FIRST CITIZENS NATIONAL BANK SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

The purpose of the Plan is to recognize those senior officers of the Bank who have contributed substantially to the success of the Bank and to encourage such officers to remain as employees of the Bank.  This Plan shall be considered an unfunded arrangement maintained primarily to provide supplemental retirement benefits for participating Executives, and to be considered a non-qualified benefit plan for purposes of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

The following words and phrases used in this Plan have the meanings specified.

“Accrual Balance” means as of any date, the liability that should be accrued by the Bank under generally accepted accounting principles (“GAAP”) to reflect the Bank’s obligation to each Executive who is  participating in the Plan, without regard to whether such amount is actually accrued as of such date.

“Actuarial (Actuarially) Equivalent” means a benefit of equivalent value to the normal form of benefit determined by generally accepted actuarial principles. An actuarially equivalent lump sum shall be calculated using the Discount Rate in effect on the determination date.

“Beneficiary” means each designated person, or the estate of a deceased Executive, entitled to benefits, if any, upon the death of the Executive, determined according to Article 4.

“Benefit Percentage”  means the percentage of Final Average Pay specified for each Executive.  The Benefit Percentage of each initial participant is set forth in Appendix A.

“Change in Control” shall mean a change in control as defined in Code Section 409A and rules, regulations, and guidance of general application thereunder issued by the Department of the Treasury, including:

a)            Change in ownership : A change in ownership of the Holding Company occurs on the date any one person or group of persons accumulates ownership of the Holding Company’s stock constituting more than 50% of the total fair market value or total voting power of the Holding Company’s stock,

(b)            Change in effective control : A change in effective control occurs when either (i) any one person or more than one person acting as a group acquires within a 12-month period ownership of stock of the Holding Company possessing 35% or more of the total voting power of the Holding Company’s stock, or (ii) a majority of the Holding Company’s Board of Directors is replaced during any 12-month period by Directors whose appointment or election is not endorsed in advance by a majority of the Holding Company’s Board of Directors, or

(c)            Change in ownership of a substantial portion of assets : A change in the ownership of a substantial portion of the Holding Company’s assets occurs if in a 12 month period any one person or more than one person acting as a group acquires assets from the Holding Company having a total gross fair market value equal to or exceeding 40% of the total gross fair market value of all of the assets of the Holding Company immediately before the acquisition or acquisitions. For this purpose, “gross fair market value” means the value of the Holding Company’s assets, or the value of the assets being disposed of, determined without regard to any liabilities associated with the assets.

“Code” means the Internal Revenue Code of 1986, as amended, and rules, regulations, and guidance of general application issued thereunder by the Department of the Treasury.

“Disability” means that an Executive is either:

(a)           Unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or

(b)           By reason of any medically determinable physical or mental impairment (which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months) receiving income replacement benefits for a period of three (3) or more months under a disability and health plan covering employees of the Bank.

“Discount Rate” means the rate used by the Plan Administrator for determining an Executive’s Accrual Balance. If required by its outside auditors, the Plan Administrator may adjust the Discount Rate to maintain the rate within reasonable standards according to GAAP.

“Early Termination” means Separation from Service before Normal Retirement Age for reasons other than death, Disability, Termination for Cause, or after a Change in Control.

“Effective Date” means January 1, 2008.

“Executive” means an officer of the Bank who is designated as a participant in the Plan by the Compensation Committee of the Board of Directors of the Bank.  The initial participants are identified in Appendix A to the Plan.

“Final Average Pay” means the average of an Executive’s annual cash compensation (including salary, bonus and other cash items) during the three completed calendar years preceding the Executive’s termination of employment.

  “Holding Company”  means Citizens Financial Services, Inc.

“Normal Retirement Age” means the Executive’s 62nd birthday.

“Plan” means this First Citizens National Bank Supplemental Executive Retirement Plan

“Plan Administrator” or “Administrator” means the plan administrator described in Article 8.

  “Plan Year” means a twelve-month period commencing on January 1 and ending on December 31 of each year. The initial Plan Year shall commence on the Effective Date.

“Separation from Service” means an Executive’s service (as an executive and/or independent contractor to the Bank and any member of a controlled group, as defined in Code Section 414), terminates for any reason, other than because of a leave of absence approved by the Bank or the Executive’s death.

 “Termination for Cause” and “Cause”  shall mean (i) the willful failure by an Executive to substantially perform his duties hereunder (other than a failure resulting from the Executive’s incapacity because of physical or mental illness, after notice from the Bank and a failure to cure such violation within thirty (30) days of said notice; (ii) the willful engaging by an Executive in misconduct injurious to the Bank; (iii) the dishonesty or gross negligence of the Executive in the performance of his duties; (iv) the breach of the Executive’s fiduciary duty involving personal profit; (v) 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; (vi) conduct on the part of Executive which brings public discredit to the Bank; (vii) unlawful discrimination by the Executive, including harassment against Bank’s employees, customers, business associates, contractors, or visitors; (viii) theft or abuse by the Executive of the Bank’s property or the property of the Bank’s customers, employees, contractors, vendors, or business associates; (ix) failure of the Executive to follow the good faith lawful instructions of the Board of Directors of the Bank with respect to its operations, after notice from the Bank and a failure to cure such violation within thirty (30) days of said notice; (x) the direction or recommendation of a state or federal bank regulatory authority to remove the Executive’s position with the Bank as identified herein;  (xi) 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; (xii) 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; (xiii) any act of fraud, misappropriation or personal dishonesty; (xv) any act insubordination; (xiv) 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 Bank or any representative of the Bank in connection with the Executive’s employment with the Bank; (xvi) the existence of any material conflict between the interests of Bank and the Executive that is not disclosed in writing by the Executive to the Bank and approved in writing by the Board of Directors of Bank; or (xvii) the Executive takes action that is clearly contrary to the best interest of the Bank.

“Year of Vesting Service” means each 12-month period in which the Executive completes 1,000 or more hours of service in the employ of the Bank, beginning on the Effective Date.

2.1            Normal Retirement Benefit . Unless a Separation from Service or a Change in Control occurs before Normal Retirement Age, upon an Executive’s termination of employment on or after attaining Normal Retirement Age the Bank shall pay to the Executive the benefit described in this Section 2.1(a) instead of any other benefit under this Plan

(a)            Amount of Normal Retirement Benefit . The annual Normal Retirement benefit is the product of the Executive’s Benefit Percentage and his Final Average Pay.

(b)            Payment of Benefit . Subject to Section 2.6, the Bank shall pay the annual benefit to the Executive in quarterly installments beginning on the first business day of the first calendar quarter beginning after the Executive’s termination of employment. The Normal Retirement benefit as provided in Section 2.1(a) above, shall be paid to the Executive (or in the event of the Executive’s death, to the Executive’s Beneficiary) for a period of 15 years (60 quarterly payments).

(c)            Alternative Forms of Payment . Subject to Section 2.6, Executive may elect to receive his Normal Retirement Benefit payable under this Plan in an Actuarially Equivalent Lump Sum, provided he elects to do so upon his initial designation as a Participant or as otherwise permitted by Code Section 409A.

2.2            Early Termination Benefit . Upon Early Termination, the Bank shall pay to the Executive the benefit described in this Section 2.2(a) instead of any other benefit under this Plan.

(a)            Amount of Benefit . An Executive’s benefit upon Early Termination shall be the Executive’s vested Accrual Balance as of the end of the month preceding his Early Termination.

(b)            Payment of Benefit . Subject to Section 2.4, an Executive’s Early Termination benefit shall be paid in a lump sum as soon as administratively practicable following the Executive’s termination of employment.  Notwithstanding the foregoing, Executive may elect to receive his Early Termination Benefit payable under this Plan in quarterly installments over a 15-year period, beginning on the first business day of the first calendar quarter beginning after the Executive’s termination of employment, provided he elects to do so upon his initial designation as a Participant or as otherwise permitted by Code Section 409A.  For purposes of the foregoing installment payment election, the quarterly payment shall be calculated as a fixed amount which amortizes the Accrual Balance at termination of employment in equal quarterly installments of principal and interest over the applicable period.  For purposes of determining the amount of the quarterly payment,  the interest rate used shall be the Discount Rate in effect at the Executive’s Early Termination.

(c)            Vesting of Accrual Balance . The vested amount of an Executive’s Accrual Balance shall be determined on the basis of the Executive’s number of Years of Vesting Service according to the following schedule:

Notwithstanding anything in this Plan to the contrary, a Participant’s Accrual Balance shall, for purposes of this Section 2.2, be fully vested if the Participant’s terminates employment by reason of Disability.

2.3            Change in Control Benefit . If a Change in Control occurs after the effective date of an Executive’s participation in the Plan but before the Executive’s Normal Retirement Age and before his Separation from Service, the Bank shall pay to the Executive the benefit described in this Section 2.3 instead of any other benefit under this Plan.

(a)            Amount of Benefit : The benefit under this Section 2.3 is equal to the Normal Retirement benefit under Section 2.1 (determined without regard to the Executive’s age or Years of Service as of the Change in Control Effective date).

(b)            Payment of Benefit : The Bank shall pay the Change in Control benefit under Section 2.3 of this Plan to the Executive that is actuarially equivalent to his benefit calculated under Section 2.1 lump sum within ten (10) days after the Change in Control. If the Executive receives the benefit under this Section 2.3 because of the occurrence of a Change in Control, the Executive shall not be entitled to claim additional benefits under Section 2.3 if an additional Change in Control occurs thereafter.

2.4            Savings Clause Relating to Compliance with Code Section 409A . Despite any contrary provision of this Plan, if when the Executive’s employment terminates the Executive is a Specified Employee, as defined in Code Section 409A, and if any payments under Article 2 of this