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Governing Law: Pennsylvania     Date: 7/27/2010
Industry: Regional Banks     Sector: Financial

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Exhibit 10.46





THIS CHANGE OF CONTROL, NON-COMPETE AND NON-DISCLOSURE AGREEMENT (the “Agreement”) is made as of this 10th day of August, 2009, by and between FIRST NATIONAL BANK OF CHESTER COUNTY, a wholly-owned subsidiary of First Chester County Corporation and a national banking association with its principal offices located at 9 North High Street, West Chester, Pennsylvania (hereinafter individually referred to as the “Bank”) and Sheryl S. Vittitoe of 374 Wellington Terrace, Jenkintown, PA 19046 (hereinafter referred to as “Executive”).




WHEREAS, the Bank desires to employ Executive as Chief Financial Officer (“Officer”) and to offer Executive certain benefits in connection with such employment;


WHEREAS, Executive is desirous of securing such employment and such benefits set forth herein; and


WHEREAS, in consideration of the receipt of such benefits, Executive is willing to be bound by certain non-compete and non-disclosure obligations as set forth herein;


NOW, THEREFORE, in consideration of the premises and mutual covenants and agreements hereinafter set forth, the parties, intending to be legally bound hereby agree as follows:


1)                          TERM OF AGREEMENT .


This Agreement is effective as of the latest to occur of the following dates:  (a) the date this Agreement is executed and delivered by both Executive and the Bank, (b) the date on which Executive’s employment as Officer commences, or (c) the date set forth above.  This Agreement will continue in effect as long as Executive is actively employed by the Bank, unless Executive and the Bank agree in writing to termination of this Agreement.


2)                          TERMINATION COMPENSATION .


If Executive’s employment with the Bank is terminated without “Cause” (as defined in Section 6) at any time within two years following a “Change of Control” (as defined in Section 4), Executive will receive the “Termination Benefits” (as defined in Section 3).  Executive will also receive the Termination Benefits if Executive terminates his or her employment for “Good Reason” (as defined in Section 5) at any time within two years following a Change of Control.



Executive is not entitled to receive the Termination Benefits if Executive’s employment is terminated by Executive or the Bank for any or no reason before a Change of Control occurs or more than two years after a Change of Control has occurred.


In order to receive the Termination Benefits, Executive must execute any release of claims that Executive may have pursuant to this Agreement (but not any other claims) that may be requested by the Bank.


The Termination Benefits will be paid to Executive under the terms and conditions hereof, without regard to whether Executive looks for or obtains alternative employment following Executive’s termination of employment with the Bank.


3)                          TERMINATION BENEFITS DEFINED .


For purposes of this Agreement, the term “Termination Benefits” will mean and include the following:


a)                                       For a period of one year from Executive’s termination (the “Benefit Period”), payment of Executive’s base salary on the same basis that Executive was paid immediately prior to Executive’s termination; Payment of any bonus Executive would otherwise be eligible to receive for the year in which Executive’s termination occurs and for that portion of the following year which is included in the Benefit Period, such bonus to be calculated and paid as provided below; and


b)                                      Continuation during the Benefit Period of all fringe benefits that Executive was receiving immediately prior to Executive’s termination, including, without limitation, life, disability, accident and group health insurance benefits coverage for Executive and Executive’s immediate family (“Fringe Benefits”), such Fringe Benefits to be provided on substantially the same terms and conditions as they were provided immediately prior to Executive’s termination.


c)                                       The bonus component of Executive’s Termination Benefits will equal the sum of (i) the bonus to which Executive would have been entitled for the year during which Executive’s termination occurs (calculated after annualizing the Bank’s consolidated financial results through the date of termination if such bonus is based upon a percentage of profits) (the “Annual Amount”), and (ii) an amount equal to the product of (x) the Annual Amount times (y) a fraction the numerator of which is the number of days in the year following termination which is included in the Benefit Period and the denominator of which is 365 (the “Prorated Amount”).  Both the Annual Amount and the Prorated Amount will be paid to Executive not later than March 31st of the year following Executive’s termination.


Notwithstanding the foregoing, if Executive terminates his or her employment for Good Reason, Executive’s Termination Benefits will be based upon the greater of (i) Executive’s salary, bonus and benefits immediately prior to Executive’s termination or (ii) Executive’s salary,




bonus and benefits immediately prior to the Change of Control which gives rise to Executive’s right to receive Termination Benefits under this Agreement.


The Bank does not intend to provide duplicative Fringe Benefits.  Consequently, Fringe Benefits otherwise receivable pursuant to this Section will be reduced or eliminated if and to the extent that Executive receives comparable Fringe Benefits from any other source (for example, another employer); provided, however, that Executive will have no obligation to seek, solicit or accept employment from another employer in order to receive such benefits.


4)                          CHANGE OF CONTROL DEFINED .


For purposes of this Agreement, a “Change of Control” will be deemed to have occurred upon the earliest to occur of the following events:


a)                                       the date the shareholders of the Bank (or the Board of Directors, if shareholder action is not required) approve a plan or other arrangement pursuant to which the Bank will be dissolved or liquidated;


b)                                      the date the shareholders of the Bank (or the Board of Directors, if shareholder action is not required) approve a definitive agreement to sell or otherwise dispose of all or substantially all of the assets of the Bank;


c)                                       the date the shareholders of the Bank (or the Board of Directors, if shareholder action is not required) and the shareholders of the other constituent corporation (or its board of directors if shareholder action is not required) have approved a definitive agreement to merge or consolidate the Bank with or into such other corporation, other than, in either case, a merger or consolidation of the Bank in which holders of shares of the common stock of the Bank (the “Common Stock”) immediately prior to the merger or consolidation will hold at least a majority of the ownership of common stock of the surviving corporation (and, if one class of common stock is not the only class of voting securities entitled to vote on the election of directors of the surviving corporation, a majority of the voting power of the surviving corporation’s voting securities) immediately after the merger or consolidation, which common stock (and, if applicable, voting securities) is to be held in the same proportion as such holders’ ownership of Common Stock immediately before the merger or consolidation;


d)                                      the date any entity, person or group, (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”)), other than the Bank or any of its subsidiaries or any employee benefit plan (or related trust) sponsored or maintained by the Bank or any of its subsidiaries, shall have become the beneficial owner of, or shall have obtained voting control over, more than fifty percent (50%) of the outstanding shares of the Common Stock; or


e)                                       the first day after the date this Plan is adopted when directors are elected so that a majority of the Board of Directors shall have been members of the




Board of Directors for less than twenty-four (24) months, unless the nomination for election of each new director who was not a director at the beginning of such twenty-four (24) month period was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period.


Notwithstanding any provision herein to the contrary, the filing of a proceeding for the reorganization of the Bank under Chapter 11 of the Federal Bankruptcy Code or any successor or other statute of similar import will not be deemed to be a Change of Control for purpose of this Agreement.


5)                          GOOD REASON DEFINED .


For purposes of this Agreement, the term “Good Reason” will mean and include the following situations:


a)                                       any material diminution in Executive’s authorities, duties or responsibilities;


b)                                      any failure to nominate or elect Executive as Chief Financial Officer;


c)                                       causing or requiring Executive to report to anyone other than the President or Board of Directors;


d)                                      assignment to Executive of duties materially inconsistent with Executive’s position as Chief Financial Officer;


e)                                       any material reduction of Executive’s annual base salary or annual bonus (or, if applicable, a change in the formula for determining Executive’s annual bonus which would have the effect of reducing by more than 10% Executive’s annual bonus as it would otherwise have been calculated immediately prior to the Change of Control that gives rise to Executive’s right to receive Termination Benefits as provided in this Agreement) or other reduction in compensation or benefits, or


f)                                         requiring Executive to be principally based at any office or location more than 50 miles from the current offices of the Bank in West Chester, Pennsylvania.


6)                          CAUSE DEFINED .


For purposes of this Agreement, the term “Cause” will mean and include the following situations:


a)                                       Executive’s conviction by a court of competent jurisdiction of any criminal offense involving dishonesty or breach of trust or any felony or crime involving moral turpitude;




b)                                      Executive’s failure to perform the duties reasonably assigned to Executive by the Board of Directors of the Bank fail without reasonable cause or excuse, which failure or breach continues for more than ten days after written notice thereof is given to Executive.


7)                          CEILING ON BENEFITS .


Under the “golden parachute” rules in the Internal Revenue Code (the “Code”) Executive will be subject to a 20% excise tax (over and above regular income tax) on any “excess parachute payment” that Executive receives following a Change in Control, and the Bank will not be permitted to deduct any such excess parachute payment.  Very generally, compensation paid to Executive that is contingent upon a Change in Control will be considered a “parachute payment” if the present value of such consideration equals or exceeds three times Executive’s average annual compensation from the Bank for the five years prior to the Change in Control.  If payments are considered “parachute payments,” then all such payments to Executive in excess of Executive’s base annual compensation will be considered “excess parachute payments” and will be subject to the 20% excise tax imposed under Section 4999 of the Code.


For example, if Executive’s base annual compensation was $100,000, Executive could receive $299,000 following a Change in Control without payment of any excise tax.  If Executive received $301,000 in connection with a Change in Control, however, the entire $301,000 would be considered a parachute payment and $201,000 of this amount would be considered an excess parachute payment subject to excise tax.


In order to avoid this excise tax and the related adverse tax consequences for the Bank, by signing this Agreement, Executive agrees that the Termination Benefits payable to Executive under this Agreement will in no event exceed the maximum amount that can be paid to Executive without causing any portion of the amounts paid or payable to Executive by the Bank following a Change in Control, whether under this Agreement or otherwise, to be considered an “excess parachute payment” within the meaning of Section 280G(b) of the Code.


If the Bank believes that these rules will result in a reduction of the payments to which Executive is entitled under this Agreement, it will so notify Executive within 60 days following delivery of the “Notice of Termination” described in Section 8.  If Executive wishes to have such determination reviewed, Executive may, within 30 days of the date Executive is notified of a reduction of payments, ask that the Bank retain, at its expense, legal counsel, certified public accountants, and/or a firm of recognized executive compensation consultants (an “Outside Expert”) to provide an opinion concerning whether, and to what extent, Executive’s Termination Benefits must be reduced so that no amount payable to Executive by the Bank (whether under t

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