Willow Financial Bancorp (WFBC)

Employment Agreements

In connection with the merger of Chester Valley Bancorp with and into Willow Financial Bancorp, Willow Financial Bancorp and Willow Financial Bank entered into an employment agreement with Donna M. Coughey, the former President and Chief Executive Officer of Chester Valley Bancorp and First Financial Bank, which provided that Ms. Coughey would become the President and Chief Executive Officer of Willow Financial Bancorp and Willow Financial Bank upon the effective date of the merger, August 31, 2005. Under the terms of her employment agreement, Ms. Coughey serves as President and Chief Executive Officer and as a director of Willow Financial Bancorp and Willow Financial Bank for a three-year term, commencing on August 31, 2005, and renewing annually for one additional year each July 1 unless notice to the contrary is given. Ms. Coughey is entitled to a minimum base salary of $300,000 per year, and a retention bonus on the one-year anniversary of the merger, of $150,000. Pursuant to the employment agreement, Ms. Coughey received a signing bonus of $200,000 upon the closing of the merger. The agreement provides that, if Ms. Coughey terminated her employment during the first year for any reason, or if her employment was terminated by Willow Financial Bancorp or Willow Financial Bank for any reason other than cause during the first year following the closing of the merger, she would have received a severance payment equal to the amount she was entitled to under her prior employment agreement with Chester Valley Bancorp and First Financial Bank less the $200,000 signing bonus and subject to no payment being deemed a “parachute payment” under Section 280G of the Internal Revenue Code of 1986, as amended. The agreement provides that, if Ms. Coughey’s employment is terminated in connection with a subsequent change in control of Willow Financial Bancorp and/or Willow Financial Bank or within twelve months thereafter, Willow Financial Bancorp will pay her three times her then current base salary and most recent bonus. The employment agreement provides that if the payments and benefits provided to Ms. Coughey pursuant to a subsequent change in control are deemed to constitute a “parachute payment” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended, then she would be reimbursed for any excise tax liability pursuant to Sections 280G and 4999 of the Internal Revenue Code and for additional taxes imposed as a result of such reimbursement. In addition, Willow Financial Bancorp, Willow Financial Bank and Ms. Coughey have generally agreed to release each other from any and all claims of actions that may result during the term of the employment agreement.

In addition, in connection with our merger with Chester Valley Bancorp, Willow Financial Bancorp and Willow Financial Bank entered into an employment agreement with Joseph T. Crowley to serve as Chief Financial Officer and Willow Financial Bank entered into employment agreements with G. Richard Bertolet, Matthew D. Kelly and Colin Maropis to serve as Executive Vice President and Chief Lending Officer, Chief Wealth Management Officer and Regional President, respectively, for an initial term expiring June 30, 2007, renewing annually for one additional year each July 1 unless notice to the contrary

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is given, commencing on the closing of the merger. Messrs. Bertolet, Crowley, Kelly and Maropis are currently entitled to a minimum base salary of $195,000, $210,000, $168,500 and $141,000, respectively. Each agreement provides that if the executive’s employment is terminated in connection with a subsequent change in control of Willow Financial Bancorp or within twelve months thereafter, the executive will be entitled to receive a payment of two times his average annual compensation (defined as the five-year average base salary and bonus) subject to no payment being deemed a “parachute payment” under Section 280G of the Internal Revenue Code of 1986, as amended. Each of these agreements provides that if the executive’s employment is terminated by Willow Financial Bancorp for other than cause, disability, retirement or death or by the executive due to a material breach by Willow Financial Bancorp, then the executive will receive one times his then current base salary. Willow Financial Bank also has entered into a Change In Control Severance agreement with a former officer of First Financial Bank who has continued his employment with Willow Financial Bank. The agreement provides for severance payments of one times the employee’s average annual compensation in the event of a termination of employment within twelve months after a change-in-control of Willow Financial Bancorp.

Willow Financial Bank entered into employment agreements in fiscal 2004 with each of Messrs. Powers and Baus, which agreements superseded existing employment agreements with such persons. Willow Financial Bank agreed to employ Messrs. Powers and Baus for a term of one year. Messrs. Powers and Baus are currently entitled to a minimum base salary of $145,000 and $180,000, respectively, which may be increased from time to time by the Board of Directors. The terms of the executives’ employment agreements are extended annually for a successive additional one-year period on each annual anniversary unless Willow Financial Bank provides not less than 30 days prior notice not to extend the employment term. Each of the employment agreements is terminable with or without cause by Willow Financial Bank. The executives have no right to compensation or other benefits pursuant to the employment agreements for any period after voluntary termination without good cause (as defined in the agreement) or termination by Willow Financial Bank for cause, disability, retirement or death. In the event that (1) the executive terminates his employment because of failure to comply with any material provision of the employment agreement by Willow Financial Bank or Willow Financial Bank changes the executive’s title or duties or (2) the employment agreement is terminated by Willow Financial Bank other than for cause, disability, retirement or death, the executives will be entitled to one times their base salary as cash severance. In the event that the executive’s employment is terminated following a change in control, as defined, or the executive terminates his employment as a result of certain adverse actions which are taken with respect to his employment following a change in control, as defined, the executives will be entitled to a cash severance amount equal to two times their average annual compensation over the past five calendar years, or such shorter period of employment of the employment agreement. Benefits under the employment agreements will be reduced to the extent necessary to ensure that the executives do not receive any “parachute payment” as such term is defined under Section 280G of the Internal Revenue Code.

Although the above-described employment agreements could increase the cost of any acquisition of control of Willow Financial Bancorp, our management does not believe that the terms thereof would have a significant anti-takeover effect. Willow Financial Bancorp and/or Willow Financial Bank may determine to enter into similar employment agreements with other officers in the future.

Employment Agreements

        Willow Grove Bank entered into employment agreements in fiscal 2004 with each of Messrs. Bell, Powers, Arrison and Baus, which agreements superseded existing employment agreements with such persons. Willow Grove Bank agreed to employ Messrs. Bell, Powers, Arrison and Baus for a term of one year. The agreements with the executives set a base salary at their then current salary levels, which may be increased from time to time by the Board of Directors. The terms of the executives' employment agreements are extended annually for a successive additional one-year period on each annual anniversary unless Willow Grove Bank provides not less than 30 days prior notice not to extend the employment term. Each of the employment agreements is terminable with or without cause by Willow Grove Bank. The executives have no right to compensation or other benefits pursuant to the employment agreements for any period after voluntary termination without good cause (as defined in the agreement) or termination by Willow Grove Bank for cause, disability, retirement or death. In the event that (1) the executive terminates his employment because of failure to comply with any material provision of the employment agreement by Willow Grove Bank or Willow Grove Bank changes the executive's title or duties or (2) the employment agreement is terminated by Willow Grove Bank other than for cause, disability, retirement or death, the executives will be entitled to one times their base salary as cash severance. In the event that the executive's employment is terminated following a change in control, as defined, or the executive terminates his employment as a result of certain adverse actions which are taken with respect to his employment following a change in control, as defined, the

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executives will be entitled to a cash severance amount equal to two times their average annual compensation over the past five calendar years, or such shorter period of employment of the employment agreement. Benefits under the employment agreements will be reduced to the extent necessary to ensure that the executives do not receive any "parachute payment" as such term is defined under Section 280G of the Internal Revenue Code.

        In connection with the merger of Chester Valley Bancorp with and into Willow Grove Bancorp, Willow Grove Bancorp and Willow Grove Bank entered into an employment agreement with Donna M. Coughey, the former President and Chief Executive Officer of Chester Valley Bancorp and First Financial Bank, which provided that Ms. Coughey would become the President and Chief Executive Officer of Willow Grove Bancorp and Willow Grove Bank upon the effective date of the merger, August 31, 2005. Under the terms of her employment agreement, Ms. Coughey will serve as President and Chief Executive Officer and as a director of Willow Grove Bancorp and Willow Grove Bank for a three-year term, commencing on August 31, 2005, and renewing annually for one additional year each July 1 unless notice to the contrary is given. Ms. Coughey is entitled to a minimum base salary of $300,000 per year, and a retention bonus, provided she remains employed on the one-year anniversary of the merger, of $150,000. Pursuant to the employment agreement, Ms. Coughey received a signing bonus of $200,000 upon the closing of the merger. The agreement provides that, if Ms. Coughey terminates her employment during the first year for any reason, or if her employment is terminated by Willow Grove Bancorp or Willow Grove Bank for any reason other than cause during the first year following the closing of the merger, she will receive a severance payment equal to the amount she would have received under her existing employment agreement with Chester Valley Bancorp and First Financial Bank less the $200,000 signing bonus and subject to no payment being deemed a "parachute payment" under Section 280G of the Internal Revenue Code of 1986, as amended. The agreement provides that, if Ms. Coughey's employment is terminated in connection with a subsequent change in control of Willow Grove Bancorp and/or Willow Grove Bank or within twelve months thereafter, Willow Grove Bancorp will pay her three times her then current base salary and most recent bonus. The employment agreement provides that if the payments and benefits provided to Ms. Coughey pursuant to a subsequent change in control are deemed to constitute a "parachute payment" within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended, then she would be reimbursed for any excise tax liability pursuant to Sections 280G and 4999 of the Internal Revenue Code and for additional taxes imposed as a result of such reimbursement. In addition, Willow Grove Bancorp, Willow Grove Bank and Ms. Coughey have generally agreed to release each other from any and all claims of actions that may result during the term of the employment agreement.

        In addition, in connection with our merger with Chester Valley Bancorp, Willow Grove Bancorp and Willow Grove Bank entered into an employment agreement with Joseph T. Crowley to serve as Chief Financial Officer and Willow Grove Bank entered into employment agreements with G. Richard Bertolet, Matthew D. Kelly and Colin Maropis to serve as Executive Vice President and Chief Lending Officer, Chief Wealth Management Officer and Regional President, respectively, for an initial term expiring June 30, 2006, renewing annually for one additional year each July 1 unless notice to the contrary is given, commencing on the closing of the merger. Messrs. Bertolet, Crowley, Kelly and Maropis are entitled to a minimum base salary of $174,250, $174,750, $164,000 and $130,966, respectively. Each agreement provides that if the executive's employment is terminated in connection with a subsequent change in control of Willow Grove Bancorp or within twelve months thereafter, the executive will be entitled to receive a payment of two times his average annual compensation (defined as the five-year average base salary and bonus) subject to no payment being deemed a "parachute payment" under Section 280G of the Internal Revenue Code of 1986, as amended. Each of these agreements provides that if the executive's employment is terminated by Willow Grove Bancorp for other than cause, disability, retirement or death or by the executive due to a material breach by Willow Grove Bancorp, then the executive will receive one times his then current base salary. Willow Grove Bank also has entered into Change In Control Severance agreements with four former officers of First Financial Bank who have continued their employment with Willow Grove Bank. Those agreements

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provide for severance payments of one times the employee's average annual compensation in the event of a termination of employment within twelve months after a change-in-control of Willow Grove Bancorp.

        Although the above-described employment agreements could increase the cost of any acquisition of control of Willow Grove Bancorp, our management does not believe that the terms thereof would have a significant anti-takeover effect. Willow Grove Bancorp and/or Willow Grove Bank may determine to enter into similar employment agreements with other officers in the future.

        On January 20, 2005, Willow Grove Bancorp and Willow Grove Bank entered into a Retirement and Severance Agreement with Frederick A. Marcell Jr., the former President and Chief Executive Officer of Willow Grove Bancorp and Willow Grove Bank. The Retirement and Severance Agreement terminated Mr. Marcell's employment agreement with Willow Grove Bancorp and Willow Grove Bank, effective on August 31, 2005, upon Ms. Coughey's assumption of the duties of President and Chief Executive Officer. Mr. Marcell has agreed to provide certain consulting services through April 30, 2006. In consideration of such services under the Retirement and Severance Agreement, Mr. Marcell will receive a consulting fee, in the amount of $244,800 per annum, plus continued group life insurance and health and dental benefits from August 31, 2005 through April 30, 2006.