Document:

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT is dated as of July 15, 2005 and is
between Willow Grove Bancorp, Inc., a Pennsylvania corporation (the “Corporation”),
Willow Grove Bank, a federally chartered savings bank and a wholly owned subsidiary
of the Corporation (the “Bank”), and Donna M. Coughey (the “Executive”).

 

WITNESSETH

 

WHEREAS, pursuant to an Agreement and Plan of Merger, dated as of January 20,
2005 (the “Merger Agreement”), between the Corporation and Chester Valley
Bancorp, Inc., a Pennsylvania corporation (“Chester Valley”), Chester
Valley shall, as of the Effective Time (as defined in the Merger Agreement),
merge with and into the Corporation, with the Corporation being the surviving
entity (the “Merger”);

 

WHEREAS, prior to the consummation of the Merger, the Corporation and Chester
Valley will respectively cause the Bank and First Financial Bank (“First
Financial”) to enter into a merger agreement providing for the merger of First
Financial with and into the Bank;

 

WHEREAS, the Corporation and the Bank (together, the “Employers”) wish
to provide for the employment by the Corporation and the Bank of the Executive
as of the Effective Time of the Merger, and the Executive wishes to serve the
Employers as of the Effective Time of the Merger, on the terms and conditions
set forth in this Agreement; and

 

WHEREAS, in order to induce the Executive to remain in the employ of
the Employers and in consideration of the Executive’s agreeing to remain in the
employ of the Employers, the parties desire to specify the severance benefits
which shall be due the Executive by the Employers in the event that her
employment with the Employers 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)                                  Accrued Benefits. 
Accrued Benefits means (i) all salary earned or accrued through the
date the Executive’s employment is terminated but not yet paid; (ii) reimbursement
for any and all monies advanced in connection with the Executive’s employment
for reasonable and necessary expenses incurred by the Executive through the
date the Executive’s employment is terminated, subject to the requirements of Section 4
hereof and provided that such expenses have not been previously reimbursed; (iii) any
bonus earned by the Executive for a performance period ending prior to the Date
of Termination, but not yet paid to the Executive, under any bonus or incentive
compensation plan or plans in which the Executive is a participant; (iv) any
vacation time accrued by the Executive under this Agreement or in accordance
with the Employers’ policies but not yet used or forfeited; and (v) to the
extent not previously paid or provided to the Executive, all other payments

 

 

and benefits to which the
Executive may be entitled under the terms of, and at the times specified in, any
applicable compensation or benefit plan, program or arrangement of the
Employers in which the Executive was participating, with it being understood
that the Executive shall not receive any benefits pursuant to any severance
plan.

 

(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 the occurrence
of any of the following with respect to the Corporation and/or the Bank: (i) the
acquisition of control of the Corporation and/or the Bank as defined in 12
C.F.R. §574.4, unless a presumption of control is successfully rebutted or
unless the transaction is exempted by 12 C.F.R. §574.3(c)(vii), or any
successor to such sections; (ii) an event that would be required to be
reported in response to Item 5.01 of Form 8-K or Item 6(e) of Schedule 14A
of Regulation 14A pursuant to the Securities Exchange Act of 1934, as amended (“Exchange
Act”), or any successor thereto, whether or not any class of securities of the
Corporation and/or the Bank is registered under the Exchange Act; (iii) any
“person” (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Corporation and/or the Bank representing 20% or more of the combined voting
power of the Corporation’s and/or the Bank’s then outstanding securities (other
than the Corporation with respect to the Bank’s securities); or (iv) during
any period of three consecutive years, individuals who at the beginning of such
period constitute the Board of Directors of the Corporation and/or the Bank cease
for any reason to constitute at least a majority thereof unless the election,
or the nomination for election by stockholders, of each new director was
approved by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of the period.

 

(e)                                  Code. 
“Code” shall mean the Internal Revenue Code of 1986, as amended.

 

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

 

(g)                                 Disability. 
“Disability” shall mean termination because of any physical or mental
impairment which qualifies the Executive for disability benefits under the
applicable long-term disability plan maintained by the Employers or any
subsidiary or, if no such plan applies, which would qualify the Executive for
disability benefits under the Federal Social Security System.

 

(h)                                 Effective Date.  The
Effective Date of this Agreement shall mean the date on which the Effective
Time of the Merger, as such terms are defined in the Merger Agreement, occurs.

 

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(i)                                     Good Reason.  Termination by the Executive of the Executive’s
employment for “Good Reason” shall mean termination by the Executive within twelve (12) months following a Change in Control of
the Corporation and/or the Bank based on:

 

(i)                                     Without the
Executive’s express written consent, (A) the failure to elect or to
re-elect or to appoint or to re-appoint the Executive to the offices of President
and Chief Executive Officer of the Employers, (B) the failure to nominate
the Executive as a director of the Corporation or to elect the Executive as a
director of the Bank, or (C) a material adverse change made by the
Employers in the Executive’s functions, duties or responsibilities as President
and Chief Executive Officer of the Employers;

 

(ii)                                  Without the Executive’s
express written consent, a reduction by either of the Employers in the
Executive’s Base Salary as the same may be increased from time to time or,
except to the extent permitted by Section 3(c) hereof, a reduction in
the package of fringe benefits provided to the Executive, taken as a whole;

 

(iii)                               The principal executive
office of either of the Employers is relocated by more than 45 miles from the
current principal executive office of the Employers or, without the Executive’s
express written consent, either of the Employers require the Executive to be
based anywhere other than an area within 45 miles of the location of the
Employers’ current principal executive office, except for required travel on
business of the Employers to an extent substantially consistent with the
Executive’s present business travel obligations;

 

(iv)                              Any purported termination
by either of the Employers of the Executive’s employment for Disability which
is not effected pursuant to a Notice of Termination satisfying the requirements
of paragraph (k) below;

 

(v)                                 The failure by the Employers
to obtain the assumption of and agreement to perform this Agreement by any
successor as contemplated in Section 11 hereof; or

 

(vi)                              A material breach of this
Agreement by the Employers or any successors thereto.

 

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

 

(k)                                  Notice of Termination.  Any purported termination of the Executive’s
employment by the Employers for any reason, or by the Executive for any reason,
including without limitation for Good Reason, shall be communicated by 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

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reasonable detail the facts and circumstances claimed to provide a
basis for termination of 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 Employers’ termination of
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 12 hereof.

 

(l)                                     Pre-Merger Options.  Pre-Merger Options means
those options to purchase common stock of Chester Valley that were granted
prior to the date on which the Merger Agreement was executed by the parties
thereto and which remain unvested immediately prior to the Effective Date.

 

(m)                               Present Value. 
Present Value of payments that would otherwise be made in the future
shall be determined using a discount rate equal to the applicable federal rate
prescribed under Section 1274(d) of the Code for the month in which
the Date of Termination occurs, compounded semi-annually.

 

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

 

2.                                      Term
of Employment.

 

(a)                                  Each
of the Employers hereby employs the Executive as President and Chief Executive
Officer, and the Executive hereby accepts said employment and agrees to render
such services to the Employers on the terms and conditions set forth in this
Agreement.  The term of employment under
this Agreement shall be for three years, commencing on the Effective Date of
this Agreement and, upon approval of the Board of Directors of each of the
Employers, shall extend for an additional year on each July 1 such that at
any time the remaining term of this Agreement shall be from two to three years
in the absence of notice to the contrary. 
Prior to the first July 1 following the date of this Agreement and
each July 1 thereafter, the Board of Directors of each of the Employers shall
consider and review (after taking into account all relevant factors, including
the Executive’s performance hereunder) an extension of the term of this
Agreement, and the term shall continue to extend each July 1 if the Boards
of Directors approve such extension unless the Executive gives written notice
to the Employers 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 either of the Employers 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 Employers as may be consistent with her titles and from time to time
assigned to her by the Boards of Directors of the Employers. During the term of
this Agreement, the Executive shall devote her best efforts and her full time
effort to the affairs and business of the Employers.

 

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(c)                                  The
Executive shall be nominated to be a member of the Board of Directors of the
Corporation, and shall be a member of the Board of Directors of the Bank, as
long as the Executive remains an employee in good standing and/or has not
violated any of the terms and provisions of this Agreement.  Termination of employment for any reason
shall be deemed to be a resignation from the Board of Directors of the
Corporation and from the Board of Directors of the Bank.

 

3.                                      Compensation
and Benefits.

 

(a)                                  Base Salary.  The
Employers shall compensate and pay the Executive for her services during the
term of this Agreement at a minimum base salary of $300,000 per year (“Base
Salary”), which may be increased from time to time in such amounts as may be
determined by the Boards of Directors of the Employers and may not be decreased
without the Executive’s express written consent.  In addition to her Base Salary, the Executive
shall be entitled to receive during the term of this Agreement such bonus
payments as may be determined by the Boards of Directors of the Employers.

 

(b)                                 Signing and Retention Bonuses.  The Employers shall pay the Executive a
signing bonus of $200,000 on the Effective Date of this Agreement.  If the Executive is still employed by the
Employers on the one-year anniversary of the Effective Date of this Agreement,
then the Employers shall pay the Executive a retention bonus of $150,000.

 

(c)                                  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 plan, stock option plan, employee stock ownership plan, welfare
and fringe benefit arrangements, or such other employee benefit plans, programs,
policies, benefits, arrangements and privileges given to employees and
executives of the Employers, to the extent commensurate with her then duties
and responsibilities, as fixed by the Boards of Directors of the Employers;
provided, however, that in light of the retention bonus set forth in Section 3(b) hereof,
the Executive shall not be entitled to participate in any incentive bonus plan
of the Employers prior to June 30, 2006.  The Employers 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 Employers 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 Employers.  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) of
this Agreement.  Notwithstanding the
foregoing, in the event that the Executive participates in any employee benefit
plan, program, policy or arrangement offered by Chester Valley and/or First
Financial (the “Chester Valley Plans”) that is continued following the
Effective Date, the Executive shall not be entitled to participate in any
employee benefit plan, program, policy or arrangement of the Employers (the “Employer
Plans”) that provides similar benefits until the Chester Valley Plan is terminated,
suspended or merged into the corresponding Employer Plan.

 

(d)                                 Vacation.  During the
term of this Agreement, the Executive shall be entitled to a minimum of four
weeks of paid vacation each calendar year.  The Executive shall not be entitled to accumulate
unused vacation time from one year to the next, except to the extent authorized
by the

 

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Employers’ vacation policies or by the Boards of Directors of the
Employers.  Accrued but unused vacation in
the year of termination of employment shall be treated as an Accrued Benefit
pursuant to which the Executive shall be entitled to payment based on the
Executive’s then current Base Salary.

 

(e)                                  Executive Survivor Income Agreement.  The Employers expressly assume and agree to
perform the Executive Survivor Income Agreement dated July 2, 2003 between
the Executive and First Financial (the “Survivor Income Agreement”) in the same
manner and to the same extent that First Financial would be required to perform
the Survivor Income Agreement if no succession had occurred; provided, however,
that the parties hereto acknowledge and agree that any payments to the
Executive pursuant to the Survivor Income Agreement will be subject to the
limitations set forth in Section 19 of this Agreement, as applicable.

 

(f)                                    SERP.  During the term
of this Agreement, the Executive will be entitled to participate in a
supplemental executive retirement plan of the Employers to be established for
the Executive’s benefit, with such plan to provide the Executive with those
benefits that she would have received under the Employers’ tax-qualified plans
but for the compensation and contribution limits contained in the Code,
including but not limited to Sections 401(a)(17), 402(g) and 415 of the
Code.

 

(g)                                 Club Membership.  The
Employers shall provide the Executive with membership in a dining club or other
organization, as may be agreed upon from time to time by the Boards of
Directors of the Employers.

 

(h)                                 Automobile Allowance. 
The Employers shall provide the Executive with an automobile allowance
of $1,200 per month. The Executive shall document her business use of the
automobile, including mileage and other incidental costs, and provide such
documentation as may be reasonably required by the Employers.

 

(i)                                     Service Credit.  The
Employers shall provide the Executive with credit for her years of service with
First Financial and its predecessors, to the extent reflected on the books of First
Financial, for the purpose of determining eligibility to participate in and the
vesting of benefits (but not for accrual of benefits) under each Employer Plan in
which the Executive becomes a participant.

 

(j)                                     Treatment of Pre-Merger Options.  The parties hereto agree that the Pre-Merger
Options held by the Executive shall be converted into stock options to purchase
the common stock of the Corporation in accordance with the terms of the Merger
Agreement.  The Executive agrees to waive
her right to accelerated vesting of the Pre-Merger Options as of the Effective
Time of the Merger, and the parties hereto agree that the Pre-Merger Options
shall continue to vest in the ordinary course pursuant to the existing vesting
schedule.

 

(k)                                  Proration.  The
Executive’s compensation, benefits and expenses shall be paid by the
Corporation and the Bank in the same proportion as the time and services
actually expended by the Executive on behalf of each respective Employer.

 

4.                                      Expenses.  The Employers 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
Employers, including, but not by way of limitation, reasonable entertainment

 

6

 

expenses (whether incurred at the Executive’s residence, while
traveling or otherwise), subject to such reasonable documentation and other
limitations as may be established by the Boards of Directors of the
Employers.  If such expenses are paid in
the first instance by the Executive, the Employers shall reimburse the
Executive therefor.

 

5.                                      Termination.

 

(a)                                  General.  The Employers
shall have the right, at any time upon prior Notice of Termination, to
terminate the Executive’s employment hereunder for any reason, and the
Executive shall have the right, upon prior Notice of Termination, to terminate
her employment hereunder for any reason.  Any payments to be made under Sections 5(c), 5(h) or
5(i) shall be contingent on the Executive’s prior execution and
non-revocation of a mutual release substantially in the form attached hereto as
Exhibit A; provided, however, that if the Employers refuse to execute such
mutual release, the Executive’s obligation to execute and not revoke the
release as a precondition to receiving such severance benefits shall terminate.

 

(b)                                 For Cause.  In the
event that the Executive’s employment is terminated by the Employers for Cause,
the Executive shall be entitled to any Accrued Benefits but shall have no right
pursuant to this Agreement to compensation or other benefits for any period
after the applicable Date of Termination.  In the event the Employers desire to terminate
the Executive’s employment for Cause, the Executive shall be given an
opportunity, together with counsel, to meet with the Boards of Directors of the
Employers either prior to the Date of Termination or within ten (10) days
thereafter.  A determination that Cause
exists shall be made by a majority of the Board of Directors in writing, which
shall specify the basis for such determination.  The Employers may suspend the Executive’s
titles, duties and authority pending the Executive’s meeting with the Boards of
Directors, and such suspension shall not constitute Good Reason.

 

(c)                                  Termination Within the First Year.  If the Employers terminate the Executive’s
employment hereunder for any reason other than Cause prior to the one-year
anniversary of the Effective Date, or if the Executive terminates her
employment hereunder for any reason other than death, Disability or Retirement prior
to the one-year anniversary of the Effective Date, then the Employers shall pay
to the Executive a cash lump sum equal to $613,928.83,
on or before the earlier of the thirtieth (30th) day following the
Date of Termination or the next following December 31, minus applicable
withholding taxes, and subject to reduction as set forth in Section 6(a) hereof.
The Executive shall also be entitled to receive any Accrued Benefits, and the
Employers shall provide continued life, medical and dental coverage to the
Executive and any dependents covered as of the Date of Termination for a period
of one year following the Date of Termination, with such coverage to be
provided on the same terms as similar coverage is provided to other employees
of the Employers.  In addition, the
pre-Merger Options shall become immediately vested and exercisable (to the
extent not previously vested and exercisable) and shall remain exercisable for
the period provided under the applicable option agreement.

 

(d)                                 Voluntary Termination by the Executive on or After One Year. In the event the Executive terminates
her employment hereunder on or after the one-year anniversary of the Effective
Date other than for death, Disability, Retirement, Good Reason or an uncured
material breach of this Agreement by the Employers, then the Executive shall be
entitled to any Accrued Benefits but shall

 

7

 

have no right pursuant to this Agreement to compensation or other
benefits for any period after the applicable Date of Termination.

 

(e)                                  Death.  In the event
the Executive’s employment hereunder is terminated due to death, the Executive’s
estate or named beneficiaries shall be entitled to death benefits in accordance
with the terms of the Survivor Income Agreement.  The Employers shall also (i) provide the
Executive with any Accrued Benefits, (ii) pay the Executive’s spouse
one-half of the Base Salary that would have been paid to the Executive for the
then remaining term of this Agreement but for such death, and (iii) provide
the Executive’s spouse and any dependents covered as of the Date of Termination
with continued medical and dental coverage for the then remaining term of this
Agreement but for such death, with such coverage to be provided on the same
terms as similar coverage is provided to other employees of the Employers.  In addition, the pre-Merger Options shall
become immediately vested and exercisable (to the extent not previously vested
and exercisable) and shall remain exercisable for the period provided under the
applicable option agreement.  Other than
as set forth above, neither the Executive nor her 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.

 

(f)                                    Disability.  In the
event the Executive’s employment hereunder is terminated due to Disability, the
Employers shall (i) provide the Executive with any Accrued Benefits and (ii) provide
continued life, medical and dental coverage to the Executive and any dependents
covered as of the Date of Termination for the then remaining term of this
Agreement but for such Disability, with such coverage to be provided on the
same terms as similar coverage is provided to other employees of the Employers.
 In addition, the pre-Merger Options
shall become immediately vested and exercisable (to the extent not previously
vested and exercisable) and shall remain exercisable for the period provided
under the applicable option agreement.  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.

 

(g)                                 Retirement.  In the
event the Executive’s employment hereunder is terminated due to Retirement, the
Employers shall (i) provide the Executive with any Accrued Benefits and (ii) provide
continued life, medical and dental coverage to the Executive and any dependents
covered as of the Date of Termination for the then remaining term of this
Agreement but for such Retirement, with such coverage to be provided on the
same terms as similar coverage is provided to other employees of the Employers.
 In addition, the pre-Merger Options
shall become immediately vested and exercisable (to the extent not previously
vested and exercisable) and shall remain exercisable for the period provided
under the applicable option agreement.  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.

 

(h)                                 Involuntary Termination on or After One Year.  In the event that on or after the one-year
anniversary of the Effective Date either (A) the Executive’s employment is
terminated by the Employers for other than Cause or the Executive’s Disability,
Retirement or death or (B) such employment is terminated by the Executive
due to a material breach of this Agreement by the Employers, which breach has
not been cured within fifteen (15) days after a written notice of
non-compliance has been given by the Executive to the Employers, then the
Employers shall (i) provide

 

8

 

the Executive with any Accrued Benefits, and (ii) pay
to the Executive, within the earlier of thirty (30) days following the Date of
Termination or the next following December 31, an amount equal to the Present
Value of the Base Salary that the Executive would have earned for the then remaining
term of this Agreement, based on the Executive’s then current Base Salary, and
provide continued life, medical and dental coverage to the Executive and any
dependents covered as of the Date of Termination for the then remaining term of
this Agreement but for such termination, with such coverage to be provided on
the same terms as similar coverage is provided to other employees of the
Employers.  In addition, the pre-Merger
Options shall become immediately vested and exercisable (to the extent not
previously vested and exercisable) and shall remain exercisable for the period
provided under the applicable option agreement.  Notwithstanding the foregoing, this Section 5(h) shall
not be applicable if the termination of employment occurs concurrently with or within
twenty-four (24) months following a Change in Control of the Corporation and/or
the Bank.

 

(i)                                     Change in Control Termination.  In the event that on or after the one-year
anniversary of the Effective Date either (i) the Executive’s employment is
terminated concurrently with or within twelve (12) months following a Change in
Control of the Corporation and/or the Bank for other than Cause or the
Executive’s Disability, Retirement or death, or (ii) the Executive elects
to terminate her employment for Good Reason, then the Employers shall, subject
to the provisions of Sections 6(b) and 7 hereof, if applicable

 

(A)                              pay to the Executive, within
the earlier of thirty (30) days following the Date of Termination or the next
following December 31, a lump sum cash severance amount equal to three (3) times
the sum of the Executive’s then current Base Salary and most recently paid
bonus;

 

(B)                                provide to the
Executive, her spouse and any dependents covered as of the Date of Termination for
a period ending at the earlier of (i) three years subsequent to the Date
of Termination or (ii) the date of the Executive’s full-time employment by
another employer (provided that the Executive, her spouse and/or her dependents
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, continued participation in all group insurance, life insurance,
health and accident insurance, disability insurance and other employee benefit
plans, programs and arrangements offered by the Employers in which the
Executive, her spouse and/or her dependents were 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 Employers and
(z) bonuses and other items of cash compensation), provided that in the event
that the participation of the Executive, her spouse and/or her dependents in
any plan, program or arrangement as provided in this subparagraph (B) is
barred, or during such period any such plan, program or arrangement is
discontinued or the benefits thereunder are materially reduced, the Employers
shall either arrange to provide the Executive, her spouse and/or her dependents
with benefits substantially similar to those which they were entitled to
receive under such plans, programs and arrangements immediately prior to the
Date of Termination or pay a cash equivalency amount, and

 

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(C)                                provide the Executive
with any Accrued Benefits.

 

In addition,
the pre-Merger Options shall become immediately vested and exercisable (to the
extent not previously vested and exercisable) and shall remain exercisable for
the period provided under the applicable option agreement.

 

6.                                      Limitation
of Benefits under Certain Circumstances.

 

(a)                                  If
the payments and benefits pursuant to Section 5(c) hereof, either
alone or together with other payments and benefits which the Executive has the
right to receive from the Employers, Chester Valley, First Financial or any of
their affiliates, would constitute a “parachute payment” under Section 280G
of the Code, the payments and benefits payable by the Employers pursuant to Section 5(c) hereof
shall be reduced, in the manner determined by the Executive, by the minimum amount,
if any, which is necessary to result in no portion of the payments and benefits
payable by the Employers under Section 5(c) being non-deductible to
the Employers pursuant to Section 280G of the Code and subject to the
excise tax imposed under Section 4999 of the Code.  The determination of any reduction in the
payments and benefits to be made pursuant to Section 5(c) shall be
based upon the opinion of independent counsel selected by the Employers and
paid for by the Employers.  Such counsel
shall be reasonably acceptable to the Executive; 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 herein 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(a), or a reduction
in the payments and benefits specified in Section 5(c) below zero.

 

(b)                                 Notwithstanding
the proration provision in Section 3(g) hereof, in the event the
payments and benefits payable by the Bank pursuant to Section 5(i) hereof,
either alone or together with other payments and benefits which the Executive
has the right to receive from the Employers, would constitute a “parachute
payment” under Section 280G of the Code, then the Bank’s share of the
payments and benefits payable by the Employers pursuant to Section 5(i) hereof
shall be reduced, in the manner determined by the Employers, by the amount, if
any, which is the minimum necessary to result in no portion of the payments and
benefits payable by the Bank under Section 5(i) being non-deductible
to the Bank pursuant to Section 280G of the Code and subject to the excise
tax imposed under Section 4999 of the Code. In the event the Bank’s share
of the payments and benefits payable by the Employers pursuant to Section 5(i) hereof
is reduced by the preceding sentence, then the Corporation’s share of such
payments and benefits shall be increased by an equivalent amount.

 

7.                                      Payment
of Additional Benefits under Certain Circumstances.

 

(a)                                  In
the event that the payments and benefits pursuant to Section 5(i) hereof,
either alone or together with other payments and benefits which the Executive
has the right to receive from the Employers or their predecessors or successors
but before giving effect to this Section 7, would constitute a “parachute
payment” as defined in Section 280G(b)(2) of the Code (the “Initial
Parachute Payment”), then the Corporation shall pay to the Executive, in a lump
sum within the earlier of thirty (30) days following the Date of Termination or
the next following December 31, a cash amount equal to the sum of the
following:

 

10

 

(A)                              twenty (20) percent (or
such other percentage equal to the tax rate imposed by Section 4999 of the
Code or any successor thereto) of the amount by which the Initial Parachute
Payment exceeds the Executive’s “base amount” from the Employers, as defined in
Section 280G(b)(3) of the Code, with the difference between the
Initial Parachute Payment and the Executive’s base amount being hereinafter
referred to as the “Initial Excess Parachute Payment”; and

 

(B)                                such additional amount
(the “Tax Allowance”) as may be necessary to compensate the Executive for the
payment by the Executive of state and federal income and excise and other taxes
on the payment provided under clause (A) above and on any payments under
this clause (B).  The Tax Allowance shall
be calculated by multiplying the “gross up percentage” (“GUP”) by the payment
to be made under clause (A) above. 
The GUP shall be determined as follows:

 

	
  GUP =

  	
   

  	
    Tax Rate

  	
   

  
	
   

  	
   

  	
  1- Tax Rate

  

 

The Tax Rate for purposes of computing the GUP shall be equal to the
sum of (i) twenty (20) percent (or such other percentage equal to the tax
rate imposed by Section 4999 of the Code or any successor thereto), and (ii) the
highest marginal federal and state income and employment-related tax rate
(including Social Security and Medicare taxes) applicable to the Executive in
the year in which the payment under clause (B) above is made, and shall
also reflect the phase-out of deductions and the ability to deduct certain of
such taxes.

 

All determinations to be made pursuant to this Section 7 shall be
based upon the opinion of independent counsel selected by the Employers and
paid for by the Employers; provided, however, that such counsel shall be
reasonably acceptable to the Executive.

 

(b)                                 Notwithstanding
the foregoing, if it shall subsequently be determined in a final judicial
determination or a final administrative settlement to which the Executive is a
party that the actual excess parachute payment as defined in Section 280G(b)(1) of
the Code is different from the Initial Excess Parachute Payment (such different
amount being hereafter referred to as the “Determinative Excess Parachute
Payment”), then the Corporation’s independent tax counsel or accountants shall
determine the amount (the “Adjustment Amount”) which either the Executive must
pay to the Corporation or the Corporation must pay to the Executive in order to
put the Executive (or the Corporation, as the case may be) in the same position
the Executive (or the Corporation, as the case may be) would have been if the
Initial Excess Parachute Payment had been equal to the Determinative Excess
Parachute Payment.  In determining the
Adjustment Amount, the independent tax counsel or accountants shall take into
account any and all taxes (including any penalties and interest) paid by or for
the Executive or refunded to the Executive or for the Executive’s benefit.  As soon as practicable after the Adjustment
Amount has been so determined, the Corporation shall pay the Adjustment Amount
to the Executive or the Executive shall repay the Adjustment Amount to the
Corporation, as the case may be.

 

11

 

(c)                                  In
each calendar year that the Executive receives payments of benefits under this Section 7,
the Executive shall report on her state and federal income tax returns such
information as is consistent with the determination made by the independent tax
counsel or accountants of the Corporation as described above.  The Corporation shall indemnify and hold the
Executive harmless from any and all losses, costs and expenses (including
without limitation, reasonable attorneys’ fees, interest, fines and penalties)
which the Executive incurs as a result of so reporting such information.  The Executive shall promptly notify the
Corporation in writing whenever the Executive receives notice of the
institution of a judicial or administrative proceeding, formal or informal, in
which the federal tax treatment under Section 4999 of the Code of any
amount paid or payable under this Section 7 is being reviewed or is in
dispute.  The Corporation shall assume
control at its expense over all legal and accounting matters pertaining to such
federal tax treatment (except to the extent necessary or appropriate for the
Executive to resolve any such proceeding with respect to any matter unrelated
to amounts paid or payable pursuant to this Section 7) and the Executive
shall cooperate fully with the Corporation in any such proceeding.  The Executive shall not enter into any
compromise or settlement or otherwise prejudice any rights the Corporation may
have in connection therewith without the prior consent of the Corporation.

 

8.                                      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(i)(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 Employers pursuant to employee benefit plans of the
Employers or otherwise.

 

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

 

10.                               Competitive
Activities.

 

(a)                                  The
Executive agrees and acknowledges that by virtue of her employment hereunder,
she will maintain an intimate knowledge of the activities and affairs of the
Employers, 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 Employers or one of its competitors, the
Executive recognizes that the services to be rendered by her hereunder are of a
character giving them a peculiar value, the loss of which cannot be adequately
or reasonably compensated for by damages.

 

12

 

(b)                                 Except
for the purpose of carrying out her 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 Employers.  The Executive agrees that
she will not divulge to others any information (whether or not documented or
recorded) or data acquired by her while in the Employers’ employ relating to
methods, processes or other trade secrets or other Confidential Information.

 

(c)                                  The
Executive agrees that the Employers are, 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 her employment, which relate to the business
of the Employers, which are confidential, or which are not readily
ascertainable from persons or other sources outside the Bank or the
Corporation.

 

(d)                                 Unless
the Executive’s employment is terminated in connection with or following a
Change in Control of the Corporation and/or the Bank, 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 Employers to cease to do business with, or to
terminate any employee’s employment with, the Employers.  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 of
the Corporation and/or the Bank.

 

(e)                                  The
Executive agrees that during the term of her employment hereunder, except with
the express consent of the Employers, she 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 Employers; 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 her to
devote substantial time to management or control of the business or activities
in which she 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 10(e) shall
not be applicable if the Executive’s employment is terminated in connection
with or following a Change in Control of the Corporation and/or the Bank.

 

(f)                                    The
Employers shall be entitled to immediate injunctive or other equitable relief
to restrain the Executive from failing to comply with any obligation under this
Section 10 or from rendering her services to persons or entities than the
Employers, in addition to any other remedies to which the Employers may be
entitled under law.  The right to such
injunctive or other equitable relief shall survive the termination by the
Employers of the Executive’s employment.

 

(g)                                 The
Executive acknowledges that the restrictions contained in this Section 10
are reasonable and necessary to protect the legitimate interests of the
Employers and that any violation

 

13

 

thereof would result in irreparable injuries to the Employers.  The Executive acknowledges that, if the
Executive violates any of these restrictions, the Employers are 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 Employers may be entitled.  The
Executive further acknowledges that the provisions of Sections 10(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 of
the Corporation and/or the Bank.

 

11.                               Assignability.  The Employers may assign this Agreement and their
rights and obligations hereunder in whole, but not in part, to any corporation,
bank or other entity with or into which the Employers may hereafter merge or
consolidate or to which the Employers may transfer all or substantially all of their
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 Employers
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.

 

12.                               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 Bank:

  	
  Secretary

  
	
   

  	
   

  	
  Willow Grove Bank

  
	
   

  	
   

  	
  Welsh & Norristown Roads

  
	
   

  	
   

  	
  Maple Glen, Pennsylvania 19002-8030

  
	
   

  	
   

  	
   

  
	
   

  	
  To the Corporation:

  	
  Secretary

  
	
   

  	
   

  	
  Willow Grove Bancorp, Inc.

  
	
   

  	
   

  	
  Welsh & Norristown Roads

  
	
   

  	
   

  	
  Maple Glen, Pennsylvania 19002-8030

  
	
   

  	
   

  	
   

  
	
   

  	
  To the Executive:

  	
  Donna M. Coughey

  
	
   

  	
   

  	
  At her last address on file with

  
	
   

  	
   

  	
  the Employers

  

 

13.                               Amendment;
Waiver.  (a) Except as set forth
in Section 13(b), 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 each of the Employers 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.

 

14

 

(b)                                 The
parties hereto acknowledge and agree that (i) the recently enacted
American Jobs Creation Act of 2004 established a new Section 409A of the
Code; (ii) Code Section 409A contains provisions governing the
taxation of deferred compensation; (iii) the compensation and other
benefits to be paid or otherwise provided under this Agreement, whether
provided hereunder or pursuant to any of the Employer Plans, may be negatively
impacted by Section 409A of the Code; (iv) the Internal Revenue
Service (“IRS”) has issued initial guidance and is expected to issue additional
guidance regarding the scope of Section 409A of the Code; and (v) the
Employers have until December 31, 2005 to amend this Agreement and the
Employer Plans to bring them into compliance with Section 409A of the
Code.  The parties hereto acknowledge and
agree that the Employers may amend, in accordance with the terms of the Employer
Plans, any or all of the Employer Plans after the date hereof in order to
comply with Section 409A of the Code. 
The parties further agree that in the event that the Employers or the
Executive determine, after a review of all applicable IRS guidance, that this
Agreement or any provision hereof is subject to Section 409A of the Code,
the parties will negotiate in good faith any changes required to be made to
this Agreement to comply with Section 409A of the Code.

 

14.                               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.

 

15.                               Nature
of Obligations.  Nothing contained
herein shall create or require the Employers 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 Employers hereunder,
such right shall be no greater than the right of any unsecured general creditor
of the Employers.

 

16.                               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.

 

17.                               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.

 

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.

 

15

 

(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 Employers’ 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
Employers’ 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 Employers may, in their discretion:  (i) pay
the Executive all or part of the compensation withheld while their obligations
under this Agreement were suspended, and (ii) reinstate (in whole or in
part) any of their obligations which were suspended.

 

(c)                                  If
the Executive is removed from office and/or permanently prohibited from
participating in the conduct of the Employers’ 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 Employers under this Agreement shall terminate
as of the effective date of the order, but vested rights of the Executive and
the Employers 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 Employers 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 Employers 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 Employers 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 Federal Deposit
Insurance Act (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, and any compensation and benefits which the Executive
may continue to receive from the Corporation pursuant to Section 3 hereof
shall be adjusted as appropriate so that they are commensurate solely with the
Executive’s duties at the Corporation.

 

16

 

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.                               Indemnification.

 

(a)                                  The
Corporation shall provide the Executive (including her heirs, executors and
administrators) with coverage under a directors’ and officers’ liability
insurance policy at its expense and shall indemnify the Executive (and her
heirs, executors and administrators) to the fullest extent permitted by law
against all expenses and liabilities reasonably incurred by her in connection
with or arising out of any action, suit or proceeding in which she may be
involved by reason of her having been a director or officer of the Corporation or
any of its subsidiaries or affiliates (whether or not she continues to be a
director or officer at the time of incurring such expenses or
liabilities).  Such expenses and
liabilities shall include, but shall not be limited to, judgments, court costs
and attorneys’ fees and the cost of reasonable settlements.  The parties hereto acknowledge and agree
that, for purposes of the right to indemnification by the Corporation as
provided by Article VI of the Corporation’s Amended and Restated Bylaws,
the Executive also is serving as a director and officer of the Bank at the
request of the Corporation.

 

(b)                                 Any
indemnification provided to the Executive by the Bank shall comply with 12
C.F.R. §545.121 or any successor regulation applicable to the Bank.

 

23.                               Entire
Agreement.  This Agreement embodies
the entire agreement between the Employers and the Executive with respect to
the matters agreed to herein.  All prior
agreements between the Employers and the Executive with respect to the matters
agreed to herein are hereby superseded and shall have no force or effect, including
the agreement between the parties dated January 20, 2005.  Without limiting the generality of the
preceding sentence, the parties hereto agree that, immediately prior to the
Effective Date, the Employment Agreement dated November 6, 2000 between Chester
Valley, First Financial and the Executive (the “Old Agreement”) shall be
cancelled and shall have no force and effect, and the Executive agrees that she
shall not be entitled to and shall not receive any payments or benefits
pursuant to the Old Agreement as a result of the transactions contemplated by
the Merger Agreement.

 

24.                               Survival.  In the event the Executive’s employment is
terminated during the term of this Agreement, any rights given under this
Agreement to the Executive or the Employers, or any obligation imposed upon the
Executive or the Employers under this Agreement, based upon the nature of such
termination shall survive the Date of Termination, including those provisions
in Sections 5, 6, 7 and 8 that relate to the specific reason for the
termination of employment.  In addition,
the provisions of Sections 9, 10, 12, 13, 21, 22 (with respect to acts or
omissions occurring on or before the Date of Termination), 23 and 24 shall
survive the Date of Termination.

 

17

 

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

 

	
  Attest:

  	
  WILLOW GROVE BANCORP

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Christopher E. Bell

  	
   

  	
  By:

  	
  /s/ Frederick A. Marcell Jr.

  	
   

  
	
  Christopher E. Bell

  	
   

  	
  Frederick A. Marcell Jr.

  
	
  Corporate Secretary

  	
   

  	
  President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  Attest:

  	
  WILLOW GROVE  BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Christopher E. Bell

  	
   

  	
  By:

  	
  /s/ Frederick A. Marcell Jr.

  	
   

  
	
  Christopher E. Bell

  	
   

  	
  Frederick A. Marcell Jr.

  
	
  Senior Vice President

  	
   

  	
  President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Donna M. Coughey

  	
   

  
	
   

  	
   

  	
  Donna M. Coughey

  

 

18

 

Exhibit A

 

GENERAL RELEASE

 

1.  Release of Claims by Executive.

 

(a)  In
consideration of the payments and benefits to be provided to                                 (“Executive”)
pursuant to the employment agreement, dated as of                   ,
2005, to which Executive and Willow Grove Bancorp, Inc., a Pennsylvania
corporation (the “Company”), are parties (the “Employment Agreement”),
the sufficiency of which is acknowledged hereby, Executive, with the intention
of binding herself and her heirs, executors, administrators and assigns, does
hereby release, remise, acquit and forever discharge the Company and its
subsidiaries and affiliates (the “Company Affiliated Group”), their
present and former officers, directors, executives, agents, attorneys and
employees, and the successors, predecessors and assigns of each of the
foregoing (collectively, the “Company Released Parties”), of and from
any and all claims, actions, causes of action, complaints, charges, demands,
rights, damages, debts, sums of money, accounts, financial obligations, suits,
expenses, attorneys’ fees and liabilities of whatever kind or nature in law,
equity or otherwise, whether accrued, absolute, contingent, unliquidated or
otherwise and whether now known or unknown, suspected or unsuspected, which
Executive, individually or as a member of a class, now has, owns or holds, or has
at any time heretofore had, owned or held, against any Company Released Party
in any capacity, including, without limitation, any and all claims (i) arising
out of or in any way connected with Executive’s service to any member of the
Company Affiliated Group (or the predecessors thereof) in any capacity, or the
termination of such service in any such capacity, (ii) for severance or
vacation benefits, unpaid wages, salary or incentive payments, (iii) for
breach of contract, wrongful discharge, impairment of economic opportunity,
defamation, intentional infliction of emotional harm or other tort, (iv) for
any violation of applicable state and local labor and employment laws
(including, without limitation, all laws concerning unlawful and unfair labor
and employment practices) and (v) for employment discrimination under any
applicable federal, state or local statute, provision, order or regulation, and
including, without limitation, any claim under Title VII of the Civil Rights
Act of 1964 (“Title VII”), the Civil Rights Act of 1988, the Fair Labor
Standards Act, the Americans with Disabilities Act (“ADA”), the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”), the Age
Discrimination in Employment Act (“ADEA”) and any similar or analogous
state statute, excepting only:

 

(A)  the
rights of Executive under the Employment Agreement, including her right to
severance;

 

(B)  the
rights of Executive (i) relating to any stock options and other
equity-based awards held by Executive as of the date hereof (collectively, the “Equity
Arrangements”) and (ii) as a stockholder of the Company or its
affiliates;

 

1

 

(C)  the
right of Executive to receive COBRA continuation coverage in accordance with
applicable law;

 

(D) 
rights to indemnification Executive may have under (i) applicable
corporate law, (ii) the bylaws or articles of incorporation of any Company
Released Party, (iii) any other agreement between Executive and a Company
Released Party, (iv) as an insured under any director’s and officer’s
liability insurance policy now or previously in force or (v) Section 6.08
of the Agreement and Plan of Merger, dated as of January 20, 2005, between
the Company and Chester Valley Bancorp, Inc.; and

 

(E) 
claims for benefits under any health, disability, retirement, life insurance or
other, similar “employee benefit plan” (within the meaning of Section 3(3) of
ERISA) of the Company Affiliated Group (the “Company Benefit Plans”).

 

(b) 
Executive acknowledges and agrees that the release of claims set forth in this Section 1
is not to be construed in any way as an admission of any liability whatsoever
by any Company Released Party, any such liability being expressly denied.

 

(c)  The
release of claims set forth in this Section 1 applies to any relief no
matter how called, including, without limitation, wages, back pay, front pay,
compensatory damages, liquidated damages, punitive damages, damages for pain or
suffering, costs, and attorney’s fees and expenses.

 

(d) 
Executive specifically acknowledges that her acceptance of the terms of the
release of claims set forth in this Section 1 is, among other things, a
specific waiver of her rights, claims and causes of action under Title VII,
ADEA, ADA and any state or local law or regulation in respect of discrimination
of any kind.

 

(e) 
Executive shall have a period of 21 days to consider whether to execute this
General Release. To the extent Executive has executed this General Release
within less than twenty-one (21) days after its delivery to her, the
Executive hereby acknowledges that her decision to execute this General Release
prior to the expiration of such twenty-one (21) day period was entirely
voluntary.  If Executive accepts the
terms hereof and executes this General Release, she may thereafter, for a
period of 7 days following (and not including) the date of execution, revoke
this General Release. If no such revocation occurs, this General Release shall
become irrevocable in its entirety, and binding and enforceable against
Executive, on the day next following the day on which the foregoing seven-day
period has elapsed. Any revocation of this General Release shall be deemed for
all purposes a revocation of this General Release in its entirety.

 

(f) 
Executive acknowledges and agrees that she has not, with respect to any
transaction or state of facts existing prior to the date hereof, filed any
complaints, charges or lawsuits against any Company Released Party with any
governmental agency, court or tribunal.

 

2.  Effect of Unenforceability of Release.  In addition to any other remedy available to
the Company hereunder, in the event that, as a result of a challenge brought by
an Employee Released Party (as defined below), the release of claims set forth
in Section 1 becomes null and void

 

2

 

or is
otherwise determined not to be enforceable, then the Company’s obligation to
make any additional payments or to provide any additional benefits under the
Severance Agreement shall immediately cease to be of any force and effect, and
Executive shall promptly return to the Company any payments or benefits the
provision of which by the Company was conditioned on the enforceability of this
General Release.

 

3.  Release of Claims by the Company.

 

(a)   The Company, with the intention of binding
itself and its subsidiaries, affiliates, predecessors and successors and their
directors and officers (collectively, the “Releasing Entities”), does hereby
release, remise, acquit and forever discharge Executive and her heirs, estate,
executors, administrators and assigns (collectively, the “Employee Released
Parties”), of and from any and all claims, actions, causes of action,
complaints, charges, demands, rights, damages, debts, sums of money, accounts,
financial obligations, suits, expenses, attorneys’ fees and liabilities of
whatever kind or nature in law, equity or otherwise, whether accrued, absolute,
contingent, unliquidated or otherwise and whether now known or unknown,
suspected or unsuspected, which the Company and its subsidiaries, affiliates,
predecessors and successors, individually or as a member of a class, now have,
own or hold, or have at any time heretofore had, owned or held, against any
Employee Released Party, excepting only:

 

(A)  rights
of the Releasing Entities under this General Release, the post-termination of
employment obligations of the Employment Agreement, the Equity Arrangements and
the Company Benefit Plans; and

 

(B) 
rights of the Releasing Entities arising by reason of Executive having
committed a crime or an act or omission to act which constitutes fraud, willful
misconduct or gross negligence.

 

(b)  The
Releasing Entities acknowledge and agree that the release of claims set forth
in this Section 3 is not to be construed in any way as an admission of any
liability whatsoever by any Employee Released Party, any such liability being
expressly denied.

 

(c)  The
release of claims set forth in this Section 3 applies to any relief no
matter how called, including, without limitation, compensatory damages,
liquidated damages, punitive damages, damages for pain or suffering, costs, and
attorney’s fees and expenses.

 

(d) 
Nothing herein shall be deemed, nor does anything contained herein purport, to
be a waiver of any right or claim or cause of action which by law the Company
is not permitted to waive.

 

(e)  The
Company acknowledges and agrees that it has not, with respect to any
transaction or state of facts existing prior to the date hereof, filed any
complaints, charges or lawsuits against any Employee Released Party with any
governmental agency, court or tribunal.

 

4.  Nondisparagement.  Executive agrees not to make any disparaging
statements about the Company Released Parties or the Company Affiliated Group’s
business practices,

 

3

 

operations or
personnel policies and practices to any of the Company Affiliated Group’s
customers, clients, competitors, suppliers, directors, consultants, employees,
former employees, or the press or other media in any country.  Similarly, the Company agrees to instruct its
executive officers and directors not to make any disparaging statement about
the Executive or Executive’s performance of her duties and responsibilities
while employed with the Company Affiliated Group to any of the Company
Affiliated Group’s customers, client’s, competitors, suppliers, directors,
consultants, employees, former employees or the press or other media in any
country.

 

5.  Counterparts.  This General Release may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.

 

6.  Successors.  This General Release shall be binding upon
any and all successors and assigns of Executive and the Company.

 

7.  Governing Law.  Except for issues or matters as to which
federal law is applicable, this General Release shall be construed in
accordance with and governed by the laws of the Commonwealth of Pennsylvania.

 

IN WITNESS WHEREOF, this General Release has been signed by or on
behalf of each of the Parties, all as of the date set forth below.

 

 

	
   

  	
  WILLOW GROVE BANCORP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Executive

  	
  By:

  
	
   

  	
  Its:

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  
								

 

4Exhibit 10.3

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT is dated as of July 15, 2005 and is
between Willow Grove Bancorp, Inc., a Pennsylvania corporation (the “Corporation”),
Willow Grove Bank, a federally chartered savings bank and wholly owned subsidiary
of the Corporation (the “Bank”), and Joseph T. Crowley (the “Executive”).

 

WITNESSETH

 

WHEREAS, pursuant to an Agreement and Plan of Merger, dated as of January 20,
2005 (the “Merger Agreement”), between the Corporation and Chester Valley
Bancorp Inc., a Pennsylvania corporation (“Chester Valley”), Chester Valley shall,
as of the Effective Time (as defined in the Merger Agreement), merge with and
into the Corporation, with the Corporation being the surviving entity (the “Merger”);

 

WHEREAS, prior to the consummation of the Merger, the Corporation and Chester
Valley will respectively cause the Bank and First Financial (“First Financial”)
to enter into a merger agreement providing for the merger of First Financial with
and into the Bank;

 

WHEREAS, the Corporation and the Bank (together the “Employers”) wish
to provide for the employment by the Employers of the Executive as of the
Effective Time of the Merger, and the Executive wishes to serve the Employers
as of the Effective Time of the Merger, on the terms and conditions set forth
in this Agreement; and

 

WHEREAS, in order to induce the Executive to remain in the employ of the
Employers and in consideration of the Executive’s agreeing to remain in the
employ of the Employers, the parties desire to specify the severance benefits
which shall be due the Executive by the Employers in the event that his
employment with the Employers 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 Employers or any
subsidiary thereof during the most recent five calendar years preceding the
Date of Termination (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 of the Corporation.  “Change in Control of the Corporation” shall
mean the occurrence of any of the following: 
(i) the acquisition of control of the Corporation as defined in 12
C.F.R. §574.4, unless a presumption of control is successfully rebutted or
unless the transaction is exempted by 12 C.F.R. §574.3(c)(vii), or any
successor to such sections; (ii) an event that would be required to be
reported in response to Item 5.01 of Form 8-K or Item 6(e) of Schedule 14A
of Regulation 14A pursuant to the Securities Exchange Act of 1934, as amended (“Exchange
Act”), or any successor thereto, whether or not any class of securities of the
Corporation is registered under the Exchange Act; (iii) any “person” (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act) is
or becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Corporation
representing 20% or more of the combined voting power of the Corporation’s then
outstanding securities; or (iv) during any period of three consecutive
years, individuals who at the beginning of such period constitute the Board of
Directors of the Corporation cease for any reason to constitute at least a
majority thereof unless the election, or the nomination for election by
stockholders, of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of
the period.

 

(e)                                  Code. 
“Code” shall mean the Internal Revenue Code of 1986, as amended.

 

(f)                                    Date of Termination.  “Date of Termination” shall mean (i) if
the Executive’s employment is terminated for Cause or for Disability, the date
specified in the Notice of Termination, (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 on which a
Notice of Termination is given or as specified in such Notice.

 

(g)                                 Disability. 
Termination by the Employers of the Executive’s employment based on “Disability”
shall mean termination because of any physical or mental impairment which
qualifies the Executive for disability benefits under the applicable long-term
disability plan maintained by the Employers or any subsidiary or, if no such
plan applies, which would qualify the Executive for disability benefits under
the Federal Social Security System.

 

(h)                                 Effective Date.  The
Effective Date of this Agreement shall mean the date on which the Effective
Time of the Merger, as such terms are defined in the Merger Agreement, occurs.

 

(i)                                     Good Reason.  Termination by the Executive of the Executive’s
employment for “Good Reason” shall mean termination by the Executive within twelve (12) months following a Change in Control of
the Corporation based on:

 

(i)                                     Without the
Executive’s express written consent, the failure to elect or to re-elect or to
appoint or to re-appoint the Executive to the office of Chief

 

2

 

Financial Officer of the Employers or a material adverse change made by
the Employers in the Executive’s functions, duties or responsibilities as Chief
Financial Officer of the Employers;

 

(ii)                                  Without the Executive’s
express written consent, a reduction by the Employers in the Executive’s Base
Salary as the same may be increased from time to time or, except to the extent
permitted by Section 3(b) hereof, a reduction in the package of
fringe benefits provided to the Executive, taken as a whole;

 

(iii)                               The principal executive
office of the Employers is relocated by more than 45 miles from the current
principal executive office of the Employers or, without the Executive’s express
written consent, the Employers require the Executive to be based anywhere other
than an area within 45 miles of the location of the Employers’ current principal
executive office, except for required travel on business of the Employers to an
extent substantially consistent with the Executive’s present business travel
obligations;

 

(iv)                              Any purported termination
by either of the Employers of the Executive’s employment for Disability which
is not effected pursuant to a Notice of Termination satisfying the requirements
of paragraph (k) below; or

 

(v)                                 The failure by the
Employers to obtain the assumption of and agreement to perform this Agreement
by any successor as contemplated in Section 10 hereof.

 

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

 

(k)                                  Notice of Termination.  Any purported termination of the Executive’s
employment by the Employers 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 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 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
Employers’ termination of the Executive’s employment for Cause, which shall be
effective immediately, and except as set forth in Section 18(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 Employers’ retirement policies, including early retirement,
generally applicable to their salaried employees.

 

3

 

2.                                      Term
of Employment.

 

(a)                                  The
Employers hereby employ the Executive as Chief Financial Officer, and the
Executive hereby accepts said employment and agrees to render such services to the
Employers 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, 2006.  Prior to July 1, 2006 and each July 1
thereafter, the Boards of Directors of the Employers 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 Boards of Directors
approve  such extension unless the
Executive gives written notice to the Employers 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 Boards of Directors of the Employers
elect not to extend the term, they 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 Employers as may be consistent with his titles and from time to time
assigned to him by the Boards of Directors of the Employers.  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 Employers.

 

3.                                      Compensation
and Benefits.

 

(a)                                  Base Salary.  The
Employers shall compensate and pay the Executive for his services during the
term of this Agreement at a minimum base salary of $174,750 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 Employers 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 Boards of Directors of the Employers.

 

(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 Employers, to
the extent commensurate with his then duties and responsibilities, as fixed by
the Boards of Directors of the Employers.  The Employers 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 Employers 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 Employers.  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.

 

4

 

(c)                                  Vacation.  During the
term of this Agreement, the Executive shall be entitled to paid annual vacation
in accordance with the policies as established from time to time by the Boards of
Directors of the Employers.  The Executive
shall not be entitled to receive any additional compensation from the Employers
for failure to take a vacation, nor shall the Executive be able to accumulate
unused vacation time from one year to the next, except to the extent authorized
by the Boards of Directors of the Employers.

 

(d)                                 Proration.  The
Executive’s compensation, benefit and expenses shall be paid by the Corporation
and the Bank in the same proportion as the time and services actually expended
by the Executive on behalf of each respective Employer.

 

4.                                      Expenses.  The Employers 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 Employers,
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 Boards of Directors of the Employers.  If such expenses are paid in the first
instance by the Executive, the Employers shall reimburse the Executive
therefor.

 

5.                                      Termination.

 

(a)                                  General.  The
Employers 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 Employers 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, Good Reason
or an uncured material breach of this Agreement by the Employers, 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 Employers.  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.

 

5

 

(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 Employers for other than Cause, Disability,
Retirement or the Executive’s death or (ii) such employment is terminated
by the Executive due to a material breach of this Agreement by the Employers,
which breach has not been cured within fifteen (15) days after a written notice
of non-compliance has been given by the Executive to the Employers, then the
Employers shall pay to the Executive, within the earlier of thirty (30) days
following the Date of Termination or the next following December 31, 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 of the Corporation.

 

(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 of the Corporation 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 Employers shall,
subject to the provisions of Section 6 hereof, if applicable,

 

(A)                              pay to the Executive, within
the earlier of thirty (30) days following the Date of Termination or the next
following December 31, a cash severance amount equal to two (2) times
the Executive’s Average Annual Compensation; and

 

(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, disability insurance and other employee benefit plans, programs and
arrangements offered by the Employers 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
Employers and the Corporation and (z) bonuses and other items of cash
compensation), provided that in the event that the Executive’s participation in
any plan, program or arrangement as provided in this subparagraph (B) is
barred, or during such period any such plan, program or arrangement is
discontinued or the benefits thereunder are materially reduced, the Employers
shall either arrange to provide the Executive with benefits substantially
similar to those which the Executive was entitled to receive under such plans,
programs and arrangements immediately prior to the Date of Termination or pay a
cash equivalency amount.

 

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 Employers, Chester Valley, First
Financial and their affiliates, would constitute a “parachute payment” under Section 280G
of the Code, the payments

 

6

 

and benefits payable by the Employers pursuant to Section 5 hereof
shall be reduced, in the manner determined by the Executive, by the amount, if
any, which is the minimum necessary to result in no portion of the payments and
benefits payable by the Employers under Section 5 being non-deductible to the
Employers pursuant to Section 280G of the Code and subject to the excise
tax imposed under Section 4999 of the Code.  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 Employers and paid by the
Employers.  Such counsel shall be
reasonably acceptable to the Employers and the Executive; 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 herein 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.

 

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 Employers pursuant to employee benefit plans of the
Employers or otherwise.

 

8.                                      Withholding.  All payments required to be made by the
Employers hereunder to the Executive shall be subject to the withholding of
such amounts, if any, relating to tax and other payroll deductions as the
Employers 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
Employers, 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 Employers 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
Employers.  The Executive agrees that he
will not divulge

 

7

 

to others any information (whether or not documented or recorded) or data
acquired by him while in the Employers’ employ relating to methods, processes
or other trade secrets or other Confidential Information.

 

(c)                                  The
Executive agrees that the Employers are, 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 Employers, which are confidential, or which are not readily
ascertainable from persons or other sources outside the Employers.

 

(d)                                 Unless
the Executive’s employment is terminated in connection with or following a
Change in Control of the Corporation, 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 Employers to cease to do business with, or to terminate any
employee’s employment with, the Employers.  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 of
the Corporation.

 

(e)                                  The
Executive agrees that during the term of his employment hereunder, except with
the express consent of the Employers, 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 Employers; 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 of the Corporation.

 

(f)                                    The
Employers 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
Employers, in addition to any other remedies to which the Employers may be
entitled under law.  The right to such
injunctive or other equitable relief shall survive the termination by the
Employers 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
Employers and that any violation thereof would result in irreparable injuries
to the Employers.  The Executive
acknowledges that, if the Executive violates any of these restrictions, the
Employers are 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 Employers

 

8

 

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 of the Corporation.

 

10.                               Assignability.  The Employers may assign this Agreement and their
rights and obligations hereunder in whole, but not in part, to any corporation,
bank or other entity with or into which the Employers may hereafter merge or
consolidate or to which the Employers may transfer all or substantially all of their
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 Employers
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.

 

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 Employers:                                                          Secretary

Willow Grove Bancorp, Inc.

Welsh & Norristown Roads

Maple Glen, Pennsylvania  19002-8030

 

To the Executive:                                                               Joseph
T. Crowley

At his last address on file with

the Employers

 

12.                               Amendment;
Waiver.  (a) Except as set forth
in Section 12(b) below, 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 Boards of Directors of the Employers
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.

 

(b)                                 The
parties hereto acknowledge and agree that (i) the recently enacted
American Jobs Creation Act of 2004 established a new Section 409A of the
Code; (ii) Code Section 409A contains provisions governing the
taxation of deferred compensation; (iii) the compensation and other
benefits to be paid or otherwise provided under this Agreement, whether
provided hereunder or pursuant to any of the Employers’ employee benefit plans,
programs, policies or arrangements (this Agreement and the plans, programs,
policies and arrangements are collectively referred to herein as the “Agreements”),
may be negatively impacted by Section 409A of the Code; (iv) the
Internal Revenue Service has issued initial guidance and is expected to issue
additional guidance regarding the scope of Section 409A of the Code; and (v) the
Employers have until December 31, 2005 to

 

9

 

amend the Agreements to bring them into compliance with Section 409A
of the Code.  The parties hereto
acknowledge and agree that the Employers may amend any or all of the Agreements
after the date hereof in order to comply with Section 409A of the Code,
without having to obtain the Executive’s consent to such amendments, provided
that the Employers agree to negotiate in good faith with the Executive any
changes to this Agreement

 

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 Employers 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 Employers hereunder,
such right shall be no greater than the right of any unsecured general creditor
of the Employers.

 

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.                               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.

 

18.                               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 Employers’ 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
Employers’ 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
Employers may, in their discretion:  (i) pay
the Executive all or part of the compensation withheld while their obligations
under this Agreement were suspended, and (ii) reinstate (in whole or in
part) any of their obligations which were suspended.

 

10

 

(c)                                  If
the Executive is removed from office and/or permanently prohibited from
participating in the conduct of the Employers’ 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 Employers under this Agreement shall terminate
as of the effective date of the order, but vested rights of the Executive and the
Employers 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 Employers 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 Employers 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 Employers as of the date
of termination shall not be affected.

 

19.                               Indemnification.

 

(a)                                  The
Corporation shall provide the Executive (including his heirs, executors and
administrators) with coverage under a directors’ and officers’ liability
insurance policy at its expense and shall indemnify the Executive (and his
heirs, executors and administrators) to the fullest extent permitted by law
against all expenses and liabilities reasonably incurred by him in connection
with or arising out of any action, suit or proceeding in which he may be
involved by reason of his having been a director or officer of the Corporation
or any of its subsidiaries or affiliates (whether or not he continues to be a
director or officer at the time of incurring such expenses or
liabilities).  Such expenses and
liabilities shall include, but shall not be limited to, judgments, court costs
and attorneys’ fees and the cost of reasonable settlements.  The parties hereto acknowledge and agree
that, for purposes of the right to indemnification by the Corporation as
provided by Article VI of the Corporation’s Amended and Restated Bylaws,
the Executive also is serving as an officer of the Bank at the request of the
Corporation.

 

(b)                                 Any
indemnification provided to the Executive by the Bank shall comply with 12
C.F.R. §545.121 or any successor regulation applicable to the Bank.

 

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

 

11

 

termination for Cause, the Executive will not, directly or indirectly,
influence or participate in the affairs or the operations of the Bank, and any
compensation and benefits which the Executive may continue to receive from the
Corporation pursuant to Section 3 hereof shall be adjusted as appropriate
so that they are commensurate solely with the Executive’s duties to the
Corporation.

 

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 Employers and the Executive with respect to
the matters agreed to herein.  All prior
agreements between the Employers and the Executive with respect to the matters agreed
to herein are hereby superseded and shall have no force or effect, including
the agreement between the parties dated March 23, 2005.  Without limiting the generality of the
preceding sentence, the parties hereto agree that, immediately prior to the Effective
Date, the Agreement dated July 29, 2003 between Chester Valley, First
Financial and the Executive (the “Old Agreement”) shall be cancelled and shall
have no force and effect, and the Executive agrees that he shall not be
entitled to and shall not receive any payments or benefits pursuant to the Old
Agreement as a result of the transactions contemplated by the Merger Agreement.

 

12

 

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

 

 

	
  Attest:

  	
  WILLOW GROVE  BANCORP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Christopher E. Bell

  	
   

  	
  By:

  	
  /s/ Frederick A. Marcell Jr.

  	
   

  
	
  Christopher E. Bell

  	
   

  	
  Frederick A. Marcell Jr.

  
	
  Corporate Secretary

  	
   

  	
  President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  Attest:

  	
  WILLOW GROVE  BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ John T. Powers

  	
   

  	
  By:

  	
  /s/ Frederick A. Marcell Jr.

  	
   

  
	
  John T. Powers

  	
   

  	
  Frederick A. Marcell Jr.

  
	
  Secretary

  	
   

  	
  President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph T. Crowley

  	
   

  
	
   

  	
   

  	
  Joseph T. Crowley

  

 

13

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