Exhibit 10.16
Federal Home Loan Bank of Pittsburgh
Supplemental Thrift Plan
Amended and Restated Effective June 26, 2007

 

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Table of Contents

              Article       Page  
 
  Preamble     1  
 
           
I.
  Definitions     2  
 
           
II.
  Participation and Vesting     5  
 
           
III.
  Deferral Elections; Employee Deferrals; Bank Deferrals     6  
 
           
IV.
  Accounts and Investment Vehicles     8  
 
           
V.
  Distribution of Benefits     9  
 
           
VI.
  Administration of the Plan     12  
 
           
VII.
  General Provisions     14  

 

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Preamble
The Federal Home Loan Bank of Pittsburgh (the “Bank”) participates in the
Financial Institutions Thrift Plan (the “Thrift Plan”), a retirement savings
plan qualified under the Internal Revenue Code (the “Code”) for employees of the
Federal Home Loan Bank of Pittsburgh. The Thrift Plan permits eligible employees
to elect to reduce and defer a percentage of their compensation, contributing
the same to the Thrift Plan. The Bank matches employee contributions based on
length of service and the amount of employee contributions.
However, as a result of the limitations imposed upon the aggregate amount of
contributions which can be made to the Thrift Plan under Section 415 and other
sections of the Code, such limitations causing a reduction in the benefits
otherwise provided to certain of the Bank’s executives, the Bank has adopted
this nonqualified, unfunded Supplemental Thrift Plan (the “Plan”). The purpose
of this Plan is to allow those employees whose benefits under the Thrift Plan
would otherwise be significantly restricted by the terms of the Thrift Plan
itself or the Code to make elective pretax deferrals and to receive the Bank
match relating to such deferrals. Additionally, under the Plan, the Bank will
match 200 percent of such employee’s contributions; provided, however, that the
Bank’s matching contribution will not exceed the excess of 3 percent of the
employee’s compensation (as defined in the Plan) over the Bank’s contribution to
the Thrift Plan.

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Article I
Definitions

1.1   “Account” means the book reserve account established and maintained
hereunder to record the contributions deemed to be made by the Participant and
the Bank, as well as the increase in value attributable to the earnings thereon,
all as described hereafter.   1.2   “Bank” means the Federal Home Loan Bank of
Pittsburgh.   1.3   “Bank Deferral” means an amount allocated by the Bank to a
Participant’s Account pursuant to Section 3.3.   1.4   “Beneficiary” means the
person or persons designated by a Participant under the provisions of this
Supplemental Thrift Plan to receive his/her benefits in the event of his/her
death prior to receipt of all benefits hereunder. If no person is designated by
a Participant or the designated person or persons do not survive the
Participant, the Participant’s Beneficiary shall be his/her estate. If a
Beneficiary who is receiving payments from a Participant’s Account dies before
the entire Account has been distributed, the remaining payments shall be made to
the Beneficiary’s estate.   1.5   “Board” or “Board of Directors” means the
Board of Directors of the Federal Home Loan Bank of Pittsburgh.   1.6   “Code”
means the Internal Revenue Code of 1986, as amended from time to time.   1.7  
“Compensation” means the annual base salary plus incentive compensation. The
portion of any incentive compensation award under a VIP (as defined below) that
is included in “Compensation” shall not exceed the maximum amount of incentive
compensation that would have been included for such Participant in that year if
the Bank’s short-term incentive compensation plan in effect as of June 25, 2007
continued in effect after 1/01/2008. Incentive compensation under an LTI (as
defined below) shall be excluded from the definition of “Compensation.”   1.8  
“Deferral Election” means a Participant’s irrevocable election to defer a
portion of his/her Compensation.   1.9   “Deferral Period” means the period
commencing with the date a Deferred Amount is first credited to a Participant’s
Account and continuing until payment of the final installment of a Participant’s
Deferred Amount.   1.10   “Deferred Amount” means the sum of all amounts
deferred pursuant to a Participant’s Deferral Election, plus the Bank match,
plus investment earnings thereon, plus any increments thereof credited to the
Participant’s Account, less any benefit payments made from the Participant’s
Account.   1.11   “Disability” means with respect to eligibility for payment of
a Participant’s vested benefit under the Plan through December 31, 2004, a
Participant’s total or partial disability as

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    determined by the Thrift Plan in accordance with the Thrift Plan in effect
at October 3, 2004. With respect to eligibility for payment of a Participant’s
vested benefit amounts under the Plan after December 31, 2004, “Disability”
means that the Participant is: a) 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; b) 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
three months under an accident and health plan covering employees of the Bank;
or c) determined to be totally disabled by the Social Security Administration.  
1.12   “Effective Date” means January 1, 1991.   1.13   “Employee Deferral”
means an amount deferred by a Participant under the Plan.   1.14   “Human
Resources Committee” means the Human Resources Committee of the Board.   1.15  
“LTI” means any Long-Term Incentive Compensation Plan maintained by the Bank
from time to time.   1.16   “Participant” means an executive or other key
employee who has been recommended by the President, and confirmed by the Board,
as eligible to participate in the Plan.   1.17   “Plan Administrator” means such
officer(s) or manager of the Bank who has been appointed by the Human Resources
Committee to administer the Plan as set forth in Section 6.1 of the Plan. The
Human Resources Managing Director shall serve as the Plan Administrator unless
the Board shall appoint another Bank officer(s) or manager.   1.18   “Retention
Incentive” means that portion of a Participant’s award under the Bank’s
short-term Variable Incentive Compensation Plan (“VIP”), if any, that is subject
to forfeiture under the terms of the VIP.   1.19   “Separation from Service”
means the Participant’s death, retirement, the time at which the Participant’s
services performed for the Bank are permanently reduced to no more than 20
percent of the average level of services performed by the Participant over the
preceding 36-month period, or other termination of employment all as set forth
in applicable definitions under 26 C.F.R. 1. 409A-1(h) and related and successor
regulations as may be in effect from time to time.   1.20   “Unforeseeable
Emergency” means: a) a severe financial hardship to a Participant resulting from
an illness or accident of: (i) the Participant; (ii) the Participant’s spouse;
(iii) the Participant’s dependent as defined in Code Section 152(a)); or (iv) if
the Participant is already receiving payments under the Supplemental Thrift
Plan, a severe financial hardship resulting from illness or accident of the
Beneficiary; b) loss of the Participant’s property due to casualty; or c) other
similar extraordinary and

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    unforeseeable circumstances arising as a result of events beyond the control
of the Participant.   1.21   “VIP” means the Bank’s short-term Variable
Incentive Compensation Plan adopted by the Bank’s Board of Directors effective
January 1, 2008 under which annual incentive compensation awards may be made.

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Article II
Participation and Vesting

2.1   Eligibility to Participate. A Participant shall become eligible for Plan
participation on the later of the first day of the calendar month coincident
with or next following the date his/her participation is approved by the Board
or the Effective Date. Once selected as a Participant, the Participant shall
continue as a Participant until the Board determines otherwise. No Participant
shall have the right to continue as a Participant in the Plan.       Upon
designation as a Participant, each Participant will be given a copy of the Plan.
Upon becoming eligible to participate in the Plan, a Participant shall have the
option to make a Deferral Election to defer a portion of his/her annual
Compensation.   2.2   Termination of Participation. No further Employee
Deferrals or Bank Deferrals shall occur with respect to a Participant after the
Participant’s employment with the Bank terminates. However, until the amounts in
a Participant’s Account are fully paid out to the Participant and/or his/her
Beneficiary, the Participant’s Account shall continue to be notionally invested
as provided in Section 4.2, and the Participant (or his/her Beneficiary) shall
continue to have the right to change such investments by written notice to the
Plan Administrator. Once a Participant’s Account has been fully paid out, such
Participant shall cease to be a Participant in the Plan and neither the
Participant nor his/her Beneficiary shall have any further rights hereunder.  
2.3   Vesting. All benefits under the Plan are fully vested at all times subject
only to Forfeiture for Cause as defined in Section 7.6. For all purposes of the
Plan, earnings with respect to amounts in a Participant’s Account which were
vested as of December 31, 2004 (and earnings on such earnings) shall be deemed
to have been vested as of December 31, 2004 and all other earnings with respect
to amounts in a Participant’s Account shall be deemed not to have been vested as
of December 31, 2004.

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Article III
Deferral Elections; Employee Deferrals; Bank Deferrals

3.1   Deferral Elections. The Plan Administrator shall provide each Participant
with a form on which to make a Deferral Election within 10 days after such
Participant becomes eligible to participate in the Plan and at least 30 days
prior to the end of each calendar year. Each Participant shall execute and
deliver the Deferral Election to the Plan Administrator no later than the last
business day of each calendar year with respect to Compensation to be earned and
amounts eligible pursuant to an LTI or VIP, excluding the Retention Incentive
portion, to be earned in the following calendar year.       An executive who
becomes eligible to participate during a calendar year shall have the option to
execute a Deferral Election and deliver it to the Administrator within 30 days
of the date he/she becomes eligible to participate in the Plan. Such election
shall apply only to Compensation and amounts pursuant to an LTI or VIP, (if
applicable) to be earned after the date of the delivery of the Deferral Election
to the Administrator and the Bank shall defer such amounts on a prorated basis
when applicable.       The Deferral Election will state the percentage of
Compensation and amounts eligible to be earned pursuant to an LTI or VIP (as
applicable) which the Participant elects to defer for the remainder of the first
year of his/her eligibility or for the forthcoming calendar year, as the case
may be. In the case of the deferral of a VIP amount, it is expressly agreed that
the Retention Incentive portion of VIP incentive compensation is not subject to
deferral. A Deferral Election shall be irrevocable for the calendar year (or
portion thereof in the case of the first year of eligibility) for which the
deferral is elected unless an amendment of the Thrift Plan requires a new
election by a Participant, and such a new election is permissible under I.R.C.
Section 409A and implementing regulations. If such an event occurs, the Plan
Administrator will communicate in writing with the Participant to request a new
Deferral Election. Notwithstanding an amendment of the Thrift Plan:

  (a)   (i) As to amounts earned in the first calendar year of participation, no
modification of a Deferral Election may be made more than thirty (30) days after
a Participant becomes eligible to participate in the Plan; and (ii) as to
amounts earned in the second and subsequent calendar years of participation, no
modification of a Deferral Election may be made after December 31 of the
calendar year preceding the calendar year in which the amounts are earned; and  
  (b)   as to amounts in a Participant’s Account which are not vested as of
December 31, 2004, the last four sentences of Section 5.5 shall apply.

3.2   Employee Deferrals. Once the Participant has made the maximum amount of
employee contributions allowable under the Thrift Plan in a calendar year,
additional amounts shall be deferred under this Plan in accordance with the
Participant’s Deferral Election. Amounts deferred under this Plan with respect
to any calendar year may not exceed 80 percent of the sum of the Participant’s
Compensation and amounts earned pursuant to an LTI and VIP, if applicable,
during such calendar year less the

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    Participant’s contributions to the Thrift Plan. For this purpose, a
Participant’s contributions to the Thrift Plan shall include any after-tax
contributions to the Thrift Plan by such Participant.   3.3   Bank Deferrals.
For each Employee Deferral, the Bank shall allocate a matching Bank Deferral
equal to 200 percent of the Employee Deferral; provided that, Bank Deferrals for
each Participant with respect to each calendar year shall not exceed the excess
of (a) three percent of the Participant’s Compensation over (b) the Bank’s
matching contribution to the Thrift Plan.

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Article IV
Accounts and Investment Vehicles

4.1   Accounts. The total of the Employee and Bank Deferrals shall be credited
monthly to the applicable Participant Account as the deferred amounts are earned
and shall be recorded on the financial books and records of the Bank as a
liability owed to the Participant.   4.2   Notional Investments. Effective
November 1, 2007, all Employee and Bank Deferrals credited to a Participant’s
Account will be assumed to be notionally invested in the investment funds
selected by Participant from time to time from a list provided to the
Participant by the Bank (such list is referred to as the “Eligible
Investments”). Such Eligible Investments shall be substantially similar to the
investment choices available under the Thrift Plan from time to time. Each
Participant’s notional share in the investment funds shall be represented by
notional units in such funds. Each valuation day the number of new notional
units credited to a Participant in the investment funds will be determined by
dividing the total amount of such Participant’s Employee and Bank Deferrals
notionally invested in the investment funds during the month by the unit value
of the investment funds as of the most recent valuation date. The notional
allocations of Employee and Bank Deferrals to the investment funds shall be as
set forth in the investment election forms completed by each Participant and
submitted to the Plan Administrator from time to time. Such election forms may
be submitted in electronic form or, at the option of the Participant in written
form.   4.3   Records. The Plan Administrator shall maintain such records as it
deems necessary to administer this Plan and shall direct the calculation of
amounts in the Participants’ Accounts. To this end, the Plan Administrator is
authorized to use Bank employees, agents or contractors to calculate the
benefits due hereunder.

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Article V
Distribution of Benefits

5.1   Amount of Benefits. A Participant’s Account shall be valued as of the last
day of the month preceding each month with respect to which the Participant is
entitled to receive a distribution hereunder, assuming no contributions were
made since the last day of the preceding month. If a contribution was made since
the last day of the preceding month, the amount of such contribution shall be
added to the value determined under the preceding sentence.   5.2   Events Which
Trigger Payment of Amounts Vested as of 12/31/04. The amounts in a Participant’s
Account which are vested as of December 31, 2004, including all earnings
thereon, shall become payable to him/her pursuant to Section 5.3 as of the
earliest of the date of his/her termination of employment with the Bank,
including termination due to death, his/her Disability, or his/her retirement or
other Separation from Service as defined above. With respect to amounts in a
Participant’s Account which are vested as of December 31, 2004, notwithstanding
any deferral election previously made, a Participant may at any time submit a
request, through the Plan Administrator, to the Human Resources Committee
seeking a distribution of part or all of such amounts for reasons of severe
financial hardship or other reasons as permitted under the provisions of the
Thrift Plan in its form as of October 3, 2004. The Human Resources Committee
may, in its absolute discretion, grant or refuse any such request. It is the
intention of the Board that hardship and other withdrawals of amounts in a
Participant’s Account which are vested as of December 31, 2004 shall be
available for the same reasons as such withdrawals are available from the Thrift
Plan (in its form as of October 3, 2004) and that the Participant shall provide
such proof and documentation as is required for hardship and other withdrawals
from the Thrift Plan.   5.3   Amounts Vested as of 12/31/04 – Form and Timing of
Payment. When a Participant’s Account is payable pursuant to Section 5.2, it
shall be paid in a lump sum within 90 days following the applicable payment
event set forth in Section 5.2. Alternatively, if the Participant has so
elected, the Participant’s Account shall be paid in from two to ten annual
installments. In the case of installment payments, the first installment payment
shall be made within 90 days of the applicable payment event set forth in
Section 5.2 and each remaining annual installment shall be paid no later than
March 31 of each succeeding year. The amount of the installment payment to be
distributed in each calendar year shall be the amount calculated by dividing the
value of the Participant’s Account as of the immediately preceding month-end by
the number of remaining installment payments, including the one whose value is
being calculated. The elections and any changes to an election which are
permitted hereunder will become effective on the first January 1 which is at
least twelve months after the date of the election. Failure to make an election
shall result in a lump sum payment within 90 days of the triggering payment
event.   5.4   Events Which Trigger Payment of Amounts Not Vested as of
12/31/04. The amount in a Participant’s Account which is not vested as of
December 31, 2004, including all

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    earnings thereon, shall become payable to him/her pursuant to Section 5.5 as
of the earliest of the date of his/her termination of employment with the Bank
(including retirement or other Separation from Service as defined above),
his/her Disability or his/her death. With respect to amounts in a Participant’s
Account which are not vested as of December 31, 2004, notwithstanding any
deferral election previously made, in the event that a Participant suffers an
Unforeseeable Emergency, the Participant may submit a request, through the Plan
Administrator, to the Human Resources Committee seeking a distribution of part
or all of the amount credited to such Participant’s Account. The Human Resources
Committee may, in its absolute discretion, grant or refuse any such request. The
amount of a distribution that the Bank may make hereunder in response to such a
Participant request shall be limited to the amount needed to satisfy the
Unforeseeable Emergency plus taxes reasonably anticipated as a result of the
distribution. Distributions shall not be allowed to the extent that the
Unforeseeable Emergency may be relieved through reimbursement or compensation by
insurance or otherwise, or by liquidation of a Participant’s assets (to the
extent such liquidation would not itself cause a severe financial hardship).  
5.5   Amounts Not Vested as of 12/31/04 – Form of Payment. When a Participant’s
Account is payable pursuant to Section 5.4, it shall be paid in a lump sum
within 90 days following the applicable payment event set forth in Section 5.4.
Alternatively, if the Participant has so elected, the Participant’s Account
shall be paid in from two to ten annual installments. Failure to make an
election at any time shall result in a lump sum payment. Any change in an
installment payment election, from an installment payment election to a lump sum
election or from a lump sum election to an installment payment election
(“Revised Election”) will become effective on the first January 1 which is at
least twelve months after the date of the election. In addition, with respect to
any such Revised Election which changes the timing of any payment, each payment
to be made to the Participant shall be deferred by a date which is at least
5 years after the date on which such payment would have been made; provided
that, for this purpose, a series of installment payments shall be treated as the
entitlement to a single payment on the date of the first payment. A Revised
Election which changes an Existing Election from installment payments to a lump
sum payment shall require that the date of such lump sum payment shall be a date
that is at least 5 years from the date the initial installment payment would
have been made. Notwithstanding the foregoing or any provision in this Plan, a
Revised Election may not cause the impermissible acceleration of any payment,
within the meaning of Internal Revenue Code Section 409A or its implementing
regulations.   5.6   Amounts Not Vested as of 12/31/04 – Timing and Calculation
of Installment Payments. Installment payments under this Plan shall be made as
follows: the first payment shall be made within 90 days of the payment event
with each remaining annual installment paid no later than March 31 of each
succeeding year. The amount of the installment payment to be distributed in each
calendar year shall be the amount calculated by dividing the value of the
Participant’s Account as of the immediately preceding month end by the number of
remaining installment payments, including the one whose value is being
calculated.

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5.7   Amounts Not Vested as of 12/31/04 – Revision of Existing Payment Election
Prior to 12/31/07. The Plan is hereby amended to permit each Participant, on or
before December 31, 2007, to amend his/her current payment election as in effect
on June 25, 2007, covering amounts not vested as of December 31, 2004. Such a
revised payment election shall be referred to as a “Transition Election.”
Provided that such Transition Election does not result in a payment in 2007,
such Transition Election shall become effective upon receipt by the Plan
Administrator and shall not be subject to the terms of Section 5.5. Any
Transition Election shall be subject to the requirements of I.R.S. Notice
2006-79.   5.8   Death Benefits. In the event of a Participant’s death prior to
the payment of all amounts in the Participant’s Account, the amount then held in
the Participant’s Account shall become payable to his/her Beneficiary in the
same manner as such amount would have been paid to the Participant had he/she
not died.   5.9   Loans. No loans are available from the Plan.

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Article VI
Administration of the Plan

6.1   Human Resources Committee. The Board has delegated to the Human Resources
Committee authority over, and responsibility for, the interpretation and
administration of the Plan; except that the power to determine eligibility for
participation in the Plan pursuant to Section 2.1 is reserved to the Board. The
Human Resources Committee shall interpret and construe the Plan and have the
responsibility to ensure that its provisions are carried out. The Human
Resources Committee shall exercise such power and responsibilities in its sole
and absolute discretion. The Human Resources Committee shall designate the Plan
Administrator.   6.2   Plan Administration. The Plan Administrator shall:

  (a)   act as the point of contact for submission of claims for benefits due
under the Plan;     (b)   calculate the benefits due under the Plan or arrange
for the calculation of benefits;     (c)   inform Participants of the terms of
the Plan and respond to their questions regarding the Plan;     (d)   review and
process claims for the payment of benefits under the Plan;     (e)   provide
necessary reporting to Bank management, Participants, the Human Resources
Committee, the Board, and others as necessary; and     (f)   take such other
action as is required to perform the tasks listed hereunder or otherwise
administer the terms of the Plan. In fulfilling the responsibilities in this
section, the Plan Administrator may use other Bank staff, other agents or engage
contractors.

6.3   Claims Procedure. All claims for benefits shall be in writing and shall be
filed with the Plan Administrator. If the Plan Administrator wholly or partially
denies a Participant’s or Beneficiary’s claim for benefits, the Plan
Administrator shall, within 90 days after the Plan’s receipt of the claim, give
the claimant written notice setting forth in understandable language:

  (a)   the specific reason(s) for the denial;     (b)   specific reference to
pertinent Plan provisions on which the denial is based;     (c)   a description
of any additional material or information which must be submitted to perfect the
claim, and an explanation of why such material or information is necessary; and

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  (d)   an explanation of the Plan’s review procedure.

The claimant shall have 60 days after the day on which such written notice of
denial is handed or mailed to him/her in which to apply (in person or by
authorized representative) to the Human Resources Committee, in writing, for a
full and fair review of the denial of this claim. In connection with such
review, the claimant (or this representative) shall be afforded a reasonable
opportunity to review pertinent documents and may submit issues and comments in
writing.
The Human Resources Committee shall issue its decision on review promptly and
within 60 days after the Plan’s receipt of the request for review, unless
special circumstances require an extension to not later than 120 days after
receipt of the request for review. (Written notice of any such extension shall
be furnished to the claimant before the commencement of such extension.) The
decision shall be in writing and shall set forth in understandable language
specific reasons for the decision and specific references to pertinent Plan
provisions on which the decision is based.

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Article VII
General Provisions

7.1   Rights to Employment. The establishment of the Plan, and selection of an
executive for inclusion as a Participant in the Plan, shall not be construed as
conferring any legal rights upon any Participant or other person for the
continuation of employment; nor shall it interfere with the rights of the Bank
to discharge any Participant and to treat him/her without regard to the effect
such treatment might have upon him/her as a Participant in the Plan.   7.2  
Source of Funding–Participant as General Creditor. The Bank has not established
any form of trust or funded account for the purpose of providing benefits under
this Plan. In the event that the Bank establishes a rabbi trust or other similar
arrangement, such arrangement shall preserve this Plan’s status under the
Internal Revenue Code as an unfunded nonqualified deferred compensation plan and
the assets of the Bank held pursuant to any such arrangement shall remain
subject to the claims of the Bank’s general creditors. Any Participant who may
have or claim any interest in or right to any amount payable hereunder shall
rely solely upon the unsecured promise of the Bank, as set forth herein, for the
payment of the claim. Nothing herein contained should be construed to give to or
vest in any Participant, now or at any time in the future, any right, title,
interest or claim in or to any specific asset, fund, reserve, account or
property of any kind whatever owned by the Bank, or in which the Bank may have
any right, title or interest, now or at any time in the future. The Plan is not
intended to be a qualified plan within the meaning of Section 401(a) of the Code
and the Bank shall not be required to qualify the Plan under the Code.   7.3  
Incapacity. In the event that the Human Resources Committee shall find that a
Participant is unable to care for his/her affairs because of illness or
accident, the Human Resources Committee may direct that any payment due him/her,
unless claim shall have been made therefor by a duly appointed legal
representative, be paid to his/her spouse, a child, a parent or other blood
relative, or to a person with whom he/she resides, and any such payment so made
shall be a complete discharge of the liabilities of the Plan therefor.   7.4  
Reporting and Withholding of Taxes. The Bank shall file Form W-2 and other
applicable tax documents as required under applicable federal and state law,
including, without limitation, required annual federal tax filings of a
Participant’s accrued benefits under the Plan. The Bank shall have the right to
deduct from each payment to be made under the Plan any required withholding
taxes and shall withhold or cause to be withheld from all payments or accruals
of benefits under the Plan (if applicable), all federal, state or local taxes
required to be withheld by law. The Participant shall be liable for the payment
of all taxes on the benefits under the Plan that are the Participant’s
responsibility under the laws establishing such taxes.   7.5   Alienation of
Benefits under the Plan. Benefits payable under this Plan shall not be subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge, whether voluntary or involuntary, including any such
liability which is for alimony or other payments for the support of a spouse or
former spouse, or

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    for any other relative of the Participant, prior to actually being received
by the person entitled to the benefits under the terms of the Plan, and any
attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber or
charge the same shall be void; nor shall any such distribution or payment be in
any way liable for or subject to the debts, contracts, liabilities, engagements
or torts of any person entitled to such distribution or payment. If any
Participant or Beneficiary is adjudicated bankrupt or purports to anticipate,
alienate, sell, transfer, assign, pledge, encumber or charge any such
distribution or payment voluntarily or involuntarily, the Bank, in its
discretion, may hold or cause to be held or applied such distribution or payment
or any part thereof to or for the benefit of such Participant or Beneficiary in
such manner as the Bank shall direct.   7.6   Forfeiture for Cause. The Bank
Deferrals and the earnings on the Bank Deferrals otherwise payable by the Plan
may be subject to forfeiture for cause at any time. “Cause” shall mean:

  (a)   the perpetration by a Participant of a defalcation involving the Bank or
any affiliate;     (b)   willful, reckless or grossly negligent conduct of a
Participant entailing a substantial violation of any material provision of the
laws, rules, regulations or orders of any governmental agency applicable to the
Bank or an affiliate;     (c)   the repeated and deliberate failure by a
Participant to comply with reasonable policies or directives of the Board of
Directors; or     (d)   the breach by a Participant of a noncompetitive covenant
or agreement with the Bank or affiliate.

Whether the facts in any given case amount to “Cause” shall be determined by the
Board of Directors.

7.7   Compliance with Laws. The provisions of the Plan shall be construed,
administered and governed under the laws of the United States including, without
limitation, Internal Revenue Code Section 409A and implementing regulations and,
to the extent they defer to state law, the laws of the Commonwealth of
Pennsylvania.   7.8   Construction. Whenever any words are used herein in the
masculine gender, they shall be construed as though they were also used in the
feminine gender in all cases where they would so apply, and whenever any words
are used herein in the singular form, they shall be construed as though they
were also used in the plural form in all cases where they would so apply. Titles
of Articles and Sections hereof are for convenience of reference only and are
not to be taken into account in construing the provisions of this Plan. In case
any provision of the Plan shall be held illegal or invalid for any reason, said
illegality or invalidity shall not affect the remaining parts of the Plan, but
the Plan shall be construed and enforced as if said illegal and invalid
provision had never been inserted herein.

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7.9   Amendment and Termination. The Bank specifically reserves the right, in
the sole and unfettered discretion of its Board, at any time, to amend, in whole
or in part, any or all of the provisions of the Plan and to terminate the Plan
in whole or in part; provided, however, that no such amendment or termination
shall reduce or eliminate the rights of a Participant accrued hereunder to the
date of such amendment or termination. Provided further, that no such
termination shall result in an impermissible acceleration of any amount deferred
under this Plan that would violate the provisions of Internal Revenue Code
Section 409A(a)(3) or Treasury Regulation Section 1.409A-3(j) or any successor
regulations.   7.10   Binding on Successors. The Plan shall be binding upon and
inure to the benefit of the Bank and its successors and assigns. The Plan shall
also be binding upon and inure to the benefit of any successor organization
succeeding to substantially all of the assets and business of the Bank. Nothing
in the Plan shall preclude the Bank from merging or consolidating into or with,
or transferring all or substantially all of its assets to, another organization
which assumes the Plan and all obligations of the Bank hereunder. The Bank
agrees that it will make appropriate provision for the preservation of
Participants’ rights under the Plan in any agreement or plan which it may enter
into to effect any merger, consolidation, reorganization or transfer of assets.
Upon such a merger, consolidation, reorganization, or transfer of assets and
assumption of Plan obligations of the Bank, the term “Bank” shall refer to such
other organization and the Plan shall continue in full force and effect.   7.11
  Permissible Payment Acceleration. In the event of an Internal Revenue Code
Section 409A Plan failure that results in income inclusion to a Participant,
payment of Participant’s benefits under this Plan shall be accelerated; provided
that, the amount of the accelerated payment shall not exceed the amount required
to be included in Participant’s income due to the Plan failure.

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