Exhibit 99.1
EXECUTIVE
EMPLOYMENT AGREEMENT
THIS AGREEMENT
executed this _ 16 th day of December, 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
Randall E. Black (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 Shumaker Williams,
P.C. and Executive was represented by Ann Pepperman, Esquire, of
McNerney, Page, Vanderlin & 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:
(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.
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
Connelly Real Estate Inc., subject to any future review for
compliance with any regulatory requirements.
4.
COMPENSATION/ANNUAL DIRECT
SALARY . As compensation
for services rendered the Corporation and Bank under this
Agreement, the Executive shall be entitled to receive from the
Corporation or Bank an annual direct salary of One Hundred Fifty
Thousand Dollars ($150,000) per year (the “Annual Direct
Salary” and as may be increased in the future), payable in
such intervals, consistent with the Bank’s payroll policy
prorated for any partial employment period. After the year 2004,
the Annual Direct Salary shall be reviewed annually no later than
December 31 of the then calendar year and shall be subject to such
annual change, but not reduced below the Annual Direct Salary in
effect at the time of such review without the Executive’s
written consent, as may be set by the Board of Directors of the
Corporation and Bank taking into account the position and duties of
the Executive and the performance of the Corporation and Bank under
the Executive’s leadership.
5. FRINGE BENEFITS, VACATION, EXPENSES, AND
PERQUISITES .
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(a)
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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 (except in the event the
Bank provides life insurance as set forth in Section 5(g), and the
group 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. The Bank shall apply
for and obtain an individual disability policy to be owned by the
Executive that shall provide Executive with a seventy percent (70%)
of Annual Direct Salary benefit integrated with any social security
benefits at standard rates. The Bank shall pay Executive the amount
of that premium for the individual policy with a standard waiver of
premium clause plus such additional amount (tax allowance) as may
be necessary to compensate the Executive for the payment by
Executive of the applicable federal, state and local income taxes
on the receipt of individual disability insurance premium. The Bank
shall enroll Executive in the current group short-term disability
policy and pay the premiums for the group short-term disability
policy in the event Executive has less than 100 days of accrued
vacation, sick days and personal days. In the event Bank enrolls
Executive in the current short term disability policy, Bank shall
at the end of the applicable term of the short-term disability
policy, evaluate if Executive has less than the requisite 100 days,
and renew said policy in such event. In computing such tax
allowance for the individual long-term disability policy, the
payment to be made under this clause shall be multiplied by the
“gross-up percentage” (“GUP”). The GUP
shall be determined as follows:
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GUP =
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Tax Rate
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1- Tax Rate
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The Tax Rate
for purposes of computing the GUP shall be the highest marginal
federal, state and local income employment-related tax rate
applicable to the Executive in the year in which the payment is
made.
In the event
that the Executive is not insured for the life insurance, long term
disability insurance and short term disability policy, if
applicable, contemplated by subsections (a) and (g) within ninety
(90) days of the execution of this Agreement, Executive may
terminate this Agreement by giving written notice within thirty
(30) days at which time all provisions shall be null and void
ab initio .
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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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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.
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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.
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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.
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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.
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(g) Life
Insurance. The Bank, after this Agreement is executed, shall
apply to acquire a single premium Bank-owned Life Insurance
(“BOLI”) policy or an individual level term thirty (30)
year policy (“Term Life Insurance”) with a death
benefit of up to $1,000,000 at standard rates on Executive’s
life under which the Bank shall be the owner of the policy, but
provide Executive through a Collateral Assignment Agreement, a
death benefit of three times Annual Salary but not to exceed
$1,000,000 in a total death benefit. The Bank may integrate this
death benefit with the existing group life insurance plan and
provide the death benefit in excess of that provided in the group
life insurance plan through the Term Life Insurance, existing BOLI
or BOLI hereinafter acquired. The BOLI shall comply with the
requirements of OCC Bulletin 2004-56 or any subsequent regulatory
guidance. In the event any of the life insurance is not provided
through single premium BOLI, the Bank shall pay the annual premiums
for the Term Life Insurance, thereby maintaining the insurance
coverage contemplated by this subsection throughout the term of
this Agreement.
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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.
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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 the
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.
11. RESTRICTIVE COVENANT .
(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
(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
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(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.
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(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.
(c) Period of Restrictive Covenant.
The provisions of this Section 11
shall be applicable, commencing on the Effective Date of this
Agreement 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 subj
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