UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
For the fiscal year ended December 31, 1995
Commission file number 0-17912
First Citizens Financial Corporation
22 Firstfield Road
Gaithersburg, Maryland 20878
(301) 527-2400
Incorporated in the State of Delaware
IRS Employer Identification Number 52-1638667
Securities registered pursuant to Section 12(b) of the Act: (Not applicable)
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01
par value
Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
Yes [X] No [ ]
The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of March 8, 1996 was $38,560,827.
At March 8, 1996, the Registrant had 2,649,182 shares of $.01 par value common
stock outstanding.
Portions of the definitive proxy statement for the annual meeting of
stockholders to be held on April 19, 1996 are incorporated by reference into
Part III.
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FIRST CITIZENS FINANCIAL CORPORATION 1995 Annual Report AND FORM 10-K Citizens
Savings Bank f.s.b.
Corporate Profile
First Citizens Financial Corporation is the holding company (formed in 1989) for
Citizens Savings Bank f.s.b. ("Citizens" or the "Bank"). At December 31, 1995,
Citizens had total assets of $607.6 million and operated through 16 offices
located in Montgomery and Frederick Counties in Maryland.
The common stock of First Citizens Financial Corporation is traded
over-the-counter on Nasdaq's National Market under the symbol "FCIT". All
depositor accounts of the Bank are insured up to $100,000 by the Savings
Association Insurance Fund, which is administered by the Federal Deposit
Insurance Corporation.
Citizens' message for 1996 is YOUR COMMUNITY BANK. Citizens has been serving its
community since 1929. Our employees actively participate in community projects,
live in your neighborhood and are here to serve you, our customers.
Table of Contents
Financial Highlights ......................... 1
Letter to Stockholders ....................... 2
Your Community Bank .......................... 4
Selected Consolidated Financial and Other Data 8
Management's Discussion and Analysis ......... 10
Consolidated Financial Statements ............ 18
Independent Auditors' Reports ................ 37
Report of Management ......................... 38
Selected Quarterly Financial Data ............ 38
Form 10-K .................................... 39
Investor Services Directory .................. 53
Citizens Savings Bank f.s.b. Locations ....... 53
Board of Directors and Corporate Officers .... 54
<TABLE>
<CAPTION>
Financial Highlights
(Dollars in thousands except per share data)
Year ended December 31,
Increase
1995 1994 (Decrease)
<S> <C> <C> <C>
Net interest income ........................ $ 17,723 $ 17,485 1.4%
(Recovery of) provision for loan losses .... (28) (635) (95.6)
Other income ............................... 2,643 2,547 3.8
Loss from real estate, net ................. 99 1,810 (94.5)
Other expense .............................. 14,202 13,525 5.0
Net income ................................. 4,107 3,635 13.0
Earnings per share of common stock ......... 1.43 1.28 11.7
</TABLE>
<TABLE>
<CAPTION>
At December 31,
Increase
1995 1994 (Decrease)
<S> <C> <C> <C>
Total assets ............................................. $607,429 $558,288 8.8%
Loans receivable, net .................................... 412,603 427,445 (3.5)
Investment securities, net .............................. 119,655 88,436 35.3
Real estate owned, net ................................... 13,269 14,826 (10.5)
Deposits ................................................. 487,097 457,007 6.6
Stockholders' equity ..................................... 38,641 34,036 13.5
Total loan originations .................................. 144,433 179,765 (19.7)
Allowance for losses on loans and real estate ............ 8,435 9,224 (8.6)
Charge-offs, net of recoveries ........................... 1,135 6,994 (83.8)
Book value per common share .............................. 14.69 13.18 11.5
Nonperforming assets, net, as a percentage of total assets 2.5% 4.4% (43.2)
Stockholders' equity as a percentage of total assets ..... 6.4 6.1 4.9
</TABLE>
Stock Traded on Nasdaq-First Citizens Financial Corporation's (the "Company")
common stock trades on Nasdaq's National Market under the symbol "FCIT". As of
December 31, 1995, First Citizens Financial Corporation had approximately 901
stockholders of record and 2,629,576 outstanding shares of common stock. The
Company has not paid any cash dividends to holders of its common stock. It is
not expected that cash dividends will be paid to holders of its common stock in
the foreseeable future. See Notes 9 and 13 to the Consolidated Financial
Statements for restrictions on the payment of dividends by Citizens Savings Bank
f.s.b. to the Company. The following table sets forth the high, low and closing
market price information for the common stock of the Company for the periods
indicated.
Calendar Quarter Ended:
<TABLE>
<CAPTION>
High Low Close
1995:
<S> <C> <C> <C> <C>
December 31. $20.00 $15.50 $19.00
September 30 18.63 17.25 18.50
June 30 .... 18.75 13.18 17.75
March 31 (a) 14.32 10.91 13.58
1994: (a)
December 31. $15.91 $11.36 $11.82
September 30 16.36 11.82 15.91
June 30 .... 12.50 10.39 11.59
March 31 (b) 12.34 9.74 10.17
<FN>
(a) Adjusted for a 10% stock dividend declared April 21, 1995.
(b) Adjusted for a 5% stock dividend declared April 20, 1994.
</FN>
</TABLE>
To Our Stockholders:
For 1995, First Citizens Financial Corporation (the "Company") reported record
net income and year-end stockholders' equity. Net income totaled $4.1 million,
or $1.43 per share, in 1995, an increase of 13% over the prior year's net income
of $3.6 million, or $1.28 per share. Stockholders' equity reached a record high
of $38.6 million at December 31, 1995, up from the $34.0 million reported at
year-end 1994. This was the fourth consecutive year during which stockholders'
equity has increased since the $21.5 million reported at December 31, 1991.
Net interest income before (recoveries of) loan loss provisions of the Company's
principal subsidiary, Citizens Savings Bank f.s.b. (the "Bank") increased
slightly to $17.7 million for 1995 from $17.5 million for 1994. Due to an
increase in deposit rates during 1995, the Bank's net interest margin decreased
to 3.15% in 1995, compared to 3.37% in 1994. However, average interest-earning
assets increased $46.6 million, to $550.4 million at December 31, 1995, from
$503.8 million at December 31, 1994, which more than offset the decline in net
interest margin.
Operating expenses decreased $1.0 million, to $14.3 million in 1995 from $15.3
million in 1994. During 1995, loss from real estate, net, amounted to $99,000 as
compared to net losses of $1.8 million in 1994. This decrease resulted primarily
from a $1.0 million reduction in the provision for losses on real estate owned.
The Bank also recognized net gains of $.7 million from the sale of real estate
owned in 1995 compared to a net loss on the sale of real estate owned of $.1
million in 1994.
The market price of the Company's stock increased to $19.00 per share at
December 31, 1995, from $11.82 per share at December 31, 1994, a 60.7% increase
over the prior year's close, after adjustment for a 10% stock dividend. The
Company paid a 10% stock dividend to stockholders on June 5, 1995, the fourth
stock dividend declared by the Board of Directors over the past several years
and a doubling of the amount of the stock dividend (5%) declared in 1994 and in
prior years.
The Bank experienced continued success in reducing its nonperforming assets, net
(including real estate owned) in 1995, decreasing these assets to $15.1 million,
or 2.5% of total assets, compared to $24.7 million, or 4.4% of total assets, as
of December 31, 1994. Classified assets, net, decreased by approximately 33%, to
$20.6 million in 1995, compared to $30.7 million in 1994. These reductions
reflect management's continued commitment to further reduce the levels of
nonperforming and classified assets.
A year ago we announced to you, our stockholders, our belief that many of the
burdens of the past years are now behind us and that management had begun to
turn its focus toward strengthening the image and position of the Bank in our
community for the future. We set out in 1995 to redefine the Bank's position as
a true "Community Bank", expanding its relationships with local middle-market
companies and placing renewed emphasis on strengthening our banking
relationships through individualized attention, responsiveness to changes in our
customers' needs and targeting new markets for future growth and development. We
committed ourselves to providing the highest level of professional service and
new and innovative products, and rededicated ourselves to the people within our
community and to our stockholders, whose needs and interests remain our foremost
priority and our most valued commodity.
1995 signaled the beginning of this renewed emphasis, and our performance over
the past year reflects well upon the results of this effort. In an era of rapid
change and uncertainty in the financial industry, we remain solidly committed to
the traditional values upon which the Bank and the Company were first founded
while at the same time positioning the Bank to compete in the future. As a
"Community Bank", we believe the value of the services we provide and the
strength of the relationships we establish are enhanced by our proximity and
accessibility to our customer base. While many competitors offer similar
services and products from distant locations, we provide individualized
attention and personal banking relationships from within our market community.
An indication of our belief that we will be better able to serve our customer
base was the addition of several new products such as "the merchant card", "the
MasterMoneyTM direct debit card" and the commercial "Cash Management system".
These new and innovative products not only make banking more convenient but also
generate fee income for the Bank. We have also established quarterly "economic
breakfasts" targeted at local middle-market companies in order to foster the
development of new relationships with these businesses. These meetings feature a
guest speaker who discusses the current economic climate and outlook at
community, regional and national levels. Also symbolic of the new direction
which the Bank began in 1995 was the relocation for our corporate headquarters
to Gaithersburg, Maryland, in March 1995. This relocation increases the
visibility and proximity of the Bank to the commercial enterprises and markets
we have targeted as we continue to develop business and customer relationships.
This new emphasis and direction are the foundations from which we will build our
future. The cornerstone of our efforts will be to continue to focus on expanding
and growing our relationships with local middle-market companies, developing a
broader network of services and products to offer our customers, while
continuing to provide the traditional banking relationships which are the heart
and soul of a "Community Bank".
We will continue to build upon the success we have experienced in these areas to
further enhance the Company's profitability, maximize its value and reward the
faithful support and continued confidence of you, our stockholders.
Very truly yours,
Herbert W. Jorgensen
Chairman of the Board and
Chief Executive Officer
Enos K. Fry
Vice Chairman of the Board
and President
Your Community Bank
Although much has changed at Citizens Savings Bank f.s.b. since we opened our
doors for business in 1929, one thing remains the same -- our fine tradition of
community service.
Community Service [ ]
Our extraordinary growth in assets is a product of our belief that we are
partners with our customers and our community. Our commitment to service extends
beyond Citizens Savings Bank branches and offices. Because of this partnership
with our community, our staff members are active volunteer leaders in a broad
range of civic endeavors. These volunteer services range from business and
economic development to health and youth organizations.
One example of this participation in the business community is our involvement
in the Montgomery Housing Partnership, Inc.'s (MHPI) Naples Manor project. MHPI
was created to work with local county government with the goal of providing
affordable housing in our community. Citizens has not only provided financial
donations to support MHPI but has also opened a line of credit for MHPI designed
to facilitate the purchase of additional housing units.
For over 66 years, we have remained a community bank, committed to helping our
customers achieve their financial goals by providing them with the best possible
savings and lending products while demonstrating our commitment to customer
service on a daily basis. Because we are partners with our community, we make
FIRST CITIZENS FINANCIAL CORPORATION
DIRECTORS RETIREMENT PLAN
WHEREAS, the Board of Directors of First Citizens Financial Corporation
(the "Corporation") previously adopted a retirement plan for directors of the
Corporation and on August 18, 1994; and
WHEREAS, it is the desire of the Board of Directors to amend the plan
dated August 18, 1994, as herein set forth;
NOW THEREFORE, the Board of Directors of the Corporation hereby amends
the Directors Retirement Plan (the "Plan"), adopted on August 18, 1994, as
follows:
1. Eligible Directors. All directors of the Corporation who have served
three (3) years as a director of the Corporation or the Bank shall be eligible
to receive retirement payments under the Plan following a Qualified Retirement
as defined below. To the extent a director who is also a full-time employee of
the Corporation or any direct or indirect subsidiary of the Corporation,
receives a retirement benefit under the Bank's qualified retirement plan (other
than by reason of a 401K plan), the retirement payment under this plan shall be
reduced by an amount equal to the retirement benefit received under such
qualified retirement and plan. A director with less than three (3) years of
service at the time of a Qualified Retirement shall not be eligible to receive
any retirement payment under the Plan. For purposes of the plan, the term
"director" shall include a member of the Board of Directors of the Corporation
or the Bank as well as a director or an advisory director of any successor
entity to the Corporation or the Bank.
2. Qualified Retirement. An eligible director shall be entitled to
receive retirement payments only if such director (i) is not renominated by the
Board of Directors of the Corporation or the Bank by reason of age, as expressed
in the resolution of such Board; (ii) resigns from the Board of Directors of the
Corporation or the Bank by reason of physical or other disability, and such
Board accepts such resignation on that basis; (iii) elects to resign or not seek
reelection as a director of the Corporation or the Bank after attaining the age
of 65 or older; (iv) dies while serving as a director of the Corporation or the
Bank; (v) resigns or retires from the Board of Directors of the Corporation or
the Bank in the event such person's continued service becomes prohibited by
reason of the
<PAGE>
"Interlocks Act" (12 U.S.C. ss. 3201 et seq.); or (vi) ceases to be a director
in connection with a Change in Control (as defined below). The foregoing
constitute "Qualified Retirement" for purposes of the Plan. In the case of a
person serving as a director of both the Corporation and the Bank, such director
shall not be entitled to receive any retirement payments under the Plan unless
such director has ceased to be a director of both the Corporation and Bank by
reason of a Qualified Retirement.
3. Retirement Payments.
(a) Each eligible director shall be entitled to receive as
retirement payments upon a Qualified Retirement an annual payment equal to the
annual retainer in effect at the time of his or her Qualified Retirement for the
highest office which such director held while serving as a member of the Board
of Directors of the Corporation or the Bank. The amount of the annual retainer
shall be determined and fixed by Resolution of the Board of Directors of the
Corporation and the Bank, respectively, as deemed appropriate, or at least
annually on the date of the Annual Stockholders meeting. The annual retainers
for the Corporation and the Bank in effect as of April 20, 1994, are as follows:
Chairman - $25,000.00; Vice Chairman - $17,500.00; all other directors -
$12,500.00. The initial retirement payment shall be made in full within ten (10)
calendar days following a Qualified Retirement and, thereafter, additional
retirement payments shall be made annually on the anniversary date of such
director's Qualified Retirement for the remainder of the Retirement Period (as
defined below). In the case of a director of both the Corporation and the Bank,
the annual retainer which such director shall be entitled to receive under the
Plan shall be an amount equal to the greater of the respective retainers which
such person is entitled to receive. A director of the Bank, but not of the
Corporation, shall have his or her annual retainer based only on the annual
retainer to the members of the Board of Directors of the Bank. A director only
of the Corporation shall have his or her annual retainer be based only on the
amount, if any, paid by the Corporation to its directors. A Qualified Retirement
by reason of death or the death of a director following a Qualified Retirement
but prior to expiration of the Retirement Period (defined below) shall entitle
the director's beneficiary or estate to receive the retirement payments which
otherwise would have been paid to the deceased director.
(b) If an eligible director serves as a director emeritus or
chairman emeritus of the Corporation or the Bank, or both, after a Qualified
Retirement, such director shall also be entitled to receive fifty percent (50%)
of the annual retainer then paid to a director or chairman and fifty percent
(50%) of the regular meeting attendance fee for each meeting of the Board
2
<PAGE>
of Directors actually attended by such director emeritus or
chairman emeritus.
4. Retirement Period. The "Retirement Period" for an eligible Director
with at least three (3) years of service at the time of a Qualified Retirement
shall be equal to the number of full years, plus whole months, of service at the
time of a Qualified Retirement but in no event shall the Retirement Period
exceed ten (10) years. Service as a director of either the Corporation or the
Bank or as a director of both shall be counted in determining the retirement
period but concurrent service as a director of both the Corporation and the Bank
shall count the same period of service. Notwithstanding the foregoing, any
person who was a director on December 12, 1991, and who executed the Supervisory
Agreement, dated December 12, 1991, between the Bank and the Office of Thrift
Supervision ("OTS"), and who otherwise meet the eligibility requirements, shall
be entitled to a Retirement Period of ten (10) years regardless of the length of
service to the Corporation or the Bank.
5. Change in Control. A "Change in Control" shall be
deemed to occur if any person or company acquires "control" of
the Corporation or the Bank within the meaning of 12 C.F.R.
Section 574.4(a).
6. Payment Obligations. Retirement payments under the Plan shall be
obligations only of the Corporation, and not of the Bank. Except as hereinafter
set forth, the Plan is an unfunded obligation of the Corporation, and all
payments hereunder shall be paid from current assets of the Corporation without
any obligation to reserve or escrow funds. Upon the qualified retirement of an
Eligible Director under this Plan, the Corporation shall fund the Retirement
Payment for such eligible director in full on the date of the Qualified
Retirement. However, upon a Change in Control of the Corporation, the
Corporation shall be obligated to fund in full all retirement payments to be
made under the Plan and create an escrow for such payments in a form
satisfactory to, and with an independent escrow agent selected by, a majority of
the persons serving as members of the Board of Directors of the Corporation
immediately prior to the Change in Control.
7. Supervision; Termination; Amendment.
(a) The Plan shall be suspended or become inoperative, as to
any director then serving on the Board of Directors of the Corporation or the
Bank during any period of time after the effective date of this Plan that the
Bank is classified as a "problem institution", as defined by the Office of
Thrift Supervision in accordance with Thrift Regulatory Bulletin 27a; provided,
however, that with respect to any person(s) who is an eligible director and who
is no longer serving as a director of
3
<PAGE>
both the Corporation and the Bank as a result of a Qualified Retirement which
occurred prior to the OTS' classification of the Bank as a "problem
institution", the payment obligations of the Corporation, and retirement
payments to such person(s), shall remain operative and continue for the
remainder of the Retirement Period with respect to such person(s). During any
period in which the Plan is suspended pursuant to this section, the service of
any person serving as director of the Corporation or the Bank, during such
period of supervision shall not be included as "service" for purposes of
determining eligibility under this Plan.
(b) The Board of Directors of the Corporation may jointly
terminate or amend the Plan at any time without any further liability on the
part of the Corporation, unless a Change in Control of the Corporation or the
Bank has occurred, however, in no event shall vested retirement benefits to
retired directors be reduced or terminated. Termination or amendment after a
Change in Control shall not reduce retirement payments relating to periods of
service prior to such termination or increase the eligibility requirements.
4
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DEFERRED FEE PLAN
THIS PLAN is effective this 1st day of January, 1996, having been duly
approved and adopted by the Board of Directors of CITIZENS SAVINGS BANK F.S.B.
(the "Bank") and FIRST CITIZENS FINANCIAL CORPORATION (the "Company") at their
respective meeting of the Board of Directors on November 16, 1995.
INTRODUCTION
To encourage the members of the Board of Directors of the Bank and the
Company to remain members of such Board of Directors, the Bank and the Company
desire to provide to their Directors a deferred fee opportunity. The Bank and
the Company shall fund the benefits under this Plan from its general assets.
Article 1
DEFINITIONS
1.1 Definitions. Whenever used in this Agreement, the
following words and phrases shall have the meanings specified:
1.1.1 "Change of Control" means a change of control as defined in 12
C.F.R. Part 574 followed within twelve (12) months by termination of the
Director's status as a member of the Board of Directors at either the Bank or
the Company, or both.
1.1.2 "Code" means the Internal Revenue Code of 1986, as amended.
References to a Code section shall be deemed to be to that section as it now
exists and to any successor provisions.
1.1.3. "Disability" means the Director's inability to
perform substantially all normal duties of a Director, as
determined by the Company's and the Bank's Board of Directors in
their sole discretion.
1.1.4. "Election Form" means the Form attached as
Exhibit 1.
1.1.5. "Fees" means the total director's fees payable to
the Director.
1.1.6 "Normal Termination Date" means the Director
attaining age 70.
1.1.7 "Termination of Service" means the Director's ceasing to be a
member of the Board of Directors of the Bank or the Company, or both, for any
reason whatsoever.
<PAGE>
Article 2
Deferral Election
2.1 Initial Election. Each Director shall make an initial deferral
election under this Plan by filing with the Bank and the Company a signed
Election Form within thirty (30) days after the date of this Plan. The Election
Form shall set forth the amount of Fees to be deferred and the form of benefit
payment. The Election Form shall be effective to defer only Fees earned after
the date the Election Form is received by the Bank.
2.2 Election Changes
2.2.1 Generally. The Director may modify the amount of Fees to be
deferred by filing a subsequent signed Election form with the Bank and the
Company. The modified deferral shall not be effective until the calendar year
following the year in which the subsequent Election Form is received by the Bank
and the Company. The Director may not change the form of benefit payment
initially elected under Section 2.1.
2.2.2. Hardship. If an unforeseeable financial emergency arising from
the death of a family member, divorce, sickness, injury, catastrophe or similar
event outside the control of the Director occurs, the Director, by written
instructions to the Bank and the Company, may reduce future deferrals under this
Plan.
Article 3
Deferral Account
3.1 Establishing and Crediting. The Bank and the Company shall
establish a Deferral Account on their books for each Director, and shall credit
to the Deferral Account the following amounts:
3.1.1. Deferrals. The Fees deferred by each Director as of
the time the Fees would have otherwise been paid to such
Director.
3.1.2. Interest. On December 15th of each calendar year and immediately
prior to the payment of any benefits, interest on the account balance since the
preceding credit under this Section 3.1.2., if any, at the annual rate
compounded monthly equal to the "Prime Rate" of interest published by Dow Jones
& Company, Inc. in The Wall Street Journal (the "Index") on the first
publication date of the calendar year. The Prime Rate of interest shall change
annually, the first day of each year (the "Change Date") and then shall accrue
interest at the new Prime Rate of interest as set forth above. In the event that
the Index
2
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provided for herein becomes unavailable or is no longer published, the Board of
Directors of the Company and the Bank shall choose, in its sole discretion, a
different index for the Prime Rate of interest which shall then control.
3.2. Statement of Accounts. The Bank and the Company shall provide to
each Director, within one hundred twenty (120) days after each calendar year
end, a statement setting forth each Director's Deferral Account balance.
3.3. Accounting Device Only. The Deferral Account is solely a device
for measuring amounts to be paid under this Plan. The Deferral Account is not a
trust fund of any kind. Each Director is a general unsecured creditor of the
Bank for the payment of benefits. The Benefits represent merely the Bank's and
the Company's promise to pay such benefits. The Director's rights are not
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, attachment, or garnishment by such Director's creditors.
Article 4
Lifetime Benefits
4.1 Normal Termination Benefit. Upon each Director's Termination of
Service, on or after the Normal Termination Date, the Bank and the Company shall
pay to such Director the benefit described in this Section 4.1.
4.1.1. Amount of Benefit. The benefit under this Section
4.1 is the Deferral Account balance at such Director's
Termination of Service.
4.1.2. Payment of Benefit. The Bank and the Company shall pay the
benefit to such Director in the form elected by such Director on the Election
Form. If the ten (10) year payment is elected, the amount of the accrued benefit
payment will be calculated by using the interest crediting rate on the date that
the benefit payments commence.
4.2 Early Termination Benefit. If any Director terminates service as a
Director before the Normal Termination Date, the Bank and the Company pay to
such Director the benefit described in this Section 4.2.
4.2.1. Amount of Benefit. The benefit under this Section
4.2 shall be the Deferral Account balance with no recomputations
or modifications:
4.2.2. Payment of Benefit. The Bank and the Company shall
pay the benefit to such Director in the form elected by such
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<PAGE>
Director on the Election Form. The Bank and the Company shall
continue to credit interest under Section 4.1.2.
4.3. Disability Benefit. If any Director terminates
service as a Director for Disability prior to the Normal
Retirement Date, the Bank and the Company shall pay to such
Director the benefit described in this Section 4.3.
4.3.1. Amount of Benefit. The benefit under this Section
4.3 is the Deferral Account balance at such Director's
Termination of Service.
4.3.2. Payment of Benefit. The Bank and the Company shall
pay the benefit to such Director in the form elected by such
Director on the Election Form. The Bank and the Company shall
continue to credit interest under Section 4.1.2.
4.4. Change of Control Benefit. Upon a Change of Control while any
Director is in the active service of the Bank or the Company, the Bank and the
Company shall pay to each Director the benefit described in this Section in lieu
of any other benefit under this Plan.
4.4.1 Amount of Benefit. The benefit under this Section 4.4 is the
Deferral Account balance at the date of each such Director's Termination of
Service.
4.4.2 Payment of Benefit. The Bank and the Company shall pay the
benefit to each Director in a lump sum within ninety (90) days after each such
Director's Termination of Service.
4.5. Hardship Distribution. Upon the Bank's or the Company's
determination (following petition by any Director) that any Director has
suffered an unforeseeable financial emergency as described in Section 2.2.2.,
the Bank and the Company shall distribute to such Director all or a portion of
the Deferral Account balance as determined by the Bank and the Company, but in
no event shall the distribution be greater than is necessary to relieve the
financial hardship.
Article 5
Death Benefits
5.1 Death During Active Service. If any Director dies while in the
active service of the Bank or the Company, the Bank and the Company shall pay to
such Director's beneficiary the benefit described in this Section 5.1.
5.1.1. Amount of Benefit. If life insurance is obtained on
the life of any Director, the benefit under Section 5.1 is the
projected age 70 benefit based on the Deferral Account balance
4
<PAGE>
and projected further deferrals until age 70. If life insurance is not obtained
on the life of such Director, the benefit will be the Deferral Account balance
on the date of death of such Director.
5.1.2 Payment of Benefit. The Bank and the Company shall pay the
benefit to the beneficiary in one hundred twenty (120) equal monthly
installments commencing on the first day of the month following such Director's
death.
5.2 Death During Benefit Period. If any Director dies after benefit
payments have commenced under this Agreement but not before receiving all such
payments, the Bank and the Company shall pay the remaining benefits to such
Director's beneficiary at the same time and in the same amounts they would have
paid to the Director had the Director survived.
Article 6
Beneficiaries
6.1 Beneficiary Designations. Each Director shall designate a
beneficiary by filing a written designation with the Bank and the Company. Each
Director may revoke or modify the designation at any time by filing a new
designation. However, designations will only be effective if signed by the
respective Director and accepted by the Bank and the Company during such
Director's lifetime. Each Director's beneficiary designation shall be deemed
automatically revoked if the beneficiary predeceases the Director, or if such
Director names a spouse as beneficiary and the marriage is subsequently
dissolved. If any Director dies without a valid beneficiary designation, all
payments shall be made to any Director's surviving spouse, if any, and if none,
to the Director's surviving children and the descendent of any deceased child by
right of representation, and if no children or descendants survive, to such
Director's estate.
6.2 Facility of Payment. If a benefit is payable to a minor, to a
person declared incompetent, or to a person incapable of handling the
disposition of his or her property, the Bank and the Company may pay such
benefit to the guardian, legal representative or person having the care or
custody of such minor, incompetent person or incapable person. The Bank and the
Company may require proof of incompetency, minority or guardianship as it may
deem appropriate prior to distribution of the benefit. Such distribution shall
completely discharge the Bank and the Company from all liability with respect to
such benefit.
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Article 7
Claims and Review Procedure
8.1 Claims Procedure. The Bank and the Company shall notify each
Director's beneficiary in writing, within ninety (90) days of his or her written
application for benefits, of his or her eligibility or noneligibility for
benefits under the Plan. If the Bank and the Company determine that the
beneficiary is not eligible for benefits or full benefits, the notice shall set
forth (1) the specific reasons for such denial, (2) a specific reference to the
provisions of the Plan on which the denial is based, (3) a description of any
additional information or material necessary for the claimant to perfect his or
her claim, and a description of why it is needed, and (4) an explanation of the
Plan's claims review procedure and other appropriate information as to the steps
to be taken if the beneficiary wishes to have the claim reviewed. If the Bank
and the Company determine that there are special circumstances requiring
additional time to make a decision, the Bank shall notify the beneficiary of the
special circumstances and the date by which a decision is expected to be made,
and may extend the time for up to an additional ninety-day period.
8.2 Review Procedure. If the beneficiary is determined by the Bank and
the Company not to be eligible for benefits, or if the beneficiary believes that
he or she is entitled to greater or different benefits, the beneficiary shall
have the opportunity to have such claim reviewed by the Bank and the Company by
filing a petition for review with the Bank and the Company within sixty (60)
days after receipt of the notice issued by the Bank and the Company. Said
petition shall state the specific reasons which the beneficiary believes
entitles him or her to benefits or to greater or different benefits. Within
sixty (60) days after receipt by the Bank and the Company of the petition, the
Bank shall afford the beneficiary (and counsel, if any) an opportunity to
present his or her position to the Bank and the Company orally or in writing,
and the beneficiary (or counsel) shall have the right to review the pertinent
documents. The Bank and the Company shall notify the beneficiary of its decision
in writing within the sixty-day period, stating specifically the basis of its
decision, written in a manner calculated to be understood by the beneficiary and
the specific provisions of the Plan on which the decision is based. If, because
of the need for a hearing, the sixty-day period is not sufficient, the decision
may be deferred for up to another sixty-day period at the election of the Bank
and the Company, but notice of this deferral shall be given to the beneficiary.
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Article 8
Amendments and Termination
The Plan may be amended or terminated only by appropriate action of the
Board of Directors of the Bank and the Company.
Article 9
9.1 No Guaranty of Employment. This Plan is not a contract for
services. It does not give any Director the right to remain as a Director of the
Bank or the Company, nor does it interfere with any rights to replace any
Director. It also does not require any Director to remain as a Director nor
interfere with any Director's right to terminate services at any time.
9.2 Non-Transferability. Benefits under this Plan cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
9.3 Tax Withholding. The Bank and the Company shall
withhold any taxes that are required to be withheld from the
benefits provided under this Plan.
9.4 Applicable Law. The Agreement and all right hereunder
shall be governed by the laws of the State of Maryland, except to
the extent preempted by the laws of the United States of America.
9.5 Effective Date. This Deferral Fee Plan is effective as
of January 1, 1996, for fees and compensation earned commencing
January 1, 1996.
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AMENDED EMPLOYMENT AGREEMENT
THIS AMENDED EMPLOYMENT AGREEMENT ("Agreement"), is made as of this 22nd day
of November, 1995, between and among FIRST CITIZENS FINANCIAL CORPORATION
("First Citizens"), CITIZENS SAVINGS BANK F.S.B. (the "Bank") and HERBERT W.
JORGENSEN (the "Employee").
WHEREAS, the parties hereto desire to enter into an Employment Agreement,
commencing January 1, 1996 (the "Employment Agreement") and to supersede and
replace all prior agreements among them relating to employment.
NOW, THEREFORE, in consideration of the premises recited herein and other
good and valuable consideration, the receipt and sufficiency of which is hereby
expressly acknowledged, the parties hereto hereby enter into this Amended
Employment Agreement to provide as follows:
NOW, THEREFORE, it is agreed as follows:
1. Employment. The Employee is employed as Chief Executive Officer of
First Citizens and Chief Executive Officer of the Bank from January 1, 1996
through the term of this Agreement. As Chief Executive Officer of First Citizens
and the Bank, the Employee shall render executive, policy and other management
services to First Citizens and the Bank of the type customarily performed by
persons serving in similar executive officer capacities. The Employee shall also
perform such duties as the Boards of Directors of First Citizens and the Bank
may from time to time reasonably direct. During the term of this Agreement,
there shall be no material increase or decrease in the duties and
responsibilities of the Employee, unless the parties otherwise agree in writing.
Unless directed otherwise by the Boards of Directors of First Citizens
or the Bank, the Employee shall be responsible for directing and administering
the operations and activities of First Citizens and the Bank in accordance with
regulatory requirements and the objectives, policies and direction of the Boards
of Directors of First Citizens and the Bank. As Chief Executive Officer and
within the limits of prudent business practice and the policies and direction
set forth by the Boards of Directors, the Employee is specifically designated
with the management authority necessary to conduct the day-to-day affairs of
First Citizens and the Bank.
<PAGE>
The Employee shall report directly to the Boards of Directors of First
Citizens and the Bank and assist in the formulation of objectives and policies
and the development of short and long range plans and programs for First
Citizens and the Bank. The Employee shall consult with the other executive
officers to insure clear communications and effective implementation of the
Boards' policies and programs.
The Employee shall provide direction to management and shall delegate
as much of his authority as may be necessary to maintain an effective
organization. The Employee shall be accountable to the Boards of Directors for
the operating results and financial soundness and stability of First Citizens
and the Bank.
2. Salary. The Bank agrees to pay the Employee during the term of this
Agreement a salary at an annual rate equal to not less than One Hundred
Thirty-six Thousand Dollars ($136,000). The salary of the Employee shall not be
decreased at any time during the term of this Agreement from the amount then in
effect, unless the Employee otherwise agrees in writing. Salary shall be paid
every other week on a pro-rated basis. For purposes of paragraphs 7(a)(ii) and
8(a) herein, the phrase "then-current salary" shall mean (a) the then-current
salary in effect under this Section 2 plus (b) any bonuses paid to the Employee
during the previous twelve (12) months.
3. Participation in Retirement and Employee Benefit Plans; Fringe
Benefits. The Employee shall be entitled to participate in any plan of First
Citizens or the Bank relating to stock options, stock purchases, pension,
thrift, profit sharing, group life insurance, medical coverage, education or
other retirement or employee benefits that First Citizens or the Bank has
adopted or may adopt for the benefit of its executive employees. The Employee
shall also be entitled to participate in any other fringe benefits which are now
or may be or become applicable to First Citizens or the Bank's executive
employees, including the payment of reasonable expenses for attending annual and
periodic meetings of trade associations and any other benefits which are
commensurate with the duties and responsibilities to be performed by the
Employee under this Agreement. The Employee shall be reimbursed for all
reasonable business expenses necessarily incurred by him in the performance of
his duties upon presentation of an itemized account indicating the amount and
business purpose of the expenses. Participation in these plans and fringe
benefits shall not reduce the salary payable to the employee under Section 2
hereof.
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<PAGE>
4. Term. The initial term of employment under this Agreement shall be
for a period commencing January 1, 1996 and ending on December 31, 1996. First
Citizens and the Bank, in the event they desire to renew this Agreement for one
(1) additional year, shall, on or before September 30, 1996, and on each
subsequent September 30th during the term of this Agreement, give the Employee
written notice of their offer to renew this Agreement for one (1) additional
year, and Employee shall have fifteen (15) calendar days from the date of such
notice to accept or reject such offer in writing. In the event the Employee
accepts the offer to renew this Agreement as provided herein, the Agreement
shall be renewed for one (1) additional year. In the event the Employee rejects
the offer to renew this Agreement, this Agreement shall terminate upon
expiration of the term as provided herein. The initial term and the renewed
terms are collectively referred to herein as the term of this Agreement. In the
event of a change in control as hereinafter defined in paragraph 8(b), the term
of employment shall be extended to the date three (3) years thereafter.
5. Standards. The Employee shall perform the Employee's duties and
responsibilities under this Agreement in accordance with such reasonable
standards as may be established from time to time by the Boards of Directors of
First Citizens and the Bank. The reasonableness of such standards shall be
measured against standards for executive performance generally prevailing in the
thrift industry.
6. Voluntary Absences. In addition to all holidays recognized by First
Citizens or the Bank, the Employee shall be entitled, without loss of pay, to be
absent voluntarily for reasonable periods of time from the performance of the
duties and responsibilities under this Agreement.
7. Termination of Employment.
(a) (i) The Boards of Directors of First Citizens and the Bank may
terminate the Employee's employment during the term of the Employment Agreement
at any time, but any termination by such Boards of Directors other than
termination for cause shall not prejudice the Employee's right to compensation
or other benefits under this Agreement, including the benefits provided pursuant
to Section 3, above. The Employee shall have no right to receive compensation or
other benefits for any period after termination for cause. The term "termination
for cause" shall mean termination because of the Employee's personal dishonesty
or breach of fiduciary duty involving
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<PAGE>
personal profit, willful violation of any law, rule or regulation (other than
traffic violations or similar offenses) or final cease and desist order. In
determining "cause", the acts or omissions shall be measured against standards
generally prevailing in the thrift industry; provided, that it shall be First
Citizens' and the Bank's burden to prove the alleged acts and omissions and the
prevailing nature of the standards First Citizens or the Bank shall have alleged
are violated by such acts and/or omissions.
(ii) The parties acknowledge and agree that
damages which will result to Employee for termination without cause shall be
extremely difficult or impossible to establish or prove, and agree that, unless
the termination is for cause, the Bank, shall be obligated, concurrently with
such termination, to make a lump sum cash payment to the Employee as liquidated
damages of an amount equal to one year's then-current salary under Section 2 of
this Agreement, computed as if paid out ratably in twenty-four bimonthly
installments and discounted to present value applying the Federal short-term
monthly rate then in effect under Section 1274(d) of the Internal Revenue of
1986, as amended (the "Code"); provided, however, that if the termination of
employment occurs in connection with or as a result of a "change in control", as
defined in Section 8(b) hereof, of either First Citizens or the Bank, the
provisions of Section 8(a) shall govern the calculation of the amount of
liquidated damages payable to the Employee and any payment pursuant to Section
8(a) shall satisfy the liquidated damage payment obligations under this Section
7(a)(ii); provided further, however, that the Employee shall have the right to
elect in writing (in connection with a termination of employment not as a result
of "change in control"), concurrently with such termination, to have the
liquidated damages paid out ratably in twenty-four bimonthly installments over
the twelve month period immediately following such termination, in which event
the amount of the liquidated damages shall not be discounted to present value.
Employee agrees that, except for such other payments and benefits to which the
Employee may be entitled as expressly provided by the terms of this Agreement,
such liquidated damages shall be in lieu of all other claims which Employee may
make by reason of such termination. Any lump sum payment to the Employee shall
be made on or before the Employee's last day of employment with First Citizens
or the Bank, or, in the event the Employee elects to have the liquidated damages
paid out ratably as set forth above, the initial payment shall be made within
thirty (30) days of the Employee's last day of employment with First Citizens or
the Bank. The
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<PAGE>
liquidated damages amount shall not be reduced by any compensation which the
Employee may receive for other employment with another employer after
termination of employment with First Citizens or the Bank.
(iii) In addition to the liquidated damages above described that are
payable to the Employee for termination without cause, the following shall apply
in the event of any termination without cause or in the event of any termination
subject to Section 8 hereof: (1) the Employee shall continue to participate in,
and accrue benefits under, all retirement, pension, profit-sharing, employee
stock ownership, and other deferred compensation plans of the Bank for the
remaining term of this Agreement as if the termination of employment of the
Employee had not occurred (with the Employee being deemed to receive annually
for the purposes of such plans the Employee's then current salary under Section
2 of the Agreement), except to the extent that such continued participation and
accrual is expressly prohibited by law or, to the extent such plan constitutes a
"qualified plan" under Section 401 of the code (a "Qualified Plan"), by the
terms of the plan; (2) the Employee shall be entitled to continue to receive all
other employee benefits and then existing fringe benefits referred to in Section
3 hereof for the remaining term of this Agreement as if the termination of
employment had not occurred; (3) the Bank shall, on the date of the Employee's
termination of employment, establish a trust that meets the guidelines of the
Model Trust released by the Internal Revenue Service in Revenue Procedure 92-64
(July 28, 1992) (as the same may be modified or supplemented from time to time)
(the "Trust"), the assets of which will be held, subject to the claims of
creditors of the Bank, solely to fund the benefits that the Employee is entitled
to under this Section 7(a)(iii), and the Bank shall transfer to the Trust an
amount sufficient to fund any benefit accrued by the Employee under any defined
benefit pension plan maintained by the Bank to the extent that such defined
benefit pension plan is not fully funded on a termination basis, as determined
under the rules and regulations published by the Pension Benefit Guaranty
Corporation, at the time of termination of the Employee's employment; and to
fund fully all benefits accrued by the Employee under any defined contribution
plan maintained by the Bank to the extent that such benefits are not fully
funded at the time of termination of the Employee's employment; and (4) all
insurance or other provisions for indemnification, defense or hold-harmless of
officers or directors of First Citizens or the Bank which are in effect on the
date the notice of termination is sent to the Employee shall continue for the
Benefit of the Employee with respect to
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<PAGE>
all of his acts and omissions while an officer or director as fully and
completely as if such termination had not occurred, and until the final
expiration or running of all periods of limitation against action which may be
applicable to such acts or omissions.
(b) If the Employee is suspended and/or temporarily prohibited from
participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act, as amended (12
U.S.C. ss.1818(e)(3) or (g)(1)), First Citizens' and the Bank'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, First
Citizens or the Bank may in their discretion (i) pay the Employee all or part of
the compensation withheld while such contractual obligations were suspended, and
(ii) reinstate in whole or in part any of their obligations which were
suspended.
(c) If the Employee is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued under
Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, as amended (12
U.S.C. ss.1818(e)(4) or (g)(1)), all obligations of First Citizens and the Bank
under this Agreement shall terminate as of the effective date of the order, but
vested rights of the parties shall not be affected.
(d) If the Bank is in default (as defined in Section 3(x)(1) of the Federal
Deposit Insurance Act, as amended), all obligations of First Citizens and the
Bank under this Agreement shall terminate as of the date of default, but this
paragraph shall not affect any vested
rights of the parties.
(e) All obligations under this Agreement shall be terminated, except to the
extent that continuation of this Agreement is necessary for the continued
operation of the Bank as determined (i) by the Director (as defined in 12 C.F.R.
ss.561.18(b)) or his or her designee, at the time the Federal Deposit Insurance
Corporation or the Resolution Trust Corporation enters into an agreement to
provide assistance to or on behalf of the Bank under the authority contained in
Section 13(c) of the Federal Deposit Insurance Act, as amended; or (ii) by the
Director or his or her designee, at the time the Director or his or her designee
approves a supervisory merger to resolve problems related to operation of the
Bank after a finding that the Bank is determined by the Director to be in an
unsafe or unsound condition. Any rights of the parties
6
<PAGE>
that have already vested, however, shall not be affected
by any termination hereunder.
(f) Should the Employee terminate his employment under this Agreement prior
to the end of the term of this Agreement, for any reason except for "Good
Reason" as hereinafter provided in paragraph 8, or should First Citizens or the
Bank terminate the Employee for cause, as herein set forth in paragraph 7(a)(i),
First Citizens and/or the Bank shall be entitled, in addition to their other
legal remedies, to enjoin the employment of the Employee with any significant
competitor of First Citizens or the Bank for a period of the remaining term of
this Agreement or six (6) months, whichever is longer. The term "significant
competitor" shall mean any commercial bank, savings bank, savings and loan
association or mortgage banking company, or a holding company affiliate of any
of the foregoing, which at the date of its employment of the Employee has total
consolidated assets, or a loan servicing portfolio, of Fifty Million Dollars
($50,000,000) or more and an office out of which the Employee would be primarily
based within thirty (30) miles of First Citizens' or the Bank's home office.
Further, the Employee shall not, during the term of his employment, or within
twelve (12) months thereafter, contact or attempt to persuade any employee of
First Citizens (including any service corporation) or the Bank to terminate his
or her employment with said company other than such terminations which would be
done in the ordinary course of business. First Citizens and/or the Bank shall be
entitled to enjoin the Employee from contacting or attempting to persuade any
person who was an employee of First Citizens (including any service corporation)
and/or the Bank, within the twelve (12) months immediately following the
Employee's termination date, from terminating his or her employment with First
Citizens and/or the Bank.
Notwithstanding the foregoing, in the event of a "change in control" of
First Citizens or the Bank, as defined in Section 8 hereof, the provisions of
this subsection (f) shall be null and void.
(g) In the event the employment of the Employee is terminated by First
Citizens or the Bank without cause under Section 7(a) hereof or the Employee's
employment is terminated in accordance with Section 8 hereof and the Bank fails
to make timely payment of the amounts then owed to the Employee under this
Agreement, upon legal judgment or settlement providing for such payment to the
Employee, the Employee shall be entitled to reimbursement for all reasonable
costs, including attorneys' fees, incurred by
7
<PAGE>
the Employee in taking action to collect such amounts or otherwise to enforce
this Agreement, plus interest on such amounts at the rate of one percent (1%)
above the prime rate (defined as the base rate on corporate loans at large U.S.
money center commercial banks as published by The Wall Street Journal),
compounded monthly, for the period from the date of employment termination until
payment is made to the Employee. Such reimbursement and interest shall be in
addition to all rights which the Employee is otherwise entitled to under this
Agreement.
8. Change in Control.
(a) If during the term of this Agreement there is a change in control of
First Citizens or the Bank, the Employee shall be entitled to receive as a
severance payment for services previously rendered to First Citizens or the
Bank, a lump sum cash payment as provided for herein (subject to Section (c)
below) in the event the Employee's employment is terminated, voluntarily or
involuntarily, in connection with, or within one year after, the change in
control of First Citizens or the Bank, unless such termination occurs by virtue
of normal retirement, permanent and total disability (as defined in Section
22(d) of the Code) or death. Subject to paragraph (c) below, the amount of this
payment shall equal (i) one year's then-current salary under Section 2 of this
Agreement, computed as if paid out ratably in twenty-four bimonthly installments
and discounted to present value applying the Federal short-term monthly rate
then in effect under Section 1274(d) of the Code, if the Employee voluntarily
terminates his employment without "Good Reason" (as hereinafter defined) or (ii)
three times the Employee's then-current salary under Section 2 of this Agreement
(excluding for this purpose any income associated with the exercise of stock
options), computed as if paid out ratably in seventy-two bimonthly installments
and discounted to present value applying the Federal short-term monthly rate
then in effect under Section 1274(d) of the Code, if the Employee's termination
of employment was either voluntary with Good Reason (as defined in paragraph
(d)), or involuntary. If the Employee notifies the Board of Directors of First
Citizens or the Bank that he intends to resign voluntarily for Good Reason, he
shall state in his notice the reasons why he believes that Good Reason exists
for his resignation. Unless First Citizens or the Bank, within 30 days of the
date of the Employee's notice of resignation, reject the Employee's statement
that Good Reason exists, the Employee's entitlement to severance payment for
three times his then-current salary as provided above shall be conclusive. If
First Citizens or the Bank rejects the
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<PAGE>
Employee's statement of Good Reason within such 30-day period, the dispute shall
be resolved by arbitration under the commercial arbitration rules of the
American Arbitration Association, but First Citizens or the Bank shall have the
burden of proving that their rejection of the Employee's statement was proper.
Payment under this Section 8(a) shall be in lieu of any payment under Section
7(a)(ii) hereof. However, payment under this Section 8(a) shall not be reduced
by any compensation which the Employee may receive from other employment with
another employer after termination of the Employee's employment with First
Citizens or the Bank. In addition, Section 7(a)(iii) shall apply in the case of
any termination of employment within the scope of this Section 8(a). Any lump
sum payment to the Employee shall be made on or before the fifth business day
after Employee's last day of employment with First Citizens or the Bank or, in
the event the Employee elects to have the liquidated damages paid out ratably,
the initial payment shall be made within thirty (30) days of the Employee's last
day of employment with First Citizens or the Bank.
(b) A "change in control", for purposes of this Agreement, shall have the
same meaning as "Acquisition of Control" as set forth in 12 C.F.R. Part 574. In
the event of a change of control, this Employment Agreement shall be binding
upon and inure to the benefit of the surviving entity.
(c) Notwithstanding any other provisions of this Agreement or of any other
agreement, contract or understanding heretofore or hereafter entered into
between the Employee and First Citizens or the Bank, except an agreement,
contract or understanding hereafter entered into that expressly modifies or
excludes application of this Section 8(c) (the "Other Agreements"), and
notwithstanding any formal or informal plan or other arrangement heretofore or
hereafter adopted by First Citizens or the Bank for the direct or indirect
provision of compensation to the Employee (including groups or classes of
participants or beneficiaries of which the Employee is a member), whether or not
such compensation is deferred, is in cash, or is in the form of a benefit to or
for the Employee (a "Benefit Plan"), the Employee shall not have any right to
receive any payment or other benefit under this Agreement, any Other Agreement
or any Benefit Plan if such payment or benefit, taking into account all other
payments or benefits to or for the Employee under this Agreement, all Other
Agreements, and all Benefit Plans, would cause any payment to the Employee under
this Agreement to be considered a "parachute payment" within the meaning of
Section 280G(b)(2) of the Code (a
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<PAGE>
"Parachute Payment"). In the event that the receipt of any such payment or
benefit under this Agreement, any Other Agreement, or any Benefit Plan would
cause the Employee to be considered to have received a Parachute Payment under
this Agreement, then the Employee shall have the right, in the Employee's sole
discretion, to designate those payments or benefits under this Agreement, any
Other Agreements, and/or any Benefit Plans, which should be reduced or
eliminated so as to avoid having the payment to the Employee under this
Agreement be deemed to be a Parachute Payment. Any payments made to the Employee
pursuant to this Employment Agreement or otherwise are subject to and
conditioned upon their compliance with 12 U.S.C. 1828(k) and any regulations
promulgated thereunder.
(d) "Good Reason" shall exist if any one or more of
the following events shall occur:
(i) a material reduction in the authority, duties or
responsibilities of the Employee from those which
existed prior to the change in control or the
reduction in the employee's job status, taking into
consideration the corporate structure of any
surviving or acquiring entity.
(ii) failure to elect or re-elect the Employee
to any office of First Citizens or of the
Bank that the Employee held immediately
prior to a change in control;
(iii) reduction in the Employee's salary or
discontinuance of (or material reduction in
value of) any benefit program in which the
Employee participated prior to the change
in control;
(iv) a good faith determination by the Employee
that, as a result of the change in control,
he has been substantially hindered in the
performance of, or has suffered a
substantial reduction in, any of the
authorities, powers, functions,
responsibilities, or duties attached to any
position held by the Employee prior to the
change in control;
(v) liquidation, dissolution, merger,
consolidation, or reorganization of First
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<PAGE>
Citizens or the Bank or sale of a significant portion
of its or their assets unless the successor entity
assumes all duties and obligations of First Citizens
and the Bank under this Agreement;
(vi) relocation of the principal office of First
Citizens or the Bank to a location more
than 5 miles from its existing location; or
(vii) any material breach of this Agreement by
First Citizens or the Bank (or any
successor).
(e) In the event Section 8(a) of this Agreement applies, any reasonable
legal fees incurred by Employee in connection with the interpretation or
enforcement of this Agreement shall be paid by First Citizens or the Bank within
seven business days of the rendering of a bill for such legal services. In the
event Employee pays such fees, Employee shall be entitled to prompt
reimbursement of such payments, plus interest on such payments at the rate
provided in Section 7(g) hereof.
(f) (1) First Citizens and the Bank agree that, in the event Employee
requests, the payment of all or any portion of amounts due under this Section 8
shall be deferred until such day or dates that Employee requests.
(2) Any such request by Employee must be made in writing no
later than the close of business on the last day of Employee's employment and
must specifically state the amount of the payment to be deferred and the date or
dates on which such payments are to be made.
(3) In the event of any deferral by Employee, the amount
deferred shall be deemed invested in such manner as Employee may indicate in
such deferral notice; provided that Employee shall be limited in his choice of
such deemed investment to any equity or fixed income (including money market)
mutual fund registered under the Investment Company Act of 1940 that is managed
by or affiliated with The Putnam Management Company, Inc., Vanguard Group,
Fidelity Management and Research Company, The Dreyfus Corporation, or Janus
Capital Corporation.
(4) If Employee so requests, the amounts deferred shall be
contributed in cash by First Citizens or the Bank to an irrevocable "rabbi
trust" satisfying the guidelines established by the Internal Revenue Service in
Revenue Procedure 92-64 (or any successor guidelines) provided that such trust
shall permit the Employee to
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<PAGE>
designate the investment of the trust assets within the same parameters set
forth in paragraph (3) above.
(5) In the event Employee shall elect to defer any amounts to
(x) the date of Employee's retirement or (y) the date Employee reaches age 70 or
any later date, Employee shall be permitted to further elect to defer such
amount to a later date, provided that any such further election shall be made on
a date no earlier than 90 days prior to, nor later than 30 days prior to, the
date Employee originally elected.
(6) First Citizens, Bank, and Employee agree that Employee
shall prepare, and submit to First Citizens or Bank, the necessary Trust
documents (in the event Employee elects under paragraph (4) to establish such a
trust) and that First Citizens or Bank shall be responsible for any reasonable
legal fees associated with the creation of said trust. Any revisions to said
Trust documents must be mutually agreed to by (x) First Citizens or Bank and (y)
Employee and in the event such agreement cannot be reached, the Trust documents
as submitted by Employee shall be executed by First Citizens, Bank, and Employee
provided that Employee shall deliver to First Citizens and Bank an opinion of
legal counsel (acceptable to First Citizens and Bank) that said Trust satisfies
the requirements of paragraph (4).
9. Disability. If the Employee shall become disabled or incapacitated
to the extent that the Employee is unable to perform the Employee's duties and
responsibilities hereunder, the Employee shall be entitled to receive disability
benefits of the type provided for other executive employees of First Citizens or
the Bank.
10. Reimbursement of the Bank by First Citizens. To the extent that
First Citizens engages in any business activities other than being the holding
company of the Bank, First Citizens shall reimburse the Bank for any portion of
the compensation paid by the Bank to the Employee hereunder that relates to the
Employee's services as to such other business activities.
11. No Assignments. This Agreement is personal to each of the parties
hereto. No party may assign or delegate any rights or obligations hereunder
without first obtaining the written consent of the other party hereto. However,
in the event of the death of the Employee all rights to receive payments
hereunder shall become rights of the Employee's estate.
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<PAGE>
12. Staff and Location. The Employee shall be provided such facilities,
support services and staff to assist the Employee in the performance of his
duties of the type customarily provided to persons serving in similar executive
officer capacities. Without the consent of the Employee, he shall not be
required to relocate his office to a location outside of Gaithersburg, Maryland.
13. Amendments or Additions; Action by Board of Directors; Entire
Agreement. No amendments or additions to this Agreement shall be binding unless
in writing and signed by all parties hereto. The prior approval by a majority
vote of the full Boards of Directors of First Citizens and the Bank shall be
required in order for First Citizens and the Bank to authorize any amendments or
additions to this Agreement, to give any consents or waivers of provisions of
this Agreement, or to take any other action under this Agreement, including any
termination of employment with or without cause under Section 7(a) hereof. This
Agreement constitutes the entire agreement among the parties on the subject
matter hereof and all prior or contemporaneous agreements or understandings on
such subject matter are superseded and replaced.
14. Section Headings. The section headings used in this Agreement are
included solely for convenience and shall not affect, or be used in connection
with, the interpretation of this Agreement.
15. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
16. Waiver of Breach. The waiver by the Bank or the Employee of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach. No waiver by the Bank shall be valid unless in
writing and signed by an authorized officer of the Bank, and no waiver by the
Employee shall be valid unless in writing and signed by the Employee.
17. Governing Law. This Agreement shall be governed by the laws of the
United States to the extent applicable and otherwise by the laws of the State of
Maryland.
18. OTS Review. The obligations of the Bank under this Agreement shall
be binding upon all parties unless disapproved by the OTS Regional Director
under Regulatory Bulletin 27a, and this Agreement shall be appropriately
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<PAGE>
modified to the extent required by the OTS Regional Director. If any of the
payments required by this Agreement to be made by the Bank are determined by the
OTS Regional Director to be contrary to Regulatory Bulletin 27a, such payments
shall instead be made by First Citizens and not by the Bank, unless the OTS
Regional Director determines that the making of such payments by First Citizens
would be likely to adversely affect the financial or managerial condition of the
Bank, in which case neither First Citizens nor the Bank shall be obligated to
make such payments.
ATTEST: CITIZENS SAVINGS BANK F.S.B.
/s/ By /s/ (SEAL)
Enos K. Fry, President and
Vice-Chairman of the Board
ATTEST: FIRST CITIZENS FINANCIAL
CORPORATION
/s/ By /s/ (SEAL)
Enos K. Fry, President and
Vice-Chairman of the Board
(SEAL)
Herbert W. Jorgensen
Employee
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AMENDED EMPLOYMENT AGREEMENT
THIS AMENDED EMPLOYMENT AGREEMENT ("Agreement"), is made this seventh day of
September , 1995, between and among FIRST CITIZENS FINANCIAL CORPORATION ("First
Citizens"), CITIZENS SAVINGS BANK F.S.B. (the "Bank") and ENOS K. FRY (the
"Employee").
WHEREAS, the parties hereto desire to enter into an Employment Agreement,
dated January 1, 1995 (the "Employment Agreement"); and
WHEREAS, the parties hereto desire to modify and amend certain terms
and provisions of the Employment Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises and premises recited herein
and such other good and valuable consideration, the receipt and sufficiency of
which is hereby expressly acknowledged, the parties hereto hereby agree to
modify and amend the Employment Agreement to provide as follows:
NOW, THEREFORE, it is agreed as follows:
1. Employment. The Employee is employed as President of First Citizens
and President of the Bank from the date hereof through the term of this
Agreement. As President of First Citizens and the Bank, the Employee shall
render executive, policy and other management services to First Citizens and the
Bank of the type customarily performed by persons serving in similar executive
officer capacities. The Employee shall also perform such duties as the Boards of
Directors of First Citizens and the Bank may from time to time reasonably
direct. During the term of this Agreement, there shall be no material increase
or decrease in the duties and responsibilities of the Employee, unless the
parties otherwise agree in writing.
Unless directed otherwise by the Boards of Directors of First Citizens or
the Bank, the Employee shall be responsible for directing and administering the
operations and activities of First Citizens and the Bank in accordance with
regulatory requirements and the objectives, policies and direction of the Chief
Executive Officer and the Boards of Directors of First Citizens and the Bank. As
President and within the limits of prudent business practice and the policies
and direction set forth by the Chief Executive Officer and the Boards of
Directors, the Employee is specifically designated the management authority
necessary
<PAGE>
to conduct the day-to-day affairs of First Citizens and the Bank, including
lending, borrowing, investing, operations, administrative services, marketing
and public relations. With the approval of the Chief Executive Officer, he
reviews key officer personnel to be hired and promoted, and he evaluates
subordinate employees, recommends promotions, disciplinary actions and/or salary
adjustments. He serves as a member of the Senior Management Committee and as a
member of the Loan Committee and as Senior Loan Officer is responsible for
planning, coordinating and supervising all Loan Division activities.
The Employee shall report directly to the Chief Executive Officer and
assist in the formulation of objectives and policies and the development of
short and long range plans and programs for First Citizens and the Bank. The
Employee shall consult with the Chief Executive Officer to insure clear
communications and effective implementation of the Boards' policies and
programs.
The Employee shall assist the Chief Executive Officer in providing
direction to management and shall delegate as much of his authority as may be
necessary to maintain an effective organization. The Employee shall be
accountable to the Chief Executive Officer and the Boards of Directors for the
operating results and financial soundness and stability of First Citizens and
the Bank.
2. Salary. The Bank agrees to pay the Employee during the term of this
Agreement a salary at an annual rate equal to not less than One Hundred
Eighty-two Thousand Nine Hundred Forty-One Dollars ($182,941). The salary of the
Employee shall not be decreased at any time during the term of this Agreement
from the amount then in effect, unless the Employee otherwise agrees in writing.
Salary shall be paid every other week on a pro-rated basis.
The Employee shall not be entitled to receive fees for serving as a
director of First Citizens or the Bank or for serving as a member of any
committee of the Boards of Directors of First Citizens or the Bank.
3. Discretionary Bonuses. In addition to his salary under Section 2
hereof, the Employee shall be entitled to participate in an equitable manner
with all other executive employees of First Citizens and the Bank in such
discretionary bonuses as may be authorized, declared and paid by the Board of
Directors of First Citizens and of the Bank to their executive employees during
the term of this Agreement; provided, that the amount of any discretionary bonus
paid to the Employee with respect to any calendar year shall in no event exceed
2
<PAGE>
fifty percent (50%) of the Employee's annual salary for such calendar year. No
other compensation provided for in this Agreement shall be deemed a substitute
for the Employee's right to participate in such bonuses when and as declared by
the Boards of Directors of First Citizens and the Bank.
4. Participation in Retirement and Employee Benefit Plans; Fringe
Benefits. The Employee shall be entitled to participate in any plan of First
Citizens or the Bank relating to stock options, stock purchases, pension,
thrift, profit sharing, group life insurance, medical coverage, education or
other retirement or employee benefits that First Citizens or the Bank has
adopted or may adopt for the benefit of its executive employees. The Employee
shall also be entitled to participate in any other fringe benefits which are now
or may be or become applicable to First Citizens or the Bank's executive
employees, including the payment of reasonable expenses for attending annual and
periodic meetings of trade associations and any other benefits which are
commensurate with the duties and responsibilities to be performed by the
Employee under this Agreement. The Employee shall be reimbursed for all
reasonable business expenses necessarily incurred by him in the performance of
his duties upon presentation of an itemized account indicating the amount and
business purpose of the expenses which expenses shall be approved by the Chief
Executive Officer. Participation in these plans and fringe benefits shall not
reduce the salary payable to the employee under Section 2 hereof.
5. Term. The initial term of employment under this Agreement shall be
for a period commencing on the date hereof and ending on December 31, 1995.
First Citizens and the Bank, in the event they desire to renew this Agreement
for one (1) additional year, shall, on or before September 30, 1995, and on each
subsequent September 30th during the term of this Agreement, give the Employee
written notice of their offer to renew this Agreement for one (1) additional
year, and Employee shall have fifteen (15) calendar days from the date of such
notice to accept or reject such offer in writing. In the event the Employee
accepts the offer to renew this Agreement as provided herein, the Agreement
shall be renewed for one (1) additional year. In the event the Employee rejects
the offer to renew this Agreement, this Agreement shall terminate upon
expiration of the terms as provided herein. The initial term and the renewed
terms are collectively referred to herein as the term of this Agreement. In the
event of a change in control as hereinafter defined in paragraph 9(b), the
initial term of employment shall
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<PAGE>
commence on the date the change in control occurs and the term of employment
shall end on the date three (3) years thereafter.
6. Standards. The Employee shall perform the Employee's duties and
responsibilities under this Agreement in accordance with such reasonable
standards as may be established from time to time by the Boards of Directors of
First Citizens and the Bank. The reasonableness of such standards shall be
measured against standards for executive performance generally prevailing in the
thrift industry.
7. Voluntary Absences; Vacations.In addition to all holidays recognized by
First Citizens or the Bank, the Employee shall be entitled, without loss of pay,
to be absent voluntarily for reasonable periods of time from the performance of
the duties and responsibilities under this Agreement. All such voluntary
absences shall count as paid vacation time, unless the Boards of Directors of
First Citizens and the Bank otherwise approve. The Employee shall be entitled to
an annual paid vacation of at least twenty-five (25) days per year or such
longer period as the Boards of Directors of First Citizens and the Bank may
approve. The timing of paid vacations shall be scheduled in a reasonable manner
by the Employee. The Employee shall not be entitled to receive any additional
compensation from First Citizens or the Bank on account of failure to take a
paid vacation, but may accumulate, in accordance with policies established from
time to time by the Boards of Directors for executive officers of First Citizens
or the Bank, unused paid vacation time from one fiscal year to the next.
8. Termination of Employment.
(a) (i) The Boards of Directors of First Citizens and the Bank may
terminate the Employee's employment during the term of the Employment Agreement
at any time, but any termination by such Boards of Directors other than
termination for cause shall not prejudice the Employee's right to compensation
or other benefits under this Agreement, including the benefits provided pursuant
to Section 4, above. The Employee shall have no right to receive compensation or
other benefits for any period after termination for cause. The term "termination
for cause" shall mean termination because of the Employee's personal dishonesty
or breach of fiduciary duty involving personal profit, willful violation of any
law, rule or regulation (other than traffic violations or similar offenses) or
final cease and desist order. In determining "cause", the acts or omissions
shall be measured against
4
<PAGE>
standards generally prevailing in the thrift industry; provided, that it shall
be First Citizens' and the Bank's burden to prove the alleged acts and omissions
and the prevailing nature of the standards First Citizens or the Bank shall have
alleged are violated by such acts and/or omissions.
(ii) The parties acknowledge and agree that
damages which will result to Employee for termination without cause shall be
extremely difficult or impossible to establish or prove, and agree that, unless
the termination is for cause, the Bank, shall be obligated, concurrently with
such termination, to make a lump sum cash payment to the Employee as liquidated
damages of an amount equal to one year's then-current salary under Section 2 of
this Agreement, computed as if paid out ratably in twenty-four bimonthly
installments and discounted to present value applying the Federal short-term
monthly rate then in effect under Section 1274(d) of the Internal Revenue of
1986, as amended (the "Code"); provided, however, that if the termination of
employment occurs in connection with or as a result of a "change in control", as
defined in Section 9(b) hereof, of either First Citizens or the Bank, the
provisions of Section 9(a) shall govern the calculation of the amount of
liquidated damages payable to the Employee and any payment pursuant to Section
9(a) shall satisfy the liquidated damage payment obligations under this Section
8(a)(ii); provided further, however, that the Employee shall have the right to
elect in writing (in connection with a termination of employment not as a result
of "change in control"), concurrently with such termination, to have the
liquidated damages paid out ratably in twenty-four bimonthly installments over
the twelve month period immediately following such termination, in which event
the amount of the liquidated damages shall not be discounted to present value.
Employee agrees that, except for such other payments and benefits to which the
Employee may be entitled as expressly provided by the terms of this Agreement,
such liquidated damages shall be in lieu of all other claims which Employee may
make by reason of such termination. Any lump sum payment to the Employee shall
be made on or before the Employee's last day of employment with First Citizens
or the Bank, or, in the event the Employee elects to have the liquidated damages
paid out ratably as set forth above, the initial payment shall be made within
thirty (30) days of the Employee's last day of employment with First Citizens or
the Bank. The liquidated damages amount shall not be reduced by any compensation
which the Employee may receive for other employment with another employer after
termination of employment with First Citizens or the Bank.
5
<PAGE>
(iii) In addition to the liquidated damages above described
that are payable to the Employee for termination without cause, the following
shall apply in the event of any termination without cause or in the event of any
termination subject to Section 9 hereof: (1) the Employee shall be entitled to
be paid for all accrued and unused vacation and sick days; (2) the Employee
shall continue to participate in, and accrue benefits under, all retirement,
pension, profit-sharing, employee stock ownership, and other deferred
compensation plans of the Bank for the remaining term of this Agreement as if
the termination of employment of the Employee had not occurred (with the
Employee being deemed to receive annually for the purposes of such plans the
Employee's then current salary (at the time of his termination) under Section 2
of the Agreement), except to the extent that such continued participation and
accrual is expressly prohibited by law or, to the extent such plan constitutes a
"qualified plan" under Section 401 of the code (a "Qualified Plan"), by the
terms of the plan; (3) the Employee shall be entitled to continue to receive all
other employee benefits and then existing fringe benefits referred to in Section
4 hereof for the remaining term of this Agreement as if the termination of
employment had not occurred; (4) the Bank shall, on the date of the Employee's
termination of employment, establish a trust that meets the guidelines of the
Model Trust released by the Internal Revenue Service in Revenue Procedure 92-64
(July 28, 1992) (as the same may be modified or supplemented from time to time)
(the "Trust"), the assets of which will be held, subject to the claims of
judgment creditors of the Bank, solely to fund the benefits that the Employee is
entitled to under this Section 8(a)(iii), and the Bank shall transfer to the
Trust an amount sufficient to fund any benefit accrued by the Employee under any
defined benefit pension plan maintained by the Bank to the extent that such
defined benefit pension plan is not fully funded on a termination basis, as
determined under the rules and regulations published by the Pension Benefit
Guaranty Corporation, at the time of termination of the Employee's employment;
and to fund fully all benefits accrued by the Employee under any defined
contribution plan maintained by the Bank to the extent that such benefits are
not fully funded at the time of termination of the Employee's employment; and
(5) all insurance or other provisions for indemnification, defense or
hold-harmless of officers or directors of First Citizens or the Bank which are
in effect on the date the notice of termination is sent to the Employee shall
continue for the Benefit of the Employee with respect to all of his acts and
omissions while an officer or director as fully and completely as if such
termination had not occurred, and until the final expiration or running of all
6
<PAGE>
periods of limitation against action which may be
applicable to such acts or omissions.
(b) If the Employee is suspended and/or temporarily prohibited from
participating in the conduct of the Bank's affairs by a notice served under
8(e)(3) or (g)(1) of the Federal Deposit Insurance Act, as amended (12 U.S.C.
1818(e)(3) and (g)(1)), First Citizens' and the Bank'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, First
Citizens or the Bank may in their discretion (i) pay the Employee all or part of
the compensation withheld while such contractual obligations were suspended, and
(ii) reinstate in whole or in part any of their obligations which were
suspended.
(c) If the Employee is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued under
Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, as amended (12
U.S.C. 1818(e)(4) or (g)(1)), all obligations of First Citizens and the Bank
under this Agreement shall terminate as of the effective date of the order, but
vested rights of the parties shall not be affected.
(d) If the Bank is in default (as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act, as amended), all obligations of First Citizens
and the Bank under this Agreement shall terminate as of the date of default, but
this paragraph shall not affect any vested
rights of the parties.
(e) All obligations under this Agreement shall be terminated, except to
the extent that continuation of this Agreement is necessary for the continued
operation of the Bank as determined (i) by the Director (as defined in 12 C.F.R.
561.18(b)) or his or her designee, at the time the Federal Deposit Insurance
Corporation or the Resolution Trust Corporation enters into an agreement to
provide assistance to or on behalf of the Bank under the authority contained in
Section 13(c) of the Federal Deposit Insurance Act, as amended; or (ii) by the
Director or his or her designee, at the time the Director or his or her designee
approves a supervisory merger to resolve problems related to operation of the
Bank after a finding that the Bank is determined by the Director to be in an
unsafe or unsound condition. Any rights of the parties that have already vested,
however, shall not be affected by any termination hereunder.
7
<PAGE>
(f) Should the Employee terminate his employment under this Agreement
prior to the end of the term of this Agreement, for any reason except for "Good
Reason" as hereinafter provided in paragraph 9, or should First Citizens or the
Bank terminate the Employee for cause, as herein set forth in paragraph 8(a)(i),
First Citizens and/or the Bank shall be entitled, in addition to their other
legal remedies, to enjoin the employment of the Employee with any significant
competitor of First Citizens or the Bank for a period of the remaining term of
this Agreement or six (6) months, whichever is longer. The term "significant
competitor" shall mean any commercial bank, savings bank, savings and loan
association or mortgage banking company, or a holding company affiliate of any
of the foregoing, which at the date of its employment of the Employee has total
consolidated assets, or a loan servicing portfolio, of Fifty Million Dollars
($50,000,000) or more and an office out of which the Employee would be primarily
based within thirty (30) miles of First Citizens' or the Bank's home office.
Further, the Employee shall not, during the term of his employment, or within
twelve (12) months thereafter, contact or attempt to persuade any employee of
First Citizens (including any service corporation) or the Bank to terminate his
or her employment with said company other than such terminations which would be
done in the ordinary course of business. First Citizens and/or the Bank shall be
entitled to enjoin the Employee from contacting or attempting to persuade any
person who was an employee of First Citizens (including any service corporation)
and/or the Bank, within the twelve (12) months immediately following the
Employee's termination date, from terminating his or her employment with First
Citizens and/or the Bank.
Notwithstanding the foregoing, in the event of a "change in control" of
First Citizens or the Bank, as defined in Section 9 hereof, the provisions of
this subsection (f) shall be null and void.
(g) In the event the employment of the Employee is terminated by First
Citizens or the Bank without cause under Section 8(a) hereof or the Employee's
employment is terminated in accordance with Section 9 hereof and the Bank fails
to make timely payment of the amounts then owed to the Employee under this
Agreement, upon legal judgment or settlement providing for such payment to the
Employee, the Employee shall be entitled to reimbursement for all reasonable
costs, including attorneys' fees, incurred by the Employee in taking action to
collect such amounts or otherwise to enforce this Agreement, plus interest on
such amounts at the rate of one percent (1%) above the prime
8
<PAGE>
rate (defined as the base rate on corporate loans at large U.S. money center
commercial banks as published by The Wall Street Journal), compounded monthly,
for the period from the date of employment termination until payment is made to
the Employee. Such reimbursement and interest shall be in addition to all rights
which the Employee is otherwise entitled to under this Agreement.
9. Change in Control.
(a) If during the term of this Agreement there is a change in control
of First Citizens or the Bank, the Employee shall be entitled to receive as a
severance payment for services previously rendered to First Citizens or the
Bank, a lump sum cash payment as provided for herein (subject to Section (c)
below) in the event the Employee's employment is terminated, voluntarily or
involuntarily, in connection with, or within one year after, the change in
control of First Citizens or the Bank, unless such termination occurs by virtue
of normal retirement, permanent and total disability (as defined in Section
22(d) of the Code) or death. Subject to paragraph (c) below, the amount of this
payment shall equal (i) one year's then-current salary under Section 2 of this
Agreement, computed as if paid out ratably in twenty-four bimonthly installments
and discounted to present value applying the Federal short-term monthly rate
then in effect under Section 1274(d) of the Code, if the Employee voluntarily
terminates his employment without "Good Reason" (as hereinafter defined) or (ii)
three times the Employee's average annual compensation which was payable by the
Bank and was includible in the Employee's gross income for federal income tax
purposes (excluding for this purpose any income associated with the exercise of
stock options) with respect to the five most recent taxable years of the
Employee ending prior to such change in control of First Citizens or the Bank
(or such portion of such period during which the Employee was a full-time
employee of First Citizens or the Bank), computed as if paid out ratably in
seventy-two bimonthly installments and discounted to present value applying the
Federal short-term monthly rate then in effect under Section 1274(d) of the
Code, if the Employee's termination of employment was either voluntary with Good
Reason (as defined in paragraph (d)), or involuntary. If the Employee notifies
the Board of Directors of First Citizens or the Bank that he intends to resign
voluntarily for Good Reason, he shall state in his notice the reasons why he
believes that Good Reason exists for his resignation. Unless First Citizens or
the Bank, within 30 days of the date of the Employee's notice of resignation,
reject the Employee's statement that Good Reason exists, the Employee's
entitlement to severance
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<PAGE>
payment for three times his five-year average compensation as provided above
shall be conclusive. If First Citizens or the Bank rejects the Employee's
statement of Good Reason within such 30-day period, the dispute shall be
resolved by the American Arbitration Association, under the rules thereof, but
First Citizens or the Bank shall have the burden of proving that their rejection
of the Employee's Statement was proper. Payment under this Section 9(a) shall be
in lieu of any payment under Section 8(a)(ii) hereof. However, payment under
this Section 9(a) shall not be reduced by any compensation which the Employee
may receive from other employment with another employer after termination of the
Employee's employment with First Citizens or the Bank. In addition, Section
8(a)(iii) shall apply in the case of any termination of employment within the
scope of this Section 9(a). Any lump sum payment to the Employee shall be made
on or before the fifth business day after Employee's last day of employment with
First Citizens or the Bank or, in the event the Employee elects to have the
liquidated damages paid out ratably as set forth above, the initial payment
shall be made within thirty (30) days of the Employee's last day of employment
with First Citizens or the Bank.
(b) A "change in control", for purposes of this Agreement, shall have
the same meaning as "Acquisition of Control" as set forth in 12 C.F.R. Part 574.
In the event of a change of control, this Employment Agreement shall be binding
upon and inure to the benefit of the surviving entity.
(c) Notwithstanding any other provisions of this Agreement or of any
other agreement, contract or understanding heretofore or hereafter entered into
between the Employee and First Citizens or the Bank, except an agreement,
contract or understanding hereafter entered into that expressly modifies or
excludes application of this Section 9(c) (the "Other Agreements"), and
notwithstanding any formal or informal plan or other arrangement heretofore or
hereafter adopted by First Citizens or the Bank for the direct or indirect
provision of compensation to the Employee (including groups or classes of
participants or beneficiaries of which the Employee is a member), whether or not
such compensation is deferred, is in cash, or is in the form of a benefit to or
for the Employee (a "Benefit Plan"), the Employee shall not have any right to
receive any payment or other benefit under this Agreement, any Other Agreement
or any Benefit Plan if such payment or benefit, taking into account all other
payments or benefits to or for the Employee under this Agreement, all Other
Agreements, and all Benefit Plans, would cause any payment to the Employee under
this
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<PAGE>
Agreement to be considered a "parachute payment" within the meaning of Section
280G(b)(2) of the Code (a "Parachute Payment"). In the event that the receipt of
any such payment or benefit under this Agreement, any Other Agreement, or any
Benefit Plan would cause the Employee to be considered to have received a
Parachute Payment under this Agreement, then the Employee shall have the right,
in the Employee's sole discretion, to designate those payments or benefits under
this Agreement, any Other Agreements, and/or any Benefit Plans, which should be
reduced or eliminated so as to avoid having the payment to the Employee under
this Agreement be deemed to be a Parachute Payment. Any payments made to the
Employee pursuant to this Employment Agreement or otherwise are subject to and
conditioned upon their compliance with 12 U.S.C. 1828(k) and any regulations
promulgated thereunder.
(d) "Good Reason" shall exist if any one or more
of the following events shall occur:
(i) a material reduction in the authority,
duties or responsibilities of the
Employee from those which existed
prior to the change in control or the
reduction in the employee's job
status, taking into consideration the
corporate structure of any surviving
or acquiring entity.
(ii) failure to elect or re-elect the
Employee to any office of First
Citizens or of the Bank that the
Employee held immediately prior to a
change in control;
(iii) reduction in the Employee's salary or
discontinuance of (or material
reduction in value of) any benefit
program in which the Employee
participated prior to the change in
control;
(iv) a good faith determination by the
Employee that, as a result of the
change in control, he has been
substantially hindered in the
performance of, or has suffered a
substantial reduction in, any of the
authorities, powers, functions,
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responsibilities, or duties attached
to any position held by the Employee
prior to the change in control;
(v) liquidation, dissolution, merger,
consolidation, or reorganization of
First Citizens or the Bank or sale of
a significant portion of its or their
assets unless the successor entity
assumes all duties and obligations of
First Citizens and the Bank under this
Agreement;
(vi) relocation of the principal office of
First Citizens or the Bank to a
location more than 25 miles from its
existing location; or
(vii) any material breach of this Agreement
by First Citizens or the Bank (or any
successor).
If the Employee notifies the Board of Directors of First Citizens or the Bank
that he intends to resign voluntarily for Good Reason, he shall state in his
notice the reasons why he believes that Good Reason exists for his resignation.
Unless First Citizens or the Bank, within thirty (30) days of the date
of the Employee's notice of resignation, rejects the Employee's statement that
Good Reason exists, the Employee's entitlement to severance payment as provided
in Section 9(a) above shall be conclusive. If the Board of Directors rejects the
Employee's statement of Good Reason within such thirty (30) day period, the
dispute shall be resolved by the American Arbitration Association, under the
rules thereof, but First Citizens or the Bank shall have the burden of proving
that their rejection of the Employee's statement was proper.
(e) In the event Section 9(a) of this Agreement applies, any
reasonable legal fees incurred by Employee in connection with the interpretation
or enforcement of this Agreement shall be paid by First Citizens or the Bank
within seven business days of the rendering of a bill for such legal services.
In the event Employee pays such fees, Employee shall be entitled to prompt
reimbursement of such payments, plus interest on such payments at the rate
provided in Section 8(g) hereof.
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(f)(1) First Citizens and the Bank agree that, in the event
Employee requests, the payment of all or any portion of amounts due under this
Section 9 shall be deferred until such day or dates that Employee requests.
(2) Any such request by Employee must be
made in writing no later than the close of business on the last day of
Employee's employment and must specifically state the amount of the payment to
be deferred and the date or dates on which such payments are to be made.
(3) In the event of any deferral by
Employee, the amount deferred shall be deemed invested in such manner as
Employee may indicate in such deferral notice; provided that Employee shall be
limited in his choice of such deemed investment to any equity or fixed income
(including money market) mutual fund registered under the Investment Company Act
of 1940 that is managed by or affiliated with The Putnam Management Company,
Inc., Vanguard Group, Fidelity Management and Research Company, The Dreyfus
Corporation, or Janus Capital Corporation.
(4) If Employee so requests, the amounts
deferred shall be contributed in cash by First Citizens or the Bank to an
irrevocable "rabbi trust" satisfying the guidelines established by the Internal
Revenue Service in Revenue Procedure 92-64 (or any successor guidelines)
provided that such trust shall permit the Employee to designate the investment
of the trust assets within the same parameters set forth in paragraph (3) above.
(5) In the event Employee shall elect to
defer any amounts to (x) the date of Employee's retirement or (y) the date
Employee reaches age 60 or any later date, Employee shall be permitted to
further elect to defer such amount to a later date, provided that any such
further election shall be made on a date no earlier than 90 days prior to, nor
later than 30 days prior to, the date Employee originally elected.
(6) First Citizens, Bank, and Employee agree
that Employee shall prepare, and submit to First Citizens or Bank, the necessary
Trust documents (in the event Employee elects under paragraph (4) to establish
such a trust) and that First Citizens or Bank shall be responsible for any
reasonable legal fees associated with the creation of said trust. Any revisions
to said Trust documents must be mutually agreed to by (x) First Citizens or Bank
and (y) Employee and in the event such agreement cannot be reached, the Trust
documents as submitted by Employee shall be executed by First Citizens, Bank,
and Employee provided that Employee shall deliver to First
13
<PAGE>
Citizens and Bank an opinion of legal counsel (acceptable to First Citizens and
Bank) that said Trust satisfies the requirements of paragraph (4).
10. Disability. If the Employee shall become disabled or incapacitated to
the extent that the Employee is unable to perform the Employee's duties and
responsibilities hereunder, the Employee shall be entitled to receive disability
benefits of the type provided for other executive employees of First Citizens or
the Bank.
11. Reimbursement of the Bank by First Citizens. To the extent that First
Citizens engages in any business activities other than being the holding company
of the Bank, First Citizens shall reimburse the Bank for any portion of the
compensation paid by the Bank to the Employee hereunder that relates to the
Employee's services as to such other business activities.
12. No Assignments. This Agreement is personal to each of the parties hereto.
No party may assign or delegate any rights or obligations hereunder without
first obtaining the written consent of the other party hereto. However, in the
event of the death of the Employee all rights to receive payments hereunder
shall become rights of the Employee's estate.
13. Other Contracts. The Employee shall not, during the term of this
Agreement, have any other paid employment other than with a subsidiary of First
Citizens, except with the prior approval of the Boards of Directors of First
Citizens and the Bank. All other Employment Agreements heretofore entered into
between the same parties as set forth herein in the first paragraph, are merged
into this Employment Agreement and hereafter shall be Null and Void and of no
effect.
14. Staff and Location. The Employee shall be provided such facilities,
support services and staff to assist the Employee in the performance of his
duties of the type customarily provided to persons serving in similar executive
officer capacities. Without the consent of the Employee, he shall not be
required to relocate his office to a location outside the Washington,
D.C.-Baltimore Metropolitan Area.
15. Amendments or Additions; Action by Board of Directors. No amendments or
additions to this Agreement shall be binding unless in writing and signed by all
parties hereto. The prior approval by a majority vote of the full Boards of
Directors of First Citizens and the Bank shall be required in order for First
Citizens and the
14
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Bank to authorize any amendments or additions to this Agreement, to give any
consents or waivers of provisions of this Agreement, or to take any other action
under this Agreement, including any termination of employment with or without
cause under Section 8(a) hereof.
16. Section Headings. The section headings used in this Agreement are
included solely for convenience and shall not affect, or be used in connection
with, the interpretation of this Agreement.
17. Severability. The provisions of this Agreement shall be deemed severable
and the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof.
18. Waiver of Breach. The waiver by the Bank or the Employee of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach. No waiver by the Bank shall be valid unless in writing
and signed by an authorized officer of the Bank, and no waiver by the Employee
shall be valid unless in writing and signed by the Employee.
19. Governing Law. This Agreement shall be governed by the laws of the United
States to the extent applicable and otherwise by the laws of the State of
Maryland.
20. OTS Review. The obligations of the Bank under this Agreement shall be
subject to the approval of the OTS Regional Director under Regulatory Bulletin
27a, and such obligations shall be appropriately modified to the extent required
by the OTS Regional Director. If any of the payments required by this Agreement
to be made by the Bank are determined by the OTS Regional Director to be
contrary to Regulatory Bulletin 27a, such payments shall instead be made by
First Citizens and not by the Bank, unless the OTS Regional Director determines
that the making of such payments by First Citizens would be likely to adversely
affect the financial or managerial condition of the Bank, in which case neither
First Citizens nor the Bank shall be obligated to make such payments.
21. Effective Date of Agreement; Supersedes Prior
Agreement. This Agreement shall become effective, as of
January 1, 1995, and shall supersede the prior Employment
15
<PAGE>
Agreement, dated January 1, 1995, which Agreement shall thereafter become void
and of no force and effect.
ATTEST: CITIZENS SAVINGS BANK F.S.B.
/s/ By /s/ (SEAL)
Herbert W. Jorgensen
Chairman of the Board
ATTEST: FIRST CITIZENS FINANCIAL
CORPORATION
/s/ By /s/ (SEAL)
Herbert W. Jorgensen
Chairman of the Board
(SEAL)
Enos K. Fry
16
<PAGE>
<PAGE>
AMENDED EMPLOYMENT AGREEMENT
THIS AMENDED EMPLOYMENT AGREEMENT ("Agreement"), is made this seventh day of
September , 1995, between and among FIRST CITIZENS FINANCIAL CORPORATION ("First
Citizens"), CITIZENS SAVINGS BANK F.S.B. (the "Bank") and CHARLES R. DUDA (the
"Employee").
WHEREAS, the parties hereto desire to enter into an Employment Agreement,
dated January 1, 1995 (the "Employment Agreement"); and
WHEREAS, the parties hereto desire to modify and amend certain terms and
provisions of the Employment Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises and premises recited herein
and such other good and valuable consideration, the receipt and sufficiency of
which is hereby expressly acknowledged, the parties hereto hereby agree to
modify and amend the Employment Agreement to provide as follows:
1. Employment. The Employee is employed as Chief Operating Officer of First
Citizens and Chief Operating Officer of the Bank from the date hereof through
the term of this Agreement. As Chief Operating Officer of First Citizens and the
Bank, the Employee shall render executive, policy and other management services
to First Citizens and the Bank of the type customarily performed by persons
serving in similar executive officer capacities. The Employee shall also perform
such duties as the Boards of Directors of First Citizens and the Bank may from
time to time reasonably direct. During the term of this Agreement, there shall
be no material increase or decrease in the duties and responsibilities of the
Employee, unless the parties otherwise agree in writing.
Unless directed otherwise by the Boards of Directors of First Citizens
or the Bank, the Employee shall be responsible for directing and administering
the operations and activities of First Citizens and the Bank in accordance with
regulatory requirements and the objectives, policies and direction of the
President, Chief Executive Officer and the Boards of Directors of First Citizens
and the Bank. As Chief Operating Officer and within the limits of prudent
business practice and the policies and direction set forth by the President,
Chief
<PAGE>
Executive Officer and the Boards of Directors, the Employee is specifically
designated the management authority necessary to conduct the day-to-day affairs
of First Citizens and the Bank, including lending, borrowing, investing,
operations, administrative services, marketing and public relations. With the
approval of the President and Chief Executive Officer, he reviews key officer
personnel to be hired and promoted, and he evaluates subordinate employees,
recommends promotions, disciplinary actions and/or salary adjustments. He serves
as Chairman of the Senior Management Committee and as a member of the Loan
Committee and as Senior Loan Officer is responsible for planning, coordinating
and supervising all Loan Division activities.
The Employee shall report directly to the President and Chief Executive
Officer and assist in the formulation of objectives and policies and the
development of short and long range plans and programs for First Citizens and
the Bank. The Employee shall consult with the President and Chief Executive
Officer to insure clear communications and effective implementation of the
Boards' policies and programs.
The Employee shall assist the President and Chief Executive Officer in
providing direction to management and shall delegate as much of his authority as
may be necessary to maintain an effective organization. The Employee shall be
accountable to the President, the Chief Executive Officer and the Boards of
Directors for the operating results and financial soundness and stability of
First Citizens and the Bank.
2. Salary. The Bank agrees to pay the Employee during the term of this
Agreement a salary at an annual rate equal to not less than One Hundred
Twenty-five Thousand Dollars ($125,000.00). The salary of the Employee shall not
be decreased at any time during the term of this Agreement from the amount then
in effect, unless the Employee otherwise agrees in writing. Salary shall be paid
every other week on a pro-rated basis.
3. Discretionary Bonuses. In addition to his salary under Section 2
hereof, the Employee shall be entitled to participate in an equitable manner
with all other executive employees of First Citizens and the Bank in such
discretionary bonuses as may be authorized, declared and paid by the Board of
Directors of First Citizens and of the Bank to their executive employees during
the term of this Agreement; provided, that the amount of any discretionary bonus
paid to the Employee with respect to any calendar year shall in no event exceed
2
<PAGE>
fifty percent (50%) of the Employee's annual salary for such calendar year. No
other compensation provided for in this Agreement shall be deemed a substitute
for the Employee's right to participate in such bonuses when and as declared by
the Boards of Directors of First Citizens and the Bank.
4. Participation in Retirement and Employee Benefit Plans; Fringe Benefits.
The Employee shall be entitled to participate in any plan of First Citizens or
the Bank relating to stock options, stock purchases, pension, thrift, profit
sharing, group life insurance, medical coverage, education or other retirement
or employee benefits that First Citizens or the Bank has adopted or may adopt
for the benefit of its executive employees. The Employee shall also be entitled
to participate in any other fringe benefits which are now or may be or become
applicable to First Citizens or the Bank's executive employees, including the
payment of reasonable expenses for attending annual and periodic meetings of
trade associations and any other benefits which are commensurate with the duties
and responsibilities to be performed by the Employee under this Agreement. The
Employee shall be reimbursed for all reasonable business expenses necessarily
incurred by him in the performance of his duties upon presentation of an
itemized account indicating the amount and business purpose of the expenses
which expenses shall be approved by the President and/or the Chief Executive
Officer. Participation in these plans and fringe benefits shall not reduce the
salary payable to the employee under Section 2 hereof.
5. Term. The initial term of employment under this Agreement shall be for a
period commencing on the date hereof and ending on December 31, 1995. First
Citizens and the Bank, in the event they desire to renew this Agreement for one
(1) additional year, shall, on or before September 30, 1995, and on each
subsequent September 30th during the term of this Agreement, give the Employee
written notice of their offer to renew this Agreement for one (1) additional
year, and Employee shall have fifteen (15) calendar days from the date of such
notice to accept or reject such offer in writing. In the event the Employee
accepts the offer to renew this Agreement as provided herein, the Agreement
shall be renewed for one (1) additional year. In the event the Employee rejects
the offer to renew this Agreement, this Agreement shall terminate upon
expiration of the terms as provided herein. The initial term and the renewed
terms are collectively referred to herein as the term of this Agreement. In the
event of a change in control as hereinafter defined in paragraph 9(b), the
initial term of employment shall
3
<PAGE>
commence on the date the change in control occurs and the term of employment
shall end on the date three (3) years thereafter.
6. Standards. The Employee shall perform the Employee's duties and
responsibilities under this Agreement in accordance with such reasonable
standards as may be established from time to time by the Boards of Directors of
First Citizens and the Bank. The reasonableness of such standards shall be
measured against standards for executive performance generally prevailing in the
thrift industry.
7. Voluntary Absences; Vacations. In addition to all holidays recognized by
First Citizens or the Bank, the Employee shall be entitled, without loss of pay,
to be absent voluntarily for reasonable periods of time from the performance of
the duties and responsibilities under this Agreement. All such voluntary
absences shall count as paid vacation time, unless the Boards of Directors of
First Citizens and the Bank otherwise approve. The Employee shall be entitled to
an annual paid vacation of at least twenty-five (25) days per year or such
longer period as the Boards of Directors of First Citizens and the Bank may
approve. The timing of paid vacations shall be scheduled in a reasonable manner
by the Employee. The Employee shall not be entitled to receive any additional
compensation from First Citizens or the Bank on account of failure to take a
paid vacation, but may accumulate, in accordance with policies established from
time to time by the Boards of Directors for executive officers of First Citizens
or the Bank, unused paid vacation time from one fiscal year to the next.
8. Termination of Employment.
(a) (i) The Boards of Directors of First Citizens and the Bank may
terminate the Employee's employment during the term of the Employment Agreement
at any time, but any termination by such Boards of Directors other than
termination for cause shall not prejudice the Employee's right to compensation
or other benefits under this Agreement, including the benefits provided pursuant
to Section 4, above. The Employee shall have no right to receive compensation or
other benefits for any period after termination for cause. The term "termination
for cause" shall mean termination because of the Employee's personal dishonesty
or breach of fiduciary duty involving personal profit, willful violation of any
law, rule or regulation (other than traffic violations or similar offenses) or
final cease and desist order. In determining "cause", the acts or omissions
shall be measured against
4
<PAGE>
standards generally prevailing in the thrift industry; provided, that it shall
be First Citizens' and the Bank's burden to prove the alleged acts and omissions
and the prevailing nature of the standards First Citizens or the Bank shall have
alleged are violated by such acts and/or omissions.
(ii) The parties acknowledge and agree that
damages which will result to Employee for termination without cause shall be
extremely difficult or impossible to establish or prove, and agree that, unless
the termination is for cause, the Bank, shall be obligated, concurrently with
such termination, to make a lump sum cash payment to the Employee as liquidated
damages of an amount equal to one year's then-current salary under Section 2 of
this Agreement, computed as if paid out ratably in twenty-four bimonthly
installments and discounted to present value applying the Federal short-term
monthly rate then in effect under Section 1274(d) of the Internal Revenue of
1986, as amended (the "Code"); provided, however, that if the termination of
employment occurs in connection with or as a result of a "change in control", as
defined in Section 9(b) hereof, of either First Citizens or the Bank, the
provisions of Section 9(a) shall govern the calculation of the amount of
liquidated damages payable to the Employee and any payment pursuant to Section
9(a) shall satisfy the liquidated damage payment obligations under this Section
8(a)(ii); provided further, however, that the Employee shall have the right to
elect in writing (in connection with a termination of employment not as a result
of "change in control"), concurrently with such termination, to have the
liquidated damages paid out ratably in twenty-four bimonthly installments over
the twelve month period immediately following such termination, in which event
the amount of the liquidated damages shall not be discounted to present value.
Employee agrees that, except for such other payments and benefits to which the
Employee may be entitled as expressly provided by the terms of this Agreement,
such liquidated damages shall be in lieu of all other claims which Employee may
make by reason of such termination. Any lump sum payment to the Employee shall
be made on or before the Employee's last day of employment with First Citizens
or the Bank, or, in the event the Employee elects to have the liquidated damages
paid out ratably as set forth above, the initial payment shall be made within
thirty (30) days of the Employee's last day of employment with First Citizens or
the Bank. The liquidated damages amount shall not be reduced by any compensation
which the Employee may receive for other employment with another employer after
termination of employment with First Citizens or the Bank.
5
<PAGE>
(iii) In addition to the liquidated
damages above described that are payable to the Employee for termination without
cause, the following shall apply in the event of any termination without cause
or in the event of any termination subject to Section 9 hereof: (1) the Employee
shall be entitled to be paid for all accrued and unused vacation and sick days;
(2) the Employee shall continue to participate in, and accrue benefits under,
all retirement, pension, profit-sharing, employee stock ownership, and other
deferred compensation plans of the Bank for the remaining term of this Agreement
as if the termination of employment of the Employee had not occurred (with the
Employee being deemed to receive annually for the purposes of such plans the
Employee's then current salary (at the time of his termination) under Section 2
of the Agreement), except to the extent that such continued participation and
accrual is expressly prohibited by law or, to the extent such plan constitutes a
"qualified plan" under Section 401 of the code (a "Qualified Plan"), by the
terms of the plan; (3) the Employee shall be entitled to continue to receive all
other employee benefits and then existing fringe benefits referred to in Section
4 hereof for the remaining term of this Agreement as if the termination of
employment had not occurred; (4) the Bank shall, on the date of the Employee's
termination of employment, establish a trust that meets the guidelines of the
Model Trust released by the Internal Revenue Service in Revenue Procedure 92-64
(July 28, 1992) (as the same may be modified or supplemented from time to time)
(the "Trust"), the assets of which will be held, subject to the claims of
judgment creditors of the Bank, solely to fund the benefits that the Employee is
entitled to under this Section 8(a)(iii), and the Bank shall transfer to the
Trust an amount sufficient to fund any benefit accrued by the Employee under any
defined benefit pension plan maintained by the Bank to the extent that such
defined benefit pension plan is not fully funded on a termination basis, as
determined under the rules and regulations published by the Pension Benefit
Guaranty Corporation, at the time of termination of the Employee's employment;
and to fund fully all benefits accrued by the Employee under any defined
contribution plan maintained by the Bank to the extent that such benefits are
not fully funded at the time of termination of the Employee's employment; and
(5) all insurance or other provisions for indemnification, defense or
hold-harmless of officers or directors of First Citizens or the Bank which are
in effect on the date the notice of termination is sent to the Employee shall
continue for the Benefit of the Employee with respect to all of his acts and
omissions while an officer or director as fully and completely as if such
termination had not occurred, and until the final expiration or running of all
6
<PAGE>
periods of limitation against action which may be
applicable to such acts or omissions.
(b) If the Employee is suspended and/or temporarily prohibited from
participating in the conduct of the Bank's affairs by a notice served under
8(e)(3) or (g)(1) of the Federal Deposit Insurance Act, as amended (12 U.S.C.
1818(e)(3) and (g)(1)), First Citizens' and the Bank'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, First
Citizens or the Bank may in their discretion (i) pay the Employee all or part of
the compensation withheld while such contractual obligations were suspended, and
(ii) reinstate in whole or in part any of their obligations which were
suspended.
(c) If the Employee is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued under
Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, as amended (12
U.S.C. 1818(e)(4) or (g)(1)), all obligations of First Citizens and the Bank
under this Agreement shall terminate as of the effective date of the order, but
vested rights of the parties shall not be affected.
(d) If the Bank is in default (as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act, as amended), all obligations of First Citizens
and the Bank under this Agreement shall terminate as of the date of default, but
this paragraph shall not affect any vested
rights of the parties.
(e) All obligations under this Agreement shall be terminated, except to
the extent that continuation of this Agreement is necessary for the continued
operation of the Bank as determined (i) by the Director (as defined in 12 C.F.R.
561.18(b)) or his or her designee, at the time the Federal Deposit Insurance
Corporation or the Resolution Trust Corporation enters into an agreement to
provide assistance to or on behalf of the Bank under the authority contained in
Section 13(c) of the Federal Deposit Insurance Act, as amended; or (ii) by the
Director or his or her designee, at the time the Director or his or her designee
approves a supervisory merger to resolve problems related to operation of the
Bank after a finding that the Bank is determined by the Director to be in an
unsafe or unsound condition. Any rights of the parties that have already vested,
however, shall not be affected by any termination hereunder.
7
<PAGE>
(f) Should the Employee terminate his employment under this Agreement
prior to the end of the term of this Agreement, for any reason except for "Good
Reason" as hereinafter provided in paragraph 9, or should First Citizens or the
Bank terminate the Employee for cause, as herein set forth in paragraph 8(a)(i),
First Citizens and/or the Bank shall be entitled, in addition to their other
legal remedies, to enjoin the employment of the Employee with any significant
competitor of First Citizens or the Bank for a period of the remaining term of
this Agreement or six (6) months, whichever is longer. The term "significant
competitor" shall mean any commercial bank, savings bank, savings and loan
association or mortgage banking company, or a holding company affiliate of any
of the foregoing, which at the date of its employment of the Employee has total
consolidated assets, or a loan servicing portfolio, of Fifty Million Dollars
($50,000,000) or more and an office out of which the Employee would be primarily
based within thirty (30) miles of First Citizens' or the Bank's home office.
Further, the Employee shall not, during the term of his employment, or within
twelve (12) months thereafter, contact or attempt to persuade any employee of
First Citizens (including any service corporation) or the Bank to terminate his
or her employment with said company other than such terminations which would be
done in the ordinary course of business. First Citizens and/or the Bank shall be
entitled to enjoin the Employee from contacting or attempting to persuade any
person who was an employee of First Citizens (including any service corporation)
and/or the Bank, within the twelve (12) months immediately following the
Employee's termination date, from terminating his or her employment with First
Citizens and/or the Bank.
Notwithstanding the foregoing, in the event of a "change in control" of
First Citizens or the Bank, as defined in Section 9 hereof, the provisions of
this subsection (f) shall be null and void.
(g) In the event the employment of the Employee is terminated by First
Citizens or the Bank without cause under Section 8(a) hereof or the Employee's
employment is terminated in accordance with Section 9 hereof and the Bank fails
to make timely payment of the amounts then owed to the Employee under this
Agreement, upon legal judgment or settlement providing for such payment to the
Employee, the Employee shall be entitled to reimbursement for all reasonable
costs, including attorneys' fees, incurred by the Employee in taking action to
collect such amounts or otherwise to enforce this Agreement, plus interest on
such amounts at the rate of one percent (1%) above the prime
8
<PAGE>
rate (defined as the base rate on corporate loans at large U.S. money center
commercial banks as published by The Wall Street Journal), compounded monthly,
for the period from the date of employment termination until payment is made to
the Employee. Such reimbursement and interest shall be in addition to all rights
which the Employee is otherwise entitled to under this Agreement.
9. Change in Control.
(a) If during the term of this Agreement there is a change in control
of First Citizens or the Bank, the Employee shall be entitled to receive as a
severance payment for services previously rendered to First Citizens or the
Bank, a lump sum cash payment as provided for herein (subject to Section (c)
below) in the event the Employee's employment is terminated, voluntarily or
involuntarily, in connection with, or within one year after, the change in
control of First Citizens or the Bank, unless such termination occurs by virtue
of normal retirement, permanent and total disability (as defined in Section
22(d) of the Code) or death. Subject to paragraph (c) below, the amount of this
payment shall equal (i) one year's then-current salary under Section 2 of this
Agreement, computed as if paid out ratably in twenty-four bimonthly installments
and discounted to present value applying the Federal short-term monthly rate
then in effect under Section 1274(d) of the Code, if the Employee voluntarily
terminates his employment without "Good Reason" (as hereinafter defined) or (ii)
three times the Employee's average annual compensation which was payable by the
Bank and was includible in the Employee's gross income for federal income tax
purposes (excluding for this purpose any income associated with the exercise of
stock options) with respect to the five most recent taxable years of the
Employee ending prior to such change in control of First Citizens or the Bank
(or such portion of such period during which the Employee was a full-time
employee of First Citizens or the Bank), computed as if paid out ratably in
seventy-two bimonthly installments and discounted to present value applying the
Federal short-term monthly rate then in effect under Section 1274(d) of the
Code, if the Employee's termination of employment was either voluntary with Good
Reason (as defined in paragraph (d)), or involuntary. If the Employee notifies
the Board of Directors of First Citizens or the Bank that he intends to resign
voluntarily for Good Reason, he shall state in his notice the reasons why he
believes that Good Reason exists for his resignation. Unless First Citizens or
the Bank, within 30 days of the date of the Employee's notice of resignation,
reject the Employee's statement that Good Reason exists, the Employee's
entitlement to severance
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<PAGE>
payment for three times his five-year average compensation as provided above
shall be conclusive. If First Citizens or the Bank rejects the Employee's
statement of Good Reason within such 30-day period, the dispute shall be
resolved by the American Arbitration Association, under the rules thereof, but
First Citizens or the Bank shall have the burden of proving that their rejection
of the Employee's Statement was proper. Payment under this Section 9(a) shall be
in lieu of any payment under Section 8(a)(ii) hereof. However, payment under
this Section 9(a) shall not be reduced by any compensation which the Employee
may receive from other employment with another employer after termination of the
Employee's employment with First Citizens or the Bank. In addition, Section
8(a)(iii) shall apply in the case of any termination of employment within the
scope of this Section 9(a). Any lump sum payment to the Employee shall be made
on or before the fifth business day after Employee's last day of employment with
First Citizens or the Bank or, in the event the Employee elects to have the
liquidated damages paid out ratably as set forth above, the initial payment
shall be made within thirty (30) days of the Employee's last day of employment
with First Citizens or the Bank.
(b) A "change in control", for purposes of this Agreement, shall have
the same meaning as "Acquisition of Control" as set forth in 12 C.F.R. Part 574.
In the event of a change of control, this Employment Agreement shall be binding
upon and inure to the benefit of the surviving entity.
(c) Notwithstanding any other provisions of this Agreement or of any
other agreement, contract or understanding heretofore or hereafter entered into
between the Employee and First Citizens or the Bank, except an agreement,
contract or understanding hereafter entered into that expressly modifies or
excludes application of this Section 9(c) (the "Other Agreements"), and
notwithstanding any formal or informal plan or other arrangement heretofore or
hereafter adopted by First Citizens or the Bank for the direct or indirect
provision of compensation to the Employee (including groups or classes of
participants or beneficiaries of which the Employee is a member), whether or not
such compensation is deferred, is in cash, or is in the form of a benefit to or
for the Employee (a "Benefit Plan"), the Employee shall not have any right to
receive any payment or other benefit under this Agreement, any Other Agreement
or any Benefit Plan if such payment or benefit, taking into account all other
payments or benefits to or for the Employee under this Agreement, all Other
Agreements, and all Benefit Plans, would cause any payment to the Employee under
this
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<PAGE>
Agreement to be considered a "parachute payment" within the meaning of Section
280G(b)(2) of the Code (a "Parachute Payment"). In the event that the receipt of
any such payment or benefit under this Agreement, any Other Agreement, or any
Benefit Plan would cause the Employee to be considered to have received a
Parachute Payment under this Agreement, then the Employee shall have the right,
in the Employee's sole discretion, to designate those payments or benefits under
this Agreement, any Other Agreements, and/or any Benefit Plans, which should be
reduced or eliminated so as to avoid having the payment to the Employee under
this Agreement be deemed to be a Parachute Payment. Any payments made to the
Employee pursuant to this Employment Agreement or otherwise are subject to and
conditioned upon their compliance with 12 U.S.C. 1828(k) and any regulations
promulgated thereunder.
(d) "Good Reason" shall exist if any one or more
of the following events shall occur:
(i) a material reduction in the authority,
duties or responsibilities of the
Employee from those which existed
prior to the change in control or the
reduction in the employee's job
status, taking into consideration the
corporate structure of any surviving
or acquiring entity.
(ii) failure to elect or re-elect the
Employee to any office of First
Citizens or of the Bank that the
Employee held immediately prior to a
change in control;
(iii) reduction in the Employee's salary or
discontinuance of (or material
reduction in value of) any benefit
program in which the Employee
participated prior to the change in
control;
(iv) a good faith determination by the
Employee that, as a result of the
change in control, he has been
substantially hindered in the
performance of, or has suffered a
substantial reduction in, any of the
authorities, powers, functions,
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<PAGE>
responsibilities, or duties attached
to any position held by the Employee
prior to the change in control;
(v) liquidation, dissolution, merger,
consolidation, or reorganization of
First Citizens or the Bank or sale of
a significant portion of its or their
assets unless the successor entity
assumes all duties and obligations of
First Citizens and the Bank under this
Agreement;
(vi) relocation of the principal office of
First Citizens or the Bank to a
location more than 25 miles from its
existing location; or
(vii) any material breach of this Agreement
by First Citizens or the Bank (or any
successor).
If the Employee notifies the Board of Directors of First Citizens or the Bank
that he intends to resign voluntarily for Good Reason, he shall state in his
notice the reasons why he believes that Good Reason exists for his resignation.
Unless First Citizens or the Bank, within thirty (30) days of the date
of the Employee's notice of resignation, rejects the Employee's statement that
Good Reason exists, the Employee's entitlement to severance payment as provided
in Section 9(a) above shall be conclusive. If the Board of Directors rejects the
Employee's statement of Good Reason within such thirty (30) day period, the
dispute shall be resolved by the American Arbitration Association, under the
rules thereof, but First Citizens or the Bank shall have the burden of proving
that their rejection of the Employee's statement was proper.
(e) In the event Section 9(a) of this Agreement applies, any
reasonable legal fees incurred by Employee in connection with the interpretation
or enforcement of this Agreement shall be paid by First Citizens or the Bank
within seven business days of the rendering of a bill for such legal services.
In the event Employee pays such fees, Employee shall be entitled to prompt
reimbursement of such payments, plus interest on such payments at the rate
provided in Section 8(g) hereof.
12
<PAGE>
(f)(1) First Citizens and the Bank agree that, in the event
Employee requests, the payment of all or any portion of amounts due under this
Section 9 shall be deferred until such day or dates that Employee requests.
(2) Any such request by Employee must be
made in writing no later than the close of business on the last day of
Employee's employment and must specifically state the amount of the payment to
be deferred and the date or dates on which such payments are to be made.
(3) In the event of any deferral by
Employee, the amount deferred shall be deemed invested in such manner as
Employee may indicate in such deferral notice; provided that Employee shall be
limited in his choice of such deemed investment to any equity or fixed income
(including money market) mutual fund registered under the Investment Company Act
of 1940 that is managed by or affiliated with The Putnam Management Company,
Inc., Vanguard Group, Fidelity Management and Research Company, The Dreyfus
Corporation, or Janus Capital Corporation.
(4) If Employee so requests, the amounts
deferred shall be contributed in cash by First Citizens or the Bank to an
irrevocable "rabbi trust" satisfying the guidelines established by the Internal
Revenue Service in Revenue Procedure 92-64 (or any successor guidelines)
provided that such trust shall permit the Employee to designate the investment
of the trust assets within the same parameters set forth in paragraph (3) above.
(5) In the event Employee shall elect to
defer any amounts to (x) the date of Employee's retirement or (y) the date
Employee reaches age 60 or any later date, Employee shall be permitted to
further elect to defer such amount to a later date, provided that any such
further election shall be made on a date no earlier than 90 days prior to, nor
later than 30 days prior to, the date Employee originally elected.
(6) First Citizens, Bank, and Employee agree
that Employee shall prepare, and submit to First Citizens or Bank, the necessary
Trust documents (in the event Employee elects under paragraph (4) to establish
such a trust) and that First Citizens or Bank shall be responsible for any
reasonable legal fees associated with the creation of said trust. Any revisions
to said Trust documents must be mutually agreed to by (x) First Citizens or Bank
and (y) Employee and in the event such agreement cannot be reached, the Trust
documents as submitted by Employee shall be executed by First Citizens, Bank,
and Employee provided that Employee shall deliver to First
13
<PAGE>
Citizens and Bank an opinion of legal counsel (acceptable to First Citizens and
Bank) that said Trust satisfies the requirements of paragraph (4).
10. Disability. If the Employee shall become disabled or incapacitated to
the extent that the Employee is unable to perform the Employee's duties and
responsibilities hereunder, the Employee shall be entitled to receive disability
benefits of the type provided for other executive employees of First Citizens or
the Bank.
11. Reimbursement of the Bank by First Citizens. To the extent that First
Citizens engages in any business activities other than being the holding company
of the Bank, First Citizens shall reimburse the Bank for any portion of the
compensation paid by the Bank to the Employee hereunder that relates to the
Employee's services as to such other business activities.
12. No Assignments. This Agreement is personal to each of the parties hereto.
No party may assign or delegate any rights or obligations hereunder without
first obtaining the written consent of the other party hereto. However, in the
event of the death of the Employee all rights to receive payments hereunder
shall become rights of the Employee's estate.
13. Other Contracts. The Employee shall not, during the term of this
Agreement, have any other paid employment other than with a subsidiary of First
Citizens, except with the prior approval of the Boards of Directors of First
Citizens and the Bank. All other Employment Agreements heretofore entered into
between the same parties as set forth herein in the first paragraph, are merged
into this Employment Agreement and hereafter shall be Null and Void and of no
effect.
14. Staff and Location. The Employee shall be provided such facilities,
support services and staff to assist the Employee in the performance of his
duties of the type customarily provided to persons serving in similar executive
officer capacities. Without the consent of the Employee, he shall not be
required to relocate his office to a location outside the Washington,
D.C.-Baltimore Metropolitan Area.
15. Amendments or Additions; Action by Board of Directors. No amendments or
additions to this Agreement shall be binding unless in writing and signed by all
parties hereto. The prior approval by a majority vote of the full Boards of
Directors of First Citizens and the Bank shall be required in order for First
Citizens and the
14
<PAGE>
Bank to authorize any amendments or additions to this Agreement, to give any
consents or waivers of provisions of this Agreement, or to take any other action
under this Agreement, including any termination of employment with or without
cause under Section 8(a) hereof.
16. Section Headings. The section headings used in this Agreement are
included solely for convenience and shall not affect, or be used in connection
with, the interpretation of this Agreement.
17. Severability. The provisions of this Agreement shall be deemed severable
and the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof.
18. Waiver of Breach. The waiver by the Bank or the Employee of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach. No waiver by the Bank shall be valid unless in writing
and signed by an authorized officer of the Bank, and no waiver by the Employee
shall be valid unless in writing and signed by the Employee.
19. Governing Law. This Agreement shall be governed by the laws of the United
States to the extent applicable and otherwise by the laws of the State of
Maryland.
20. OTS Review. The obligations of the Bank under this Agreement shall be
subject to the approval of the OTS Regional Director under Regulatory Bulletin
27a, and such obligations shall be appropriately modified to the extent required
by the OTS Regional Director. If any of the payments required by this Agreement
to be made by the Bank are determined by the OTS Regional Director to be
contrary to Regulatory Bulletin 27a, such payments shall instead be made by
First Citizens and not by the Bank, unless the OTS Regional Director determines
that the making of such payments by First Citizens would be likely to adversely
affect the financial or managerial condition of the Bank, in which case neither
First Citizens nor the Bank shall be obligated to make such payments.
21. Effective Date of Agreement; Supersedes Prior
Agreement. This Agreement shall become effective, as of
January 1, 1995, and shall supersede the prior Employment
15
<PAGE>
Agreement, dated January 1, 1995, which Agreement shall thereafter become void
and of no force and effect.
ATTEST: CITIZENS SAVINGS BANK F.S.B.
/s/ By /s/ (SEAL)
Herbert W. Jorgensen
Chairman of the Board
ATTEST: FIRST CITIZENS FINANCIAL
CORPORATION
/s/ By /s/ (SEAL)
Herbert W. Jorgensen
Chairman of the Board
(SEAL)
Charles R. Duda
Employee
16
<PAGE>
ADDENDUM TO EMPLOYMENT AGREEMENT
(Benjamin O. Delaney, Jr.)
THIS ADDENDUM TO EMPLOYMENT AGREEMENT is made this 15th day of
December, 1994, by and between FIRST
CITIZENS MORTGAGE CORPORATION ("First Citizens Mortgage")
and BENJAMIN O. DELANEY, JR. (the "Employee").
In consideration of the receipt of Ten Dollars ($10.00) in hand paid,
and such other consideration the sufficiency of which is hereby acknowledged,
the parties hereto agree as follows:
1. Section 2, "Salary" of the Employment Agreement,
dated January 1, 1994, is hereby modified and amended to
read as follows:
"2. Salary. First Citizens Mortgage agrees to pay the Employee
during the term of this Agreement a salary at an annual rate
equal to not less than One Hundred Fifty Thousand Dollars
($150,000.00). The Employee's salary shall be reviewed
annually as of December 31st of each year during the term of
this Agreement by the Board of Directors of First Citizens
Mortgage. In determining the salary, the Board of Directors of
First Citizens Mortgage may also provide for performance or
merit increases. The salary of the Employee shall not be
decreased at any time during the term of this Agreement from
the amount then in effect, unless the Employee otherwise
agrees in writing. The Employee's salary shall be paid every
other week on a pro-rated basis. The
<PAGE>
Employee shall not be entitled to receive fees for serving as
a director of First Citizens Mortgage or for serving as a
member of any committee of First Citizens Mortgage or Citizens
Savings Bank F.S.B.
2. All other terms and provisions of the Employment
Agreement, except as expressly modified herein, shall
remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have affixed their hands and
seals the date first written above.
ATTEST: FIRST CITIZENS MORTGAGE
CORPORATION
/s/ By: /s/ [SEAL]
Herbert W. Jorgensen
Chief Executive Officer
/s/ /s/ [SEAL)
Witness Benjamin O. Delaney, Jr.
Employee
2
<PAGE>
ADDENDUM TO EMPLOYMENT AGREEMENT
THIS ADDENDUM is made this 21st day of November, 1995,
between FIRST CITIZENS MORTGAGE CORPORATION ("First Citizens
Mortgage") and BENJAMIN O. DELANEY, JR. (the "Employee").
WHEREAS, the parties hereto entered into an Employment
Agreement, dated January 1, 1994; and
WHEREAS, the parties desire to extend and amend said Employment
Agreement as set forth herein.
NOW, THEREFORE, in consideration for the mutual premises set forth
herein, the parties hereby agree as follows:
1. By Resolution approved by the Board of Directors of First Citizens
Mortgage at its Board Meeting held on October 26, 1995, the term of the
Employment Agreement is hereby extended for one (1) additional year.
2. The language of Section 9, "Change in Control", is
hereby amended by adding the following language as subsection
9.(e) of the Employment Agreement.
"(e) (1) First Citizens and the Bank agree that, in the event
Employee requests, the payment of all or any portion of
amounts due under this Section 9 shall be deferred until such
day or dates that Employee requests.
(2) Any such request by Employee must be made in
writing no later than the close of business on the last day of
Employee's employment and must specifically state the amount
of the payment to be deferred and the date or dates on which
such payments are to be made.
<PAGE>
(3) In the event of any deferral by Employee, the
amount deferred shall be deemed invested in such manner as
Employee may indicate in such deferral notice; provided that
Employee shall be limited in his choice of such deemed
investment to any equity or fixed income (including money
market) mutual fund registered under the Investment Company
Act of 1940 that is managed by or affiliated with The Putnam
Management Company, Inc., Vanguard Group, Fidelity Management
and Research Company, The Dreyfus Corporation, or Janus
Capital Corporation.
(4) If Employee so requests, the amounts deferred
shall be contributed in cash by First Citizens or the Bank to
an irrevocable "rabbi trust" satisfying the guidelines
established by the Internal Revenue Service in Revenue
Procedure 92-64 (or any successor guidelines) provided that
such trust shall permit the Employee to designate the
investment of the trust assets within the same parameters set
forth in paragraph (3) above.
(5) In the event Employee shall elect to defer any
amounts to (x) the date of Employee's retirement or (y) the
date Employee reaches age 60 or any later date, Employee shall
be permitted to further elect to defer such amount to a later
date, provided that any such further election shall be made on
a date no earlier than 90 days prior to, nor later than 30
days prior to, the date Employee originally elected.
(6) First Citizens, Bank, and Employee agree that
Employee shall prepare, and submit to First Citizens or Bank,
the necessary Trust documents (in the event Employee elects
under paragraph (4) to establish such a trust) and that First
Citizens or Bank shall be responsible for any reasonable legal
fees associated with the creation of said trust. Any revisions
to said Trust documents must be mutually agreed to by (x)
First Citizens or Bank and (y) Employee and in the event such
agreement cannot be reached, the Trust documents as submitted
by Employee shall be executed by First Citizens, Bank, and
Employee provided that Employee shall deliver
2
<PAGE>
to First Citizens and Bank an opinion of legal counsel
(acceptable to First Citizens and Bank) that said Trust
satisfies the requirements of paragraph (4)."
3. All other terms and provisions of the Employment
Agreement shall remain in full force and effect.
ATTEST: FIRST CITIZENS MORTGAGE CORPORATION
/s/ By: /s/ (SEAL)
Herbert W. Jorgensen
Chief Executive Officer
/s/ By: /s/ (SEAL)
Witness Benjamin O. Delaney, Jr.
Employee
3
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of January 1, 1994, between FIRST
CITIZENS MORTGAGE CORPORATION ("First Citizens Mortgage")
and BENJAMIN O. DELANEY, JR. (the "Employee").
WHEREAS, the parties desire to enter into this Agreement to set forth the
terms and conditions for the employment relationship of the Employee with First
Citizens Mortgage; and
WHEREAS, the Employee is currently serving as
President of First Citizens Mortgage; and
WHEREAS, the Board of Directors of First Citizens Mortgage has approved and
authorized the entry into this Agreement with the Employee, subject to review by
the Office of Thrift Supervision ("OTS") Regional Director as to the obligations
of First Citizens Mortgage hereunder;
NOW, THEREFORE, it is agreed as follows:
1. Employment. The Employee is employed as President of First Citizens
Mortgage, a wholly owned subsidiary of Citizens Savings Bank F.S.B., from the
date hereof through the term of this Agreement. As President of First Citizens
Mortgage, the Employee shall serve as chief operating officer and shall render
executive, policy and other management services to First Citizens Mortgage of
the type customarily performed by persons serving in similar executive officer
capacities. The Employee shall also serve as a voting member of the Board of
Directors and perform such duties as the Board of Directors of First Citizens
Mortgage may from time to time reasonably direct. During the term of this
Agreement, there shall be no material increase or decrease in the duties and
responsibilities of the Employee, unless the parties otherwise agree in writing.
Unless directed otherwise by the Board of Directors of First Citizens
Mortgage, the Employee shall be responsible for directing and administering the
operations and activities of First Citizens Mortgage in accordance with
regulatory requirements and the objectives, policies and direction of the Chief
Executive Officer and the Board of Directors. As President and within the limits
of prudent business practice and the
<PAGE>
policies and direction set forth by the Chief Executive Officer and the Board of
Directors, the Employee is specifically designated the management authority
necessary to conduct the day-to-day affairs of the corporation, including
lending, borrowing, operations, administrative services, marketing and public
relations, hiring, promotion and discipline of employees, approval and
modification of FNMA and FHLMC loans and supervision of all mortgage secondary
activities.
The Employee shall report directly to the Chief Executive Officer and
assist the Chief Executive Officer in the formulation of corporation objectives
and policies and the development of short and long range plans and programs. The
Employee shall consult with the Chief Executive Officer to insure clear
communications and effective implementation of the Board's policies and
programs.
The Employee shall assist the Chief Executive Officer in providing
direction to management and shall delegate as much of his authority as may be
necessary in his determination to maintain an effective organization. The
Employee shall be accountable to the Board for the corporation's operating
results and financial soundness and stability of First Citizens Mortgage. It is
intended that he shall serve as a member of Citizens Savings Bank F.S.B. Senior
Management Committee and as a member of the Loan Committee.
2. Salary. First Citizens Mortgage agrees to pay the Employee during the
term of this Agreement a salary at an annual rate equal to not less than One
Hundred Fifty Thousand Dollars ($150,000). The Employee's salary shall be
reviewed annually as of December 31st of each year during the term of this
Agreement by the Board of Directors of First Citizens Mortgage. In determining
the salary, the Board of Directors of First Citizens Mortgage shall compensate
the Employee for increases in the cost of living and may also provide for
performance or merit increases. The salary of the Employee shall not be
decreased at any time during the term of this Agreement from the amount then in
effect, unless the Employee otherwise agrees in writing. The Employee's salary
shall be paid every other week on a pro-rated basis. The Employee shall not be
entitled to receive fees for serving as a director of First Citizens Mortgage or
for serving as a member of any committee of First Citizens Mortgage or Citizens
Savings Bank F.S.B.
2
<PAGE>
3. Discretionary Bonuses. In addition to his salary under Section 2 hereof,
the Employee shall be entitled to participate in an equitable manner with all
other executive employees of First Citizens Mortgage in such discretionary
bonuses as may be authorized, declared and paid by the Board of Directors of
First Citizens Mortgage to its executive employees during the term of this
Agreement; provided, that the amount of any discretionary bonus paid to the
Employee with respect to any calendar year shall in no event exceed fifty
percent (50%) of the Employee's annual salary for such calendar year. No other
compensation provided for in this Agreement shall be deemed a substitute for the
Employee's right to participate in such bonuses when and as declared by the
Board of Directors.
4. Participation in Retirement and Employee Benefit Plans; Fringe Benefits.
The Employee shall be entitled to participate in any plan of First Citizens
Mortgage relating to stock options, stock purchases, pension, thrift, profit
sharing, group life insurance, medical coverage, education or other retirement
or employee benefits that First Citizens Mortgage has adopted or may adopt for
the benefit of its executive employees; provided such plan(s) are the same and
adopted by Citizens Savings Bank F.S.B. and/or First Citizens Financial
Corporation. The Employee shall also be entitled to participate in any other
fringe benefits which are now or may be or become applicable to First Citizens
Mortgage's executive employees, including the payment of reasonable expenses for
attending annual and periodic meetings of trade associations and any other
benefits which are commensurate with the duties and responsibilities to be
performed by the Employee under this Agreement. The Employee shall be reimbursed
for all reasonable business expenses necessarily incurred by him in the
performance of his duties upon presentation of an itemized account indicating
the amount and business purpose of the expenses which expenses shall be approved
by the Chief Executive Officer. Participation in these plans and fringe benefits
shall not reduce the salary payable to the Employee under Section 2 hereof.
5. Term. The initial term of employment under this Agreement shall be for a
period commencing on the date hereof and ending on December 31, 1996. First
Citizens Mortgage may renew this Agreement by written notice to the Employee for
one (1) additional year on or before December 31, 1994, and on each subsequent
December 31st during the term of this Agreement, unless the Employee gives
contrary written notice to the other parties hereto prior to such renewal date.
Each initial term and all
3
<PAGE>
such renewed terms are collectively referred to herein as the term of this
Agreement. In the event of a change in control as hereinafter defined in
paragraph 9(b), the initial term of employment shall commence on the date the
change in control occurs and the term of employment shall end three (3) years
thereafter. First Citizens (or its successor) may renew this Agreement by
written notice to the employee for one (1) additional year on or before the last
day of the first year term hereof and on each subsequent yearly date thereafter,
unless the Employee gives contrary written Notice to the other parties hereto
prior to such renewal date.
6. Standards. The Employee shall perform the Employee's duties and
responsibilities under this Agreement in accordance with such reasonable
standards as may be established from time to time by the Board of Directors of
First Citizens Mortgage. The reasonableness of such standards shall be measured
against standards for executive performance generally prevailing in the mortgage
banking industry.
7. Voluntary Absences; Vacations. In addition to all holidays recognized by
First Citizens Mortgage, the Employee shall be entitled, without loss of pay, to
be absent voluntarily for reasonable periods of time from the performance of the
duties and responsibilities under this Agreement. All such voluntary absences
shall count as paid vacation time, unless the Board of Directors of First
Citizens Mortgage otherwise approves. The Employee shall be entitled to an
annual paid vacation of at least twenty-four (24) days per year or such longer
period as the Board of Directors of First Citizens Mortgage may approve. The
timing of paid vacations shall be scheduled in a reasonable manner by the
Employee. The Employee shall not be entitled to receive any additional
compensation from First Citizens Mortgage on account of failure to take a paid
vacation, but may accumulate, in accordance with policies established from time
to time by the Board of Directors for executive officers of Citizens Savings
Bank F.S.B., unused paid vacation time from one fiscal year to the next.
8. Termination of Employment.
(a) (i) The Board of Directors of First Citizens Mortgage may terminate
the Employee's employment during the term of the Employment Agreement at any
time, but any termination by such Board of Directors other than termination for
cause shall not prejudice the Employee's right to compensation or other benefits
under this Agreement. The Employee shall have no right to receive
4
<PAGE>
compensation or other benefits for any period after termination for cause. The
term "termination for cause" shall mean termination because of the Employee's
personal dishonesty, incompetence, willful 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 this Agreement. In determining incompetence, the acts or omissions
shall be measured against standards generally prevailing in the mortgage banking
industry; provided, that it shall be First Citizens Mortgage's burden to prove
the alleged acts and omissions and the prevailing nature of the standards First
Citizens Mortgage shall have alleged are violated by such acts and/or omissions.
(ii) The parties acknowledge and agree that damages which will
result to the Employee for termination without cause shall be extremely
difficult or impossible to establish or prove, and agree that, unless the
termination is for cause, First Citizens Mortgage shall be obligated,
concurrently with such termination, to make a lump sum cash payment to the
Employee as liquidated damages of an amount equal to the Employee's then current
salary under Section 2 of this Agreement applied to the remaining term of the
Employment Agreement, computed as if paid out ratably in bi-monthly installments
over the remaining term of the Employment Agreement and discounted to present
value applying the federal short term monthly rate then in effect under Section
1274(d) of the Internal Revenue Code of 1986, as amended (the "Code"); and
provided that any payments to Employee pursuant to this Section 8(a)(ii), when
added to any payments to Employee pursuant to Section 8(a)(iii) hereof, shall
not exceed three (3) times the Employee's average annual compensation for the
most recent five (5) taxable years as determined in accordance with the
provisions of OTS Regulatory Bulletin 27a. Employee agrees that, except for such
other payments and benefits to which the Employee may be entitled as expressly
provided by the terms of this Agreement, such liquidated damages shall be in
lieu of all other claims which Employee may make by reason of such termination.
Such payment to the Employee shall be made within thirty (30) days of the
Employee's last day of employment with First Citizens Mortgage. The liquidated
damages amount shall not be reduced by any compensation which the Employee may
receive for other employment with another employer after termination of
employment with First Citizens Mortgage.
5
<PAGE>
(iii) In addition to the liquidated damages above described that
are payable to the Employee for termination without cause, or in the event of
any termination subject to Section 9 hereof, all insurance or other provisions
for indemnification, defense or hold harmless of officers or directors of First
Citizens Mortgage, Citizens Savings Bank F.S.B. and/or First Citizens Financial
Corporation, which are in effect on the date the notice of termination is sent
to the Employee shall continue for the benefit of the Employee with respect to
all of his acts and omissions while an officer or director as fully and
completely as if such termination had not occurred, and until the final
expiration or running of all periods of limitation against actions which may be
applicable to such acts or omissions.
(b) If the Employee is suspended and/or temporarily prohibited from
participating in the conduct of affairs of First Citizens Mortgage by a notice
served under 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act, as amended
(12 U.S.C. 1818(e)(3) and (g)(1)), First Citizens Mortgage'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, First
Citizens Mortgage may in its discretion (i) pay the Employee all or part of the
compensation withheld while such contractual obligations were suspended, and
(ii) reinstate in whole or in part any of its obligations which were suspended.
(c) If the Employee is removed and/or permanently prohibited from
participating in the conduct of First Citizens Mortgage's affairs by an order
issued under Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, as
amended (12 U.S.C. 1818(e)(4) or (g)(1)), all obligations of First Citizens
Mortgage under this Agreement shall terminate as of the effective date of the
order, but vested rights of the parties shall not be affected.
(d) If Citizens Savings Bank F.S.B. is in default (as defined in
Section 3(x)(1) of the Federal Deposit Insurance Act, as amended), all
obligations under this Agreement shall terminate as of the date of default, but
this paragraph shall not affect any vested rights of the parties.
(e) All obligations under this Agreement shall be terminated, except to
the extent that continuation of this Agreement is necessary for the continued
operation of First Citizens Mortgage as determined (i) by the Director (as
defined in 12 C.F.R. 561.18(b)) or his or her
6
<PAGE>
designee, at the time the Federal Deposit Insurance Corporation or the
Resolution Trust Corporation (or any successor agency or entity established by
Congress) enters into an agreement to provide assistance to or on behalf of
Citizens Savings Bank F.S.B. under the authority contained in Section 13(c) of
the Federal Deposit Insurance Act, as amended; or (ii) by the Director or his or
her designee, at the time the Director or his or her designee approves a
supervisory merger to resolve problems related to operation of Citizens Savings
Bank F.S.B. after a finding that Citizens Savings Bank F.S.B. is determined by
the Director to be in an unsafe or unsound condition. Any rights of the parties
that have already vested, however, shall not be affected by any termination
hereunder.
(f) Should the Employee terminate his employment under this Agreement
for any reason except for "Good Cause" as hereinafter provided in paragraph 9,
or should First Citizens Mortgage Corporation terminate the Employee for cause,
as herein set forth in paragraph 8(a)(i), First Citizens Mortgage shall be
entitled, in addition to its other legal remedies, to enjoin the Employee for a
period of twelve (12) months from engaging, either directly or indirectly, in
any mortgage activities with any party or parties located in Montgomery, Prince
George's, Howard and Frederick Counties, Maryland that have referred potential
mortgagors (i.e. accounts, realtors, banks, savings associations or similar
business relationships). The Employee shall not, during the term of his
employment, or within twelve (12) months thereafter, contact or attempt to
persuade any employee of First Citizens Mortgage to terminate his or her
employment with said company other than such terminations which would be done in
the ordinary course of business. First Citizens Mortgage shall be entitled to
enjoin the Employee from contacting or attempting to persuade any person who was
an employee of First Citizens Mortgage, within the twelve (12) months
immediately preceding the Employee's termination date, from terminating his or
her employment with First Citizens Mortgage. The parties acknowledge and agree
that damages which will result to First Citizens Mortgage in the event of a
breach of the foregoing provisions shall be extremely difficult or impossible to
establish or prove. Therefore, the parties agree that First Citizens Mortgage
shall be entitled to receive from the Employee as liquidated damages a sum equal
to 100% of all fees, discounts and/or profits for each loan originated or
serviced in violation of these provisions. In addition to the liquidated
damages, First Citizens Mortgage shall be entitled to reimbursement for all
reasonable costs, including attorneys' fees, incurred by
7
<PAGE>
First Citizens Mortgage in taking action to enforce this Agreement.
(g) In the event the employment of the Employee is terminated by First
Citizens Mortgage without cause under Section 8(a) hereof or the Employee's
employment is terminated in accordance with Section 9 hereof and First Citizens
Mortgage fails to make timely payment of the amounts then owed to the Employee
under this Agreement, upon legal judgment or settlement providing for such
payment to the Employee, the Employee shall be entitled to reimbursement for all
reasonable costs, including attorneys' fees, incurred by the Employee in taking
action to collect such amounts or otherwise to enforce this Agreement, plus
interest on such amounts at the rate of one percent (1%) above the prime rate
(defined as the base rate on corporate loans at large U.S. money center
commercial banks as published by The Wall Street Journal), compounded monthly,
for the period from the date of employment termination until payment is made to
the Employee. Such reimbursement and interest shall be in addition to all rights
which the Employee is otherwise entitled to under this Agreement.
9. Change in Control.
(a) If during the term of this Agreement there is a change in control
of Citizens Savings Bank F.S.B. or First Citizens Financial Corporation, the
Employee shall be entitled to receive as a severance payment for services
previously rendered to First Citizens Mortgage, a lump sum cash payment as
provided for herein (subject to Section 9(c) below) in the event the Employee's
employment is terminated, either involuntarily by First Citizens Mortgage or
voluntarily by the Employee for "Good Reason" (as defined in Section 9(d)
hereof), after the change in control of Citizens Savings Bank F.S.B. or First
Citizens Financial Corporation unless such termination occurs by virtue of
normal retirement, permanent and total disability (as defined in Section 22(d)
of the Code) or death. Subject to Section 9(c) below, in the event such
termination of employment is involuntary by First Citizens Mortgage or voluntary
by the Employee for "Good Reason", the amount of this payment shall equal the
liquidated damages payable to the Employee as set forth herein in Section
8(a)(ii). Payment under this Section 9(a) shall be in lieu of any amount owed to
the Employee as liquidated damages for termination without cause under Sections
8(a)(i) and (ii) hereof. However, payment under this Section 9(a) shall not be
reduced by any compensation which the Employee may receive from other employment
with another employer after termination of the
8
<PAGE>
Employee's employment with First Citizens Mortgage. In addition, Section
8(a)(iii) shall apply in the case of any termination of employment within the
scope of this Section 9(a).
(b) A "change in control," for purposes of this Agreement, shall have
the same meaning as "Acquisition of Control" as set forth in 12 C.F.R. Part 574.
In the event of a change of control, this Employment Agreement shall be binding
upon and inure to the benefit of the surviving entity.
(c) Notwithstanding any other provisions of this Agreement or of any
other agreement, contract or understanding heretofore or hereafter entered into
between the Employee and First Citizens Mortgage, except an agreement, contract
or understanding hereafter entered into that expressly modifies or excludes
application of this Section 9(c) (the "Other Agreements"), and notwithstanding
any formal or informal plan or other arrangement heretofore or hereafter adopted
by First Citizens Mortgage for the direct or indirect provision of compensation
to the Employee (including groups or classes of participants or beneficiaries of
which the Employee is a member), whether or not such compensation is deferred,
is in cash, or is in the form of a benefit to or for the Employee (a "Benefit
Plan"), the Employee shall not have any right to receive any payment or other
benefit under this Agreement, any Other Agreement or any Benefit Plan if such
payment or benefit, taking into account all other payments or benefits to or for
the Employee under this Agreement, all Other Agreements, and all Benefit Plans,
would cause any payment to the Employee under this Agreement to be considered a
"parachute payment" within the meaning of Section 280G(b)(2) of the Code (a
"Parachute Payment"). In the event that the receipt of any such payment or
benefit under this Agreement, any Other Agreement, or any Benefit Plan would
cause the Employee to be considered to have received a Parachute Payment under
this Agreement, then the Employee shall have the right, in the Employee's sole
discretion, to designate those payments or benefits under this Agreement, any
Other Agreements, and/or any Benefit Plans, which should be reduced or
eliminated so as to avoid having the payment to the Employee under this
Agreement be deemed to be a Parachute Payment. Any payments made to the Employee
pursuant to this Employment Agreement or otherwise are subject to and
conditioned upon their compliance with 12 U.S.C. 1828(k) and any regulations
promulgated thereunder.
(d) "Good Reason" shall include a material
reduction in the authority, duties or responsibilities of
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the Employee from those which existed prior to the change in control or the
reduction in the employee's job status taking into consideration the corporate
structure of any surviving or acquiring entity. If the Employee notifies the
Board of Directors of First Citizens Mortgage that he intends to resign
voluntarily for Good Reason, he shall state in his notice the reasons why he
believes that Good Reason exists for his resignation.
Unless First Citizens Mortgage, within thirty (30) days of the date of
the Employee's notice of resignation, rejects the Employee's statement that Good
Reason exists, the Employee's entitlement to severance payment as provided in
Section 9(a) above shall be conclusive. If the Board of Directors rejects the
Employee's statement of Good Reason within such thirty (30) day period, the
dispute shall be resolved by the American Arbitration Association, under the
rules thereof, but First Citizens Mortgage shall have the burden of proving that
their rejection of the Employee's statement was proper.
10. Disability. If the Employee shall become disabled or incapacitated to the
extent that the Employee is unable to perform the Employee's duties and
responsibilities hereunder, the Employee shall be entitled to receive disability
benefits of the type provided for other executive employees of First Citizens
Mortgage and/or Citizens Savings Bank F.S.B.
11. No Assignments. This Agreement is personal to each of the parties hereto.
No party may assign or delegate any rights or obligations hereunder without
first obtaining the written consent of the other party hereto. However, in the
event of the death of the Employee, all rights to receive payments hereunder
shall become rights of the Employee's estate.
12. Other Contracts. The Employee shall not, during the term of this
Agreement, have any other paid employment other than with a subsidiary of
Citizens Savings Bank F.S.B., except with the prior approval of the Board of
Directors of First Citizens Mortgage. All other Employment Agreements heretofore
entered into between the same parties as set forth herein in the first
paragraph, are merged into this Employment Agreement and hereafter shall be Null
and Void and of no effect.
13. Staff and Location. The Employee shall be provided such facilities,
support services and staff to assist the Employee in the performance of his
duties of the type customarily provided to persons serving in similar executive
officer capacities. Without the consent
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of the Employee, he shall not be required to relocate his
office to a location outside the Washington,
D.C.-Baltimore Metropolitan Area.
14. Amendments or Additions; Action by Board of Directors. No amendments or
additions to this Agreement shall be binding unless in writing and signed by all
parties hereto. The prior approval by a majority vote of the full Board of
Directors of First Citizens Mortgage shall be required in order for First
Citizens Mortgage to authorize any amendments or additions to this Agreement, to
give any consents or waivers of provisions of this Agreement, or to take any
other action under this Agreement including any termination of employment with
or without cause under Section 8(a) hereof.
15. Section Headings. The section headings used in this Agreement are
included solely for convenience and shall not affect, or be used in connection
with, the interpretation of this Agreement.
16. Severability. The provisions of this Agreement shall be deemed severable
and the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof.
17. Waiver of Breach. The waiver by First Citizens Mortgage or the Employee
of a breach of any provision of this Agreement shall not operate or be construed
as a waiver of any subsequent breach. No waiver by First Citizens Mortgage shall
be valid unless in writing and approved by the Board of Directors of First
Citizens Mortgage, and no waiver by the Employee shall be valid unless in
writing and signed by the Employee.
18. Governing Law. This Agreement shall be governed by the laws of the United
States to the extent applicable and otherwise by the laws of the State of
Maryland.
19. OTS Review. The obligations of First Citizens Mortgage under this
Agreement shall be subject to the approval of the OTS Regional Director under
Regulatory Bulletin 27a, and such obligations shall be appropriately modified to
the extent required by the OTS Regional Director. If any of the payments
required by this Agreement to be made by the Bank are determined by the OTS
Regional Director to be contrary to Regulatory Bulletin 27a or likely to
adversely affect the financial or managerial condition of First Citizens
Mortgage, then First Citizens Mortgage shall not be obligated to make such
payments.
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ATTEST: FIRST CITIZENS MORTGAGE
CORPORATION
/s/ By: /s/ (SEAL)
Stanley Betts
Chief Executive Officer
WITNESS:
/s/ By: /s/ (SEAL)
Benjamin O. Delaney, Jr.
Employee
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SUPPLEMENTAL RETIREMENT AGREEMENT WITH
ENOS K. FRY
THIS AGREEMENT is made and entered into this 7th day of March, 1996, by
and between CITIZENS SAVINGS BANK F.S.B., a federally-chartered savings bank
(the "Bank") and ENOS K.
FRY (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive has been in the employ of the Bank for 21 years
and is now serving the Bank as President pursuant to an Amended Employment
Agreement dated as of September 7, 1995 (the "Employment Agreement"); and
WHEREAS, the services of the Executive have been an invaluable contri-
bution to the success of the Bank; and
WHEREAS, the Bank wishes to provide certain supplemental retirement
benefits to the Executive in accordance with the terms and conditions of this
Agreement:
NOW, THEREFORE, the parties agree as follows:
ARTICLE ONE
Employment Agreement. The terms and conditions of the Executive's
employment by the Bank shall be governed by the Employment Agreement. This
Agreement shall not be deemed to modify or supercede the Employment Agreement.
ARTICLE TWO
Supplemental Retirement Benefit. If the Executive shall continue in the
employment of the Bank until the Executive attains the age of 65, which date is
April 29, 2008 (the "Normal Retirement Date"), he may retire and, commencing
with the first month thereafter, the Bank will pay the Executive on an annual
basis, an amount equal to the difference between 70 percent of his average
annual cash compensation for the 24 months of his employment with the Bank next
preceding such retirement and the sum of the payments made to the Executive on
an annual basis upon his attaining the age of 65 from the following sources:
social security income; pension benefits derived from the Bank's qualified
pension plan; annual pension or retirement benefits payable by any other
employer or under any plan or arrangement maintained by any other employer with
respect to service by the Executive after his termination of employment with the
Bank; and a life annuity commencing at age 65 that is the actuarial equivalent
of the value of contributions made by the Bank (other than salary reduction
contributions) to the Executive's 401(k) Plan account and of contributions
(other than salary reduction contributions) made by any other employer to any
defined contribution plan on behalf of the Executive with respect to service by
the Executive after his termination of employment with the Bank (collectively
the "Executive's Other Benefits"); such that the sum of the Executive's Other
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Benefits and the amount of the benefit payments payable on an annual basis
pursuant to this Agreement (the "Supplemental Retirement Benefit") shall equal,
but not exceed, 70 percent of the Executive's average annual cash compensation
for the 24 months of his employment with the Bank next preceding such
retirement. Subject to Article Three, below, this Supplemental Retirement
Benefit shall be paid to the Executive for a period of at least 15 years or for
his life, whichever is longer, in equal monthly installments of an amount equal
to one-twelfth of the annual Supplemental Retirement Benefit, commencing on the
first month after the Normal Retirement Date, and on each consecutive month
thereafter.
If the Executive dies before receiving 180 monthly payments (whether
before or after the Normal Retirement Date), the Bank shall make or continue to
make the payments that would have been made to the Executive under this
Agreement if he had not died to such individual or individuals as the Executive
may have designated in writing and filed with the Bank, as beneficiaries of this
Supplemental Retirement Benefit until 180 monthly payments have been made (with
such payments beginning on the first day of the month following the date of
death, if the Executive dies before the Normal Retirement Date). In the absence
of any effective beneficiary designation by the Executive, such payments shall
be paid to the executor or personal representative of the Executive's Estate.
ARTICLE THREE
Consulting Services; Noncompete. It is mutually agreed that during the
60-month payment period immediately following his retirement after his Normal
Retirement Date from active employment, or for his life, whichever is shorter,
the Executive shall, at the request of the Bank, be available at reasonable
times and places as may be mutually agreed upon to render services to the Bank
in an advisory or consulting capacity. In furnishing such services, the
Executive shall not be an employee of the Bank, but shall act in the capacity of
an independent contractor. The Executive shall not be required to provide more
than 120 hours of consulting services during any 12-month period.
The Supplemental Retirement Benefit shall not be paid for any month
after the Executive's Normal Retirement Date during which the Executive shall be
employed by, or perform consulting or other material services for, a
"significant competitor" of the Bank. The term "significant competitor" shall
mean any commercial bank, savings bank, savings and loan association, or
mortgage banking company, or a holding company affiliate of any of the
foregoing, that at the date of its employment or other engagement of the
Executive to provide such services has an office out of which the Executive
would be primarily based within 30 miles of the Bank's home office.
ARTICLE FOUR
Disability. If, while employed by the Bank, the Executive's employment
terminates by reason of a "disability", as defined herein, and such disability
continues until the Executive's Normal Retirement Date, the Executive shall
thereupon be entitled to receive the annual Supplemental Retirement Benefit in
accordance with the provisions of Article Two, above. For purposes of this
Agreement, "disability" shall mean the inability of the Executive to engage in
his position with the Bank, as it exists at the date that this Agreement becomes
effective, for a period of at least six
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months, by reason of any medically determinable physical or mental impairment
which can be expected to result in death or be of indefinite duration.
ARTICLE FIVE
Deferred Vested Benefit.
(a) In the event the Bank terminates the Executive's employment for
"cause," as that term is defined in Section 8(a)(i) of the Employment Agreement
("Cause"), then all benefits and payments payable to the Executive, or his
beneficiaries, successors, heirs, legatees and devises pursuant to this
Agreement, shall be forfeited, and the Bank shall have no further obligations
hereunder.
(b) In the event the Bank terminates the Executive's employment with
the Bank prior to the Normal Retirement Date, for any reason other than for
Cause, then the Supplemental Retirement Benefit payable to the Executive
hereunder shall be in an amount equal to (i) the Supplemental Retirement
Benefit, as calculated and payable in accordance with Article Two, above, based
on the Executive's cash compensation for the 24 months of his employment with
the Bank immediately preceding such termination, (ii) reduced by five percent
for each full year by which the Executive's age at the time of such termination
is less than age 55.
(c) In the event that the Executive terminates his employment with the
Bank before his Normal Retirement Date (i) for "Good Reason" as defined in
Section 9(d) of the Employment Agreement (determined as if a "change in control"
as defined in Section 9(b) of the Employment Agreement had occurred immediately
before such termination) ("Good Reason") or (ii) without Good Reason, so long as
he complies with the noncompetition requirement set out in this Article Five(c),
then the Supplemental Retirement Benefit payable to the Executive hereunder
shall be an amount equal to (i) the Supplemental Retirement Benefit, as
calculated and payable in accordance with Article Two, above, based on the
Executive's cash compensation for the 24 months of his employment with the Bank
immediately preceding such termination, (ii) reduced by five percent for each
full year by which the Executive's age at the time of such termination is less
than age 55. Such Supplemental Retirement Benefit shall be forfeited if, during
the first 36 months after any voluntary termination of his employment without
Good Reason (or until his Normal Retirement Date, if earlier), the Executive
shall be employed by, or perform consulting or other material services for, a
"significant competitor" of the Bank (as defined in Article Three, above).
ARTICLE SIX
Small Amounts. In the event the amount of any monthly payments provided
herein shall be less than $100.00, the Bank in its sole discretion may, in lieu
thereof, pay the commuted value of such payments to the person entitled to
receive such payments.
ARTICLE SEVEN
Beneficiary. The Beneficiary of any payments to be made after the
Executive's death shall be Susan S. Fry, his wife, or such other person or
persons as the Executive shall designate in writing to
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<PAGE>
the Bank. If no Beneficiary shall survive the Executive, any such payments shall
be paid to the Executive's estate.
ARTICLE EIGHT
Source of Payments. The Executive, the Beneficiary and any other person
or persons having or claiming a right to payments hereunder or to any interest
in this Agreement shall rely solely on the unsecured promise of the Bank set
forth herein, and nothing in this Agreement shall be construed to give the
Executive, the Beneficiary or any other person or persons any right, title,
interest or claim in or to any specified assets, fund, reserve, account or
property of any kind whatsoever owned by the Bank or in which it may have any
right, title or interest now or in the future. The Executive, his Beneficiary,
successors, heirs, legatees and devisees shall have the right to enforce his
claim against the Bank in the same manner as any unsecured creditor.
ARTICLE NINE
Insurance. If the Bank shall elect to purchase a life insurance
contract to provide the Bank with funds to make payments hereunder, the Bank
shall at all times be the sole and complete owner and beneficiary of such
insurance contract and shall have the unrestricted right to use all amounts and
exercise all options and privileges thereunder without the knowledge or consent
of the Executive or the Beneficiary or any other person, it being expressly
agreed that neither the Executive nor the Beneficiary nor any other person shall
have any right, title or interest whatsoever in or to any such contract. If the
Bank purchases a life insurance contract on the life of the Executive, the
Executive agrees to sign any papers that may be required for that purpose and to
undergo any medical examination or tests which may be necessary.
This article shall not be construed as giving the Executive or the
Beneficiary any greater rights than those of any other unsecured creditor of the
Bank.
ARTICLE TEN
Amendment. This Agreement may be amended at any time or from time to time
by written agreement of the parties.
ARTICLE ELEVEN
Assignment. Neither the Executive, nor the Beneficiary, nor any other
person entitled to payment hereunder shall have the power to transfer, assign,
anticipate, mortgage or otherwise encumber in advance any of such payments, nor
shall such payments be subject to seizure for the payment of public or private
debts, judgments, alimony or separate maintenance; or be transferable by
operation of law in the event of bankruptcy, insolvency or otherwise.
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<PAGE>
ARTICLE TWELVE
Binding Effect. This Agreement shall be binding upon the parties, their
heirs, executors, administrators, successors and assigns. The Bank agrees that
it will not be a party to any merger, consolidation or reorganization, unless
and until its obligations hereunder shall be expressly assumed by its successor
or successors. This Agreement shall supercede and replace the Salary
Continuation Plan agreement dated December 28, 1995 by and among the First
Citizens Financial Corporation, the Bank and the Executive and such agreement
shall be of no force or effect after the date hereof.
This Agreement shall not be deemed to constitute a contract of
employment between the parties thereto, nor shall any provision hereof restrict
the right of the Bank to discharge the Executive or restrict the right or the
Executive to terminate his employment in accordance with the Employment
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
5th day of March, 1996.
/S/ /S/
Witness Enos K. Fry, Executive
ATTEST: CITIZENS SAVINGS BANK
/S/ /S/
By:
Barbara J. Guy Herbert W. Jorgensen
Secretary Chairman of the Board
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<PAGE>
SUPPLEMENTAL RETIREMENT AGREEMENT WITH
BENJAMIN O. DELANEY, JR.
THIS AGREEMENT is made and entered into this 7th day of March, 1996, by
and between FIRST CITIZENS MORTGAGE CORPORATION, a corporation organized and
existing under the laws of the state of Maryland (the "FCMC"), and BENJAMIN O.
DELANEY, JR. (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive has been in the employ of FCMC for 12 years and
is now serving FCMC as President pursuant to an Employment Agreement dated as of
January 1, 1994, as amended (the "Employment Agreement"); and
WHEREAS, the services of the Executive have been an invaluable contribution
to the success of the FCMC; and
WHEREAS, FCMC wishes to provide certain supplemental retirement
benefits to the Executive in accordance with the terms and conditions of this
Agreement:
NOW, THEREFORE, the parties agree as follows:
ARTICLE ONE
Employment Agreement. The terms and conditions of the Executive's
employment by the FCMC shall be governed by the Employment Agreement. This
Agreement shall not be deemed to modify or supercede the Employment Agreement.
ARTICLE TWO
Supplemental Retirement Benefit. If the Executive shall continue in the
employment of FCMC until the Executive attains the age of 65, which date is
August 6, 2009 (the "Normal Retirement Date"), he may retire and, commencing
with the first month thereafter, FCMC will pay the Executive on an annual basis,
an amount equal to the difference between 60 percent of his average annual cash
compensation for the 24 months of his employment with FCMC next preceding such
retirement and the sum of the payments made to the Executive on an annual basis
upon his attaining the age of 65 from the following sources: social security
income; pension benefits derived from any qualified pension plan covering
employees of FCMC; annual pension or retirement benefits payable by any other
employer or under any plan or arrangement maintained by any other employer with
respect to service by the Executive after his termination of employment with
FCMC; and a life annuity commencing at age 65 that is the actuarial equivalent
of the value of contributions made by FCMC (other than salary reduction
contributions) to the Executive's 401(k) Plan account and of contributions
(other than salary reduction contributions) made by any other employer to any
defined contribution plan on behalf of the Executive with respect to service by
the Executive after his termination of employment with FCMC (collectively the
"Executive's Other Benefits"); such that the
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<PAGE>
sum of the Executive's Other Benefits and the amount of the benefit payments
payable on an annual basis pursuant to this Agreement (the "Supplemental
Retirement Benefit") shall equal, but not exceed, 60 percent of the Executive's
average annual cash compensation for the 24 months of his employment with FCMC
next preceding such retirement. Subject to Article Three, below, this
Supplemental Retirement Benefit shall be paid to the Executive for a period of
at least 15 years or for his life, whichever is longer, in equal monthly
installments of an amount equal to one-twelfth of the annual Supplemental
Retirement Benefit, commencing on the first month after the Normal Retirement
Date, and on each consecutive month thereafter.
If the Executive so retires, but dies before receiving 180 monthly
payments, (whether before or after the Normal Retirement Date), FCMC shall make
or continue to make the payments that would have been made to the Executive
under this Agreement if he had not died to such individual or individuals as the
Executive may have designated in writing and filed with FCMC, as beneficiaries
of this Supplemental Retirement Benefit until 180 monthly payments have been
made (with such payments beginning on the first day of the month following the
date of death, if the Executive dies before the Normal Retirement Date). In the
absence of any effective beneficiary designation by the Executive, such payments
shall be paid to the executor or personal representative of the Executive's
Estate.
ARTICLE THREE
Consulting Services; Noncompete. It is mutually agreed that during the
60-month payment period immediately following his retirement after his Normal
Retirement Date from active employment, or for his life, whichever is shorter,
the Executive shall, at the request of FCMC, be available at reasonable times
and places as may be mutually agreed upon to render services to FCMC in an
advisory or consulting capacity. In furnishing such services, the Executive
shall not be an employee of FCMC, but shall act in the capacity of an
independent contractor. The Executive shall not be required to provide more than
120 hours of consulting services during any 12-month period.
The Supplemental Retirement Benefit shall not be paid for any month
after the Executive's Normal Retirement Date during which the Executive shall be
employed by, or perform consulting or other material services for, a
"significant competitor" of FCMC. The term "significant competitor" shall mean
any commercial bank, savings bank, savings and loan association, or mortgage
banking company, or a holding company affiliate of any of the foregoing, that at
the date of its employment or other engagement of the Executive to provide such
services has an office out of which the Executive would be primarily based
within 30 miles of FCMC's home office.
ARTICLE FOUR
Disability. If, while employed by FCMC, the Executive's employment
terminates by reason of a "disability", as defined herein, and such disability
continues until the Executive's Normal Retirement Date, the Executive shall
thereupon be entitled to receive the annual Supplemental Retirement Benefit in
accordance with the provisions of Article Two, above. For purposes of this
Agreement, "disability" shall mean the inability of the Executive to engage in
his position with FCMC, as it exists at the date that this Agreement becomes
effective, for a period of at least six months, by
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<PAGE>
reason of any medically determinable physical or mental impairment which can be
expected to result in death or be of indefinite duration.
ARTICLE FIVE
Deferred Vested Benefit.
(a) In the event FCMC terminates the Executive's employment "cause," as
that term is defined in Section 8(a)(i) of the Employment Agreement ("Cause"),
then all benefits and payments payable to the Executive, or his beneficiaries,
successors, heirs, legatees and devises pursuant to this Agreement, shall be
forfeited, and FCMC shall have no further obligations hereunder.
(b) In the event FCMC terminates the Executive's employment prior to
the Normal Retirement Date, for any reason other than for Cause, then the
Supplemental Retirement Benefit payable to the Executive hereunder shall be in
an amount equal to (i) the Supplemental Retirement Benefit, as calculated and
payable in accordance with Article Two, above, based on the Executive's cash
compensation for the 24 months of his employment with FCMC immediately preceding
such termination. (ii) reduced by five percent for each full year by which the
Executive's age at the time of such termination is less than age 55.
(c) In the event that the Executive terminates his employment with FCMC
before his Normal Retirement Date (i) for "Good Reason" as defined in Section
9(d) of the Employment Agreement (determined as if a "change in control" as
defined in Section 9(b) of the Employment Agreement had occurred immediately
before such termination) ("Good Reason") or (ii) without Good Reason, so long as
he complies with the noncompetition requirement set out in this Article Five(c),
then the Supplemental Retirement Benefit payable to the Executive hereunder
shall be an amount equal to (i) the Supplemental Retirement Benefit, as
calculated and payable in accordance with Article Two, above, based on the
Executive's cash compensation for the 24 months of his employment with FCMC
immediately preceding such termination, (ii) reduced by five percent for each
full year by which the Executive's age at the time of such termination is less
than age 55. Such Supplemental Retirement Benefit shall be forfeited if, during
the first 36 months after any voluntary termination of his employment without
Good Reason (or until his Normal Retirement Date, if earlier), the Executive
shall be employed by, or perform consulting or other material services for, a
"significant competitor" of FCMC (as defined in Article Three, above).
ARTICLE SIX
Small Amounts. In the event the amount of any monthly payments provided
herein shall be less than $100.00, FCMC in its sole discretion may, in lieu
thereof, pay the commuted value of such payments to the person entitled to
receive such payments.
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<PAGE>
ARTICLE SEVEN
Beneficiary. The Beneficiary of any payments to be made after the
Executive's death shall be Joan Ellen Delaney, his wife, or such other person or
persons as the Executive shall designate in writing to FCMC. If no Beneficiary
shall survive the Executive, any such payments shall be paid to the Executive's
estate.
ARTICLE EIGHT
Source of Payments. The Executive, the Beneficiary and any other person
or persons having or claiming a right to payments hereunder or to any interest
in this Agreement shall rely solely on the unsecured promise of FCMC set forth
herein, and nothing in this Agreement shall be construed to give the Executive,
the Beneficiary or any other person or persons any right, title, interest or
claim in or to any specified assets, fund, reserve, account or property of any
kind whatsoever owned by FCMC or in which it may have any right, title or
interest now or in the future. The Executive, his Beneficiary, successors,
heirs, legatees and devisees shall have the right to enforce his claim against
FCMC in the same manner as any unsecured creditor.
ARTICLE NINE
Insurance. If FCMC shall elect to purchase a life insurance contract to
provide FCMC with funds to make payments hereunder, FCMC shall at all times be
the sole and complete owner and beneficiary of such insurance contract and shall
have the unrestricted right to use all amounts and exercise all options and
privileges thereunder without the knowledge or consent of the Executive or the
Beneficiary or any other person, it being expressly agreed that neither the
Executive nor the Beneficiary nor any other person shall have any right, title
or interest whatsoever in or to any such contract. If FCMC purchases a life
insurance contract on the life of the Executive, the Executive agrees to sign
any papers that may be required for that purpose and to undergo any medical
examination or tests which may be necessary.
This article shall not be construed as giving the Executive or the
Beneficiary any greater rights than those of any other unsecured creditor of
FCMC.
ARTICLE TEN
Amendment. This Agreement may be amended at any time or from time to time
by written agreement of the parties.
ARTICLE ELEVEN
Assignment. Neither the Executive, nor the Beneficiary, nor any other
person entitled to payment hereunder shall have the power to transfer, assign,
anticipate, mortgage or otherwise encumber in advance any of such payments, nor
shall such payments be subject to seizure for the payment of public or private
debts, judgments, alimony or separate maintenance; or be transferable
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by operation of law in the event of bankruptcy, insolvency or otherwise.
ARTICLE TWELVE
Binding Effect. This Agreement shall be binding upon the parties, their
heirs, executors, administrators, successors and assigns. FCMC agrees that it
will not be a party to any merger, consolidation or reorganization, unless and
until its obligations hereunder shall be expressly assumed by its successor or
successors. This Agreement shall supercede and replace any prior agreement
relating to a Salary Continuation Plan heretofore entered into by FCMC and the
Executive and any such agreement shall be of no force or effect after the date
hereof.
This Agreement shall not be deemed to constitute a contract of
employment between the parties thereto, nor shall any provision hereof restrict
the right of FCMC to discharge the Executive or restrict the right or the
Executive to terminate his employment in accordance with the Employment
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement this 7th
day of March, 1996.
/S/ /S/
Witness Benjamin O. Delaney, Jr., Executive
ATTEST: FIRST CITIZENS MORTGAGE
CORPORATION
/S/ /S/
By:
Barbara J. Guy William Walsh, III
Secretary Chairman of the Board
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<PAGE>
MANAGEMENT INCENTIVE COMPENSATION PLAN OF
CITIZENS SAVINGS BANK F.S.B.
FOR THE YEAR ENDING DECEMBER 31, 1995
A. Description
This INCENTIVE COMPENSATION PLAN FOR MANAGEMENT INDIVIDUALS OF CITIZENS
SAVINGS BANK F.S.B. is a means by which additional compensation shall
be made available to designated Senior Management Officers who
contribute to the successful operation of the Bank. The purpose of this
plan is to provide an opportunity for these individuals to share in the
rewards of successful Bank performance, in recognition of their
leadership, excellence in performance, and achievement of Bank profit
and growth objectives.
This plan shall be effective for the year beginning January 1, 1995,
and ending December 31, 1995. This plan may be continued, amended, or
discontinued in subsequent years at the discretion of the Board of
Directors.
B. Definitions
1. Base Salary - the amount of regular wages and/or salary paid
to the management participant as regular earnings during the
year, exclusive of any other form of additional compensation.
2. Management Participant - in order to participate in this plan,
management individuals named herein must be in the active
employment of the Bank at the end of the plan year and occupy
one of the management positions named in this plan; any
individual who ceases to be employed, regardless of cause, by
the Bank prior to the time that distribution is made, shall
forfeit all rights to receiving any incentive payment which
may otherwise be due under this plan.
3. Incentive Payment - shall be those amounts payable to
management participants as determined in accord with this
plan; incentive payments are expressed and calculated as a
percentage of each participant's base salary; incentive
payments shall be made in the form of a one-time cash
distribution to the management participant and shall be
subject to deductions for income tax withholding. Payment
shall be made after the close of the plan year within twenty
(20) days after the yearly earnings have been made public.
4. Net Income - is the difference between total receipts and
total expenses after taxes for the year, 1994, as reported in
the Bank's annual statement and verified by the Bank's
independent auditors.
<PAGE>
C. Determination of Incentive Payment
1. The determination of incentives payable to Executive Management (Enos K.
Fry and Charles R. Duda) will be based solely upon the attainment of the
company's net income goal.
2. The determination of incentives payable to Senior Management participants
shall be based upon two criteria listed below:
a. The performance of the Bank as measured by achievements of net income goals
(50%).
b. Achieving the department's operating goals for the year (50%).
The base incentive for the attainment of these goals for the
Bank is as follows:
Enos K. Fry 25%
Charles R. Duda 20%
All other Senior Officers 15%
The bonus pool shall be tiered as follows:
Budget Bonus Potential Pool
100% 100% $169,035
105% 105% $205,532
110% 110% $242,029
The incentive percentage of the bonus moves up 5% with each 5%
increase in net income over the budget. The accrual for the
bonus pool will be included in the attainment of the net
income calculation. In the event the incentive accrual is the
determining factor in making the budget, the incentive pool
will be lowered by the amount needed to attain the budgeted
net income.
Management Participants
Enos K. Fry
Charles R. Duda
Dave Bowman
Tim Hall
Mark Schissler
Bill Scott
Terry Thomas
<PAGE>
MANAGEMENT INCENTIVE COMPENSATION PLAN OF
CITIZENS SAVINGS BANK F.S.B.
FOR THE YEAR ENDING DECEMBER 31, 1996
A. Description
This INCENTIVE COMPENSATION PLAN FOR MANAGEMENT INDIVIDUALS OF CITIZENS
SAVINGS BANK F.S.B. is a means by which additional compensation shall
be made available to designated Senior Management Officers who
contribute to the successful operation of the Bank. The purpose of this
plan is to provide an opportunity for these individuals to share in the
rewards of successful Bank performance, in recognition of their
leadership, excellence in performance, and achievement of Bank profit
and growth objectives.
This plan shall be effective for the year beginning January 1, 1996,
and ending December 31, 1996. This plan may be continued, amended, or
discontinued in subsequent years at the discretion of the Board of
Directors.
B. Definitions
1. Base Salary - the amount of regular wages and/or salary paid
to the management participant as regular earnings during the
year, exclusive of any other form of additional compensation.
2. Management Participant - in order to participate in this plan,
management individuals named herein must be in the active
employment of the Bank at the end of the plan year and occupy
one of the management positions named in this plan; any
individual who ceases to be employed, regardless of cause, by
the Bank prior to the time that distribution is made, shall
forfeit all rights to receiving any incentive payment which
may otherwise be due under this plan.
3. Incentive Payment - shall be those amounts payable to
management participants as determined in accord with this
plan; incentive payments are expressed and calculated as a
percentage of each participant's base salary; incentive
payments shall be made in the form of a one-time cash
distribution to the management participant and shall be
subject to deductions for income tax withholding. Payment
shall be made after the close of the plan year within twenty
(20) days after the yearly earnings have been made public.
4. Net Income - is the difference between total receipts and
total expenses after taxes for the year, 1995, as reported in
the Bank's annual statement and verified by the Bank's
independent auditors.
<PAGE>
C. Determination of Incentive Payment
1. The determination of incentives payable to Executive Management (Enos K.
Fry and Charles R. Duda) will be based solely upon the attainment of the
company's net income goal.
2. The determination of incentives payable to Senior Management participants
shall be based upon two criteria listed below:
a. The performance of the Bank as measured by achievements of net income goals
(50%).
b. Achieving the department's operating goals for the year (50%).
The base incentive for the attainment of these goals for the
Bank is as follows:
Enos K. Fry 25%
Charles R. Duda 20%
All other Senior Officers 15%
The bonus pool shall be tiered as follows:
Budget Bonus Potential Pool
100% 100% $169,035
105% 105% $205,532
110% 110% $242,029
The incentive percentage of the bonus moves up 5% with each 5%
increase in net income over the budget. The accrual for the
bonus pool will be included in the attainment of the net
income calculation. In the event the incentive accrual is the
determining factor in making the budget, the incentive pool
will be lowered by the amount needed to attain the budgeted
net income.
Management Participants
Enos K. Fry
Charles R. Duda
Dave Bowman
Tim Hall
LuAnn Loeber
Mark Schissler
Bill Scott
Terry Thomas
<PAGE>
DIVIDEND AGREEMENT
This Agreement is made this 3rd day of August, 1989, by and between First
Citizens Financial Corporation (the"Acquiror") and the Federal Savings and Loan
Insurance Corporation (the "FSLIC"), a corporate instrumentality and agency of
the United States, which is under the operating direction of the Federal Home
Loan Bank Board (the "Board").
WHEREAS, the Acquiror has filed with the FSLIC the appropriate application
("Application") under the Savings and Loan Holding Company Act ("Holding Company
Act"), or notice ("Notice") under the Change in Savings and Loan Control Act
("Control Act") for approval of its proposed acquisition of control of Citizens
Savings Bank, F.S.B. (The "Institution"); and
WHEREAS, in reviewing an Application under the Holding Company Act, the FSLIC
must make a determination under the standards of 12 U.S.C. 1730a(e), and in
determining whether to disapprove a Notice under the Control Act, the FSLIC must
consider the standards set forth in 12 U.S.C. 1730(q)(7) (and in some cases also
1730(q)(8); and
WHEREAS, in order to make a determination to approve the subject Application or
not disapprove the Notice, pursuant to the applicable standards, the FSLIC
requires that the Acquiror enter into this Agreement; and
WHEREAS, the Acquiror is willing to enter into this Agreement in order that the
FSLIC will act favorably upon the Acquiror's Application or Notice;
NOW THEREFORE, in consideration of the FSLIC acting favorably on the Application
or Notice, the Acquiror agrees as follows:
I. DEFINITIONS
The following terms used in this Agreement shall have the following
meanings:
A. "Control" means conclusive control or rebuttable control as set forth in 12
C.F.R. Section 574.4(a) and (b).
B. "Date of Acquisition" means the effective date on which the Acquiror
acquired control of the Institution.
C. "Default" means the failure of the Acquiror to comply with its obligations
under Section II or Section III of this Agreement or the breach of any
representation, warranty or covenant set forth in Section III of this
Agreement.
<PAGE>
-2-
D. "Dividend" means (a) any dividend paid or other distribution (including,
but not limited to, a liquidating distribution) made on or with respect to
any shares of capital stock of the Institution, but not including a stock
dividend of stock of the Institution, or (b) any payment on account of the
purchase, redemption or other acquisition or retirement of any such shares
or any warrants or option thereon, whether made by the Institution or any
direct or indirect subsidiary thereof.
E. "Fully Phased-In Capital Requirement" means the Institution's fully phased
in regulatory capital requirement as defined in 12 C.F.R Section 563.13 or
any successor regulation.
F. "Institution" means the Institution as defined in the preamble to this
Agreement, provided that if the Acquiror merges the institution being
acquired into another insured institution (as defined in Section
408(a)(1)(A) of the National Housing Act), as part of the transaction being
acted upon by the FSLIC in connection with this Agreement, then the term
Institution for purposes of all sections of this Agreement other than
Sections I.B. and III shall mean the resulting institution in such merger.
G. "Net Capital" means Regulatory Capital, excluding any portion thereof
resulting from granted forbearance or FSLIC assistance that otherwise serve
to increase Regulatory Capital.
H. "Regulatory Capital" means regulatory capital defined in accordance with 12
C.F.R. Section 561.13, or any successor regulation thereto.
I. "Regulatory Capital Requirement" means the Institution's regulatory capital
requirement at a given time computed in accordance with 12 C.F.R. Section
563.13, or any successor regulation thereto.
J. "Shares" means all shares of the stock of the Institution that have been
acquired by the Acquiror; any securities convertible into any such shares;
any options, warrants or other rights for the acquisition of any such
shares; and all such shares, securities, options, warrants or rights that
may otherwise be issued to or acquired by the Acquiror, whether before or
after the Date of Acquisition, together with the certificates or other
instruments or agreements evidencing those shares, securities, options,
warrants or rights.
K. "Principal Supervisory Agent" means the Principal Supervisory Agent at the
Federal Home Loan Bank of Atlanta.
<PAGE>
-3-
II. OBLIGATIONS OF ACQUIROR
A. The Acquiror may not accept from the Institution, nor cause the Institution
to pay, any Dividend that would cause the Institution's Regulatory Capital
to fall below its Regulatory Capital Requirement.
B. At any time the Institution's Net Capital exceeds the Fully Phased-In
Requirement, the Acquiror may not accept from the Institution, nor cause
the Institution to pay, Dividends in an amount exceeding 100 percent of the
Institution's cumulative net income for the prior eight (8) quarters as
reflected on the Institution's quarterly reports to the Board, less
cumulative dividends paid for such prior eight (8) quarters, without the
prior written approval of the Principal Supervisory Agent. Provided,
however, that if a Dividend would cause the Institution's Net Capital to
fall below its Fully Phased-In Capital Requirement, such dividend may not
cause the Institution's Net Capital to fall below the Institution's Fully
Phased-In Capital Requirement by an amount exceeding 50 percent of the
Institution's cumulative net income for the prior eight (8) quarters as
reflected on the Institution's quarterly reports to the Board, less
cumulative dividends paid for such prior eight (8) quarters, without the
prior written approval of the Principal Supervisory Agent.
C. At any time the Institution's Net Capital exceeds the Regulatory Capital
Requirement, but is less than the Fully Phased-In Capital Requirement, the
Acquiror may not accept from the Institution, nor cause the Institution to
pay, Dividends in an amount exceeding 50 percent of the Institution's
cumulative net income for the prior eight (8) quarters as reflected on the
Institution's quarterly reports to the Board, less cumulative dividends
paid for such prior eight (8) quarters, without the prior written approval
of the Principal Supervisory Agent.
D. The Acquiror may not accept from the Institution, nor cause the Institution
to pay, any Dividend that is prohibited by any statute or regulation,
including but not limited to 12 C.F.R. Section 563b.3(g), or by any
agreement entered into by the Institution with the FSLIC or its delegates.
III. REPRESENTATIONS, COVENANTS AND WARRANTIES OF THE ACQUIROR
Acquiror represents, covenants and warrants to FSLIC that the
information given to the FSLIC by the Acquiror and relied on thereby in
connection with the acquisition of control of the Institution is true,
accurate, complete and current in all material respects.
IV. DEFAULTS
A. If the FSLIC shall determine that a Default has occurred, it shall give
notice of such Default to the Acquiror and to the Institution and afford
the Acquiror an opportunity to cure such Default. If such Default is not
cured within ninety (90) days of the date the notice of Default is issued,
or waived or forborne in the manner provided herein, the FSLIC may exercise
any right, or exercise or seek any remedy that is available in
<PAGE>
-4-
law or equity, or by statute or regulation including but not limited to
specific performance and administrative or judicial enforcement
proceedings. No failure or delay on the part of the FSLIC in the exercise
of any right or remedy shall operate as a waiver or forbearance thereof,
nor shall any partial exercise of any right or remedy preclude other or
further exercise of any other right or remedy. The Acquiror shall pay any
attorney fees and other reasonable expenses incurred by the FSLIC in
exercising its rights or seeking any remedies hereunder.
B. The FSLIC, in its sole discretion, may waive or forbear any past Default
hereunder and its consequences, before or after the giving of the notice of
Default in the manner provided above, by delivering notice of such waiver
or forbearance in writing to the Acquiror, but no such waiver or
forbearance shall extend to any Default that occurs subsequent to the date
of such waiver or forbearance, and no waiver or forbearance of purported
waiver or purported forbearance that is not in writing shall be effective.
Any waiver or forbearance of any right, power, or remedy shall not preclude
its further exercise.
C. The Acquiror hereby agrees to execute and deliver any documents and to take
such other actions as the FSLIC may request in order for the FSLIC to
exercise its rights under this Agreement. The foregoing will in no way
limit the Acquiror's right to seek judicial relief in connection with a
matter related to, or arising under, this Agreement.
V. MISCELLANEOUS PROVISIONS
A. Any notice hereunder shall be in writing and shall be delivered by hand or
sent by United States express mail or commercial express mail, postage
prepaid, and addressed as follows:
If to the Acquiror: First Citizens Financial Corporation
8485 Fenton Street
Silver Spring, MD 20910
If to the FSLIC: Principal Supervisory Agent
Federal Home Loan Bank of Atlanta
1475 Peachtree Street, N.W.
Atlanta, GA 30309
If to the Institution: Citizens Savings Bank F.S.B.
8485 Fenton Street
Silver Spring, MD 20910
B. This Agreement shall be deemed a contract made under and governed by
Federal law.
C. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective transferees, successors, assigns,
heirs, administrators, executors, and trustees.
<PAGE>
-5-
D. All references to regulations of the Board or the FSLIC used in this
Agreement shall include any successor regulation thereto, it being
expressly understood that subsequent amendments to such regulations may be
made and that such amendments may increase or decrease the Acquiror's
obligation under this Agreement.
E. No supplement, modification or amendment of this Agreement shall be binding
unless executed in writing by both of the parties.
F. This Agreement has been duly authorized, executed, and delivered, and
constitutes, in accordance with its terms, a valid and binding obligation
of the Acquiror and the FSLIC. It is understood and agreed that this
Agreement is a "written agreement entered into with the Corporation" as
that phrase is used in Section 407(e) of the National Housing Act ("NHA"),
12 U.S.C Section 1730(e) (1982).
G. Any rights, powers, and remedies given to the parties by this Agreement
shall be in addition to all rights, powers, and remedies given by any
applicable statute, regulation, or rule of law.
H. The Principal Supervisory Agent has the authority to act on behalf of the
FSLIC in granting approvals, waivers or forbearance, giving notices of
default, or taking any other action provided for in this Agreement.
I. This Agreement shall be effective as of the Date of Acquisition.
J. If any provision of this Agreement is invalid or unenforceable, all of the
remaining provisions of this Agreement shall nevertheless remain in full
force and effect and shall be binding on the Acquirors and the FSLIC.
K. This Agreement, together with any understanding agreed to in writing by the
parties, constitutes the entire agreement between the parties and
supersedes all prior agreements and understandings of the parties in
connection with the subject matter hereof.
L. This Agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which shall constitute the same
instruments, and any party may execute this Agreement by signing any such
counterpart.
<PAGE>
-6-
VI. TERMINATION OF AGREEMENT
Unless otherwise terminated or extended by the mutual consent of the
parties hereto, the Acquiror's obligations under this Agreement shall terminate:
(1) ten years after the Date of Acquisition; or (2) as a result of a transfer of
all of the Acquiror's Shares which has received all applicable regulatory
approvals. Termination of this Agreement shall not preclude the exercise by the
FSLIC or any right or remedy hereunder which arose out of a Default that
occurred or existed prior to such termination and in respect to which notice of
such Default has been given pursuant to Section V hereof on or before the
ninetieth (90th) day following such termination. In addition, termination of
this Agreement shall not terminate any of the Acquiror's obligations arising
from any other source including, but not limited to, any other agreement with
the FSLIC, or any statute or regulation.
IN WITNESS WHEREOF, the parties have executed this Agreement by their duly
authorized officer or designated agency on this 3rd day of August, 1989.
FIRST CITIZENS FINANCIAL CORPORATION
By: -----------------------------------------------------
FEDERAL SAVINGS AND LOAN
INSURANCE CORPORATION
By: -----------------------------------------------------
Supervisory Agent
Federal Home Loan Bank of
Atlanta
Exhibit No. 11
FIRST CITIZENS FINANCIAL CORPORATION AND SUBSIDIARIES
COMPUTATION OF PRIMARY AND FULLY DILUTED EARNINGS PER SHARE(a)
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------------------
1995 1994 1993
---- ---- ----
(Dollars in thousands except per share data)
<S> <C> <C> <C>
PRIMARY:
Net income ............................ $ 4,107 $ 3,635 $ 5,879
========== ========== ==========
Shares:
Weighted average number of common
shares outstanding ............... 2,611,052 2,570,805 2,553,592
Dilutive effect of exercise of
stock options .................... 252,787 258,299 221,492
---------- ---------- ----------
Weighted average number of common
shares outstanding, as adjusted .. 2,863,839 2,829,104 2,775,084
========== ========== ==========
Net income per share ............... $ 1.43 $ 1.28 $ 2.12
========== ========== ==========
ASSUMING FULL DILUTION:
Shares:
Weighted average number of common
shares as adjusted, for primary
computation ...................... 2,863,839 2,829,104 2,775,084
Additional dilutive effect of
exercise of stock options ........ 22,107 -- 6,609
---------- ---------- ----------
Weighted average number of common
shares outstanding, as adjusted .. 2,885,946 2,829,104 2,781,693
========== ========== ==========
Net income per share ............... $ 1.42 $ 1.28 $ 2.12
========== ========== ==========
<FN>
----------
(a) restated for the effects of a 10% stock dividend distributed June 5, 1995.
</FN>
</TABLE>
Exhibit 23 (a)
Consent of Independent Auditors
The Board of Directors
First Citizens Financial Corporation
Gaithersburg, Maryland:
We consent to incorporation by reference in the registration statements
(Nos. 33-27259, 33-62466 and 33-91612) of our report dated February 3, 1995,
relating to the consolidated statement of financial condition of First Citizens
Financial Corporation and subsidiary as of December 31, 1994, and the related
consolidated statements of income, stockholders' equity, and cash flows for each
of the years in the two-year period ended December 31, 1994, which report is
incorporated by reference in the December 31, 1995 annual report on Form 10-K of
First Citizens Financial Corporation. Our report refers to a change in the
method of accounting for income taxes in 1993.
KPMG PEAT MARWICK LLP
Washington, D.C.
March 20, 1996
<PAGE>
Exhibit 23 (b)
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation by
reference in this Form 10-K of our report dated January 26, 1996 included in
First Citizens Financial Corporation's (the "Corporation") Registration
Statement File Nos. 33-27259, 33-62466 and 33-91612. It should be noted that we
have not audited any financial statements of the Corporation subsequent to
December 31, 1995 or performed any audit procedures subsequent to the date of
our report.
ARTHUR ANDERSEN LLP
Washington, D.C.
March 29, 1996
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from First
Citizens Financial Corporation's Form 10-K for the Year ended December 31, 1995
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000846869
<NAME> FIRST CITIZENS FINANCIAL CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 10,538
<INT-BEARING-DEPOSITS> 5,173
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 73,730
<INVESTMENTS-CARRYING> 42,083
<INVESTMENTS-MARKET> 42,439
<LOANS> 454,984
<ALLOWANCE> 8,435
<TOTAL-ASSETS> 607,429
<DEPOSITS> 487,097
<SHORT-TERM> 27,640
<LIABILITIES-OTHER> 6,551
<LONG-TERM> 47,500
0
0
<COMMON> 26
<OTHER-SE> 38,728
<TOTAL-LIABILITIES-AND-EQUITY> 607,429
<INTEREST-LOAN> 36,728
<INTEREST-INVEST> 6,574
<INTEREST-OTHER> 161
<INTEREST-TOTAL> 43,463
<INTEREST-DEPOSIT> 22,138
<INTEREST-EXPENSE> 25,740
<INTEREST-INCOME-NET> 17,723
<LOAN-LOSSES> (28)
<SECURITIES-GAINS> 46
<EXPENSE-OTHER> 14,301
<INCOME-PRETAX> 6,093
<INCOME-PRE-EXTRAORDINARY> 6,093
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,107
<EPS-PRIMARY> 1.43
<EPS-DILUTED> 1.42
<YIELD-ACTUAL> 7.87
<LOANS-NON> 1,828
<LOANS-PAST> 0
<LOANS-TROUBLED> 5,475
<LOANS-PROBLEM> 4,075
<ALLOWANCE-OPEN> 7,642
<CHARGE-OFFS> 166
<RECOVERIES> 12
<ALLOWANCE-CLOSE> 7,460
<ALLOWANCE-DOMESTIC> 1,252
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 6,208
</TABLE>
