Exhibit
10.4


 


FIRST
FINANCIAL BANK


BOARD OF
DIRECTORS 2005 DEFERRED COMPENSATION PLAN


 


AMENDMENT
NO. 1


 


WHEREAS, First
Financial Bank (the “Company”) maintains the First Financial Bank 2005
Executive Deferred Compensation Plan (the “Plan”);


 


WHEREAS, the Company
desires to amend the Plan to freeze participation and cease deferrals of
compensation under the Plan effective as of the closing date of the merger of
the Company with Willow Grove Bank (the “Closing Date”); and


 


WHEREAS, the
Company has the authority under Paragraph 13 of the Plan to amend the Plan.


 


NOW, THEREFORE,
the Plan is hereby amended, effective as of the Closing Date, as follows:


 


1.     Paragraph 4.1 of the Plan is hereby
amended by adding the following new sentence to the end thereof:


 


“Notwithstanding anything
herein to the contrary, as of the closing date of the merger of the Company
with Willow Grove Bank (the “Closing Date”), no Compensation shall be deferred
under the Plan.”


 


2.     Paragraph 16 shall be amended by adding the following new paragraph to
the end thereof:


 


“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.”


 


3.     In all other respects, the Plan shall
remain in full force and effect.


 


IN WITNESS WHEREOF, this
Amendment No. 1 is hereby executed this 24th day of August,
2005.


 


	
   

  	
  FIRST FINANCIAL BANK

  
	
   

  	
  By:

  	
  /s/ Donna M. Coughey

  	
   

  
	
   

  	
  Name: Donna M. Coughey

  
	
   

  	
  Title: President and Chief
  Executive Officer

  



 





















 


AMENDMENT
NO. 2


 


to the


 


FIRST
FINANCIAL BANK


BOARD OF
DIRECTORS 2005 DEFERRED COMPENSATION PLAN


 


WHEREAS, First Financial
Bank maintained the First Financial Bank Board of Directors 2005 Deferred
Compensation Plan (the “Plan”);


 


WHEREAS, First Financial
Bank merged with and into Willow Grove Bank (the “Bank”), pursuant to the
Agreement and Plan of Merger dated January 20, 2005, by and between
Chester Valley Bancorp Inc. and Willow Grove Bancorp, Inc. (the “Merger”);


 


WHEREAS, in connection
with the Merger, the Plan was amended to freeze participation and to cease
further deferrals of compensation;


 


WHEREAS, Section 5.2
of the Plan provides that any amounts credited to the Account of a Participant
or Inactive Participant shall accrue interest compounded annually;


 


WHEREAS, the Bank, as
successor employer, wishes to amend the Plan to provide that amounts deferred
by a Participant or an Inactive Participant may be invested in the hypothetical
investment choices as offered under the Willow Grove Bancorp, Inc.
Deferred Compensation Plan (the “Willow Grove Plan”), as such investment
elections may exist from time to time; and


 


WHEREAS, the Board of
Directors of the Bank has the authority under Section 10 of the Plan to
amend the Plan.


 


NOW THEREFORE, effective
the date this amendment is executed, the Plan is hereby amended, as follows:


 


1.             In
the cover page of the Plan the reference to “First Financial Bank” is
changed to “Willow Grove Bank.”


 


2.             All
references in the Plan to “First Financial Bank” are changed to “Willow Grove
Bank.”


 


3.             Section 2.1(f) of
the Plan is amended and restated in its entirety as follows:


 


“Company” refers to
Willow Grove Bank.


 





















 


4.             Section 5.2
of the Plan is amended to read in its entirety as follows:


 


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 shall be equal to the average of the three-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 Company.  If the Company establishes a rabbi trust for
all or a portion of the amounts credited to a Participant’s Account, their
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 Willow
Grove Bancorp, Inc. 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.


 


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(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.


 


(e)           Trust.  The Committee has deposited in the Trust
Agreement for the Willow Grove 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 Company’s obligations
with respect to the Participants’ Account established under this
Section 5.2.


 


5.             Section 10.1
of the Plan is hereby amended to add the last sentence at the end thereof:


 


Notwithstanding anything
in the Plan to the contrary, the Board of Directors of the Company may amend in
good faith any terms of the Plan, including retroactively, in order to comply
with Section 409A of the Code.


 


6.             All
capitalized terms used but not defined herein shall have the meaning as set
forth in the Plan.


 


7.             In
all other respects, the provisions of the Plan shall remain in full force and
effect.


 


IN
WITNESS WHEREOF, this Amendment has been executed this 25th
day of October 2005.


 


	
   

  	
  WILLOW GROVE BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Donna M. Coughey

  	
   

  
	
   

  	
   

  	
  Donna M. Coughey

  
	
   

  	
   

  	
  President and Chief
  Executive Officer

  



 


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FIRST FINANCIAL BANK


 


BOARD OF DIRECTORS 2005 DEFERRED COMPENSATION PLAN


 





















 


FIRST FINANCIAL BANK


BOARD OF DIRECTORS 2005 DEFERRED
COMPENSATION PLAN


 


First Financial Bank
hereby establishes the First Financial Bank Board of Directors 2005 Deferred
Compensation Plan effective January 1, 2005.


 


1.             PURPOSE


 


The primary purpose of
the Plan is to provide deferred compensation to the non-employee members of the
First Financial Bank (“Company”) 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 Company has adopted this Plan to provide
those members of the Board of Directors of the Company who are not also
employees of the Company 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 Company 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.             “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 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.


 


c.             “Board” refers to the Board of Directors
of the Company.


 


d.             “Code” refers to the Internal Revenue
Code of 1986, as amended from time to time, and successor Codes thereto as
amended.


 





















 


e.             “Committee” refers to the Administrative
Committee established pursuant to Section 11.1 that acts on behalf of the
Company in discharging the Company’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 Company who exercises discretion or authority on behalf of the Company
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 Company officers who shall serve as members of the
Committee.  Because this Plan is a “top
hat” arrangement, neither the Company nor the Committee shall be subject to the
fiduciary duties imposed by ERISA.


 


f.              “Company” refers to First Financial Bank.


 


g.             “Compensation” refers to Director’s fees
for service as a Director.


 


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


 


i.              “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 Participant’s
employer..


 


j.              “Effective Date” refers to January 1,
2005.


 


k.             “ERISA” refers to the Employee Retirement
Income Security Act of 1974, as amended from time to time.


 


l.              “Exchange Act” shall mean the Securities
Exchange Act of 1934, as amended, and any valid regulations issued thereunder.


 


m.            “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 Termination of Service but still has a vested,
accrued benefit.


 


n.             “Participant” refers to a Director who
elects to defer under the Plan part or all of his or her Compensation earned
during the applicable Plan Year.


 


o.             “Plan” shall mean this First Financial
Bank Board of Directors 2005 Deferred Compensation Plan, as amended from time
to time.


 


p.             “Plan Administrator” refers to the
Company.


 


q.             “Plan Year” refers to the calendar year.


 


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r.              “Securities Act” refers to the Securities
Act of 1933, as amended, and any valid regulations issued thereunder.


 


s.             “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.


 


t.              “Termination of Service” refers to a
Director’s ceasing to be a member of the Board.


 


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 Company or Committee.
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.


 


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 


 


3





















 


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; provided, however, that if a Participant is determined to be
Disabled, he or she shall be excused from any deferrals for the remainder of
his or her Disability, although such person shall otherwise remain a
Participant.


 


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.


 


5.2.         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.  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 Company.  If the Company establishes a rabbi trust for
all or a portion of the amounts credited to a Participant’s Account, their
earnings or losses on such credited amounts shall be determined under that
trust agreement.


 


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.


 


6.             IN-SERVICE WITHDRAWALS


 


6.1.         Withdrawals
on Previously Specified Dates. 
Prior to the termination of his or her employment, 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.


 


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6.2.         Other
Withdrawals.  Prior to the
termination of his or her service as a Director, Disability, or an income tax
obligation distribution, 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 Termination of Service of a Participant or Inactive Participant, the
Company 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;
in the absence of a timely election, payments shall be made on substantially
equal installments over a fifteen-year period commencing on the Start
Date.  The payment from the Account shall
occur or commence as soon as administratively feasible after the Termination of
Service occurs (“Start Date”).


 


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 Company shall withhold any taxes or
other amounts which federal, state, or local law requires the Company to
deduct, withhold, and deposit.  The
Company’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 remain or become general assets of the Company.  All payments under this Plan shall come from
the general assets of the Company.  The
amounts credited to a Director’s Accounts are not secured by any specific
assets of the Company.  This Plan shall
not be construed to require the Company to fund any of the benefits provided
hereunder or to establish a trust or purchase insurance or other product for
such purpose.  The Company 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 


 


5





















 


have any rights against
the Company 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 Company 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 Company at any time when there
is distribution of his or her Accounts under this Plan; nor shall any provision
of the Plan impede the Company 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 Company will employ any
person at any particular position or level of Compensation, or (b) any
person will continue as a Director.


 


10.          AMENDMENT OR TERMINATION OF PLAN


 


10.1.       The
Board of Directors of the Company may modify, suspend, or terminate the Plan in
any manner at any time.  Such
modification, suspension, or termination shall be in writing and may not reduce
any accrued vested benefits allocated to a Participant’s Account under this
Plan, but may modify, suspend, or terminate future accruals or allocations
under the Plan and may alter any other aspects of the Plan.


 


a.             In modifying, suspending, or terminating
the Plan, or in taking any other action with respect to the implementation,
operation, maintenance, or administration of the Plan, the Board of Directors
may act by a resolution of the Board or by action of its authorized
representative.


 


10.2.       This
Plan shall terminate immediately if an impartial arbitrator or court of
competent jurisdiction finally determines that this Plan is not exempt from the
fiduciary, funding, vesting, or plan termination insurance provisions of Title
I and Title IV of ERISA.  The Plan shall
terminate as of the date of the final determination that it ceased to be
exempt; and all 


 


6





















 


Accounts under this Plan shall be distributed to
Participants, Inactive Participants, or Beneficiaries at the time and in the
manner determined by the Plan Administrator.


 


11.          ADMINISTRATIVE PROCEDURES AND DISPUTE RESOLUTION


 


11.1.       Plan
Administrator.  The Plan
Administrator shall be the Company.  The
Board of Directors may establish an Administrative Committee composed of any
persons, including officers or employees of the Company, who act on behalf of
the Company in discharging the duties of the Company in administering the
Plan.  No Administrative Committee member
who is a full-time officer or employee of the Company 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 Company.  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 Company 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 Company.  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
Company.


 


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 Company 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 Company shall be the “administrator” as
defined in Section 3(16)(A) of ERISA for purposes of the reporting
and disclosure requirements of ERISA and the Code.  The President of the Company, or in his or
her absence, the General Counsel of the Company, shall be the agent for service
of process on the Plan.


 


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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 Company. 
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 Company’s or his or her duties under the Plan shall be
paid or reimbursed by the Company.  Such
costs shall include fees or expenses arising from the Committee’s retention,
with the consent of the Company, 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 Company
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 Company; 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 Company 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, and 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
Claimant or a duly authorized representative of the Claimant may review all
pertinent documents and submit issues and comments in writing.


 


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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 Company 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 Company.  Any
notice to, or any service of process upon, the Company or the Committee with
respect to this Plan may be addressed as follows:


 


Chief Financial Officer


First Financial Bank


100 E. Lancaster Avenue


Downington, PA 19335


 


11.9.       Indemnification.  To the extent permitted by law, the Company
shall, and hereby does, indemnify and hold harmless any director, officer, or
employee of the Company 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 Company (or in the President’s absence, the chief financial
officer of the Company) and offer in writing to the President (or in the
President’s absence, the chief financial officer of the Company) the
opportunity, at the Company’s expense, to handle and defend such action, suit,
or proceeding, and the Company 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 Company) such
notice and opportunity shall relieve the Company of any liability to said
individual under this Section 11.9. 
The Company 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 Company
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 Company or the Committee to perform a specific
act at a specific time required by this Plan, the Company or 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 Company, 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 Company.  If a Director,
Participant, Inactive Participant, or Beneficiary in an application for a
benefit or in response to any request by the Company 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 Company
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, the Company or the Plan Administrator may correct
its error and adjust any payment on the basis of correct facts.  The 


 


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amount of any overpayment may be deducted from or
added to the next succeeding payments, or the Plan Administrator may make a
request for reimbursement from the Director, Participant, Inactive Participant
or Beneficiary as directed by the Plan Administrator.  The Plan Administrator and the Company
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
Company, his or her portion of the Account shall be reinstated and distributed
as soon as administratively feasible. 
Prior to forfeiting any Account, the Company 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 Company’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.


 


11