WILLIAM PENN BANK, FSB
DEFERRED COMPENSATION PLAN FOR
DIRECTORS AND ADVISORY DIRECTORS
As amended and
restated
WHEREAS, William Penn Bank, FSB (the
“Bank”) through its Board of Directors (the
“Board”) adopted a Deferred Compensation Plan for
Directors and Advisory Directors (the “Plan”) on
December 19, 1984 which plan has remained in effect since that date
of approval; and
WHEREAS, certain revisions to the
Plan are necessary in order to conform such Plan to the
requirements of Section 409A of the Internal Revenue Code of 1986,
as amended (“Code”) and related regulations and notices
promulgated thereunder, with such revisions to be effective as of
January 1, 2009.
NOW THEREFORE, the Bank, acting
through its Board, hereby adopts this Restated Deferred
Compensation Plan (the “Restated Plan”), on December 3,
2008 to be effective as of the 1 st day of January 2009,
for certain directors (the “Participants”) to be
designated from time to time by the Board in accordance with the
following provisions:
ARTICLE I
Purpose
1.1 The
purpose of this Plan is to provide Directors and Advisory Directors
of William Penn Bank, FSB the opportunity to defer the payment of
compensation earned in that capacity with one common bookkeeping
account being maintained for all Participants.
ARTICLE II
Definitions
2.1 “Account”
means the one common bookkeeping account for all deferred
compensation maintained on behalf of all Participants in the
Plan.
2.2 Change
in Control of the Bank or the Company shall mean: (i) a change in
ownership of the Bank or the Company under paragraph (a) below, or
(ii) a change in effective control of the Bank or the Company under
paragraph (b) below, or (iii) a change in the ownership of a
substantial portion of the assets of the Bank or the Company under
paragraph (c) below:
(a) CHANGE
IN THE OWNERSHIP OF THE BANK OR THE COMPANY. A change in the
ownership of the Bank or the Company shall occur on the date that
any one person, or more than one person acting as a group (as
defined in paragraph (b)), acquires ownership of stock of the
corporation that, together with stock held by such person or group,
constitutes more than 50 percent of the total fair market value or
total voting power of the stock of such corporation. However, if
any one person or more than one person acting as a group, is
considered to own more than 50 percent of the total fair market
value or total voting power of the stock of a corporation, the
acquisition of
additional stock by the same person
or persons is not considered to cause a change in the ownership of
the corporation (or to cause a change in the effective control of
the corporation (within the meaning of paragraph (b) below). An
increase in the percentage of stock owned by any one person, or
persons acting as a group, as a result of a transaction in which
the corporation acquires its stock in exchange for property will be
treated as an acquisition of stock for purposes of this section.
This paragraph (a) applies only when there is a transfer of stock
of a corporation (or issuance of stock of a corporation) and stock
in such corporation remains outstanding after the
transaction.
(b) CHANGE
IN THE EFFECTIVE CONTROL OF THE BANK OR THE COMPANY. A change in
the effective control of the Bank or the Company shall occur on the
date that either (i) any one person, or more than one person acting
as a group (as determined below), acquires (or has acquired during
the 12-month period ending on the date of the most recent
acquisition by such person or persons) ownership of stock of the
corporation possessing 30 percent or more of the total voting power
of the stock of such corporation; or (ii) a majority of members of
the corporation's board of directors is replaced during any
12-month period by directors whose appointment or election is not
endorsed by a majority of the members of the corporation's board of
directors prior to the date of the appointment or election,
provided that for purposes of this paragraph (b)(ii), the term
corporation refers solely to a corporation for which no other
corporation is a majority shareholder. In the absence of an event
described in paragraph (i) or (ii), a change in the effective
control of a corporation will not have occurred. If any one person,
or more than one person acting as a group, is considered to
effectively control a corporation (within the meaning of this
paragraph (b)), the acquisition of additional control of the
corporation by the same person or persons is not considered to
cause a change in the effective control of the corporation (or to
cause a change in the ownership of the corporation within the
meaning of paragraph (a)). Persons will not be considered to be
acting as a group solely because they purchase or own stock of the
same corporation at the same time, or as a result of the same
public offering.
(c) CHANGE
IN THE OWNERSHIP OF A SUBSTANTIAL PORTION OF THE BANK OR THE
COMPANY'S ASSETS. A change in the ownership of a substantial
portion of the Bank or the Company's assets shall occur on the date
that any one person, or more than one person acting as a group (as
determined below), acquires (or has acquired during the 12-month
period ending on the date of the most recent acquisition by such
person or persons) assets from the corporation that have a total
gross fair market value equal to or more than 40% of the total
gross fair market value of all of the assets of the corporation
immediately prior to such acquisition or acquisitions. For this
purpose, gross fair market value means the value of the assets of
the corporation, or the value of the assets being disposed of,
determined without regard to any liabilities associated with such
assets. There is no Change in Control event under this paragraph
(c) when there is a transfer to an entity that is controlled by the
shareholders of the transferring corporation immediately after the
transfer.
(d) Each
of the sub-paragraphs (a) through (c) above shall be construed and
interpreted consistent with the requirements of Section 409A of the
Code and any Treasury regulations or other guidance issued
thereunder. However, a change in control shall not be deemed to
have occurred as a result of a holding company reorganization of
the Company and simultaneous acquisition of more than 50% of the
Company's stock
(following the Company's conversion to stock
form) by a parent savings and loan holding company or bank holding
company.
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2.3
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“Company” shall mean William Penn
Bancorp, Inc.
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2.4 “Disability”
means (A) the Participant is unable to engage in any substantial
gainful activity by reason of any medically determinable physical
or mental impairment that can be expected to result in death or can
be expected to last for a continuous period of not less than 12
months; or (B) the Participant is, by reason of any medically
determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period
of not less than 12 months, receiving income replacement benefits
for a period of not less than three months under an accident and
health plan covering employees of the Bank. As a condition to any
benefits, the Bank may require the Participant to submit to such
physical or mental evaluations and tests as the Board of Directors
deems appropriate.
2.5 “Eligible
Participant” shall mean individuals who are Directors or
Advisory Directors of the Bank.
2.6 “Participant”
means any Eligible Participant who has properly executed a
Participation Agreement.
2.7 “Plan”
means the William Penn Bank, FSB Deferred Compensation Plan for
Directors and Advisory Directors as it may be amended from time to
time, and the Participation Agreement executed by the Participant,
both of which constitute the Plan.
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2.8
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“Bank” means William Penn Bank,
FSB.
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ARTICLE
III
3.1 Any
present or future Eligible Participant shall be eligible to
participate in the Plan, provided a Participation Agreement is
executed before such participation is desired.
ARTICLE
IV
Deferment
of Compensation
4.1 Participation
in the Plan is optional. Any Director who elects to participate may
defer all or part of his/her annual compensation earned as a
Director. The Participant shall have the right to amend or
terminate his/her election to participate in the Plan prior to
January 1 of each year.
ARTICLE
V
Plan
Administration
5.1 The
deferred compensation of the Participant will not be paid by the
Bank to the Participant as it is earned by the Participant. Rather,
the Bank shall credit to the Account referred to in Section 5.2
below the amount of Participant’s deferred compensation
earned over that period.
5.2 The
Bank hereby establishes one bookkeeping Account for all
Participants. The principal amount of compensation deferred in any
and all Plan years together with the interest accrued on that
amount at a rate equal to the highest rate offered on the Bank
certificates of deposit on December 31, adjusted annually, will be
payable to the Participant, or in the event of his/her death, to
this/her beneficiary/estate, as the Participant elects under
Article 8.1 of this document. The account shall not constitute
or be treated as a trust fund of any kind.
5.3 Following
the end of each year, the Bank will furnish each Participant with a
prior year statement showing the amount of deferred compensation
and interest credited to the Account during the prior year for that
Participant at the close of the last business day of the prior
calendar year. Notwithstanding the foregoing, amounts assigned to
Participants are not assigned to their Account unconditionally, and
shall always remain the property of the Bank. The Participants
rights in the Account are limited to the rights to receive payments
as hereinafter provided and the Participant’s position with
respect thereto is that of a general unsecured creditor of the
Bank.
ARTICLE
VI
Distributions and Hardship
Withdrawals
6.1 Normal
Retirement Benefit. Upon the retirement of the Participant on or
after age 70 (“Normal Retirement Age”), the Bank shall
pay to the Participant by the first day of the first month
following Normal Retirement Age the benefit described in this
Section 6.1 in lieu of any other benefit under this
Agreement.
6.1.1 Amount of Benefit.
The benefit under this Section 6.1 is the bookkeeping Account
balance at the date of the retirement after Normal Retirement
Age.
6.1.2 Payment of Benefit.
The Bank shall pay the benefit to the Participant in the form
elected by the Participant on the Election Form. If the Participant
elected to receive his benefit in the form of installments, the
Bank shall continue to credit interest on the remaining account
balance during any applicable installment period fixed at the rate
in effect under Section 5.2 on the date of the Participant’s
Termination of Service.
6.2 In
the event of his/her death, a beneficiary properly designated in
writing by him/her, shall receive distributions beginning on the
first day of the first month after the Participant’s
death.
6.3 A
Participant may request a withdrawal under this Agreement prior to
termination of Director status or prior to his 70 th
birthday which the Bank may, in its discretion, grant if the
request is based on Hardship.
“Hardship”
If an Unforeseeable Emergency occurs, the
Participant, by written instructions
