Exhibit 10.12


 


WILLOW FINANCIAL BANCORP, INC.


AMENDED AND RESTATED 1999 STOCK OPTION PLAN


 


ARTICLE I


ESTABLISHMENT OF THE PLAN


 


Willow Financial
Bancorp, Inc. (the “Corporation”), formerly known as Willow Grove Bancorp,
Inc., hereby amends and restates its 1999 Stock Option Plan (as amended and
restated, the “Plan”) upon the terms and conditions hereinafter stated, with
the amendment and restatement effective as of October 23, 2007.


 


ARTICLE II


PURPOSE OF THE PLAN


 


The purpose of
this Plan is to improve the growth and profitability of the Corporation and its
Subsidiary Companies by providing Employees and Non-Employee Directors with a
proprietary interest in the Corporation as an incentive to contribute to the
success of the MHC, the Corporation and the Subsidiary Companies, and rewarding
Employees and Non-Employee Directors for outstanding performance. All Incentive
Stock Options issued under this Plan are intended to comply with the
requirements of Section 422 of the Code and the regulations thereunder, and all
provisions hereunder shall be read, interpreted and applied with that purpose
in mind. Each recipient of an Award hereunder is advised to consult with his or
her personal tax advisor with respect to the tax consequences under federal,
state, local and other tax laws of the receipt and/or exercise of an Award
hereunder.


 


ARTICLE III


DEFINITIONS


 


3.01        “Award” means an Option or Stock Appreciation
Right granted pursuant to the terms of this Plan.


 


3.02        “Bank” means Willow Financial Bank, the wholly
owned subsidiary of the Corporation.


 


3.03        “Board” means the Board of Directors of the
Corporation.


 


3.04        “Change in Control”
shall mean a change in the ownership of the Corporation or the Bank, a change
in the effective control of the Corporation or the Bank or a change in the
ownership of a substantial portion of the assets of the Corporation or the
Bank, in each case as provided under Section 409A of the Code and the
regulations thereunder.


 


3.05        “Code” means the Internal Revenue Code of 1986,
as amended.


 

















 


3.06        “Committee” means a committee of two or more
directors appointed by the Board pursuant to Article IV hereof each of whom
shall be a Non-Employee Director as defined in Rule 16b-3(b)(3)(i) of the
Exchange Act or any successor thereto and within the meaning of Section 162(m)
of the Code and the regulations promulgated thereunder.


 


3.07        “Common Stock” means shares of the common
stock, par value $.01 per share, of the Corporation.


 


3.08        “Disability” means in the case of any Optionee
that the Optionee: (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
three months under an accident and health plan covering employees of the
Corporation or the Bank (or would have received such benefits for at least
three months if he had been eligible to participate in such plan).


 


3.09        “Effective Date” means the day upon which the
Board originally adopted this Plan.


 


3.10        “Employee” means any person who is employed by
the MHC, the Corporation, the Bank or any Subsidiary Company, or is an Officer
of the MHC, the Corporation, the Bank or any Subsidiary Company, but not including
directors who are not also Officers of or otherwise employed by the MHC, the
Corporation, the Bank or any Subsidiary Company.


 


3.11        “Exchange Act” means the Securities Exchange
Act of 1934, as amended.


 


3.12        “Fair Market Value”
shall be equal to the fair market value per share of the Corporation’s Common
Stock on the date an Award is granted. For purposes hereof, the Fair Market
Value of a share of Common Stock shall be the closing sale price of a share of
Common Stock on the date in question (or, if such day is not a trading day in
the U.S. markets, on the nearest preceding trading day), as reported with
respect to the principal market (or the composite of the markets, if more than
one) or national quotation system in which such shares are then traded, or if
no such closing prices are reported, the mean between the high bid and low
asked prices that day on the principal market or national quotation system then
in use. Notwithstanding the foregoing, if the Common Stock is not readily
tradable on an established securities market for purposes of Section 409A of
the Code, then the Fair Market Value shall be determined by means of a
reasonable valuation method that takes into consideration all available
information material to the value of the Corporation and that otherwise
satisfies the requirements applicable under Section 409A of the Code and the
regulations thereunder.


 


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3.13        “Incentive Stock Option” means any Option
granted under this Plan which the Board intends (at the time it is granted) to
be an incentive stock option within the meaning of Section 422 of the Code or
any successor thereto.


 


3.14        “MHC” means Willow Grove Mutual Holding
Company, the former parent mutual holding company of the Corporation.


 


3.15        “Non-Employee Director” means a member of the
Board of the Corporation or Board of Directors of either the MHC or the Bank or
any successor thereto, including an advisory director or a director emeritus of
the Boards of the Corporation and/or the MHC or the Bank, who is not an Officer
or Employee of the Corporation, the MHC, the Bank or any Subsidiary Company.


 


3.16        “Non-Qualified Option” means any Option granted
under this Plan which is not an Incentive Stock Option.


 


3.17        “Offering” means the offering of Common Stock
to the public in connection with the conversion of the Bank to the stock form
of organization, the establishment of the MHC and the issuance of the capital
stock of the Bank to the Corporation.


 


3.18        “Officer” means an Employee whose position in
the MHC, the Corporation or a Subsidiary Company is that of a corporate
officer, as determined by the Board.


 


3.19        “Option” means a right granted under this Plan
to purchase Common Stock.


 


3.20        “Optionee” means an Employee or Non-Employee Director
or former Employee or Non-Employee Director to whom an Option is granted under
the Plan.


 


3.21        “Retirement” means a termination of employment
which constitutes a “retirement” under any applicable qualified pension benefit
plan maintained by the MHC, the Corporation or a Subsidiary Corporation, or, if
no such plan is applicable, which would constitute “retirement” under the
Corporation’s pension benefit plan, if such individual were a participant in
that plan.


 


3.22        “Stock Appreciation Right” means a right to
surrender an Option in consideration for a payment by the Corporation in cash
and/or Common Stock, as provided in the discretion of the Board or the
Committee in accordance with Section 8.10.


 


3.23        “Subsidiary Companies” means those subsidiaries
of the MHC and the Corporation, including the Bank, which meet the definition
of “subsidiary corporations” set forth in Section 424(f) of the Code, at the
time of granting of the Option in question.


 


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ARTICLE IV


ADMINISTRATION OF THE PLAN


 


4.01        Duties of the Committee. The
Plan shall be administered and interpreted by the Committee, as appointed from
time to time by the Board pursuant to Section 4.02. The Committee shall have
the authority to adopt, amend and rescind such rules, regulations and
procedures as, in its opinion, may be advisable in the administration of the
Plan, including, without limitation, rules, regulations and procedures which
(i) deal with satisfaction of an Optionee’s tax withholding obligation pursuant
to Section 12.02 hereof, (ii) include arrangements to facilitate the Optionee’s
ability to borrow funds for payment of the exercise or purchase price of an
Award, if applicable, from securities brokers and dealers, and (iii) include
arrangements which provide for the payment of some or all of such exercise or
purchase price by delivery of previously-owned shares of Common Stock or other
property and/or by withholding some of the shares of Common Stock which are
being acquired. The interpretation and construction by the Committee of any
provisions of the Plan, any rule, regulation or procedure adopted by it
pursuant thereto or of any Award shall be final and binding in the absence of
action by the Board.


 


4.02        Appointment and Operation
of the Committee. The members of the Committee shall be appointed by, and
will serve at the pleasure of, the Board. The Board from time to time may
remove members from, or add members to, the Committee, provided the Committee
shall continue to consist of two or more members of the Board, each of whom
shall be a Non-Employee Director, as defined in Rule 16b-3(b)(3)(i) of the
Exchange Act or any successor thereto. In addition, each member of the
Committee shall be an “outside director” within the meaning of Section 162(m)
of the Code and regulations thereunder at such times as is required under such
regulations. The Committee shall act by vote or written consent of a majority
of its members. Subject to the express provisions and limitations of the Plan,
the Committee may adopt such rules, regulations and procedures as it deems
appropriate for the conduct of its affairs. It may appoint one of its members
to be chairman and any person, whether or not a member, to be its secretary or
agent. The Committee shall report its actions and decisions to the Board at
appropriate times but in no event less than one time per calendar year.


 


4.03        Revocation for Misconduct.
The Board or the Committee may by resolution immediately revoke, rescind
and terminate any Option, or portion thereof, to the extent not yet vested, or
any Stock Appreciation Right, to the extent not yet exercised, previously
granted or awarded under this Plan to an Employee who is discharged from the
employ of the Corporation or a Subsidiary Company for cause, which, for
purposes hereof, shall mean termination because of the Employee’s personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties,
willful violation of any law, rule, or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order. Options
granted to a Non-Employee Director who is removed for cause pursuant to the
Corporation’s Certificate of Incorporation and Bylaws or the Bank’s Charter and
Bylaws shall terminate as of the effective date of such removal.


 


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4.04        Limitation on Liability. Neither
the members of the Board nor any member of the Committee shall be liable for
any action or determination made in good faith with respect to the Plan, any
rule, regulation or procedure adopted by it pursuant thereto or any Awards
granted under it. If a member of the Board or the Committee is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
by reason of anything done or not done by him in such capacity under or with
respect to the Plan, the Corporation shall, subject to the requirements of
applicable laws and regulations, indemnify such member against all liabilities
and expenses (including attorneys’ fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in the best interests of the Corporation and its
Subsidiary Companies and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful.


 


4.05        Compliance with Law and
Regulations. All Awards granted hereunder shall be subject to all
applicable federal and state laws, rules and regulations and to such approvals
by any government or regulatory agency as may be required. The Corporation
shall not be required to issue or deliver any certificates for shares of Common
Stock prior to the completion of any registration or qualification of or
obtaining of consents or approvals with respect to such shares under any
federal or state law or any rule or regulation of any government body, which
the Corporation shall, in its sole discretion, determine to be necessary or
advisable. Moreover, no Option or Stock Appreciation Right may be exercised if
such exercise would be contrary to applicable laws and regulations.


 


4.06        Restrictions on Transfer. The
Corporation may place a legend upon any certificate representing shares
acquired pursuant to an Award granted hereunder noting that the transfer of
such shares may be restricted by applicable laws and regulations.


 


4.07        No
Deferral of Compensation Under Section 409A of the Code. All Awards granted
under the Plan are designed to not constitute a deferral of compensation for
purposes of Section 409A of the Code. Notwithstanding any other provision in
this Plan to the contrary, all of the terms and conditions of any Awards
granted under this Plan shall be designed to satisfy the exemption for stock
options or stock appreciation rights set forth in the regulations issued under
Section 409A of the Code. Both this Plan and the terms of all Options and Stock
Appreciation Rights granted hereunder shall be interpreted in a manner that
requires compliance with all of the requirements of the exemption for stock
options or stock appreciation rights set forth in the regulations issued under
Section 409A of the Code. No Optionee shall be permitted to defer the
recognition of income beyond the exercise date of a Non-Qualified Option or
Stock Appreciation Rights or beyond the date that the Common Stock received upon
the exercise of an Incentive Stock Option is sold.


 


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ARTICLE V


ELIGIBILITY


 


Awards may be
granted to such Employees and Non-Employee Directors of the MHC, the
Corporation and the Subsidiary Companies as may be designated from time to time
by the Board or the Committee. Awards may not be granted to individuals who are
not Employees or Non-Employee Directors of either the Corporation or its
Subsidiary Companies. Non-Employee Directors shall be eligible to receive only
Awards of Non-Qualified Options pursuant to this Plan.


 


ARTICLE VI


COMMON STOCK COVERED BY THE PLAN


 


6.01        Option Shares. The
aggregate number of shares of Common Stock which may be issued pursuant to this
Plan, subject to adjustment as provided in Article IX, shall be 224,087, which
is equal to 10% of the shares of Common Stock sold to the public in the
Offering. None of such shares shall be the subject of more than one Award at
any time, but if an Option as to any shares is surrendered before exercise, or
expires or terminates for any reason without having been exercised in full, or
for any other reason ceases to be exercisable, the number of shares covered
thereby shall again become available for grant under the Plan as if no Awards
had been previously granted with respect to such shares. Notwithstanding the
foregoing, if an Option is surrendered in connection with the exercise of a
Stock Appreciation Right, the number of shares covered thereby shall not be
available for grant under the Plan. During the time this Plan remains in
effect, grants to each Employee and each Non-Employee Director shall not exceed
25% and 5% of the shares of Common Stock available under the Plan, respectively.
Awards made to Non-Employee Directors in the aggregate may not exceed 30% of
the number of shares available under this Plan.


 


6.02        Source of Shares. The
shares of Common Stock issued under the Plan may be authorized but unissued
shares, treasury shares or shares purchased by the Corporation on the open
market or from private sources for use under the Plan.


 


ARTICLE VII


DETERMINATION OF


AWARDS, NUMBER OF SHARES, ETC.


 


The Board or
the Committee shall, in its discretion, determine from time to time which
Employees and Non-Employee Directors will be granted Awards under the Plan, the
number of shares of Common Stock subject to each Award, whether each Option
will be an Incentive Stock Option or a Non-Qualified Option (in the case of
Employees) and the exercise price of an Option. In making all such
determinations there shall be taken into account the duties, responsibilities
and performance of each respective Employee and Non-Employee Director, his
present and potential contributions to the growth and success of the
Corporation, his salary and such other factors deemed relevant to accomplishing
the purposes of the Plan.


 


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ARTICLE VIII


OPTIONS AND STOCK APPRECIATION RIGHTS


 


Each Option
granted hereunder shall be on the following terms and conditions:


 


8.01        Stock Option Agreement. The
proper Officers on behalf of the Corporation and each Optionee shall execute a
Stock Option Agreement which shall set forth the total number of shares of
Common Stock to which it pertains, the exercise price, whether it is a
Non-Qualified Option or an Incentive Stock Option, and such other terms,
conditions, restrictions and privileges as the Board or the Committee in each
instance shall deem appropriate, provided they are not inconsistent with the
terms, conditions and provisions of this Plan. Each Optionee shall receive a
copy of his executed Stock Option Agreement. Any Option granted with the
intention that it will be an Incentive Stock Option but which fails to satisfy
a requirement for Incentive Stock Options shall continue to be valid and shall
be treated as a Non-Qualified Option.


 


8.02        Option Exercise Price.


 


(a)           Incentive Stock Options.
The per share price at which the subject Common Stock may be purchased upon
exercise of an Incentive Stock Option shall be no less than one hundred percent
(100%) of the Fair Market Value of a share of Common Stock at the time such
Incentive Stock Option is granted, except as provided in Section 8.09(b).


 


(b)           Non-Qualified Options. The
per share price at which the subject Common Stock may be purchased upon
exercise of a Non-Qualified Option shall be established by the Committee at the
time of grant, but in no event shall be less than the one hundred percent
(100%) of the Fair Market Value of a share of Common Stock at the time such
Non-Qualified Option is granted.


 


8.03 
Vesting and Exercise of Options.


 


(a)           General Rules. Incentive
Stock Options and Non-Qualified Options granted to Optionees shall become
vested and exercisable at the rate of 20% per year over five years, commencing
one year from the date of grant and an additional 20% shall vest on each
successive anniversary of the date the Option was granted, and the right to
exercise shall be cumulative. Notwithstanding the foregoing, except as provided
in Section 8.03(b) hereof, no vesting shall occur on or after an Optionee’s
employment or service as a Non-Employee Director is terminated for any reason
other than his death or Disability. In determining the number of shares of
Common Stock with respect to which Options are vested and/or exercisable, fractional
shares will be rounded up to the nearest whole number if the fraction is 0.5 or
higher, and down if it is less.


 


(b)           Accelerated Vesting. Unless
the Board or the Committee shall specifically state otherwise at the time an
Option is granted, all Options granted under this Plan shall become vested and
exercisable in full on the date an Optionee terminates his employment with the
MHC, the


 


7

















 


Corporation or a Subsidiary
Company or service as a Non-Employee Director because of his death or
Disability. All Options hereunder shall become immediately vested and
exercisable in full on the date an Optionee terminates his employment with the
MHC, the Corporation or a Subsidiary Corporation due to Retirement if as of the
date of such Retirement (i) such treatment is either authorized or is not
prohibited by applicable laws and regulations, or (ii) an amendment to the Plan
providing for such treatment has been approved by the stockholders of the
Corporation at a meeting of stockholders held more than one year after the
consummation of the Offering. In addition, all Options hereunder shall become
immediately vested and exercisable in full as of the effective date of a Change
in Control if as of the date of such Change in Control (i) such treatment is
either authorized or is not prohibited by applicable laws and regulations or
(ii) an amendment to the Plan providing for such treatment has been approved by
the stockholders of the Corporation at a meeting of stockholders held more than
one year after consummation of the Offering.


 


8.04 
Duration of Options.


 


(a)           General Rule. Except
as provided in Sections 8.04(b) and 8.09, each Option or portion thereof
granted to an Employee shall be exercisable at any time on or after it vests
and becomes exercisable until the earlier of (i) ten (10) years after its date
of grant or (ii) six (6) months after the date on which the Employee ceases to
be employed by the MHC, the Corporation and all Subsidiary Companies, unless
the Board or the Committee in its discretion decides at the time of grant or
thereafter to extend such period of exercise upon termination of employment to
a period not exceeding five (5) years.


 


Except as
provided in Section 8.04(b), each Option or portion thereof granted to a
Non-Employee Director shall be exercisable at any time on or after it vests and
becomes exercisable until the earlier of (i) ten (10) years after its date of
grant or (ii) three (3) years after the date on which the Non-Employee Director
ceases to serve as a director of the MHC, the Corporation and all Subsidiary
Companies, unless the Board or the Committee in its discretion decides at the
time of grant or thereafter to extend such period of exercise upon termination
of service to a period not exceeding five (5) years.


 


(b)           Exceptions. Unless
the Board or the Committee shall specifically state otherwise at the time an
Option is granted: (i) if an Employee terminates his employment with the MHC,
the Corporation or a Subsidiary Company as a result of Disability or Retirement
without having fully exercised his Options, the Employee shall have the right,
during the three (3) year period following his termination due to Disability or
Retirement, to exercise such Options, and (ii) if a Non-Employee Director
terminates his service as a director (including service as an advisory director
or director emeritus) with the MHC, the Corporation or a Subsidiary Company as
a result of Disability or Retirement without having fully exercised his
Options, the Non-Employee Director shall have the right, during the three (3)
year period following his termination due to Disability or Retirement, to
exercise such Options.


 


Unless the
Board or the Committee shall specifically state otherwise at the time an Option
is granted, if an Employee or Non-Employee Director terminates his employment
or service with the


 


8

















 


MHC, the Corporation or a
Subsidiary Company following a Change in Control without having fully exercised
his Options, the Optionee shall have the right to exercise such Options during
the remainder of the original ten (10) year term (or five (5) year term for
Options subject to Section 8.09(b) hereof) of the Option from the date of
grant.


 


If an Optionee
dies while in the employ or service of the MHC, the Corporation or a Subsidiary
Company or terminates employment or service with the MHC, the Corporation or a
Subsidiary Company as a result of Disability or Retirement and dies without
having fully exercised his Options, the executors, administrators, legatees or
distributees of his estate shall have the right, during the one (1) year period
following his death, to exercise such Options.


 


In no event,
however, shall any Option be exercisable more than ten (10) years (five (5)
years for Options subject to Section 8.09(b) hereof) from the date it was
granted.


 


8.05        Nonassignability. Options
shall not be transferable by an Optionee except by will or the laws of descent
or distribution, and during an Optionee’s lifetime shall be exercisable only by
such Optionee or the Optionee’s guardian or legal representative. Notwithstanding
the foregoing, or any other provision of this Plan, an Optionee who holds
Non-Qualified Options may transfer such Options to his or her spouse, lineal
ascendants, lineal descendants, or to a duly established trust for the benefit
of one or more of these individuals. Options so transferred may thereafter be
transferred only to the Optionee who originally received the grant or to an
individual or trust to whom the Optionee could have initially transferred the
Option pursuant to this Section 8.05. Options which are transferred pursuant to
this Section 8.05 shall be exercisable by the transferee according to the same
terms and conditions as applied to the Optionee.


 


8.06        Manner of Exercise. Options
may be exercised in part or in whole and at one time or from time to time. The
procedures for exercise shall be set forth in the written Stock Option
Agreement provided for in Section 8.01 above.


 


8.07        Payment for Shares. Payment
in full of the purchase price for shares of Common Stock purchased pursuant to
the exercise of any Option shall be made to the Corporation upon exercise of
the Option. All shares sold under the Plan shall be fully paid and
nonassessable. Payment for shares may be made by the Optionee (i) in cash or by
check, (ii) by delivery of a properly executed exercise notice, together with
irrevocable instructions to a broker to sell the shares and then to properly
deliver to the Corporation the amount of sale proceeds to pay the exercise
price, all in accordance with applicable laws and regulations, or (iii) at the
discretion of the Committee, by delivering shares of Common Stock (including
shares acquired pursuant to the exercise of an Option) equal in Fair Market
Value to the purchase price of the shares to be acquired pursuant to the
Option, by withholding some of the shares of Common Stock which are being
purchased upon exercise of an Option, or any combination of the foregoing. With
respect to subclause (iii) hereof, the shares of Common Stock delivered to pay
the purchase price must have either been (a) purchased in open market
transactions or (b) issued by the Corporation pursuant to a plan thereof, in
each case more than six months prior to the exercise date of the Option.


 


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8.08        Voting and Dividend Rights.
No Optionee shall have any voting or dividend rights or other rights of a
stockholder in respect of any shares of Common Stock covered by an Option prior
to the time that his name is recorded on the Corporation’s stockholder ledger
as the holder of record of such shares acquired pursuant to an exercise of an
Option.


 


8.09        Additional Terms
Applicable to Incentive Stock Options. All Options issued under the Plan as
Incentive Stock Options will be subject, in addition to the terms detailed in
Sections 8.01 to 8.08 above, to those contained in this Section 8.09.


 


(a)           Notwithstanding any contrary provisions
contained elsewhere in this Plan and as long as required by Section 422 of the
Code, the aggregate Fair Market Value, determined as of the time an Incentive
Stock Option is granted, of the Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by the Optionee during any
calendar year under this Plan, and stock options that satisfy the requirements
of Section 422 of the Code under any other stock option plan or plans
maintained by the Corporation (or any parent or Subsidiary Company), shall not
exceed $100,000.


 


(b)           Limitation on Ten
Percent Stockholders. The price at which shares of Common Stock may be
purchased upon exercise of an Incentive Stock Option granted to an individual
who, at the time such Incentive Stock Option is granted, owns, directly or
indirectly, more than ten percent (10%) of the total combined voting power of
all classes of stock issued to stockholders of the Corporation or any
Subsidiary Company, shall be no less than one hundred and ten percent (110%) of
the Fair Market Value of a share of the Common Stock of the Corporation at the
time of grant, and such Incentive Stock Option shall by its terms not be
exercisable after the earlier of the date determined under Section 8.04 or the
expiration of five (5) years from the date such Incentive Stock Option is
granted.


 


(c)           Notice of Disposition;
Withholding; Escrow. An Optionee shall immediately notify the Corporation
in writing of any sale, transfer, assignment or other disposition (or action
constituting a disqualifying disposition within the meaning of Section 421 of
the Code) of any shares of Common Stock acquired through exercise of an
Incentive Stock Option, within two (2) years after the grant of such Incentive
Stock Option or within one (1) year after the acquisition of such shares,
setting forth the date and manner of disposition, the number of shares disposed
of and the price at which such shares were disposed of. The Corporation shall
be entitled to withhold from any compensation or other payments then or
thereafter due to the Optionee such amounts as may be necessary to satisfy any
withholding requirements of federal or state law or regulation and, further, to
collect from the Optionee any additional amounts which may be required for such
purpose. The Committee or the Board may, in its discretion, require shares of
Common Stock acquired by an Optionee upon exercise of an Incentive Stock Option
to be held in an escrow arrangement for the purpose of enabling compliance with
the provisions of this Section 8.09(c).


 


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8.10        Stock Appreciation Rights.


 


(a)           General Terms and
Conditions. The Board or the Committee may, but shall not be obligated to,
authorize the Corporation, on such terms and conditions as it deems appropriate
in each case, to grant rights to Optionees to surrender an exercisable Option,
or any portion thereof, in consideration for the payment by the Corporation of
an amount equal to the excess of the Fair Market Value of the shares of Common
Stock subject to the Option, or portion thereof, surrendered over the exercise
price of the Option with respect to such shares (any such authorized surrender
and payment being hereinafter referred to as a “Stock Appreciation Right”). Such
payment, at the discretion of the Board or the Committee, may be made in shares
of Common Stock valued at the then Fair Market Value thereof, or in cash, or
partly in cash and partly in shares of Common Stock.


 


The terms and
conditions with respect to a Stock Appreciation Right may include (without
limitation), subject to other provisions of this Section 8.10 and the Plan: the
period during which, date by which or event upon which the Stock Appreciation
Right may be exercised; the method for valuing shares of Common Stock for
purposes of this Section 8.10; a ceiling on the amount of consideration which
the Corporation may pay in connection with exercise and cancellation of the
Stock Appreciation Right; and arrangements for income tax withholding. The
Board or the Committee shall have complete discretion to determine whether,
when and to whom Stock Appreciation Rights may be granted.


 


(b)           Time Limitations. If
a holder of a Stock Appreciation Right terminates service with the Corporation
as an Officer or Employee, the Stock Appreciation Right may be exercised only
within the period, if any, within which the Option to which it relates may be
exercised.


 


(c)           Effects of Exercise of
Stock Appreciation Rights or Options. Upon the exercise of a Stock
Appreciation Right, the number of shares of Common Stock available under the
Option to which it relates shall decrease by a number equal to the number of
shares for which the Stock Appreciation Right was exercised. Upon the exercise
of an Option, any related Stock Appreciation Right shall terminate as to any
number of shares of Common Stock subject to the Stock Appreciation Right that
exceeds the total number of shares for which the Option remains unexercised.


 


(d)           Time of Grant. A
Stock Appreciation Right granted in connection with an Incentive Stock Option
must be granted concurrently with the Option to which it relates, and a Stock
Appreciation Right granted in connection with a Non-Qualified Option must also
be granted concurrently with the Option to which it relates.


 


(e)           Non-Transferable. The
holder of a Stock Appreciation Right may not transfer or assign the Stock
Appreciation Right otherwise than by will or in accordance with the laws of
descent and distribution, and during a holder’s lifetime a Stock Appreciation
Right may be exercisable only by the holder.


 


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ARTICLE IX


ADJUSTMENTS FOR CAPITAL CHANGES


 


9.01 General Adjustments. The aggregate number
of shares of Common Stock available for issuance under this Plan, the number of
shares to which any outstanding Award relates, the maximum number of shares
that can be covered by Award to each Employee and each Non-Employee Director
and the exercise price per share of Common Stock under any outstanding Option
shall be proportionately adjusted for any increase or decrease in the total number
of outstanding shares of Common Stock issued subsequent to the Effective Date
of this Plan resulting from a split, subdivision or consolidation of shares or
any other capital adjustment, the payment of a stock dividend, or other
increase or decrease in such shares effected without receipt or payment of
consideration by the Corporation.


 


9.02 Adjustments for Mergers and Other Corporate Transactions. If,
upon a merger, consolidation, reorganization, liquidation, recapitalization or
the like of the Corporation, the shares of the Corporation’s Common Stock shall
be exchanged for other securities of the Corporation or of another corporation,
each Award shall be converted, subject to the conditions herein stated, into
the right to purchase or acquire such number of shares of Common Stock or
amount of other securities of the Corporation or such other corporation as were
exchangeable for the number of shares of Common Stock of the Corporation which
such optionees would have been entitled to purchase or acquire except for such
action, and appropriate adjustments shall be made to the per share exercise
price of outstanding Options, provided that in each case the number of shares
or other securities subject to the substituted or assumed stock options and the
exercise price thereof shall be determined in a manner that satisfies the
requirements of Treasury Regulation §1.424-1 and the regulations issued under
Section 409A of the Code so that the substituted or assumed option is not
deemed to be a modification of the outstanding Options.


 


ARTICLE X


AMENDMENT AND TERMINATION OF THE PLAN


 


The Board may,
by resolution, at any time terminate or amend the Plan with respect to any
shares of Common Stock as to which Awards have not been granted, subject to any
required stockholder approval or any stockholder approval which the Board may
deem to be advisable for any reason, such as for the purpose of obtaining or
retaining any statutory or regulatory benefits under tax, securities or other
laws or satisfying any applicable stock exchange listing requirements. The
Board may not, without the consent of the holder of an Award, alter or impair
any Award previously granted or awarded under this Plan except as specifically
authorized herein.


 


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ARTICLE XI


EMPLOYMENT AND SERVICE RIGHTS


 


Neither the
Plan nor the grant of any Awards hereunder nor any action taken by the
Committee or the Board in connection with the Plan shall create any right on
the part of any Employee or Non-Employee Director to continue in such capacity.


 


ARTICLE XII


WITHHOLDING


 


12.01 Tax Withholding. The
Corporation may withhold from any cash payment made under this Plan sufficient
amounts to cover any applicable withholding and employment taxes, and if the
amount of such cash payment is insufficient, the Corporation may require the
Optionee to pay to the Corporation the amount required to be withheld as a
condition to delivering the shares acquired pursuant to an Award. The
Corporation also may withhold or collect amounts with respect to a
disqualifying disposition of shares of Common Stock acquired pursuant to
exercise of an Incentive Stock Option, as provided in Section 8.09(c).


 


12.02      Methods of Tax Withholding. The
Board or the Committee is authorized to adopt rules, regulations or procedures
which provide for the satisfaction of an Optionee’s tax withholding obligation
by the retention of shares of Common Stock to which the Employee would
otherwise be entitled pursuant to an Award and/or by the Optionee’s delivery of
previously owned shares of Common Stock or other property.


 


ARTICLE XIII


EFFECTIVE DATE OF THE PLAN; TERM


 


13.01      Effective Date of the Plan. This
Plan shall become effective on the Effective Date, and Awards may be granted
hereunder no earlier than the date that this Plan is approved by stockholders
of the Corporation and prior to the termination of the Plan, provided that this
Plan is approved by stockholders of the Corporation pursuant to Article XIV
hereof. The amendment and restatement of this Plan was adopted effective as of October
23, 2007.


 


13.02      Term of the Plan. Unless
sooner terminated, this Plan shall remain in effect for a period of ten (10)
years ending on the tenth anniversary of the Effective Date. Termination of the
Plan shall not affect any Awards previously granted and such Awards shall
remain valid and in effect until they have been fully exercised or earned, are
surrendered or by their terms expire or are forfeited.


 


ARTICLE XIV


STOCKHOLDER APPROVAL


 


The stockholders
of the Corporation approved this Plan as originally adopted at a meeting of
stockholders of the Corporation held within twelve (12) months following the
Effective Date in order


 


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to meet the requirements of (i)
Section 422 of the Code and regulations thereunder, (ii) Section 162(m) of the
Code and regulations thereunder, (iii) the Nasdaq Stock Market for continued
quotation of the Common Stock on the Nasdaq Stock Market and (iv) the
regulations of the Office of Thrift Supervision.


 


ARTICLE XV


MISCELLANEOUS


 


15.01      Governing Law. To the
extent not governed by federal law, this Plan shall be construed under the laws
of the State of Pennsylvania.


 


15.02      Pronouns. Wherever
appropriate, the masculine pronoun shall include the feminine pronoun, and the
singular shall include the plural.


 


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