FIRST CHESTER COUNTY CORPORATION

EXECUTIVE INCENTIVE PLAN

ANNUAL INCENTIVE AND LONG TERM INCENTIVE PLANS

ARTICLE I – Introduction

A vital component of the success of First Chester County Corporation (“Corporation”) is the ability of the executive management team to meet and achieve performance objectives consistent with the strategic objectives of the Corporation and the best interests of its shareholders.  The ability to grow and manage the Corporation in a positive manner is critical to the Corporation’s future success.  This Executive Incentive Plan (“Plan”), which includes both an Annual Incentive Plan and a Long Term Incentive Plan, has been developed as a meaningful compensation tool to encourage the growth and proper management of the Corporation.  The major purposes of the Plan are:

·                   To motivate and reward executives for positive performance of the Corporation on an annual basis;

·                   To provide additional compensation to executives that is directly linked to their individual and collective performance; and

·                   To emphasize the long term growth and profitability of the Corporation.

The focus of this Plan is to provide an incentive for the executive team to achieve annual and longer term performance objectives that are coordinated with the objectives of the Corporation.

ARTICLE II – Definitions

2.1                                  The following definitions shall be used in this Plan:

“Board of Directors” means the Board of Directors of the Corporation.

“CEO” means the chief executive officer of the Corporation, as appointed by the Board of Directors.

“Change in Ownership or Effective Control” has the meaning provided in regulations issued pursuant to Section 409A of the Code.

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

“Corporation” means First Chester County Corporation.

“Disability” means that a person is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve months.  Disability shall be determined by the Board of Directors in consultation with the medical experts it selects.

The “Effective Date” of the Plan is January 1, 2006.

“Employee” means any individual regularly employed by the Corporation.

“Participant” means an Employee chosen to participate in this Plan pursuant to the terms of Article III.

“Plan” means the First Chester County Corporation Executive Incentive Plan, as set forth in this document, and any amendments adopted by the Board of Directors.  The Plan includes within it two types of incentive arrangements — the Annual Incentive Plan and the Long Term Incentive Plan.

“Plan Year” means the calendar year.

“President” means the President of the Corporation, as appointed by the Board of Directors.

“Retirement” means that a person has retired from regular employment with the Corporation following either (i) a minimum of ten (10) years of service and attainment of sixty (60) years of age or (ii) a minimum of five (5) years of service and attainment of sixty-five (65) years of age.

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ARTICLE III – Participation

3.1                                  (a)                                   Participation in the Plan will be determined at the beginning of each Plan Year by the CEO and the President, and will be approved by the Board of Directors.  To participate, an Employee must be a regular employee of the Corporation with on-going responsibilities that are executive in nature and that have a meaningful impact on the Corporation’s results.  Participation in the Plan by the CEO and the President will be approved annually by the Board of Directors.  Generally, Participants will include officers at the Senior Vice President level and above.

1.                                        Exhibit A will list Participants each year in the Annual Incentive Plan and Exhibit C, the Participants in the Long Term Incentive Plan.  Those exhibits may include multiple levels of participation.  These levels will generally be based upon position responsibility.

2.                                        An Employee may become a new Participant during the Plan Year if newly hired.  Any awards will be pro-rated for the portion of the year in which participation occurs, unless otherwise approved by the Board.  The CEO and the President will make the final determination (with Board approval) of new participation during the Plan Year for any position other than that of CEO or President.  The Board of Directors will decide on the participation of any new CEO or President.

3.                                        A Participant’s eligibility will cease at the termination of employment (other than retirement, death or disability) and the Participant will not receive any awards under the Plan for the Plan Year of employment termination.  Termination as a result of retirement, death or disability will result in pro-rated awards under the Plan through the last working date for the Plan Year in which termination occurred, or, in the case of multi-year awards, as otherwise determined by the Board of Directors.

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ARTICLE IV – Performance Factors under the Annual Incentive Plan

4.1                                  (a)                                   The Annual Incentive benefits provided under the Plan are based upon the Corporation’s financial performance factors, which may be amended as provided in Section 7.2.  In general, these factors will be measures such as return on assets, return on equity, net income, earnings per share or similar indicators.  The factors and weighing of the factors are determined at the beginning of each Plan Year.  Each factor has quantifiable objectives consisting of threshold, target and optimum goals.  Additionally, a portion of each Participant’s award may be based on unit, team, functional area, and individual performance objectives that are determined by management at the beginning of each Plan Year.  Generally, the CEO and President will have most or all of their performance based on the Corporation’s overall performance, and other Participants will have a proportionately greater level of their award based on individual performance or the performance of an area of responsibility.

(b)                                  The Corporation’s performance factors for each year’s Annual Incentive awards under the Plan will be set forth in Exhibit B, which may be changed from time to time.  Individual Participant objectives will be established after discussion between the Participant and the Participant’s manager (usually the CEO or President).

ARTICLE V – Award Calculation and Distribution under the Annual Incentive Plan

5.1                                  Awards under the Plan are calculated according to determination of the established performance factors at the end of each Plan Year.  The Corporation’s performance between the threshold and target, and between the target and optimum will be interpolated.  Unit, team, and functional area performance, if applicable, is determined by the CEO and the President.  Individual performance is determined by each Participant’s manager, as approved by the CEO and the President.  An individual Participant’s performance that does not meet the position’s requirements (an annual performance evaluation that is less than satisfactory) will result in no award granted to that Participant for that Plan Year even though the Corporation’s performance is above threshold.  If

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the Corporation’s performance is below the threshold, no award (including no individual award) will be granted under the Annual Incentive portion of the Plan for that Plan Year.

5.2                                  Annual awards are paid in cash less required income tax withholding.  Payment will be within two and a half months after the end of the Plan Year.  Any Participant terminating employment (except by retirement, death, or disability) prior to the actual payment of the award will forfeit that award.  The award schedule for each Plan Year is found with the performance factors in Exhibit B, as changed from time to time.

ARTICLE VI – Long Term Incentive Provisions

6.1                                  The Participants in the Long Term Incentive portion of the Plan will be chosen from time to time  by the CEO and the President, subject to the approval of the Board of Directors.  The participation of the CEO and the President will be determined each year by the Board of Directors.

6.2                                  The Employees chosen to participate will be listed on Exhibit C, which may be changed from time to time.

6.3                                  The Long Term Incentive portion o