Document:

Exhibit 10.46

 

 

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, 

 

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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 

 

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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;

 

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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.

 

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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.

 

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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.

 

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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

  

 

11Exhibit 10.49

 

AMENDMENT TO LIMITED WAIVER

 

This
Amendment to Limited Waiver (this “Amendment”), is made as of July 26,
2010 (the “Effective Date”), by and between FIRST CHESTER COUNTY
CORPORATION, a Pennsylvania corporation (“Borrower”) and GRAYSTONE TOWER
BANK, a Pennsylvania chartered bank (“Lender”).  Unless otherwise set forth herein, all
capitalized terms used herein shall have the meaning given such terms in the
Loan Documents (defined below).

 

WHEREAS, in connection
with a loan from Lender to Borrower (the “Loan”), the Borrower executed
and delivered to Lender that certain Promissory Note (“Note”), that
certain Loan Agreement (“Loan Agreement”) and that certain  Pledge Agreement (the “Pledge”), each
dated as of November 20, 2010 (this Waiver, the Note, the Loan Agreement, the
Pledge and any other documents executed by Borrower in connection with the
Loan, in each case as amended through the date hereof, are collectively herein
referred to as the “Loan Documents”);

 

WHEREAS, Section 5.07
of the Loan Agreement requires the Borrower and the Bank to remain in
compliance with any formal or informal regulatory enforcement action or
guidance, including, without limitation, to the extent compliance is required
as of a particular date, the Regulatory Letters (as defined in the Loan
Agreement) and Section 5.08(b) of the Loan Agreement requires the Borrower and
the Bank to have sufficient capital to satisfy all applicable regulatory
requirements in order to be considered well capitalized by regulatory
authorities, and in order to satisfy any additional requirements imposed by
formal or informal regulatory action;

 

WHEREAS, the Office of
the Comptroller of the Currency (the “OCC”) issued a letter dated
November 4, 2009 (the “OCC Letter”), to First National Bank of Chester
County (the “Bank”) requiring that the Bank achieve and maintain, by
December 31, 2009, a Tier 1 leverage capital ratio of not less than 8%, a
Tier 1 risk-based capital ratio of not less than 10%, and a total risk-based
capital ratio of not less than 12% (the “IMCRs”);

 

WHEREAS, on May 5,
2010, pursuant to Section 8.01 of the Loan Agreement, Lender entered into a
limited waiver under which Lender waived Bank’s obligation to maintain a Tier 1
leverage capital ratio of at least 8% as of March 31, 2010, pursuant to Section
5.07 and Section 5.08(b) of the Loan Agreement; provided, however, that
Borrower maintain, at all times while such waiver is in effect, a Tier 1
leverage capital ratio of at least 7.75% (the “Waiver”);

 

WHEREAS, Borrower has,
subsequent to the date of the Waiver, determined that as of the year ended
December 31, 2009 and quarter ended March 31, 2010, the Bank did not met
certain IMCRs as required by the OCC Letter; and

 

WHEREAS, pursuant to
Section 8.01 of the Loan Agreement, and subject to the terms and conditions
contained herein, Lender is willing to amend the Waiver to waive compliance
with Sections 5.07 and 5.08(b) of the Loan Agreement as it relates to the Bank’s
Tier 1 leverage capital ratio and total risk-based capital ratio being less
than 8% and 12%, respectively, as of December 31, 2009 and March 31, 2010, on
the limited basis set forth herein.

 

NOW, THEREFORE, in
consideration of the foregoing premises, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
and 

 

 

fully intending to be
legally bound by the Waiver as amended by this Amendment, the parties hereto
agree as follows:

 

1.                                       Definitions.  Capitalized terms used herein without
definition shall have the meanings assigned to such terms in the Loan
Documents, as applicable.

 

2.                                       Amendment.  Section 2 of the Waiver shall be amended and
restated in its entirety as follows:

 

Limited
Waiver.  Pursuant to Section 8.01 of
the Loan Agreement and subject to the limitations contained herein, the
undersigned Lender hereby waives Bank’s obligation to maintain the following
capital ratios pursuant to Sections 5.07 and 5.08(b) of the Loan Agreement:

 

(a)           a Tier 1 leverage capital ratio of at
least 8% as of December 31, 2009 and March 31, 2010; provided, however,
that such waiver shall be conditioned on Borrower maintaining, at all times
while this Amendment is in effect, a Tier 1 leverage capital ratio of at least
6% (the “Leverage Waiver Condition”).

 

(b)           a total risk-based capital ratio of
at least 12% as of December 31, 2009 and March 31, 2010; provided, however,
that such waiver shall be conditioned on Borrower maintaining, at all times
while this Amendment is in effect, a total risk-based capital ratio of at least
10% (the “Total Risk-Based Capital Waiver Condition” and, collectively
with the Leverage Waiver, the “Waiver Conditions”).

 

(c)           The foregoing waivers shall
automatically and without further action terminate if the Waiver Conditions
cease to be satisfied.

 

3.             Effectiveness. 
This Amendment shall be effective on the date hereof.  Notwithstanding any provision contained
therein, the Waiver, as amended by this Amendment, is hereby affirmed by the
parties.

 

4.                                       Provisions Of
General Application.

 

4.1.          Governing Law. 
This Amendment shall be deemed to be a contract made under, and for all
purposes shall be construed in accordance with, the laws of the Commonwealth of
Pennsylvania.

 

4.2.          No Other Amendments or Waivers.  The foregoing waivers and modifications are only
effective in the specific instances and for the specific purposes for which
each is given and shall not be effective for any other purposes, and no
provision of the Loan Documents is amended in any way other than as provided
herein and no Default or Event of Default is hereby waived.  Except as otherwise expressly provided or
contemplated by the Waiver, as amended hereby, all of the terms, conditions and
provisions of the Loan Agreement remain unaltered and in full force and effect.  The Waiver does not imply any obligation or
agreement by the Lender to make any other amendment, waiver, modification or
consent as to any matter on any
subsequent occasion.

 

2

 

4.3.          Counterparts. 
This Amendment may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed an original and it shall
not be necessary in making proof of this Amendment to produce or account for
more than one such counterpart.

 

4.4.          References. 
On and after the effective date of this Amendment, (a) each reference in
the Loan Agreement to “this Agreement”, “hereunder”, “hereof” or words of like
import, and each reference to the Loan Agreement by the words “thereunder,” “thereof”
or words of like import in any Loan Document or other document executed in
connection with the Loan Agreement, shall mean and be a reference to the Loan
Agreement, as modified by the Waiver, as amended hereby, and (b) each reference
in the Waiver to “this Waiver,” “hereunder,” “hereof” or words of like import,
shall mean and be a reference to the Waiver, as amended hereby.

 

[Signature
pages follow]

 

3

 

COUNTERPART
SIGNATURE PAGE TO

AMENDMENT TO LIMITED WAIVER

 

IN WITNESS WHEREOF, the
parties have executed this Amendment as of the date first above written.

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  FIRST CHESTER COUNTY
  CORPORATION,

  
	
   

  	
  a Pennsylvania Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John A. Featherman,
  III

  
	
   

  	
   

  
	
   

  	
  Name: John A. Featherman,
  III

  
	
   

  	
  Title: Chairman, President
  and Chief Executive Officer

  

 

 

COUNTERPART
SIGNATURE PAGE TO

AMENDMENT TO LIMITED WAIVER

 

                IN WITNESS WHEREOF, the parties have executed this
Amendment as of the date first above written.

 

	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  GRAYSTONE TOWER BANK, a
  Pennsylvania chartered bank

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Andrew S. Samuel

  
	
   

  	
   

  
	
   

  	
  Name: Andrew S. Samuel

  
	
   

  	
  Title: President and Chief
  Executive Officer

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