EXHIBIT 10 (ii)
CITIZENS FINANCIAL SERVICES, INC.
DIRECTORS' DEFERRED
COMPENSATION PLAN
CITIZENS FINANCIAL SERVICES, INC.
DIRECTORS' DEFERRED COMPENSATION PLAN
ARTICLE I
DEFINITIONS
1.01 Administrator: The administrator appointed to administer the Plan.
1.02 Board: The Board of Directors of Citizens Financial Services, Inc.
1.03 Code: The Internal Revenue Code of 1986, as amended, or as it
may be amended from time to time.
1.04 Compensation: All of a Participant's fees, earnings or compensation
which is actually paid to him/her during the Plan Year.
1.05 Director: An individual who is a member of the Board of Directors
of First Citizens National Bank, as elected in accordance
with the bylaws of the Bank, Citizens Financial Services,
Inc. or any subsidiary and/or affiliated corporation.
1.06 Effective Date: January 1, 1991.
1.07 Employer: First Citizens National Bank, Citizens Financial Services,
Inc. and any subsidiary and/or affiliated corporation
1.08 Participant: A Director participating in the Plan.
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1.09 Plan: The Citizens Financial Services, Inc. Directors' Deferred
Compensation Plan.
1.10 Plan Year: The twelve (12) consecutive month period beginning each
January 1 and ending on December 31.
1.11 Retirement Date: As designated in the Articles of Association or By-Laws
of Citizens Financial Services and affiliated
corporations.
1.12 Valuation Date: The last day of each Plan Year.
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ARTICLE II
ELIGIBILITY
2.01 Only those Directors, as defined in section 1.05, shall be eligible to
participate in this Plan. Those Directors deemed eligible to participate shall
be so notified. A Director electing to participate in this Plan
shall notify the Board by filing a written notice with the Board, in the
form so prescribed by the Board. Such Director shall become a Participant on
the first day of the Plan Year (each January 1) following his/her election to
participate.
2.02 In addition, any individuals who are on the Board of Directors of an
institution or corporation which is absorbed or acquired by the Employer
sponsoring this Plan shall also become Participants in this Plan on the day
that such acquisition becomes effective, subject to approval by the Board.
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ARTICLE III
CONTRIBUTIONS
3.01 The Plan and the benefits thereunder shall be unfunded at all times. A
bookkeeping account shall be established and maintained for each Participant
to which will be credited the fee amounts that each Participant elects to
defer. The benefits payable under the Plan shall be paid by the Employer, when
due under the terms of the Plan, out of its general assets.
3.02 A limit on the amount of deferrals may be established by the Board and
shall be subject to the sole discretion of the Board. Deferrals shall be
limited such that when aggregated with Compensation paid to any one
Participant the generally accepted rules of "reasonableness of compensation"
will be observed. Thus the amount of Compensation paid during the Plan Year
shall not exceed the value of services performed. In determining whether
Compensation is "reasonable" the value of the services rendered in earlier
years shall be taken into consideration.
The test of reasonableness shall be whether the total payments in the current
Plan Year plus all Compensation paid in earlier years represents a reasonable
allowance for all services rendered up to the end of the current Plan Year.
3.03 The Employer shall pay all the administrative expenses of the Plan so long
as the Plan remains in effect.
3.04 A Participant may elect to deter all or a portion of his/her future
monthly Director's fees. Such election must be in writing and filed with the
Administrator prior to the first day of the Plan Year for Directors in office
and prior to the date their term begins for Directors elected to fill
vacancies and who were not Directors on the preceding December 31.
3.05 An election to defer Director's fees shall continue from year to year
unless the Participant terminates it in accordance with section 3.06.
3.06 An election by a Director to defer fees may be terminated by written
request to the Administrator. In the event of such termination the amount
already deferred by the Participant shall not be paid to such Participant
until the occurrence of one of the events enumerated in section 4.03.
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ARTICLE lV
BENEFITS
4.01 The amount of the benefit payable under the Plan shall be equal to that
benefit which can be purchased with the funds in the Participant's account.
4.02 The benefit payable to or on behalf of a Participant as determined under
section 4.01 shall be paid in the form as decided upon by the Board, in its
sole discretion, upon the occurrence of one of the events enumerated in
Section 4.03. Under no circumstances shall a benefit payout period exceed the
life expectancy of the Participant or the Participant and his or her spouse.
4.03 Benefits due under the Plan shall be distributed upon the occurrence of
one of the following events:
(a) the Participant's attainment of his/her Retirement Date;
(b) the disability of the Participant;
(c) the death of the Participant;
(d) the "hostile" acquisition of the Employer by another
institution; or
(e) the termination of the Participant as a Director.
4.04 Benefits payable under the Plan shall be paid by the Employer from the
general assets of the Employer and charged against the Account maintained with
respect to the benefits of such Participant. No payment shall be made to or
with respect to a Participant to the extent that such payment would exceed the
balance then remaining in the Account maintained with respect to the benefits
of such Participant.
4.05 A Participant has the right to designate a Beneficiary to receive any
benefits under the Plan because of the death of the Participant before
retirement and to change that designation from time to time.
4.06 The Plan shall provide a death benefit to the Beneficiary of a
Participant who dies before reaching his/her Retirement Date. Such benefit
shall be equal to the benefit thus accrued under the Plan for such Participant
at the time of death.
4.07 In the event that a Participant incurs a long-term disability, as defined
below, he/she Shall be entitled to a benefit equal to the benefit thus accrued
under the Plan. Disability means the inability to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment that can be expected to last for a continuous period of not less
than twelve (12) months. The permanence and degree of such impairment shall be
supported by medical evidence.
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ARTICLE V
ADMINISTRATION
5.01 The Administrator shall have such powers and duties as are necessary for
the proper administration of the Plan, including, but not limited to, the
power to make decisions with respect to the application and interpretation of
the Plan.
5.02 The Administrator shall be entitled to rely on the advice or opinion of
any consultant, accountant or attorney and such persons may also act in their
respective professional capacities as advisors to the Employer.
5.03 Subject to the limitations contained in the Plan, the Administrator shall
be empowered from time to time, at its discretion, to establish rules for the
transaction of its business and for the administration of the Plan.
5.04 The Administrator shall be responsible for filing any returns, reports or
documents with the various government agencies, such as the Internal Revenue
Service, as required by law or the regulations. In addition, the Administrator
shall also be responsible for providing communication to Participants as
required by law or the regulations.
5.05 On each Valuation Date, or as soon as practicable thereafter, the
Administrator shall furnish to each Participant and retired Participant a
statement reflecting the status of his/her account, including interest
credited thereto, as of the end of such Plan Year.
5.06 Upon the occurrence of one of the events enumerated in section 4.03 of
the Plan, the Administrator shall begin payment of benefits to such
Participant, or such Participant's Beneficiary, from the Employer's general
assets in the form prescribed in section 4.02 until such Participant's account
is exhausted.
5.07 Claims: The Administrator shall make each claim determination in a
uniform and non-discriminatory manner. Within 90 days after the receipt of the
claim by the Administrator, the Administrator shall either grant the claim,
deny the claim or notify the Participant, former Participant, or Beneficiary
(hereafter "Claimant") that special circumstances have required an extension
of time for the processing of the claim; such extension not to exceed 180 days
from the original notice.
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Within 30 days after denial of any benefit under the Plan, the Administrator
shall give to the Claimant written notice by certified mail, directed to his
or her last address of record with the Administrator, of the denial of claim
for benefits. The notice shall set forth the specific reason for such denial,
shall make specific reference to Plan provisions upon which the denial is
based, shall describe any additional material or information necessary for the
Claimant to perfect his or her claim and why such material is necessary, and
shall advise the Claimant that he or she may file a written appeal of the
determination with the Administrator within 60 days after receipt of such
notice. In connection with such appeal, the Claimant or his or her duly
authorized representative may review pertinent documents and submit issues and
comments in writing. Failure of the Claimant to file a written appeal with the
Administrator within the allowable 60-day period shall constitute an
irrevocable consent by the Claimant to the Administrator's decision denying
the benefit claimed, and the Administrator's written notice shall so state.
Within 60 days after the filing of the appeal, the Administrator shall notify
the Claimant either as to the decision on the appeal or that special
circumstances require an extension of time for processing; such extension not
to exceed 120 days from the date of the filing of the appeal. If neither the
decision nor a notice of extension is furnished within the 60-day period, the
claim shall be deemed to be denied on appeal.
All notices under this section shall be written in a manner calculated to be
understood by Claimant.
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ARTICLE VI
AMENDMENT AND TERMINATION
6.01 While it is the intention of the Employer that this Plan should be
permanent and continue to operate, the Employer reserves the right to
terminate the Plan, at any time, at its discretion, subject to the approval
and consent of the Board.
6.02 The Employer reserves the right to amend the Plan agreement at any time,
and from time to time, by appropriate action of the Board and delivery of a
certified copy of the amendment to the Administrator.
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ARTICLE VII
MISCELLANEOUS
7.01 Nothing contained in this Plan shall create, or be construed or
interpreted to create, any new or additional obligations on the part of the
Employer to retain any person in its employ or interfere in any way with the
right of the Employer or the Board to discharge any Director.
7.02 Should any provision of this Plan be determined by a court of competent
jurisdiction to be unlawful or unenforceable, such determination shall not
adversely affect the remaining provisions of this Plan, unless it shall make
impossible the maintenance or operation of the Plan for its intended purpose.
To the extent any provision of this Plan is determined to be unlawful or
unenforceable, this Plan shall be construed to be carried out to the fullest
7.03 This Plan may be executed in any number of counterparts, each of which
shall be considered an original and said counterparts shall constitute by one
and the same instrument,
7.04 The Plan at all times shall be entirely unfunded and no provision shall
at any time be made with respect to segregating any assets of the Employer for
payment of benefits hereunder. No Participant, Beneficiary or any other person
shall have any interest in any particular assets of the Employer by reason of
the right to receive a benefit under the Plan and any such Participant,
Beneficiary or other person shall have only the rights of a general creditor
of the Employer with respect to any rights under the Plan. Nothing contained
in the Plan shall constitute a guarantee by the Employer or any other entity
or person that the assets of the Employer will be sufficient to pay any
benefit hereunder.
7.05 No benefit payable under the Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge prior to actual receipt thereof by the payee. Any attempt to do so
shall be void and the Employer shall not be liable for or subject to the
debts, contract, liabilities or torts of any person entitled to any benefit
under the Plan.
7.06 In the event a Participant ceases to be a Director and becomes a
director, proprietor, officer, partner, employee or otherwise becomes
affiliated with any business that is in competition with the Employer, the
entire balance of such Participant's account, including interest, if directed
by the Board, and in its sole discretion, shall be subject to forfeiture.
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Furthermore, a Participant will achieve a nonforfeitable interest in his or
her benefit only as such benefit becomes payable as determined by the form of
payment designated by the Board (section 4.02). If a terminated Participant
should become a director, proprietor, officer, partner, employee or otherwise
becomes affiliated with any business that is in competition with the Employer,
the balance of such Participant's benefit not yet paid out shall be subject to
forfeiture at the discretion of the Board.
7.07 The benefits of individuals (Directors) who are Participants in the
Directors' Deferred Compensation Plan of First citizens National Bank or the
Deferred Compensation Plan - Directors' Fees of Star Savings and Loan
Association on or before December 31, 1990, shall in no way be subject to
reduction or attachment due to a change in the ownership or ownership makeup
of First Citizens National Bank or Star Savings and Loan Association which is
effective on or after December 31, 1990.
IN WITNESS WHEREOF, the individuals have hereunto set their hands and have
caused this instrument to be executed by the Employer.
CITIZENS FINANCIAL SERVICES, INC.
Employer
December 17, 1991 /s/ Richard E. Wilber
Date Richard E. Wilber
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