AMENDED & RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
Exhibit 10.1
AMENDED &
RESTATED
THIS
AGREEMENT executed this 19th day
of September, 2006, which amends and restates the Executive Employment Agreement
dated December 16, 2005, is made as of the 20th day of April, 2004 (Effective
Date), between Citizens Financial Services, Inc. (the “Corporation”) and First
Citizens National Bank (the “Bank”) and Xxxxxxx X. Xxxxx (the
“Executive”).
WHEREAS,
the Bank is a subsidiary of the Corporation; and
WHEREAS,
any reference to “Corporation” shall mean Corporation or Bank;
WHEREAS,
the Corporation and Bank desire to employ the Executive as President and Chief
Executive Officer under the terms and conditions set forth herein;
and
WHEREAS,
the Executive desires to serve the Corporation and Bank in an executive capacity
under the terms and conditions set forth in this Agreement;
WHEREAS,
the Corporation and the Bank were represented by Xxxxxxxx Xxxxxxxx, P.C. and
Executive was represented by Xxx Xxxxxxxxx, Esquire, of XxXxxxxx, Page,
Xxxxxxxxx & Hall, during the negotiation of this Agreement;
NOW,
THEREFORE, in consideration of the mutual covenants and agreements set forth
herein, and intending to be legally bound hereby, the parties agree as
follows:
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(a)
General. The
Corporation and Bank hereby shall employ the Executive and the Executive hereby
accepts employment with the Corporation and Bank for a term of three (3) years
beginning on April 20, 2004, and ending three years later (the “Employment
Period”), subject, however, to prior termination of this Agreement as set forth
below. The initial term of this Agreement shall commence on the Effective Date
hereof and shall continue through April 20, 2007. This Agreement shall be
renewed automatically on June 1 of each year for successive terms of three years
each, unless either party notifies the other party at least 90 (ninety) days
prior to such date of such party's determination not to renew this Agreement
beyond the then existing term. It is the intention of the parties that this
Agreement be "Evergreen" unless (i) either party gives written notice to the
other party of his or its intention not to renew this Agreement as provided
above or (ii) this Agreement is terminated pursuant to Section 12 hereof. Each
reference herein to "the term of this Agreement" shall include the initial term
and any renewal term. Except in the event Executive retires pursuant
to the then current retirement policy, at the end of the term of the Agreement,
Executive, if requested, shall submit his resignation for any Board of Director
or similar position he may hold at the Bank, Corporation, or its subsidiaries or
affiliates.
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2. POSITION AND DUTIES. The Executive shall serve as the President and Chief Executive Officer of the Corporation and Bank, reporting only to the Board of Directors of the Corporation and Bank and shall have supervision and control over, and responsibility for, the general management and operation of the Corporation and Bank, and shall have such other powers and duties as may from time to time be prescribed by the Board of Directors of the Corporation and Bank.
3. ENGAGEMENT IN OTHER
EMPLOYMENT. The Executive will devote his full
attention, time and energies to the business of Corporation, Bank and any of
their subsidiaries or affiliates. The Executive shall neither engage
in any business or commercial activities, duties or pursuits which compete with
the business or commercial activities of the Corporation, Bank or any of their
subsidiaries or affiliates, nor serve as a director or officer or in any other
capacity in a company which competes with the Corporation, Bank or any of their
subsidiaries or affiliates. The Executive may continue his activities
as disclosed to the Corporation and Bank to date in Xxxxxxxx Real Estate Inc.,
subject to any future review for compliance with any regulatory
requirements.
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5.
FRINGE BENEFITS,
VACATION, EXPENSES, AND PERQUISITES.
(a) Employee Benefit
Plans. The Executive shall be entitled to participate in or
receive benefits under all Bank employment benefit plans including, but not
limited to, the management incentive plan, any pension plan, profit-sharing
plan, savings plan, or life insurance plan which the Executive’s current
grandfather status provides Executive with a death benefit equal to three times
Annual Direct Salary, but not to exceed the group life insurance policy limits,
and the group long term disability insurance plan as made available by the Bank
to its employees subject to and on a basis consistent with terms, conditions and
overall administration of such plans and arrangements, including without
limitation the eligibility requirements of such plans or
arrangements.
(b) Vacation, Holidays, Sick
Days and Personal Days. The Executive shall be entitled to
twenty paid vacation days in each calendar year. The Executive shall
also be entitled to all paid holidays, sick days and personal days given by the
Corporation and/or the Bank to its employees. In addition,
irrespective of any change in policy by the Corporation and/or the Bank, the
Executive shall be entitled to carry vacation days, sick days, and personal days
over for an additional one full year.
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(c) Business
Expenses. During the term of his employment hereunder, the
Executive shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by him, which are properly accounted for, in accordance with
the policies and procedures established by the Board of Directors of the
Corporation and/or the Bank for its senior executive officers.
(d) Automobile. The
Executive shall be provided with a company-owned or leased vehicle which may
include at Executive’s option a sport utility vehicle or truck reasonably
acceptable to Executive and Bank during the Employment Period. The
vehicle will be replaced no less than every third year. The vehicle
is to be used for Corporation or Bank business and/or business development, and
as properly documented as required by applicable Internal Revenue guidelines by
Executive for personal business.
(e) Club
Memberships. The Corporation shall provide payment of annual
dues and monthly business development expenses for the Executive in connection
with a club membership in the market area. Any other contributions
(assessments) associated with the club membership are the sole responsibility of
the Executive and are to be paid by the Executive.
(f) Professional Memberships and
Continuing Education. The Corporation and/or Bank shall pay
all fees and expenses associated with the Executive’s professional memberships
and continuing education related to the Executive’s status as a Public
Accountant.
(g) Additional Life
Insurance. The Executive has acquired an individual level term
thirty (30) year policy (“Term Life Insurance”) with a death benefit of
$600,000.00. The Bank shall annually pay Executive
$3,000.00 on or within two weeks of the day the annual premium is
due, provided that the Executive is an employee pursuant to the terms
of this Agreement or as it may be amended or as otherwise provided pursuant to
Sections 13(b), 13(c) or 14(c). This amount is to reimburse Executive for the
Term Life Insurance Premium and to provide Executive with funds to pay any
applicable federal, state and local taxes owed due to the receipt of the Term
Life Insurance premium, and is in lieu of performing an annual gross-up
calculation.
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6. INDEMNIFICATION. The
Corporation will indemnify the Executive as required under Pennsylvania and
federal law, with respect to any threatened, pending or completed legal or
regulatory action, suit or proceeding brought against him by reason of the fact
that he is or was a director, officer, employee or agent of the
Corporation.
7. LIABILITY
INSURANCE. The Bank and/or the Corporation shall use its best
efforts to obtain insurance coverage for the Executive under an insurance policy
covering officers and directors of the Bank and Corporation against lawsuits,
arbitrations or other legal or regulatory proceedings; however, nothing herein
shall be construed to require the Bank and/or the Corporation to obtain such
insurance, if the Board of Directors of the Bank and/or Corporation determine
that such coverage cannot be obtained at a reasonable price.
8.
RESIDENCE. Irrespective
of any existing or future policies of the Corporation or Bank, Executive shall
not be required to change his place of residence while employed as President and
Chief Executive officer of the Corporation and Bank.
9. UNAUTHORIZED
DISCLOSURE. During the term of his employment hereunder, or at
any later time, the Executive shall not, without the written consent of the
Board of Directors of the Corporation or Bank or a person authorized thereby,
knowingly disclose to any person, other than an employee of the Corporation or
Bank or a person to whom disclosure is reasonably necessary or appropriate in
connection with the performance by the Executive of his duties as an executive
of the Corporation or Bank, any confidential information, trade secrets, or know
how, obtained by him while in the employ of the Corporation or
Bank. Confidential information, trade secrets, or know how
includes:
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any
services, products, improvements, formulas, projects, proposals, designs
or styles, processes, customers, (including, but not limited to, customers
of Corporation, Bank or any of their affiliates or subsidiaries on whom
the Executive called or with whom he became acquainted during the term of
his employment),
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methods
of business or any business practices, research, product or business
plans, customer lists, markets, software, developments, inventions,
technology, drawings, engineering, marketing, distribution and sales
methods and systems, finances, sales and profit figures,
and
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other
business information of Corporation, Bank or any of their subsidiaries or
affiliates, the disclosure of which could be or will be materially
damaging to the Corporation, Bank or any of their subsidiaries or
affiliates.
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Provided,
however, that confidential information, trade secrets or know how shall not
include:
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any
information known generally to the public (other than as a result of
unauthorized disclosure by the Executive or any person with the
assistance, consent or direction of the Executive),
or
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any
information of a type not otherwise considered confidential by persons
engaged in the same business or a business similar to that conducted by
the Corporation or Bank or any information that must be disclosed as
required by law.
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10.
RETURN OF COMPANY
PROPERTY AND DOCUMENTS. The Executive agrees
that, at the time of termination of his employment, regardless of the reason for
termination, he, as soon as practical, will deliver to Corporation or Bank, any
and all company property, including, but not limited to, keys, security codes or
passes, mobile telephones, pagers, computers, devices, confidential information
(as defined in this Agreement), records, data, notes, reports, proposals, lists,
correspondence, specifications, drawings, blueprints, sketches, software
programs, equipment, other documents or property, or reproductions of any of the
aforementioned items developed or obtained by the Executive during the course of
his employment.
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(a)
Non-competition and
Non-solicitation. The Executive hereby acknowledges and recognizes the
highly competitive nature of the business of Corporation and Bank and
accordingly agrees that, for the applicable period and the applicable
circumstances set forth in Section 11(c) hereof, Executive shall
not:
(i) be
engaged, directly or indirectly, either for his own account or as agent,
consultant, employee, partner, officer, director, proprietor, investor (except
as an investor owning less than 5% of the stock of a publicly owned company) or
otherwise of any person, firm, corporation or enterprise engaged in (1) the
banking or financial services industry (including bank holding company), or (2)
any other activity in which Corporation, Bank or any of their subsidiaries or
affiliates are engaged during the Employment Period, in any county in which, a
branch, or office of Corporation or any of its subsidiaries is
located, or within a fifty (50) mile radius of any branch, or office
of Corporation or any of its subsidiaries, any of the foregoing which existed on
the date of termination of the Executive’s employment, which radius includes
areas located outside of the Commonwealth of Pennsylvania (the “Non-Competition
Area”); or
(ii)
provide financial or other assistance to any person, firm, corporation, or
enterprise engaged in (1) the banking or financial services industry (including
bank holding company), or (2) any other activity in which Corporation, Bank or
any of their subsidiaries or affiliates are engaged during the Employment Period
in the Non-Competition Area; or
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(iii)
directly or indirectly contact, solicit or induce any person, firm, corporation
or other entity who or which is a customer or referral source of Corporation,
Bank or any of their subsidiaries or affiliates during the term of Executive’s
employment or at the date of termination of Executive’s employment, to become a
client, customer or referral service of any other person, firm, corporation or
other entity provided that such other person, firm, corporation or other entity
competes in any way with the Corporation, Bank or any of their subsidiaries or
affiliates; or
(iv)
directly
or indirectly solicit, induce or encourage any employee of Corporation, Bank or
any of their subsidiaries or affiliates, who is employed during the term of
Executive’s employment or at the date of termination of Executive’s employment,
to leave the employ of Corporation, Bank or any of their subsidiaries or
affiliates or to seek, obtain or accept employment with any person or entity
other than Corporation, Bank or any of their subsidiaries or affiliates,
provided, however, the furnishing of a written reference, requested by an
employee, shall not itself be a violation of this restrictive
covenant.
(b) Amendment of Restrictive
Covenant. It is expressly understood and agreed that, although
Executive, Corporation and Bank consider the restrictions contained in Section
11(a) reasonable for the purpose of preserving for Corporation, Bank and any of
their subsidiaries or affiliates, their good will and other proprietary rights,
if a final judicial determination is made by a court having jurisdiction that
the time or territory or any other restriction contained in Section 11(a) is an
unreasonable or otherwise unenforceable restriction against the Executive, the
provisions of Section 11(a) shall not be rendered void, but shall be deemed
amended to apply as to such maximum time and territory and to such other extent
as such court may judicially determine or indicate to be
reasonable.
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(c) Period of Restrictive
Covenant. The provisions of this Section 11 shall be
applicable, commencing on the Effective Date this Agreement is entered and
ending:
(i) one
(1) year after the effective date of termination of employment by Corporation
and/or Bank with Cause.
(ii) two
(2) years after the effective date of termination of employment by Corporation
and/or Bank without Cause, or resignation by Executive with or without Good
Reason; and
(iii) two (2)
years if Executive’s employment terminates following a Change of Control during
the first year of employment and the payments in Section 14(c) hereof are
triggered, and
(iv) thirty
(30) months if Executive’s employment terminates following a Change of Control
during the second year of employment and the payments in Section 14(c) hereof
are triggered, and
(v) three
(3) years if Executive’s employment terminates following a Change of Control
after the second year of employment and the payments in Section 14(c) hereof are
triggered, provided however in all events that
the Restrictive
Covenant shall continue,
(vi) during
such period of time that the executive receives any disability payment pursuant
to any disability benefit or policy provided or funded by the Corporation or the
Bank whether pursuant to this agreement or a plan or
arrangement provided
to other Corporation or Bank employees.
(d)
Exception to
Non-competition. In the event that Executive’s employment is
terminated by Corporation and/or Bank for Cause, or by Executive without Good
Reason, the Executive may during the applicable period of Restrictive Covenant
engage in the practice of Public Accounting. However, the Executive
shall comply and shall be subject to Section 11(a)(ii), (iii) and (iv) with
regard to services other than accounting services offered by any entity in which
he is a partner, shareholder, owner, officer, or employee.
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(f)
Enforcement of
Restrictive Covenant and Unauthorized Disclosure. Executive
acknowledges that his breach of any of the restrictions set forth in this
Agreement in Sections 9, 10 and 11 will result in irreparable injury which is
not compensable in damages or other legal remedies, and Bank and Corporation may
seek to obtain injunctive relief against the breach, or threatened breach of
this Agreement, and/or specific performance and damages, as well as other legal
and equitable remedies including attorney’s fees which may be available and to
which Bank and Corporation may be entitled. The right to equitable
relief shall include, without limitation, the right to both preliminary and
permanent injunctions against any breach or threatened breach and specific
performance for the provisions of this Agreement, and in such case, the Employee
shall raise no objection, and hereby waives any objection, to the form of relief
prayed for in any such proceeding. Employer shall not be required to
post a bond or similar assurance should Employer bring any action for equitable
relief in order to enforce this Agreement.
12. TERMINATION.
(a)
Death. Notwithstanding
any other provisions of this Agreement, this Agreement shall terminate
automatically upon the Executive’s death and the Executive’s rights under this
Agreement shall cease as of the date of such termination.
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(b)
Disability.
Notwithstanding any other provisions of this Agreement, if, as a result of
physical or mental injury or impairment, Executive is unable to perform all of
the essential job functions of his position on a full time basis, with or
without a reasonable accommodation, and without posing a direct threat to
himself and others, for a period in excess of one (1) month, not to exceed six
(6) months, all obligations of Bank and Corporation to pay Executive an Annual
Direct Salary as set forth in Section 4 of this Agreement are suspended
provided, however, in the event Executive does not have sufficient time off or
sick leave to cover this period, the Bank shall pay his
Annual Direct Salary until the end of the 6th
month after the determination by the Board of Directors, in its reasonable
discretion, that the Executive is disabled. Any paid time off, sick
leave, or short term disability pay Executive may be entitled to receive,
pursuant to an established disability plan or program of the Bank and/or
Corporation shall be considered part of the compensation Executive shall receive
while disabled and shall not be in addition to the compensation received by
Executive under this provision of the Agreement. Executive agrees that should he
remain unable to perform all of the essential functions of his position on a
full time basis, with or without a reasonable accommodation and without posing a
direct threat to himself or others, after six (6) months, the Bank and/or
Corporation will suffer an undue hardship by continuing Executive in his
position. Upon this event, all compensation and employment
obligations of the Bank and Corporation under this Agreement shall
cease and this Agreement shall terminate. In such event,
the time period for the Restrictive Covenant set forth in Section 11(c)(vi)
shall control.
(c) Cause. Notwithstanding
any other provisions of this Agreement, the Bank and/or Corporation may
terminate the Executive’s employment hereunder for “Cause.” As used in this
Agreement, the Bank and/or Corporation shall have “Cause” to terminate the
Executive’s employment hereunder upon: (i) the willful failure by the
Executive to substantially perform his duties hereunder (other than a failure
resulting from the Executive’s incapacity because of physical or mental illness,
as provided in Section 12(b) hereof), after notice from the Corporation or Bank
and a failure to cure such violation within thirty (30) days of said notice;
(ii) the willful engaging by the Executive in misconduct injurious to the
Corporation or Bank; (iii) the willful violation by the Executive of the
provisions of Sections 3, 8, 9 or 11 hereof, after notice from the Corporation
or Bank and a failure to cure such violation within thirty (30) days of said
notice; (iv) the dishonesty or gross negligence of the Executive in the
performance of his duties; (v) the breach of Executive’s fiduciary duty
involving personal profit; (vi) the material violation of any law, rule or
regulation governing banks or bank officers or any final cease and desist order
issued by a bank regulatory authority; (vii) conduct on the part of Executive
which brings public discredit to the Corporation or Bank; (viii) unlawful
discrimination by the Executive, including harassment against Corporation or
Bank’s employees, customers, business associates, contractors, or visitors; (ix)
theft or abuse by Executive of the Corporation or Bank’s property or the
property of Corporation or Bank’s customers, employees, contractors, vendors, or
business associates; (x) failure of the Executive to follow the good faith
lawful instructions of the Board of Directors of Corporation or Bank with
respect to its operations, after notice from the Corporation or Bank and a
failure to cure such violation within thirty (30) days of said notice; (xi) the
direction or recommendation of a state or federal bank regulatory authority to
remove the Executive’s position with Corporation and/or Bank as identified
herein; (xii) any final removal or prohibition order to which the
Executive is subject, by a federal banking agency pursuant to Sections 8(e) and
8(g) of the Federal Deposit Insurance Act; (xiii) the Executive’s conviction of
or plea of guilty or nolo
contendere to a felony, crime of falsehood or a crime
involving moral turpitude, or the actual incarceration of Executive; (xiv) any
act of fraud, misappropriation or personal dishonesty; (xv) insubordination;
(xvi) misrepresentation of a material fact, or omission of information necessary
to make the information supplied not materially misleading, in an application or
other information provided by the Executive to the Corporation or any
representative of the Corporation in connection with the Executive’s employment
with Corporation; (xvii) the existence of any material conflict between the
interests of Corporation and the Executive that is not disclosed in writing by
the Executive to the Corporation and approved in writing by the Board of
Directors of Corporation; or (xviii) the Executive takes action that is clearly
contrary to the best interest of the Corporation.
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(d) Termination by
Executive. The Executive may terminate his employment hereunder if (i) as
a result of physical or mental injury or impairment, Executive is unable to
perform all of the essential job functions of his position on a full time basis,
with or without a reasonable accommodation, and without posing a direct threat
to himself and others, or (ii) for Good Reason. The term “Good
Reason” shall mean (1) any assignment to the Executive, without his consent, of
any duties other than those contemplated by, or any limitation of the powers of
the Executive not contemplated by Section 2 hereof; or (2) any removal of the
Executive from any of the positions indicated in Section 2 hereof, except as a
result of his regulatory removal and/or in connection with termination of the
Executive’s employment for Cause; or (3) failure of the Bank to comply with
Sections 2 or 4 hereof, provided such alleged breach is not a result of his
regulatory removal and/or in connection with termination of the Executive’s
employment For Cause, all after notice from the Executive to
the Corporation and Bank that such action or limitation of the Bank or
Corporation constitutes Good Reason and the failure to cure such situation
within thirty (30) days of said notice, or if said situation cannot be cured
within thirty (30) days, within a reasonable time thereafter if a diligent
effort is being made by the Corporation and/or the Bank to cure such
situation.
13.
PAYMENTS UPON
TERMINATION ABSENT A CHANGE IN CONTROL.
(a)
If the Executive’s employment is terminated by the Executive because of his
health as described in Section 12 (d)(i) hereof, or if the Executive’s
employment is terminated by the Bank or Corporation because of Executive’s
disability or for Cause (as defined herein), the Corporation shall pay the
Executive his full Annual Direct Salary through the date of termination at the
rate in effect at the time of termination and the Corporation and Bank shall
have no further obligation to the Executive under this Agreement.
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(b)
If the Executive’s employment is terminated by the Corporation or Bank other
than pursuant to Sections 12(a) (Death); 12(b) (Disability); or 12(c) (Cause)
hereof, then the Corporation shall promptly pay the Executive a lump sum amount
equal to and no greater than two (2) times the Executive’s Annual Direct Salary
as defined in Section 4, minus applicable taxes and withholdings. In addition,
for a period of one (1) year from the date of termination of employment, or
until Executive secures substantially similar benefits through other employment,
whichever shall first occur, Executive shall receive a continuation of health
care and life insurance described in Section 5(a), payments for Executive’s
individual life insurance policy as set forth in Section 5(g) in effect with
respect to Executive during the one (1) year prior to his termination of
employment. In addition the Corporation shall continue for a period
of one (1) year from the date of termination of employment, or until Executive
secures substantially similar benefits through other employment, whichever shall
first occur Executive’s long term disability coverage to the extent Executive
remains eligible under the Corporation’s long term disability
plan. In the event of a break in service and Executive becomes
employed within one year of termination of employment without his new employer
offering substantially similar long term disability coverage and Executive would
be eligible for the Corporation’s long term disability coverage but for not
being an employee of the Corporation, the Corporation shall pay Executive a
dollar amount equal to the cost to the Executive of obtaining such benefits in
effect with respect to Executive during one (1) year prior to his termination of
employment, (or substantially similar benefits) for the remainder of the one
year period, not to exceed 125% of the cost to the Corporation of providing long
term disability coverage under its group long term policy. If
Corporation cannot provide such benefits under the terms of the plans or
contracts, Corporation shall pay to Executive, a dollar amount equal to the cost
to the Executive of obtaining such benefits (or substantially similar benefits),
not to exceed 125% of the cost to the Corporation of obtaining such benefits (or
substantially similar benefits). However, in the event
the payment described herein, when added to all other amounts or benefits
provided to or on behalf of the Executive in connection with his termination of
employment, would result in the imposition of an excise tax under Code Section
4999, such payments shall be retroactively (if necessary) reduced to the extent
necessary to avoid such excise tax imposition. Upon written notice to
Executive, together with calculations of Corporation’s independent auditors,
Executive shall remit to Corporation the amount of the reduction, plus such
interest, as may be necessary to avoid the imposition of such excise
tax. Notwithstanding the foregoing or any other provision of this
contract to the contrary, if any portion of the amount herein payable to the
Executive is determined to be non-deductible pursuant to the regulations
promulgated under Section 280G of the Internal Revenue Code of 1986, as amended
(the “Code”), the Corporation shall be required only to pay to Executive the
amount determined to be deductible under Section 280G.
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(d)
Notwithstanding any other provision in this section, in the event that Executive
is determined to be a key employee as that term is defined by Section 409A of
the IRC no payment shall be made until one day following six months from the
date of separation from service as that term is defined by Section 409A of the
IRC.
14.
PAYMENTS UPON
TERMINATION FOLLOWING A CHANGE IN CONTROL.
(a)
If a Change in Control (as defined herein) shall occur and if, between the Date
of the Change in Control (as defined herein) and one (1) year after the Date of
Change in Control (as defined herein), there shall be:
(i) any
involuntary termination of Executive’s employment (other than for the reasons
set forth in Sections 12(a), (b) or (c) of this Agreement); or
(ii) any
failure by the acquiring person or entity to offer employment to Executive as of
the Date of Change in Control (as defined herein), in a position having
equivalent responsibilities, title, authority, except reporting
authority,
compensation and benefits as Executive received immediately prior to the Change
in Control (as defined herein); or
(iii) any
reduction in Executive’s title, responsibilities, except reporting
responsibilities, or authority, including such title, responsibilities or
authority as such may be increased from time to time during the term of this
Agreement; or
(iv) the
assignment to Executive of duties inconsistent with Executive’s office on the
date of the Change in Control or as the same may be increased from time to time
after the Change in Control; or
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(v) any
reassignment of Executive to a location greater than fifty (50) miles from the
location of Executive’s office on the date of the Change in Control; or
(vi) any
reduction in Executive’s Annual Direct Salary in effect on the date of the
Change in Control or as the same may be increased from time to time after the
Change in Control; or
(vii) any
failure to provide Executive with benefits at least as favorable as those
enjoyed by Executive under any of Corporation or Bank’s retirement or pension,
life insurance described in Section 5(a), payments for
Executive’s
individual life insurance policy as set forth in Section 5(g), medical, health
and accident, disability or other employee benefit plans in which Executive
participated at the time of the Change in Control, or the
taking of any action
that would materially reduce any of such benefits in effect at the time of the
Change in Control, then at the option of Executive, exercisable by Executive
within sixty (60) days of the occurrence of any
of the foregoing
events, Executive may resign from employment with Corporation and Bank (or, if
involuntarily terminated, give notice of intention to collect benefits under
this Agreement) by delivering a notice in
writing (the “Notice
of Termination”) to Corporation and Bank and the provisions of Section 14 (c) of
this Agreement shall apply.
(b)
During the period of time between the execution of an agreement to effect a
Change in Control (as defined herein) and the Date of the Change in Control (as
defined herein), Executive’s employment may only be terminated for Cause (as
defined herein). If, during that period of time, Executive’s employment is
terminated for Cause (as defined herein), then all rights of Executive under
this Agreement shall cease as of the effective date of such
termination. If, during that period of time, Executive’s employment
is terminated other than for Cause (as defined herein), then Executive may give
notice of intention to collect benefits under this Agreement by delivering a
notice in writing (“Notice of Termination”) to Corporation and Bank and the
provisions of Section 14(c) of this Agreement shall apply.
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(i)
For less than twelve (12) months of continuous service Corporation or Bank shall
promptly pay Executive a lump sum amount equal to and no greater than two (2)
times the Executive’s Annual Direct Salary as defined in
Section 4, minus
applicable taxes and withholdings.
(ii) For
more than twelve (12) months of continuous service Corporation or Bank shall
promptly pay Executive a lump sum amount equal to his two and one-half (2.5)
times the Executive’s then current Annual Direct Salary as
defined in Section
4.
(iii)
For more than twenty-four (24) months of continuous service Corporation or Bank
shall promptly pay Executive a lump sum amount equal to his two and ninety-nine
hundredths (2.99) times the Executive’s then current
Annual Direct Salary
as defined in Section 4.
In
addition, for a period of one (1) year from the date of termination of
employment, or until Executive secures substantially similar benefits through
other employment, whichever shall first occur, Executive shall receive a
continuation of health care and life insurance described in Section 5(a),
payments for Executive’s individual life insurance policy as set forth in
Section 5(g) in effect with respect to Executive during the one (1)
year prior to his termination of employment. In addition the
Corporation shall continue for a period of one (1) year from the date of
termination of employment, or until Executive secures substantially similar
benefits through other employment, whichever shall first occur Executive’s long
term disability coverage to the extent Executive remains eligible under the
Corporation’s long term disability plan. In the event of a break in
service and Executive becomes employed within one year of termination of
employment without his new employer offering substantially similar long term
disability coverage and Executive would be eligible for the Corporation’s long
term disability coverage but for not being an employee of the Corporation, the
Corporation shall pay Executive a dollar amount equal to the cost to the
Executive of obtaining such benefits in effect with respect to Executive during
one (1) year prior to his termination of employment, (or substantially similar
benefits) for the remainder of the one year period, not to exceed 125% of the
cost to the Corporation of providing long term disability coverage under its
group long term policy. If Corporation cannot provide such
benefits under the terms of the plans or contracts, Corporation shall pay to
Executive, a dollar amount equal to the cost to the Executive of obtaining such
benefits (or substantially similar benefits), not to exceed 125% of the cost to
the Corporation of obtaining such benefits (or substantially similar
benefits). However, in the event the payment described herein, when
added to all other amounts or benefits provided to or on behalf of the Executive
in connection with his termination of employment, would result in the imposition
of an excise tax under Code Section 4999, such payments shall be retroactively
(if necessary) reduced to the extent necessary to avoid such excise tax
imposition. Upon written notice to Executive, together with
calculations of Corporation’s independent auditors, Executive shall remit to
Corporation the amount of the reduction, plus such interest, as may be necessary
to avoid the imposition of such excise tax. Notwithstanding the
foregoing or any other provision of this contract to the contrary, if any
portion of the amount herein payable to the Executive is determined to be
non-deductible pursuant to the regulations promulgated under Section 280G of the
Internal Revenue Code of 1986, as amended (the “Code”), the Corporation shall be
required only to pay to Executive the amount determined to be deductible under
Section 280G.
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15.
DEFINITION OF CHANGE
IN CONTROL. For purposes of this Agreement, the term “Change
in Control” shall mean: A change in control (other than one occurring
by reason of an acquisition of the Corporation or Bank by Executive) of a nature
that would be required to be reported in response to Item 6(e) of Schedule 14A
of Regulation 14A and any successor rule or regulation promulgated under the
Securities Exchange Act of 1934 (the “Exchange Act”) if Corporation or Bank were
subject to the Exchange Act reporting requirements; provided that, without
limiting the foregoing, such a change in control shall be deemed to have
occurred if the Board of Directors certifies that one of the following has
occurred:
(a) any
“person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act),
other than the Corporation or Bank or any “person” who on the date hereof is a
director or officer of the Corporation or Bank is or becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Corporation or Bank representing fifty percent
(50%) or more of the combined voting power of the Corporation’s or Bank’s then
outstanding securities, or
(b) during
any period of one (1) year during the term of Executive’s employment under this
Agreement, individuals who at the beginning of such period constitute the Board
of Directors of the Corporation or Bank cease for any reason to constitute at
least a majority thereof, unless the election of each director who was not a
director at the beginning of such period has been approved in advance by
directors representing at least two-thirds of the directors then in office who
were directors at the beginning of the period;
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(c) a
merger, consolidation or business combination with the Corporation and/or
Bank occurs.
(d) Notwithstanding any other provision in
this section, in the event that Executive is determined to be a key
employee as that term is defined by Section 409A of the IRC no payment
shall be made until one day following six months from the date of
separation from service as that term is defined by Section 409A of the
IRC.
16. DEFINITION OF DATE OF
CHANGE IN CONTROL. For purposes of this Agreement, the
Date of Change in Control shall mean:
(a) the first date on which a single person
and/or entity, or group of affiliated persons and/or entities, acquire the
beneficial ownership of fifty percent (50%) or more of the Corporation’s
voting securities, or more than fifty percent (50%) of the total fair
market value of the Corporation, or
(b) the date of the closing of an
Agreement, transferring all or substantially all of the Bank or
Corporation’s assets, or
(c) the date on which a merger,
consolidation or business combination is consummated, as applicable,
or
(d) the date on which individuals who
formerly constituted a majority of the Board of Directors of the Bank or
Corporation under Section 15(b) hereof and the replacement Directors
otherwise approved under Section 15(b), ceased to be a majority within a
one year period.
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17.
DAMAGES FOR BREACH OF
CONTRACT. In the event of a breach of this Agreement
by either the Corporation, Bank or the Executive resulting in damages to another
party to this Agreement, that party may recover from the party breaching the
Agreement, only those damages as set forth herein. In no event shall
any party be entitled to the recovery of attorney’s fees or costs except as
provided in Sections 11(f) and 18.
18.
ARBITRATION. Corporation,
Bank and Executive recognize that in the event a dispute should arise between
them concerning the interpretation or implementation of this Agreement, lengthy
and expensive litigation will not afford a practical resolution of the issues
within a reasonable period of time. Consequently, with the exception
of the Unauthorized Disclosure Provisions of Section 9, and the Restrictive
Covenant provisions in Section 11 which the Corporation or Bank may seek to
enforce in any court of competent jurisdiction, each party agrees that all
disputes, disagreements and questions of interpretation concerning this
Agreement are to be submitted for resolution, in Williamsport, Pennsylvania, to
the American Arbitration Association (the “Association”) in accordance with the
Association’s National Rules for the Resolution of Employment Disputes or other
applicable rules then in effect (“Rules”). Corporation, Bank or
Executive may initiate an arbitration proceeding at any time by giving notice to
the other in accordance with the Rules. Corporation, Bank and
Executive may, as a matter or right, mutually agree on the appointment of a
particular arbitrator from the Association’s pool. The arbitrator shall not be
bound by the rules of evidence and procedure of the courts of the Commonwealth
of Pennsylvania but shall be bound by the substantive law applicable to this
Agreement. The arbitration proceeding and all filing, testimony,
documents, and information, relating to or presented during the evaluation
proceeding, shall be disclosed exclusively for the purpose of facilitating the
arbitration process and for no other purpose and shall be deemed to be
information subject to the confidentiality provisions of this
Agreement. The decision of the arbitrator, absent fraud, duress,
incompetence or gross and obvious error of fact, shall be final and binding upon
the parties and shall be enforceable in courts of proper
jurisdiction. Following written notice of a request for arbitration,
Corporation, Bank and Executive shall be entitled to an injunction restraining
all further proceedings in any pending or subsequently filed litigation
concerning this Agreement, except as otherwise provided herein. The
Arbitrator or the Court, (which ever is applicable) may award the prevailing
party in a dispute reasonable counsel fees not to exceed $25,000.
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19.
NOTICE. For
the purposes of this Agreement, notices and all other communications provided
for in the Agreement shall be in writing and shall be deemed to have been
duly given when hand-delivered or mailed by United States certified mail, return
receipt requested, postage prepaid, addressed as follows:
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If to the
Executive:
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Xxxxxxx
X. Xxxxx
00 Xxxxxx X Xxxx
Xxxxxxx, XX 00000
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with a copy
to:
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Xxx
Xxxxxxxxx, Esquire
XxXxxxxx,
Page, Xxxxxxxxx & Xxxx
000
Xxxxxx Xxxxxx
X.X. Xxx 0
Xxxxxxxxxxxx, XX 00000
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If to the
Bank:
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R.
Xxxxxx Xxxxxxxx, Chairman
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
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with a copy
to:
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Xxxx
X. Xxxxx, Esquire
Xxxxxxxx
Xxxxxxxx, P.C.
P.
O. Xxx 00
Xxxxxxxxxx,
XX 00000
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If to the
Corporation:
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R. Xxxxxx Xxxxxxxx,
Chairman
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
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with a copy
to:
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Xxxx X. Xxxxx,
Esquire
Xxxxxxxx
Xxxxxxxx, P.C.
P.
O. Xxx 00
Xxxxxxxxxx,
XX 00000
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or to
such other address as any party may have furnished to the other in writing in
accordance herewith, except that notices of change of address shall be effective
only upon receipt.
20.
SUCCESSORS. This
Agreement shall inure to the benefit of and be binding upon the Executive, his
personal representatives, heirs or assigns and to the Bank and/or the
Corporation and any of their successors or assigns.
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22.
AMENDMENT. This
Agreement may be amended or canceled only by mutual agreement
of the parties in writing.
23.
PAYMENT OF MONEY DUE
DECEASED EXECUTIVE. In the event of Executive’s
death, any monies that may be due him from the Corporation or Bank under this
Agreement as of the date of death, shall be paid to the person designated by him
in writing for this purpose, or in the absence of any such designation, to his
estate.
24.
LAW
GOVERNING. This Agreement shall be governed by and construed
in accordance
with the laws of the Commonwealth of Pennsylvania provided that this Agreement
shall also be interpreted as is minimally required to qualify any payment as not
triggering any penalty on the Executive, the Corporation or the Bank pursuant to
Section 409A of the IRC.
25. ENTIRE
AGREEMENT. This Agreement supersedes any and all agreements,
either oral or in writing, between the parties with respect to the employment of
the Executive by the Corporation and Bank, and this Agreement contains all the
covenants and agreements between the parties with respect to the subject matter
of this Agreement.
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IN
WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have
caused this Agreement to be duly executed in their respective names and, in the
case of the Corporation and Bank, by its authorized representatives the day and
year above mentioned.
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ATTEST:
By: /s/
Xxxxx X. Xxxxxxx
By: Xxxxx X. Xxxxxxx
Secretary of the Company and Bank
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CITIZENS FINANCIAL SERVICES,
INC.
By: /s/ R.
Xxxxxx Xxxxxxxx
By: R. Xxxxxx Xxxxxxxx
Chairman of the Board of Directors
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ATTEST:
By: /s/
Xxxxx X. Xxxxxxx
By: Xxxxx X. Xxxxxxx
Secretary of the Company and Bank
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FIRST CITIZENS NATIONAL
BANK
By: /s/ R.
Xxxxxx Xxxxxxxx
By: R. Xxxxxx Xxxxxxxx
Chairman of the Board of Directors
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ATTEST:
By: /s/
Xxxx Xxxxx Xxxx
By: Xxxx Xxxxx Xxxx
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By: /s/
Xxxxxxx X. Xxxxx
By: Xxxxxxx
X. Xxxxx
Chief
Executive Officer and President
of
the Company and the Bank
(Executive)
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AMENDMENT
TO THE EMPLOYMENT AGREEMENT
BY
AND BETWEEN XXXXXXX X. XXXXX, CITIZENS FINANCIAL SERVICES, INC. AND FIRST
CITIZENS NATIONAL BANK
WHEREAS, Xxxxxxx X. Xxxxx
entered into an amended and restated employment agreement with Citizens
Financial Services, Inc. (the “Company”) and First Citizens National Bank (the
“Bank”) effective December 31, 2008 (the “Employment Agreement”);
and
WHEREAS, the Boards of
Directors of the Company and the Bank resolved to amend the Employment Agreement
effective March 1, 2010, to clarify the terms of Mr. Black’s health insurance
coverage in the event of a change in control.
NOW, THEREFORE, Mr. Black, the
Bank and the Company hereby agree to amend the Employment Agreement as
follows:
Effective
March 1, 2010, Sections 13(b) and 13(c) of the Employment Agreement shall be
amended to extend Mr. Black’s insurance coverage in the event of a change in
control from one (1) year to eighteen (18) months by replacing the reference to
“one (1) year” of continued health, life and long-term disability insurance
coverage with “eighteen (18) months”.
IN WITNESS WHEREOF, the parties have duly executed and delivered this Amendment to the Employment Agreement as of March 16, 2010.
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ATTEST:
By: /s/
Xxxx Xxxxx Xxxx
By: Xxxx Xxxxx Xxxx
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CITIZENS FINANCIAL SERVICES,
INC.
By: /s/ R.
Xxxxxx Xxxxxxxx
By: R. Xxxxxx Xxxxxxxx
Chairman of the Board of Directors
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ATTEST:
By: /s/
Xxxx Xxxxx Xxxx
By: Xxxx Xxxxx Xxxx
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FIRST CITIZENS NATIONAL
BANK
By: /s/ R.
Xxxxxx Xxxxxxxx
By: R. Xxxxxx Xxxxxxxx
Chairman of the Board of Directors
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ATTEST:
By: /s/
Xxxx Xxxxx Xxxx
By: Xxxx Xxxxx Xxxx
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By: /s/
Xxxxxxx X. Xxxxx
By: Xxxxxxx
X. Xxxxx
Chief
Executive Officer and President
of
the Company and the Bank
(Executive)
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