no surviving spouse, the benefits remaining
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under the Plan to be paid to a Beneficiary shall be payable to the
Participant's estate.
9.5 Doubt as to Beneficiary. If the Committee has any doubt as to the proper
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Beneficiary to receive payments pursuant to the Plan, the Committee shall
have the right, exercisable in its discretion, to cause the Company and its
Affiliates to withhold such payments until this matter is resolved to the
Committee's satisfaction.
9.6 Discharge of Obligations. The payment of benefits under the Plan to a
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Beneficiary shall fully and completely discharge the Company and its
Affiliates and the Committee from all further obligations under the Plan
with respect to the Participant.
ARTICLE 10
Leave of Absence
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If a Participant is authorized by the Company or its Affiliates for any
reason to take a leave of absence from employment with the Company or its
Affiliates, such Participant shall continue to be considered employed by the
Company during such leave of absence (and therefore not to have experienced a
Termination of Employment) and service during the leave of absence shall be
credited for purposes of determining the Participant's Years of Credited
Service.
ARTICLE 11
Termination, Amendment or Modification
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11.1 Termination. Although the Company anticipates that it will continue as a
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sponsor of the Plan for an indefinite period of time, there is no guarantee
that it will continue as a sponsor of the Plan or will not terminate its
sponsorship of the Plan at any time in the future. Accordingly, the Company
reserves the right to terminate its sponsorship of the Plan at any time
with respect to any or all of its Participants, by action of the Board.
Upon termination of sponsorship of the Plan by the Company, the Annual and
Monthly Benefit of each affected Participant shall be determined as if he
had experienced a Termination of Employment on the date Plan sponsorship is
terminated. Monthly Benefits shall be paid to affected Participants as
follows: Prior to a Change in Control, the Company shall have the right, in
its sole discretion, to pay or require its Affiliates to pay the Equivalent
Actuarial Value of the Monthly Benefits for the Payout Period in a lump
sum; otherwise payments shall be made as provided for in Article 3. After a
Change in Control, the Company and its Affiliates shall be required to pay
the Equivalent Actuarial Value of the Monthly Benefits for the Payout
Period in a lump sum; provided, however, that if a Participant's Plan
Agreement provides for the payment of Plan benefits after a Change in
Control, then the timing and amount of the Participant's Monthly Benefits
shall be made as provided for in the Participant's Plan Agreement.
Notwithstanding the preceding sentence, payments due to a Participant in
connection with a Change in Control may, at the written election of the
Participant, be distributed to the Participant in a cash lump sum equal to
the Equivalent Actuarial Value of the Participant's Monthly Benefit. If an
Affiliate terminates its sponsorship of the Plan, the Plan shall terminate
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with respect to Participants employed by that Affiliate. The termination of
sponsorship of the Plan or the termination of the Plan shall not adversely
affect any Participant who has become entitled to the payment of any
benefits under the Plan as of the date of termination; provided, however,
that the Company shall have the right to accelerate payments without a
premium or prepayment penalty by paying the Equivalent Actuarial Value of
the remaining benefits in a lump sum.
11.2 Amendment. The Company may, at any time, amend or modify the Plan in whole
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or in part by action of the Board; provided, however, that no amendment or
modification shall be effective to decrease or restrict the value of a
Participant's Annual Benefit determined at the time the amendment or
modification is made, calculated as if the Participant had experienced a
Termination of Employment as of the effective date of the amendment or
modification. The amendment or modification of the Plan shall not affect
any Participant who has become entitled to the payment of benefits under
the Plan as of the date of the amendment or modification; provided,
however, that the Company or an Affiliate shall have the right to
accelerate payments without a premium or prepayment penalty by paying the
Equivalent Actuarial Value of the unpaid Monthly Benefits in a lump sum.
11.3 Effect of Payment. The full payment of the applicable benefit under the
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Plan shall completely discharge all obligations to a Participant and his
designated Beneficiaries under the Plan.
ARTICLE 12
Administration
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12.1 Committee Duties. The Plan shall be administered by a Committee which shall
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consist of the Board, or such committee as the Board shall appoint. Members
of the Committee may be Participants under the Plan. The Committee shall
also have the discretion and authority to (i) make, amend, interpret, and
enforce all appropriate rules and regulations for the administration of the
Plan and (ii) decide or resolve any and all questions including
interpretations of the Plan, as may arise in connection with the Plan. Any
individual on the Committee who is a Participant shall not vote or act on
any matter relating solely to himself. When making a determination or
calculation, the Committee shall be entitled to rely on information
furnished by a Participant or the Company.
12.2 Agents. In the administration of the Plan, the Committee may, from time to
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time, employ agents and delegate to them such administrative duties as it
sees fit (including acting through a duly appointed representative) and may
from time to time consult with counsel who may be counsel to the Company
and its Affiliates.
12.3 Binding Effect of Decisions. The decision or action of the Committee with
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respect to any question arising out of or in connection with the
administration, interpretation and application of the Plan and the rules
and regulations promulgated hereunder shall be final and conclusive and
binding upon all persons having any interest in the Plan.
12.4 Indemnity of Committee. The Company shall indemnify and hold harmless the
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members of the Committee, and any person to whom the duties of the
Committee may be delegated, against any and all claims, losses, damages,
expenses or liabilities arising from any action or failure to act with
respect to the Plan, except in the case of gross misconduct by the
Committee or any of its members or any such delegate.
12.5 Information. To enable the Committee to perform its functions, the Company
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and its Affiliates shall supply full and timely information to the
Committee as the Committee may reasonably request.
ARTICLE 13
Other Benefits and Agreements
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The benefits provided for a Participant under the Plan are in addition to
any other benefits available to such Participant under any other plan or program
sponsored by the Company or its Affiliates. The Plan shall supplement and shall
not supersede, modify or amend any other such plan or program except as may
otherwise be expressly provided therein.
ARTICLE 14
Claims Procedures
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14.1 Presentation of Claim. Any Participant (such Participant being referred to
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below as a "Claimant") may deliver to the Committee a written claim for a
determination with respect to the amounts distributable to such Claimant
from the Plan. If such a claim relates to the contents of a notice received
by the Claimant, the claim must be made within 60 days after such notice
was received by the Claimant. All other claims must be made within 180 days
of the date on which the event that caused the claim to arise occurred. The
claim must state with particularity the determination desired by the
Claimant.
14.2 Notification of Decision. The Committee shall consider a Claimant's claim
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within a reasonable time, and shall notify the Claimant in writing:
(a) that the Claimant's requested determination has been made, and that
the claim has been allowed in full; or
(b) that the Committee has reached a conclusion contrary, in whole or in
part, to the Claimant's requested determination, and such notice must
set forth in a manner calculated to be understood by the Claimant:
(i) the specific reason(s) for the denial of the claim, or any part of
it;
(ii) specific reference(s) to pertinent provisions of the Plan upon
which such denial was based;
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(iii) a description of any additional material or information
necessary for the Claimant to perfect the claim, and an explanation of
why such material or information is necessary; and
(iv) an explanation of the claim review procedure set forth in Section
13.3 below.
14.3 Review of a Denied Claim. With 60 days after receiving a notice from the
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Committee that a claim has been denied, in whole or in part, a Claimant (or
the Claimant's duly authorized representative) may file with the Committee
a written request for a review of the denial of the claim. Thereafter, but
not later than 30 days after the review procedure began, the Claimant (or
the Claimant's duly authorized representative):
(a) may review pertinent documents;
(b) may submit written comments or other documents; and/or
(c) may request a hearing, which the Committee, in its sole discretion, may
grant.
14.4 Decision on Review. The Committee shall render its decision on review
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promptly, and not later than 60 days after the filing of a written request
for review of the denial, unless a hearing is held or other special
circumstances require additional time, in which case the Committee's
decision must be rendered within 120 days after such date. Such decision
must be written in a manner calculated to be understood by the Claimant,
and it must contain:
(a) specific reasons for the decision;
(b) specific reference(s) to the pertinent Plan provisions upon which the
decision was based; and
(c) such other matters as the Committee deems relevant.
14.5 Legal Action. A Claimant's compliance with the foregoing provisions of this
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Article 14 is a mandatory prerequisite to a Claimant's right to commence
any legal action with respect to any claim for benefits under the Plan.
ARTICLE 15
Trust
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15.1 Establishment of the Trust. The Company or its Affiliates may establish the
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Trust upon such terms as it deems appropriate.
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15.2 Interrelationship of the Plan and the Trust. The provisions of the Plan,
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including a Participant's Plan Agreement, shall govern the rights of such
Participant to receive distributions pursuant to the Plan. The provisions
of the Trust shall govern the rights of the Company, its Affiliates,
Participants and the creditors of the Company and its Affiliates to the
assets transferred to the Trust. The Company and its Affiliates shall at
all times remain liable to carry out its obligations under the Plan.
15.3 Investment of Trust Assets. The trustee of the Trust shall be authorized,
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upon written instructions received from the Committee or investment manager
appointed by the Committee, to invest and reinvest the assets of the Trust
in accordance with the applicable trust agreement.
15.4 Distributions From the Trust. The Company and its Affiliates' obligations
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under the Plan may be satisfied with Trust assets distributed pursuant to
the terms of the Trust and any such distribution shall reduce the Company's
and its Affiliates' obligations under the Plan.
ARTICLE 16
Miscellaneous
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16.1 Status of Plan. The Plan is intended to be a plan that is not qualified
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within the meaning of Code Section 401(a) and that "is unfunded and is
maintained by an employer primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated
employees" within the meaning of ERISA Sections 201(2), 301(a)(3) and
401(a)(1). The Plan shall be administered and interpreted to the extent
possible in a manner consistent with that intent.
16.2 Unsecured General Creditor. Participants and their beneficiaries, heirs,
--------------------------
successors and assigns shall have no legal or equitable rights, interests
or claims in any property or assets of the Company or its Affiliates. For
purposes of the payment of benefits under the Plan, any and all assets of
the Company or its Affiliates shall be, and remain the general, unpledged
and unrestricted assets of such entity. The Company's and its Affiliates'
obligation under the Plan shall be merely of an unfunded and unsecured
promise to pay money in the future.
16.3 Liability. The Company's or its Affiliates' liability for the payment of
---------
benefits shall be defined only by the Plan including a Participant's Plan
Agreement. The Company or its Affiliates shall have no obligation to a
Participant under the Plan except as expressly provided in the Plan
including such Participant's Plan Agreement.
16.4 Nonassignability. Neither a Participant nor any other person shall have any
----------------
right to commute, sell, assign, transfer, pledge, anticipate, mortgage or
otherwise encumber, transfer, hypothecate, alienate or convey in advance of
actual receipt, the amounts, if any, payable hereunder, or any part
thereof, which are, and all rights to which are expressly declared to be,
unassignable and non-transferable. No part of the amounts payable shall,
prior to actual payment, be subject to seizure,
14
attachment, garnishment or sequestration for the payment of any debts,
judgments, alimony or separate maintenance allowed by a Participant or any
other person, be transferable by operation of law in the event of a
Participant's or any other person's bankruptcy or insolvency or be
transferable to a spouse as a result of a property settlement or otherwise.
16.5 Not a Contract of Employment. The terms and conditions of the Plan,
-------------------------------
including a Participant's Plan Agreement, shall not be deemed to constitute
a contract of employment between the Company or its Affiliates and a
Participant. Nothing in the Plan shall be deemed to give a Participant the
right to be retained in the service of the Company or its Affiliates or to
interfere with the right of the Company or its Affiliates to discipline or
discharge such Participant at any time.
16.6 Furnishing Information. A Participant will cooperate with the Committee by
----------------------
furnishing any and all information requested by the Committee and take such
other actions as may be requested in order to facilitate the administration
of the Plan and the payments of benefits hereunder, including but not
limited to, taking such physical examinations as the Committee may deem
necessary.
16.7 Terms. Whenever any words are used herein in the masculine, they shall be
-----
construed as though they were in the feminine in all cases where they would
so apply; and whenever any words are used herein in the singular or in the
plural, they shall be construed as though they were used in the plural or
the singular, as the case may be, in all cases where they would so apply.
16.8 Captions. The captions of the articles, sections and paragraphs of the Plan
--------
are for convenience only and shall not control or affect the meaning or
construction of any of its provisions.
16.9 Governing Law. Subject to ERISA, the provisions of the Plan shall be
--------------
construed and interpreted according to the internal laws of the State of
New Jersey without regard to its conflicts of laws and principles.
16.10Notice. Any notice or filing required or permitted to be given to the
------
Committee under the Plan shall be sufficient if in writing and
hand-delivered, or sent by registered or certified mail, to the address
below.
Board of Directors
Penn Federal Savings Bank
622 Eagle Rock Avenue
West Orange, New Jersey 07052-2989
Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark on the
receipt for registration or certification. Any notice or filing required or
permitted to be given to a Participant under the Plan shall be sufficient
if in writing and hand-delivered, or sent by mail, to the last known
address of such Participant.
15
16.11Successors. The provisions of the Plan shall bind and inure to the benefit
----------
of the Company or its Affiliates, and their successors and assigns and the
Participant and the Participant's designated Beneficiaries.
16.12Spouse's Interest. The interest in the benefits hereunder of a spouse of a
-----------------
Participant who has predeceased the Participant shall automatically pass to
the Participant and shall not be transferable by such spouse in any manner
including, but not limited to, such spouse's will, nor shall such interest
pass under the laws of intestate succession.
16.13Validity. In case any provision of the Plan shall be illegal or invalid
--------
for any reason, said illegality or invalidity shall not affect the
remaining parts hereof, but the Plan shall be constructed and enforced as
if such illegal or invalid provision had never been inserted herein.
16.14Incompetent. If the Committee determines in its discretion that a benefit
-----------
under the Plan is to be paid to a minor, a person declared incompetent or
to a person incapable of handling the disposition of that person's
property, the Committee may direct payment of such benefit to the guardian,
legal representative or person having the care and custody of such minor,
incompetent or incapable person. The Committee may require proof of
minority, incompetence, incapacity or guardianship, as it may deem
appropriate prior to distribution of the benefit. Any payment of a benefit
shall be a payment for the account of the Participant, and shall be a
complete discharge of any liability under the Plan for such payment amount
16.15Court Order. The Committee is authorized to make any payments directed by
-----------
court order in any action in which the Plan or the Committee has been named
as a party. In addition, if a court determines that a spouse or former
spouse of a Participant has an interest in the Participant's benefits under
the Plan in connection with a property settlement or otherwise, the
Committee, in its sole discretion shall have the right, notwithstanding any
election made by the Participant, to immediately distribute the spouse's or
former spouse's interest in the Participant's benefits under the Plan to
that spouse or former spouse.
16.16Distribution in the Event of Taxation. If, for any reason, all or any
---------------------------------------
portion of a Participant's benefits under the Plan becomes taxable to the
Participant prior to receipt, a Participant may petition the Committee for
a distribution of that portion of his benefit that has become taxable. Upon
the grant of such a petition, which grant shall not be unreasonably
withheld (and, after a Change in Control, shall be granted), the Company or
an Affiliate shall distribute to the Participant immediately available
funds in an amount equal to the taxable portion of his benefit (which
amount shall not exceed such Participant's Equivalent Actuarial Value of
his unpaid Monthly Benefits). If the petition is granted, the tax liability
distribution shall be made within 90 days of the date when the
Participant's petition is granted. Such a distribution shall affect and
reduce the benefits to be paid under the Plan.
16
16.17Insurance. The Company or its Affiliates, on its own behalf or on behalf
---------
of the trustee of the Trust, and, in its sole discretion, may apply for and
procure insurance on the life of any Participant, in such amounts and in
such forms as it may choose. The Company or its Affiliates or the trustee
of the Trust, as the case may be, shall be the sole owner and beneficiary
of any such insurance. No Participant shall have any interest whatsoever in
any such policy or policies, and a Participant shall at the request of the
Company submit to medical examinations and supply such information and
execute such documents as may be required by the insurance company or
companies to whom the Company or its Affiliates has applied for insurance.
16.18Legal Fees To Enforce Rights After Change in Control. The Company is aware
----------------------------------------------------
that upon the occurrence of a Change in Control, the Board (which might
then be comprised of new members) or stockholders of the Company, its
Affiliates, or of any successor corporation, might then cause or attempt to
cause the Company, its Affiliates, or such successor to refuse to comply
with its obligations under the Plan and might cause or attempt to cause the
Company or its Affiliates to institute, or may institute, litigation
seeking to deny Participants the benefits intended under the Plan. In these
circumstances, the purpose of the Plan could be frustrated. Accordingly,
if, following a Change in Control, it should appear to any Participant that
the Company, its Affiliates, or any successor corporation has failed to
comply with any of its obligations under the Plan or any agreement
thereunder, or, if the Company, its Affiliates, or any other person takes
any action to declare the Plan void or unenforceable or institutes any
litigation or other legal action designed to deny, diminish or to recover
from any Participant the benefits intended to be provided, then the Company
and its Affiliates irrevocably authorizes such Participant to retain
counsel of his choice at the expense of the Company or its Affiliates to
represent such Participant in connection with the initiation or defense of
any litigation or other legal action, whether by or against the Company,
its Affiliates, or any director, officer, stockholder or other Affiliate of
the Company or any successor thereto in any jurisdiction.
The Company has signed the Plan as of March 1, 2003.
PENN FEDERAL SAVINGS BANK
By: ________________________
Name: ________________________
Title: ________________________
PENN FEDERAL SAVINGS BANK
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AGREEMENT
Penn Federal Savings Bank ("Penn Federal") is the sponsor of the Penn
Federal Savings Bank Supplemental Executive Retirement Plan (the "Plan"). Penn
Federal and the undersigned executive (the "Employee") hereby agree, for good
and valuable consideration, the value of which is hereby acknowledged, that the
Employee shall participate in the Plan as such Plan is currently in effect and
as the same may hereafter be modified or amended. The Employee does hereby
acknowledge that he has been provided with a copy of the Plan as currently in
effect and he does specifically agree to the terms and conditions thereof. The
Employee understands that his receipt of benefits under the Plan shall be
subject to all provisions of the Plan. All capitalized terms not defined herein
shall have the meaning assigned to them under the Plan.
PROVISIONS REGARDING PLAN BENEFITS, PAYOUT PERIOD AND EARLY RETIREMENT ELECTION
1. No limitations other than those contained in the Plan and this Plan
Agreement shall apply to the Employee's entitlement to benefits under
the Plan.
2. The Employee's annual benefit percentage is 70%. This percentage will
be multiplied by the Employee's Final Average Compensation to
determine the Employee's Annual Benefit.
3. The Employee's maximum Annual Benefit shall be $300,000. There is no
minimum Annual Benefit.
4. The "Payout Period" shall be 180 consecutive months, subject to the
modification rules in the Plan for early retirement benefits.
5. If elected by the Employee, the Payout Period shall commence on a
designated Early Retirement Date. The Early Retirement Date shall not
be earlier than one year following the date the Employee elects in
writing to have his benefits commence. The Employee acknowledges and
understands that (a) no benefit will be paid on an Early Retirement
Date unless a written election is made, and (b) if benefits commence
on an Early Retirement Date, the Employee's monthly payment under the
Plan will be smaller than the Monthly Benefit he would have received
had benefits commenced at his Normal Retirement Date, to reflect the
earlier commencement of benefits.
The Employee understands that he may at any time, upon written request to
the Committee, obtain a copy of the Plan as then in effect.
_________________________________ ---------------------,2003
, Employee
PENN FEDERAL SAVINGS BANK
By ______________________________ ---------------------,2003
Name: ___________________________
Title: ___________________________