Document:

Exhibit 10.7

 

WILLOW FINANCIAL BANK

 

AMENDED AND RESTATED 2005 EXECUTIVE DEFERRED
COMPENSATION PLAN

 

 

WILLOW FINANCIAL BANK

AMENDED AND RESTATED 2005
EXECUTIVE DEFERRED COMPENSATION PLAN

 

The Willow Financial Bank
(the “Bank”) Amended and Restated 2005 Executive Deferred Compensation Plan
(the “Plan”) amends and restates the First Financial Bank 2005 Executive
Deferred Compensation Plan that was effective as of January 1, 2005 and
subsequently amended on August 24, 2005 and October 25, 2005 (the “Prior Plan”).
The Bank is the successor to First Financial Bank by merger. The Bank has
herein restated the Plan, which continues to remain frozen as of August 31,
2005, with the intention that the Plan shall at all times satisfy Section 409A
of the Code (as defined herein) and the regulations thereunder. The provisions
of the Plan shall be construed to effectuate such intentions.

 

1.                                      PURPOSE

 

The primary purpose of
the Plan is to provide deferred compensation to a select group of management or
highly compensated employees within the meaning of Sections 201(2), 301(a)(3),
and 401(a)(1) of ERISA, 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”). More specifically, the Bank adopted
this Plan to provide Employees with the opportunity to defer part or all of
that portion of their Compensation.

 

2.                                      DEFINITIONS AND CAPITALIZED TERMS

 

2.1.                            When
used in this Plan document, the capitalized terms set forth in alphabetical
order herein have the definitions specified below unless the context in which
the term appears clearly requires a different meaning.

 

a.                                       “Account” refers to the bookkeeping
entries established and maintained by the Bank or the Committee for the purpose
of recording (i) the amounts of Compensation deferred by an Employee under this
Plan, (ii) any investment earnings, losses, interest accruals, administrative
expenses, etc. with respect to those amounts, and (iii) any distributions to an
Employee or Beneficiary

 

b.                                      “Bank” refers to Willow Financial Bank.

 

c.                                       “Beneficiary” refers to the person or
entity selected to receive any portion of an Employee’s Account that has not
been distributed from the Plan at the time of the Employee’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 an Employee fails to designate a Beneficiary or no designated
Beneficiary survives the Employee, or, if not a natural person, does not
continue in effect, then the Plan Administrator will direct payment of benefits
to the Employee’s spouse, if the Employee is married at the date of his or her
death, or to the Employee’s estate, if the Employee is not married at the time
of his or her death. For purposes of this subsection, an Employee who is
legally separated or who has been abandoned within the meaning of state law
shall not be regarded as married. In the event of a conflict between the designation
of Beneficiary hereunder and the designation of Beneficiary under a Participant’s
will, the designation of Beneficiary 

 

 

hereunder shall govern. If
the Participant is married and he or she and his or her spouse, as applicable,
die under circumstances under which the survivor cannot be determined, it shall
be presumed that the Participant was the survivor.

 

d.                                      “Board” refers to the Board of Directors
of the Bank.

 

e.                                       “Change in Control” refers to a change in
the ownership of the Company or the Bank, a change in the effective control of
the Company or the Bank or a change in the ownership of a substantial portion
of the assets of the Company or the Bank, in each case as provided under
Section 409A of the Code and the regulations thereunder.

 

f.                                         “Code” refers to the Internal Revenue
Code of 1986, as amended from time to time.

 

g.                                      “Committee” refers to the Administrative
Committee established pursuant to Section 14.1 that acts on behalf of the Bank
in discharging the Bank’s duties as the Plan Administrator. Notwithstanding any
other provision of the Plan document, any member of the Committee or any other
officer or employee of the Bank who exercises discretion or authority on behalf
of the Bank shall not be a fiduciary of the Plan merely by virtue of his or her
exercise of such discretion or authority. The Board shall identify the Bank
officers who shall serve as members of the Committee. Because this Plan is a “top
hat” arrangement, neither the Bank nor the Committee shall be subject to the
fiduciary duties imposed by ERISA.

 

h.                                      “Company” refers to Willow Financial Bancorp,
Inc., the parent company of the Bank.

 

i.                                          “Compensation” refers to an Employee’s
total cash remuneration (without regard to any limits imposed by or with
reference to Section 401(a)(17) of the Code).

 

j.                                          “Controlled Group” refers to all
corporations and entities which with the Bank are treated as a controlled group
within the meaning of Section 414(b) and (c) of the Code.

 

k.                                       “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.

 

l.                                          “Effective Date” of the amended and
restated Plan shall be January 1, 2005.

 

m.                                    “Employee” refers to any employee of the Bank
within the meaning of Section 3121(d) of the Code, who is highly compensated or
a member of management within the meaning of Section 201(2), 301(a)(3), and
401(a)(1) of ERISA selected by the President of the Bank to participate in this
Plan.

 

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

 

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

 

p.                                      “Inactive Participant” refers to an
Employee 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 Employment but still has a
vested, accrued benefit.

 

q.                                      “Participant” refers to an eligible
Employee who elects to defer under the Plan part or all of his or her
Compensation earned during the applicable Plan Year.

 

r.                                         “Plan” shall mean this Willow Financial
Bank Amended and Restated 2005 Executive Deferred Compensation Plan, as amended
from time to time.

 

s.                                       “Plan Administrator” refers to the Bank.

 

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

 

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

 

v.                                      “Separation from Service” means a
termination of a Participant’s services (whether as an employee or as an
independent contractor) to the Company and the Bank. Whether a Separation from
Service has occurred shall be determined in accordance with
the requirements of Section 409A of the Code based on whether the facts and circumstances indicate
that the Company, the Bank and the Participant reasonably anticipated that no
further services would be performed after a certain date or that the level of
bona fide services the Participant would perform after such date (whether as an
employee or as an independent contractor) would permanently decrease to no more
than twenty percent (20%) of the average level of bona fide services performed
(whether as an employee or an independent contractor) over the immediately
preceding thirty-six (36) month period.

 

w.                                    “Substantially Equal Annual Installments”
refers to an annual installment payment over the number of years selected by
the Participant in accordance with this Plan, calculated as follows:  the Account of a Participant shall be
calculated as of the last day of a month; and the annual installment shall be
calculated by multiplying the balance by a fraction, the numerator of which is
one, and the denominator of which is the remaining number of annual
installments due to the Participant.

 

x.                                        “Termination of Employment” refers to an
Employee’s Separation from Service.

 

3.                                      ELIGIBILITY

 

The President of the Bank
is hereby eligible to participate in the Plan. The President of the Bank, in
his or her sole discretion, may designate from time to time from among those 

 

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employees of the Bank
who are part of a select group of management or highly compensated employees within
the meaning of Section 201(2), 301(a)(3), and 401(a)(1) of ERISA, those
Employees of the Bank who are eligible to participate in the Plan for one or
more Plan Years and the date upon which each such Employee’s participation may
commence. All designated Employees shall be notified by the President or the
Committee of their eligibility to participate. An Employee’s eligibility to
participate in the Plan does not confer upon the Employee any right to continue
as an Employee or to any bonus or remuneration of any kind. However,
notwithstanding the foregoing, no additional Employees shall become
Participants in the Plan after August 31, 2005.

 

4.                                      DEFERRAL OF COMPENSATION

 

4.1.                            Election
to Defer. An Employee who is eligible to participate in the Plan may elect
to defer the receipt of Compensation by completing a deferral election form
provided or approved by the Bank or the Committee. Pursuant to the deferral
election form, an eligible Employee may elect to defer any whole percentage, up
to 100% of his or her Compensation. At the time an Employee completes a
deferral election form, the Employee 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 Employee’s
Account and the rate and form of the distribution. Notwithstanding anything
herein to the contrary, as of the closing date of the merger of First Financial
Bank with and into Willow Financial Bank, which occurred on August 31, 2005 (the
“Closing Date”), no further Compensation shall be deferred under the Plan.

 

4.2.                            Date
and Notice of Deferral Election. An eligible Employee 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 Employee will
render the services for which he or she will earn any part of the Compensation
payable to the Employee for service during that year (“Deferral Election Period”).
For the initial Plan Year of the Plan, the first Deferral Election Period shall
end December 31, 2004. The Deferral Election Period, in which a deferral
election of an eligible Employee is made in the Employee’s first year of
employment with the Bank (“New Hire Election”), shall end no earlier than 30
days after his or her first date of employment with the Bank. A New Hire
Election shall be effective with respect to Compensation paid after the end of
the election period and during the calendar year in which the election is made.

 

4.3.                            Multiple
Elections. An election to defer Compensation shall be effective on the
date an eligible Employee delivers a completed deferral election form to the
Committee; provided, however, that, if the eligible Employee delivers another
properly completed deferral election form to 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 Hire Election, in order to
defer any portion of Compensation earned in any calendar year, an eligible
Employee must submit at least one completed deferral election form during the
Deferral Election Period.

 

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4.4.                            No
Deferral Adjustments. After an annual election has taken effect for any
Plan Year, a Participant may not increase or decrease the percentage of
Compensation to be deferred during that Plan Year.

 

5.                                      DEFERRED COMPENSATION ACCOUNTS

 

5.1.                            Maintenance
of Accounts. The Plan Administrator shall maintain one or more Accounts
with respect to any Compensation deferred by an eligible Employee under Section
4 above. The Plan Administrator shall credit the Account with the full amount
of Compensation deferred in any payroll 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 Employee’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                               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 Bank.

 

(b)                                 Hypothetical
Investment Choices. The Committee shall establish one or more hypothetical
investment choices (“Investment Choices”) under this Plan and may add to or
change or discontinue any Investment Choice included in the list of available
Investment Choices in its absolute discretion; however, the Plan may not offer
the common stock of the Company as an Investment Choice. An Investment Choice
must qualify as a notional investment measure that qualifies as a predetermined
actual investment within the meaning of Treasury Regulation Section
31.3121(v)(2)-(1)(d)(2), which generally will require an Investment Choice to
be an actual available investment (for example, a mutual fund or common stock and
not based on the greater of the rate of return of two or more actual
investments).

 

(c)                                  Allocation
and Reallocation of Investment Choices. A Participant may allocate amounts
credited to his or her Account to one or more of the Investment Choices authorized
under the Plan. Subject to the rules established by the Committee, a
Participant may reallocate amounts credited to his or her Account (to be
effective as soon as administratively practicable) to one or more of such
Investment Choices, by filing with the Committee a notice, in 

 

5

 

such form as may be
specified by the Committee. The Committee may restrict allocations or
reallocations by specified Participants into or out of specified Investment
Choices or specify minimum amounts that may be allocated or reallocated by a
Participant; however, any such allocation or reallocation shall be made in
accordance with all applicable provisions of the Exchange Act and the
regulations promulgated thereunder, including but not limited to
Section 16(b) and the regulations thereunder.

 

(d)                                 Investment
Return. In order to simulate an investment return for the amounts held in
each Participant’s Account, the account balance shall be reduced for the
reasonable transaction costs associated with the Participant’s investment
directions and be adjusted to recognize the hypothetical income, appreciation
and depreciation generated by the hypothetical investments that the Account is
deemed to be invested in.

 

(e)                                  Trust.
The Committee has deposited in the Trust Agreement for the Willow Financial
Bancorp, Inc. Deferred Compensation Plan, which is designed to constitute a “rabbi
trust,” amounts of cash or other property in an amount not exceeding the amount
of the Bank’s obligations with respect to the Participants’ Accounts
established under this Section 5.2.

 

5.3.                            Unpaid
Balances. The unpaid balance of all Accounts payable under the Plan
shall continue to be credited with the accruals of interest as described in
Section 5.2 above, unless an alternative Investment Choice is selected by a
Participant.

 

5.4.                            Bank’s
General Assets. Each Participant understands and agrees that all
Compensation deferred under the Plan and all amounts credited to a Participant’s
Account under the Plan (a) are the general assets of the Bank, (b) may be used
in the operation of the Bank’s business or in any other manner permitted by
law, and (c) remain subject to the claims of the Bank’s creditors. Each Participant
agrees, on behalf of such Participant and his or her Beneficiary, that (i)
title to any amounts deferred under the Plan or credited to a Participant’s
Account remains in the Bank and (ii) neither the Participant nor his or her
Beneficiary has any property interests whatsoever in said amounts, except as general
unsecured creditors of the Bank.

 

6.                                      EFFECT ON EMPLOYEE BENEFITS

 

Amounts deferred under
this Plan or distributed pursuant to the terms of this Plan are not taken into
account in the calculation of an Employee’s benefits under any employee pension
or welfare benefit program or under any other compensation practice maintained
by the Bank, except to the extent provided in such program or practice. However,
the benefits provided for a Participant and a Participant’s Beneficiary under
this Plan are in addition to benefits available to such Participant or
Beneficiary under any other plan or program of the Bank.

 

7.                                      PAYMENT OF DEFERRED COMPENSATION ACCOUNTS

 

7.1.                            In-Service
Withdrawals.

 

a.                                       Withdrawals on Previously
Specified Dates. Prior
to a Separation from Service, a Participant shall receive a withdrawal of amounts
deferred in a particular Plan year upon the occurrence of the date and pursuant
to the form specified in his or her deferral election 

 

6

 

form for that Plan Year,
under Section 4.1 above, to the extent that such amounts have not been
disbursed under this Section 7 prior to that date.

 

b.                                      Other Withdrawals. Prior to a Separation from Service, a Participant may not withdraw any
funds from his or her Account, except as provided in paragraph 7.1.a.

 

7.2.                            Termination
of Employment. Subject to a Participant’s or Inactive
Participant’s election of a distribution date and form under Section 4.1, upon
the Separation from Service of a Participant or Inactive Participant for any
reason other that death, the Bank shall distribute his or her Account under the
Plan, in either (i) a single lump sum or (ii) substantially equal annual
installments over a period of fifteen years. Such selection must be made at the
time the election to defer Compensation is made under Section 4.1. The payment
from the Account shall occur or commence on the first day of the month
following the lapse of six months following the date the Separation from
Service occurs (“Start Date”). If the benefits are to be paid in annual
installments, the first annual installment shall be paid on or as soon as
practicable following the Participant’s Separation from Service (subject to the
six-month delay required above), and all subsequent annual payments shall be
paid on the annual anniversary date of the first payment.

 

7.3.                            Death
Prior to Commencement of Distributions. Upon the death of a Participant
or Inactive Participant prior to the commencement of any distribution under
Section 7.2 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.

 

7.4.                            Death
After Commencement of Distributions. Upon the death of a Participant or
Inactive Participant after the commencement of any distribution in accordance
with Section 7.2 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.

 

7.5.                            Withholding
and Other Tax Consequences. From any payments made under this Plan, the
Bank shall withhold any taxes or other amounts which federal, state, or local
law requires the Bank to deduct, withhold, and deposit. The Bank’s
determination of the type and amount of taxes to be withheld from any payment
shall be final and binding on all persons having or claiming to have an
interest in this Plan or in any Accounts under this Plan. Any adverse
consequences incurred by a Participant or Inactive Participant with respect to
his or her participation in the Plan or in connection with a distribution from
or vesting under the Plan shall be the sole responsibility of the Participant
or Inactive Participant.

 

7.6.                            Vesting.
All benefits accrued under this Plan shall be fully vested at all times.

 

8.                                      TRANSFER

 

8.1.                            Outgoing
Transfers. If a Participant under this Plan is transferred to an entity
which is a member of the Bank’s Controlled Group (“U.S. Entity”), the
Participant shall not be 

 

7

 

deemed to have terminated
employment for purposes of this Plan until the Participant ceases to be
employed by a U.S. Entity and has a Separation from Service.

 

9.                                      FUNDING

 

All amounts deferred
under this Plan shall remain or become general assets of the Bank. All payments
under this Plan shall come from the general assets of the Bank. The amounts
credited to an Employee’s Accounts are not secured by any specific assets of
the Bank. This Plan shall not be construed to require the Bank to fund any of
the benefits provided hereunder or to establish a trust or purchase insurance
or other product for such purpose. The Bank may make such arrangements as it
desires to provide for the payment of benefits. Neither an Employee,
Participant, or Inactive Participant nor his or her Beneficiary or estate shall
have any rights against the Bank with respect to any portion of any Account
under the Plan except as general unsecured creditors. No Employee, Participant,
Inactive Participant, or Beneficiary has an interest in any Account under this
Plan until the Employee, Participant, Inactive Participant, or Beneficiary
actually receives payment from the Account. Notwithstanding the terms of this
Section, the Bank may, but need not, establish a rabbi trust with respect to
all or a portion of a Participant’s Accounts.

 

10.                               NON-ALIENATION OF BENEFITS

 

No Employee, 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 Employee, Participant, Inactive Participant,
or Beneficiary. Nothing in the preceding sentence shall prohibit an offset of
amounts which the Employee, Participant, Inactive Participant, or Beneficiary
owes to the Bank at any time when there is a distribution of his or her
Accounts under this Plan, nor shall any provision of the Plan impede the Bank
from recovering directly from an Employee, 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.

 

11.                               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 the Bank (a) will employ any person
at any particular position or level of Compensation, (b) will offer any person
initial or continued participation in any commission, bonus, or other
compensation program, or (c) will continue any person’s employment with the
Bank.

 

12.                               NOTICE UNDER WARN

 

Any amounts paid (i) to
any Employee under the Worker Adjustment and Restraining Notification Act of
1988 (“WARN”) or under any other laws regarding termination of 

 

8

 

employment, or
(ii) to any third party for the benefit of said Employee or for the benefit of
his or her dependents shall not be offset or reduced by any amounts paid or
determined to be payable by the Bank to said Employee or to his or her
dependents under this Plan.

 

13.                               AMENDMENT OR TERMINATION OF PLAN

 

13.1.                        Amendment or Termination. The Bank
intends the Plan to be permanent but reserves the right to amend or terminate
the Plan when, in the sole opinion of the Bank, such amendment or termination
is advisable. Any such amendment or termination shall be made pursuant to a
resolution of the Board. In addition, in the event that the Committee
determines, after a review of Section 409A of the Code and all applicable
Internal Revenue Service guidance, that the Plan or payment election form needs
to be further amended to comply with Section 409A of the Code, the Committee
may amend the Plan or the payment election form to make any changes required
for it to comply with Section 409A of the Code.

 

13.2.                        Effect of Amendment or Termination.

 

(a)                                  General.      No amendment or
termination of the Plan shall directly or indirectly reduce the vested portion
of any account held hereunder as of the effective date of such amendment or
termination. A termination of the Plan will not be a distributable event,
except in the three circumstances set forth in Section 13.2(b) below. No
additional deferrals may be made after termination of the Plan, but the Company
or the Bank shall continue to credit gains and losses pursuant to Section 5
until the vested balance of the Participant’s account has been fully
distributed to the Participant or his Beneficiary.

 

(b)                                 Termination.      Under
no circumstances may the Plan permit the acceleration of the time or form of
any payment under the Plan prior to the payment events specified herein, except
as provided in this Section 13.2(b). The Company or the Bank may, in their
discretion, elect to terminate the Plan in any of the following three
circumstances and accelerate the payment of the entire unpaid balance of the
Participant’s vested benefits as of the date of such payment in accordance with
Section 409A of the Code:

 

(i)                                     the
Plan is irrevocably terminated within the 30 days preceding a Change In Control
and (1) all arrangements sponsored by the Company and the Bank that would be
aggregated with the Plan under Treasury Regulation §1.409A-1(c)(2) are
terminated, and (2) the Participant and all participants under the other
aggregated arrangements receive all of their benefits under the terminated
arrangements within 12 months of the date the Company and the Bank irrevocably
take all necessary action to terminate the Plan and the other aggregated arrangements;

 

(ii)                                  the
Plan is irrevocably terminated at a time that is not proximate to a downturn in
the financial health of the Company or the Bank and (1) all arrangements
sponsored by the Company and the Bank that would be aggregated with the Plan
under Treasury Regulation 1.409A-1(c) if the Participant participated in such
arrangements are terminated, (2) no payments are made within 12 months of the 

 

9

 

date the Company and the
Bank take all necessary action to irrevocably terminate the arrangements, other
than payments that would be payable under the terms of the arrangements if the
termination had not occurred, (3) all payments are made within 24 months of the
date the Company and the Bank take all necessary action to irrevocably
terminate the arrangements, and (4) neither the Company nor the Bank adopts a
new arrangement that would be aggregated with the Plan under Treasury
Regulation 1.409A-1(c) if a Participant participated in both arrangements, at any
time within three years following the date the Company and the Bank take all
necessary action to irrevocably terminate the Plan; or

 

(iii)                               the
Plan is terminated within 12 months of a corporate dissolution taxed under
Section 331 of the Code, or with the approval of a bankruptcy court pursuant to
11 U.S.C. §503(b)(1)(A), provided that the amounts deferred by a Participant
under the Plan are included in the Participant’s gross income in the later of
(1) the calendar year in which the termination of the Plan occurs, or (2) the
first calendar year in which the payment is administratively practicable.

 

14.                               ADMINISTRATIVE PROCEDURES AND DISPUTE RESOLUTION

 

14.1.                     Plan
Administrator. The Plan Administrator shall be the Bank. The Board of
Directors may establish an Administrative Committee composed of any persons,
including officers or employees of the Bank, who act on behalf of the Bank in
discharging the duties of the Bank in administering the Plan. No Administrative
Committee member who is a full-time officer or employee of the Bank shall
receive compensation with respect to his or her service on the Administrative
Committee. Any member of the Administrative Committee may resign by delivering
his or her written resignation to the Board of Directors of the Bank. The Board
may remove any Committee member by providing him or her with written notice of
the removal.

 

14.2.                     Committee
Organization and Procedures.

 

a.                                       The President of the Bank may designate a
chairperson from the members of the Administrative Committee. The
Administrative Committee may appoint its own secretary, who may or may not be a
member of the Administrative Committee and may or may not be a person distinct
from the Secretary of the Bank. The Committee secretary shall have the primary
responsibility for keeping a record of all meetings and acts of the
Administrative Committee and shall have custody of all documents, the
preservation of which shall be necessary or convenient to the efficient
functioning of the Administrative Committee. All reports required by law may be
signed by the Chairperson or another member of the Administrative Committee, as
designated by the Chairperson, on behalf of the 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.

 

14.3.                     Administrative
Authority. The Bank and the Committee have complete discretionary
authority to perform all functions necessary or appropriate to the operation of
the Plan, including, without limitation, authority to (a) construe and
interpret the provisions of the 

 

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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 Employee to be or become a
Participant; (c) decide eligibility (subject to Section 3) for, and the amount
of, benefits for any Participant, Inactive Participant, or Beneficiary; (d)
authorize and direct all disbursements under the Plan; and (e) employ and
engage such persons, counsel, and agents and to obtain such administrative,
clerical, medical, legal, audit, and actuarial services as it may deem
necessary in carrying out the provisions of the Plan. The Bank shall be the “administrator”
as defined in Section 3(16)(A) of ERISA for purposes of the reporting and
disclosure requirements of ERISA and the Code. The President of the Bank, or in
his or her absence, the General Counsel of the Bank, shall be the agent for
service of process on the Plan.

 

14.4.                     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 14.3, shall be paid directly by the Bank. Such expenses may not be
charged against Participant Accounts or reduce the amount of Compensation or
interest accruals allocated to Participant Accounts under the Plan. All
reasonable costs incurred by a Committee member in the discharge of the Bank’s
or his or her duties under the Plan shall be paid or reimbursed by the Bank. Such
costs shall include fees or expenses arising from the Committee’s retention,
with the consent of the Bank, of any attorneys, accountants, actuaries,
consultants or recordkeepers required by the Committee to discharge its duties
under the Plan. Nothing in the preceding two sentences or in any other
provisions of the Plan shall require the Bank to pay or reimburse any Committee
member or any other person for the cost, liability, loss, fee, or expense
incurred by the Committee member or other person in any dispute with the Bank,
nor may any Committee member or other person reimburse himself, herself, or
itself from any Plan contributions for any such cost, liability, loss, fee, or
expense.

 

14.5.                     Insurance.
The Bank may, but need not, obtain liability insurance to protect its
directors, officers, employees, or representatives against liability in the
operation of the Plan.

 

14.6.                     Claims
Procedure.

 

a.                                       A claim for benefits shall be considered
filed only when actually received by the Plan Administrator.

 

b.                                      Any time a claim for benefits is wholly
or partially denied, the Participant, Inactive Participant, or Beneficiary
(hereinafter “Claimant”) shall be given written notice of such denial within 90
days after the claim is filed, unless special circumstances require an
extension of time for processing the claim. If there is an extension, the
Claimant shall be notified of the extension and the reason for the extension
within the initial 90-day period. The extension shall expire within 180 days
after the claim is filed. Such notice will indicate the reason for denial, the
pertinent provisions of the Plan on which the denial is based, an explanation
of the claims appeal procedure and appeal time limits set forth herein, a
description of any additional material or information necessary to perfect the
claim, and an explanation of why such material or information is necessary. The
denial will also include a statement describing the Claimant’s right to bring
an action under Section 502(a) of ERISA following an adverse determination on
review.

 

11

 

14.7.                     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 a 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 a
review is not made within such 60-day period, the Claimant shall forfeit his or
her right to a review. The Claimant or a duly authorized representative of the
Claimant may review all pertinent documents and submit issues and comments in
writing.

 

b.                                      The Plan Administrator shall then review
the claim. The Plan Administrator may issue a written decision reaffirming,
modifying, or setting aside its former action within 60 days after receipt of
the written request for a review, or 120 days if special circumstances require
an extension. The Claimant shall be notified in writing of any such extension
within 60 days following the request for a review. An original or copy of the
decision shall be furnished to the Claimant. A notification of adverse benefit
determination shall set forth, in a manner calculated to be understood by the
Claimant, (i) the specific reason or reasons for the adverse determination;
(ii) references to the specific Plan provisions on which the benefit
determination is based; (iii) a statement that the Claimant is entitled to
receive, upon request and free of charge, reasonable access to, and copies of,
all documents, records, and other information relevant to the claim for
benefits; and (iv) describe the Claimant’s right to bring an action under
Section 502(a) of ERISA. The decision shall be final and binding upon the
Claimant and the Plan Administrator and all other persons having or claiming to
have an interest in the Plan or in any Account established under the Plan.

 

14.8.                     Notices.
Any notice from the Bank or the Committee to an Employee, Participant, Inactive
Participant, or Beneficiary regarding this Plan may be addressed to the last
known residence of said person as indicated in the records of the Bank. Any
notice to, or any service of process upon, the Bank or the Committee with
respect to this Plan may be addressed as follows:

 

Chief Financial Officer

Willow Financial Bank

170 South Warner Road

Wayne, Pennsylvania  19087

 

14.9.                     Indemnification.
To the extent permitted by law, the Bank shall, and hereby does, indemnify and
hold harmless any director, officer, or employee of the Bank who is or may be
deemed to be responsible for the operation of the Plan, from and against any
and all losses, claims, damages, or liabilities (including attorneys’ fees and
amounts paid, with the approval of the Board, in settlement of any claim)
arising out of or resulting from a duty, act, omission, or decision with
respect to the Plan, so long as such duty, act, omission, or decision does not
involve gross negligence or willful misconduct on the part of such director,
officer, or employee. Any individual so indemnified shall, within 10 days after
receipt of notice of any action, suit, or proceeding, notify the President of
the Bank (or in the President’s absence, the chief financial officer of the Bank)
and offer in writing to the President (or in the President’s absence, the chief

 

12

 

financial officer of the Bank)
the opportunity, at the Bank’s expense, to handle and defend such action, suit,
or proceeding, and the Bank shall have the right, but not the obligation, to
conduct the defense in any such action, suit, or proceeding. An individual’s
failure to give the President (or in the President’s absence, the chief
financial officer of the Bank) such notice and opportunity shall relieve the Bank
of any liability to said individual under this Section 14.9. The Bank may
satisfy its obligations under this provision (in whole or in part) by the
purchase of insurance. Any payment by an insurance carrier to or on behalf of
such individual shall, to the extent of such payment, discharge any obligation
of the Bank to the individual under this indemnification.

 

15.                               MISCELLANEOUS

 

15.1.                     Alternative
Acts and Times. If it becomes impossible or burdensome for the Bank or
the Committee to perform a specific act at a specific time required by this
Plan, the Bank or the Committee may perform such alternative act which most
nearly carries out the intent and purpose of this Plan and may perform such
required or alternative act at a time as close as administratively feasible to
the time specified in this Plan for such performance.

 

15.2.                     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.

 

15.3.                     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.

 

15.4.                     Facility
of Payment. If the Plan Administrator, in its sole discretion,
determines that any Employee, 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 Employee, Participant, Inactive Participant, or
Beneficiary; (b) payment to any person or institution maintaining custody of
the Employee, 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 Employee, Participant, Inactive
Participant, or Beneficiary. The receipt by any such person of any such payment
shall be a complete acquittance therefor; and any such payment, to the extent
thereof, shall discharge the liability of the Bank, the Committee, and the Plan
for any amounts owed to the Employee, 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.

 

13

 

15.5.                     Correction
of Errors. Any crediting of Compensation or interest accruals to the
Accounts of any Employee, Participant, Inactive Participant, or Beneficiary
under a mistake of fact or law shall be returned to the Bank. If an Employee,
Participant, Inactive Participant, or Beneficiary in an application for a
benefit or in response to any request by the Bank or the Plan Administrator for
information, makes any erroneous statement, omits any material fact, or fails
to correct any information previously furnished incorrectly to the Bank or the
Plan Administrator, or if the Plan Administrator makes an error in determining
the amount payable to an Employee, Participant, Inactive Participant, or
Beneficiary, then the Bank or the Plan Administrator may correct its error and
adjust any payment on the basis of correct facts. The 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 Employee,
Participant, Inactive Participant or Beneficiary as directed by the Plan
Administrator. The Plan Administrator and the Bank reserve the right to
maintain any action, suit, or proceeding to recover any amounts improperly or
incorrectly paid to any person under the Plan or in settlement of a claim or
satisfaction of a judgment involving the Plan.

 

15.6.                     Missing
Persons. In the event a distribution of a part or all of an Account is
required to be made from the Plan to an Employee, Participant, Inactive
Participant, or Beneficiary, and such person cannot be located, the relevant
portion of the Account shall remain subject to the Plan and, if treated as a
forfeiture, shall be used to defray the Bank’s contribution obligation under
this Plan. If the affected Employee, Participant, Inactive Participant, or
Beneficiary later contacts the Bank, his or her portion of the Account shall be
reinstated and distributed as soon as administratively feasible. Prior to
forfeiting any Account, the Bank shall attempt to contact the Employee,
Participant, Inactive Participant, or Beneficiary by return receipt mail (or
other carrier) at his or her last known address according to the Bank’s records
and, where practical, by letter-forwarding services offered through the
Internal Revenue Service, or the Social Security Administration, or such other
means as the Plan Administrator deems appropriate.

 

15.7.                     Plan Frozen. Notwithstanding anything herein to the
contrary, any and all provisions of the Plan shall be interpreted consistent
with the fact that the Plan has been frozen effective as of the Closing Date
(including the freezing of the Plan as of the Closing Date).

 

IN
WITNESS WHEREOF,
the designated officer has executed this document on the date set forth
adjacent to his or her signature below.

 

	
   

  	
  Willow Financial Bank

  
	
   

  	
   

  
	
  Dated:

  	
  October 23, 2007

  	
   

  	
  By:

  	
  /s/ Donna M. Coughey

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  President and Chief
  Executive Officer

  	
   

  
							

 

14Exhibit 10.8

 

WILLOW FINANCIAL BANK

 

AMENDED AND RESTATED BOARD OF DIRECTORS

 

2005 DEFERRED COMPENSATION PLAN

 

 

WILLOW FINANCIAL BANK

AMENDED AND RESTATED BOARD OF
DIRECTORS

2005 DEFERRED COMPENSATION PLAN

 

The Willow Financial Bank
(the “Bank”) Amended and Restated 2005 Board of Directors
Deferred Compensation Plan (the “Plan”) amends and restates the First Financial Bank Board of
Directors 2005 Deferred Compensation Plan that was effective as of
January 1, 2005 and subsequently amended on August 24, 2005 and October 25,
2005 (the “Prior Plan”). The Bank is the successor to First Financial Bank by
merger. The Bank has herein restated the Plan, which continues to remain frozen
as of August 31, 2005, with the intention that the Plan shall at all times
satisfy Section 409A of the Code (as defined herein) and the regulations
thereunder. The provisions of the Plan shall be construed to effectuate such
intentions.

 

1.                                      PURPOSE

 

The primary purpose of
the Plan is to provide deferred compensation to the non-employee members of the
Bank’s Board of Directors, through an unfunded “top hat” arrangement exempt
from the fiduciary, funding, vesting, and plan termination insurance provisions
of Title I and Title IV of ERISA (“Top Hat”). The Bank has adopted this Plan to
provide those members of the Board of Directors of the Bank who are not also
employees of the Bank with the opportunity to defer part or all of their
Compensation.

 

2.                                      DEFINITIONS AND CAPITALIZED TERMS

 

2.1.         When used in this
Plan document, the capitalized terms set forth in alphabetical order herein
have the definitions specified below unless the context in which the term
appears clearly requires a different meaning.

 

a.     “Account” refers to the bookkeeping
entries established and maintained by the Bank or the Committee for the purpose
of recording (i) the amounts of Compensation deferred by a Director under this
Plan, (ii) any investment earnings, losses, interest accruals, administrative
expenses, etc. with respect to those amounts, and (iii) any distributions to a
Director or Beneficiary

 

b.     “Bank” refers to Willow Financial Bank.

 

c.     “Beneficiary” refers to the person or
entity selected to receive any portion of a Director’s Account that has not
been distributed from the Plan at the time of the Director’s death. Such
designation shall be on a form provided or approved by the Plan Administrator,
and such designation shall be effective when the form is received by the
Committee. If a Director fails to designate a Beneficiary or no designated
Beneficiary survives the Director, or, if not a natural person, does not
continue in effect, then the Plan Administrator will direct payment of benefits
to the Director’s spouse, if the Director is married at the date of his or her
death, or to the Director’s estate, if the Director is not married at the time
of his or her death. For purposes of this subsection, a Director who is legally
separated or who has been abandoned within the meaning of state law shall not
be regarded as married. In the event of a conflict between the designation of
Beneficiary hereunder and the designation of Beneficiary under a Participant’s
will, the

 

 

designation of
Beneficiary hereunder shall govern. If the Participant is married and he or she
and his or her spouse, as applicable, die under circumstances under which the
survivor cannot be determined, it shall be presumed that the Participant was
the survivor.

 

d.     “Board” refers to the Board of Directors
of the Bank.

 

e.     “Change in Control” refers to a change in
the ownership of the Company or the Bank, a change in the effective control of
the Company or the Bank or a change in the ownership of a substantial portion
of the assets of the Company or the Bank, in each case as provided under
Section 409A of the Code and the regulations thereunder.

 

f.     “Code” refers to the Internal Revenue Code
of 1986, as amended from time to time.

 

g.     “Committee” refers to the Administrative
Committee established pursuant to Section 11.1 that acts on behalf of the Bank
in discharging the Bank’s duties as the Plan Administrator. Notwithstanding any
other provision of the Plan document, any member of the Committee or any other
officer or employee of the Bank who exercises discretion or authority on behalf
of the Bank shall not be a fiduciary of the Plan merely by virtue of his or her
exercise of such discretion or authority. The Board shall identify the Bank
officers who shall serve as members of the Committee. Because this Plan is a “top
hat” arrangement, neither the Bank nor the Committee shall be subject to the
fiduciary duties imposed by ERISA.

 

h.     “Company” refers to Willow Financial
Bancorp, Inc., the parent company of the Bank.

 

i.     “Compensation” refers to a Director’s
total cash remuneration (without regard to any limits imposed by or with
reference to Section 401(a)(17) of the Code).

 

j.     “Controlled Group” refers to all
corporations and entities which with the Bank are treated as a controlled group
within the meaning of Section 414(b) and (c) of the Code.

 

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

 

l.     “Disability” refers to when a Participant
(i) is unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months, or (ii) is, by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected
to last for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than 3 months under an accident
and health plan covering employees of the Bank (or would be receiving such
benefits if he was eligible to participate in such plan).

 

m.     “Effective Date” of the amended and
restated Plan shall be January 1, 2005.

 

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

 

2

 

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

 

p.     “Inactive Participant” refers to a
Director who deferred Compensation under the Plan during a previous Plan Year
but who does not defer any Compensation payable during the current Plan Year
and to a Participant who has had a Separation from Service but still has a
vested, accrued benefit.

 

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

 

r.     “Plan” shall mean this Willow Financial
Bank Amended and Restated 2005 Executive Deferred Compensation Plan, as amended
from time to time.

 

s.     “Plan Administrator” refers to the Bank.

 

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

 

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

 

v.    
“Separation from Service” means a termination of a Participant’s
services (whether as an employee or as an independent contractor) to the
Company and the Bank. Whether a Separation from Service has occurred shall be
determined in
accordance with the requirements of Section 409A of the Code based
on whether the facts and circumstances indicate that the Company, the Bank and
the Participant reasonably anticipated that no further services would be
performed after a certain date or that the level of bona fide services the Participant
would perform after such date (whether as an employee or as an independent
contractor) would permanently decrease to no more than twenty percent (20%) of
the average level of bona fide services performed (whether as an employee or an
independent contractor) over the immediately preceding thirty-six (36) month
period.

 

w.     “Substantially Equal Annual Installments”
refers to an annual installment payment over the number of years selected by
the Participant in accordance with this Plan, calculated as follows:  the Account of a Participant shall be
calculated as of the last day of a month; and the annual installment shall be
calculated by multiplying the balance by a fraction, the numerator of which is
one, and the denominator of which is the remaining number of annual
installments due to the Participant.

 

3.                                      ELIGIBILITY

 

3.1.         The Board. The
non-employee members of the Board are eligible to participate in the Plan.

 

4.                                      DEFERRAL OF COMPENSATION

 

4.1.         Election to Defer.
A Director may elect to defer the receipt of Compensation by completing a
deferral election form provided or approved by the Bank or the Committee.

 

3

 

Pursuant to the deferral
election form, a Director may elect to defer any whole percentage, up to 100%
of his or her Compensation. At the time a Director completes a deferral
election form, the Director may designate in writing a specific date upon the
occurrence of which the Compensation deferred for any Plan Year, adjusted under
Section 5 below, shall be distributed from the Director’s Account and the rate
and form of the distribution. Notwithstanding anything herein to the contrary, as of the closing date
of the merger of First Financial Bank with and into Willow Financial Bank,
which occurred on August 31, 2005 (the “Closing Date”), no further Compensation
shall be deferred under the Plan.

 

4.2.         Date and Notice of
Deferral Election. A Director must submit his or her deferral election
form to the Committee no later than the last day of the deferral election
period, which shall be the ninety-day period ending on the last day preceding
the calendar year in which the eligible Director will render the services for
which he or she will earn any part of the Compensation payable to the Director
for service during that year (“Deferral Election Period”). For the initial Plan
Year of the Plan, the first Deferral Election Period shall end no earlier than
December 31, 2004. The Deferral Election Period, in which a deferral election
of a Director that is made in the Director’s first year as a Director where the
individual becomes a Director after the Deferral Election Period for a
particular year (“New Director Election”), shall end no earlier than 30 days
after his or her first date of becoming a Director. A New Director Election
shall be effective with respect to Compensation paid after the end of the
Director’s initial election period.

 

4.3.         Multiple Elections.
An election to defer Compensation shall be effective on the date a Director
delivers a completed deferral election form to the Committee; provided,
however, that, if the Director delivers another properly completed deferral
election form for the Committee prior to the close of the Deferral Election
Period described in Section 4.2, the deferral election on the form bearing the
latest date shall control. After the last day of the election period, the
controlling election made prior to the close of the period shall be irrevocable.
Except with respect to a New Director Election, in order to defer any portion
of Compensation earned in any calendar year, a Director must submit at least
one completed deferral election form during the Deferral Election Period.

 

4.4.         No Deferral
Adjustments. After an annual election has taken effect for any Plan
Year, a Participant may not increase or decrease the percentage of Compensation
to be deferred during that Plan Year.

 

5.                                      DEFERRED COMPENSATION ACCOUNTS

 

5.1.         Maintenance of
Accounts. The Plan Administrator shall maintain one or more Accounts
with respect to any Compensation deferred by a Director under Section 4 above. The
Plan Administrator shall credit the Account with the full amount of
Compensation deferred in any payment period. If the Compensation deferred is
subject to federal or state employment taxes (e.g., taxes under the Federal
Insurance Contributions Act or Federal Unemployment Tax Act), said taxes shall
be withheld and deducted from a portion of the Director’s Compensation not
deferred under this Plan. A Participant or Inactive Participant shall be fully
vested at all times in amounts deferred under Section 4 above, as adjusted for
any interest accruals, administrative expenses, or distributions as described
below.

 

4

 

5.2.         Investment of Account
Balances.

 

(a)           Interest Accruals.
Any amounts credited to the Account of a Participant or Inactive Participant as
a result of the deferral of all or part of his or her Compensation shall accrue
interest compounded annually, until
such time as the Participant or Inactive Participant shall elect another
Investment Choice as provided below. The accrual of interest begins and
the compounding of interest occurs on January 1 of each Plan Year, except for
the first Plan Year, where the compounding of interest shall begin on the Effective
Date. The rate at which interest accrues for any Plan Year shall equal the
average of the 3-month LIBOR for the calendar year preceding the Plan Year,
plus 360 basis points, or such higher rate established by the Committee,
provided, however, that in no event shall the rate be less than five percent
(5%) nor greater than twelve percent (12%). If the full amount of such interest
accruals are allocated to a Participant’s Account, any federal, state, or local
income or employment tax consequences attributable to interest accruals under
this Section 5.2 shall be borne by or inure to the benefit of the Bank. If the Bank
establishes a rabbi trust for all or a portion of the amounts credited to a
Participant’s Account, the earnings or losses on such credited amounts shall be
determined under that trust agreement.

 

(b)           Hypothetical Investment
Choices. The Committee shall establish one or more
hypothetical investment choices (“Investment Choices”) under this Plan and may
add to or change or discontinue any Investment Choice included in the list of
available Investment Choices in its absolute discretion; however, the Plan may
not offer the common stock of the Company as an Investment Choice. An
Investment Choice must qualify as a notional investment measure that qualifies
as a predetermined actual investment within the meaning of Treasury Regulation
Section 31.3121(v)(2)-(1)(d)(2), which generally will require an Investment
Choice to be an actual available investment (for example, a mutual fund or
common stock and not based on the greater of the rate of return of two or more
actual investments).

 

(c)           Allocation and Reallocation of Investment Choices. A Participant
may allocate amounts credited to his or her Account to one or more of the
Investment Choices authorized under the Plan. Subject to the rules established
by the Committee, a Participant may reallocate amounts credited to his or her
Account (to be effective as soon as administratively practicable) to one or
more of such Investment Choices, by filing with the Committee a notice, in such
form as may be specified by the Committee. The Committee may restrict
allocations or reallocations by specified Participants into or out of specified
Investment Choices or specify minimum amounts that may be allocated or reallocated
by a Participant; however, any such allocation or reallocation shall be made in
accordance with all applicable provisions of the Exchange Act and the
regulations promulgated thereunder, including but not limited to Section 16(b)
and the regulations thereunder.

 

(d)           Investment Return. In order to
simulate an investment return for the amounts held in each Participant’s
Account, the account balance shall be reduced for the reasonable transaction
costs associated with the Participant’s investment directions and be adjusted
to recognize the hypothetical income, appreciation and depreciation generated
by the hypothetical investments that the Account is deemed to be invested in.

 

5

 

(e)           Trust. The Committee has deposited
in the Trust Agreement for the Willow Financial Bancorp, Inc. Deferred
Compensation Plan, which is designed to constitute a “rabbi trust,” amounts of
cash or other property in an amount not exceeding the amount of the Bank’s
obligations with respect to the Participants’ Accounts established under this
Section 5.2.

 

5.3.         Unpaid Balances. The
unpaid balance of all Accounts payable under the Plan shall continue to be
credited with the accruals of interest as described in Section 5.2 above,
unless an alternative Investment Choice is selected by a Participant.

 

6.                                      IN-SERVICE WITHDRAWALS

 

6.1.         Withdrawals on
Previously Specified Dates.    Prior to a Separation from Service, a
Participant shall receive a withdrawal of amounts deferred in a particular Plan
year upon the occurrence of the date and pursuant to the form specified in his
or her deferral election form for that Plan Year, under Section 4.1 above, to
the extent that such amounts have not been disbursed under this Section 6 prior
to that date.

 

6.2.         Other Withdrawals.    Prior to a Separation from Service, a
Participant may not withdraw any funds from his or her Account, except as
provided in Section 6.1.

 

6.3.         Termination of Service.    Subject to a Participant’s or Inactive
Participant’s election of a distribution date and form under Section 4.1, upon
the Separation from Service of a Participant or Inactive Participant for any
reason other than death, the Bank shall distribute his or her Account under the
Plan, in either (i) a single lump sum or (ii) substantially equal annual
installments over a period of fifteen years. Such selection must be made at the
time the deferrals are elected to be made in Section 4.1. The payment shall
occur or commence on the first day of the month following the lapse of six
months following the date the Separation from Service occurs (“Start Date”). If
the benefits are to be paid in annual installments, the first annual
installment shall be paid on or as soon as practicable following the
Participant’s Separation from Service (subject to the six-month delay required
above), and all subsequent annual payments shall be paid on the annual
anniversary date of the first payment.

 

6.4.         Death Prior to
Commencement of Distributions.    Upon the death of a Participant or Inactive
Participant prior to the commencement of any distribution under Section 6.3
above, the Accounts of such Participant or Inactive Participant shall be
distributed to his or her Beneficiary in a lump sum. The payment from the
Accounts shall occur as soon as administratively feasible after the death of
the Participant or Inactive Participant.

 

6.5.         Death After
Commencement of Distributions.    Upon the death of a Participant or Inactive
Participant after the commencement of any distribution in accordance with
Section 6.3 above, the balance remaining in the Account of such Participant or
Inactive Participant shall be distributed to his or her Beneficiary in a lump
sum. The payment from the Accounts shall occur as soon as administratively
feasible after the death of the Participant or Inactive Participant.

 

6.6.         Withholding and Other
Tax Consequences.    From any
payments made under this Plan, the Bank shall withhold any taxes or other
amounts which federal, state, or local law

 

6

 

requires the Bank to
deduct, withhold, and deposit. The Bank’s determination of the type and amount
of taxes to be withheld from any payment shall be final and binding on all
persons having or claiming to have an interest in this Plan or in any Accounts
under this Plan. Any adverse consequences incurred by a Participant or Inactive
Participant with respect to his or her participation in the Plan or in
connection with a distribution from or vesting under the Plan shall be the sole
responsibility of the Participant or Inactive Participant.

 

6.7.         Vesting:  All benefits accrued under this Plan shall be
fully vested at all times.

 

7.                                      FUNDING

 

All amounts deferred
under this Plan shall remain or become general assets of the Bank. All payments
under this Plan shall come from the general assets of the Bank. The amounts
credited to a Director’s Accounts are not secured by any specific assets of the
Bank. This Plan shall not be construed to require the Bank to fund any of the
benefits provided hereunder or to establish a trust or purchase insurance or
other product for such purpose. The Bank may make such arrangements as it
desires to provide for the payment of benefits. Neither a Director,
Participant, or Inactive Participant nor his or her Beneficiary or estate shall
have any rights against the Bank with respect to any portion of any Account
under the Plan except as general unsecured creditors. No Director, Participant,
Inactive Participant, or Beneficiary has an interest in any Account under this
Plan until the Director, Participant, Inactive Participant, or Beneficiary
actually receives payment from the Account. Notwithstanding the terms of this
Section, the Bank may, but need not, establish a rabbi trust with respect to
all or a portion of a Participant’s Accounts.

 

8.                                      NON-ALIENATION OF BENEFITS

 

No Director, Participant,
Inactive Participant, or Beneficiary may, except as otherwise required by law,
sell, assign, transfer, convey, hypothecate, encumber, anticipate, pledge, or
otherwise dispose of any interest in this Plan or in any Account established
under this Plan, and any attempt to do so shall be void. No portion of any
Account shall, prior to receipt thereof, be subject to the debts, contracts,
liabilities, or engagements of any Director, Participant, Inactive Participant,
or Beneficiary. Nothing in the preceding sentence shall prohibit an offset of
amounts which the Director, Participant, Inactive Participant, or Beneficiary
owes to the Bank at any time when there is a distribution of his or her Accounts
under this Plan, nor shall any provision of the Plan impede the Bank from
recovering directly from a Director, Participant, Inactive Participant, or
Beneficiary, or by offset against payments being made to them, any payments to
which he or she was not entitled under the Plan.

 

9.                                      LIMITATION OF RIGHTS

 

Nothing in this Plan
document or in any related instrument shall cause this Plan to be treated as a
contract of employment within the meaning of the Federal Arbitration Act, 9
U.S.C. 1 et. seq., or otherwise shall be construed as evidence of any agreement
or understanding, express or implied, that (a) the Bank will employ any person
at any particular position or level of Compensation, or (b) any person will
continue as a Director.

 

7

 

10.                               AMENDMENT OR TERMINATION OF PLAN

 

10.1.        Amendment or Termination.    The Bank intends the Plan to be permanent
but reserves the right to amend or terminate the Plan when, in the sole opinion
of the Bank, such amendment or termination is advisable. Any such amendment or
termination shall be made pursuant to a resolution of the Board. In addition,
in the event that the Committee determines, after a review of Section 409A of
the Code and all applicable Internal Revenue Service guidance, that the Plan or
payment election form needs to be further amended to comply with Section 409A
of the Code, the Committee may amend the Plan or the payment election form to
make any changes required for it to comply with Section 409A of the Code.

 

10.2.        Effect of
Amendment or Termination.

 

(a)           General.     No amendment or termination of the
Plan shall directly or indirectly reduce the vested portion of any account held
hereunder as of the effective date of such amendment or termination. A termination
of the Plan will not be a distributable event, except in the three
circumstances set forth in Section 10.2(b) below.

 

(b)           Termination.     Under
no circumstances may the Plan permit the acceleration of the time or form of
any payment under the Plan prior to the payment events specified herein, except
as provided in this Section 10.2(b). The Bank may, in its discretion, elect to
terminate the Plan in any of the following three circumstances and accelerate
the payment of the entire unpaid balance of the Participant’s vested benefits
as of the date of such payment in accordance with Section 409A of the Code:

 

(i)                                     the
Plan is irrevocably terminated within the 30 days preceding a Change in Control
and (1) all arrangements sponsored by the Bank that would be aggregated with
the Plan under Treasury Regulation §1.409A-1(c)(2) are terminated, and (2) the
Participant and all participants under the other aggregated arrangements
receive all of their benefits under the terminated arrangements within 12
months of the date the Bank irrevocably takes all necessary action to terminate
the Plan and the other aggregated arrangements;

 

(ii)                                  the
Plan is irrevocably terminated at a time that is not proximate to a downturn in
the financial health of the Bank and (1) all arrangements sponsored by the Bank
that would be aggregated with the Plan under Treasury Regulation 1.409A-1(c) if
the Participant participated in such arrangements are terminated, (2) no
payments are made within 12 months of the date the Bank takes all necessary
action to irrevocably terminate the arrangements, other than payments that
would be payable under the terms of the arrangements if the termination had not
occurred, (3) all payments are made within 24 months of the date the Bank takes
all necessary action to irrevocably terminate the arrangements, and (4) the Bank
does not adopt a new arrangement that would be aggregated with the Plan under
Treasury Regulation 1.409A-1(c) if a Participant participated in both
arrangements, at any time within three years following the date the Bank takes
all necessary action to irrevocably terminate the Plan; or

 

8

 

(iii)                               the
Plan is terminated within 12 months of a corporate dissolution taxed under
Section 331 of the Code, or with the approval of a bankruptcy court pursuant to
11 U.S.C. §503(b)(1)(A), provided that the amounts deferred by a Participant
under the Plan are included in the Participant’s gross income in the later of
(1) the calendar year in which the termination of the Plan occurs, or (2) the
first calendar year in which the payment is administratively practicable.

 

11.                               ADMINISTRATIVE PROCEDURES AND DISPUTE RESOLUTION

 

11.1.       Plan Administrator.
The Plan Administrator shall be the Bank. The Board of Directors may establish
an Administrative Committee composed of any persons, including officers or
employees of the Bank, who act on behalf of the Bank in discharging the duties
of the Bank in administering the Plan. No Administrative Committee member who
is a full-time officer or employee of the Bank shall receive compensation with
respect to his or her service on the Administrative Committee. Any member of
the Administrative Committee may resign by delivering his or her written
resignation to the Board of Directors of the Bank. The Board may remove any
Committee member by providing him or her with written notice of the removal.

 

11.2.       Committee Organization
and Procedures.

 

a.   The President of the Bank may designate a
chairperson from the members of the Administrative Committee. The
Administrative Committee may appoint its own secretary, who may or may not be a
member of the Administrative Committee and may or may not be a person distinct
from the Secretary of the Bank. The Committee secretary shall have the primary
responsibility for keeping a record of all meetings and acts of the
Administrative Committee and shall have custody of all documents, the
preservation of which shall be necessary or convenient to the efficient
functioning of the Administrative Committee. All reports required by law may be
signed by the Chairperson or another member of the Administrative Committee, as
designated by the Chairperson, on behalf of the Bank.

 

b.   The Administrative Committee shall act by
a majority of its members in office and may adopt such rules and regulations as
it deems desirable for the conduct of its affairs.

 

11.3.       Administrative Authority.   The
Bank and the Committee have complete discretionary authority to perform all
functions necessary or appropriate to the operation of the Plan, including,
without limitation, authority to (a) construe and interpret the provisions of
the Plan document and any related instrument and determine any question arising
under the Plan document or related instrument, or in connection with the administration
or operation thereof, (b) determine in its sole discretion all facts and
relevant considerations affecting the eligibility of any Director to be or
become a Participant; (c) decide eligibility (subject to Section 3) for, and
the amount of, benefits for any Participant, Inactive Participant, or
Beneficiary; (d) authorize and direct all disbursements under the Plan; and (e)
employ and engage such persons, counsel, and agents and to obtain such
administrative, clerical, medical, legal, audit, and actuarial services as it
may deem necessary in carrying out the provisions of the Plan. The Bank shall
be the “administrator” as defined in Section 3(16)(A) of ERISA for purposes of
the reporting and

 

9

 

disclosure requirements
of ERISA and the Code. The President of the Bank, or in his or her absence, the
General Counsel of the Bank, shall be the agent for service of process on the
Plan.

 

11.4.       Expenses   All
expenses (including fees designated by Committee) which are necessary to
operate and administer the Plan, including but not limited to expenses incurred
in connection with the provisions of Section 11.3, shall be paid directly by
the Bank. Such expenses may not be charged against Participant Accounts or reduce
the amount of Compensation or interest accruals allocated to Participant
Accounts under the Plan. All reasonable costs incurred by a Committee member in
the discharge of the Bank’s or his or her duties under the Plan shall be paid
or reimbursed by the Bank. Such costs shall include fees or expenses arising
from the Committee’s retention, with the consent of the Bank, of any attorneys,
accountants, actuaries, consultants or recordkeepers required by the Committee
to discharge its duties under the Plan. Nothing in the preceding two sentences
or in any other provisions of the Plan shall require the Bank to pay or
reimburse any Committee member or any other person for the cost, liability,
loss, fee, or expense incurred by the Committee member or other person in any
dispute with the Bank, nor may any Committee member or other person reimburse
himself, herself, or itself from any Plan contributions for any such cost,
liability, loss, fee, or expense.

 

11.5.       Insurance.   The
Bank may, but need not, obtain liability insurance to protect its directors,
officers, employees, or representatives against liability in the operation of
the Plan.

 

11.6.       Claims Procedure.

 

a.   A claim for benefits shall be considered
filed only when actually received by the Plan Administrator.

 

b.   Any time a claim for benefits is wholly or
partially denied, the Participant, Inactive Participant, or Beneficiary
(hereinafter “Claimant”) shall be given written notice of such denial within 90
days after the claim is filed, unless special circumstances require an
extension of time for processing the claim. If there is an extension, the
Claimant shall be notified of the extension and the reason for the extension
within the initial 90-day period. The extension shall expire within 180 days
after the claim is filed. Such notice will indicate the reason for denial, the
pertinent provisions of the Plan on which the denial is based, an explanation
of the claims appeal procedure and appeal time limits set forth herein, a
description of any additional material or information necessary to perfect the
claim, and an explanation of why such material or information is necessary. The
denial will also include a statement describing the Claimant’s right to bring
an action under Section 502(a) of ERISA following an adverse determination on
review.

 

11.7.       Appeal Procedures

 

a.   Any person who has had a claim for benefits
denied by the Plan Administrator, or is otherwise adversely affected by the
action or inaction of the Plan Administrator, shall have the right to request
review by the Plan Administrator. Such request must be in writing and must be
received by the Plan Administrator within 60 days after such person receives
notice of the Plan Administrator’s action. If written request for review is not
made within such 60-day period, the Claimant shall forfeit his or her right to
review. The

 

10

 

Claimant or a duly
authorized representative of the Claimant may review all pertinent documents
and submit issues and comments in writing.

 

b.   The Plan Administrator shall then review the
claim. The Plan Administrator may issue a written decision reaffirming,
modifying, or setting aside its former action within 60 days after receipt of
the written request for a review, or 120 days if special circumstances require
an extension. The Claimant shall be notified in writing of any such extension
within 60 days following the request for a review. An original or copy of the
decision shall be furnished to the Claimant. A notification of adverse benefit
determination shall set forth, in a manner calculated to be understood by the
Claimant, (i) the specific reason or reasons for the adverse determination;
(ii) references to the specific Plan provisions on which the benefit
determination is based; (iii) a statement that the Claimant is entitled to
receive, upon request and free of charge, reasonable access to, and copies of,
all documents, records, and other information relevant to the claim for
benefits; and (iv) describe the Claimant’s right to bring an action under
Section 502(a) of ERISA. The decision shall be final and binding upon the
Claimant and the Plan Administrator and all other persons having or claiming to
have an interest in the Plan or in any Account established under the Plan.

 

11.8.       Notices.   Any notice from the Bank or the Committee to
a Director, Participant, Inactive Participant, or Beneficiary regarding this
Plan may be addressed to the last known residence of said person as indicated
in the records of the Bank. Any notice to, or any service of process upon, the Bank
or the Committee with respect to this Plan may be addressed as follows:

 

Chief Financial Officer

Willow Financial Bank

170 South Warner Road

Wayne, Pennsylvania 19087

 

11.9.       Indemnification.
  To the extent permitted by law, the Bank
shall, and hereby does, indemnify and hold harmless any director, officer, or
employee of the Bank who is or may be deemed to be responsible for the
operation of the Plan, from and against any and all losses, claims, damages, or
liabilities (including attorneys’ fees and amounts paid, with the approval of
the Board, in settlement of any claim) arising out of or resulting from a duty,
act, omission, or decision with respect to the Plan, so long as such duty, act,
omission, or decision does not involve gross negligence or willful misconduct
on the part of such director, officer, or employee. Any individual so
indemnified shall, within 10 days after receipt of notice of any action, suit,
or proceeding, notify the President of the Bank (or in the President’s absence,
the chief financial officer of the Bank) and offer in writing to the President
(or in the President’s absence, the chief financial officer of the Bank) the
opportunity, at the Bank’s expense, to handle and defend such action, suit, or
proceeding, and the Bank shall have the right, but not the obligation, to
conduct the defense in any such action, suit, or proceeding. An individual’s
failure to give the President (or in the President’s absence, the chief
financial office of the Bank) such notice and opportunity shall relieve the Bank
of any liability to said individual under this Section 11.9. The Bank may
satisfy its obligations under this provision (in whole or in part) by the
purchase of insurance. Any payment by an insurance carrier to or on behalf of
such individual shall, to the extent of such payment, discharge any obligation
of the Bank to the individual under this indemnification.

 

11

 

12.                               MISCELLANEOUS

 

12.1.       Alternative Acts and
Times.   If it becomes impossible
or burdensome for the Bank or the Committee to perform a specific act at a
specific time required by this Plan, the Bank or the Committee may perform such
alternative act which most nearly carries out the intent and purpose of this
Plan and may perform such required or alternative act at a time as close as
administratively feasible to the time specified in this Plan for such
performance.

 

12.2.       Masculine and Feminine,
Singular and Plural.   Whenever
used herein, pronouns shall include all genders, and the singular shall include
the plural, and the plural shall include the singular, whenever the context
shall plainly so require.

 

12.3.       Governing Law and
Severability.   This Plan shall,
except as expressly provided for hereunder, be construed in accordance with the
laws of the Commonwealth of Pennsylvania (exclusive of its provisions regarding
conflicts of law) to the extent that such laws are not preempted by ERISA or
other federal laws. If any provision of this Plan shall be held illegal or
invalid for any reason, such determination shall not affect the remaining
provisions of this Plan, which shall be construed as if said illegal or invalid
provisions had never been included.

 

12.4.       Facility of Payment.
  If the Plan Administrator, in its sole
discretion, determines that any Director, Participant, Inactive Participant, or
Beneficiary by reason of infirmity, minority, or other disability, is
physically, mentally, or legally incapable of giving a valid receipt for any payment
due him or her or is incapable of handling his or her own affairs and if the
Plan Administrator is not aware of any legal representative appointed on his or
her behalf, then the Plan Administrator, in its sole discretion, may direct (a)
payment to or for the benefit of the Director, Participant, Inactive
Participant, or Beneficiary; (b) payment to any person or institution
maintaining custody of the Director, Participant, Inactive Participant, or
Beneficiary; or (c) payment to any other person selected by the Plan
Administrator to receive, manage, and disburse such payment for the benefit of
the Director, Participant, Inactive Participant, or Beneficiary. The receipt by
any such person of any such payment shall be a complete acquittance therefor;
and any such payment, to the extent thereof, shall discharge the liability of
the Bank, the Committee, and the Plan for any amounts owed to the Director,
Participant, Inactive Participant, or Beneficiary hereunder. In the event of
any controversy or uncertainty regarding who should receive or whom the Plan
Administrator should select to receive any payment under this Plan, the Plan
Administrator may seek instruction from a court of proper jurisdiction or may
place the payment (or Account) into such court with final distribution to be
determined by such court.

 

12.5.       Correction of Errors.
  Any crediting of Compensation or
interest accruals to the Accounts of any Director, Participant, Inactive
Participant, or Beneficiary under a mistake of fact or law shall be returned to
the Bank. If a Director, Participant, Inactive Participant, or Beneficiary in
an application for a benefit or in response to any request by the Bank or the
Plan Administrator for information, makes any erroneous statement, omits any
material fact, or fails to correct any information previously furnished
incorrectly to the Bank or the Plan Administrator, or if the Plan Administrator
makes an error in determining the amount payable to a Director, Participant,
Inactive Participant, or Beneficiary, then the Bank or the Plan Administrator
may correct its error and adjust any payment on the basis of correct facts. The

 

12

 

amount of any overpayment
may be deducted from or added to the next succeeding payments, or the Plan
Administrator may make a request for reimbursement from the Director,
Participant, Inactive Participant or Beneficiary as directed by the Plan
Administrator. The Plan Administrator and the Bank reserve the right to
maintain any action, suit, or proceeding to recover any amounts improperly or
incorrectly paid to any person under the Plan or in settlement of a claim or
satisfaction of a judgment involving the Plan.

 

12.6.       Missing Persons.
  In the event a distribution of a part
or all of an Account is required to be made from the Plan to a Director,
Participant, Inactive Participant, or Beneficiary, and such person cannot be
located, the relevant portion of the Account shall remain subject to the Plan. If
the affected Director, Participant, Inactive Participant, or Beneficiary later
contacts the Bank, his or her portion of the Account shall be reinstated and
distributed as soon as administratively feasible. Prior to forfeiting any
Account, the Bank shall attempt to contact the Director, Participant, Inactive
Participant, or Beneficiary by return receipt mail (or other carrier) at his or
her last known address according to the Bank’s records and, where practical, by
letter-forwarding services offered through the Internal Revenue Service, or the
Social Security Administration, or such other means as the Plan Administrator
deems appropriate.

 

12.7.        Plan Frozen.   Notwithstanding
anything herein to the contrary, any and all provisions of the Plan shall be
interpreted consistent with the fact that the Plan has been frozen effective as
of the Closing Date (including the freezing of participation in the Plan as of
the Closing Date).

 

IN
WITNESS WHEREOF,
the designated officer has executed this document on the date set forth
adjacent to his or her signature below.

 

	
   

  	
  Willow Financial Bank

  
	
   

  	
   

  
	
  Dated:

  	
  October 23, 2007

  	
   

  	
  By:

  	
  /s/ Donna M. Coughey

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  President and Chief
  Executive Officer

  	
   

  
							

 

13

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