EXHIBIT 99.1
EXECUTIVE EMPLOYMENT
AGREEMENT
This
EXECUTIVE EMPLOYMENT AGREEMENT (this “ Agreement
”) is made as of May 31, 2005 between CITIZENS FINANCIAL
CORPORATION, a Kentucky corporation (“ Employer
”), and MICHAEL S. WILLIAMS, CLU, an individual currently
residing in Duncan, South Carolina (“ Employee
”).
RECITALS
Employer
desires to employ Employee for the Employer Group, and Employee
wishes to accept such employment, upon the terms and conditions set
forth in this Agreement.
AGREEMENT
The
parties, intending to be legally bound, agree as
follows:
1.
DEFINITIONS
For
the purposes of this Agreement, the following terms have the
meanings specified or referred to in this
Section 1.
“
Agreement ” — this Executive Employment
Agreement, as amended from time to time.
“
Benefits ” — as defined in Section
3.3.
“
Boards of Directors ” — the boards of
directors of the constituents of the Employer Group.
“
Bonuses ” — as defined in Section
3.2.
“
Confidential Information ” — any and
all:
(a)
trade secrets concerning the business and affairs of the Employer
Group, including without limitation products, past, current, and
planned research and development, current and planned distribution
methods and processes, customer lists, current and anticipated
customer requirements, market studies, business plans, computer
software and programs (including object code and source code), and
any other information, however documented, that is a trade secret
within the meaning of the Uniform Trade Secrets Act, KRS
365.880-.900;
(b)
information concerning the business and affairs of the Employer
Group including without limitation historical internal financial
statements, financial projections and budgets, historical and
projected sales data, the names and backgrounds of key personnel,
and personnel training and techniques and materials, however
documented; and
(c)
notes, analyses, compilations, studies, summaries, and other
material prepared by or for the Employer Group containing or based,
in whole or in part, on any information included in the
foregoing.
“
disability ” — as defined in Section
6.2.
“
Effective Date ” — May 31,
2005.
“
Employee ” — as defined in the heading of
this Agreement.
“
Employee Invention ” — any idea,
invention, technique, modification, process, or improvement
(whether patentable or not) and any work of authorship (whether or
not copyright protection may be obtained for it) created, conceived
or developed by Employee, either solely or in conjunction with
others, during the Employment Period, or a period that includes a
portion of the Employment Period, that relates in any way to, or is
useful in any manner in, the business then being conducted or
proposed to be conducted by the Employer Group, and any such item
created by Employee, either solely or in conjunction with others,
following termination of Employee’s employment with Employer,
that is based upon or uses Confidential Information.
“
Employer ” — as defined in the heading of
this Agreement.
“
Employer Group ” — Employer and the
Insurance Subsidiaries.
“
Employment Period ” — the actual term of
Employee’s employment by Employer, beginning on the Effective
Date and terminating as provided herein.
“
for cause ” — as defined in Section
6.3.
“
for convenience of Employer ” — as
defined in Section 6.5.
“
for good reason ” — as defined in Section
6.4.
“
Insurance Subsidiaries ” — Citizens
Security Life Insurance Company, United Liberty Life Insurance
Company and Citizens Insurance Company.
“
Nominal Expiration Date ” — as defined in
Section 2.2.
“
person ” — any individual, corporation
(including any non-profit corporation), general or limited
partnership, limited liability company, joint venture, estate,
trust, association, organization or governmental body.
“
Post-Employment Limitation Period ” — as
defined in Section 8.3.
“
President of Employer ” — Darrell R.
Wells and his successors in office as president of
Employer.
“
President of the Insurance Subsidiaries ”
— Joseph M. Bost and his successors in office as president of
the Insurance Subsidiaries.
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“
Proprietary Items ” — as defined in
Section 7.2.
“
Salary — as defined in Section 3.1.
2.
EMPLOYMENT TERMS AND DUTIES
2.1
Employment . Employer hereby employs Employee, and Employee
hereby accepts employment by Employer, upon the terms and
conditions set forth in this Agreement.
2.2
Term . The term of Employee’s employment under this
Agreement will begin on the Effective Date and shall terminate on
May 31, 2006 (the “Nominal Expiration Date”). The
Nominal Expiration Date shall be automatically extended for
successive periods of one year each, but in no event beyond May 31,
2011, unless either party shall give at least thirty (30) days
notice of termination of this Agreement as of the original or last
extended Nominal Expiration Date. This Agreement is subject to
earlier termination as provided in Section 6.
2.3
Duties . Employee will have such offices and duties for the
Employer Group as are assigned or delegated to Employee by the
President of Employer or the Boards of Directors of the Employer
Group, and will initially serve as Vice President of Marketing for
Life & Health Products of Employer and as Senior Vice President
of Marketing for Life & Health Products of the Insurance
Subsidiaries. Employee will devote his entire business time,
attention, skill and energy exclusively to the business of the
Employer Group, will use his best efforts to promote the success of
the Employer Group’s business, and will cooperate fully with
the President of Employer, the President of the Insurance
Subsidiaries and the Boards of Directors of the Employer Group in
the advancement of the best interests of the Employer Group.
Nothing in this Section 2.3, however, will prevent Employee from
engaging in additional activities in connection with personal
investments and community affairs that are not inconsistent with
Employee’s duties under this Agreement.
3.
COMPENSATION
3.1
Salary . During the Employment Period, Employer will pay
Employee a salary (the “ Salary ”), which will
be payable bi-weekly less withholding according to applicable law
and Employer’s customary payroll practices. For the period
from the Effective Date for the remainder of calendar year 2005,
the Salary shall be at the annual rate of $100,000. For calendar
year 2006, the Salary shall be at the annual rate of $125,000. For
periods after calendar year 2006, the Salary shall be at the annual
rate of $125,000 unless renegotiated.
3.2
Bonuses . Employer will pay the following additional sums to
Employee (“ Bonuses ”), less withholding
according to applicable law and Employer’s customary payroll
practices:
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(a)
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Employer will pay Employee a
one-time guaranteed bonus of $15,000 on the date of payment of the
first installment of the Salary;
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(b)
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Employer will also pay Employee a
one-time guaranteed bonus of $20,000 on April 1, 2006, provided
that:
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(i)
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Employee remains employed by
Employer on or through March 31, 2006; and
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(ii)
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amounts due and payable at any
time under this paragraph (b) shall be offset, dollar-for-dollar,
to the extent of any amounts then or thereafter due and payable
under paragraph (c) following.
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(c)
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During the Employment Period,
Employee shall be eligible to participate in any other bonus plan
established by the Board of Directors of Employer, in its
discretion, that generally covers other senior executives of
Employer.
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3.3
Benefits . Employee and his dependents will, during the
Employment Period, be permitted to participate in all such life
insurance, hospitalization, major medical and dental plans of
Employer that may be in effect from time to time, on the same terms
and conditions under which other senior executives of Employer and
their dependents are eligible under those plans (collectively, the
“ Benefits ”).
4.
FACILITIES AND EXPENSES
4.1
Employee Support and Expense Reimbursements . During the
Employment Period, Employer will furnish Employee suitable office
space, equipment, supplies and such other facilities and personnel
for the performance of Employee’s duties under this
Agreement. Employer will pay on behalf of Employee (or reimburse
Employee for) actual and reasonable expenses incurred by Employee
at the request of, or on behalf of, Employer in the performance of
Employee’s duties pursuant to this Agreement, and in
accordance with Employer’s expense reimbursement policies.
Employee must file expense reports with respect to such expenses in
accordance with Employer’s expense reimbursement
policies.
4.2
Relocation Expenses . During the Employment Period, Employer
will also pay on behalf of Employee (or reimburse Employee for)
actual and reasonable expenses incurred by Employee in relocating
from Duncan to Louisville as follows:
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(a)
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round-trip transportation
expenses for Employee between Louisville and Duncan once per week
for up to six (6) months from the Effective Date prior to
Employee’s relocation to Louisville;
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(b)
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the following costs of selling
Employee’s house in Duncan: any costs to obtain a Broker
Market Analysis; a real estate commission not exceeding the lesser
of six percent (6%) or the usual and customary commission under
local practice to the realtor selected by Employee and any
participating realtor; and other usual and customary seller’s
costs under local practice to the extent approved by
Employer;
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(c)
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round-trip transportation,
lodging and meal expenses for two (2) trips of up to four (4) days
for Employee and his spouse to locate a suitable house in
Louisville; and
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(d)
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costs for moving to Louisville,
including packing, insuring and transporting household goods from
Duncan to Louisville, for servicing appliances, for
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mileage, lodging and meals for
Employee and his family members residing with him and a
non-accountable $1,000 cash allowance for costs associated with new
services, licences, registrations etc.
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5.
VACATIONS AND HOLIDAYS
Employee
will be entitled to paid vacation, personal and sick days in
accordance with the policies of Employer in effect for its senior
executives from time to time. Vacation may be taken by Employee at
such time or times as reasonably chosen by the Employee, on notice
to the President of the Insurance Subsidiaries. Employee will also
be entitled to paid holidays and other paid leave as provided in
Employer’s policies.
6.
TERMINATION
6.1
Events of Termination . Subject to the other provisions of
this Section 6, the Employment Period, the Employee’s Salary,
Bonuses and Benefits, and any and all other rights of Employee
under this Agreement or otherwise as an employee of Employer will
terminate:
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(a)
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on the original or last extended
Nominal Expiration Date;
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(b)
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upon the death of
Employee;
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(c)
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upon the disability of Employee
(as defined in Section 6.2), immediately upon notice from either
party to the other;
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(d)
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for cause (as defined in Section
6.3), immediately upon notice from Employer to Employee, or at such
later time as such notice may specify or at such earlier time as
Employee may then determine;
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(e)
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for good reason (as defined in
Section 6.4), immediately upon notice from Employee to
Employer;
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(f)
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upon the resignation of Employee
other than for good reason, upon not less than two (2) weeks notice
from Employee to Employer or at such earlier time as Employer may
then determine; or
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(g)
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for the convenience of Employer
(as defined in Section 6.5), immediately upon notice from Employer
to Employee, or at such later time as such notice may specify or at
such earlier time as Employee may then determine.
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6.2
Definition of Disability . For purposes of Section 6.1,
Employee will be deemed to have a “ disability ”
if, by reason of a change in his physical or mental condition,
Employee is unable to perform Employee’s duties under this
Agreement for sixty (60) consecutive days, or ninety (90) days
during any twelve month period, as determined in accordance with
this Section 6.2. The disability of Employee will be
determined by a medical doctor selected by written agreement of
Employer and Employee upon the request of either party by notice to
the other. If Employer and Employee cannot agree on the selection
of a medical
5
doctor, each
of them will select a medical doctor and the two medical doctors
will select a third medical doctor who will determine whether
Employee has a disability. The determination of the medical doctor
selected under this Section 6.2 will be binding on both parties.
Employee must submit to a reasonable number of examinations by the
medical doctor making the determination of disability under this
Section 6.2, and Employee hereby authorizes the disclosure and
release to Employer of such determination and all supporting
medical records. If Employee is not legally competent,
Employee’s legal guardian or duly authorized attorney-in-fact
will act in Employee’s stead, under this Section 6.2, for the
purposes of submitting Employee to the examinations, and providing
the authorization of disclosure, required under this Section
6.2.
6.3
Definition of “For Cause .” For purposes of
Section 6.1, the phrase “ for cause ” means:
(a) Employee’s material breach of this Agreement, which
breach continues for a period of ten (10) days after Employer has
given Employee written notice thereof; (b) Employee’s
failure to adhere to any written Employer policy (including without
limitation, its Code of Business Ethics and Conduct and Insider
Trading Policy) if Employee has been given a reasonable opportunity
to comply with such policy or cure his failure to comply (which
reasonable opportunity must be granted during the ten (10) day
period preceding termination of this Agreement); (c) the
appropriation (or attempted appropriation) of a material business
opportunity of the Employer Group, including attempting to secure
or securing any personal profit in connection with any transaction
entered into on behalf of the Employer Group; (d) the
misappropriation (or attempted misappropriation) of any of the
Employer Group’s funds or property; or (e) the
conviction of, the indictment for (or its procedural equivalent),
or the entering of a guilty plea or plea of no contest with respect
to, a felony, the equivalent thereof, or a misdemeanor with respect
to which imprisonment is a possible punishment (exc
