EXHIBIT 10.1


CHANGE IN CONTROL AGREEMENT


 


 


THIS CHANGE IN CONTROL
AGREEMENT (“Agreement”) is entered into as of the 17th day of March, 2015, by and among CITIZENS &
NORTHERN CORPORATION, a Pennsylvania corporation (the “Corporation”), CITIZENS & NORTHERN BANK, a Pennsylvania
bank (the “Bank”), and Stan R. Dunsmore, an employee of the Corporation and/or the Bank and/or of a subsidiary
of either (the “Employee”). The Corporation and the Bank are collectively referred to herein as the “Employer.”


 


WHEREAS, the Employer
wishes to assure itself of the continuity of the Employee’s services in the event of any actual change in control of the
Corporation; and


 


WHEREAS, the Employer
and the Employee accordingly desire to enter into this Agreement on the terms and conditions set forth below;


 


NOW, THEREFORE, in
consideration of the premises and mutual covenants set forth herein, it is hereby agreed by and between the parties as follows:


 


1.                 
Term of Agreement.
The “Term” of this Agreement shall commence on the date hereof and shall continue through December 31, 2015; provided,
however, that on such date and on each December 31 thereafter, the Term of this Agreement shall automatically be extended for
one additional year unless, not later than the preceding January 1 either party shall have given written notice to the other that
such party does not wish to extend the Term; and provided, however, that if a Change in Control (as defined in Section 3 below)
shall have occurred during the original or any extended Term of this Agreement, the Term of this Agreement shall continue for a
period of twenty-four (24) calendar months commencing with the calendar month in which such Change in Control occurs and shall
end upon the expiration of such 24 month period.


 


2.                 
Employment After a Change in Control.
If the Employee is in the employ of the Bank on the date of a Change in Control, the Bank hereby agrees to continue the Employee
in its employ for the period commencing on the date of the Change in Control and ending on the last day of the Term of this Agreement
(the “Employment Period”). During the Employment Period, the Employee shall hold such position with the Bank and exercise
such authority and perform such employment duties as are commensurate with the Employee’s position, authority and duties
immediately prior to the Change in Control. The Employee agrees that during the Employment Period the Employee shall devote full
business time exclusively to the Employee’s duties and perform such duties faithfully and efficiently; provided, however,
that nothing in this Agreement shall prevent either (i) the Employee from voluntarily resigning from employment upon at
least sixty (60) days’ written notice to the Bank under circumstances which do not constitute a Termination (as defined below
in Section 5), or (ii) the Bank terminating the Employee for “Cause” as defined in Section 5 hereof or for any
other reason or no reason.


 


3.                 
Change in Control.
For purposes of this Agreement, a “Change in Control” means the happening of any of the following: the merger of the
Corporation into, or the consolidation of the Corporation with, another entity; the sale or other disposition of all or substantially
all of the Corporation’s assets; or the liquidation of the Corporation; provided, however, that a Change in Control
shall not be deemed to have occurred by reason of a transaction, or a substantially concurrent or otherwise related series
of transactions, upon the completion of which 50 percent or more of the beneficial ownership of the voting power of the Corporation
(or of the surviving corporation or corporation directly or indirectly controlling the Corporation) is held by (i) employee benefit
plans of the Corporation ; or (ii) an “Affiliate” of the Corporation (as defined in the Securities Exchange Act of
1934, as amended).


 



    	 



    	 



    




 


4.                 
Compensation During the Employment Period.
During the Employment Period, the Employee shall be compensated as follows:


 


a.             
The Employee shall receive compensation which is not less than compensation paid by the Employer to the Employee
immediately prior to the Employment Period; and


 


b.             
The Employee shall be eligible to participate in the Employer employee benefit plans which are not materially less
favorable to the Employee than the Employer employee benefit plans in which the Employee participated in immediately prior to the
Employment Period.


 


5.                 
Termination.
For purposes of this Agreement, the term “Termination” shall mean termination of the employment of the Employee during
the Employment Period either (i) by the Employer, for any reason other than death, Disability (as defined below),
or Cause (as described below), or (ii) by resignation of the Employee upon the occurrence of one or more of the following
events:


 


a.              
A significant change in the nature or scope of the Employee’s authorities or duties from those described in
Section 2 above, a breach of any of the provisions of Section 4 above, or the breach by the Employer of any other provision of
this Agreement;


 


b.             
The relocation of the Employee’s office to a location more than 35 miles from the location of the Employee’s
office immediately prior to the Employment Period;


 


c.              
A reasonable determination by the Employee that, as a result of a Change in Control and a change in circumstances
thereafter significantly affecting the nature and scope of Employee’s authorities and duties from those described in Section
2 above, the Employee is unable to exercise the authorities, powers, functions or duties associated with the Employee’s position
as contemplated by Section 2 above; or


 


d.             
The failure of the Corporation to obtain a satisfactory agreement from any successor to assume and agree to perform
this Agreement as contemplated in Section 15 below.


 


The date of the Employee’s
Termination under this Section 5 shall be the date specified by the Employee or the Employer, as the case may be, in a written
notice to the other party complying with the requirements of Section 11 below. For purposes of this Agreement, the Employee shall
be considered to have a “Disability” during the period in which the Employee is unable, by reason of a medically determinable
physical or mental impairment, to engage in the material and substantial duties of the Employee’s regular occupation, which
condition is expected to be permanent. For purposes of this Agreement, the term “Cause” means, in the reasonable judgment
of the Board of Directors of the Employer, (i) the willful and continued failure by the Employee to substantially perform the Employee’s
duties with the Employer after written notification by the Employer, or (ii) the willful engaging by the Employee in conduct which
is demonstrably injurious to the Employer, monetarily or otherwise, or (iii) the engaging by the Employee in egregious misconduct
involving moral turpitude. For purposes of this Agreement, no act, or failure to act, on the Employee’s part shall be deemed
“willful” unless done, or omitted to be done, by the Employee not in good faith and without reasonable belief that
such action was in the best interest of the Employer.


 


6.                 
Severance Payments.
In the event of a Termination described in Section 5 above, in lieu of the amounts otherwise payable under Section 4 above, the
Employee shall be entitled to receive (i) Employer-paid COBRA premiums (relating to the Employee’s group medical insurance
continuation premiums) for a period of eighteen (18) months after the date of Termination, and (ii) a lump sum payment in
cash no later than thirty (30) business days after the date of Termination equal to the sum of:


 






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		a.	the Employee’s unpaid salary, accrued vacation pay and unreimbursed business expenses through
and including the date of Termination; and



	 	 	 
		b.	an amount equal to one times the Employee’s base salary in effect immediately
prior to the date of Termination.
	 	 	 



7.                 
Excess Parachute Payment Limitation.
Notwithstanding any other provision of this Agreement, if the sum of the payments to the Employee described in this Agreement and
in any other agreement, program, or plan between the Employee and the Employer (or an affiliate of the Employer) attributable to
the same Change in Control constitute “excess parachute payments” (as defined in Section 280G(b)(1) of the Internal
Revenue Code of 1986, as amended (“Code”)), the Employer shall reduce the amounts otherwise payable to the Employee
under this Agreement so that the Employee’s total “parachute payment” (as defined in Code Section 280G(b)(2)(A))
under this Agreement and any other agreements, programs, or plans shall be One Thousand Dollars ($1,000) less than the amount that
would be an “excess parachute payment.”


 


8.                 
Withholding.
All payments to the Employee under this Agreement will be subject to all applicable withholding of state and federal taxes.


 


9.                 
Confidentiality and Non-Solicitation.
The Employee agrees that:


 


a.              
Except as may be required by the lawful order of a court or agency of competent jurisdiction, or except to the extent that
the Employee has express authorization from the Employer, the Employee agrees to keep secret and confidential all non-public information
concerning the Employer (or any entity controlled by the Employer) which was acquired by or disclosed to the Employee during the
course of the Employee’s employment with the Employer (or any entity controlled by the Employer), and not to disclose the
same, either directly or indirectly, to any other person, firm or business entity or to use it in any way.


 


b.             
While the Employee is employed by the Employer (or any entity controlled by the Employer) and for a period of twelve (12)
months after the date of the Employee’s Termination or other termination of employment with the Employer, the Employee covenants
and agrees that Employee will not, whether for Employee or for any other person, business, partnership, association, firm, company
or corporation, initiate contact with, solicit, divert or take away any of the customers (entities or individuals from which the
Employer or any entity controlled by the Employer receives payment for services) of the Employer (or any entity controlled by the
Employer) or employees of the Employer (or any entity controlled by the Employer) in existence from time to time during Employee’s
employment with the Employer (or any entity controlled by the Employer) and at the time of such initiation, solicitation or diversion.


 


10.             
Mitigation and Set-Off.
The Employee shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment
or otherwise. The Employer shall not be entitled to set off against the amounts payable to the Employee under this Agreement any
amounts earned by the Employee in other employment after termination of employment with the Employer, or any amounts which might
have been earned by the Employee in other employment had he sought such other employment.


 


11.             
Notices.
Any notice of Termination of the Employee’s employment by the Employer or the Employee for any reason under Section 5 above
shall be upon no less than fifteen (15) days’ and no greater than forty-five (45) days’ advance written notice to the
other party. Any notices, requests, demand and other communications provided for by this Agreement shall be sufficient if in writing
and if sent by registered or certified mail to the Employee at the last address the Employee has filed in writing with the Employer
or, in the case of the Employer, to the attention of the Secretary of the Employer, at its principal executive offices.


 






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12.             
Non-Alienation.
The Employee shall not have any right to pledge, hypothecate, anticipate or in any way create a lien upon any amounts provided
under this Agreement; and no amounts payable hereunder shall be assignable in anticipation of payment either by voluntary or involuntary
acts, or by operation of law. Nothing in this Section 12 shall limit the Employee’s rights or powers to dispose of the Employee’s
property by Last Will and Testament or limit any rights or powers which the Employee’s executor or administrator would otherwise
have. This Agreement shall inure to the benefit of and be enforceable by the Employee’s personal or legal representatives,
executors, administrators, successors, heirs, designees, devisees, and legatees. If the Employee should die while any amount is
still payable to the Employee hereunder had the Employee continued to live, all such amounts shall be paid in accordance with the
terms of this Agreement to the Employee’s designees, devisees, or legatee, or if there are none, to the Employee’s
estate.


 


13.             
Governing Law.
The provisions of this Agreement shall be construed in accordance with the laws of the State of Pennsylvania, without application
of conflict of laws provisions thereunder.


 


14.             
Amendment.
This Agreement may be amended or canceled by mutual agreement of the parties in writing without the consent of any other person
and, except as specifically provided in Section 15 hereto, so long as the Employee lives, no person, other than the parties hereto,
shall have any rights under or interest in this Agreement or the subject matter hereof.


 


15.             
Successors to the Employer.
This Agreement shall be binding upon and inure to the benefit of the Employer and any successor of the Employer. The Employer shall
require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all
of the business and/or assets of the Employer to expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Employer would be required to perform it if no succession had taken place.


 


16.             
Employment Status.
Nothing herein contained shall be deemed to create an employment agreement between the Employer and the Employee, providing for
the employment of the Employee by the Employer for any fixed period of time. The Employee’s employment with the Employer
is terminable at will by the Employer or the Employee, and each shall have the right to terminate the Employee’s employment
with the Employer at any time, with or without Cause, subject to (i) the notice provisions of this Agreement, and (ii) the Employer’s
obligation to provide severance payments if and as required by Section 6. Upon a termination of the Employee’s employment
prior to the date of a Change in Control, there shall be no rights of the Employee under this Agreement.


 


17.             
409A SAFE HARBOR.


 


a.General.
It is intended that this Agreement shall comply with the provisions of section 409A of the Code and the Department of the Treasury
(the "Department") Regulations relating thereto, or an exemption to section 409A of the Code. Any payments that qualify
for the "short-term deferral" exception or another exception under section 409A of the Code shall be paid under the applicable
exception. For purposes of the limitations on nonqualified deferred compensation under section 409A of the Code, each payment of
compensation under this Agreement shall be treated as a separate payment of compensation for purposes of applying the section 409A
of the Code deferral election rules and the exclusion under section 409A of the Code for certain short-term deferral amounts. All
payments to be made upon a termination of employment under this Agreement may only be made upon a "separation from service"
under section 409A of the Code. In no event may the Employee, directly or indirectly, designate the calendar year of any payment
under this Agreement. Within the time period permitted by the applicable Department Regulations (or such later time as may be permitted
under section 409A or any Internal Revenue Service or Department rules or other guidance issued thereunder), the Corporation may,
in consultation with the Employee, modify the Agreement in order to cause the provisions of the Agreement to comply with the requirements
of section 409A of the Code, so as to avoid the imposition of taxes and penalties on the Employee pursuant to section 409A of the
Code.


 






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b.In-Kind
Benefits and Reimbursements. Notwithstanding anything to the contrary in this Agreement, all reimbursements and in-kind benefits
provided under this Agreement shall be made or provided in accordance with the requirements of section 409A of the Code including,
where applicable, the requirement that (i) any reimbursement is for expenses incurred during the Employee’s lifetime (or
during a shorter period of time specified in this Agreement); (ii) the amount of expenses eligible for reimbursement, or in-kind
benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided,
in any other calendar year; (iii) the reimbursement of an eligible expense will be made no later than the last day of the calendar
year following the year in which the expense is incurred; and (iv) the right to reimbursement or in-kind benefits is not subject
to liquidation or exchange for another benefit.


 


c.Delay
of Payments. Notwithstanding any other provision of this Agreement to the contrary, if the Employee is considered a "specified
employee" for purposes of section 409A of the Code (as determined in accordance with the methodology established by the Corporation
and the Bank as in effect on the date of termination), (i) any payment that constitutes nonqualified deferred compensation within
the meaning of section 409A of the Code that is otherwise due to the Employee under this Agreement during the six-month period
following his separation from service (as determined in accordance with section 409A of the Code) shall be accumulated and paid
to Employee on the first business day of the seventh month following his separation from service (the "Delayed Payment Date")
and (ii) in the event any equity compensation awards held by the Employee that vest upon termination of the Employee’s employment
constitute nonqualified deferred compensation within the meaning of section 409A of the Code, the delivery of shares of common
stock (or cash) as applicable in settlement of such award shall be made on the earliest permissible payment date (including the
Delayed Payment Date) or event under section 409A on which the shares (or cash) would otherwise be delivered or paid. The Employee
shall be entitled to interest on any delayed cash payments from the date of termination to the Delayed Payment Date at a rate equal
to the applicable federal short-term rate in effect under Code section 1274(d) for the month in which the Employee’s separation
from service occurs. If the Employee dies during the postponement period, the amounts and entitlements delayed on account of section
409A of the Code shall be paid to the person designated by the Employee in writing for this purpose, or in the absence of any such
designation, to (i) his spouse if she survives him, or (ii) to his estate if his spouse does not survive him, on the first to occur
of the Delayed Payment Date or 30 days after the date of the Employee’s death. The foregoing shall apply only to those payments
required hereunder, if any, that do not qualify as short term deferrals or an exempt pay arrangement under section 409A.


 



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18.             
Severability.
In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason,
the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect.


 


19.             
Survival.
Notwithstanding any other provision of this Agreement to the contrary, Sections 9, 15 and 17 shall survive the termination of this
Agreement and the termination of the Employee’s employment with the Employer.


 


20.             
Counterparts.
This Agreement may be executed in two or more counterparts, any one of which shall be deemed the original without reference to
the others.


 


IN WITNESS WHEREOF,
the Employee and the Employer have executed this Agreement as of the day and year first above written, but on the dates indicated
below each.


 





 





	 	EMPLOYEE:	 
	 	 	 
	 	Signature: 	/s/ Stan R. Dunsmore
	 	 	 
	 	Printed Name: 	Stan R. Dunsmore
	 	Address: 	314 Meadow Road
	 	 	Emporium, PA 15834
	 	 	 
	 	Date: 	3/17/15
	 	 	 



 


	 	 	 
	 	 	 
	 	CORPORATION:
	 	 	 
	 	CITIZENS & NORTHERN CORPORATION
	 	 	 
	 	By:	/s/ J. Bradley Scovill
	 	 	 
	 	Title:	President & CEO
	 	 	 
	 	Date:	3/17/15
	 	 	 
	 	 	 
	 	 	 
	 	BANK:	 
	 	 	 
	 	CITIZENS & NORTHERN BANK
	 	 	 
	 	By:	/s/ J. Bradley Scovill
	 	 	 
	 	Title:	President & CEO
	 	 	 
	 	Date:	3/17/15




 






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