Exhibit 10.8


 


WILLOW FINANCIAL BANK


 


AMENDED AND RESTATED BOARD OF DIRECTORS


 


2005 DEFERRED COMPENSATION PLAN


 

















 


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


 

















 


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


 


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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


 


9

















 


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.


 


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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

















 


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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