CHANGE IN CONTROL AGREEMENT

This CHANGE IN CONTROL AGREEMENT (“Agreement”) is hereby entered into as of November 21, 2023 (the “Effective Date”), by and between FIRST CITIZENS COMMUNITY BANK (the “Bank”), CITIZENS FINANCIAL SERVICES, INC. (the “Company”), the holding company of the Bank, as guarantor, and Stephen J. Guillaume (“Executive”).

WHEREAS, the Bank recognizes the importance of Executive to the Bank’s operations and wishes to protect Executive’s position with the Bank in the event of a change in control of the Bank or the Company for the period provided for in this Agreement; and

WHEREAS, Executive and the Bank desire to enter into an agreement setting forth the terms and conditions of payments due to Executive in the event of a change in control and the related rights and obligations of each of the parties.

NOW, THEREFORE, in consideration of the promises and mutual covenants herein contained, it is hereby agreed as follows:

If the Company or the Bank cannot provide the benefits under Section 1(a)(ii) or 1(a)(iii) under the terms of the plans or contracts, the Bank shall pay to Executive, a dollar amount equal to the cost to Executive of obtaining such benefits (or substantially similar benefits), not to exceed 125% of the cost to the Company or the Bank of obtaining such benefits (or substantially similar benefits).  Such payment shall be made to Executive in a lump sum within ten (10) days following the effective date of the Release, or, if later, it being determined that the Company or the Bank cannot provide the benefits under the applicable plans or contracts.

For purposes of this Agreement, a “Qualifying Termination” shall mean:

For purposes of this Agreement, “Cause” shall mean: (a) the willful failure by Executive to substantially perform his duties (other than a failure resulting from Executive’s incapacity because of physical or mental illness), after notice from the Company or the Bank and a failure to cure such violation within thirty (30) days of said notice; (b) the willful engaging by Executive in misconduct injurious to the Company or the Bank or the reputation of the Company or the Bank, or which is reasonably likely to be injurious to the Company or the Bank or the reputation of the Company or the Bank; (c) the dishonesty or gross negligence of Executive in the performance of his duties; (d) the breach of Executive’s fiduciary duty involving personal profit; (e) the material violation of any law, rule or regulation governing banks or bank officers or any final cease and desist order issued by a bank regulatory authority, or the material violation of any Company or Bank policy; (f) conduct on the part of Executive which brings or is reasonably likely to bring public discredit to the Company or the Bank; (g) unlawful discrimination by Executive, including harassment against the Company or the Bank’s employees, customers, business associates, contractors, or visitors; (h) theft or abuse by Executive of the Company or the Bank’s property or the property of the Company or the Bank’s customers, employees, contractors, vendors, or business associates; (i) failure of Executive to follow the good faith lawful instructions of the board of directors of the Company or the Bank with respect to its operations, after notice from the Company or the Bank and a failure to cure such violation within thirty (30) days of said notice; (j) the direction or recommendation of a state or federal bank regulatory authority to remove Executive’s position with the Company and/or the Bank as identified herein; (k) any final removal or prohibition order to which Executive is subject, by a federal banking agency pursuant to Sections 8(e) and 8(g) of the Federal Deposit Insurance Act; (l) Executive’s conviction of or plea of guilty or nolo contendere to a felony, crime of falsehood or a crime involving moral turpitude, or the actual incarceration of Executive; (m) any act of fraud, misappropriation or personal dishonesty; (n) insubordination; (o) misrepresentation of a material fact, or omission of information necessary to make the information supplied not materially misleading, in an application or other information provided by Executive to the Company or any representative of the Company in connection with Executive’s employment with the Company or the Bank; (p) the existence of any material conflict between the interests of the Company or the Bank and Executive that is not disclosed in writing by Executive to the Company or the Bank and approved in writing by the board of directors of the Company or the Bank; or (q) Executive takes action that is contrary to the best interest of the Company.

For purposes of this Agreement, “Good Reason” shall mean the occurrence of any of the following events, without Executive’s consent:

(f) any failure to provide Executive with benefits at least as favorable as those enjoyed by Executive under any of the Company’s or the Bank’s retirement or pension, life insurance plans, medical, health and accident, disability or other employee benefit plans in which Executive participated at the Date of the Change in Control, or the taking of any action that would materially reduce any of such benefits in effect at the Date of the Change in Control; provided, in each case, (i) Executive provides written notice to the Bank stating the basis for such Good Reason within sixty (60) days following the initial occurrence of such event, (ii) the Bank fails to cure the action or inaction that is the basis for Good Reason within thirty (30) days following such notice, and (iii) Executive resigns within thirty (30) days following the expiration of such cure period.

The Bank shall make all payments provided for under this Agreement. The Company, however, unconditionally guarantees all amounts and benefits due to Executive and, if the Bank does not timely pay or provide such amounts and benefits, the Company shall pay or provide such amounts and benefits.

This Agreement contains the entire understanding between the parties hereto and supersedes any prior agreement between the Bank and Executive, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring to Executive of a kind elsewhere provided. No provision of this Agreement shall be interpreted to mean that Executive is subject to receiving fewer benefits than those available to Executive without reference to this Agreement. Nothing in this Agreement shall alter the at-will nature of Executive’s employment or confer upon Executive the right to continue in the employ of the Bank or shall impose on the Bank any obligation to employ or retain Executive in its employ for any period.

If, for any reason, any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provision of this Agreement or any part of such provision not held so invalid, and each such other provision and part thereof shall to the full extent consistent with law continue in full force and effect.

The headings of sections and paragraphs are included in this Agreement solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement. In addition, references to the masculine in this Agreement shall apply to both the masculine and the feminine.

Except to the extent preempted by federal law, the validity, interpretation, performance, and enforcement of this Agreement shall be governed by the laws of the Commonwealth of Pennsylvania, without regard to principles of conflicts of law of that state.

The Company, the Bank and Executive recognize that in the event a dispute should arise between them concerning the interpretation or implementation of this Agreement, lengthy and expensive litigation will not afford a practical resolution of the issues within a reasonable period of time. Therefore, each party agrees that all disputes, disagreements and questions of interpretation concerning this Agreement are to be submitted for resolution, in Williamsport, Pennsylvania, to the American Arbitration Association (the “Association”) in accordance with the Association’s National Rules for the Resolution of Employment Disputes or other applicable rules then in effect (“Rules”). The Company, the Bank or Executive may initiate an arbitration proceeding at any time by giving notice to the other in accordance with the Rules. The Company, the Bank and Executive may, as a matter or right, mutually agree on the appointment of a particular arbitrator from the Association’s pool. The arbitrator shall not be bound by the rules of evidence and procedure of the courts of the Commonwealth of Pennsylvania but shall be bound by the substantive law applicable to this Agreement. The arbitration proceeding and all filing, testimony, documents, and information, relating to or presented during the evaluation proceeding, shall be disclosed exclusively for the purpose of facilitating the arbitration process and for no other purpose and shall be treated as strictly confidential. The decision of the arbitrator, absent fraud, duress, incompetence or gross and obvious error of fact, shall be final and binding upon the parties and shall be enforceable in courts of proper jurisdiction. Following written notice of a request for arbitration, the Company, the Bank and Executive shall be entitled to an injunction restraining all further proceedings in any pending or subsequently filed litigation concerning this Agreement, except as otherwise provided herein. The Arbitrator or the Court (whichever is applicable) may award the prevailing party in a dispute reasonable counsel fees not to exceed $25,000.

All reasonable legal fees and expenses paid or incurred by Executive pursuant to any dispute or question of interpretation relating to this Agreement shall be paid or reimbursed by the Bank, only if Executive is successful in arbitration.

The Company or the Bank shall provide Executive (and Executive’s heirs, executors and administrators) with coverage under a standard directors’ and officers’ liability insurance policy at its expense and shall indemnify Executive (and Executive’s heirs, executors and administrators) to the fullest extent permitted under applicable law against all expenses and liabilities reasonably incurred in connection with or arising out of any action, suit or proceeding in which Executive may be involved by reason of having been a director or officer of the Company or the Bank (whether or not Executive continues to be a director or officer at the time of incurring such expenses or liabilities), such expenses and liabilities to include, but not be limited to, judgments, court costs, attorneys’ fees and the costs of reasonable settlements.

The Bank and the Company shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all of the business or assets of the Bank or the Company, expressly and unconditionally to assume and agree to perform the Bank’s and the Company’s obligations under this Agreement, in the same manner and to the same extent that the Bank and the Company would be required to perform if no such succession or assignment had taken place.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the date first set forth above.