Document:

CHANGE IN CONTROL AGREEMENT

 

This AGREEMENT ("Agreement") is hereby entered into as of December 9, 2017, (the "Effective Date"), by and between FIRST CITIZENS COMMUNITY BANK (the "Bank"), David Z. Richards, Jr.  ("Executive"), and CITIZENS FINANCIAL SERVICES, INC. (the "Company"), the holding company of the Bank, as guarantor.

 

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 Board of Directors of 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:

 

1.              Term of Agreement.

 

The initial term of this Agreement shall commence on the Effective Date and continue through December 9, 2020.  This Agreement shall renew automatically on December 9th of each year for successive terms of three years each, unless either party notifies the other party at least ninety (90) days prior to the date of the party's determination not to renew this Agreement beyond the then existing term. It is the intention of the parties that this Agreement be "evergreen" unless (i) either party gives written notice to the other party of his or its intention not to renew this Agreement as provided above or (ii) this Agreement is terminated by the Bank for Cause or due to Executive's death, termination of employment due to disability, or Executive's voluntary termination of employment prior to a Change in Control. Each reference herein to "the term of this Agreement" shall include the initial term and any renewal term.

2.              Change in Control.

 

(a)                If a Change in Control shall occur and if, between the Date of the Change in Control and one (1) year after the Date of Change in Control, there shall be:

(i)              any involuntary termination of Executive's employment (other than for death, disability or Cause); or

(ii)           any failure by the acquiring person or entity to offer employment to Executive as of the Date of Change in Control, in a position having equivalent responsibilities, title, authority, except reporting authority, compensation and benefits as Executive received immediately prior to the Date of the Change in Control; or

(iii)            any reduction in Executive's title, responsibilities (except reporting responsibilities), or authority, including the title, responsibilities or authority as they may be modified from time to time during the term of this Agreement; or

 

(iv)         the assignment to Executive of duties inconsistent with Executive's office on the Date of the Change in Control or as the same may be increased from time to time after the Date of the Change in Control; or

(v)            any reassignment of Executive to a location greater than fifty (50) miles from the location of Executive's office on the Date of the Change in Control; or

(vi)           any reduction in Executive's annual direct salary in effect on the Date of the Change in Control or as the same may be increased from time to time after the Date of the Change in Control; or

(vii)           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, then at the option of Executive, exercisable by Executive within sixty (60)  days of the occurrence of any of the foregoing events, Executive may resign from employment with the Bank (or, if involuntarily terminated, give notice of intention to collect benefits under this Agreement) by delivering a notice in writing (the "Notice of Termination") to the Bank and the provisions of Section 2(c) of this Agreement shall apply.

(b)                  During the period of time between the execution of an agreement to effect a Change in Control and the Date of the Change in Control, Executive's employment may only be terminated for Cause (as defined herein). If, during that period of time, Executive's employment is terminated for Cause, then all rights of Executive under this Agreement shall cease as of the effective date of such termination.  If, during that period of time, Executive's employment is terminated other than for Cause, then Executive may give notice of intention to collect benefits under this Agreement by delivering a Notice of Termination to the Bank and the provisions of Section 2(c) of this Agreement shall apply.

(c)                  In the event that Executive delivers a Notice of Termination to the Bank, following the Change in Control, Executive shall be entitled to receive a lump sum amount equal to one time Executive's then current base salary, payable within ten (10) days of Executive's termination of employment.

 

In addition, for a period of eighteen (18) months from the date of termination of employment, or until Executive secures substantially similar benefits through other employment, whichever shall first occur, Executive shall receive a continuation of health care insurance under the same terms and conditions Executive received coverage prior to his termination of employment.  In addition, the Company or the Bank shall continue for a period of eighteen (18) months from the date of termination of employment, or until Executive secures substantially similar benefits through other employment, whichever shall first occur, Executive's long term disability coverage to the extent Executive remains eligible under the Company's or the Bank's long term disability plan.  In the event of a termination of employment and Executive becomes employed within eighteen (18) months of the termination of employment without his new employer offering substantially similar long term disability coverage and Executive would be eligible for the Company's or the Bank's long term disability coverage but for not being an employee of the Company or the Bank, the Company or the Bank shall pay Executive a dollar amount equal to the cost to Executive of obtaining such benefits in effect with respect to Executive during one (1) year prior to his termination of employment, (or substantially similar benefits) for the remainder of the one year period, not to exceed 125% of the cost to the Company or the Bank of providing long term disability coverage under its group long term policy.  If the Company or the Bank cannot provide such benefits under the terms of the plans or contracts, the Company or 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).  The payment shall be made to Executive in a lump sum within ten (10) days of Executive's termination of employment or, if later, it being determined that the Company or the Bank cannot provide the benefits under the applicable plans or contracts.  However, in the event the payment described herein, when added to all other amounts or benefits provided to or on behalf of Executive in connection with his termination of employment, would result in the imposition of an excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), such payments shall be retroactively (if necessary) reduced to the extent necessary to avoid such excise tax imposition.  Upon written notice to Executive, together with calculations of the Company's or the Bank's independent auditors, Executive shall remit to the Company or the Bank the amount of the reduction, plus such interest, as may be necessary to avoid the imposition of such excise tax. Notwithstanding the foregoing or any other provision of this contract to the contrary, if any portion of the amount herein payable to Executive is determined to be non-deductible pursuant to the regulations promulgated under Section 280G of the Code, the Company or the Bank shall be required only to pay to Executive the amount determined to be deductible under Section 280G of the Code.

(d)                     The parties to this Agreement intend for the payments hereunder to satisfy the short-term deferral exception under Section 409A of the Code or, in the case of continued insurance coverage, not constitute deferred compensation (since such amounts are not taxable to Executive).  However, notwithstanding anything to the contrary in this Agreement, to the extent payments do not meet the short-term deferral exception of Section 409A of the Code and, in the event Executive is a Specified Employee no payment shall be made to Executive under this Agreement prior to the first day of the seventh month following the event of termination in excess of the "permitted amount" under Section 409A of the Code.  For these purposes the "permitted amount" shall be an amount that does not exceed two times the lesser of: (A) the sum of Executive's annualized compensation based upon the annual rate of pay for services provided to the Company or the Bank for the calendar year preceding the year in which Executive has an event of termination, or (B) the maximum amount that may be taken into account under a tax-qualified plan pursuant to Section 401(a)(17) of the Code for the calendar year in which occurs the event of termination.  The payment of the "permitted amount" shall be made within sixty (60) days of the occurrence of the event of termination.  Any payment in excess of the permitted amount shall be made to Executive on the first day of the seventh month following the event of termination.  The term "Specified Employee" shall be interpreted to comply with Section 409A of the Code and shall mean a key employee within the meaning of Section 416(i) of the Code (without regard to Section 5 thereof), but an individual shall be a "Specified Employee" only if the Company is a publicly-traded institution or the subsidiary of a publicly-traded holding company.

 

3.              Definition of Cause.

 

For purposes of this Agreement, "Cause" shall mean: (i) 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; (ii) the willful engaging by Executive in misconduct injurious to the Company or the Bank; (iii) the dishonesty or gross negligence of Executive in the performance of his duties; (iv) the breach of 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 Company or the Bank; (vii) unlawful discrimination by Executive, including harassment against the Company or the Bank's employees, customers, business associates, contractors, or visitors; (viii) 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; (ix) 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; (x) 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; (xi) 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; (xii) 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; (xiv) insubordination; (xv) 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; (xvi) 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 (xvii) Executive takes action that is clearly contrary to the best interest of the Company.

 

4.              Change in Control Definitions.

 

(a)                 For purposes of this Agreement, the term "Change in Control" shall mean:  A change in control (other than one occurring by reason of an acquisition of the Company or the Bank by Executive) of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A and any successor rule or regulation promulgated under the Securities Exchange Act of 1934 (the "Exchange Act") if the Company or the Bank were subject to the Exchange Act reporting requirements; provided that, without limiting the foregoing, such a Change in Control shall be deemed to have occurred if the Board of Directors of the Company certifies that one of the following has occurred:

(i)             any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than the Company or the Bank or any "person" who on the date hereof is a director or officer of the Company or the Bank is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company or the Bank representing fifty percent (50%) or more of the combined voting power of the Company's or the Bank's then outstanding securities, or

(ii)              during any period of one (1) year during the term of Executive's employment under this Agreement, individuals who at the beginning of such period constitute the board of directors of the Company or the Bank cease for any reason to constitute at least a majority thereof, unless the election of each director who was not a director at the beginning of such period has been approved in advance by directors representing at least two-thirds of the directors then in office who were directors at the beginning of the period;

(iii)          a merger, consolidation or business combination with the Company and/or the Bank occurs.

(b)            For purposes of this Agreement, the "Date of Change in Control" shall mean:

(i)              the first date on which a single person and/or entity, or group of affiliated persons and/or entities, acquire the beneficial ownership of fifty percent (50%) or more of the Company's voting securities, or more than fifty percent (50%) of the total fair market value of the Company or the Bank, or

(ii)              the date of the closing of an Agreement, transferring all or substantially all of the assets of the Company or the Bank, or

 

(iii)          the date on which a merger, consolidation or business combination is consummated, as applicable, or

(iv)            the date on which individuals who formerly constituted a majority of the board of directors of the Bank or the Company under Section 4(a)(ii) hereof and the replacement directors otherwise approved under Section 4(a)(ii), ceased to be a majority within a one year period.

5.              Source of Payments.

 

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.

 

6.              Effect on Prior Agreements and Existing Benefit Plans.

 

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 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.

 

7.              No Attachment.

 

(a)                 Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or to execution, attachment, levy or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to affect any such action shall be null, void and of no effect.

(b)                  This Agreement shall be binding upon, and inure to the benefit of, Executive, the Bank, the Company and their respective successors and assigns.

8.              Modification and Waiver.

(a)                  This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto.

(b)                 No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel.  No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.

 

9.              Severability.

 

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.

 

10.              Headings for Reference Only.

 

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.

 

11.              Governing Law.

 

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.

 

12.              Arbitration.

 

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 deemed to be information subject to the confidentiality provisions of this Agreement.  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.

 

13.              Payment of Legal Fees.

 

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.

 

14.              Indemnification.

 

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.

15.              Successors to the Bank and the Company.

 

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.

 

16.              Miscellaneous.

 

In the event any of the foregoing provisions of this Section 16 are in conflict with the terms of this Agreement, this Section 16 shall prevail.

(a)                 Any payments made to Executive pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with 12 U.S.C. §1828(k) and FDIC regulation 12 C.F.R. Part 359, Golden Parachute and Indemnification Payments.

[Signature page follows]

SIGNATURES

 

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

 

	 	FIRST CITIZENS COMMUNITY BANK	 
	 	 	 	 
	
ATTEST: /s/ Terry B. Osborne

	
By: 

	/s/ Randall E. Black	 
	 Terry B. Osborne	 	Randall E. Black	 
	 Corporate Secretary	 	For the Entire Board of Directors	 
	 	 	 	 

 

 

	 	
CITIZENS FINANCIAL SERVICES, INC.

(Guarantor)

	 
	 	 	 	 
	
ATTEST: /s/ Terry B. Osborne

	
By: 

	/s/ Randall E. Black	 
	 Terry B. Osborne	 	Randall E. Black	 
	 Corporate Secretary	 	for the Entire Board of Directors	 
	 	 	 	 

 

	 	EXECUTIVE	 
	 	 	 	 
	
ATTEST /s/ Terry B. Osborne

	
By: 

	/s/ David Z. Richards, Jr.	 
	 Terry B. Osborne	 	David Z. Richards, Jr. 	 
	 Corporate Secretary	 	ExecutiveEX-10.1

 Exhibit 10.1 

[AMENDED AND RESTATED] SEVERANCE COMPENSATION AGREEMENT 

This [Amended and Restated] Severance Compensation Agreement (the “Agreement”) is entered into this
1st day of January, 2018 (”Effective Date”), by and between Citizens Business Bank (the “Bank”), and E. Allen Nicholson, Executive Vice President of the Bank (the
“Executive”). 
 Whereas, the Bank’s Board of Directors has determined that it is appropriate to reinforce and encourage the continued
attention and dedication of members of the Bank’s senior management, including the Executive, to their assigned duties without distraction in circumstances arising from the possibility of a Change in Control (as defined herein) of CVB Financial
Corp. (the “Company”) or the Bank, a wholly owned subsidiary of the Company; and 
 Whereas, this Agreement sets forth the compensation which the
Bank agrees it will pay to the Executive upon a Change in Control and subsequent termination of the Executive’s employment or resignation for good reason by the Executive; and 

[Whereas, this Agreement amends and restates in its entirety that certain Severance Compensation Agreement entered into by and between the Bank and the
Executive, dated as of June 1, 2016 (the “Prior Agreement”).] 
 Now, therefore, in consideration of these promises and the mutual covenants
and agreements contained herein and to induce the Executive to remain employed by the Bank and to continue to exert Executive’s best efforts on behalf of the Bank, and for other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows: 
  

	1.	Compensation Upon a Change in Control. 

 A. In the event that a Change in Control
occurs during the Bank’s employment of the Executive and 
 (i) the Executive’s employment is terminated by the Bank or any
successor to the Company or the Bank other than for Cause (as defined below), within one hundred and twenty (120) days prior to the completion of such Change of Control or within one (1) year after the completion of such Change in Control;
or 
 (ii) the Executive resigns his or her employment for Good Reason (as defined below) within one (1) year after the completion of
such Change in Control; 
 the Executive shall be paid in the aggregate the following (subject to reduction as set forth elsewhere in this
Agreement): (i) an amount equal to two (2) times the Executive’s annual base compensation for the last calendar year ended immediately preceding the Change in Control, plus (ii) an amount equal to two (2) times the average annual
bonus received for the last two calendar years ended immediately preceding the Change in Control, plus (iii) all obligations accrued with respect to employment prior to any such termination pursuant to Section 1A(i) or 1A(ii) of this
Agreement (such as earned but unused vacation pay) and vested benefits (including but not limited to any vested awards of stock options or restricted stock under any Bank or Company equity incentive plans as determined in accordance with the terms
of such equity incentive plans). The Bank shall pay such amounts and/or provide such vested benefits, less applicable withholdings, employment and payroll taxes (which taxes shall be paid upon termination or resignation of the

  
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Executive’s employment or at the time payments are made hereunder, as required by law), in 24 equal monthly installments (without interest or other adjustment) on the first day of each month
commencing with the first such date that is at least six (6) months after the date of the Executive’s “separation from service” (as such term is defined for purposes of Section 409A of the Internal Revenue Code pursuant to
Treasury Regulations and other guidance promulgated thereunder) and continuing for 23 successive months thereafter. This payment schedule is intended to comply with the requirements of Section 409A of the Internal Revenue Code and shall be
interpreted consistently therewith. 
 B. The Executive may designate in writing (on a form provided by the Bank and delivered by the
Executive to the Bank before the Executive’s death, substantially in the form attached to this Agreement) primary and contingent beneficiaries to receive the balance of any payments or vested or accrued benefits under section 1.A that are not
made prior to the Executive’s death and the proportions in which such beneficiaries are to receive such payment. The total amount of the balance of such payment or the sum of such benefits shall be paid or transferred to such beneficiaries in a
single unreduced lump sum payment or transfer made within ninety (90) days following the Executive’s death. The Executive may change beneficiary designations from time to time by completing and delivering additional such forms to the Bank.
The last written beneficiary designation on such form delivered by the Executive to the Bank prior to the Executive’s death will control. If the Executive fails to designate a beneficiary in such manner, or if no designated beneficiary survives
the Executive, then the Executive’s payment balance shall be paid to the Executive’s estate in an unreduced lump sum payment or vested benefit transfer within ninety (90) days following the Executive’s death. 

 

	2.	Definitions. 

 A. Change in Control. For purposes of this Agreement, a
“Change in Control” shall deemed to have occurred if: 
 (i) any one person, or more than one person acting as a group, acquires
(or has acquired during the 12 month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company or the Bank possessing more than 50% of the total voting power of the Company’s or the
Bank’s stock; 
 (ii) a majority of the members of the Company’s Board of Directors is replaced during any twelve (12) month
period by directors whose appointment for election is not endorsed by a majority of the members of the Company’s board prior to the date of the appointment or election; 

(iii) a merger or consolidation where the holders of the Bank’s or the Company’s voting stock immediately prior to the effective date
of such merger or consolidation own less than 50% of the voting stock of the entity surviving such merger or consolidation; 
 (iv) any one
person, or more than one person acting as a group, acquired (or has acquired during the twelve month period ending on the date of the most recent acquisition by such person or persons) assets from the Bank that have a total gross fair market value
greater than 50% of the total gross fair market value of all of the Bank’s assets immediately before the acquisition or acquisitions; provided, however, transfer of assets which 

  
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otherwise would satisfy the requirements of this subsection (iv) will not be treated as a Change in Control if the assets are transferred to: 

(a) a shareholder of the Bank (immediately before the asset transfer) in exchange for or with respect to its stock; 

(b) an entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Company or the Bank; 

(c) a person, or more than one person acting as a group, that owns, directly or indirectly, 50% or more of the total value or voting power of
all the outstanding stock of the Company or the Bank; or 
 (d) an entity, at least 50% of the total value or voting power is owned,
directly or indirectly by a person, or more than one person acting as a group, that owns, directly or indirectly, 50% or more of the total value or voting power of all the outstanding stock of the Company or the Bank. 

Each event comprising a Change in Control is intended to constitute a “change in ownership or effective control”, or a “change
in the ownership of a substantial portion of the assets,” of the Company or the Bank as such terms are defined for purposes of Section 409A of the Internal Revenue Code and “Change in Control” as used herein shall be interpreted
consistently therewith. 
 Notwithstanding the foregoing, a Change in Control shall not be deemed to occur as a result of any transaction
which is principally undertaken to change the jurisdiction of incorporation of the Company or the Bank. 
 B. “Good Reason” shall
mean, for purposes of this Agreement: 
 (i) The Executive’s then current level of annual base salary is reduced without the
Executive’s written consent; 
 (ii) there is an (relative to the Executive’s annual base salary) overall reduction in the employee
benefits provided to the Executive (including, without limitation, medical, dental, life and health insurance and incentive bonus opportunity) from the plans in effect immediately prior to the Change in Control; 

(iii) The Executive suffers a diminution in his or her title, authority, duties or responsibilities; 

(iv) Any of the Executive’s salary payments, bonus payments and/or stock option grants are not made or provided timely and in accordance
either with the Executive’s employment agreement or applicable law; 
 (v) the relocation of the location to which the Executive is
required to report to a location more than fifty (50) miles from the Executive’s work location at the time immediately preceding a Change in Control; 

(vi) the Bank or any successor to the Bank either fails to assume or communicates that it intends to refuse to assume any part of this
Agreement, including all of the Bank’s or its successor’s obligations as set forth herein, except as otherwise required by law or regulation; or 

  
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 (vii) any material breach of this Agreement by the Bank or its successor. 

C. Cause. For purposes of this Agreement, the Bank shall have “Cause” to terminate the Executive’s employment and shall not be
obligated to make any payments hereunder or otherwise in the event the Executive has: 
 (i) committed a significant act of dishonesty,
deceit or breach of fiduciary duty in the performance of Executive’s duties as an employee of the Bank; 
 (ii) grossly neglected or
willfully failed in any way to perform substantially the duties of such employment; or 
 (iii) acted or failed to act in any other way that
reflects materially and adversely on the Bank. In the event of a termination of the Executive’s employment by the Bank for Cause, the Bank shall deliver to the Executive at the time the Executive is notified of the termination of
Executive’s employment a written statement setting forth in reasonable detail the facts and circumstances claimed by the Bank to provide a basis for the termination of the Executive’s employment for Cause. 

 

	 	D.	Person. For purposes of this Agreement, “person” shall mean any individual, corporation, limited liability company, trust, partnership or any other form of entity. 

 

	3.	Term. 

 This Agreement shall terminate, except to the extent that any obligation of the Bank
hereunder remains unpaid as of such time, upon the earliest of the following (the “Term”): 
 (i) the termination or resignation of
the Executive’s employment from the Bank for any reason (unless a Change in Control has occurred and the Executive either has been terminated within one hundred and twenty (120) days prior to such Change in Control or within one
(1) year after such Change in Control or has resigned for Good Reason within one (1) year after such Change in Control, and would otherwise be entitled to the payments set forth in Section 1. above); 

(ii) three (3) years from the date hereof if a Change in Control has not occurred during such period; 

(iii) the termination of the Executive’s employment from the Bank for Cause, whether or not within one hundred and twenty (120) days
prior to a Change of Control within one (1) year after a Change in Control; 
 (iv) one (1) year after a Change in Control if the
Executive is still employed with the Bank or its successor; or 
 (v) after a Change in Control upon satisfaction of all of the Bank’s
obligations hereunder. 

  
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	4.	No Obligation to Mitigate Damages; No Effect on Other Contractual Rights. 

 A. The
Executive shall not be required to mitigate damages or the amount of any payment provided for under this Agreement by seeking other employment or otherwise, nor shall the amount of any payment provided for under this Agreement be reduced by any
compensation earned by the Executive as the result of employment by another employer after the effective date of termination or resignation, or otherwise, by his or her engagement as a consultant or his conduct of any other business activities. 

B. The provisions of this Agreement, and any payment provided for hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive’s existing rights, or rights which would accrue solely as a result of the passage of time, under any employment agreement or other plan, arrangement or deferred compensation agreement, except as set forth in Sections 9 or
10 below or as otherwise agreed to in writing by the Bank and the Executive. 
  

	5.	Successor to the Bank. 

 A. The Bank will require any successor or assign (whether
direct or indirect by purchase or otherwise) to all or substantially all of the business and/or assets of the Bank, by written agreement with the Executive, to assume and agree to perform this Agreement in full. As used in this Agreement,
“Bank” shall mean the Bank as herein before defined and any successor or assign to its business and/or assets as aforesaid which executes and delivers the agreement provided for in this section 5 or which otherwise becomes bound by all the
terms and provisions of this Agreement by operations of law. Notwithstanding the assumption of this Agreement by a successor or assign of the Bank, if a Change in Control (as defined in section 2.A above) has occurred, the Executive shall have and
be entitled from such successor to all rights under section 1 of this Agreement. 
 B. If the Executive should die while any amounts are
still payable or benefits are still transferable to the Executive hereunder, all such amounts shall be paid or benefits transferred in accordance with the terms of this Agreement to the Executive’s designated beneficiary(ies) or, if there are
no such designated beneficiary(ies), to the Executive’s estate. This Agreement shall, therefore, inure to the benefit of and be enforceable by the Executive’s designated beneficiaries, personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. 
  

	6.	Confidentiality and Non-Solicitation. 

(A) During the Executive’s employment with the Bank, the Executive has had access to and has become acquainted with, and, following the
Effective Date, will continue to have access to and to become acquainted with, what the Executive and the Bank acknowledge are trade secrets and other confidential and proprietary information of the Bank, including but not limited to, knowledge or
data concerning the Bank, its operations and business, the identity of customers of the Bank, including knowledge of their financial conditions or their financial needs, as well as their methods of doing business, pricing information for the
purchase or sale of assets, financing and securitization arrangements, research materials, manuals, computer programs, formulas for analyzing asset portfolios, marketing plans and tactics, salary and wage information, and other business information
(collectively and hereinafter “Confidential Information”). The Executive acknowledges that all Confidential Information is and shall continue to be the exclusive property of the Bank, whether or not prepared in whole or in part by the
Executive. The Executive shall not disclose any of the 

  
 5 

 
aforesaid Confidential Information, directly or indirectly, under any circumstances or by any means, to third persons without the prior written consent of the Bank, or use it in any way, except
as required in the course of the Executive’s employment with the Bank. 
 (B) The Executive agrees that all inventions, discoveries,
improvements, trade secrets, formulae, techniques, processes, and know-how, whether or not patentable, and whether or not reduced to practice, that are conceived or developed during the Executive’s
employment with the Bank, either alone or jointly with others, if on the Bank’s time, using the Bank’s facilities, relating to the Bank or to the banking industry shall be owned exclusively by the Bank, and the Executive hereby assigns to
the Bank all of the Executive’s right, title and interest in all such intellectual property. The Executive agrees that the Bank shall be the sole owner of all domestic and foreign patents or other rights pertaining thereto, and further agrees
to execute all documents that the Bank reasonably determines to be necessary or convenient for use in applying for, prosecuting, perfecting, or enforcing patents or other intellectual property rights, including the execution of any assignments,
patent applications, or other documents that the Bank may reasonable request. This provision is intended to be applied consistent with applicable law. 

(C) The Executive understands that the Bank is hereby advising the Executive that any provision in this Agreement requiring the Executive to
assign rights in any invention does not apply to an invention that qualifies fully under the provisions of Section 2870 of the California Labor Code. That Section provides as follows: 

“(a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights
in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information, except for those
inventions that either: 
 (1) Relate at the time of conception or reduction to practice of the invention to the employer’s business, or
actual or demonstrably anticipated research or development of the employer; or 
 (2) Result from any work performed by the employee for the
employer. 
  

	 	(b)	To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the
public policy of the state and is unenforceable.” 

 By signing this Agreement, the Executive acknowledges that this
paragraph shall constitute written notice of the provisions in Section 2870. 
 (D) The Executive agrees that, (i) for the one
(1) year period following termination of the Executive’s employment with the Bank, the Executive shall not use the Bank’s Confidential Information to solicit the banking business of any customer with whom the Bank or the Company is
doing or has done business preceding such termination, use such Confidential Information to encourage any such customers to stop using the facilities or services of the Bank, or use such Confidential Information to encourage any such customers to
use the facilities or services of any competitor of the Bank; and (ii) for a one (1) year period following the termination of the Executive’s employment with the Bank for any reason, including a Change in Control, not to solicit the
services of any officer, employee or independent contractor of the Bank. 

  
 6 

 The covenants contained in this Section 6 shall be considered as a series of separate
covenants, one for each political subdivision of California, and one for each entity or individual with respect to whom solicitation is prohibited. Except as provided in the previous sentence, each such separate covenant shall be deemed identical in
terms to the covenant contained in this Section 6. If in any arbitration or judicial proceeding an arbitrator or a court refuses to enforce any of such separate covenants (or any part thereof), then such unenforceable covenant (or such part)
shall be eliminated from this Agreement to the extent necessary to permit the remaining separate covenants (or portions thereof) to be enforced. In the event that a provision of this Section 6 or any such separate covenant or portion thereof,
is determined to exceed the time, geographic or scope limitations permitted by applicable law, then such provision shall be reformed to the maximum time, geographic or scope limitations, as the case may be, permitted by applicable law. The Executive
hereby consents, to the extent the Executive may lawfully do so, to the arbitral or judicial modification of this Agreement as described in this Section 6. 
  

	7.	Release. 

 As a condition to the Executive’s receiving any payments pursuant to
Section 1 of this Agreement, the Executive must sign and deliver a general waiver and release to the Company and the Bank, not later than forty-five (45) days following the date of termination of employment and not thereafter revoke, in
form and substance acceptable to the Company and the Bank, releasing the Company, the Bank, their respective employees, officers, directors, shareholders and agents, and each person who controls any of them within the meaning of Section 15 of
the Securities Act of 1933, as amended, from any and all claims of any kind or nature, whether known or unknown (other than claims with respect to payments pursuant to Section 1 of this Agreement, payments of vested benefits or accrued
obligations under any employee benefit plan of the Bank or the Company, or valid claims for indemnification), from the beginning of time to the date of termination. 
  

	8.	Legal Fees and Expenses. 

 In the event of any judicial or
non-judicial proceeding (including arbitration) of any dispute between the Bank and the Executive concerning the validity, enforceability, interpretation or enforcement of this Agreement, the party that does
not prevail in such dispute shall pay to the prevailing party all legal fees and expenses which the prevailing party may incur as a result of such proceeding. 
  

	9.	Limitation on Payments. 

 Notwithstanding anything contained herein to the contrary, in no event
shall the total compensation paid out upon the departure of the Executive be in excess of that considered by the FDIC or the California Department of Business Oversight—Division of Financial Institutions to be safe and sound at the time of such
payment, taking into consideration all applicable laws, regulations, or other regulatory guidance. Any payments made to the Executive, pursuant to this Agreement or otherwise, are subject to and conditioned upon compliance with all applicable
banking regulations, including, but not limited to, 12 U.S.C. Section 1828(k) and any regulations promulgated thereunder. The Executive agrees that should any payments that are made or benefits that are provided pursuant to this Agreement be
considered unsafe or unsound or otherwise prohibited by applicable law, regulation or regulatory order, the Executive agrees that he/she shall return or otherwise reimburse the Company for the amount of such prohibited payments or benefits to the
maximum extent required by such law, regulation or regulatory order. Without limiting the foregoing, the Executive agrees to promptly comply with any 

  
 7 

 
applicable rule or regulation which requires the return or reimbursement to the Company of any payments, benefits or other compensation, including, but not limited to, return or reimbursement in
connection with any incentive compensation previously paid prior to the issuance of a financial restatement as required under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Sarbanes-Oxley Act of 2002 and all regulations
promulgated by any self-regulatory organization on which the Company’s common stock may then be listed. 
 Notwithstanding any other provisions of this
Agreement, if the Company’s principal tax advisor determines that the total amounts payable pursuant to this Agreement, together with other payments to which the Executive is entitled, would constitute an “excess parachute
payment” (as defined in Section 280G of the Internal Revenue Code), as amended, then the total payment under section 1.A above (and proportionally each monthly installment thereof) shall be reduced to the largest amount which may be paid
without any portion of such amount being subject to the excise tax imposed by Section 4999 of the Internal Revenue Code. 
  

	10.	Regulatory Provisions. 

 (a) Suspension and Removal Orders. If the
Executive is suspended and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by notice served under Section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act (12 U.S.C. Section 1818(e)(3) and
(g)(1)), the Bank’s obligations under this Agreement shall be suspended as of the date of any such service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Bank shall (to the fullest extent permitted by
law): (i) pay the Executive any compensation withheld while its obligations under this Agreement were suspended, as though the Executive was never suspended; and (ii) reinstate (in whole or in part) any of its obligations under this Agreement
which were suspended. If the Executive is removed and/or permanently prohibited from participating in the conduct of the Bank’s affairs by an order issued under Section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act (12 U.S.C.
Section 1818(e)(3) or (g)(1)), all obligations of the Bank under this Agreement shall terminate as of the effective date of the order, but any vested rights of the Executive shall not be affected. 

(b) Termination by Default. If the Bank is in default (as defined in Section 3(x)(1) of the Federal Deposit Insurance Act (12
U.S.C. Section 1813(x)(1)), all obligations under this Agreement shall terminate as of the date of default, but any vested rights of the Executive shall not be affected. 
  

	11.	Notice. 

 For purposes of this Agreement, notices and all other communications provided for in the
Agreement shall be in writing and shall be deemed to have been given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid as follows: 

 

					
	If the Bank:        	 	Citizens Business Bank	 	
		 	701 N. Haven Avenue, Suite 350	 	
		 	Ontario, California 91764	 	
		 	Attention: Christopher D. Myers, President and CEO	 	

 If to the Executive: At the address below his signature or such other address as either party may have been furnished to the
other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 

  
 8 

	12.	Arbitration. 

 Any dispute or controversy arising out of or relating to any interpretation,
construction, performance, termination or breach of this Agreement, will be governed by the Federal Arbitration Act, 9 U.S.C §§ 1 et seq. and will be settled by final binding arbitration by a single arbitrator to be held in Ontario,
California, in accordance with the JAMS rules for resolution of employment disputes then in effect, except as provided herein. The rules can be found online at http://www.jamsadr.com/rules-employment-arbitration/#one. The arbitrator selected shall
have the authority to grant any party all remedies otherwise available by law, including injunctions, but shall not have the power to grant any remedy that would not be available in a state or federal court in California. The arbitrator shall make a
good faith effort to apply the substantive law (and the law of remedies, if applicable) of the state of California, or federal law, or both, as applicable, without reference to its conflicts of laws provisions, but an arbitration decision shall not
be subject to review because of errors of law. The arbitrator is without jurisdiction to apply any different substantive law. The arbitrator shall have the authority to hear and rule on dispositive motions (such as motions for summary adjudication
or summary judgment). The arbitrator shall have the powers granted by California law and the rules of JAMS which conducts the arbitration, except as modified or limited herein. Notwithstanding anything to the contrary in the rules of JAMS, the
arbitration shall provide (i) for written discovery and depositions as provided under California law, and (ii) for a written decision by the arbitrator that includes the essential findings and conclusions upon which the decision is based
which shall be issued no later than thirty (30) days after a dispositive motion is heard and/or an arbitration hearing has completed. The Bank shall pay all fees and administrative costs charged by the arbitrator and JAMS. The Executive and the
Bank shall have the same amount of time to file any claim against any other party as such party would have if such a claim had been filed in state or federal court. In conducting the arbitration, the arbitrator shall follow the rules of evidence of
the State of California (including but not limited to all applicable privileges), and the award of the arbitrator must follow California and/or federal law, as applicable. The arbitrator shall be selected by the mutual agreement of the parties. If
the parties cannot agree on an arbitrator, the parties shall alternately strike names from a list provided by JAMS until only one name remains. The decision of the arbitrator will be final, conclusive, and binding on the parties to the arbitration.
The prevailing party in the arbitration, as determined by the arbitrator, shall be entitled to recover his/her or its reasonable attorneys; fees and costs, including the costs or fees charged by the arbitrator and JAMS to the extent allowed by law.
Judgment may be entered on the arbitrator’s decision in any court having jurisdiction. 
  

	13.	Validity. 

 The invalidity or unenforceability of any provisions of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 
  

	14.	Counterparts. 

 This Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original but all of which together will constitute one and the same instrument. 

  
 9 

	15.	Miscellaneous. 

 No provisions of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing signed by the Executive and the Bank. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or any prior to subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth expressly in this Agreement. [Upon execution hereof, this Agreement shall amend and restate in its entirety the Prior Agreement.] This Agreement shall be governed by and
construed in accordance with the laws of the State of California, without reference to its conflicts of laws principles. 
 IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date first written above, 
  

			
	Citizens Business Bank
		
	By:	 	/s/ Christopher D. Myers
		 	Christopher D. Myers
		 	President and CEO

  

			
	EXECUTIVE:	 	/s/ E. Allen Nicholson
		 	E. Allen Nicholson
		 	Executive Vice President

 Address: 701 N. Haven Avenue 

City and State: Ontario, California 91764 

  
 10

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