CHANGE OF CONTROL, NON-COMPETE AND
NON-DISCLOSURE AGREEMENT
THIS CHANGE OF
CONTROL, NON-COMPETE AND NON-DISCLOSURE AGREEMENT (the
"Agreement") is made as of this 10th day of
June, 2005,
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 Michelle E. Venema of 450
Barker
Drive, West Chester, PA 19380 (hereinafter
referred to as "Executive").
BACKGROUND
WHEREAS,
the Bank desires to
employ Executive as
Executive Vice President
of Business Banking ("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
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Control" (as definedin 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
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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
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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 adverse change in Executive's status, responsibilities
or Fringe Benefits;
b) any failure
to nominate or elect Executive as Executive Vice
President of Business Banking;
c) causing or
requiring Executive
to report to anyone
other than the
President;
d) assignment to
Executive of duties materially inconsistent with
Executive's position as Executive Vice President of Business
Banking;
e) any reduction of Executive's annual base salary or annual bonus
(or,
if applicable, a
change in the formula for determining Executive's
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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 conside
