EMPLOYMENT AGREEMENT
AGREEMENT ("Agreement"), dated April 16, 1996 by and between
CITIZENS FINANCIAL SERVICES, INC. (the "Corporation"), and Xxxxxxx
X. Xxxxxx ("Executive").
WITNESSETH THAT:
WHEREAS, Executive presently is the duly elected and acting
President of the Corporation and First Citizens National Bank (the
"Bank"); and
WHEREAS, the Corporation recognizes the valuable services that
Executive has rendered and desires to be assured that Executive
will continue his active participation in the business of the
Corporation and the Bank; and
WHEREAS, the Corporation and Executive desire to set forth the
benefits to which Executive would be entitled in the event that
Executive's employment by the Corporation is terminated, as outlined
herein;
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Corporation and Executive hereby
agree as follows:
1. Termination.
The Executive's employment hereunder may be terminated without
any breach of the Agreement only under the following circumstances.
(a) Death. The Executive's employment shall be
terminated upon his death.
(b) Retirement. Corporation may terminate the
Executive's employment upon his retirement in accordance with
the Corporation's retirement policies, including early
retirement, generally applicable to its salaried employees,
provided, however, that after Executive attains the age of
sixty-five (65) this Agreement may be extended annually on a
year-to-year basis by written consent of both parties.
(c) Cause. Termination by the Corporation of
Executive's employment for "Cause" shall mean termination
because of misconduct, breach of fiduciary duty involving
personal profit, intentional failure to perform stated duties,
willful violation of any law, rule, or regulation (other than
traffic violations or similar offenses), or final cease-and-desist
order, or material breach of any provision of any
employment contract between the Corporation and the Executive,
including this Agreement, the willful engaging of the
Executive in misconduct injurious to Corporation, monetarily
or otherwise, or the commission of any act involving moral
turpitude or other conduct on the part of Executive which
brings public discredit to Corporation or Bank. For purposes
of this paragraph, no act or failure to act, on Executive's
part shall be considered "willful" unless done, or omitted to
be done, by Executive not in good faith and without reasonable
belief that Executive's action or omission was in the best
interest of the Corporation. Notwithstanding the foregoing,
Executive shall not be deemed to have been terminated for
Cause unless and until there shall have been delivered to
Executive a copy of a Notice of Termination, after reasonable
notice to Executive and an opportunity for Executive, together
with Executive's counsel, to be heard before the Board of
Directors of the Corporation, and a finding that in the good
faith opinion of such Board, Executive was guilty of conduct
set forth above in the first sentence of this Section 1 (c),
such finding specifying the particulars thereof in detail.
(d) Termination by Executive for Good Reason. Termination by
Executive of his employment for "Good Reason"
shall mean termination by Executive based on a change in
control of the Corporation. For purposes of the Agreement, a
"change in control" of Corporation shall mean a change in
control of the nature that would be required to be reported in
response to item 6(e) of Schedule 14A promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act') or any successor thereto; provided that, without
limitation, such a change in control shall be deemed to have
occurred if any person (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act), other than a person or persons
who are directors or offices of the Corporation or the 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 representing twenty-five percent (25%) or
more of the combined voting power of Corporation's then
outstanding securities; or during any period of two (2) or
more consecutive years, individuals who at the beginning of
such period constitute the Board of Directors of Corporation
cease for any reason to constitute at least a majority thereof
unless the election, or the nomination for election by
Corporation's stockholders, or each new director was approved
by a vote of at least two-thirds (2/3) of the directors then
still in office who were directors at the beginning of the
period.
(i) Executive may terminate his employment with
Corporation within twenty four (24) months of a change in
control of Corporation if the Corporation assigns to
Executive, without Executive's express written consent,
any duties inconsistent with Executive's positions,
duties, responsibilities and status with the Corporation
immediately prior to a change in control, or changes the
Executive's reporting responsibilities, titles or offices
as in effect immediately prior to a change in control, or
removes the Executive from or fails to re-elect Executive
to any such positions, titles, or offices, except in
connection with the termination of Executive's employment
for Cause, Disability or Retirement or as a result of
Executive's death or by Executive other than for Good
Reason.
(ii) Executive may terminate his employment with
Corporation within twenty four (24) months of a change in
control of Corporation, if the Corporation reduces the
Executive's base salary as in effect on the date of the
change in control or as the same may be increased from
time to time thereafter.
(iii) Executive may terminate his employment
with the Corporation within twenty four (24) months of a
change in control of Corporation, if the Corporation
fails to continue in effect any benefit or compensation
plan, stock ownership plan, stock purchase plan, stock
option plan, life insurance plan, health-and-accident
plan, disability plan or any other benefit plan in which
Executive is participating at the time of a change in
control of Corporation, the Corporation takes any action
which would adversely affect Executive's participation in
or materially reduce Executive's benefits under any of
such plan or the Corporation deprives Executive of any
material fringe benefit enjoyed by Executive at the time
of a change in control of Corporation.
(iv) Subsequent to a change in control of
Corporation or Bank, any purported termination of
Executive's employment which is not effected pursuant to
a Notice of Termination satisfying the requirements of
paragraph (2) below (and, if applicable, paragraph 1(c)
above); and for purposes of this Agreement, no such
purported termination shall be effective.
(e) Disability. The Executive's employment may be
terminated by the Executive upon his disability as defined
herein, provided that the Executive shall provide prior
written notice, if reasonably possible, of such disability
termination at least fourteen (14) days in advance of the
planned termination date and, if requested by the Corporation,
shall furnish Corporation with a written statement from a
qualified doctor to such effect and provided, further, that at
Corporation's request, the Executive shall have concurred with
the conclusion of the Executive's doctor with respect to the
disability.
The Executive's employment may be terminated by the
Corporation upon Executive's disability, as set forth below.
"Disability" shall mean the Executive's inability to
perform the essential functions of his job with or without a
reasonable accommodation for a period longer than the
following: (1) after Executive has exhausted all accumulated
sick leave days as a result of Executive's absence from his
duties due to physical or mental illness, unless within thirty
(30) days after Notice of Termination (as hereinafter defined)
is given following such absence, Executive shall have returned
to the full time performance of his duties; or (2) after
Executive's absence from his duties on a full time basis for
ninety (90) consecutive business days with such absence being
due to Executive's incapacity as a result of physical or
mental illness; unless within thirty (30) days after Notice of
Termination (as hereinafter defined) is given following such
absence, Executive shall have returned to the full time
performance of his duties.
2. Notice of Termination.
Any purported termination by the Corporation to paragraphs
1(b), (c) or (e) above or by Executive pursuant to paragraph (d)
above shall be communicated by a written "Notice of Termination" to
the other party hereto. For purposes of this Agreement, a "Notice
of Termination" shall mean a notice which shall indicate the
specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment
under the provision so indicated.
(a) Date of Termination. "Date of Termination" shall
mean:
(i) if Executive's employment is terminated for
Disability, thirty (30) days after Notice of Termination
is given provided that Executive shall not have returned
to the performance of Executive's duties on a full-time
basis during such thirty (30) day period'
(ii) if Executive's employment is terminated
pursuant to paragraph (c) above, the date specified in
the Notice of Termination; and
(iii) if Executive's employment is terminated
for any other reason, the date on which a Notice of
Termination is given or as specified in such Notice;
provided such date shall not be less than thirty (30)
days nor more than ninety (90) days after such Notice of
Termination is given.
3. Benefits Upon Termination.
(a) If Executive's employment by the Corporation shall
be terminated by the Corporation for any reason other than the
Executive's Retirement, Disability or Death as described in
paragraph 1(a), (b) or (e) or for cause as described in
paragraph 1(c), the Executive or his designee as defined in
Section 7(b) shall be entitled to receive from Corporation,
within thirty (30) business days of the Date of Termination,
a lump-sum payment in cash in an amount equal to one hundred
percent (100%) of the Base Amount (as defined herein) of the
Executive.
In addition, the Executive shall be entitled to remain a
participant in any health and accident, disability and life
insurance plan of Corporation or Bank in which Executive was
a participant at the Date of Termination, provided such
continued participation does not violate the provisions or
conditions of such plan or policies or does not violate any
state or federal law, rule or regulation. If Executive's
participation in such plans amounts to a violation of the
plans or policies or of state or federal laws or regulations,
the Corporation shall pay the Executive on a monthly basis
those sums equal to premiums which the Corporation would have
paid on behalf of the Executive if he had been permitted to
continue participating in the applicable health and accident,
disability and/or life insurance plan. These payments shall
terminate on the twelve-month anniversary of the date of
Termination, or the first date of employment by the Executive
in a full-time position with any other company, whichever
occurs first.
Executive shall be entitled to only those pension and
profit sharing benefits as shall have accrued prior to the
Date of Termination.
In addition to the amounts listed above, if a Change in
Control occurs as defined in paragraph 1(d) above within
twelve months of the termination of the Executive, the
Corporation shall pay to Executive an additional lump-sum cash
payment of seventy-five percent (75%) of the Base Amount.
This sum shall be paid within thirty (30) days of the Change
in Control.
(b) If Executive's employment by the Corporation shall
be terminated due to a Change in Control of the Corporation or
if Executive terminates his employment for Good Reason as
defined in 1(d), then Executive will receive within 30
business days of the Date of Termination, a lump-sum benefit
in cash equal to one hundred seventy-five percent (175%) of
the Base Amount. In addition, Executive shall be entitled to
remain a participant in any health and accident, disability
and life insurance plan of employer in which Executive was a
participant at the Date of Termination provided such
continuation as a plan participant does not violate provisions
or conditions of such plan or policies or does not violate any
federal or state law, rule or regulation.
If Executive's participation in such plans amounts to
violation of the plans or policies or of state or federal laws
or regulations, the Corporation shall pay Executive, on a
monthly basis, those sums equal to premiums which the
Corporation would have paid on behalf of the Executive if he
had been permitted to continue participating in the applicable
health and accident, disability and/or life insurance plan.
These payments shall terminate on the twelve-month anniversary
of the date of termination, or the first date of employment by
the Executive in a full-time position for any other company,
whichever occurs first.
(c) In the event the lump-sum severance payment made
pursuant to this Section 3 hereof, either alone or together
with other payments which the Executive has the right to
receive from Corporation, would constitute a Parachute
Payment, such lump-sum severance payment shall be reduced to
the largest amount as will result in no portion of the lump-sum
severance payment under Section 3 hereof being subject to
the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1954, as amended (the "Code"). The determination of
any reduction in the lump-sum severance payment under Section
3 hereof pursuant to the foregoing provision shall be made
independent counsel to the Corporation in consultation with
the Independent Certified Public Accountants of the
Corporation.
(d) The Corporation and the Executive recognize that
this Agreement may have to be amended in order to reflect any
future regulations promulgated under Section 280G of the Code
to assure that no Excess Parachute Payments would be paid to
the Executive by the Corporation upon termination of
employment pursuant to the Section 3, and hereby agree in good
faith negotiate such an amendment and to not unreasonably
withhold consent thereto upon the promulgation of any such
regulations.
4. Base Amount, Parachute Payments and Present Value.
"Base Amount", "Parachute Payments", "Excess Parachute
Payments", and "Present Value" shall each have the meanings
attributed to them under the Code and any regulations which may be
promulgated after the date hereof as necessary or appropriate to
carry out the purposes of this section.
5. Relocation Expenses.
In the event Executive is transferred by or at the request of
Corporation at any time during the term of this Agreement to a new
principle place of work, Corporation shall reimburse Executive:
(a) All reasonable expenses paid or incurred for the
moving of the personal effects and household goods of
Executive and Executive's family to Executive's new residence.
(b) Any reasonable loss incurred by Executive in the
sale of Executive's residence at Executive's home in Mansfield,
which loss shall be determined by the long term capital loss
incurred by Executive in the sale of his residence for federal
income tax purposes under the Code.
6. Mitigation.
Executive shall not be required to mitigate the amount of any
payment provided for in Section 3 hereof by seeking other
employment or otherwise, nor, with the exception of those
limitations regarding payments for health and accident disability
life insurance policies found in Section 3(a) and (b) above, shall
the amount of any payment provided for in Section 3 be reduced by
any compensation earned by Executive as a result of employment by
another employer after the Date of Termination, or otherwise.
7. Successors; Binding Agreement.
(a) The Corporation 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 Corporation, by agreement in form and substance
satisfactory to Executive, to expressly assume and agree to
perform this Agreement in the same manner and to the same
extent that Corporation would be required to perform it if no
such succession had taken place. Failure of the Corporation
to obtain such agreement prior to the effectiveness of any
such succession shall be a breach of this Agreement and shall
entitle Executive to compensation from the Corporation in the
same amount and on the same terms as Executive would be
entitled hereunder if Executive terminated his employment for
Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. As used in
the Agreement, "Corporation" shall mean the Corporation as
hereinbefore defined and any successor to its business and/or
assets as aforesaid which executes and delivers the Agreement
provided for in this paragraph 7 or which otherwise becomes
bound by all other terms and provisions of this Agreement by
operation of law.
(b) This Agreement shall inure to the benefit of and be
enforceable by Executive's personal and legal representatives,
executors, administrators, successors, heirs, distributees,
devisees and legatees. If Executive should die while any
amount would still be payable to Executive hereunder if
Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to Executive's devisee, legatee or
other designee or, if there be no such person, to Executive's
estate.
8. Notice. For purposes of this Agreement, notices and all
other communications provided for in this Agreement shall be in
writing and shall be deemed to have been duly given when delivered
or mailed by Unites States certified or registered mail, return
receipt requested, postage prepaid, addressed to the respective
addresses set forth below:
To Corporation: Chairman of the Board
Citizens Financial Services, Inc.
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
To Executive: Xxxxxxx X. Xxxxxx
00 Xxxxxxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
9. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by Executive and such
officer as may be specifically designated by the Board of Directors
of the Corporation to sign on behalf of the Corporation. 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 shall be deemed a
waiver of similar or dissimilar provisions or conditions at the
same or at any prior to, or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by any party
which are not expressly set forth in the Agreement; provided,
however, that this Agreement shall not supersede or in any way
limit the rights, duties or obligations the Executive may have
under any other written agreement with the Corporation. The
validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the Commonwealth of
Pennsylvania.
10. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
unenforceability of any other provision of this Agreement, which
shall remain in full force and effect.
11. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original
but all of which together will constitute one and the same
instrument.
12. Arbitration. Any dispute or controversy arising under
or in connection with this Agreement shall be settled exclusively
by arbitration in Mansfield, Pennsylvania, or at any other mutually
acceptable location in accordance with the rules of the American
Arbitration Association then in effect. Judgement may be entered
on the arbitrator's award in any court having jurisdiction.
13. Regulatory and Other Proceedings. The provisions of this
Section 13 shall control as to the continuing rights and
obligations under this Agreement for as long as they are required
to be included in employment contracts for officers of an
institution insured by the Federal Deposit Insurance Corporation
("FDIC"), and so long as the Bank is an insured institution.
(a) The Executive is suspended and/or temporarily
prohibited from participating in the conduct of the Bank's
affairs by a Notice served under 12 U.S.C.S. 1818(e)(4) and
(g)(1)[the Federal Deposit Insurance Act of September 21,
1950, Chapter 967], the Corporation's obligations under this
Agreement shall be suspended as of the date of service, unless
stayed by appropriate proceedings. If the charges in the
notice are dismissed, the Corporation shall pay the Executive
all of the compensation withheld while its obligations
hereunder were suspended and reinstate its obligations.
(b) If the Executive is removed and/or permanently
prohibited from participating in the conduct of the Bank's
affairs by any order issued under 12 U.S.C.S. 1818(e)(1)(2)(3)
and (g)(1)[the Federal Deposit Insurance Act of September 21,
1950, Chapter 967] all obligations of the Corporation under
this Agreement shall terminate as of the effective date of the
order, provided that vested rights of the contracting parties
shall not be affected.
(c) If the Bank becomes in default (as defined in
Section 401 (d) of the National Housing Act), or any other
similar United States Statute regulating national banks, all
obligations under this Agreement shall terminate as of the
date of default, provided that this paragraph shall not affect
any vested rights of the contracting parties.
(d) All obligations under this Agreement shall be
terminated, except to the extent determined that continuation
thereof is necessary for the continued operation of the Bank,
by the FDIC at the time the FDIC enters into an agreement to
provide assistance to or on behalf of the Bank, under the
authority of any United States Statue or regulations adopted
pursuant thereto, at the time such Board of its principal
supervisory agent approves a supervisory merger to resolve
problems related to the operation of Bank or when Bank is
determined by the Board to be in an unsafe or unsound
condition, provided that any rights of the parties that have
already vested shall not be affected by such action.
IN WITNESS WHEREOF, this Agreement has been executed as of the
date first above written.
ATTEST: CITIZENS FINANCIAL SERVICES, INC.
/s/ Xxxxx X. Xxxxxxx By /s/ Xxxxxx Xxxxxx
Secretary Xxxxxx Xxxxxx, Chairman of the
Board of Directors
WITNESS:
/s/ Xxxxxxx Xxx Xxxxx By /s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx, President
EXHIBIT "A"
[Presently, First Citizens does not have a policy regarding
termination of employment for employees with long-term
disabilities; however, one is being considered. Any termination
provision will incorporate FMLA requirements if applicable, and
First Citizens short and long-term disability plans. Decisions
need to be made regarding employment return to work cutoff as it
relates to disability, benefits accrual during disability and
whether benefits will also terminate if employment is terminated
due to long-term disability. Disability "retirement" should be
considered. The absolute minimum time frame should be six months.
Many employers use six months to one year as the cutoff. To my
knowledge, none have extended the cutoff beyond two years.]
