Exhibit 10.46

 

[g144802kgi001.jpg]

 

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 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”).

 

BACKGROUND

 

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,

 

2

--------------------------------------------------------------------------------

 

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

 

3

--------------------------------------------------------------------------------

 

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;

 

4

--------------------------------------------------------------------------------

 

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 this Agreement or
otherwise) will be considered an excess parachute payment.

 

The Outside Expert will be as mutually agreed by Executive and the Bank,
provided that if we are not able to reach a mutual agreement, the Bank will
select an Outside Expert, Executive will select an Outside Expert, and the two
Outside Experts will select a third Outside Expert to provide the opinion
required under this Section.  The determination of the Outside Expert will be
final and binding, subject to any contrary determination made by the Internal
Revenue Service.

 

5

--------------------------------------------------------------------------------

 

If the Bank believes that Executive’s Termination Benefits will exceed the
limitation contained in this Section, it will nonetheless make payments to
Executive, at the times stated above, in the maximum amount that it believes may
be paid without exceeding such limitation. The balance, if any, will then be
paid after the opinion of the Outside Expert has been received.

 

If the amount paid to Executive by the Bank following a Change in Control is
ultimately determined, pursuant to the opinion of the Outside Expert or by the
Internal Revenue Service, to have exceeded the limitation contained in this
Section, the excess will be treated as a loan to Executive by the Bank and will
be repayable on the 90th day following demand by the Bank, together with
interest at the “applicable federal rate” provided in Section 1274(d) of the
Code.

 

In the event that the provisions of Sections 280G and 4999 of the Code are
repealed without successor provisions, this Section will be of no further force
or effect.

 

8)                         TERMINATION NOTICE AND PROCEDURE.

 

Any termination by the Bank or Executive of Executive’s employment during the
two years immediately following a Change of Control will be communicated by
written Notice of Termination to Executive if such Notice of Termination is
delivered by the Bank and to the Bank if such Notice of Termination is delivered
by Executive, all in accordance with the following procedures:

 

The Notice of Termination will indicate the specific termination provision in
this Agreement relied upon, if applicable, and will set forth in reasonable
detail the facts and circumstances alleged to provide a basis for such
termination.

 

Any Notice of Termination by the Bank will be in writing signed by the Chairman
of the Board of the Bank.

 

The Executive must provide Notice of Termination for Good Reason to the Bank
within 90 days of the initial existence of the condition, upon the Notice of
which, the Bank will have 30 days during which it may remedy the condition.

 

If the Bank furnishes Executive with a Notice of Termination or if Executive
furnishes the Bank with a Notice of Termination, and no good faith dispute
exists regarding such termination, then the date of Executive’s termination will
be the date such Notice of Termination is deemed given pursuant to Section 14 of
this Agreement.

 

If the Bank in good faith furnishes Executive with a Notice of Termination for
Cause and Executive in good faith notifies the Bank that a dispute exists
concerning such termination within the 15-day period following Executive’s
receipt of such notice, Executive may elect to continue Executive’s employment
during such dispute.  If it is thereafter determined that (i) Cause did exist,
the date of Executive’s termination will be the earlier of (A) the date on which
the dispute is finally determined or (B) the date of Executive’s death or
permanent disability; or (ii) Cause did not exist, Executive’s employment will
continue as if the Bank had not delivered its Notice of Termination and there
will be no termination arising out of such notice.

 

6

--------------------------------------------------------------------------------

 

If Executive in good faith furnishes a Notice of Termination for Good Reason and
the Bank notifies Executive that a dispute exists concerning the termination
within the 15-day period following the Bank’s receipt of such notice, Executive
may elect to continue Executive’s employment during such dispute.  If it is
thereafter determined that (i) Good Reason did exist, Executive’s date of
termination will be the earlier of (A) the date on which the dispute is finally
determined or (B) the date of Executive’s death or permanent disability; or
(ii) Good Reason did not exist, Executive’s employment will continue after such
determination as if Executive had not delivered the Notice of Termination
asserting Good Reason.  If Good Reason is determined to exist, Executive’s
salary, bonus and Fringe Benefits prior to such determination will be no less
than Executive’s salary, bonus and benefits immediately prior to the Change of
Control which gives rise to Executive’s right to receive Termination Benefits as
provided in this Agreement.

 

If Executive does not elect to continue employment pending resolution of a
dispute regarding a Notice of Termination, and it is finally determined that the
reason for termination set forth in such Notice of Termination did not exist, if
such notice was delivered by Executive, Executive will be deemed to have
voluntarily terminated Executive’s employment other than for Good Reason and if
delivered by the Bank, the Bank will be deemed to have terminated Executive
without Cause.

 

9)                         RESTRICTIONS AND LIMITATIONS.

 

This Agreement is intended to comply with the requirements of Section 409A of
the Code or an exemption thereunder and shall in all respects be administered in
accordance with Section 409A.  Notwithstanding anything in the Agreement to the
contrary, any payments or distributions hereunder may only be made upon a
“Change of Control” (as defined in Section 4) or an involuntary separation from
service for “Good Reason” (as defined in Section 5) at any time within two years
following a Change of Control.

 

Compliance with Code Section 409A  For purposes of this Agreement, Executive’s
termination of employment shall mean Executive’s “separation from service” as
defined under Code Section 409A.  Each payment under this Agreement that is
determined to be subject to Section 409A shall be treated as a separate
payment.  In no event may Executive, directly or indirectly, designate the
calendar year of any payment to be made under this Agreement.  Notwithstanding
any provision of this Agreement to the contrary, if Executive is a “specified
employee” (as defined in Section 409A of the Code) as of his “separation from
service” (as defined in Section 409A of the Code), then the payment of any
amounts payable hereunder that are subject to Section 409A of the Code shall be
postponed in compliance with Section 409A (without any reduction in such
payments ultimately paid or provided to Executive) until the first payroll date
that occurs after the date that is six (6) months following Executive’s
“separation from service.”  Any such postponed payments shall be paid in a lump
sum to Executive on the first payroll date that occurs after the date that is
six (6) months following Executive’s “separation from service.”  If Executive
dies during the postponement period prior to the payment of the postponed
amount, the amounts withheld on account of Section 409A shall be paid to
Executive’s estate within sixty (60) days after the date of her death.

 

7

--------------------------------------------------------------------------------

 

10)                  COMPETITION.

 

During the Term of this Agreement and for a period of one (1) year following
termination thereof, for any reason whatsoever, Executive shall not, directly or
indirectly:  (a) be employed by any other bank or similar financial institution
doing business in Chester County, Pennsylvania; (b) on behalf of a competing
bank or similar financial institution, solicit, engage in, or accept business or
perform any services for any organization or individual that at any time during
the one (1) year ending with Executive’s termination was a Bank client, customer
or affiliate, or a source of business with which or who Executive dealt or had
any contact during the term of Executive’s employment with the Bank; (c) solicit
any employee of the Bank for the purpose of inducing such employee to resign
from the Bank; nor (d) induce or assist others in engaging in the activities
described in subparagraphs (a) through (c) above.  Notwithstanding the foregoing
if Executive’s employment is terminated due to a Change of Control, the
provisions of clause (a) of the prior sentence shall be null and void and
Executive shall be entitled to be employed by any bank or financial institution
doing business in Chester County, Pennsylvania or in any other location.

 

11)                  DISCLOSURE OF CONFIDENTIAL INFORMATION.

 

During the period during which Executive is employed by the Bank and following
the voluntary or involuntary termination of Executive’s employment with the Bank
for any reason whatsoever, Executive shall not use for any non-Bank purpose or
disclose to any person or entity any confidential information acquired during
the course of employment with the Bank.  Executive shall not, directly or
indirectly, copy, take, or remove from the Bank’s premises, any of the Bank’s
books, records, customer lists, or any other documents or materials.  The term
“confidential information” as used in this Agreement includes, but is not
limited to, records, lists, and knowledge of the Bank’s customers, suppliers,
methods of operation, processes, trade secrets, methods of determination of
prices and rates, financial condition, as the same may exist from time to time.

 

12)                  SUCCESSORS.

 

The Bank will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Bank or any of its subsidiaries to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Bank would be required to perform it if no such succession had taken place. 
Failure of the Bank to obtain such assumption and agreement prior to the
effectiveness of any such succession will be a breach of this Agreement and will
entitle Executive to compensation in the same amount and on the same terms to
which Executive would be entitled hereunder if Executive terminates his or her
employment for Good Reason following a Change of Control, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective will be deemed the date of Executive’s termination.  As used
in this agreement “the Bank” will mean “the Bank” as hereinbefore defined and
any successor to its business and/or assets which assumes and agrees to perform
this Agreement by operation of law or otherwise.

 

8

--------------------------------------------------------------------------------

 

13)                  BINDING AGREEMENT.

 

This Agreement will inure to the benefit of and be enforceable by Executive and
Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.  If Executive should die
while any amount would still be payable to Executive hereunder had Executive
continued to live, all such amounts, unless otherwise provided herein, will be
paid in accordance with the terms of this Agreement to Executive’s devisee,
legatee or other designee or, if there is no such designee, to Executive’s
estate.

 

14)                  NOTICES.

 

For purposes of this Agreement, notices and all other communications provided
for in this Agreement will be in writing and will be deemed to have been duly
given when personally delivered or mailed by United States certified or
registered mail, return receipt requested, postage prepaid, addressed to
Executive at the last address Executive has filed in writing with the Bank or,
in the case of the Bank, at its main office, attention of the Chairman of the
Board of Directors, or to such other address as either party may have furnished
to the other in writing in accordance herewith, except that notice of change of
address will be effective only upon receipt.

 

15)                  MISCELLANEOUS.

 

No provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing and signed by
Executive and the Chairman of the Board of the Bank.  No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party will be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time.  No agreement or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement.  The validity, interpretation, construction and
performance of this Agreement will be governed by the laws of the State of
Pennsylvania without regard to its conflicts of law principles.  All references
to sections of the Exchange Act or the Code will be deemed also to refer to any
successor provisions to such sections.  Any payments provided for hereunder will
be paid net of any applicable withholding required under federal, state or local
law.  The obligations of the Bank that arise prior to the expiration of this
Agreement will survive the expiration of the term of this Agreement.

 

16)                  VALIDITY.

 

The invalidity or unenforceability of any provision of this Agreement will not
affect the validity or enforceability of any other provision of this Agreement,
which will remain in full force and effect.

 

17)                  COUNTERPARTS.

 

This Agreement may be executed in several counterparts, each of which will be
deemed to be an original but all of which together will constitute one and the
same instrument.

 

9

--------------------------------------------------------------------------------

 

18)                  EXPENSES AND INTEREST.

 

If a good faith dispute arises with respect to the enforcement of Executive’s
rights under this Agreement or if any arbitration or legal proceeding will be
brought in good faith to enforce or interpret any provision contained herein, or
to recover damages for breach hereof, and Executive is the prevailing party,
Executive will recover from the Bank any reasonable attorneys’ fees and
necessary costs and disbursements incurred as a result of such dispute or legal
proceeding, and prejudgment interest on any money judgment obtained by Executive
calculated at the rate of interest announced by Chase Manhattan Bank, New York
from time to time as its prime rate from the date that payments to Executive
should have been made under this Agreement.  It is expressly provided that the
Bank will in no event recover from Executive any attorneys’ fees, costs,
disbursements or interest as a result of any dispute or legal proceeding
involving the Bank and Executive.

 

19)                  PAYMENT OBLIGATIONS ABSOLUTE.

 

The Bank’s obligation to pay Executive the Termination Benefits in accordance
with the provisions herein will be absolute and unconditional and will not be
affected by any circumstances; provided, however, that the Bank may apply
amounts payable under this Agreement to any debts owed to the Bank by Executive
on the date of Executive’s termination.  All amounts payable by the Bank in
accordance with this Agreement will be paid without notice or demand.  If the
Bank has paid Executive more than the amount to which Executive is entitled
under this Agreement, the Bank will have the right to recover all or any part of
such overpayment from Executive or from whomsoever has received such amount.

 

20)                  ENTIRE AGREEMENT.

 

This Agreement sets forth the entire agreement between Executive and the Bank
concerning the subject matter discussed in this Agreement and supersedes all
prior agreements, promises, covenants, arrangements, communications,
representations, or warranties, whether written or oral, by any officer,
employee or representative of the Bank.  Any prior agreements or understandings
with respect to the subject matter set forth in this Agreement are hereby
terminated and canceled.

 

10

--------------------------------------------------------------------------------

 

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

 

 

FIRST NATIONAL BANK OF CHESTER COUNTY

 

 

 

 

 

By:

/s/ Kevin C. Quinn

 

 

Kevin C. Quinn, President

 

 

 

 

 

/s/ Sheryl S. Vittitoe

 

Sheryl S. Vittitoe

 

11

--------------------------------------------------------------------------------