Exhibit 10.8

 

WILLOW FINANCIAL BANK

 

AMENDED AND RESTATED BOARD OF DIRECTORS

 

2005 DEFERRED COMPENSATION PLAN

 

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WILLOW FINANCIAL BANK

AMENDED AND RESTATED BOARD OF DIRECTORS

2005 DEFERRED COMPENSATION PLAN

 

The Willow Financial Bank (the “Bank”) Amended and Restated 2005 Board of
Directors Deferred Compensation Plan (the “Plan”) amends and restates the First
Financial Bank Board of Directors 2005 Deferred Compensation Plan that was
effective as of January 1, 2005 and subsequently amended on August 24, 2005 and
October 25, 2005 (the “Prior Plan”). The Bank is the successor to First
Financial Bank by merger. The Bank has herein restated the Plan, which continues
to remain frozen as of August 31, 2005, with the intention that the Plan shall
at all times satisfy Section 409A of the Code (as defined herein) and the
regulations thereunder. The provisions of the Plan shall be construed to
effectuate such intentions.

 

1.                                      PURPOSE

 

The primary purpose of the Plan is to provide deferred compensation to the
non-employee members of the Bank’s Board of Directors, through an unfunded “top
hat” arrangement exempt from the fiduciary, funding, vesting, and plan
termination insurance provisions of Title I and Title IV of ERISA (“Top Hat”).
The Bank has adopted this Plan to provide those members of the Board of
Directors of the Bank who are not also employees of the Bank with the
opportunity to defer part or all of their Compensation.

 

2.                                      DEFINITIONS AND CAPITALIZED TERMS

 

2.1.         WHEN USED IN THIS PLAN DOCUMENT, THE CAPITALIZED TERMS SET FORTH IN
ALPHABETICAL ORDER HEREIN HAVE THE DEFINITIONS SPECIFIED BELOW UNLESS THE
CONTEXT IN WHICH THE TERM APPEARS CLEARLY REQUIRES A DIFFERENT MEANING.

 

A.     “ACCOUNT” REFERS TO THE BOOKKEEPING ENTRIES ESTABLISHED AND MAINTAINED BY
THE BANK OR THE COMMITTEE FOR THE PURPOSE OF RECORDING (I) THE AMOUNTS OF
COMPENSATION DEFERRED BY A DIRECTOR UNDER THIS PLAN, (II) ANY INVESTMENT
EARNINGS, LOSSES, INTEREST ACCRUALS, ADMINISTRATIVE EXPENSES, ETC. WITH RESPECT
TO THOSE AMOUNTS, AND (III) ANY DISTRIBUTIONS TO A DIRECTOR OR BENEFICIARY

 

B.     “BANK” REFERS TO WILLOW FINANCIAL BANK.

 

C.     “BENEFICIARY” REFERS TO THE PERSON OR ENTITY SELECTED TO RECEIVE ANY
PORTION OF A DIRECTOR’S ACCOUNT THAT HAS NOT BEEN DISTRIBUTED FROM THE PLAN AT
THE TIME OF THE DIRECTOR’S DEATH. SUCH DESIGNATION SHALL BE ON A FORM PROVIDED
OR APPROVED BY THE PLAN ADMINISTRATOR, AND SUCH DESIGNATION SHALL BE EFFECTIVE
WHEN THE FORM IS RECEIVED BY THE COMMITTEE. IF A DIRECTOR FAILS TO DESIGNATE A
BENEFICIARY OR NO DESIGNATED BENEFICIARY SURVIVES THE DIRECTOR, OR, IF NOT A
NATURAL PERSON, DOES NOT CONTINUE IN EFFECT, THEN THE PLAN ADMINISTRATOR WILL
DIRECT PAYMENT OF BENEFITS TO THE DIRECTOR’S SPOUSE, IF THE DIRECTOR IS MARRIED
AT THE DATE OF HIS OR HER DEATH, OR TO THE DIRECTOR’S ESTATE, IF THE DIRECTOR IS
NOT MARRIED AT THE TIME OF HIS OR HER DEATH. FOR PURPOSES OF THIS SUBSECTION, A
DIRECTOR WHO IS LEGALLY SEPARATED OR WHO HAS BEEN ABANDONED WITHIN THE MEANING
OF STATE LAW SHALL NOT BE REGARDED AS MARRIED. IN THE EVENT OF A CONFLICT
BETWEEN THE DESIGNATION OF BENEFICIARY HEREUNDER AND THE DESIGNATION OF
BENEFICIARY UNDER A PARTICIPANT’S WILL, THE

 

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DESIGNATION OF BENEFICIARY HEREUNDER SHALL GOVERN. IF THE PARTICIPANT IS MARRIED
AND HE OR SHE AND HIS OR HER SPOUSE, AS APPLICABLE, DIE UNDER CIRCUMSTANCES
UNDER WHICH THE SURVIVOR CANNOT BE DETERMINED, IT SHALL BE PRESUMED THAT THE
PARTICIPANT WAS THE SURVIVOR.

 

D.     “BOARD” REFERS TO THE BOARD OF DIRECTORS OF THE BANK.

 

E.     “CHANGE IN CONTROL” REFERS TO A CHANGE IN THE OWNERSHIP OF THE COMPANY OR
THE BANK, A CHANGE IN THE EFFECTIVE CONTROL OF THE COMPANY OR THE BANK OR A
CHANGE IN THE OWNERSHIP OF A SUBSTANTIAL PORTION OF THE ASSETS OF THE COMPANY OR
THE BANK, IN EACH CASE AS PROVIDED UNDER SECTION 409A OF THE CODE AND THE
REGULATIONS THEREUNDER.

 

F.     “CODE” REFERS TO THE INTERNAL REVENUE CODE OF 1986, AS AMENDED FROM TIME
TO TIME.

 

G.     “COMMITTEE” REFERS TO THE ADMINISTRATIVE COMMITTEE ESTABLISHED PURSUANT
TO SECTION 11.1 THAT ACTS ON BEHALF OF THE BANK IN DISCHARGING THE BANK’S DUTIES
AS THE PLAN ADMINISTRATOR. NOTWITHSTANDING ANY OTHER PROVISION OF THE PLAN
DOCUMENT, ANY MEMBER OF THE COMMITTEE OR ANY OTHER OFFICER OR EMPLOYEE OF THE
BANK WHO EXERCISES DISCRETION OR AUTHORITY ON BEHALF OF THE BANK SHALL NOT BE A
FIDUCIARY OF THE PLAN MERELY BY VIRTUE OF HIS OR HER EXERCISE OF SUCH DISCRETION
OR AUTHORITY. THE BOARD SHALL IDENTIFY THE BANK OFFICERS WHO SHALL SERVE AS
MEMBERS OF THE COMMITTEE. BECAUSE THIS PLAN IS A “TOP HAT” ARRANGEMENT, NEITHER
THE BANK NOR THE COMMITTEE SHALL BE SUBJECT TO THE FIDUCIARY DUTIES IMPOSED BY
ERISA.

 

H.     “COMPANY” REFERS TO WILLOW FINANCIAL BANCORP, INC., THE PARENT COMPANY OF
THE BANK.

 

I.     “COMPENSATION” REFERS TO A DIRECTOR’S TOTAL CASH REMUNERATION (WITHOUT
REGARD TO ANY LIMITS IMPOSED BY OR WITH REFERENCE TO SECTION 401(A)(17) OF THE
CODE).

 

J.     “CONTROLLED GROUP” REFERS TO ALL CORPORATIONS AND ENTITIES WHICH WITH THE
BANK ARE TREATED AS A CONTROLLED GROUP WITHIN THE MEANING OF SECTION 414(B) AND
(C) OF THE CODE.

 

k.     “Director” refers to a member of the Board of Directors of the Bank who
is not an employee of the Bank.

 

L.     “DISABILITY” REFERS TO WHEN A PARTICIPANT (I) IS UNABLE TO ENGAGE IN ANY
SUBSTANTIAL GAINFUL ACTIVITY BY REASON OF ANY MEDICALLY DETERMINABLE PHYSICAL OR
MENTAL IMPAIRMENT WHICH CAN BE EXPECTED TO RESULT IN DEATH OR CAN BE EXPECTED TO
LAST FOR A CONTINUOUS PERIOD OF NOT LESS THAN 12 MONTHS, OR (II) IS, BY REASON
OF ANY MEDICALLY DETERMINABLE PHYSICAL OR MENTAL IMPAIRMENT WHICH CAN BE
EXPECTED TO RESULT IN DEATH OR CAN BE EXPECTED TO LAST FOR A CONTINUOUS PERIOD
OF NOT LESS THAN 12 MONTHS, RECEIVING INCOME REPLACEMENT BENEFITS FOR A PERIOD
OF NOT LESS THAN 3 MONTHS UNDER AN ACCIDENT AND HEALTH PLAN COVERING EMPLOYEES
OF THE BANK (OR WOULD BE RECEIVING SUCH BENEFITS IF HE WAS ELIGIBLE TO
PARTICIPATE IN SUCH PLAN).

 

M.     “EFFECTIVE DATE” OF THE AMENDED AND RESTATED PLAN SHALL BE JANUARY 1,
2005.

 

N.     “ERISA” REFERS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED FROM TIME TO TIME.

 

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O.     “EXCHANGE ACT” SHALL MEAN THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED, AND ANY VALID REGULATIONS ISSUED THEREUNDER.

 

P.     “INACTIVE PARTICIPANT” REFERS TO A DIRECTOR WHO DEFERRED COMPENSATION
UNDER THE PLAN DURING A PREVIOUS PLAN YEAR BUT WHO DOES NOT DEFER ANY
COMPENSATION PAYABLE DURING THE CURRENT PLAN YEAR AND TO A PARTICIPANT WHO HAS
HAD A SEPARATION FROM SERVICE BUT STILL HAS A VESTED, ACCRUED BENEFIT.

 

Q.     “PARTICIPANT” REFERS TO AN ELIGIBLE DIRECTOR WHO ELECTS TO DEFER UNDER
THE PLAN PART OR ALL OF HIS OR HER COMPENSATION EARNED DURING THE APPLICABLE
PLAN YEAR.

 

R.     “PLAN” SHALL MEAN THIS WILLOW FINANCIAL BANK AMENDED AND RESTATED 2005
EXECUTIVE DEFERRED COMPENSATION PLAN, AS AMENDED FROM TIME TO TIME.

 

S.     “PLAN ADMINISTRATOR” REFERS TO THE BANK.

 

T.     “PLAN YEAR” REFERS TO THE CALENDAR YEAR.

 

U.     “SECURITIES ACT” REFERS TO THE SECURITIES ACT OF 1933, AS AMENDED, AND
ANY VALID REGULATIONS ISSUED THEREUNDER.

 

V.     “SEPARATION FROM SERVICE” MEANS A TERMINATION OF A PARTICIPANT’S SERVICES
(WHETHER AS AN EMPLOYEE OR AS AN INDEPENDENT CONTRACTOR) TO THE COMPANY AND THE
BANK. WHETHER A SEPARATION FROM SERVICE HAS OCCURRED SHALL BE DETERMINED IN
ACCORDANCE WITH THE REQUIREMENTS OF SECTION 409A OF THE CODE BASED ON WHETHER
THE FACTS AND CIRCUMSTANCES INDICATE THAT THE COMPANY, THE BANK AND THE
PARTICIPANT REASONABLY ANTICIPATED THAT NO FURTHER SERVICES WOULD BE PERFORMED
AFTER A CERTAIN DATE OR THAT THE LEVEL OF BONA FIDE SERVICES THE PARTICIPANT
WOULD PERFORM AFTER SUCH DATE (WHETHER AS AN EMPLOYEE OR AS AN INDEPENDENT
CONTRACTOR) WOULD PERMANENTLY DECREASE TO NO MORE THAN TWENTY PERCENT (20%) OF
THE AVERAGE LEVEL OF BONA FIDE SERVICES PERFORMED (WHETHER AS AN EMPLOYEE OR AN
INDEPENDENT CONTRACTOR) OVER THE IMMEDIATELY PRECEDING THIRTY-SIX (36) MONTH
PERIOD.

 

W.     “SUBSTANTIALLY EQUAL ANNUAL INSTALLMENTS” REFERS TO AN ANNUAL INSTALLMENT
PAYMENT OVER THE NUMBER OF YEARS SELECTED BY THE PARTICIPANT IN ACCORDANCE WITH
THIS PLAN, CALCULATED AS FOLLOWS:  THE ACCOUNT OF A PARTICIPANT SHALL BE
CALCULATED AS OF THE LAST DAY OF A MONTH; AND THE ANNUAL INSTALLMENT SHALL BE
CALCULATED BY MULTIPLYING THE BALANCE BY A FRACTION, THE NUMERATOR OF WHICH IS
ONE, AND THE DENOMINATOR OF WHICH IS THE REMAINING NUMBER OF ANNUAL INSTALLMENTS
DUE TO THE PARTICIPANT.

 

3.                                      ELIGIBILITY

 

3.1.         THE BOARD. THE NON-EMPLOYEE MEMBERS OF THE BOARD ARE ELIGIBLE TO
PARTICIPATE IN THE PLAN.

 

4.                                      DEFERRAL OF COMPENSATION

 

4.1.         ELECTION TO DEFER. A DIRECTOR MAY ELECT TO DEFER THE RECEIPT OF
COMPENSATION BY COMPLETING A DEFERRAL ELECTION FORM PROVIDED OR APPROVED BY THE
BANK OR THE COMMITTEE.

 

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PURSUANT TO THE DEFERRAL ELECTION FORM, A DIRECTOR MAY ELECT TO DEFER ANY WHOLE
PERCENTAGE, UP TO 100% OF HIS OR HER COMPENSATION. AT THE TIME A DIRECTOR
COMPLETES A DEFERRAL ELECTION FORM, THE DIRECTOR MAY DESIGNATE IN WRITING A
SPECIFIC DATE UPON THE OCCURRENCE OF WHICH THE COMPENSATION DEFERRED FOR ANY
PLAN YEAR, ADJUSTED UNDER SECTION 5 BELOW, SHALL BE DISTRIBUTED FROM THE
DIRECTOR’S ACCOUNT AND THE RATE AND FORM OF THE DISTRIBUTION. NOTWITHSTANDING
ANYTHING HEREIN TO THE CONTRARY, AS OF THE CLOSING DATE OF THE MERGER OF FIRST
FINANCIAL BANK WITH AND INTO WILLOW FINANCIAL BANK, WHICH OCCURRED ON AUGUST 31,
2005 (THE “CLOSING DATE”), NO FURTHER COMPENSATION SHALL BE DEFERRED UNDER THE
PLAN.

 

4.2.         DATE AND NOTICE OF DEFERRAL ELECTION. A DIRECTOR MUST SUBMIT HIS OR
HER DEFERRAL ELECTION FORM TO THE COMMITTEE NO LATER THAN THE LAST DAY OF THE
DEFERRAL ELECTION PERIOD, WHICH SHALL BE THE NINETY-DAY PERIOD ENDING ON THE
LAST DAY PRECEDING THE CALENDAR YEAR IN WHICH THE ELIGIBLE DIRECTOR WILL RENDER
THE SERVICES FOR WHICH HE OR SHE WILL EARN ANY PART OF THE COMPENSATION PAYABLE
TO THE DIRECTOR FOR SERVICE DURING THAT YEAR (“DEFERRAL ELECTION PERIOD”). FOR
THE INITIAL PLAN YEAR OF THE PLAN, THE FIRST DEFERRAL ELECTION PERIOD SHALL END
NO EARLIER THAN DECEMBER 31, 2004. THE DEFERRAL ELECTION PERIOD, IN WHICH A
DEFERRAL ELECTION OF A DIRECTOR THAT IS MADE IN THE DIRECTOR’S FIRST YEAR AS A
DIRECTOR WHERE THE INDIVIDUAL BECOMES A DIRECTOR AFTER THE DEFERRAL ELECTION
PERIOD FOR A PARTICULAR YEAR (“NEW DIRECTOR ELECTION”), SHALL END NO EARLIER
THAN 30 DAYS AFTER HIS OR HER FIRST DATE OF BECOMING A DIRECTOR. A NEW DIRECTOR
ELECTION SHALL BE EFFECTIVE WITH RESPECT TO COMPENSATION PAID AFTER THE END OF
THE DIRECTOR’S INITIAL ELECTION PERIOD.

 

4.3.         MULTIPLE ELECTIONS. AN ELECTION TO DEFER COMPENSATION SHALL BE
EFFECTIVE ON THE DATE A DIRECTOR DELIVERS A COMPLETED DEFERRAL ELECTION FORM TO
THE COMMITTEE; PROVIDED, HOWEVER, THAT, IF THE DIRECTOR DELIVERS ANOTHER
PROPERLY COMPLETED DEFERRAL ELECTION FORM FOR THE COMMITTEE PRIOR TO THE CLOSE
OF THE DEFERRAL ELECTION PERIOD DESCRIBED IN SECTION 4.2, THE DEFERRAL ELECTION
ON THE FORM BEARING THE LATEST DATE SHALL CONTROL. AFTER THE LAST DAY OF THE
ELECTION PERIOD, THE CONTROLLING ELECTION MADE PRIOR TO THE CLOSE OF THE PERIOD
SHALL BE IRREVOCABLE. EXCEPT WITH RESPECT TO A NEW DIRECTOR ELECTION, IN ORDER
TO DEFER ANY PORTION OF COMPENSATION EARNED IN ANY CALENDAR YEAR, A DIRECTOR
MUST SUBMIT AT LEAST ONE COMPLETED DEFERRAL ELECTION FORM DURING THE DEFERRAL
ELECTION PERIOD.

 

4.4.         NO DEFERRAL ADJUSTMENTS. AFTER AN ANNUAL ELECTION HAS TAKEN EFFECT
FOR ANY PLAN YEAR, A PARTICIPANT MAY NOT INCREASE OR DECREASE THE PERCENTAGE OF
COMPENSATION TO BE DEFERRED DURING THAT PLAN YEAR.

 

5.                                      DEFERRED COMPENSATION ACCOUNTS

 

5.1.         MAINTENANCE OF ACCOUNTS. THE PLAN ADMINISTRATOR SHALL MAINTAIN ONE
OR MORE ACCOUNTS WITH RESPECT TO ANY COMPENSATION DEFERRED BY A DIRECTOR UNDER
SECTION 4 ABOVE. THE PLAN ADMINISTRATOR SHALL CREDIT THE ACCOUNT WITH THE FULL
AMOUNT OF COMPENSATION DEFERRED IN ANY PAYMENT PERIOD. IF THE COMPENSATION
DEFERRED IS SUBJECT TO FEDERAL OR STATE EMPLOYMENT TAXES (E.G., TAXES UNDER THE
FEDERAL INSURANCE CONTRIBUTIONS ACT OR FEDERAL UNEMPLOYMENT TAX ACT), SAID TAXES
SHALL BE WITHHELD AND DEDUCTED FROM A PORTION OF THE DIRECTOR’S COMPENSATION NOT
DEFERRED UNDER THIS PLAN. A PARTICIPANT OR INACTIVE PARTICIPANT SHALL BE FULLY
VESTED AT ALL TIMES IN AMOUNTS DEFERRED UNDER SECTION 4 ABOVE, AS ADJUSTED FOR
ANY INTEREST ACCRUALS, ADMINISTRATIVE EXPENSES, OR DISTRIBUTIONS AS DESCRIBED
BELOW.

 

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5.2.         INVESTMENT OF ACCOUNT BALANCES.

 

(A)           INTEREST ACCRUALS. ANY AMOUNTS CREDITED TO THE ACCOUNT OF A
PARTICIPANT OR INACTIVE PARTICIPANT AS A RESULT OF THE DEFERRAL OF ALL OR PART
OF HIS OR HER COMPENSATION SHALL ACCRUE INTEREST COMPOUNDED ANNUALLY, UNTIL SUCH
TIME AS THE PARTICIPANT OR INACTIVE PARTICIPANT SHALL ELECT ANOTHER INVESTMENT
CHOICE AS PROVIDED BELOW. THE ACCRUAL OF INTEREST BEGINS AND THE COMPOUNDING OF
INTEREST OCCURS ON JANUARY 1 OF EACH PLAN YEAR, EXCEPT FOR THE FIRST PLAN YEAR,
WHERE THE COMPOUNDING OF INTEREST SHALL BEGIN ON THE EFFECTIVE DATE. THE RATE AT
WHICH INTEREST ACCRUES FOR ANY PLAN YEAR SHALL EQUAL THE AVERAGE OF THE 3-MONTH
LIBOR FOR THE CALENDAR YEAR PRECEDING THE PLAN YEAR, PLUS 360 BASIS POINTS, OR
SUCH HIGHER RATE ESTABLISHED BY THE COMMITTEE, PROVIDED, HOWEVER, THAT IN NO
EVENT SHALL THE RATE BE LESS THAN FIVE PERCENT (5%) NOR GREATER THAN TWELVE
PERCENT (12%). IF THE FULL AMOUNT OF SUCH INTEREST ACCRUALS ARE ALLOCATED TO A
PARTICIPANT’S ACCOUNT, ANY FEDERAL, STATE, OR LOCAL INCOME OR EMPLOYMENT TAX
CONSEQUENCES ATTRIBUTABLE TO INTEREST ACCRUALS UNDER THIS SECTION 5.2 SHALL BE
BORNE BY OR INURE TO THE BENEFIT OF THE BANK. IF THE BANK ESTABLISHES A RABBI
TRUST FOR ALL OR A PORTION OF THE AMOUNTS CREDITED TO A PARTICIPANT’S ACCOUNT,
THE EARNINGS OR LOSSES ON SUCH CREDITED AMOUNTS SHALL BE DETERMINED UNDER THAT
TRUST AGREEMENT.

 

(b)           Hypothetical Investment Choices. The Committee shall establish one
or more hypothetical investment choices (“Investment Choices”) under this Plan
and may add to or change or discontinue any Investment Choice included in the
list of available Investment Choices in its absolute discretion; however, the
Plan may not offer the common stock of the Company as an Investment Choice. An
Investment Choice must qualify as a notional investment measure that qualifies
as a predetermined actual investment within the meaning of Treasury Regulation
Section 31.3121(v)(2)-(1)(d)(2), which generally will require an Investment
Choice to be an actual available investment (for example, a mutual fund or
common stock and not based on the greater of the rate of return of two or more
actual investments).

 

(c)           Allocation and Reallocation of Investment Choices. A Participant
may allocate amounts credited to his or her Account to one or more of the
Investment Choices authorized under the Plan. Subject to the rules established
by the Committee, a Participant may reallocate amounts credited to his or her
Account (to be effective as soon as administratively practicable) to one or more
of such Investment Choices, by filing with the Committee a notice, in such form
as may be specified by the Committee. The Committee may restrict allocations or
reallocations by specified Participants into or out of specified Investment
Choices or specify minimum amounts that may be allocated or reallocated by a
Participant; however, any such allocation or reallocation shall be made in
accordance with all applicable provisions of the Exchange Act and the
regulations promulgated thereunder, including but not limited to Section 16(b)
and the regulations thereunder.

 

(d)           Investment Return. In order to simulate an investment return for
the amounts held in each Participant’s Account, the account balance shall be
reduced for the reasonable transaction costs associated with the Participant’s
investment directions and be adjusted to recognize the hypothetical income,
appreciation and depreciation generated by the hypothetical investments that the
Account is deemed to be invested in.

 

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(e)           Trust. The Committee has deposited in the Trust Agreement for the
Willow Financial Bancorp, Inc. Deferred Compensation Plan, which is designed to
constitute a “rabbi trust,” amounts of cash or other property in an amount not
exceeding the amount of the Bank’s obligations with respect to the Participants’
Accounts established under this Section 5.2.

 

5.3.         UNPAID BALANCES. THE UNPAID BALANCE OF ALL ACCOUNTS PAYABLE UNDER
THE PLAN SHALL CONTINUE TO BE CREDITED WITH THE ACCRUALS OF INTEREST AS
DESCRIBED IN SECTION 5.2 ABOVE, UNLESS AN ALTERNATIVE INVESTMENT CHOICE IS
SELECTED BY A PARTICIPANT.

 

6.                                      IN-SERVICE WITHDRAWALS

 

6.1.         WITHDRAWALS ON PREVIOUSLY SPECIFIED DATES.    PRIOR TO A SEPARATION
FROM SERVICE, A PARTICIPANT SHALL RECEIVE A WITHDRAWAL OF AMOUNTS DEFERRED IN A
PARTICULAR PLAN YEAR UPON THE OCCURRENCE OF THE DATE AND PURSUANT TO THE FORM
SPECIFIED IN HIS OR HER DEFERRAL ELECTION FORM FOR THAT PLAN YEAR, UNDER SECTION
4.1 ABOVE, TO THE EXTENT THAT SUCH AMOUNTS HAVE NOT BEEN DISBURSED UNDER THIS
SECTION 6 PRIOR TO THAT DATE.

 

6.2.         OTHER WITHDRAWALS.    PRIOR TO A SEPARATION FROM SERVICE, A
PARTICIPANT MAY NOT WITHDRAW ANY FUNDS FROM HIS OR HER ACCOUNT, EXCEPT AS
PROVIDED IN SECTION 6.1.

 

6.3.         TERMINATION OF SERVICE.    SUBJECT TO A PARTICIPANT’S OR INACTIVE
PARTICIPANT’S ELECTION OF A DISTRIBUTION DATE AND FORM UNDER SECTION 4.1, UPON
THE SEPARATION FROM SERVICE OF A PARTICIPANT OR INACTIVE PARTICIPANT FOR ANY
REASON OTHER THAN DEATH, THE BANK SHALL DISTRIBUTE HIS OR HER ACCOUNT UNDER THE
PLAN, IN EITHER (I) A SINGLE LUMP SUM OR (II) SUBSTANTIALLY EQUAL ANNUAL
INSTALLMENTS OVER A PERIOD OF FIFTEEN YEARS. SUCH SELECTION MUST BE MADE AT THE
TIME THE DEFERRALS ARE ELECTED TO BE MADE IN SECTION 4.1. THE PAYMENT SHALL
OCCUR OR COMMENCE ON THE FIRST DAY OF THE MONTH FOLLOWING THE LAPSE OF SIX
MONTHS FOLLOWING THE DATE THE SEPARATION FROM SERVICE OCCURS (“START DATE”). IF
THE BENEFITS ARE TO BE PAID IN ANNUAL INSTALLMENTS, THE FIRST ANNUAL INSTALLMENT
SHALL BE PAID ON OR AS SOON AS PRACTICABLE FOLLOWING THE PARTICIPANT’S
SEPARATION FROM SERVICE (SUBJECT TO THE SIX-MONTH DELAY REQUIRED ABOVE), AND ALL
SUBSEQUENT ANNUAL PAYMENTS SHALL BE PAID ON THE ANNUAL ANNIVERSARY DATE OF THE
FIRST PAYMENT.

 

6.4.         DEATH PRIOR TO COMMENCEMENT OF DISTRIBUTIONS.    UPON THE DEATH OF
A PARTICIPANT OR INACTIVE PARTICIPANT PRIOR TO THE COMMENCEMENT OF ANY
DISTRIBUTION UNDER SECTION 6.3 ABOVE, THE ACCOUNTS OF SUCH PARTICIPANT OR
INACTIVE PARTICIPANT SHALL BE DISTRIBUTED TO HIS OR HER BENEFICIARY IN A LUMP
SUM. THE PAYMENT FROM THE ACCOUNTS SHALL OCCUR AS SOON AS ADMINISTRATIVELY
FEASIBLE AFTER THE DEATH OF THE PARTICIPANT OR INACTIVE PARTICIPANT.

 

6.5.         DEATH AFTER COMMENCEMENT OF DISTRIBUTIONS.    UPON THE DEATH OF A
PARTICIPANT OR INACTIVE PARTICIPANT AFTER THE COMMENCEMENT OF ANY DISTRIBUTION
IN ACCORDANCE WITH SECTION 6.3 ABOVE, THE BALANCE REMAINING IN THE ACCOUNT OF
SUCH PARTICIPANT OR INACTIVE PARTICIPANT SHALL BE DISTRIBUTED TO HIS OR HER
BENEFICIARY IN A LUMP SUM. THE PAYMENT FROM THE ACCOUNTS SHALL OCCUR AS SOON AS
ADMINISTRATIVELY FEASIBLE AFTER THE DEATH OF THE PARTICIPANT OR INACTIVE
PARTICIPANT.

 

6.6.         WITHHOLDING AND OTHER TAX CONSEQUENCES.    FROM ANY PAYMENTS MADE
UNDER THIS PLAN, THE BANK SHALL WITHHOLD ANY TAXES OR OTHER AMOUNTS WHICH
FEDERAL, STATE, OR LOCAL LAW

 

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REQUIRES THE BANK TO DEDUCT, WITHHOLD, AND DEPOSIT. THE BANK’S DETERMINATION OF
THE TYPE AND AMOUNT OF TAXES TO BE WITHHELD FROM ANY PAYMENT SHALL BE FINAL AND
BINDING ON ALL PERSONS HAVING OR CLAIMING TO HAVE AN INTEREST IN THIS PLAN OR IN
ANY ACCOUNTS UNDER THIS PLAN. ANY ADVERSE CONSEQUENCES INCURRED BY A PARTICIPANT
OR INACTIVE PARTICIPANT WITH RESPECT TO HIS OR HER PARTICIPATION IN THE PLAN OR
IN CONNECTION WITH A DISTRIBUTION FROM OR VESTING UNDER THE PLAN SHALL BE THE
SOLE RESPONSIBILITY OF THE PARTICIPANT OR INACTIVE PARTICIPANT.

 

6.7.         VESTING:  ALL BENEFITS ACCRUED UNDER THIS PLAN SHALL BE FULLY
VESTED AT ALL TIMES.

 

7.                                      FUNDING

 

All amounts deferred under this Plan shall remain or become general assets of
the Bank. All payments under this Plan shall come from the general assets of the
Bank. The amounts credited to a Director’s Accounts are not secured by any
specific assets of the Bank. This Plan shall not be construed to require the
Bank to fund any of the benefits provided hereunder or to establish a trust or
purchase insurance or other product for such purpose. The Bank may make such
arrangements as it desires to provide for the payment of benefits. Neither a
Director, Participant, or Inactive Participant nor his or her Beneficiary or
estate shall have any rights against the Bank with respect to any portion of any
Account under the Plan except as general unsecured creditors. No Director,
Participant, Inactive Participant, or Beneficiary has an interest in any Account
under this Plan until the Director, Participant, Inactive Participant, or
Beneficiary actually receives payment from the Account. Notwithstanding the
terms of this Section, the Bank may, but need not, establish a rabbi trust with
respect to all or a portion of a Participant’s Accounts.

 

8.                                      NON-ALIENATION OF BENEFITS

 

No Director, Participant, Inactive Participant, or Beneficiary may, except as
otherwise required by law, sell, assign, transfer, convey, hypothecate,
encumber, anticipate, pledge, or otherwise dispose of any interest in this Plan
or in any Account established under this Plan, and any attempt to do so shall be
void. No portion of any Account shall, prior to receipt thereof, be subject to
the debts, contracts, liabilities, or engagements of any Director, Participant,
Inactive Participant, or Beneficiary. Nothing in the preceding sentence shall
prohibit an offset of amounts which the Director, Participant, Inactive
Participant, or Beneficiary owes to the Bank at any time when there is a
distribution of his or her Accounts under this Plan, nor shall any provision of
the Plan impede the Bank from recovering directly from a Director, Participant,
Inactive Participant, or Beneficiary, or by offset against payments being made
to them, any payments to which he or she was not entitled under the Plan.

 

9.                                      LIMITATION OF RIGHTS

 

Nothing in this Plan document or in any related instrument shall cause this Plan
to be treated as a contract of employment within the meaning of the Federal
Arbitration Act, 9 U.S.C. 1 et. seq., or otherwise shall be construed as
evidence of any agreement or understanding, express or implied, that (a) the
Bank will employ any person at any particular position or level of Compensation,
or (b) any person will continue as a Director.

 

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10.                               AMENDMENT OR TERMINATION OF PLAN

 

10.1.        Amendment or Termination.    The Bank intends the Plan to be
permanent but reserves the right to amend or terminate the Plan when, in the
sole opinion of the Bank, such amendment or termination is advisable. Any such
amendment or termination shall be made pursuant to a resolution of the Board. In
addition, in the event that the Committee determines, after a review of Section
409A of the Code and all applicable Internal Revenue Service guidance, that the
Plan or payment election form needs to be further amended to comply with Section
409A of the Code, the Committee may amend the Plan or the payment election form
to make any changes required for it to comply with Section 409A of the Code.

 

10.2.        Effect of Amendment or Termination.

 

(a)           General.     No amendment or termination of the Plan shall
directly or indirectly reduce the vested portion of any account held hereunder
as of the effective date of such amendment or termination. A termination of the
Plan will not be a distributable event, except in the three circumstances set
forth in Section 10.2(b) below.

 

(b)           Termination.     Under no circumstances may the Plan permit the
acceleration of the time or form of any payment under the Plan prior to the
payment events specified herein, except as provided in this Section 10.2(b). The
Bank may, in its discretion, elect to terminate the Plan in any of the following
three circumstances and accelerate the payment of the entire unpaid balance of
the Participant’s vested benefits as of the date of such payment in accordance
with Section 409A of the Code:

 

(i)                                     the Plan is irrevocably terminated
within the 30 days preceding a Change in Control and (1) all arrangements
sponsored by the Bank that would be aggregated with the Plan under Treasury
Regulation §1.409A-1(c)(2) are terminated, and (2) the Participant and all
participants under the other aggregated arrangements receive all of their
benefits under the terminated arrangements within 12 months of the date the Bank
irrevocably takes all necessary action to terminate the Plan and the other
aggregated arrangements;

 

(ii)                                  the Plan is irrevocably terminated at a
time that is not proximate to a downturn in the financial health of the Bank and
(1) all arrangements sponsored by the Bank that would be aggregated with the
Plan under Treasury Regulation 1.409A-1(c) if the Participant participated in
such arrangements are terminated, (2) no payments are made within 12 months of
the date the Bank takes all necessary action to irrevocably terminate the
arrangements, other than payments that would be payable under the terms of the
arrangements if the termination had not occurred, (3) all payments are made
within 24 months of the date the Bank takes all necessary action to irrevocably
terminate the arrangements, and (4) the Bank does not adopt a new arrangement
that would be aggregated with the Plan under Treasury Regulation 1.409A-1(c) if
a Participant participated in both arrangements, at any time within three years
following the date the Bank takes all necessary action to irrevocably terminate
the Plan; or

 

8

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(iii)                               the Plan is terminated within 12 months of a
corporate dissolution taxed under Section 331 of the Code, or with the approval
of a bankruptcy court pursuant to 11 U.S.C. §503(b)(1)(A), provided that the
amounts deferred by a Participant under the Plan are included in the
Participant’s gross income in the later of (1) the calendar year in which the
termination of the Plan occurs, or (2) the first calendar year in which the
payment is administratively practicable.

 

11.                               ADMINISTRATIVE PROCEDURES AND DISPUTE
RESOLUTION

 

11.1.       PLAN ADMINISTRATOR. THE PLAN ADMINISTRATOR SHALL BE THE BANK. THE
BOARD OF DIRECTORS MAY ESTABLISH AN ADMINISTRATIVE COMMITTEE COMPOSED OF ANY
PERSONS, INCLUDING OFFICERS OR EMPLOYEES OF THE BANK, WHO ACT ON BEHALF OF THE
BANK IN DISCHARGING THE DUTIES OF THE BANK IN ADMINISTERING THE PLAN. NO
ADMINISTRATIVE COMMITTEE MEMBER WHO IS A FULL-TIME OFFICER OR EMPLOYEE OF THE
BANK SHALL RECEIVE COMPENSATION WITH RESPECT TO HIS OR HER SERVICE ON THE
ADMINISTRATIVE COMMITTEE. ANY MEMBER OF THE ADMINISTRATIVE COMMITTEE MAY RESIGN
BY DELIVERING HIS OR HER WRITTEN RESIGNATION TO THE BOARD OF DIRECTORS OF THE
BANK. THE BOARD MAY REMOVE ANY COMMITTEE MEMBER BY PROVIDING HIM OR HER WITH
WRITTEN NOTICE OF THE REMOVAL.

 

11.2.       COMMITTEE ORGANIZATION AND PROCEDURES.

 

A.   THE PRESIDENT OF THE BANK MAY DESIGNATE A CHAIRPERSON FROM THE MEMBERS OF
THE ADMINISTRATIVE COMMITTEE. THE ADMINISTRATIVE COMMITTEE MAY APPOINT ITS OWN
SECRETARY, WHO MAY OR MAY NOT BE A MEMBER OF THE ADMINISTRATIVE COMMITTEE AND
MAY OR MAY NOT BE A PERSON DISTINCT FROM THE SECRETARY OF THE BANK. THE
COMMITTEE SECRETARY SHALL HAVE THE PRIMARY RESPONSIBILITY FOR KEEPING A RECORD
OF ALL MEETINGS AND ACTS OF THE ADMINISTRATIVE COMMITTEE AND SHALL HAVE CUSTODY
OF ALL DOCUMENTS, THE PRESERVATION OF WHICH SHALL BE NECESSARY OR CONVENIENT TO
THE EFFICIENT FUNCTIONING OF THE ADMINISTRATIVE COMMITTEE. ALL REPORTS REQUIRED
BY LAW MAY BE SIGNED BY THE CHAIRPERSON OR ANOTHER MEMBER OF THE ADMINISTRATIVE
COMMITTEE, AS DESIGNATED BY THE CHAIRPERSON, ON BEHALF OF THE BANK.

 

B.   THE ADMINISTRATIVE COMMITTEE SHALL ACT BY A MAJORITY OF ITS MEMBERS IN
OFFICE AND MAY ADOPT SUCH RULES AND REGULATIONS AS IT DEEMS DESIRABLE FOR THE
CONDUCT OF ITS AFFAIRS.

 

11.3.       ADMINISTRATIVE AUTHORITY.   THE BANK AND THE COMMITTEE HAVE COMPLETE
DISCRETIONARY AUTHORITY TO PERFORM ALL FUNCTIONS NECESSARY OR APPROPRIATE TO THE
OPERATION OF THE PLAN, INCLUDING, WITHOUT LIMITATION, AUTHORITY TO (A) CONSTRUE
AND INTERPRET THE PROVISIONS OF THE PLAN DOCUMENT AND ANY RELATED INSTRUMENT AND
DETERMINE ANY QUESTION ARISING UNDER THE PLAN DOCUMENT OR RELATED INSTRUMENT, OR
IN CONNECTION WITH THE ADMINISTRATION OR OPERATION THEREOF, (B) DETERMINE IN ITS
SOLE DISCRETION ALL FACTS AND RELEVANT CONSIDERATIONS AFFECTING THE ELIGIBILITY
OF ANY DIRECTOR TO BE OR BECOME A PARTICIPANT; (C) DECIDE ELIGIBILITY (SUBJECT
TO SECTION 3) FOR, AND THE AMOUNT OF, BENEFITS FOR ANY PARTICIPANT, INACTIVE
PARTICIPANT, OR BENEFICIARY; (D) AUTHORIZE AND DIRECT ALL DISBURSEMENTS UNDER
THE PLAN; AND (E) EMPLOY AND ENGAGE SUCH PERSONS, COUNSEL, AND AGENTS AND TO
OBTAIN SUCH ADMINISTRATIVE, CLERICAL, MEDICAL, LEGAL, AUDIT, AND ACTUARIAL
SERVICES AS IT MAY DEEM NECESSARY IN CARRYING OUT THE PROVISIONS OF THE PLAN.
THE BANK SHALL BE THE “ADMINISTRATOR” AS DEFINED IN SECTION 3(16)(A) OF ERISA
FOR PURPOSES OF THE REPORTING AND

 

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DISCLOSURE REQUIREMENTS OF ERISA AND THE CODE. THE PRESIDENT OF THE BANK, OR IN
HIS OR HER ABSENCE, THE GENERAL COUNSEL OF THE BANK, SHALL BE THE AGENT FOR
SERVICE OF PROCESS ON THE PLAN.

 

11.4.       EXPENSES   ALL EXPENSES (INCLUDING FEES DESIGNATED BY COMMITTEE)
WHICH ARE NECESSARY TO OPERATE AND ADMINISTER THE PLAN, INCLUDING BUT NOT
LIMITED TO EXPENSES INCURRED IN CONNECTION WITH THE PROVISIONS OF SECTION 11.3,
SHALL BE PAID DIRECTLY BY THE BANK. SUCH EXPENSES MAY NOT BE CHARGED AGAINST
PARTICIPANT ACCOUNTS OR REDUCE THE AMOUNT OF COMPENSATION OR INTEREST ACCRUALS
ALLOCATED TO PARTICIPANT ACCOUNTS UNDER THE PLAN. ALL REASONABLE COSTS INCURRED
BY A COMMITTEE MEMBER IN THE DISCHARGE OF THE BANK’S OR HIS OR HER DUTIES UNDER
THE PLAN SHALL BE PAID OR REIMBURSED BY THE BANK. SUCH COSTS SHALL INCLUDE FEES
OR EXPENSES ARISING FROM THE COMMITTEE’S RETENTION, WITH THE CONSENT OF THE
BANK, OF ANY ATTORNEYS, ACCOUNTANTS, ACTUARIES, CONSULTANTS OR RECORDKEEPERS
REQUIRED BY THE COMMITTEE TO DISCHARGE ITS DUTIES UNDER THE PLAN. NOTHING IN THE
PRECEDING TWO SENTENCES OR IN ANY OTHER PROVISIONS OF THE PLAN SHALL REQUIRE THE
BANK TO PAY OR REIMBURSE ANY COMMITTEE MEMBER OR ANY OTHER PERSON FOR THE COST,
LIABILITY, LOSS, FEE, OR EXPENSE INCURRED BY THE COMMITTEE MEMBER OR OTHER
PERSON IN ANY DISPUTE WITH THE BANK, NOR MAY ANY COMMITTEE MEMBER OR OTHER
PERSON REIMBURSE HIMSELF, HERSELF, OR ITSELF FROM ANY PLAN CONTRIBUTIONS FOR ANY
SUCH COST, LIABILITY, LOSS, FEE, OR EXPENSE.

 

11.5.       INSURANCE.   THE BANK MAY, BUT NEED NOT, OBTAIN LIABILITY INSURANCE
TO PROTECT ITS DIRECTORS, OFFICERS, EMPLOYEES, OR REPRESENTATIVES AGAINST
LIABILITY IN THE OPERATION OF THE PLAN.

 

11.6.       CLAIMS PROCEDURE.

 

A.   A CLAIM FOR BENEFITS SHALL BE CONSIDERED FILED ONLY WHEN ACTUALLY RECEIVED
BY THE PLAN ADMINISTRATOR.

 

B.   ANY TIME A CLAIM FOR BENEFITS IS WHOLLY OR PARTIALLY DENIED, THE
PARTICIPANT, INACTIVE PARTICIPANT, OR BENEFICIARY (HEREINAFTER “CLAIMANT”) SHALL
BE GIVEN WRITTEN NOTICE OF SUCH DENIAL WITHIN 90 DAYS AFTER THE CLAIM IS FILED,
UNLESS SPECIAL CIRCUMSTANCES REQUIRE AN EXTENSION OF TIME FOR PROCESSING THE
CLAIM. IF THERE IS AN EXTENSION, THE CLAIMANT SHALL BE NOTIFIED OF THE EXTENSION
AND THE REASON FOR THE EXTENSION WITHIN THE INITIAL 90-DAY PERIOD. THE EXTENSION
SHALL EXPIRE WITHIN 180 DAYS AFTER THE CLAIM IS FILED. SUCH NOTICE WILL INDICATE
THE REASON FOR DENIAL, THE PERTINENT PROVISIONS OF THE PLAN ON WHICH THE DENIAL
IS BASED, AN EXPLANATION OF THE CLAIMS APPEAL PROCEDURE AND APPEAL TIME LIMITS
SET FORTH HEREIN, A DESCRIPTION OF ANY ADDITIONAL MATERIAL OR INFORMATION
NECESSARY TO PERFECT THE CLAIM, AND AN EXPLANATION OF WHY SUCH MATERIAL OR
INFORMATION IS NECESSARY. THE DENIAL WILL ALSO INCLUDE A STATEMENT DESCRIBING
THE CLAIMANT’S RIGHT TO BRING AN ACTION UNDER SECTION 502(A) OF ERISA FOLLOWING
AN ADVERSE DETERMINATION ON REVIEW.

 

11.7.       APPEAL PROCEDURES

 

A.   ANY PERSON WHO HAS HAD A CLAIM FOR BENEFITS DENIED BY THE PLAN
ADMINISTRATOR, OR IS OTHERWISE ADVERSELY AFFECTED BY THE ACTION OR INACTION OF
THE PLAN ADMINISTRATOR, SHALL HAVE THE RIGHT TO REQUEST REVIEW BY THE PLAN
ADMINISTRATOR. SUCH REQUEST MUST BE IN WRITING AND MUST BE RECEIVED BY THE PLAN
ADMINISTRATOR WITHIN 60 DAYS AFTER SUCH PERSON RECEIVES NOTICE OF THE PLAN
ADMINISTRATOR’S ACTION. IF WRITTEN REQUEST FOR REVIEW IS NOT MADE WITHIN SUCH
60-DAY PERIOD, THE CLAIMANT SHALL FORFEIT HIS OR HER RIGHT TO REVIEW. THE

 

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CLAIMANT OR A DULY AUTHORIZED REPRESENTATIVE OF THE CLAIMANT MAY REVIEW ALL
PERTINENT DOCUMENTS AND SUBMIT ISSUES AND COMMENTS IN WRITING.

 

B.   THE PLAN ADMINISTRATOR SHALL THEN REVIEW THE CLAIM. THE PLAN ADMINISTRATOR
MAY ISSUE A WRITTEN DECISION REAFFIRMING, MODIFYING, OR SETTING ASIDE ITS FORMER
ACTION WITHIN 60 DAYS AFTER RECEIPT OF THE WRITTEN REQUEST FOR A REVIEW, OR 120
DAYS IF SPECIAL CIRCUMSTANCES REQUIRE AN EXTENSION. THE CLAIMANT SHALL BE
NOTIFIED IN WRITING OF ANY SUCH EXTENSION WITHIN 60 DAYS FOLLOWING THE REQUEST
FOR A REVIEW. AN ORIGINAL OR COPY OF THE DECISION SHALL BE FURNISHED TO THE
CLAIMANT. A NOTIFICATION OF ADVERSE BENEFIT DETERMINATION SHALL SET FORTH, IN A
MANNER CALCULATED TO BE UNDERSTOOD BY THE CLAIMANT, (I) THE SPECIFIC REASON OR
REASONS FOR THE ADVERSE DETERMINATION; (II) REFERENCES TO THE SPECIFIC PLAN
PROVISIONS ON WHICH THE BENEFIT DETERMINATION IS BASED; (III) A STATEMENT THAT
THE CLAIMANT IS ENTITLED TO RECEIVE, UPON REQUEST AND FREE OF CHARGE, REASONABLE
ACCESS TO, AND COPIES OF, ALL DOCUMENTS, RECORDS, AND OTHER INFORMATION RELEVANT
TO THE CLAIM FOR BENEFITS; AND (IV) DESCRIBE THE CLAIMANT’S RIGHT TO BRING AN
ACTION UNDER SECTION 502(A) OF ERISA. THE DECISION SHALL BE FINAL AND BINDING
UPON THE CLAIMANT AND THE PLAN ADMINISTRATOR AND ALL OTHER PERSONS HAVING OR
CLAIMING TO HAVE AN INTEREST IN THE PLAN OR IN ANY ACCOUNT ESTABLISHED UNDER THE
PLAN.

 

11.8.       NOTICES.   ANY NOTICE FROM THE BANK OR THE COMMITTEE TO A DIRECTOR,
PARTICIPANT, INACTIVE PARTICIPANT, OR BENEFICIARY REGARDING THIS PLAN MAY BE
ADDRESSED TO THE LAST KNOWN RESIDENCE OF SAID PERSON AS INDICATED IN THE RECORDS
OF THE BANK. ANY NOTICE TO, OR ANY SERVICE OF PROCESS UPON, THE BANK OR THE
COMMITTEE WITH RESPECT TO THIS PLAN MAY BE ADDRESSED AS FOLLOWS:

 

Chief Financial Officer

Willow Financial Bank

170 South Warner Road

Wayne, Pennsylvania 19087

 

11.9.       INDEMNIFICATION.   TO THE EXTENT PERMITTED BY LAW, THE BANK SHALL,
AND HEREBY DOES, INDEMNIFY AND HOLD HARMLESS ANY DIRECTOR, OFFICER, OR EMPLOYEE
OF THE BANK WHO IS OR MAY BE DEEMED TO BE RESPONSIBLE FOR THE OPERATION OF THE
PLAN, FROM AND AGAINST ANY AND ALL LOSSES, CLAIMS, DAMAGES, OR LIABILITIES
(INCLUDING ATTORNEYS’ FEES AND AMOUNTS PAID, WITH THE APPROVAL OF THE BOARD, IN
SETTLEMENT OF ANY CLAIM) ARISING OUT OF OR RESULTING FROM A DUTY, ACT, OMISSION,
OR DECISION WITH RESPECT TO THE PLAN, SO LONG AS SUCH DUTY, ACT, OMISSION, OR
DECISION DOES NOT INVOLVE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT ON THE PART OF
SUCH DIRECTOR, OFFICER, OR EMPLOYEE. ANY INDIVIDUAL SO INDEMNIFIED SHALL, WITHIN
10 DAYS AFTER RECEIPT OF NOTICE OF ANY ACTION, SUIT, OR PROCEEDING, NOTIFY THE
PRESIDENT OF THE BANK (OR IN THE PRESIDENT’S ABSENCE, THE CHIEF FINANCIAL
OFFICER OF THE BANK) AND OFFER IN WRITING TO THE PRESIDENT (OR IN THE
PRESIDENT’S ABSENCE, THE CHIEF FINANCIAL OFFICER OF THE BANK) THE OPPORTUNITY,
AT THE BANK’S EXPENSE, TO HANDLE AND DEFEND SUCH ACTION, SUIT, OR PROCEEDING,
AND THE BANK SHALL HAVE THE RIGHT, BUT NOT THE OBLIGATION, TO CONDUCT THE
DEFENSE IN ANY SUCH ACTION, SUIT, OR PROCEEDING. AN INDIVIDUAL’S FAILURE TO GIVE
THE PRESIDENT (OR IN THE PRESIDENT’S ABSENCE, THE CHIEF FINANCIAL OFFICE OF THE
BANK) SUCH NOTICE AND OPPORTUNITY SHALL RELIEVE THE BANK OF ANY LIABILITY TO
SAID INDIVIDUAL UNDER THIS SECTION 11.9. THE BANK MAY SATISFY ITS OBLIGATIONS
UNDER THIS PROVISION (IN WHOLE OR IN PART) BY THE PURCHASE OF INSURANCE. ANY
PAYMENT BY AN INSURANCE CARRIER TO OR ON BEHALF OF SUCH INDIVIDUAL SHALL, TO THE
EXTENT OF SUCH PAYMENT, DISCHARGE ANY OBLIGATION OF THE BANK TO THE INDIVIDUAL
UNDER THIS INDEMNIFICATION.

 

11

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12.                               MISCELLANEOUS

 

12.1.       ALTERNATIVE ACTS AND TIMES.   IF IT BECOMES IMPOSSIBLE OR BURDENSOME
FOR THE BANK OR THE COMMITTEE TO PERFORM A SPECIFIC ACT AT A SPECIFIC TIME
REQUIRED BY THIS PLAN, THE BANK OR THE COMMITTEE MAY PERFORM SUCH ALTERNATIVE
ACT WHICH MOST NEARLY CARRIES OUT THE INTENT AND PURPOSE OF THIS PLAN AND MAY
PERFORM SUCH REQUIRED OR ALTERNATIVE ACT AT A TIME AS CLOSE AS ADMINISTRATIVELY
FEASIBLE TO THE TIME SPECIFIED IN THIS PLAN FOR SUCH PERFORMANCE.

 

12.2.       MASCULINE AND FEMININE, SINGULAR AND PLURAL.   WHENEVER USED HEREIN,
PRONOUNS SHALL INCLUDE ALL GENDERS, AND THE SINGULAR SHALL INCLUDE THE PLURAL,
AND THE PLURAL SHALL INCLUDE THE SINGULAR, WHENEVER THE CONTEXT SHALL PLAINLY SO
REQUIRE.

 

12.3.       GOVERNING LAW AND SEVERABILITY.   THIS PLAN SHALL, EXCEPT AS
EXPRESSLY PROVIDED FOR HEREUNDER, BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE COMMONWEALTH OF PENNSYLVANIA (EXCLUSIVE OF ITS PROVISIONS REGARDING
CONFLICTS OF LAW) TO THE EXTENT THAT SUCH LAWS ARE NOT PREEMPTED BY ERISA OR
OTHER FEDERAL LAWS. IF ANY PROVISION OF THIS PLAN SHALL BE HELD ILLEGAL OR
INVALID FOR ANY REASON, SUCH DETERMINATION SHALL NOT AFFECT THE REMAINING
PROVISIONS OF THIS PLAN, WHICH SHALL BE CONSTRUED AS IF SAID ILLEGAL OR INVALID
PROVISIONS HAD NEVER BEEN INCLUDED.

 

12.4.       FACILITY OF PAYMENT.   IF THE PLAN ADMINISTRATOR, IN ITS SOLE
DISCRETION, DETERMINES THAT ANY DIRECTOR, PARTICIPANT, INACTIVE PARTICIPANT, OR
BENEFICIARY BY REASON OF INFIRMITY, MINORITY, OR OTHER DISABILITY, IS
PHYSICALLY, MENTALLY, OR LEGALLY INCAPABLE OF GIVING A VALID RECEIPT FOR ANY
PAYMENT DUE HIM OR HER OR IS INCAPABLE OF HANDLING HIS OR HER OWN AFFAIRS AND IF
THE PLAN ADMINISTRATOR IS NOT AWARE OF ANY LEGAL REPRESENTATIVE APPOINTED ON HIS
OR HER BEHALF, THEN THE PLAN ADMINISTRATOR, IN ITS SOLE DISCRETION, MAY DIRECT
(A) PAYMENT TO OR FOR THE BENEFIT OF THE DIRECTOR, PARTICIPANT, INACTIVE
PARTICIPANT, OR BENEFICIARY; (B) PAYMENT TO ANY PERSON OR INSTITUTION
MAINTAINING CUSTODY OF THE DIRECTOR, PARTICIPANT, INACTIVE PARTICIPANT, OR
BENEFICIARY; OR (C) PAYMENT TO ANY OTHER PERSON SELECTED BY THE PLAN
ADMINISTRATOR TO RECEIVE, MANAGE, AND DISBURSE SUCH PAYMENT FOR THE BENEFIT OF
THE DIRECTOR, PARTICIPANT, INACTIVE PARTICIPANT, OR BENEFICIARY. THE RECEIPT BY
ANY SUCH PERSON OF ANY SUCH PAYMENT SHALL BE A COMPLETE ACQUITTANCE THEREFOR;
AND ANY SUCH PAYMENT, TO THE EXTENT THEREOF, SHALL DISCHARGE THE LIABILITY OF
THE BANK, THE COMMITTEE, AND THE PLAN FOR ANY AMOUNTS OWED TO THE DIRECTOR,
PARTICIPANT, INACTIVE PARTICIPANT, OR BENEFICIARY HEREUNDER. IN THE EVENT OF ANY
CONTROVERSY OR UNCERTAINTY REGARDING WHO SHOULD RECEIVE OR WHOM THE PLAN
ADMINISTRATOR SHOULD SELECT TO RECEIVE ANY PAYMENT UNDER THIS PLAN, THE PLAN
ADMINISTRATOR MAY SEEK INSTRUCTION FROM A COURT OF PROPER JURISDICTION OR MAY
PLACE THE PAYMENT (OR ACCOUNT) INTO SUCH COURT WITH FINAL DISTRIBUTION TO BE
DETERMINED BY SUCH COURT.

 

12.5.       CORRECTION OF ERRORS.   ANY CREDITING OF COMPENSATION OR INTEREST
ACCRUALS TO THE ACCOUNTS OF ANY DIRECTOR, PARTICIPANT, INACTIVE PARTICIPANT, OR
BENEFICIARY UNDER A MISTAKE OF FACT OR LAW SHALL BE RETURNED TO THE BANK. IF A
DIRECTOR, PARTICIPANT, INACTIVE PARTICIPANT, OR BENEFICIARY IN AN APPLICATION
FOR A BENEFIT OR IN RESPONSE TO ANY REQUEST BY THE BANK OR THE PLAN
ADMINISTRATOR FOR INFORMATION, MAKES ANY ERRONEOUS STATEMENT, OMITS ANY MATERIAL
FACT, OR FAILS TO CORRECT ANY INFORMATION PREVIOUSLY FURNISHED INCORRECTLY TO
THE BANK OR THE PLAN ADMINISTRATOR, OR IF THE PLAN ADMINISTRATOR MAKES AN ERROR
IN DETERMINING THE AMOUNT PAYABLE TO A DIRECTOR, PARTICIPANT, INACTIVE
PARTICIPANT, OR BENEFICIARY, THEN THE BANK OR THE PLAN ADMINISTRATOR MAY CORRECT
ITS ERROR AND ADJUST ANY PAYMENT ON THE BASIS OF CORRECT FACTS. THE

 

12

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AMOUNT OF ANY OVERPAYMENT MAY BE DEDUCTED FROM OR ADDED TO THE NEXT SUCCEEDING
PAYMENTS, OR THE PLAN ADMINISTRATOR MAY MAKE A REQUEST FOR REIMBURSEMENT FROM
THE DIRECTOR, PARTICIPANT, INACTIVE PARTICIPANT OR BENEFICIARY AS DIRECTED BY
THE PLAN ADMINISTRATOR. THE PLAN ADMINISTRATOR AND THE BANK RESERVE THE RIGHT TO
MAINTAIN ANY ACTION, SUIT, OR PROCEEDING TO RECOVER ANY AMOUNTS IMPROPERLY OR
INCORRECTLY PAID TO ANY PERSON UNDER THE PLAN OR IN SETTLEMENT OF A CLAIM OR
SATISFACTION OF A JUDGMENT INVOLVING THE PLAN.

 

12.6.       MISSING PERSONS.   IN THE EVENT A DISTRIBUTION OF A PART OR ALL OF
AN ACCOUNT IS REQUIRED TO BE MADE FROM THE PLAN TO A DIRECTOR, PARTICIPANT,
INACTIVE PARTICIPANT, OR BENEFICIARY, AND SUCH PERSON CANNOT BE LOCATED, THE
RELEVANT PORTION OF THE ACCOUNT SHALL REMAIN SUBJECT TO THE PLAN. IF THE
AFFECTED DIRECTOR, PARTICIPANT, INACTIVE PARTICIPANT, OR BENEFICIARY LATER
CONTACTS THE BANK, HIS OR HER PORTION OF THE ACCOUNT SHALL BE REINSTATED AND
DISTRIBUTED AS SOON AS ADMINISTRATIVELY FEASIBLE. PRIOR TO FORFEITING ANY
ACCOUNT, THE BANK SHALL ATTEMPT TO CONTACT THE DIRECTOR, PARTICIPANT, INACTIVE
PARTICIPANT, OR BENEFICIARY BY RETURN RECEIPT MAIL (OR OTHER CARRIER) AT HIS OR
HER LAST KNOWN ADDRESS ACCORDING TO THE BANK’S RECORDS AND, WHERE PRACTICAL, BY
LETTER-FORWARDING SERVICES OFFERED THROUGH THE INTERNAL REVENUE SERVICE, OR THE
SOCIAL SECURITY ADMINISTRATION, OR SUCH OTHER MEANS AS THE PLAN ADMINISTRATOR
DEEMS APPROPRIATE.

 

12.7.        Plan Frozen.   Notwithstanding anything herein to the contrary, any
and all provisions of the Plan shall be interpreted consistent with the fact
that the Plan has been frozen effective as of the Closing Date (including the
freezing of participation in the Plan as of the Closing Date).

 

IN WITNESS WHEREOF, the designated officer has executed this document on the
date set forth adjacent to his or her signature below.

 

 

Willow Financial Bank

 

 

Dated:

October 23, 2007

 

By:

/s/ Donna M. Coughey

 

 

 

 

Title:

President and Chief Executive Officer

 

 

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