Document:

Exhibit 10.3

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is
dated as of October 23, 2007 and is between Willow Financial Bank, a federally chartered
savings bank (the “Bank” or the “Employer”), and Ammon J. Baus (the “Executive”).

 

WITNESSETH

 

WHEREAS, the
Bank was previously known as Willow Grove Bank;

 

WHEREAS, the
Executive is currently employed as the Chief Credit Officer of the Bank, and
the Bank and the Executive have previously entered into an employment agreement
dated May 1, 2004, as amended by Amendment Number 1 thereto, dated February
2007 (the “Prior Agreement”);

 

WHEREAS, the
Bank desires to amend and restate the Prior Agreement in order to make changes
to comply with Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”), as well as certain other changes; and

 

WHEREAS, in order to induce the Executive to remain in the employ of
the Employer and in consideration of the Executive’s agreeing to remain in the
employ of the Employer, the parties desire to specify the severance benefits
which shall be due the Executive by the Employer in the event that his
employment with the Employer is terminated under specified circumstances;

 

NOW THEREFORE, in consideration of the mutual agreements herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereby agree as follows:

 

1.                                      Definitions.
The following words and terms shall have the meanings set forth below for
the purposes of this Agreement:

 

(a)                                  Average
Annual Compensation. The Executive’s “Average Annual Compensation” for
purposes of this Agreement shall be deemed to mean the average amount of Base
Salary and cash bonus paid to the Executive by the Employer or any subsidiary
thereof during the most recent five calendar years preceding the year in which
the Date of Termination occurs (or such shorter period as the Executive was
employed).

 

(b)                                 Base
Salary. “Base Salary” shall have the meaning set forth in Section 3(a)
hereof.

 

(c)                                  Cause.
Termination of the Executive’s employment for “Cause” shall mean
termination because of personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, willful violation of any law, rule or regulation (other
than traffic violations or similar offenses) or final cease-and-desist order, or
material breach of any provision of this Agreement.

 

 

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

 

(e)                                  Corporation. “Corporation” shall mean Willow Financial
Bancorp, Inc.

 

(f)                                    Date
of Termination. “Date of Termination” shall mean (i) if the Executive’s
employment is terminated for Cause, the date on which the Notice of Termination
is given, (ii) if the Executive’s employment is terminated due to his death,
the date of death, and (iii) if the Executive’s employment is terminated for
any other reason, the date specified in such Notice of Termination.

 

(g)                                 Disability.
“Disability” shall mean the Executive (i) is unable to engage in any
substantial gainful activity by reason of any medically determinable physical
or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, or (ii)
is, by reason of any medically determinable physical or mental impairment which
can be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, receiving income replacement benefits for a
period of not less than three months under an accident and health plan covering
employees of the Employer.

 

(h)                                 Effective Date. The Effective Date of this Agreement shall
mean the date first written above.

 

(i)                                     Good
Reason. Termination by the Executive of the Executive’s employment for “Good
Reason” shall mean termination by the Executive based on the occurrence of any
of the following events:

 

(i) any material breach of this Agreement by the Employer, including
without limitation any of the following: (A) a material diminution in the
Executive’s base compensation, (B) a material diminution in the Executive’s
authority, duties or responsibilities as prescribed in Section 2, or (C) a
material diminution in the authority, duties or responsibilities of the officer
to whom the Executive is required to report, or

 

(ii) any material change in the geographic location at which the
Executive must perform his services under this Agreement;

 

provided, however, that prior
to any termination of employment for Good Reason, the Executive must first
provide written notice to the Employer within ninety (90) days of the initial
existence of the condition, describing the existence of such condition, and the
Employer shall thereafter have the right to remedy the condition within thirty
(30) days of the date the Employer received the written notice from the
Executive. If the Employer remedies the condition within such thirty (30) day
cure period, then no Good Reason shall be deemed to exist with respect to such
condition. If the Employer does not remedy the condition within such thirty
(30) day cure period, 

 

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then the Executive may deliver
a Notice of Termination for Good Reason at any time within sixty (60) days following
the expiration of such cure period.

 

(j)                                     IRS.
IRS shall mean the Internal Revenue Service.

 

(k)                                  Notice
of Termination. Any purported termination of the Executive’s employment by
the Employer for any reason, including without limitation for Cause, Disability
or Retirement, or by the Executive for any reason, including without limitation
for Good Reason, shall be communicated by a written “Notice of Termination” to
the other party hereto. For purposes of this Agreement, a “Notice of
Termination” shall mean a dated notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision so indicated,
(iii) specifies a Date of Termination, which shall be not less than thirty (30)
nor more than ninety (90) days after such Notice of Termination is given,
except in the case of the Employer’s termination of the Executive’s employment for
Cause, which shall be effective immediately, and except as set forth in Section
19(a) hereof; and (iv) is given in the manner specified in Section 11 hereof.

 

(k)                                  Retirement.
“Retirement” shall mean voluntary termination by the Executive in
accordance with the Employer’s retirement policies, including early retirement,
generally applicable to the Employer’s salaried employees.

 

2.                                      Term
of Employment.

 

(a)                                  The
Employer hereby employs the Executive as Chief Credit Officer and the Executive
hereby accepts said employment and agrees to render such services to the
Employer on the terms and conditions set forth in this Agreement. Unless
extended as provided in this Section 2, this Agreement shall terminate on June
30, 2008. Prior to July 1, 2008 and each July 1 thereafter, the Board of
Directors of the Employer shall consider and review (after taking into account
all relevant factors, including the Executive’s performance) a one-year
extension of the term of this Agreement, and the term shall continue to extend
each July 1 if the Board of Directors approves such extension unless the
Executive gives written notice to the Employer of the Executive’s election not
to extend the term, with such notice to be given not less than thirty (30) days
prior to any July 1. If the Board of Directors elects not to extend the term, it
shall give written notice of such decision to the Executive not less than
thirty (30) days prior to any such July 1. If any party gives timely notice
that the term will not be extended as of any July 1, then this Agreement shall
terminate at the conclusion of its remaining term. References herein to the
term of this Agreement shall refer both to the initial term and successive
terms.

 

(b)                                 During
the term of this Agreement, the Executive shall perform such executive services
for the Employer as may be consistent with his title and from time to time
assigned to him by the Board of Directors of the Employer. During the term of
this Agreement, the Executive shall devote his best efforts and his full time effort
to the affairs and business of the Employer.

 

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3.                                      Compensation
and Benefits.

 

(a)                                  Base Salary. The Employer shall compensate and pay the
Executive for his services during the term of this Agreement at a minimum base
salary of $190,000 per year (“Base Salary”), which may be increased from time
to time in such amounts as may be determined by the Board of Directors of the
Employer and may not be decreased without the Executive’s express written
consent. In addition to his Base Salary, the Executive shall be entitled to
receive during the term of this Agreement such bonus payments as may be
determined by the Board of Directors of the Employer.

 

(b)                                 Benefit Plans. During the term of this Agreement, the Executive
shall be entitled to participate in and receive the benefits of any pension or
other retirement benefit plan, profit sharing, stock option, employee stock
ownership, or other plans, benefits and privileges given to employees and
executives of the Employer, to the extent commensurate with his then duties and
responsibilities, as fixed by the Board of Directors of the Employer. The
Employer shall not make any changes in such plans, benefits or privileges which
would adversely affect the Executive’s rights or benefits thereunder, unless
such change occurs pursuant to a program applicable to all executive officers
of the Employer and does not result in a proportionately greater adverse change
in the rights of or benefits to the Executive as compared with any other
executive officer of the Employer. Nothing paid to the Executive under any plan
or arrangement presently in effect or made available in the future shall be
deemed to be in lieu of the salary payable to the Executive pursuant to Section
3(a) hereof.

 

(c)                                  Paid Time Off. During the term of this Agreement, the
Executive shall be entitled to paid time off in accordance with the policies as
established from time to time by the Board of Directors of the Employer. The
Executive shall not be entitled to receive any additional compensation from the
Employer for failure to utilize such paid time off, nor shall the Executive be
able to accumulate unused paid time off from one year to the next, except to
the extent authorized by the Board of Directors of the Employer.

 

4.                                      Expenses.
The Employer shall reimburse the Executive or otherwise provide for or pay
for all reasonable expenses incurred by the Executive in furtherance of, or in
connection with the business of the Employer, including, but not by way of
limitation, automobile and other traveling expenses, subject to such reasonable
documentation and other limitations as may be established by the Board of
Directors of the Employer. If such expenses are paid in the first instance by
the Executive, the Employer shall reimburse the Executive therefor. Such
reimbursement shall be paid promptly by the Employer and in any event no later
than March 15 of the year immediately following the year in which such expenses
were incurred.

 

5.                                      Termination.

 

(a)                                  General. The Employer shall have the right, at any time upon
prior Notice of Termination, to terminate the Executive’s employment hereunder
for any reason, including without limitation termination for Cause, Disability
or Retirement, and the Executive shall have the right, upon prior Notice of
Termination, to terminate his employment hereunder for any reason.

 

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(b)                                 For Cause. In the event that the Executive’s employment is
terminated by the Employer for Cause, the Executive shall have no right
pursuant to this Agreement to compensation or other benefits for any period
after the applicable Date of Termination.

 

(c)                                  Voluntary Termination by the Executive. In the event the
Executive terminates his employment hereunder other than for death, Disability,
Retirement or Good Reason, then the Executive shall have no right pursuant to
this Agreement to compensation or other benefits for any period after the
applicable Date of Termination.

 

(d)                                 Death. In the event the Executive’s employment hereunder is
terminated due to death, neither the Executive nor his estate or named
beneficiaries shall have any right pursuant to this Agreement to compensation
or other benefits for any period after the Date of Termination.

 

(e)                                  Disability. In the event the Executive’s employment
hereunder is terminated due to Disability, the Executive shall be entitled to
receive any disability benefits provided under any disability plan maintained
by the Employer. Other than as set forth above, the Executive shall have no
right pursuant to this Agreement to compensation or other benefits for any
period after the Date of Termination.

 

(f)                                    Retirement. In the event the Executive’s employment
hereunder is terminated due to Retirement, the Executive shall have no right pursuant
to this Agreement to compensation or other benefits for any period after the
Date of Termination.

 

(g)                                 Involuntary Termination. In the event that (i) the Executive’s
employment is terminated by the Employer for other than Cause, Disability,
Retirement or the Executive’s death or (ii) such employment is terminated by
the Executive for Good Reason, then the Employer shall pay to the Executive,
within thirty (30) days following the Date of Termination, a cash severance
amount equal to one times the Executive’s current Base Salary; provided,
however, that this Section 5(g) shall not be applicable if the termination of
employment occurs concurrently with or subsequent to a Change in Control.

 

(h)                                 Change in Control Termination. In the event that (i) the Executive’s
employment is terminated concurrently with or within twelve (12) months
following a Change in Control for other than Cause, Disability, Retirement or
the Executive’s death or (ii) the Executive elects to terminate his employment
for Good Reason, then the Employer shall, subject to the provisions of Section
6 hereof, if applicable,

 

(A)                              pay
to the Executive, within thirty (30) days following the Date of Termination, a
cash severance amount equal to two (2) times the Executive’s Average Annual
Compensation;

 

(B)                                maintain
and provide for a period ending at the earlier of (i) one year subsequent to
the Date of Termination or (ii) the date of the Executive’s full-time
employment by another employer (provided that the Executive is entitled under
the terms of such employment to benefits substantially similar to those
described in this subparagraph (B)), at no cost to the Executive, the Executive’s
continued participation in 

 

5

 

all group
insurance, life insurance, health and accident insurance, and disability
insurance offered by the Employer in which the Executive was participating
immediately prior to the Date of Termination; provided that any insurance
premiums payable by the Employer or any successors pursuant to this Section
5(h)(B) shall be payable at such times and in such amounts as if the Executive
was still an employee of the Employer, subject to any increases in such amounts
imposed by the insurance company or COBRA, and the amount of insurance premiums
required to be paid by the Employer in any taxable year shall not affect the
amount of insurance premiums required to be paid by the Employer in any other
taxable year; and provided further that if the Executive’s participation in any
group insurance plan is barred, the Employer shall either arrange to provide
the Executive with insurance benefits substantially similar to those which the
Executive was entitled to receive under such group insurance plan or, if such
coverage cannot be obtained, pay a lump sum cash equivalency amount within
thirty (30) days following the Date of Termination based on the annualized rate
of premiums being paid by the Employer as of the Date of Termination; and

 

(C)                                pay
to the Executive, in a lump sum within thirty (30) days following the Date of
Termination, a cash amount equal to the projected cost to the Employer of
providing benefits to the Executive for a period of twelve (12) months pursuant
to any other employee benefit plans, programs or arrangements offered by the Employer
in which the Executive was entitled to participate immediately prior to the
Date of Termination (excluding (y) stock option plans, restricted stock plans
and employee stock ownership plans of the Employer and (z) bonuses and other
items of cash compensation), with the projected cost to the Employer to be
based on the costs incurred for the calendar year immediately preceding the
year in which the Date of Termination occurs and with any automobile-related
costs to exclude any depreciation on Bank-owned automobiles.

 

6.                                      Limitation
of Benefits under Certain Circumstances. If the payments and benefits
pursuant to Section 5 hereof, either alone or together with other payments and
benefits which the Executive has the right to receive from the Employer and its
affiliates, would constitute a “parachute payment” under Section 280G of the
Code, then the payments and benefits payable by the Employer pursuant to Section
5 hereof shall be reduced by the minimum amount necessary to result in no
portion of the payments and benefits payable by the Employer under Section 5
being non-deductible to the Employer pursuant to Section 280G of the Code and
subject to the excise tax imposed under Section 4999 of the Code. If the
payments and benefits under Section 5 are required to be reduced, the cash
severance shall be reduced first, followed by a reduction in the fringe
benefits. The determination of any reduction in the payments and benefits to be
made pursuant to Section 5 shall be based upon the opinion of independent tax
counsel selected by the Employer and paid by the Employer. Such counsel shall
promptly prepare the foregoing opinion, but in no event later than thirty (30)
days from the Date of Termination, and may use such actuaries as such counsel
deems necessary or advisable for the purpose. Nothing contained in this Section
6 shall result in a reduction of any payments or benefits to which the
Executive may be entitled upon termination of employment under any
circumstances other than as specified in this Section 6, or a reduction in the
payments and benefits specified in Section 5 below zero.

 

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7.                                      Mitigation;
Exclusivity of Benefits.

 

(a)                                  The
Executive shall not be required to mitigate the amount of any benefits
hereunder by seeking other employment or otherwise, nor shall the amount of any
such benefits be reduced by any compensation earned by the Executive as a
result of employment by another employer after the Date of Termination or
otherwise, except as set forth in Section 5(h)(B)(ii) hereof.

 

(b)                                 The
specific arrangements referred to herein are not intended to exclude any other
benefits which may be available to the Executive upon a termination of
employment with the Employer pursuant to employee benefit plans of the Employer
or otherwise.

 

8.                                      Withholding.
All payments required to be made by the Employer hereunder to the Executive
shall be subject to the withholding of such amounts, if any, relating to tax
and other payroll deductions as the Employer may reasonably determine should be
withheld pursuant to any applicable law or regulation.

 

9.                                      Competitive
Activities.

 

(a)                                  The
Executive agrees and acknowledges that by virtue of his employment hereunder,
he will maintain an intimate knowledge of the activities and affairs of the
Employer, including trade secrets, plans, business plans, strategies,
projections, market studies, customer information, employee records and other
internal proprietary and confidential information and matters (collectively “Confidential
Information”). As a result, and also because of the special, unique and
extraordinary services that the Executive is capable of performing for the
Employer or one of its competitors, the Executive recognizes that the services
to be rendered by him hereunder are of a character giving them a peculiar
value, the loss of which cannot be adequately or reasonably compensated for by
damages.

 

(b)                                 Except
for the purpose of carrying out his duties hereunder, the Executive will not
remove or retain, or make copies or reproductions of, any figures, documents,
records, discs, computer records, calculations, letters, papers, or recorded or
documented information of any type or description relating to the business of
the Employer. The Executive agrees that he will not divulge to others any
information (whether or not documented or recorded) or data acquired by him
while in the Employer’s employ relating to methods, processes or other trade
secrets or other Confidential Information.

 

(c)                                  The
Executive agrees that the Employer is, and shall be, the sole and exclusive
owner of all improvements, ideas and suggestions, whether or not subject to
patent or trademark protection, and all copyrightable materials which are
conceived by the Executive during his employment, which relate to the business
of the Employer, which are confidential, or which are not readily ascertainable
from persons or other sources outside the Employer.

 

(d)                                 Unless
the Executive’s employment is terminated in connection with or following a
Change in Control, then for a period of one year after the termination of
employment, the Executive shall not, directly or indirectly, solicit, induce,
encourage or attempt to influence any 

 

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client, customer or employee of
the Employer to cease to do business with, or to terminate any employee’s
employment with, the Employer. The Executive shall not be subject to any of the
limitations set forth in the preceding sentence if the Executive’s employment
is terminated in connection with or following a Change in Control.

 

(e)                                  The
Executive agrees that during the term of his employment hereunder, except with
the express consent of the Employer, he will not, directly or indirectly,
engage or participate in, become a director of, or render advisory or other
services for, or in connection with, or become interested in, or make any
financial investment in any firm, corporation, business entity or business
enterprise competitive with or to any business of the Employer; provided,
however, that the Executive shall not thereby be precluded or prohibited from
owning passive investments, including investments in the securities of other
financial institutions, so long as such ownership does not require him to
devote substantial time to management or control of the business or activities
in which he has invested. Notwithstanding anything to the contrary contained in
this Agreement, during the term of this Agreement, the Executive shall have no
employment contract or other written or oral agreement concerning employment as
an officer of a savings bank or any other financial institution or financial
institution holding company nor with any other entity or person other than the
Bank or the Corporation. The provisions of this Section 9(e) shall not be
applicable if the Executive’s employment is terminated in connection with or
following a Change in Control.

 

(f)                                    The
Employer shall be entitled to immediate injunctive or other equitable relief to
restrain the Executive from failing to comply with any obligation under this
Section 9 or from rendering his services to persons or entities than the
Employer, in addition to any other remedies to which the Employer may be
entitled under law. The right to such injunctive or other equitable relief
shall survive the termination by the Employer of the Executive’s employment.

 

(g)                                 The
Executive acknowledges that the restrictions contained in this Section 9 are
reasonable and necessary to protect the legitimate interests of the Employer
and that any violation thereof would result in irreparable injuries to the
Employer. The Executive acknowledges that, if the Executive violates any of
these restrictions, the Employer is entitled to obtain from any court of
competent jurisdiction, preliminary and permanent injunctive relief as well as
damages, and an equitable accounting of any earnings, profits and other
benefits arising from such violation, which rights shall be cumulative and in
addition to any other rights or remedies to which the Employer may be entitled.
The Executive further acknowledges that the provisions of Sections 9(a), (b),
(c), (f) and (g) shall remain in full force and effect beyond the termination
of the Executive’s employment for any reason, including but not limited to
termination in connection with or following a Change in Control.

 

10.                               Assignability.
The Employer may assign this Agreement and its rights and obligations
hereunder in whole, but not in part, to any corporation, bank or other entity
with or into which the Employer may hereafter merge or consolidate or to which
the Employer may transfer all or substantially all of its assets, if in any
such case said corporation, bank or other entity shall by operation of law or
expressly in writing assume all obligations of the Employer hereunder as fully
as if it had been originally made a party hereto, but may not otherwise assign
this Agreement or its 

 

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rights and obligations hereunder. The Executive may not assign or
transfer this Agreement or any rights or obligations hereunder.

 

11.                               Notice.
For the purposes of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by certified or registered mail, return
receipt requested, postage prepaid, addressed to the respective addresses set
forth below:

 

	
  To the Employer:

  	
   

  	
  Board of Directors

  
	
   

  	
   

  	
  Willow Financial Bank

  
	
   

  	
   

  	
  170 South Warner Road

  
	
   

  	
   

  	
  Wayne, Pennsylvania 19087

  
	
   

  	
   

  	
   

  
	
  To the Executive:

  	
   

  	
  Ammon J. Baus

  
	
   

  	
   

  	
  At his last address on file with

  
	
   

  	
   

  	
  the Employer

  

 

12.                               Amendment;
Waiver. No provisions of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing and signed by the Executive and such officer or officers as may be
specifically designated by the Board of Directors of the Employer to sign on
its behalf. No waiver by any party hereto at any time of any breach by any
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. In addition, notwithstanding anything in this Agreement to the
contrary, the Employer may amend in good faith any terms of this Agreement,
including retroactively, in order to comply with Section 409A of the Code.

 

13.                               Governing
Law. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the United States where applicable
and otherwise by the substantive laws of the Commonwealth of Pennsylvania.

 

14.                               Nature
of Obligations. Nothing contained herein shall create or require the
Employer to create a trust of any kind to fund any benefits which may be
payable hereunder, and to the extent that the Executive acquires a right to
receive benefits from the Employer hereunder, such right shall be no greater
than the right of any unsecured general creditor of the Employer.

 

15.                               Headings.
The section headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.

 

16.                               Validity.
The invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provisions of this
Agreement, which shall remain in full force and effect.

 

17.                               Changes in Statutes or Regulations. If any statutory or
regulation provision referenced herein is subsequently changed or re-numbered,
or is replaced by a separate provision, 

 

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then the references in this
Agreement to such statutory or regulatory provision shall be deemed to be a
reference to such section as amended, re-numbered or replaced.

 

18.                               Counterparts.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together will constitute one
and the same instrument.

 

19.                               Regulatory
Actions. The following provisions shall be applicable to the parties to the
extent that they are required to be included in employment agreements between a
savings association and its employees pursuant to Section 563.39(b) of the
Regulations Applicable to All Savings Associations, 12 C.F.R. §563.39(b), or
any successor thereto, and shall be controlling in the event of a conflict with
any other provision of this Agreement, including without limitation Section 5
hereof.

 

(a)                                  The
Bank’s Board of Directors may terminate the Executive’s employment at any time,
but any termination by the Bank’s Board of Directors, other than termination
for Cause, shall not prejudice the Executive’s right to compensation or other
benefits under this Agreement.

 

(b)                                 If
the Executive is suspended from office and/or temporarily prohibited from
participating in the conduct of the Employer’s affairs by a notice served under
Section 8(e)(3) or Section 8(g)(1) of the Federal Deposit Insurance Act (“FDIA”)
(12 U.S.C. §1818(e)(3) and 1818(g)(1)), the Employer’s obligations under this Agreement
shall be suspended as of the date of service, unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the Employer may, in
its discretion:  (i) pay the Executive
all or part of the compensation withheld while its obligations under this
Agreement were suspended, and (ii) reinstate (in whole or in part) any of its
obligations which were suspended.

 

(c)                                  If
the Executive is removed from office and/or permanently prohibited from
participating in the conduct of the Employer’s affairs by an order issued under
Section 8(e)(4) or Section 8(g)(1) of the FDIA (12 U.S.C. §1818(e)(4) and
(g)(1)), all obligations of the Employer under this Agreement shall terminate
as of the effective date of the order, but vested rights of the Executive and
the Employer as of the date of termination shall not be affected.

 

(d)                                 If
the Bank is in default, as defined in Section 3(x)(1) of the FDIA (12 U.S.C. §1813(x)(1)),
all obligations under this Agreement shall terminate as of the date of default,
but vested rights of the Executive and the Employer as of the date of
termination shall not be affected.

 

(e)                                  All
obligations under this Agreement shall be terminated pursuant to 12 C.F.R. §563.39(b)(5),
except to the extent that it is determined that continuation of the Agreement
for the continued operation of the Employer is necessary: (i) by the Director
of the Office of Thrift Supervision (“OTS”), or his/her designee, at the time
the Federal Deposit Insurance Corporation (“FDIC”) enters into an agreement to
provide assistance to or on behalf of the Bank under the authority contained in
Section 13(c) of the FDIA (12 U.S.C. §1823(c)); or (ii) by the Director of the
OTS, or his/her designee, at the time the Director or his/her designee approves
a supervisory merger to resolve problems related to operation of the Bank or
when the Bank is determined by the 

 

10

 

Director of the OTS to be in an unsafe or unsound condition, but vested
rights of the Executive and the Employer as of the date of termination shall
not be affected.

 

20.                               Regulatory
Prohibition. Notwithstanding any other provision of this Agreement to the
contrary, any payments made to the Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon their compliance with Section
18(k) of the FDIA (12 U.S.C. §1828(k)) and the regulations promulgated
thereunder, including 12 C.F.R. Part 359. In the event of the Executive’s
termination of employment with the Bank for Cause, all employment relationships
and managerial duties with the Bank shall immediately cease regardless of
whether the Executive is in the employ of the Corporation following such
termination. Furthermore, following such termination for Cause, the Executive
will not, directly or indirectly, influence or participate in the affairs or
the operations of the Bank.

 

21.                               Payment
of Costs and Legal Fees and Reinstatement of Benefits. In the event any
dispute or controversy arising under or in connection with the Executive’s termination
is resolved in favor of the Executive, whether by judgment, arbitration or
settlement, the Executive shall be entitled to the payment of (a) all legal
fees incurred by the Executive in resolving such dispute or controversy, and (b)
any back-pay, including Base Salary, bonuses and any other cash compensation,
fringe benefits and any compensation and benefits due to the Executive under
this Agreement.

 

22.                               Entire
Agreement. This Agreement embodies the entire agreement between the
Employer and the Executive with respect to the matters agreed to herein. All
prior agreements between the Employer and the Executive with respect to the
matters agreed to herein, including the Prior Agreement, are hereby superseded
and shall have no force or effect.

 

IN WITNESS WHEREOF, this Agreement is effective as of the date first written
above.

 

 

	
  Attest:

  	
  WILLOW
  FINANCIAL  BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Joseph
  T. Crowley

  	
   

  	
  By:

  	
  /s/ Donna M.
  Coughey

  
	
  Joseph T.
  Crowley

  	
   

  	
  Donna M.
  Coughey

  
	
  Senior Vice
  President, 

  	
   

  	
  President
  and Chief Executive Officer

  
	
   

  	
  Chief Financial
  Officer and 

  	
   

  
	
   

  	
  Corporate Secretary

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ammon J.
  Baus

  
	
   

  	
   

  	
  Ammon J.
  Baus

  
					

 

 

11Exhibit 10.4

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

THIS AMENDED
AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”)  is dated as of October 23, 2007 and is between
Willow Financial Bank, a federally chartered savings bank (the “Bank” or the “Employer”),
and Matthew D. Kelly (the “Executive”).

 

WITNESSETH

 

WHEREAS, the
Bank was previously known as Willow Grove Bank;

 

WHEREAS, the
Executive is currently employed as the Chief Wealth Management  Officer of the Bank, and the Bank and the
Executive have previously entered into an employment agreement dated July 15,
2005 (the “Prior Agreement”);

 

WHEREAS, the
Bank desires to amend and restate the Prior Agreement in order to make changes
to comply with Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”), as well as certain other changes; and

 

WHEREAS, in
order to induce the Executive to remain in the employ of the Employer and in
consideration of the Executive’s agreeing to remain in the employ of the
Employer, the parties desire to specify the severance benefits which shall be
due the Executive by the Employer in the event that his employment with the Employer
is terminated under specified circumstances;

 

NOW THEREFORE,
in consideration of the mutual agreements herein contained, and upon the other
terms and conditions hereinafter provided, the parties hereby agree as follows:

 

1.                                      Definitions.
The following words and terms shall have the meanings set forth below for
the purposes of this Agreement:

 

(a)                                  Average Annual Compensation. The Executive’s “Average Annual
Compensation” for purposes of this Agreement shall be deemed to mean the
average amount of Base Salary and cash bonus paid to the Executive by the
Employer or any subsidiary thereof during the most recent five calendar years
preceding the year in which the Date of Termination occurs (or such shorter
period as the Executive was employed).

 

(b)                                 Base Salary. “Base Salary” shall have the
meaning set forth in Section 3(a) hereof.

 

(c)                                  Cause. Termination of the Executive’s
employment for “Cause” shall mean termination because of personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful violation of any
law, rule or regulation (other than traffic violations or similar offenses) or
final cease-and-desist order, or material breach of any provision of this
Agreement.

 

 

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

 

(e)                                  Corporation. “Corporation” shall mean Willow Financial
Bancorp, Inc.

 

(f)                                    Date of Termination. “Date of Termination”
shall mean (i) if the Executive’s employment is terminated for Cause, the date on
which the Notice of Termination is given, (ii) if the Executive’s employment is
terminated due to his death, the date of death, and (iii) if the Executive’s
employment is terminated for any other reason, the date specified in such
Notice of Termination.

 

(g)                                 Disability. “Disability” shall mean the Executive (i) is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months, or (ii) is, by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than three months under an
accident and health plan covering employees of the Employer.

 

(h)                                 Effective Date. The Effective Date of this Agreement shall
mean the date first written above.

 

(i)                                     Good Reason. Termination by the Executive
of the Executive’s employment for “Good Reason” shall mean termination by the
Executive based on the occurrence of any of the following events:

 

(i) any material breach of this Agreement by the Employer, including
without limitation any of the following: (A) a material diminution in the Executive’s
base compensation, (B) a material diminution in the Executive’s authority,
duties or responsibilities as prescribed in Section 2, or (C) a material
diminution in the authority, duties or responsibilities of the officer to whom
the Executive is required to report, or

 

(ii) any material change in the geographic location at which the
Executive must perform his services under this Agreement;

 

provided, however, that prior
to any termination of employment for Good Reason, the Executive must first
provide written notice to the Employer within ninety (90) days of the initial
existence of the condition, describing the existence of such condition, and the
Employer shall thereafter have the right to remedy the condition within thirty
(30) days of the date the Employer received the written notice from the
Executive. If the Employer remedies the condition within such thirty (30) day
cure period, then no Good Reason shall be deemed to exist with respect to such
condition. If the Employer does not remedy the condition within such thirty
(30) day cure period, then the Executive may deliver a Notice of Termination
for Good Reason at any time within sixty (60) days following the expiration of
such cure period.

 

2

 

(j)                                     IRS. IRS shall mean the Internal Revenue
Service.

 

(k)                                  Notice of Termination. Any purported
termination of the Executive’s employment by the Employer for any reason,
including without limitation for Cause, Disability or Retirement, or by the
Executive for any reason, including without limitation for Good Reason, shall
be communicated by a written “Notice of Termination” to the other party hereto.
For purposes of this Agreement, a “Notice of Termination” shall mean a dated
notice which (i) indicates the specific termination provision in this Agreement
relied upon, (ii) sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive’s employment under
the provision so indicated, (iii) specifies a Date of Termination, which shall
be not less than thirty (30) nor more than ninety (90) days after such Notice
of Termination is given, except in the case of the Employer’s termination of the
Executive’s employment for Cause, which shall be effective immediately, and
except as set forth in Section 19(a) hereof; and (iv) is given in the manner
specified in Section 11 hereof.

 

(l)                                     Retirement. “Retirement” shall mean
voluntary termination by the Executive in accordance with the Employer’s
retirement policies, including early retirement, generally applicable to their
salaried employees.

 

2.                                      Term
of Employment.

 

(a)                                  The
Employer hereby employs the Executive as Chief Wealth Management Officer, and
the Executive hereby accepts said employment and agrees to render such services
to the Employer on the terms and conditions set forth in this Agreement. Unless
extended as provided in this Section 2, this Agreement shall terminate on June
30, 2008. Prior to July 1, 2008 and each July 1 thereafter, the Board of
Directors of the Employer shall consider and review (after taking into account
all relevant factors, including the Executive’s performance hereunder) a
one-year extension of the term of this Agreement, and the term shall continue
to extend each July 1 if the Board of Directors approves such extension unless
the Executive gives written notice to the Employer of the Executive’s election
not to extend the term, with such written notice to be given not less than
thirty (30) days prior to any such July 1. If the Board of Directors of the
Employer elects not to extend the term, it shall give written notice of such
decision to the Executive not less than thirty (30) days prior to any such July
1. If any party gives timely notice that the term will not be extended as of
any July 1, then this Agreement shall terminate at the conclusion of its
remaining term. References herein to the term of this Agreement shall refer
both to the initial term and successive terms.

 

(b)                                 During
the term of this Agreement, the Executive shall perform such executive services
for the Employer as may be consistent with his titles and from time to time
assigned to him by the Board of Directors of the Employer. During the term of
this Agreement, the Executive shall devote his best efforts and his full time
effort to the affairs and business of the Employer.

 

3.                                      Compensation
and Benefits.

 

(a)                                  Base Salary. The Employer shall compensate and pay the
Executive for his services during the term of this Agreement at a minimum base
salary of $181,330 per year (“Base Salary”), which may be increased from time
to time in such amounts as may be determined by the Board of 

 

3

 

Directors of the Employer and
may not be decreased without the Executive’s express written consent. In
addition to his Base Salary, the Executive shall be entitled to receive during
the term of this Agreement such bonus payments as may be determined by the
Board of Directors of the Employer.

 

(b)                                 Benefit Plans. During the term of this Agreement, the Executive
shall be entitled to participate in and receive the benefits of any pension or
other retirement benefit plan, profit sharing, stock option, employee stock
ownership, or other plans, benefits and privileges given to employees and
executives of the Employer, to the extent commensurate with his then duties and
responsibilities, as fixed by the Board of Directors of the Employer. The Employer
shall not make any changes in such plans, benefits or privileges which would
adversely affect the Executive’s rights or benefits thereunder, unless such
change occurs pursuant to a program applicable to all executive officers of the
Employer and does not result in a disproportionately greater adverse change in
the rights of or benefits to the Executive as compared with any other executive
officer of the Employer. Nothing paid to the Executive under any plan or
arrangement presently in effect or made available in the future shall be deemed
to be in lieu of the salary payable to the Executive pursuant to Section 3(a)
hereof.

 

(c)                                  Paid Time Off. During the term of this Agreement, the
Executive shall be entitled to paid time off in accordance with the policies as
established from time to time by the Board of Directors of the Employer. The
Executive shall not be entitled to receive any additional compensation from the
Employer for failure to utilize such paid time off, nor shall the Executive be
able to accumulate unused paid time off from one year to the next, except to
the extent authorized by the Board of Directors of the Employer.

 

4.                                      Expenses.
The Employer shall reimburse the Executive or otherwise provide for or pay
for all reasonable expenses incurred by the Executive in furtherance of or in
connection with the business of the Employer, including, but not by way of
limitation, automobile expenses and other traveling expenses, subject to such
reasonable documentation and other limitations as may be established by the
Board of Directors of the Employer. If such expenses are paid in the first
instance by the Executive, the Employer shall reimburse the Executive therefor.
Such reimbursement shall be paid promptly by the Employer and in any event no
later than March 15 of the year immediately following the year in which such
expenses were incurred.

 

5.                                      Termination.

 

(a)                                  General. The Employer shall have the right, at any time upon
prior Notice of Termination, to terminate the Executive’s employment hereunder
for any reason, including without limitation termination for Cause, Disability
or Retirement, and the Executive shall have the right, upon prior Notice of
Termination, to terminate his employment hereunder for any reason.

 

(b)                                 For Cause. In the event that the Executive’s employment is
terminated by the Employer for Cause, the Executive shall have no right
pursuant to this Agreement to compensation or other benefits for any period
after the applicable Date of Termination.

 

4

 

(c)                                  Voluntary Termination by the Executive. In the event the
Executive terminates his employment hereunder other than for death, Disability,
Retirement or Good Reason, then the Executive shall have no right pursuant to
this Agreement to compensation or other benefits for any period after the
applicable Date of Termination.

 

(d)                                 Death. In the event the Executive’s employment hereunder is
terminated due to death, neither the Executive nor his estate or named
beneficiaries shall have any right pursuant to this Agreement to compensation
or other benefits for any period after the Date of Termination.

 

(e)                                  Disability. In the event the Executive’s employment
hereunder is terminated due to Disability, the Executive shall be entitled to
receive any disability benefits provided under any disability plan maintained
by the Employer. Other than as set forth above, the Executive shall have no
right pursuant to this Agreement to compensation or other benefits for any
period after the Date of Termination.

 

(f)                                    Retirement. In the event the Executive’s employment
hereunder is terminated due to Retirement, the Executive shall have no right
pursuant to this Agreement to compensation or other benefits for any period
after the Date of Termination.

 

(g)                                 Involuntary Termination. In the event that (i) the Executive’s
employment is terminated by the Employer for other than Cause, Disability,
Retirement or the Executive’s death or (ii) such employment is terminated by
the Executive for Good Reason, then the Employer shall pay to the Executive,
within thirty (30) days following the Date of Termination, a cash severance
amount equal to one times the Executive’s current Base Salary; provided,
however, that this Section 5(g) shall not be applicable if the termination of
employment occurs concurrently with or subsequent to a Change in Control.

 

(h)                                 Change in Control Termination. In the event that (i) the
Executive’s employment is terminated concurrently with or within twelve (12)
months following a Change in Control for other than Cause, Disability,
Retirement or the Executive’s death or (ii) the Executive elects to terminate his
employment for Good Reason, then the Employer shall, subject to the provisions
of Section 6 hereof, if applicable,

 

(A)                              pay
to the Executive, within thirty (30) days following the Date of Termination, a
cash severance amount equal to two (2) times the Executive’s Average Annual
Compensation;

 

(B)                                maintain and provide
for a period ending at the earlier of (i) one year subsequent to the Date of
Termination or (ii) the date of the Executive’s full-time employment by another
employer (provided that the Executive is entitled under the terms of such
employment to benefits substantially similar to those described in this
subparagraph (B)), at no cost to the Executive, the Executive’s continued
participation in all group insurance, life insurance, health and accident
insurance, and disability insurance offered by the Employer in which the
Executive was participating immediately prior to the Date of Termination;
provided that any insurance premiums payable by the Employer or any successors
pursuant to this Section 5(h)(B) shall be payable at such times and in such 

 

5

 

amounts as if the Executive was still an employee of the Employer,
subject to any increases in such amounts imposed by the insurance company or
COBRA, and the amount of insurance premiums required to be paid by the Employer
in any taxable year shall not affect the amount of insurance premiums required
to be paid by the Employer in any other taxable year; and provided further that
if the Executive’s participation in any group insurance plan is barred, the Employer
shall either arrange to provide the Executive with insurance benefits
substantially similar to those which the Executive was entitled to receive
under such group insurance plan or, if such coverage cannot be obtained, pay a
lump sum cash equivalency amount within thirty (30) days following the Date of
Termination based on the annualized rate of premiums being paid by the Employer
as of the Date of Termination; and

 

(C)                                pay
to the Executive, in a lump sum within thirty (30) days following the Date of
Termination, a cash amount equal to the projected cost to the Employer of
providing benefits to the Executive for a period of twelve (12) months pursuant
to any other employee benefit plans, programs or arrangements offered by the
Employer in which the Executive was entitled to participate immediately prior
to the Date of Termination (excluding (y) stock option plans, restricted stock
plans and employee stock ownership plans of the Employer and (z) bonuses and
other items of cash compensation), with the projected cost to the Employer to
be based on the costs incurred for the calendar year immediately preceding the
year in which the Date of Termination occurs and with any automobile-related
costs to exclude any depreciation on Bank-owned automobiles.

 

6.                                      Limitation
of Benefits under Certain Circumstances. If the payments and benefits
pursuant to Section 5 hereof, either alone or together with other payments and
benefits which the Executive has the right to receive from the Employer and its
affiliates, would constitute a “parachute payment” under Section 280G of the
Code, then the payments and benefits payable by the Employer pursuant to
Section 5 hereof shall be reduced by the minimum amount necessary to result in
no portion of the payments and benefits payable by the Employer under Section 5
being non-deductible to the Employer pursuant to Section 280G of the Code and
subject to the excise tax imposed under Section 4999 of the Code. If the
payments and benefits under Section 5 are required to be reduced, the cash
severance shall be reduced first, followed by a reduction in the fringe
benefits. The determination of any reduction in the payments and benefits to be
made pursuant to Section 5 shall be based upon the opinion of independent
counsel selected by the Employer and paid by the Employer. Such counsel shall promptly
prepare the foregoing opinion, but in no event later than thirty (30) days from
the Date of Termination, and may use such actuaries as such counsel deems
necessary or advisable for the purpose. Nothing contained in this Section 6
shall result in a reduction of any payments or benefits to which the Executive
may be entitled upon termination of employment under any circumstances other
than as specified in this Section 6, or a reduction in the payments and
benefits specified in Section 5 below zero.

 

6

 

7.                                      Mitigation;
Exclusivity of Benefits.

 

(a)                                  The
Executive shall not be required to mitigate the amount of any benefits hereunder
by seeking other employment or otherwise, nor shall the amount of any such
benefits be reduced by any compensation earned by the Executive as a result of
employment by another employer after the Date of Termination or otherwise,
except as set forth in Section 5(h)(B)(ii) hereof.

 

(b)                                 The
specific arrangements referred to herein are not intended to exclude any other
benefits which may be available to the Executive upon a termination of
employment with the Employer pursuant to employee benefit plans of the Employer
or otherwise.

 

8.                                      Withholding.
All payments required to be made by the Employer hereunder to the Executive
shall be subject to the withholding of such amounts, if any, relating to tax
and other payroll deductions as the Employer may reasonably determine should be
withheld pursuant to any applicable law or regulation.

 

9.                                      Competitive
Activities

 

(a)                                  The
Executive agrees and acknowledges that by virtue of his employment hereunder,
he will maintain an intimate knowledge of the activities and affairs of the
Employer, including trade secrets, plans, business plans, strategies,
projections, market studies, customer information, employee records and other
internal proprietary and confidential information and matters (collectively “Confidential
Information”). As a result, and also because of the special, unique and
extraordinary services that the Executive is capable of performing for the
Employer or one of its competitors, the Executive recognizes that the services
to be rendered by him hereunder are of a character giving them a peculiar
value, the loss of which cannot be adequately or reasonably compensated for by
damages.

 

(b)                                 Except
for the purpose of carrying out his duties hereunder, the Executive will not
remove or retain, or make copies or reproductions of, any figures, documents,
records, discs, computer records, calculations, letters, papers, or recorded or
documented information of any type or description relating to the business of
the Employer. The Executive agrees that he will not divulge to others any
information (whether or not documented or recorded) or data acquired by him
while in the Employer’s employ relating to methods, processes or other trade
secrets or other Confidential Information.

 

(c)                                  The
Executive agrees that the Employer is, and shall be, the sole and exclusive
owner of all improvements, ideas and suggestions, whether or not subject to
patent or trademark protection, and all copyrightable materials which are
conceived by the Executive during his employment, which relate to the business
of the Employer, which are confidential, or which are not readily ascertainable
from persons or other sources outside the Employer.

 

(d)                                 Unless
the Executive’s employment is terminated in connection with or following a
Change in Control, then for a period of one year after the termination of
employment, the Executive shall not, directly or indirectly, solicit, induce,
encourage or attempt to influence any client, customer or employee of the
Employer to cease to do business with, or to terminate any employee’s 

 

7

 

employment with, the Employer. The
Executive shall not be subject to any of the limitations set forth in the
preceding sentence if the Executive’s employment is terminated in connection
with or following a Change in Control.

 

(e)                                  The
Executive agrees that during the term of his employment hereunder, except with
the express consent of the Employer, he will not, directly or indirectly,
engage or participate in, become a director of, or render advisory or other
services for, or in connection with, or become interested in, or make any
financial investment in any firm, corporation, business entity or business
enterprise competitive with or to any business of the Employer; provided,
however, that the Executive shall not thereby be precluded or prohibited from
owning passive investments, including investments in the securities of other
financial institutions, so long as such ownership does not require him to
devote substantial time to management or control of the business or activities
in which he has invested. Notwithstanding anything to the contrary contained in
this Agreement, during the term of this Agreement, the Executive shall have no
employment contract or other written or oral agreement concerning employment as
an officer of a savings bank or any other financial institution or financial
institution holding company nor with any other entity or person other than the
Bank or the Corporation. The provisions of this Section 9(e) shall not be
applicable if the Executive’s employment is terminated in connection with or
following a Change in Control.

 

(f)                                    The
Employer shall be entitled to immediate injunctive or other equitable relief to
restrain the Executive from failing to comply with any obligation under this
Section 9 or from rendering his services to persons or entities than the
Employer, in addition to any other remedies to which the Employer may be
entitled under law. The right to such injunctive or other equitable relief
shall survive the termination by the Employer of the Executive’s employment.

 

(g)                                 The
Executive acknowledges that the restrictions contained in this Section 9 are
reasonable and necessary to protect the legitimate interests of the Employer
and that any violation thereof would result in irreparable injuries to the
Employer. The Executive acknowledges that, if the Executive violates any of
these restrictions, the Employer is entitled to obtain from any court of
competent jurisdiction, preliminary and permanent injunctive relief as well as
damages, and an equitable accounting of any earnings, profits and other
benefits arising from such violation, which rights shall be cumulative and in
addition to any other rights or remedies to which the Employer may be entitled.
The Executive further acknowledges that the provisions of Sections 9(a), (b),
(c), (f) and (g) shall remain in full force and effect beyond the termination
of the Executive’s employment for any reason, including but not limited to
termination in connection with or following a Change in Control.

 

10.                               Assignability.
The Employer may assign this Agreement and its rights and obligations
hereunder in whole, but not in part, to any corporation, bank or other entity
with or into which the Employer may hereafter merge or consolidate or to which
the Employer may transfer all or substantially all of its assets, if in any
such case said corporation, bank or other entity shall by operation of law or
expressly in writing assume all obligations of the Employer hereunder as fully
as if it had been originally made a party hereto, but may not otherwise assign
this Agreement or its rights and obligations hereunder. The Executive may not
assign or transfer this Agreement or any rights or obligations hereunder.

 

8

 

11.                               Notice.
For the purposes of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by first-class certified or registered
mail, return receipt requested, postage prepaid, addressed to the respective
addresses set forth below:

 

	
  To the Employer:

  	
   

  	
  Secretary

  
	
   

  	
   

  	
  Willow Financial Bank

  
	
   

  	
   

  	
  170 South Warner Road

  
	
   

  	
   

  	
  Wayne, Pennsylvania  19087

  
	
   

  	
   

  	
   

  
	
  To the Executive:

  	
   

  	
  Matthew D. Kelly

  
	
   

  	
   

  	
  At his last address on file with

  
	
   

  	
   

  	
  the Employer

  

 

12.                               Amendment;
Waiver. No provisions of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing and signed by the Executive and such officer or officers as may be
specifically designated by the Board of Directors of the Employer to sign on
its behalf. No waiver by any party hereto at any time of any breach by any
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. In addition, notwithstanding anything in this Agreement to the
contrary, the Employer may amend in good faith any terms of this Agreement,
including retroactively, in order to comply with Section 409A of the Code.

 

13.                               Governing
Law. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the United States where applicable
and otherwise by the substantive laws of the Commonwealth of Pennsylvania.

 

14.                               Nature
of Obligations. Nothing contained herein shall create or require the Employer
to create a trust of any kind to fund any benefits which may be payable
hereunder, and to the extent that the Executive acquires a right to receive
benefits from the Employer hereunder, such right shall be no greater than the
right of any unsecured general creditor of the Employer.

 

15.                               Headings.
The section headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.

 

16.                               Validity.
The invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provisions of this
Agreement, which shall remain in full force and effect.

 

17.                               Changes in Statutes or Regulations. If any statutory or
regulation provision referenced herein is subsequently changed or re-numbered,
or is replaced by a separate provision, then the references in this Agreement
to such statutory or regulatory provision shall be deemed to be a reference to
such section as amended, re-numbered or replaced.

 

9

 

18.                               Counterparts.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together will constitute one
and the same instrument.

 

19.                               Regulatory
Actions. The following provisions shall be applicable to the parties to the
extent that they are required to be included in employment agreements between a
savings association and its employees pursuant to Section 563.39(b) of the
Regulations Applicable to All Savings Associations, 12 C.F.R. §563.39(b), or
any successor thereto, and shall be controlling in the event of a conflict with
any other provision of this Agreement, including without limitation Section 5
hereof.

 

(a)                                  The
Bank’s Board of Directors may terminate the Executive’s employment at any time,
but any termination by the Bank’s Board of Directors, other than termination
for Cause, shall not prejudice the Executive’s right to compensation or other
benefits under this Agreement.

 

(b)                                 If
the Executive is suspended from office and/or temporarily prohibited from
participating in the conduct of the Employer’s affairs by a notice served under
Section 8(e)(3) or Section 8(g)(1) of the Federal Deposit Insurance Act (“FDIA”)
(12 U.S.C. §1818(e)(3) and 1818(g)(1)), the Employer’s obligations under this
Agreement shall be suspended as of the date of service, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the
Employer may, in its discretion:  (i) pay
the Executive all or part of the compensation withheld while its obligations
under this Agreement were suspended, and (ii) reinstate (in whole or in part)
any of its obligations which were suspended.

 

(c)                                  If
the Executive is removed from office and/or permanently prohibited from
participating in the conduct of the Employer’s affairs by an order issued under
Section 8(e)(4) or Section 8(g)(1) of the FDIA (12 U.S.C. §1818(e)(4) and
(g)(1)), all obligations of the Employer under this Agreement shall terminate
as of the effective date of the order, but vested rights of the Executive and
the Employer as of the date of termination shall not be affected.

 

(d)                                 If
the Bank is in default, as defined in Section 3(x)(1) of the FDIA (12 U.S.C. §1813(x)(1)),
all obligations under this Agreement shall terminate as of the date of default,
but vested rights of the Executive and the Employer as of the date of
termination shall not be affected.

 

(e)                                  All
obligations under this Agreement shall be terminated pursuant to 12 C.F.R. §563.39(b)(5),
except to the extent that it is determined that continuation of the Agreement
for the continued operation of the Employer is necessary:  (i) by the Director of the Office of Thrift
Supervision (“OTS”), or his/her designee, at the time the Federal Deposit
Insurance Corporation (“FDIC”) enters into an agreement to provide assistance
to or on behalf of the Bank under the authority contained in Section 13(c) of
the FDIA (12 U.S.C. §1823(c)); or (ii) by the Director of the OTS, or his/her
designee, at the time the Director or his/her designee approves a supervisory
merger to resolve problems related to operation of the Bank or when the Bank is
determined by the Director of the OTS to be in an unsafe or unsound condition,
but vested rights of the Executive and the Employer as of the date of
termination shall not be affected.

 

10

 

20.                               Regulatory
Prohibition. Notwithstanding any other provision of this Agreement to the
contrary, any payments made to the Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon their compliance with Section
18(k) of the FDIA (12 U.S.C. §1828(k)) and the regulations promulgated
thereunder, including 12 C.F.R. Part 359. In the event of the Executive’s
termination of employment with the Bank for Cause, all employment relationships
and managerial duties with the Bank shall immediately cease regardless of
whether the Executive remains in the employ of the Corporation following such
termination. Furthermore, following such termination for Cause, the Executive will
not, directly or indirectly, influence or participate in the affairs or the
operations of the Bank.

 

21.                               Payment
of Costs and Legal Fees and Reinstatement of Benefits. In the event any
dispute or controversy arising under or in connection with the Executive’s
termination is resolved in favor of the Executive, whether by judgment,
arbitration or settlement, the Executive shall be entitled to the payment of
(a) all legal fees incurred by the Executive in resolving such dispute or controversy,
and (b) any back-pay, including Base Salary, bonuses and any other cash
compensation, fringe benefits and any compensation and benefits due to the
Executive under this Agreement.

 

22.                               Entire
Agreement. This Agreement embodies the entire agreement between the Employer
and the Executive with respect to the matters agreed to herein. All prior
agreements between the Employer and the Executive with respect to the matters
agreed to herein are hereby superseded and shall have no force or effect,
including the Prior Agreement, the agreement between the parties dated January
20, 2005 and the agreement dated June 30, 2003 between Chester Valley Bancorp,
Inc., First Financial and the Executive.

 

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

 

	
  Attest:

  	
  WILLOW
  FINANCIAL  BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Joseph
  T. Crowley

  	
   

  	
  By:

  	
  /s/ Donna M.
  Coughey

  
	
  Joseph T.
  Crowley

  	
   

  	
  Donna M.
  Coughey

  
	
  Senior Vice
  President, Chief

  	
   

  	
  President
  and Chief Executive Officer

  
	
   

  	
  Financial
  Officer and Corporate

  	
   

  
	
   

  	
  Secretary

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Matthew
  D. Kelly

  
	
   

  	
   

  	
  Matthew D.
  Kelly

  
					

 

 

11

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