Document:

serp.htm

    Exhibit
10.6

    
      

      FIRST
CITIZENS NATIONAL BANK

      SUPPLEMENTAL
EXECUTIVE RETIREMENT PLAN

      

      Purpose

      

      The
purpose of the Plan is to recognize those senior officers of the Bank who have
contributed substantially to the success of the Bank and to encourage such
officers to remain as employees of the Bank.  This Plan shall be
considered an unfunded arrangement maintained primarily to provide supplemental
retirement benefits for participating Executives, and to be considered a
non-qualified benefit plan for purposes of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”).

      

      

      ARTICLE
1

      DEFINITIONS

      

      The
following words and phrases used in this Plan have the meanings
specified.

      

      “Accrual
Balance” means as of any date, the liability that should be accrued by
the Bank under generally accepted accounting principles (“GAAP”) to reflect the
Bank’s obligation to each Executive who is  participating in the Plan,
without regard to whether such amount is actually accrued as of such
date.

      

      “Actuarial
(Actuarially) Equivalent” means a benefit of equivalent value to the
normal form of benefit determined by generally accepted actuarial principles. An
actuarially equivalent lump sum shall be calculated using the Discount Rate in
effect on the determination date.

      

      “Beneficiary”
means each designated person, or the estate of a deceased Executive, entitled to
benefits, if any, upon the death of the Executive, determined according to
Article 4.

      

      “Benefit
Percentage” means the
percentage of Final Average Pay specified for each Executive.  The
Benefit Percentage of each initial participant is set forth in Appendix
A.

      

      “Change
in Control” shall mean a change in control as defined in Code Section
409A and rules, regulations, and guidance of general application thereunder
issued by the Department of the Treasury, including:

      

      a)           Change
in ownership: A change in
ownership of the Holding Company occurs on the date any one person or group of
persons accumulates ownership of the Holding Company’s stock constituting more
than 50% of the total fair market value or total voting power of the Holding
Company’s stock,

      

      (b)           Change
in effective control: A change in
effective control occurs when either (i) any one person or more than one person
acting as a group acquires within a 12-month period ownership of stock of the
Holding Company possessing 35% or more of the total voting power of the Holding
Company’s stock, or (ii) a majority of the Holding Company’s Board of Directors
is replaced during any 12-month period by Directors whose appointment or
election is not endorsed in advance by a majority of the Holding Company’s Board
of Directors, or

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (c)           Change
in ownership of a substantial portion of assets: A change in the
ownership of a substantial portion of the Holding Company’s assets occurs if in
a 12 month period any one person or more than one person acting as a group
acquires assets from the Holding Company having a total gross fair market value
equal to or exceeding 40% of the total gross fair market value of all of the
assets of the Holding Company immediately before the acquisition or
acquisitions. For this purpose, “gross fair market value” means the value of the
Holding Company’s assets, or the value of the assets being disposed of,
determined without regard to any liabilities associated with the
assets.

      

      “Code”
means the Internal Revenue Code of 1986, as amended, and rules, regulations, and
guidance of general application issued thereunder by the Department of the
Treasury.

      

      “Disability”
means that an Executive is either:

      

      (a)           Unable
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months, or

      

      (b)           By
reason of any medically determinable physical or mental impairment (which can be
expected to result in death or can be expected to last for a continuous period
of not less than 12 months) receiving income replacement benefits for a period
of three (3) or more months under a disability and health plan covering
employees of the Bank.

      

      “Discount
Rate” means the rate used by the Plan Administrator for determining an
Executive’s Accrual Balance. If required by its outside auditors, the Plan
Administrator may adjust the Discount Rate to maintain the rate within
reasonable standards according to GAAP.

      

      “Early
Termination” means Separation from Service before Normal Retirement Age
for reasons other than death, Disability, Termination for Cause, or after a
Change in Control.

      

      “Effective
Date” means January 1, 2008.

      

      “Executive”
means an officer of the Bank who is designated as a participant in the
Plan by the Compensation Committee of the Board of Directors of the
Bank.  The initial participants are identified in Appendix A to the
Plan.

      

      “Final
Average Pay” means the average of an Executive’s annual cash compensation
(including salary, bonus and other cash items) during the three completed
calendar years preceding the Executive’s termination of employment.

      

       “Holding
Company” means
Citizens Financial Services, Inc.

      

      “Normal
Retirement Age” means the Executive’s 62nd birthday.

      

      “Plan”
means this First Citizens National Bank Supplemental Executive Retirement
Plan

      

      “Plan
Administrator” or “Administrator”
means the plan administrator described in Article 8.

      

       “Plan
Year” means a twelve-month period commencing on January 1 and ending on
December 31 of each year. The initial Plan Year shall commence on the Effective
Date.

      

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      “Separation
from Service” means an Executive’s service (as an executive and/or
independent contractor to the Bank and any member of a controlled group, as
defined in Code Section 414), terminates for any reason, other than because of a
leave of absence approved by the Bank or the Executive’s death.

       

       “Termination for Cause” and “Cause” shall
mean (i) the willful failure by an Executive to substantially perform his duties
hereunder (other than a failure resulting from the Executive’s incapacity
because of physical or mental illness, after notice from the Bank and a failure
to cure such violation within thirty (30) days of said notice; (ii) the willful
engaging by an Executive in misconduct injurious to the Bank; (iii) the
dishonesty or gross negligence of the Executive in the performance of his
duties; (iv) the breach of the Executive’s fiduciary duty involving personal
profit; (v) 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; (vi) conduct on the part of Executive which brings public
discredit to the Bank; (vii) unlawful discrimination by the Executive, including
harassment against Bank’s employees, customers, business associates,
contractors, or visitors; (viii) theft or abuse by the Executive of the Bank’s
property or the property of the Bank’s customers, employees, contractors,
vendors, or business associates; (ix) failure of the Executive to follow the
good faith lawful instructions of the Board of Directors of the Bank with
respect to its operations, after notice from the Bank and a failure to cure such
violation within thirty (30) days of said notice; (x) the direction or
recommendation of a state or federal bank regulatory authority to remove the
Executive’s position with the Bank as identified herein;  (xi) any
final removal or prohibition order to which the Executive is subject, by a
federal banking agency pursuant to Sections 8(e) and 8(g) of the Federal Deposit
Insurance Act; (xii) the 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; (xiii) any act of fraud, misappropriation
or personal dishonesty; (xv) any act insubordination; (xiv) 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 the Executive to the Bank or any representative of the Bank in
connection with the Executive’s employment with the Bank; (xvi) the existence of
any material conflict between the interests of Bank and the Executive that is
not disclosed in writing by the Executive to the Bank and approved in writing by
the Board of Directors of Bank; or (xvii) the Executive takes action that is
clearly contrary to the best interest of the Bank.

      

      “Year
of Vesting Service” means each 12-month period in which the Executive
completes 1,000 or more hours of service in the employ of the Bank, beginning on
the Effective Date.

      

      ARTICLE
2

      LIFETIME
BENEFITS

      

      2.1           Normal
Retirement Benefit.
Unless a Separation from Service or a Change in Control occurs before Normal
Retirement Age, upon an Executive’s termination of employment on or after
attaining Normal Retirement Age the Bank shall pay to the Executive the benefit
described in this Section 2.1(a) instead of any other benefit under this
Plan

      

      (a)           Amount
of Normal Retirement
Benefit. The annual Normal
Retirement benefit is the product of the Executive’s Benefit Percentage and his
Final Average Pay.

      

      (b)           Payment
of Benefit. Subject to
Section 2.6, the Bank shall pay the annual benefit to the Executive in quarterly
installments beginning on the first business day of the first
calendar quarter beginning after the Executive’s termination of
employment. The Normal Retirement benefit as provided in Section 2.1(a) above,
shall be paid to the Executive (or in the event of the Executive’s death, to the
Executive’s Beneficiary) for a period of 15 years (60 quarterly
payments).

      

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      (c)           Alternative
Forms of Payment. Subject to
Section 2.6, Executive may elect to receive his Normal Retirement Benefit
payable under this Plan in an Actuarially Equivalent Lump Sum, provided he
elects to do so upon his initial designation as a Participant or as otherwise
permitted by Code Section 409A.

      

      2.2           Early
Termination Benefit.
Upon Early Termination, the Bank shall pay to the Executive the benefit
described in this Section 2.2(a) instead of any other benefit under this
Plan.

      

      (a)           Amount
of Benefit. An
Executive’s benefit upon Early Termination shall be the Executive’s vested
Accrual Balance as of the end of the month preceding his Early
Termination.

      

      (b)           Payment
of Benefit. Subject to
Section 2.4, an Executive’s Early Termination benefit shall be paid in a lump
sum as soon as administratively practicable following the Executive’s
termination of employment.  Notwithstanding the foregoing, Executive
may elect to receive his Early Termination Benefit payable under this Plan in
quarterly installments over a 15-year period, beginning on the first business
day of the first calendar quarter beginning after the
Executive’s termination of employment, provided he elects to do so upon his
initial designation as a Participant or as otherwise permitted by Code Section
409A.  For purposes of the foregoing installment payment election, the
quarterly payment shall be calculated as a fixed amount which amortizes the
Accrual Balance at termination of employment in equal quarterly installments of
principal and interest over the applicable period.  For purposes of
determining the amount of the quarterly payment,  the interest rate
used shall be the Discount Rate in effect at the Executive’s Early
Termination.

      

      (c)           Vesting
of Accrual
Balance. The vested amount
of an Executive’s Accrual Balance shall be determined on the basis of the
Executive’s number of Years of Vesting Service according to the following
schedule:

      

      
        	
                Vesting
      Schedule

              
	
                Years
      of Vesting Service

              	 
      	
                Percent
      Vested

              
	
                Less
      than 1

              	 
      	
                0%

              
	
                1
      but less than 2

              	 
      	
                33
      1/3%

              
	
                2
      but less than 3

              	 
      	
                66
      2/3%

              
	
                3
      or more

              	 
      	
                      100%

              

      

      

      

      Notwithstanding
anything in this Plan to the contrary, a Participant’s Accrual Balance shall,
for purposes of this Section 2.2, be fully vested if the Participant’s
terminates employment by reason of Disability.

      

      2.3           Change
in Control
Benefit.
If a Change in Control occurs after the effective date of an Executive’s
participation in the Plan but before the Executive’s Normal Retirement Age and
before his Separation from Service, the Bank shall pay to the Executive the
benefit described in this Section 2.3 instead of any other benefit under this
Plan.

      

      (a)           Amount
of Benefit: The benefit under
this Section 2.3 is equal to the Normal Retirement benefit under Section 2.1
(determined without regard to the Executive’s age or Years of Service as of the
Change in Control Effective date).

      

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      (b)           Payment
of Benefit: The Bank shall
pay the Change in Control benefit under Section 2.3 of this Plan to the
Executive that is actuarially equivalent to his benefit calculated under Section
2.1 lump sum within ten (10) days after the Change in Control. If the Executive
receives the benefit under this Section 2.3 because of the occurrence of a
Change in Control, the Executive shall not be entitled to claim additional
benefits under Section 2.3 if an additional Change in Control occurs
thereafter.

      

      2.4           Savings
Clause Relating to Compliance with Code Section 409A.
Despite any contrary provision of this Plan, if when the Executive’s employment
terminates the Executive is a Specified Employee, as defined in Code Section
409A, and if any payments under Article 2 of this Plan will result in additional
tax or interest to the Executive because of Section 409A, the Executive will not
be entitled to the payments under Article 2 until the earliest of:

      

      (i)           the
date that is at least six (6) months after termination of the Executive’s
employment for reasons other than the Executive’s death, or

      

      (ii)           the
date of the Executive’s death, or

      

      (iii)           any
earlier date that does not result in additional tax or interest to the Executive
under Section 409A.

      

      If any
provision of this Plan would subject an Executive to additional tax or interest
under Section 409A of the Code or result in a violation of Section 409A of Code,
the Bank shall reform such provision. However, the Bank shall maintain to the
maximum extent practicable the original intent of the applicable provision
without subjecting the Executive to additional tax or interest, and the Bank
shall not be required to incur any additional compensation expense as a result
of the reformed provision. References in this Plan to Section 409A of the Code
include rules, regulations, and guidance of general application issued by the
Department of the Treasury under Code Section 409A.

      

      2.5           One
Benefit Only. Despite anything to the contrary in this Plan, an Executive and
Beneficiary are entitled to one benefit only under this Plan, which shall be
determined by the first event to occur that is dealt with by this
Plan.

      

      ARTICLE
3

      DEATH
BENEFITS

      

      3.1           Death
During Active Service
or After Benefit Commencement.  If
an Executive dies before a Separation from Service, the Executive’s Beneficiary
shall be entitled to receive an amount in cash equal to the benefit the
Executive would have received under Section 2.1 if he were deemed to have
attained his Normal Retirement Age immediately prior to his death, unless the
Change in Control benefit shall have previously been paid to the
Executive.  If a benefit is payable to the Executive’s Beneficiary
under this Section 3.1, the benefit shall be paid in a lump sum within 90 days
after the Executive’s death.  If the Executive dies after a Separation
from Service but prior to the time all payments have been made, the remaining
payments shall be made to the Executive’s Beneficiary at the same time such
payment would have been made to the Executive.

      

      ARTICLE
4

      BENEFICIARIES

      

      4.1           Beneficiary
Designations.
The Executive shall have the right to designate at any time a Beneficiary to
receive any benefits payable under this Plan upon the death of the Executive.
The Beneficiary designated under this Plan may be the same as, or different
from, the beneficiary designation under any other benefit plan of the Bank in
which the Executive participates.

      

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

      4.2           Beneficiary
Designation: Change.
The Executive shall designate a Beneficiary by completing and signing the
Beneficiary Designation Form and delivering it to the Plan Administrator or its
designated agent. The Executive’s Beneficiary designation shall be deemed
automatically revoked if the Beneficiary predeceases the Executive or if the
Executive names a spouse as Beneficiary and the marriage is subsequently
dissolved. The Executive shall have the right to change a Beneficiary by
completing, signing, and otherwise complying with the terms of the Beneficiary
Designation Form and the Plan Administrator’s rules and procedures, as in effect
from time to time. Upon the acceptance by the Plan Administrator of a new
Beneficiary Designation Form, all Beneficiary designations previously filed
shall be cancelled. The Plan Administrator shall be entitled to rely on the last
Beneficiary Designation Form filed by the Executive and accepted by the Plan
Administrator before the Executive’s death.

      

      4.3           Acknowledgment.
No designation or change in designation of a Beneficiary shall be effective
until received, accepted, and acknowledged in writing by the Plan Administrator
or its designated agent.

      

      4.4           No
Beneficiary Designation.
If the Executive dies without a valid beneficiary designation, or if all
designated Beneficiaries predecease the Executive, then the Executive’s spouse
shall be the designated Beneficiary. If the Executive has no surviving spouse,
the benefits shall be made to the personal representative of the Executive’s
estate.

      

      4.5           Facility
of Payment.
If a benefit is payable to a minor, to a person declared incapacitated, or to a
person incapable of handling the disposition of his or her property, the Bank
may pay such benefit to the guardian, legal representative, or person having the
care or custody of the minor, incapacitated person, or incapable person. The
Bank may require proof of incapacity, minority, or guardianship as it may deem
appropriate before distribution of the benefit. Distribution shall completely
discharge the Bank from all liability for the benefit.

      

      ARTICLE
5

      GENERAL
LIMITATIONS

      

      5.1           Termination
for Cause.
Despite any contrary provision of this Plan, the Bank shall not pay any benefit
under this Plan if an Executive’s a Separation from Service is the result
of an Executive’s Termination for Cause.

      

      5.2           Removal.
If an Executive is removed from office or permanently prohibited from
participating in the Bank’s affairs by an order issued under Section 8(e)(4) or
(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. 1818(e)(4) or (g)(1), all
obligations of the Bank under this Plan shall terminate as to the Executive as
of the effective date of the order.

      

      5.3           Default.
Notwithstanding any provision of this Plan to the contrary, if the Bank is in
“default” or “in danger of default,” as those terms are defined in Section 3(x)
of the Federal Deposit Insurance Act, 12 U.S.C. 1813(x), all obligations under
this Plan shall terminate.

      

      5.4           FDIC
Open-Bank Assistance.
All obligations under this Plan shall terminate, except to the extent determined
that continuation of the contract is necessary for the continued operation of
the Bank, when the Federal Deposit Insurance Corporation enters into an
agreement to provide assistance to or on behalf of the Bank under the authority
contained in Federal Deposit Insurance Act Section 13(c). 12 U.S.C.
1823(c).

      

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      ARTICLE
6

      CLAIMS
AND REVIEW PROCEDURES

      

      6.1           Claims
Procedure. A person or beneficiary (“claimant”) who has not received
benefits under this Plan that he or she believes should be paid may make a claim
for such benefits as follows:

      

      (a)           Initiation
- Written
Claim. The claimant
initiates a claim by submitting to the Administrator a written claim for the
benefits. If the claim relates to the contents of a notice received by the
claimant, the claim must be made within 60 days after the notice was received by
the claimant. All other claims must be made within 180 days after the date of
the event that caused the claim to arise. The claim must state with
particularity the determination desired by the claimant.

      

      (b)           Timing
of Bank Response. The Bank shall
respond to the claimant within 90 days after receiving the claim. If the
Bank determines that special circumstances require additional time for
processing the claim, the Bank may extend the response period by an additional
90 days by notifying the claimant in writing before the end of the initial
90-day period that an additional period is required. The notice of extension
must state the special circumstances and the date by which the Bank expects to
render its decision.

      

      (c)           Notice
of decision.
If the Bank denies part or all of the claim, the Bank shall notify the
claimant in writing of the denial. The Bank shall write the notification in a
manner calculated to be understood by the claimant. The notification shall set
forth -

      

      (i)           the
specific reasons for the denial,

      

      (ii)           a
reference to the specific provisions of the Plan on which the denial is
based,

      

      (iii)           a
description of any additional information or material necessary for the claimant
to perfect the claim and an explanation of why it is needed,

      

      (iv)           an
explanation of the Plan’s review procedures and the time limits applicable to
such procedures, and

      

      (v)           a
statement of the claimant’s right to bring a civil action under ERISA Section
502(a) following an adverse benefit determination on review.

      

      6.2           Review
Procedure.
If the Bank denies part or all of the claim, the claimant shall have the
opportunity for a full and fair review by the Bank of the denial, as follows
-

      

      (a)           Initiation
- Written
Request. To initiate the
review, the claimant, within 60 days after receiving the Bank’s notice of
denial, must file with the Bank a written request for review.

      

      (b)           Additional
Submissions
- Information
Access. The claimant
shall then have the opportunity to submit written comments, documents, records,
and other information relating to the claim. The Bank shall also provide the
claimant, upon request and free of charge, reasonable access to and copies of
all documents, records, and other information relevant (as defined in applicable
ERISA regulations) to the claimant’s claim for benefits.

      

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

      (c)           Considerations
on Review. In considering
the review, the Bank shall take into account all materials and information the
claimant submits relating to the claim, without regard to whether the
information was submitted or considered in the initial benefit
determination.

      

      (d)           Timing
of Bank Response. The Bank shall
respond in writing to the claimant within 60 days after receiving the request
for review. If the Bank determines that special circumstances require additional
time for processing the claim, the Bank may extend the response period by an
additional 60 days by notifying the claimant in writing before the end of the
initial 60-day period that an additional period is required. The notice of
extension must state the special circumstances and the date by which the Bank
expects to render its decision.

      

      (e)           Notice
of Decision. The Bank shall
notify the claimant in writing of its decision on review. The Bank shall write
the notification in a manner calculated to be understood by the claimant. The
notification shall set forth -

      

      (i)           the
specific reason for the denial,

      

      (ii)           a
reference to the specific provisions of the Plan on which the denial is
based,

      

      (iii)           a
statement that the claimant is entitled to receive, upon request and free of
charge, reasonable access to and copies of all documents, records, and other
information relevant (as defined in applicable ERISA regulations) to the
claimant’s claim for benefits, and

      

      (iv)           a
statement of the claimant’s right to bring a civil action under ERISA Section
502(a).

      

      6.3           Reimbursement
of Expenses.
If the claimant prevails at the conclusion of the claims and review procedure
outlined in this Article 6, including any civil action brought by the claimant
under ERISA Section 502(a), the Bank shall reimburse the claimant for all
reasonable legal expenses incurred by the claimant in the claims and review
procedure.

      

      ARTICLE
7

      MISCELLANEOUS

      

      7.1           Amendments
and Termination.
Subject to Section 7.13, this Plan may be amended or terminated by the Bank;
provided, however, that the amendment or termination of the Plan shall not
reduce an Executive’s vested accrued benefit.

      

      7.2           Binding
Effect.
This Plan shall bind each participating Executive, the Bank, and their
Beneficiaries, survivors, executors, successors, administrators, and
transferees.

      

      7.3           No
Guarantee of Employment.
This Plan is not an employment policy or contract. It does not give a
participating Executive the right to remain an employee of the Bank nor does it
interfere with the Bank’s right to discharge the Executive. It also does not
require an Executive to remain an employee or interfere with the Executive’s
right to terminate employment at any time.

      

                  7.4           Non-Transferability.
Benefits under this Plan cannot be sold, transferred, assigned, pledged,
attached, or encumbered in any manner.

      

      7.5           Successors. The
Bank shall require any successor (whether direct or indirect, by purchase,
merger, consolidation, or otherwise) to all or substantially all of the business
or assets of the Bank to expressly assume this Plan in the same manner and to
the same extent that the Bank would be required to perform under this Plan if no
such succession had occurred.

      

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

      7.6           Tax
Withholding.
The Bank shall withhold any taxes that are required to be withheld from the
benefits provided under this Plan.

      

      7.7           Applicable
Law.
This Plan and all rights hereunder shall be governed by the laws of the
Commonwealth of Pennsylvania, except to the extent preempted by the laws of the
United States of America.

      

      7.8           Unfunded
Arrangement. Each
participating Executive and Beneficiary are general unsecured creditors of the
Bank for the payment of benefits under this Plan. The benefits represent the
mere promise by the Bank to pay the benefits. Rights to benefits are not subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by creditors. Any insurance on an
Executive’s life is a general asset of the Bank to which the Executive and
Beneficiary have no preferred or secured claim.

      

      7.9           Severability.
If any provision of this Plan is held invalid, such invalidity shall not affect
any other provision of this Plan not held invalid, and each such other provision
shall continue in full force and effect to the full extent consistent with law.
If any provision of this Plan is held invalid in part, such invalidity shall not
affect the remainder of the provision not held invalid, and the remainder of
such provision together with all other provisions of this Plan shall continue in
full force and effect to the full extent consistent with law.

      

      7.10          Headings.
Caption headings and subheadings herein are included solely for convenience of
reference and shall not affect the meaning or interpretation of any provision of
this Plan..

      

      7.11          Notices.
All notices, requests, demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered by hand or
mailed, certified or registered mail, return receipt requested, with postage
prepaid, to the following addresses or to such other address as either party may
designate by like notice. If to the Bank, notice shall be given to:

      

      Chairman
and Vice Chairman of the Board of Directors

      First
Citizens National Bank

      15 South Main Street

      Mansfield,
PA  16933

      

      or to
such other or additional person or persons as the Bank shall have designated to
the Executive in writing. If to an Executive, notice shall be given to the
Executive at the Executive’s address appearing on the Bank’s records, or to such
other or additional person or persons as the Executive shall have designated to
the Bank in writing.

      

      7.12         Payment
of Legal Fees.
The Bank is aware that after a Change in Control, management of the Bank could
cause or attempt to cause the Bank to refuse to comply with its obligations
under this Plan, or could institute or cause or attempt to cause the Bank to
institute litigation seeking to have this Plan declared unenforceable, or could
take or attempt to take other action to deny an Executive the benefits intended
under this Plan. In these circumstances the purpose of this Plan would be
frustrated.

      

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

      It is the
intention of the Bank that the Executive not be required to incur the expenses
associated with the enforcement of rights under this Plan, whether by litigation
or other legal action, because the cost and expense thereof would substantially
detract from the benefits intended to be granted to the Executive hereunder. It
is the intention of the Bank that an Executive not be forced to negotiate
settlement of rights under this Plan under threat of incurring expenses.
Accordingly, if after a Change in Control occurs it appears to the Executive
that:

      

      (i)           the
Bank has failed to comply with any of its obligations under this Plan,
or

      

      (ii)           the
Bank or any other person has taken any action to declare this Plan void or
unenforceable, or instituted any litigation or other legal action designed to
deny, diminish, or to recover from an Executive the benefits intended to be
provided to the Executive hereunder, the Bank irrevocably authorizes the
Executive from time to time to retain counsel of the Executive’s choice (at the
Bank’s expense as provided in this Section 7.12) to represent the Executive in
the initiation or defense of any litigation or other legal action, whether by or
against the Bank or any director, officer, stockholder, or other person
affiliated with the Bank, in any jurisdiction.

      

      Despite
any existing or previous attorney-client relationship between the Bank and any
counsel chosen by an Executive under this Section 7.12, the Bank irrevocably
consents to the Executive entering into an attorney-client relationship with
that counsel, and the Bank and the Executive agree that a confidential
relationship shall exist between the Executive and that counsel. Reasonable fees
and expenses of counsel selected from time to time by the Executive as provided
in this Section shall be paid or reimbursed to the Executive by the Bank on a
regular, periodic basis upon presentation by the Executive of a statement or
statements prepared by such counsel in accordance with such counsel’s customary
practices, up to a maximum aggregate
amount of $100,000, whether suit be brought or not, and whether or not incurred
in trial, bankruptcy, or appellate proceedings.

      

      The
Bank’s obligation to pay an Executive’s legal fees provided by this Section 7.12
operates separately from and in addition to any legal fee reimbursement
obligation the Bank may have with the Executive under any separate employment,
severance, or other agreement between the Executive and the Bank. Despite any
contrary provision in this Section 7.12 however, the Bank shall not be required
to pay or reimburse the Executive’s legal expenses if doing so would violate
Section 18(k) of the Federal Deposit Insurance Act [12 U.S.C. 1828(k)] and Rule
359.3 of the Federal Deposit Insurance Corporation [12 CFR 359.3].

      

      7.13         Termination
or Modification of Plan
Because of Changes in Law, Rules or Regulations.
The Bank is establishing this Plan on the assumption that certain existing tax
laws, rules, and regulations will continue in effect in their current form. If
that assumption materially changes and the change has a material detrimental
effect on this Plan, then the Bank reserves the right to terminate or modify
this Plan accordingly, subject to the written consent of a participating
Executive, which shall not be unreasonably withheld. This Section 7.13 shall
become null and void effective immediately upon an event that is considered a
Change in Control.

      

      ARTICLE
8

      ADMINISTRATION
OF PLAN

      

      8.1           Plan
Administrator Duties.
This Plan shall be administered by a Plan Administrator consisting of the Bank’s
Board of Directors or such Committee or person(s) as the Board shall appoint.
The Plan Administrator shall also have the discretion and authority to (i) make,
amend, interpret, and enforce all appropriate rules and regulations for the
administration of this Plan and (ii) decide or resolve any and all questions,
including interpretations of this Plan, as may arise in connection with the
Plan.

      

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

      8.2           Agents.
In the administration of this Plan, the Plan Administrator may employ agents and
delegate to them such administrative duties as it sees fit (including acting
through a duly appointed representative) and may from time to time consult with
counsel, who may be counsel to the Bank.

      

      8.3           Binding
Effect of Decisions.
The decision or action of the Plan Administrator with respect to any question
arising out of or in connection with the administration, interpretation, and
application of the Plan and the rules and regulations promulgated hereunder
shall be final and conclusive and binding upon all persons having any interest
in the Plan. No Executive or Beneficiary shall be deemed to have any right,
vested or non-vested, regarding the continued use of any previously adopted
assumptions, including, but not limited to, the Discount Rate.

      

      8.4           Indemnity
of Plan Administrator.
The Bank shall indemnify and hold harmless the members of the Plan Administrator
against any and all claims, losses, damages, expenses, or liabilities arising
from any action or failure to act with respect to this Plan, except in the case
of willful misconduct by the Plan Administrator or any of its
members.

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

      

      

      Appendix
A

      

      Initial Plan
Participants

      

      

      Executive                                                                                                Benefit
Percentage

      

      Randall E.
Black                                                                                                16.4%
of Final Average Pay

      

      Terry B.
Osborne                                                                                                14.7%
of Final Average Pay

      

      Mickey L.
Jones                                                                                                13.6%
of Final Average Payexhibit10_b.htm

     

    EXHIBIT 10 (b10-1)

    
 

    AMENDMENT
TO THE

    CAPITOL
BANCORP LTD.

    EMPLOYEE
SAVINGS AND STOCK OWNERSHIP PLAN

    AMENDMENT
NUMBER 56

    

    

    The
Capitol Bancorp Ltd. Employee Savings and Stock Ownership Plan is hereby amended
effective December 10, 2007 adding the following participating employer at the
end of the list contained:

    

    
      
        
          	
                  Name
      of

                  Employer

                	 
      	
                  Type
      of

                  Entity

                	 
      	
                  State
      of

                  Organization

                	 
      	
                  Date
      of

                  Participation

                
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                  Clemson
      Holdings, LLC

                	 
      	
                  Limited

                  Liability

                  Company

                	 
      	
                  Michigan

                	 
      	
                  12/10/2007

                

        

      

    

    

    

    

    
      	
               

               

               

              Dated:  December 10,
      2007

            	
              CAPITOL
      BANCORP LIMITED

               

               

              By:  /s/ Cristin K.
      Reid                        
       
                                                                

                Cristin K.
      Reid

                Corporate
      President

            

    

    

    

    

    
      	
               

               

               

              Dated:  December 10,
      2007

            	
              CLEMSON
      HOLDINGS LLC

               

               

              By:  /s/ Robert
      Hogan               
                                                                            

                Robert
      Hogan

                Manager

            

    

    

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    EXHIBIT 10 (b10-2)

     

    AMENDMENT
TO THE

    CAPITOL
BANCORP LTD.

    EMPLOYEE
SAVINGS AND STOCK OWNERSHIP PLAN

    AMENDMENT
NUMBER 57

    

    

    The
Capitol Bancorp Ltd. Employee Savings and Stock Ownership Plan is hereby amended
effective January 3, 2008 adding the following participating employer at the end
of the list contained:

    

    
      
        
          	
                  Name
      of

                  Employer

                	 
      	
                  Type
      of

                  Entity

                	 
      	
                  State
      of

                  Organization

                	 
      	
                  Date
      of

                  Participation

                
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                  Adams
      Dairy Bank

                	 
      	
                  Bank

                	 
      	
                  Missouri

                	 
      	
                  01/03/2008

                

        

      

    

    

    

    

    
      	
               

               

               

              Dated:  January 3,
      2008

            	
              CAPITOL
      BANCORP LIMITED

               

               

              By:  /s/ Cristin K.
      Reid                       
        
                                                                

                Cristin K.
      Reid

                Corporate
      President

            

    

    

    

    

    
      	
               

               

               

              Dated:  January 3,
      2008

            	
              ADAMS
      DAIRY BANK

               

               

              By:  /s/ David C.
      Chinnery                
        
                                                                

                David C.
      Chinnery

                President &
      CEO

            

    

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    
EXHIBIT 10 (b10-3)

    
 

    AMENDMENT
TO THE

    CAPITOL
BANCORP LTD.

    EMPLOYEE
SAVINGS AND STOCK OWNERSHIP PLAN

    AMENDMENT
NUMBER 58

    

    

    The
Capitol Bancorp Ltd. Employee Savings and Stock Ownership Plan is hereby amended
effective February 8, 2008 adding the following participating employer at the
end of the list contained:

    

    
      
        	
                Name
      of

                Employer

              	 
      	
                Type
      of

                Entity

              	 
      	
                State
      of

                Organization

              	 
      	
                Date
      of

                Participation

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Mountain
      View

                Bank
      of Commerce

              	 
      	
                Bank

              	 
      	
                Colorado

              	 
      	
                2/8/2008

              

      

    

    

    

    

    
      	
               

               

               

              Dated:  February 8,
      2008

            	
              CAPITOL
      BANCORP LIMITED

               

               

              By:  /s/ Cristin K.
      Reid                       
        
                                                                

                Cristin K.
      Reid

                Corporate
      President

            

    

    

    

    

    
      	
               

               

               

              Dated:  February 8,
      2008

            	
              MOUNTAIN
      VIEW BANK OF COMMERCE

               

               

              By:  /s/ John
      Ellison                          
         
                                                                

                John
      Ellison

                President and
      CEO

            

    

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    
EXHIBIT 10 (b10-4)

    
 

    AMENDMENT
TO THE

    CAPITOL
BANCORP LTD.

    EMPLOYEE
SAVINGS AND STOCK OWNERSHIP PLAN

    AMENDMENT
NUMBER 59

    

    

    The
Capitol Bancorp Ltd. Employee Savings and Stock Ownership Plan is hereby amended
effective April 30, 2008 adding the following participating employer at the end
of the list contained:

    

    
      
        	
                Name
      of

                Employer

              	 
      	
                Type
      of

                Entity

              	 
      	
                State
      of

                Organization

              	 
      	
                Date
      of

                Participation

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Colonia
      Bank

              	 
      	
                Bank

              	 
      	
                Arizona

              	 
      	
                4/30/2008

              

      

    

    

    

    

    
      	
               

               

               

              Dated:  April 30,
      2008

            	
              CAPITOL
      BANCORP LIMITED

               

               

              By:  /s/ Cristin K.
      Reid                       
        
                                                                

                Cristin K.
      Reid

                Corporate
      President

            

    

    

    

    

    
      	
               

               

               

              Dated:  April 30,
      2008

            	
              COLONIA
      BANK

               

               

              By:  /s/ Gil
      Jimenez                                                                                           

                Gil
      Jimenez

                President

            

    

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    
EXHIBIT 10 (b10-5)

    
 

    AMENDMENT
TO THE

    CAPITOL
BANCORP LTD.

    EMPLOYEE
SAVINGS AND STOCK OWNERSHIP PLAN

    AMENDMENT
NUMBER 60

    

    

    The
Capitol Bancorp Ltd. Employee Savings and Stock Ownership Plan is hereby amended
effective May 15, 2008 adding the following participating employer at the end of
the list contained:

    

    
      
        	
                Name
      of

                Employer

              	 
      	
                Type
      of

                Entity

              	 
      	
                State
      of

                Organization

              	 
      	
                Date
      of

                Participation

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Pisgah
      Community

                Bank

              	 
      	
                Bank

              	 
      	
                North
      Carolina

              	 
      	
                5/15/2008

              

      

    

    

    

    

    
      	
               

               

               

              Dated:  May 15,
      2008

            	
              CAPITOL
      BANCORP LIMITED

               

               

              By:  /s/ Cristin K.
      Reid                      
         
                                                                

                Cristin K.
      Reid

                Corporate
      President

            

    

    

    

    

    
      	
               

               

               

              Dated:  May 15,
      2008

            	
              PISGAH
      COMMUNITY BANK

               

               

              By:  /s/ Ted
      Durham                           
        
                                                                

                Ted
      Durham

                President

            

    

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    
EXHIBIT 10 (b10-6)

    
 

    AMENDMENT
TO THE

    CAPITOL
BANCORP LTD.

    EMPLOYEE
SAVINGS AND STOCK OWNERSHIP PLAN

    AMENDMENT
NUMBER 61

    

    

    The
Capitol Bancorp Ltd. Employee Savings and Stock Ownership Plan is hereby amended
effective April 23, 2008 adding the following participating employer at the end
of the list contained:

    

    
      
        	
                Name
      of

                Employer

              	 
      	
                Type
      of

                Entity

              	 
      	
                State
      of

                Organization

              	 
      	
                Date
      of

                Participation

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Ft.
      Myers

                Holdings,
      LLC

              	 
      	
                Limited

                Liability

                Company

              	 
      	
                Michigan

              	 
      	
                4/23/2008

              

      

    

    

    

    

    
      	
               

               

               

              Dated:  April 23,
      2008

            	
              CAPITOL
      BANCORP LIMITED

               

               

              By:  /s/ Cristin K.
      Reid                       
        
                 
                                                               

                Cristin K.
      Reid

                Corporate
      President

            

    

    

    

    

    
      	
               

               

               

              Dated:  April 23,
      2008

            	
              Ft.
      Myers Holdings, LLC

               

               

              By:  /s/ Len
      Davenport                      
        
                                                                

                Len
      Davenport

                Manager

               

            
	 
      	 
      

    

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    
EXHIBIT 10 (b10-7)

    
 

    AMENDMENT
TO THE

    CAPITOL
BANCORP LTD.

    EMPLOYEE
SAVINGS AND STOCK OWNERSHIP PLAN

    AMENDMENT
NUMBER 62

    

    

    The
Capitol Bancorp Ltd. Employee Savings and Stock Ownership Plan is hereby amended
effective May 18, 2008 adding the following participating employer at the end of
the list contained:

    

    
      
        	
                Name
      of

                Employer

              	 
      	
                Type
      of

                Entity

              	 
      	
                State
      of

                Organization

              	 
      	
                Date
      of

                Participation

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                Capitol
      Capital,

                LLC

              	 
      	
                Limited

                Liability

                Company

              	 
      	
                Michigan

              	 
      	
                5/18/2008

              

      

    

    

    

    

    
      	
               

               

               

              Dated:  May 18,
      2008

            	
              CAPITOL
      BANCORP LIMITED

               

               

              By:  /s/ Cristin K.
      Reid                          
             
                                                               

                Cristin K.
      Reid

                Corporate
      President

            

    

    

    

    

    
      	
               

               

               

              Dated:  May 18,
      2008

            	
              Capitol
      Capital, LLC

               

               

              By: 
      /s/ Joseph D.
      Reid                         
                                                             

               
      Joseph D. Reid

               
      Capitol Bancorp Ltd.

                (member)

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