Exhibit 10.1


 


PROPOSED LOAN AGREEMENT


 


 


THIS LOAN AGREEMENT (“Loan
Agreement”) is made and entered into as of the ____ day of ________, 202__ by and between the WILLIAM PENN BANK EMPLOYEE
STOCK OWNERSHIP PLAN TRUST (“Borrower”), a trust for the William Penn Bank Employee Stock Ownership Plan,
as amended and restated (“ESOP”); and WILLIAM PENN BANCORPORATION (the “Lender”), a corporation
organized and existing under the laws of the State of Maryland.


 


W I T N E S S E T H


 


WHEREAS, the
Borrower is authorized to purchase shares of common stock of William Penn Bancorporation (“Common Stock”), directly
from William Penn Bancorporation or in open market purchases in an amount not to exceed one million, twelve thousand (1,012,000)
shares of Common Stock.


 


WHEREAS, the Borrower is authorized
to borrow funds from the Lender for the purpose of financing authorized purchases of Common Stock; and


 


WHEREAS, the Lender is willing to
make a loan to the Borrower for such purpose.


 


NOW, THEREFORE, the parties agree
hereto as follows:


 


 


ARTICLE I


 


DEFINITIONS


 


The following definitions shall apply for
purposes of this Loan Agreement, except to the extent that a different meaning is plainly indicated by the context:


 


Business Day means any day
other than a Saturday, Sunday or other day on which banks are authorized or required to close under federal or local law or regulation.


 


Code means the Internal Revenue
Code of 1986, as amended (including the corresponding provisions of any succeeding law).


 


Default means an event or
condition that would constitute an Event of Default. The determination as to whether an event or condition would constitute an
Event of Default shall be determined without regard to any applicable requirements of notice or lapse of time.


 


ERISA means the Employee
Retirement Income Security Act of 1974, as amended (including the corresponding provisions of any succeeding law).


 


Event of Default means an
event or condition described in Article 5.


 


Loan means the loan described
in Section 2.1.


 


Loan Documents means, collectively,
the Loan Agreement, the Promissory Note and the Pledge Agreement and all other documents now or hereafter executed and delivered
in connection with such documents, including all amendments, modifications and supplements of or to all such documents.


 






    1


     


    

 


Pledge Agreement means the
agreement described in Section 2.8(a).


 


Principal Amount means the
face amount of the Promissory Note, determined as set forth in Section 2.1(c).


 


Promissory Note means the
promissory note described in Section 2.3.


 


Register means the register
described in Section 2.9.


 


 


ARTICLE II


 


THE LOAN; PRINCIPAL AMOUNT; 


INTEREST; SECURITY; INDEMNIFICATION


 


Section 2.1The Loan; Principal
Amount.


 


(a)       The
Lender hereby agrees to lend to the Borrower such amount, and at such time, as shall be determined under this Section 2.1; provided,
however, that in no event shall the aggregate amount lent under this Loan Agreement from time to time exceed the greater of (i) ten
million, one hundred and twenty thousand dollars ($10,120,000) or (ii) the aggregate amount paid by the Borrower to purchase
up to one million, twelve thousand (1,012,000) shares of Common Stock.


 


(b)       Subject
to the limitations of Section 2.1(a), the Borrower shall determine the amounts borrowed under this Agreement, and the time at
which such borrowings are affected. Each such determination shall be evidenced in a writing that shall set forth the amount to
be borrowed and the date on which the Lender shall disburse such amount, and such writing shall be furnished to the Lender by
notice from the Borrower. The Lender shall disburse to the Borrower the amount specified in each such notice on the date specified
therein or, if later, as promptly as practicable following the Lender’s receipt of such notice; provided, however, that
the Lender shall have no obligation to disburse funds pursuant to this Agreement following the occurrence of a Default or an Event
of Default until such time as such Default or Event of Default shall have been cured.


 


(c)       For
all purposes of this Loan Agreement, the Principal Amount on any date shall be equal to the excess, if any, of:


 


		(i)	the aggregate amount disbursed by
                                         the Lender pursuant to Section 2.1(b) on or before such date; over



 


		(ii)	the aggregate amount of any repayments
                                         of such amounts made before such date.



 


The Lender shall maintain on the Register a record of, and
shall record in the Promissory Note, the Principal Amount, any changes in the Principal Amount and the effective date of any changes
in the Principal Amount.


 


Section 2.2Interest.


 


(a)       The
Borrower shall pay to the Lender interest on the Principal Amount, for the period commencing with the first disbursement of funds
under this Loan Agreement and continuing until the Principal Amount shall be paid in full, at the rate of ________per annum.
Interest payable under this Agreement shall be computed on the basis of a year of 365 days and actual days elapsed (including
the first day but excluding the last) occurring during the period to which the computation relates.


 






    2


     


    

 


(b)       Accrued
interest on the Principal Amount shall be payable by the Borrower on the dates set forth in Schedule I to the Promissory Note.
All interest on the Principal Amount shall be paid by the Borrower in immediately available funds.


 


(c)       Anything
in the Loan Agreement or the Promissory Note to the contrary notwithstanding, the obligation of the Borrower to make payments
of interest shall be subject to the limitation that payments of interest shall not be required to be made to the Lender to the
extent that the Lender’s receipt thereof would not be permissible under the law or laws applicable to the Lender limiting
rates of interest that may be charged or collected by the Lender. Any such payment referred to in the preceding sentence shall
be made by the Borrower to the Lender on the earliest interest payment date or dates on which the receipt thereof would be permissible
under the laws applicable to the Lender limiting rates of interest that may be charged or collected by the Lender. Such deferred
interest shall not bear interest.


 


Section 2.3Promissory Note.


 


The Loan shall be evidenced by the Promissory
Note of the Borrower attached hereto as an exhibit payable to the order of the lender in the Principal Amount and otherwise duly
completed.


 


Section 2.4Payment of Trust Loan.


 


The Principal Amount of the Loan shall
be repaid in accordance with Schedule I to the Promissory Note on the dates specified therein until fully paid.


 


Section 2.5Prepayment.


 


The Borrower shall be entitled to prepay
the Loan in whole or in part, at any time and from time to time; provided, however, that the Borrower shall give notice to the
Lender of any such prepayment; and provided, further, that any partial prepayment of the Loan shall be in an amount not less than
$1,000. Any such prepayment shall be: (a) permanent and irrevocable; (b) accompanied by all accrued interest through the date
of such prepayment; (c) made without premium or penalty; and (d) applied on the inverse order of the maturity of the installment
thereof unless the Lender and the Borrower agree to apply such prepayments in some other order.


 


Section 2.6Method of Payments.


 


(a)       All
payments of principal and interest payable hereunder shall be made in lawful money of the United States, in immediately available
funds, to the Lender at the address specified in or pursuant to this Loan Agreement for notices to the Lender (Section 6.7(b)),
on the date on which such payment shall become due. Any such payment made on such date but after such time shall, if the amount
paid bears interest, and except as expressly provided to the contrary herein, be deemed to have been made on, and interest shall
continue to accrue and be payable thereon until, the next succeeding Business Day. If any payment of principal or interest becomes
due on a day other than a Business Day, such payment may be made on the next succeeding Business Day, and when paid, such payment
shall include interest to the day on which payment is in fact made.


 






    3


     


    

 


(b)       Notwithstanding
anything to the contrary contained in this Loan Agreement or the Promissory Note, the Borrower shall not be obligated to make
any payment, repayment or prepayment on the Promissory Note if doing so would cause the Borrower to cease to be a tax exempt trust
under section 501(a) of the Code or if such act or failure to act would cause the Borrower to engage in any “prohibited
transaction” as such term is defined in the section 4975(c) of the Code and the regulations promulgated thereunder which
is not exempted by section 4975(c)(2) or (d) of the Code and the regulations promulgated thereunder or in section 406 of ERISA
and the regulations promulgated thereunder which is not exempted by section 408(b) of ERISA and the regulations promulgated thereunder;
provided, however, that in each case, the Borrower, may act or refrain from acting pursuant to this Section 2.6(b) on the basis
of an opinion of counsel, and any opinion of such counsel. The Borrower may consult with counsel, and any opinion of such counsel
shall be full and complete authorization and protection in respect of any action taken or suffered or omitted by it hereunder
in good faith and in accordance with such opinion of counsel. Nothing contained in this Section 2.6(b) shall be construed as imposing
a duty on the Borrower to consult with counsel. Any obligation of the Borrower to make any payment, repayment or prepayment on
the Promissory Note or refrain from taking any other act hereunder or under the Promissory Note which is excused pursuant to this
Section 2.6(b) shall be considered a binding obligation of the Borrower, or both, as the case may be, for the purposes of determining
whether a Default or Event of Default has occurred hereunder or under the Promissory Note and nothing in this Section 2.6(b) shall
be construed as providing a defense to any remedies otherwise available upon a Default or an Event of Default hereunder (other
than the remedy of specific performance).


 


Section 2.7Use of Proceeds of
Loan.


 


The entire proceeds of the Loan shall be
used solely for acquiring shares of Common Stock, and for no other purpose whatsoever.


 


Section 2.8Security.


 


(a)       In
order to secure the due payment and performance by the Borrower of all of its obligations under this Loan Agreement, simultaneously
with the execution and delivery of this Loan Agreement by the Borrower, the Borrower shall:


 


		(i)	pledge to the Lender as Collateral
                                         (as defined in the Pledge Agreement), and grant to the Lender a first priority lien on
                                         and security interest in, the Common Stock purchased with the Principal Amount, by the
                                         execution and delivery to the lender of the Pledge Agreement attached hereto as an exhibit;
                                         and



 


		(ii)	execute and deliver, or cause to
                                         be executed and delivered, such other agreement, instruments and documents as the Lender
                                         may reasonably require in order to effect the purposes of the Pledge Agreement and this
                                         Loan Agreement.



 


(b)       The
Lender shall release from encumbrance under the Pledge Agreement and transfer to the Borrower, as of the date on which any payment
or repayment of the Principal Amount is made, a number of shares of Common Stock held as Collateral determined pursuant to the
applicable provisions of the ESOP.


 


Section 2.9Registration of the
Promissory Note.


 


(a)       The
Lender shall maintain a Register providing for the registration of the Principal Amount and any stated interest and of transfer
and exchange of the Promissory Note. Transfer of the Promissory Note may be effected only by the surrender of the old instrument
and either the reissuance by the Borrower of the old instrument to the new holder or the issuance by the Borrower of a new instrument
to the new holder. The old Promissory Note so surrendered shall be canceled by the Lender and returned to the Borrower after such
cancellation.


 






    4


     


    

 


(b)       Any
new Promissory Note issued pursuant to Section 2.9(a) shall carry the same rights to interest (unpaid and to accrue) carried by
the Promissory Note so transferred or exchanged so that there will not be any loss or gain of interest on the note surrender.
Such new Promissory Note shall be subject to all of the provisions and entitled to all of the benefits of this Agreement. Prior
to due presentment for registration or transfer, the Borrower may deem and treat the registered holder of any Promissory Note
as the holder thereof for purposes of payment and other purposes. A notation shall be made on each new Promissory Note of the
amount of all payments of principal and interest theretofore paid.


 


 


ARTICLE III


 


REPRESENTATIONS AND WARRANTIES OF
THE BORROWER


 


The Borrower hereby represents and warrants
to the Lender as follows:


 


Section 3.1Power, Authority,
Consents.


 


The Borrower has the power to execute,
deliver and perform this Loan Agreement, the Promissory Note and Pledge Agreement, all of which have been duly authorized by all
necessary and proper corporate or other action.


 


Section 3.2Due Execution, Validity,
Enforceability.


 


Each of the Loan Documents, including,
without limitation, this Loan Agreement, the Promissory Note and the Pledge Agreement, has been duly executed and delivered by
the Borrower; and each constitutes the valid and legally binding obligation of the Borrower, enforceable in accordance with its
terms.


 


Section 3.3Properties, Priority
of Liens.


 


The liens which have been created and granted
by the Pledge Agreement constitute valid, first liens on the properties and assets covered by the Pledge Agreement, subject to
no prior or equal lien.


 


Section 3.4No Defaults, Compliance
with Laws.


 


The Borrower is not in default in any material
respect under any agreement, ordinance, resolution, decree, bond, note, indenture, order or judgment to which it is a party or
by which it is bound, or any other agreement or other instrument by which any of the properties or assets owned by it is materially
affected.


 


Section 3.5Purchase of Common
Stock.


 


Upon consummation of any purchase of Common
Stock by the Borrower with the proceeds of the Loan, the Borrower shall acquire valid, legal and marketable title to all of the
Common Stock so purchased, free and clear of any liens, other than a pledge to the Lender of the Common Stock so purchased pursuant
to the Pledge Agreement. Neither the execution and delivery of the Loan Documents nor the performance of any obligation thereunder
violates any provisions of law or conflicts with or results in a breach of or creates (with or without the giving of notice of
lapse of time, or both) a default under any agreement to which the Borrower is a party or by which it is bound or any of its properties
is affected. No consent of any federal, state, or local governmental authority, agency, or other regulatory body, the absence
of which could have a materially adverse effect on the Borrower or the Trustee, is or was required to be obtained in connection
with the execution, delivery, or performance of the Loan Documents and the transaction contemplated therein or in connection therewith,
including without limitation, with respect to the transfer of the shares of Common Stock purchased with the proceeds of the Loan
pursuant thereto.


 






    5


     


    

 


Section 3.6ESOP; Contributions.


 


The ESOP provides that the ESOP sponsor
may make contributions to the ESOP in an amount necessary to enable the Trustee to amortize the Loan in accordance with the terms
of the Promissory Note; provided, however, that no such contributions shall be required if they would adversely affect the qualification
of the ESOP under section 401(a) of the Code.


 


Section 3.7Trustee.


 


The trustee of the ESOP has been duly appointed
by the ESOP sponsor.


 


Section 3.8Compliance with Laws;
Actions.


 


Neither the execution and delivery by the
Borrower of this Loan Agreement or any instruments required thereby, nor compliance with the terms and provisions of any such
documents by the lender, constitutes a violation of any provision of any law or any regulation, order, writ, injunction or decree
of any court or governmental instrumentality, or an event of default under any agreement, to which the Borrower is a party, to
which the Borrower is bound or to which the Borrower is subject, which violation or event of default would have a material adverse
effect on the Borrower. There is no action or proceeding pending or threatened against either the ESOP or the Borrower before
any court or administrative agency.


 


 


ARTICLE IV


 


REPRESENTATIONS AND WARRANTIES OF
THE LENDER


 


The Lender hereby represents and warrants
to the Borrower as follows:


 


Section 4.1Power, Authority,
Consents.


 


The Lender has the power to execute, deliver
and perform this Loan Agreement, the Pledge Agreement and all documents executed by the Lender in connection with the Loan, all
of which have been duly authorized by all necessary and proper corporate or other action. No consent, authorization or approval
or other action by any governmental authority or regulatory body, and no notice by the Lender to, or filing by the Lender with,
any governmental authority or regulatory body is required for the due execution, delivery and performance of this Loan Agreement.


 


Section 4.2Due Execution, Validity,
Enforceability.


 


This Loan Agreement and the Pledge Agreement
have been duly executed and delivered by the Lender, and each constitutes a valid and legally binding obligation of the Lender,
enforceable in accordance with its terms.


 






    6


     


    

 


ARTICLE V


 


EVENTS OF DEFAULT


 


Section 5.1Events of Default
under Loan Agreement.


 


Each of the following events shall constitute
an “Event of Default” hereunder:


 


(a)       Failure
to make any payment or mandatory prepayment of principal of the Promissory Note when due, or failure to make any payment of interest
on the Promissory Note not later than five (5) Business Days after the date when due.


 


(b)       Failure
by the Borrower to perform or observe any term, condition or covenant of this Loan Agreement or of any of the other Loan Documents,
including, without limitation, the Promissory Note and the Pledge Agreement.


 


(c)       Any
representation or warranty made in writing to the Lender in any of the Loan Documents, or any certificate, statement or report
made or delivered in compliance with this Loan Agreement, shall have been false or misleading in any material respect when made
or delivered.


 


Section 5.2Lender’s Rights
upon Event of Default.


 


If an Event of Default under this Loan
Agreement shall occur and be continuing, the Lender shall have no rights to assets of the Borrower other than: (a) contributions
(other than contributions of Common Stock) that are made by the ESOP sponsor to enable the Borrower to meet its obligations pursuant
to this Loan Agreement and earnings attributable to the investment of such contributions and (b) “Eligible Collateral”
(as defined in the Pledge Agreement); provided, however, that: (i) the value of the Borrower’s assets transferred to the
Lender following an Event of Default in satisfaction of the due and unpaid amount of the Loan shall not exceed the amount in default;
(ii) the Borrower’s assets shall be transferred to the Lender following an Event of Default only to the extent of the failure
of the Borrower to meet the payment schedule of the Loan; and (iii) all rights of the Lender to the Common Stock purchased with
the proceeds of the Loan covered by the Pledge Agreement following an Event of Default shall be governed by the terms of the Pledge
Agreement.


 


 


ARTICLE VI


 


MISCELLANEOUS PROVISIONS


 


 


Section 6.1RESERVED


 


 


Section 6.2Payments.


 


All payments hereunder and under the Promissory
Note shall be made without set-off or counterclaim and in such amounts as may be necessary in order that all such payments shall
not be less than the amounts otherwise specified to be paid under this Loan Agreement and the Promissory Note, subject to any
applicable tax withholding requirements. Upon payment in full of the Promissory Note, the Lender shall mark such Promissory Note
 “Paid” and return it to the Borrower.


 






    7


     


    

 


Section 6.3Survival.


 


All agreements, representations and warranties
made herein shall survive the delivery of this Loan Agreement and the Promissory Note.


 


Section 6.4Modifications, Consents and Waivers; Entire
Agreement.


 


No modification, amendment or waiver of
or with respect to any provision of this Loan Agreement, the Promissory Note, the Pledge Agreement, or any of the other Loan Documents,
nor consent to any departure from any of the terms or conditions thereof, shall in any event be effective unless it shall be in
writing and signed by the party against whom enforcement thereof is sought. Any such waiver or consent shall be effective only
in the specific instance and for the purpose for which given. No consent to or demand on a party in any case shall, of itself,
entitle it to any other or further notice or demand in similar or other circumstances. This Loan Agreement embodies the entire
agreement and understanding between the Lender and the Borrower and supersedes all prior agreements and understandings relating
to the subject matter hereof.


 


Section 6.5Remedies Cumulative.


 


Each and every right granted to the Lender
hereunder or under any other document delivered hereunder or in connection herewith, or allowed it by law or equity, shall be
cumulative and may be exercised from time to time. No failure on the part of the Lender or the holder of the Promissory Note to
exercise, and no delay in exercising, any right shall operate as a waiver thereof, nor shall any single or partial exercise of
any right preclude any other or future exercise thereof or the exercise of any other right. The due payment and performance of
the obligations under the Loan Documents shall be without regard to any counterclaim, right of offset or any other claim whatsoever
which the Borrower may have against the Lender and without regard to any other obligation of any nature whatsoever which the Lender
may have to the Borrower, and no such counterclaim or offset shall be asserted by the Borrower in any action, suit or proceeding
instituted by the Lender for payment or performance of such obligations.


 


Section 6.6Further Assurances; Compliance with Covenants.


 


At any time and from time to time, upon
the request of the Lender, the Borrower shall execute, deliver and acknowledge or cause to be executed, delivered and acknowledged,
such further documents and instruments and do such other acts and things as the Lender may reasonably request in order to fully
effect the terms of this Loan Agreement, the Promissory Note, the Pledge Agreement, the other Loan Documents and any other agreements,
instruments and documents delivered pursuant hereto or in connection with the Loan.


 


Section 6.7Notices.


 


Except as otherwise specifically provided
for herein, all notice, requests, reports and other communications pursuant to this Loan Agreement shall be in writing, either
by letter (delivered by hand or commercial messenger service or sent by registered or certified mail, return receipt requested,
except for routine reports delivered in compliance with Article VI hereof which may be sent by ordinary first-class mail) or telex
or telecopier addressed as follows:


 






    8


     


    

 


		(a)	If to the Borrower:



 


William Penn Bank Employee Stock Ownership Plan,
as amended and restated


Terry Sager and William Parry, Trustees


c/o William Penn Bank


10 Canal Street, Suite 104


Bristol, Pennsylvania 19007


Phone: (267) 540-8500


 


		(b)	If to the Lender:



 


William Penn Bancorporation


10 Canal Street, Suite 104


Bristol, Pennsylvania 19007


Attn: Kenneth J. Stephon


Phone: (267) 540-8500


 


 


Any notice, request or communication hereunder shall be deemed
to have been given on the day on which it is delivered by hand or by commercial messenger service, or sent by telex or telecopier,
to such party at its address specified above, or, if sent by mail, on the third Business Day after the day deposited in the mail,
postage prepaid, addressed as aforesaid. Any party may change the person or address to whom or which notices are to be given hereunder,
by notice duly given hereunder; provided, however, that any such notice shall be deemed to have been given only when actually
received by the party to whom it is addressed.


 


Section 6.8Counterparts.


 


This Loan Agreement may be signed in any
number of counterparts which, when taken together, shall constitute one and the same document.


 


Section 6.9Construction; Governing
Law.


 


The headings used in the table of contents
and in this Loan Agreement are for convenience only and shall not be deemed to constitute a part hereof. All uses herein of any
gender or of singular or plural terms shall be deemed to include uses of the other genders or plural or singular terms, as the
context may require. All references in this Loan Agreement of an Article or section shall be to an Article or section of this
Loan Agreement, unless otherwise specified. This Loan Agreement, the Promissory Note, the Pledge Agreement and the other Loan
Documents shall be governed by, and construed and interpreted in accordance with, the laws of the Commonwealth of Pennsylvania.


 


Section 6.10Severability.


 


Wherever possible, each provision of this
Loan Agreement shall be interpreted in such manner as to be effective and valid under applicable law; however, the provisions
of this Loan Agreement are severable, and if any clause or provision hereof shall be held invalid or unenforceable in whole or
in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof,
in such jurisdiction and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause
or provisions in this Loan Agreement in any jurisdiction. Each of the covenants, agreements and conditions contained in this Loan
Agreement are independent, and compliance by a party with any of them shall not excuse non-compliance by such party with any other.
The Borrower shall not take any action the effect of which shall constitute a breach or violation of any provision of this Loan
Agreement.


 






    9


     


    

 


Section 6.11Binding Effect: No
Assignment or Delegation.


 


This Loan Agreement shall be binding upon
and inure to the benefit of the Borrower and its successors and the Lender and its successors and assigns. The rights and obligations
of the Borrower under this Agreement shall not be assigned or delegated without the prior written consent of the Lender, and any
purported assignment or delegation without such consent shall be void.


 


IN WITNESS WHEREOF, the parties have caused
this Loan Agreement to be executed as of the date first written above.


 





	 	WILLIAM
    PENN BANK EMPLOYEE STOCK OWNERSHIP PLAN TRUST   
	 	 
	 	 
	 	 
	 	Terry Sager,
    Trustee
	 	 
	 	 
	 	 
	 	William Parry, Trustee  
	 	 
	 	WILLIAM PENN BANCORPORATION, AS LENDER  
	 	 
	 	By:	 
	 	 	Kenneth J. Stephon  
	 	 	President and Chief Executive Officer  



 






    10


     


    

 


PROPOSED PLEDGE AGREEMENT


 


THIS PLEDGE AGREEMENT (“Pledge
Agreement”) is made as of the _____ day of ___________, 202__ by and between the WILLIAM PENN BANK EMPLOYEE STOCK OWNERSHIP
PLAN TRUST (“Pledgor”), and WILLIAM PENN BANCORPORATION (“Pledgee”).


 


W I T N E S S E T H


 


WHEREAS, this Pledge Agreement is
being executed and delivered to the Pledgee pursuant to the terms of a Loan Agreement (“Loan Agreement”), by and between
the Pledgor and the Pledgee;


 


NOW, THEREFORE, in consideration
of the mutual agreements contained herein and in the Loan Agreement, the parties hereto do hereby covenant and agree as follows:


 


Section 1. Definitions. The
following definitions shall apply for purposes of this Pledge Agreement, except to the extent that a different meaning is plainly
indicated by the context; all capitalized terms used but not defined herein shall have the respective meanings assigned to them
in the Loan Agreement:


 


Collateral shall mean the
Pledged Shares and, subject to Section 5 hereof, and to the extent permitted by applicable law, all rights with respect thereto,
and all proceeds of such Pledged Shares and rights.


 


ESOP shall mean the William
Penn Bank Employee Stock Ownership Plan, as amended and restated.


 


Event of Default shall mean
an event so defined in the Loan Agreement.


 


Liabilities shall mean all
the obligations of the Pledgor to the Pledgee under the Loan Agreement and the Promissory Note entered into on ________________,
202__and any amendments thereto.


 


Pledged Shares shall mean
all the Shares of Common Stock of the Pledgee purchased by the Pledgor with the proceeds of the loan made by the Pledgee to the
Pledgor pursuant to the Loan Agreement, but excluding any such shares previously released pursuant to Section 4.


 


Section 2. Pledge. To secure
the payment of and performance of all the Liabilities, the Pledgor hereby pledges to the Pledgee, and grants to the Pledgee, a
security interest in, and lien upon, the Collateral.


 


Section 3. Representations and Warranties
of the Pledgor. The Pledgor represents, warrants, and covenants to the Pledgee as follows:


 


(a)       the
execution, delivery and performance of this Pledge Agreement and the pledging of the Collateral hereunder do not and will not
conflict with, result in a violation of, or constitute a default under, any agreement binding upon the Pledgor;


 


(b)       the
Pledged Shares are and will continue to be owned by the Pledgor free and clear of any liens or rights of any other person except
the lien hereunder and under the Loan Agreement in favor of the Pledgee, and the security interest of the Pledgee in the Pledged
Shares and the proceeds thereof is and will continue to be prior to and senior to the rights of all others;


 






    1 


    


    

 


(c)       this
Pledge Agreement is the legal, valid, binding and enforceable obligation of the Pledgor in accordance with its terms;


 


(d)       the
Pledgor shall, from time to time, upon request of the Pledgee, promptly deliver to the Pledgee such stock powers, proxies, and
similar documents, satisfactory in form and substance to the Pledgee, with respect to the Collateral as the Pledgee may reasonably
request; and


 


(e)       subject
to the first sentence of Section 4(b), the Pledgor shall not, so long as any Liabilities are outstanding, sell, assign, exchange,
pledge or otherwise transfer or encumber any of its rights in and to any of the Collateral.


 


Section 4. Eligible Collateral.


 


(a)       As
used herein the term “Eligible Collateral” shall mean the amount of Collateral which has an aggregate fair market
value equal to the amount by which the Pledgor is in default or such lesser amount of Collateral as may be required pursuant to
Section 13 of this Pledge Agreement.


 


(b)       The
Pledged Shares shall be released from this Pledge Agreement in a manner conforming to the requirements of Treasury Regulations
Section 54.4975-7(b)(8), as the same may be from time to time amended or supplemented, and the applicable provisions of the ESOP.
Subject to such Regulations, the Pledgee may from time to time, after any Default or Event of Default, and without prior notice
to the Pledgor, transfer all or any part of the Eligible Collateral in the name of the Pledgee or its nominee, without disclosing
that such Eligible Collateral is subject to any rights of the Pledgor and may from time to time, whether before or after any of
the Liabilities shall become due and payable, without notice to the Pledgor, take all or any of the following actions: (i) notify
the parties obligated on any of the Eligible Collateral to make payment to the Pledgee of any amounts due or due to become due
thereunder, (ii) release or exchange all or any part of the Eligible Collateral, or compromise or extend or renew for any period
(whether or not longer than the original period) any obligations of any nature of any party with respect thereto, and (iii) take
control of any proceeds of the Eligible Collateral.


 


Section 5. Delivery.


 


(a)       Unless
otherwise determined by the parties, the Pledgor shall deliver to the Pledgee upon execution of this Pledge Agreement (i) either
(A) certificates for the Pledged Shares, each certificate duly signed in blank by the Pledgor or accompanied by a stock transfer
power duly signed in blank by the Pledgor and each such certificate accompanied by all required documentary or stock transfer
tax stamps or (B) if the Trustee does not yet have possession of the Pledged Shares, an assignment by the Pledgor of all the Pledgor’s
rights to and interest in the Pledged Shares and (ii) an irrevocable proxy, in form and substance satisfactory to the Pledgee,
signed by the Pledgor with respect to the Pledged Shares.


 


(b)       So
long as no Default or Event of Default shall have occurred and be continuing, (i) the Pledgor shall be entitled to exercise any
and all voting and other rights pertaining to the Collateral or any part thereof for any purpose not inconsistent with the terms
of this Pledge Agreement, and (ii) the Pledgor shall be entitled to receive any and all cash dividends or other distributions
paid in respect of the Collateral.


 






    2


     


    

 


Section 6. Events of Default.


 


(a)       If
a Default or Event Default shall be existing, in addition to the rights it may have under the Loan Agreement, the Promissory Note,
and this Pledge Agreement, or by virtue of any other instrument, (i) the Pledgee may exercise, with respect to the Eligible Collateral,
from time to time, any rights and remedies available to it under the Uniform Commercial Code as in effect from time to time in
the Commonwealth of Pennsylvania or otherwise available to it and (ii) the Pledgee shall have the right, for and in the name,
place and stead of the Pledgor, to execute endorsement, assignments, stock powers and other instruments of conveyance or transfer
with respect to all or any of the Eligible Collateral. Written notification of intended disposition of any of the Eligible Collateral
shall be given by the Pledgee to the Pledgor at least three (3) Business Days before such disposition. No action of the Pledgee
hereunder shall impair or affects its rights in and to the Eligible Collateral. All rights and remedies of the Pledgee expressed
hereunder are in addition to all other rights and remedies possessed by it, including, without limitation, those contained in
the documents referred to in the definition of Liabilities in Section 1 hereof.


 


(b)       In
any sale of any of the Eligible Collateral after a Default or an Event of Default shall have occurred, the Pledgee is hereby authorized
to comply with any limitation or restriction in connection with such sale as it may be advised by counsel if necessary in order
to avoid violation of applicable law (including, without limitation, compliance with such procedures as may restrict the number
of prospective bidders and purchasers or further restrict such prospective bidders or purchasers to persons who will represent
and agree that they are purchasing for their own account for investment and not with a view to the distribution or resale of such
Eligible Collateral), or in order to obtain such required approval of the sale or of the purchase by any governmental regulatory
authority or official, and the Pledgor further agrees that such compliance shall not result in such sale’s being considered
or deemed not to have been made in a commercially reasonable manner, nor shall the Pledgee be liable or accountable to the Pledgor
for any discount allowed by reason of the fact that such Eligible Collateral is sold in compliance with any such limitation or
restriction.


 


Section 7. Payment in Full.
Upon the payment in full of all outstanding Liabilities, this Pledge Agreement shall terminate and the Pledgee shall forthwith
assign, transfer and deliver to the Pledgor, against receipt and without recourse to the Pledgee, all Collateral then held by
the Pledgee pursuant to the Pledge Agreement.


 


Section 8. No Waiver. No
failure or delay in the part of the Pledgee in exercising any right or remedy hereunder or under any other document which confers
or grants any rights to the Pledgee in respect of the Liabilities shall operate as a waiver thereof nor shall any single or partial
exercise of any such rights or remedy preclude any other or further exercise thereof or the exercise of any other right or remedy
of the Pledgee.


 


Section 9. Binding Effect; No Assignment
or Delegation. This Pledge Agreement shall be binding upon and inure to the benefit of the Pledgor, the Pledgee and their
respective successors and assigns, except that the Pledgor may not assign or transfer its rights hereunder without the prior written
consent of the Pledgee (which consent shall not unreasonably be withheld). Each duty or obligation of the Pledgor to the Pledgee
pursuant to the provisions of this Pledge Agreement shall be performed in favor of any person or entity designated by the Pledgee,
and any duty or obligation of the Pledgee to the Pledgor may be performed by any other person or entity designated by the Pledgee.


 






    3


     


    

 


Section 10. Governing Law.
This Pledge Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania applicable
to agreements to be performed wholly within the Commonwealth of Pennsylvania.


 


Section 11. Notices. All
notices, requests, instructions or documents hereunder shall be in writing and delivered personally or sent by United States mail,
registered or certified, return receipt requested, with proper postage prepaid as follows:


 


(a)       If
to the Pledgee:


 


William Penn Bancorporation


10 Canal Street, Suite 104


Bristol, Pennsylvania 19007


Phone: (267) 540-8500


Attn: Kenneth J. Stephon


 


 


(b)       If
to the Pledgor:


 


William Penn Bank Employee Stock Ownership Plan,
as amended and restated


Terry Sager and William Parry, Trustees


c/o William Penn Bank


10 Canal Street, Suite 104


Bristol, Pennsylvania 19007


Phone: (267) 540-8500


 


 


or at such other address as either of the parties may designate
by written notice to the other party. If delivered personally, the date on which a notice, request, instruction or document is
delivered shall be the date on which such delivery is made, and, if delivered by mail, the date on which such notice, request,
instruction, or document is deposited in the mail shall be the date of delivery. Each notice, request, instruction or document
shall bear the date on which it is delivered.


 


Section 12. Interpretation.
Wherever possible each provision of this Pledge Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision herein shall be prohibited by or invalid under such law, such provision shall be ineffective
to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions
hereof.


 


Section 13. Construction.
All provisions hereof shall be construed so as to maintain (a) that the ESOP is a qualified leveraged employee stock ownership
plan under section 401(a) and 4975(e)(7) of the Internal Revenue Code of 1986 (the “Code”), (b) the Trust as exempt
from taxation under section 501(a) of the Code and (c) the Trust Loan as an exempt loan under section 54.4975-7(b) of the Treasury
Regulations and as described in Department of Labor Regulation section 2550.408b-3.


 






    4


     


    

 


IN WITNESS WHEREOF, this Pledge Agreement
has been duly executed by the parties hereto as of the day and year first above written.


 


	 	WILLIAM PENN BANK EMPLOYEE STOCK OWNERSHIP PLAN TRUST
	 	 
	 	 
	 	Terry Sager, as Trustee  
	 	 
	 	 
	 	 
	 	William Parry, as Trustee  
	 	 
	 	 
	 	WILLIAM PENN BANCORPORATION  
	 	 
	 	By:	 
	 	 	Kenneth J. Stephon  
	 	 	President
    and Chief Executive Officer




 






    5


     


    

 





PROPOSED PROMISSORY NOTE


 


FOR VALUE RECEIVED, the undersigned, WILLIAM PENN
BANK EMPLOYEE STOCK OWNERSHIP PLAN TRUST (the “Borrower”), hereby promises to pay to the order of WILLIAM PENN
BANCORPORATION (the “Lender”) an amount equal to the greater of (i) ten million, one hundred and twenty
thousand dollars ($10,120,000) or (ii) the aggregate amount paid by the Borrower to purchase up to one million,
twelve thousand (1,012,000) shares of Common Stock (the “Principal Amount”) payable in accordance
with the Loan Agreement made and entered into between the Borrower and the Lender of even date herewith (the “Loan Agreement”)
pursuant to which this Promissory Note is issued on ______________, 202_.


 


The Principal Amount of this Promissory
Note shall be payable in accordance with the schedule attached hereto (“Schedule I”), which sets for the principal
and interest payments due pursuant to this Promissory Note.


 


This Promissory Note shall bear interest
at the rate per annum set forth or established under the Loan Agreement, such interest to be payable in accordance with Schedule
I.


 


Anything herein to the contrary notwithstanding,
the obligation of the Borrower to make payments of interest shall be subject to the limitation that payments of interest shall
not be required to be made to the Lender to the extent that the Lender’s receipt thereof would not be permissible under
the law or laws applicable to the Lender limiting rates on interest that may be charged or collected by the Lender. Any such payments
on interest that are not made as a result of the limitation referred to in the preceding sentence shall be made by the Borrower
to the Lender on the earliest interest payment date or dates on which the receipt thereof would be permissible under the laws
applicable to the Lender limiting rates of interest that may be charged or collected by the Lender. Such deferred interest shall
not bear interest.


 


Payments of both principal and interest
on this Promissory Note are to be made at the principal office of the Lender or such other place as the holder hereof shall designate
to the Borrower in writing, in lawful money of the United States of America in immediately available funds.


 


Failure to make any payments of principal
on this Promissory Note when due, or failure to make any payment of interest on this Promissory Note not later than five (5) Business
Days after the date when due, shall constitute a default hereunder, whereupon the principal amount of accrued interest on this
Promissory Note shall immediately become due and payable in accordance with the terms of the Loan Agreement.


 


This Promissory Note is secured by a Pledge
Agreement between the Borrower and the Lender of even date herewith and is entitled to the benefits thereof.


 


	 	WILLIAM PENN BANK EMPLOYEE STOCK OWNERSHIP PLAN TRUST
	 	 
	 	 
	 	Terry Sager, as Trustee  
	 	 
	 	 
	 	 
	 	William Parry, as Trustee  




 






    1