Document:

Exhibit 10.14

 

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 28 day of March,
2006, 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
Michael T.  Steinberger of 906 Tallmadge
Drive, West Chester, PA 19380 (hereinafter referred to as “Executive”).

 

BACKGROUND

 

WHEREAS, the Bank desires to ensure the
continued employment of Executive with the Bank by providing certain benefits
to Executive in connection with a Change of Control (as defined below) and the
compensation increase effective on the date of the signing of this Agreement;

 

WHEREAS, Executive is desirous of securing
such benefits on the terms and conditions 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

 

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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.

 

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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 Senior Vice President - Senior
Commercial Real Estate Loan Officer;

 

(c)                                  causing
or requiring Executive to report to anyone other than the Executive Vice
President - Business Banking;

 

(d)                                 assignment
to Executive of duties materially inconsistent with Executive’s position as
Senior Vice President - Senior Commercial Real Estate Loan Officer;

 

(e)                                  any
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

 

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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.

 

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.

 

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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.

 

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 11 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.

 

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

 

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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.                                      DEFERRAL
OF PAYMENTS.

 

To the extent that any payment under this
Agreement, when combined with all other payments received during the year that
are subject to the limitations on deductibility under Section 162(m) of
the Code, exceeds the limitations on deductibility under Section 162(m) of
the Code, such payment will, in the discretion of the Bank, be deferred to the
next succeeding calendar year.   Such
deferred amounts will be paid no later than the 60th day after the end of such
next succeeding calendar year, provided that such payment, when combined with
any other payments subject to the Section 162(m) limitations received
during the year, does not exceed the limitations on deductibility under Section 162(m) of
the Code.

 

10.                               COMPETITION.

 

During the Term of this Agreement and for a
period of six (6) months following Executive’s termination of employment
on a voluntary basis, Executive shall not, directly or indirectly be employed
by any other bank or similar financial institution doing business in Chester
County, Pennsylvania.  During the term of
this Agreement and for a period of one (1) year following Executive’s
voluntary termination, Executive shall not (a) 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; (b) solicit any employee of the Bank for the purpose of
inducing such employee to resign from the bank; nor (c) induce or assist
others in engaging in the activities described in all subparagraphs
herein.  Notwithstanding the foregoing if
(i) Executive’s employment is terminated due to a Change of Control, (ii) the
Bank’s current Chief Executive Officer or President no longer are employed by
the Bank (other than due to such person’s death, disability or retirement), or (iii) the
Bank and Executive otherwise agree in writing, 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

 

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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.

 

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

 

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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.

 

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,

 

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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.

 

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/ Deborah R. Pierce

  
	
   

  	
   

  	
  Deborah R. Pierce

  
	
   

  	
   

  	
  Executive Vice President – Human Resources

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Michael T. Steinberger

  
	
   

  	
   

  	
  Michael T. Steinberger

  
	
   

  	
   

  	
  Senior Vice President – Senior Commercial

  
	
   

  	
   

  	
  Real Estate Loan Officer

  

 

10Exhibit 10.15

 

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 19 day of June,
2006, 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 Andrew
H. Stump of 811 Peter Christopher Drive,
West Chester, PA 19382 (hereinafter referred to as “Executive”).

 

BACKGROUND

 

WHEREAS, the Bank desires to ensure the
continued employment of Executive with the Bank by providing certain benefits
to Executive in connection with a Change of Control (as defined below) and the
compensation increase effective on the date of the signing of this Agreement;

 

WHEREAS, Executive is desirous of securing
such benefits on the terms and conditions 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

 

2

 

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.

 

3

 

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 Senior Vice President - Senior Commercial Loan Officer;

 

(c)                                  causing
or requiring Executive to report to anyone other than the Executive Vice President - Business Banking;

 

(d)                                 assignment
to Executive of duties materially inconsistent with Executive’s position as Senior Vice President - Senior Commercial Loan Officer;

 

(e)                                  any
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

 

4

 

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.

 

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.

 

5

 

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.

 

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 11 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.

 

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

 

6

 

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.                                      DEFERRAL
OF PAYMENTS.

 

To the extent that any payment under this
Agreement, when combined with all other payments received during the year that
are subject to the limitations on deductibility under Section 162(m) of
the Code, exceeds the limitations on deductibility under Section 162(m) of
the Code, such payment will, in the discretion of the Bank, be deferred to the
next succeeding calendar year.  Such
deferred amounts will be paid no later than the 60th day after the end of such
next succeeding calendar year, provided that such payment, when combined with
any other payments subject to the Section 162(m) limitations received
during the year, does not exceed the limitations on deductibility under Section 162(m) of
the Code.

 

10.                               COMPETITION.

 

During the Term of this Agreement and for a
period of six (6) months following Executive’s
voluntary termination of employment, Executive shall not, (a) directly or
indirectly be employed by any other bank or similar financial institution doing
business in Chester County, Pennsylvania, or (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 six (6) months  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.  During the term of this Agreement
and for a period of one (1) year following Executive’s termination,
Executive shall not (a) solicit any employee of the Bank for the purpose
of inducing such employee to resign from the Bank; nor (b) induce or
assist others in engaging in the activities described in all subparagraphs herein.  Notwithstanding the foregoing if Executive’s
employment is terminated due to a Change of Control, the provisions of the
first sentence of this section 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.

 

7

 

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.

 

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,

 

8

 

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.

 

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

 

9

 

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.

 

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/ Deborah R. Pierce

  
	
   

  	
   

  	
  Deborah R. Pierce

  
	
   

  	
   

  	
  Executive Vice President – Human Resources

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Andrew H. Stump

  
	
   

  	
   

  	
  Andrew H. Stump

  
	
   

  	
   

  	
  Senior Vice President – Senior Commercial Loan Officer

  

 

10

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