Document:

Exhibit 10.7

 

CHANGE IN CONTROL AGREEMENT

 

THIS CHANGE IN CONTROL
AGREEMENT (“Agreement”) is entered into as of the 9th day of January, 2018, by and among CITIZENS & NORTHERN
CORPORATION, a Pennsylvania corporation (the “Corporation”), CITIZENS & NORTHERN BANK, a Pennsylvania
bank (the “Bank”), and Tracy E. Watkins, 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, 2018; 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 her 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) her spouse if he survives her, or (ii) to her estate if her spouse does not survive her, 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/ Tracy E.
    Watkins

 

	 	Printed Name:	Tracy E. Watkins
	 	Address:	1972 N. Williamson Road
	 	 	Covington, PA 16917
	 	 	 
	 	Date:	01/09/18

 

	 	CORPORATION:
	 	 
	 	CITIZENS & NORTHERN CORPORATION
	 	 	 
	 	By:	/s/ J. Bradley
    Scovill
	 	 	 
	 	Title:	President & CEO
	 	 	 
	 	Date:	01/09/18
	 	 	 
	 	BANK:
	 	 
	 	CITIZENS & NORTHERN BANK
	 	 	 
	 	By:	/s/ J. Bradley
    Scovill
	 	 	 
	 	Title:	President & CEO
	 	 	 
	 	Date:	01/09/18

 

    	Page 6 of 6Exhibit 10.8

 

CITIZENS & NORTHERN CORPORATION

 

DEFERRED COMPENSATION PLAN

 

     
 

     

    

 

CITIZENS & NORTHERN CORPORATION

DEFERRED COMPENSATION PLAN

 

ARTICLE
I.PURPOSE:

 

This Plan adopted this
17th day of December, 2015 and effective January 1, 2016 by Citizens & Northern Corporation.

 

The Company hereby
adopts the Plan to provide deferred compensation benefits for certain of its key management/highly compensated employees. The Plan
is intended to be an unfunded plan maintained primarily for the purpose of providing deferred compensation supplemental retirement
benefits for a select group of management or highly compensated employees under Sections 201(2), 301(a)(3) and 401(a)(l) of the
Employee Retirement Income Security Act of 1974 ("ERISA"). The Plan is intended to be a nonqualified deferred compensation
plan that complies with the provisions of Section 409A of the Internal Revenue Code (the "Code"). The Plan shall be interpreted,
operated and administered in a manner consistent with these intentions.

 

ARTICLE
II.DEFINITIONS:

 

2.1.       “Account”
means, the account maintained with respect to each Participant which is credited with Deferred Contribution Credits and deemed
investment gains or losses, minus payments to the Participant.

 

2.2.       “Beneficiary”
means the person, persons, entity or entities designated by a Participant or determined pursuant to the provisions of Article V
of the Plan.

 

2.3.       “Board”
means the Board of Directors of the Company.

 

2.4.       
“Committee” means the Compensation Committee of the Board of Directors or any other Committee of the Board of Directors
so designated by the Board as authorized to administer the Plan.

 

2.5.       “Company”
means Citizens & Northern Corporation.

 

2.6.       “Compensation”
shall mean the Participant’s base salary plus incentive bonus compensation paid to the Participant for a Plan Year.

 

2.7.       “Deferred
Contribution Credit” means the amount credited to the Participant’s Account as described in Section 4.1.

 

2.8.       “Disabled”
means Disabled within the meaning of Section 409A of the Code and the regulations thereunder. Generally, this means that the Participant
is 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 is, 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 not less than three months
under an accident and health plan covering Employees of the Employer.

 

     
 

     

    

  

2.9.        “Effective
Date” shall mean January 1, 2016.

 

2.10.       “Employee”
means any individual who is actively employed by the Employer provided that the individual is a highly compensated or management
employee of the Employer.

 

2.11.       “Employer”
means separately and collectively Citizens & Northern Bank and Citizens & Northern Corporation.

 

2.12.       
“Participant” means with respect to any Plan Year an Employee designated by the Committee as eligible to participate
in the Plan.

 

2.13.       “Participation
Agreement” means the written agreement entered into between a Participant and the Employer which sets forth applicable Deferred
Contribution Credit percentages, election options and/or beneficiary designations of the Participant.

 

2.14.       “Plan”
means the Citizens & Northern Deferred Compensation Plan, as amended from time to time and at all times operated and maintained
consistent with Section 409A of the Code.

 

2.15.       “Plan
Year” means the twelve-month period ending each December 31.

 

2.16.       “Qualifying
Distribution Event” means (i) the Separation from Service of the Participant, (ii) the date the Participant becomes Disabled,
or (iii) the death of the Participant.

 

2.17.       “Separation
from Service” or “Separates from Service” shall mean “separation from service” as set forth under
Code Section 409A.

 

2.18.       “Specified
Employee” means any Participant who as of such Participant’s Separation from Service is a key employee. A Participant
is a key employee if the Participant qualifies as a key employee under Section 416(i)(1)(A)(i), (ii) or (iii) of the Code (and
regulations promulgated thereto) at any time during the twelve month period ending on December 31 of each year. If the Participant
is a key employee as of December 31 of any year the Participant is treated as a key employee for the entire 12 month period beginning
on the following April 1.

 

2.19.       “Spouse”
or “Surviving Spouse” means, except as otherwise provided in the Plan, a person who is the legally married spouse or
surviving spouse of a Participant.

 

ARTICLE
III.PARTICIPATION:

 

The Committee, in its
sole discretion, shall designate each Employee who is eligible to participate in the Plan. Provided however participation under
the Plan is available only to Employees who constitute management and/or highly compensated Employees of the Employer.

 

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ARTICLE
IV.CONTRIBUTION CREDITS:

 

4.1.       Deferred
Contribution Credits. Each Participant may
elect, by entering into a Participation Agreement with the Employer, to defer the receipt of Compensation from the Employer by
a dollar amount or percentage specified in the Participation Agreement. The amount of Compensation the Participant elects to defer
shall be credited by the Employer to the Account of such Participant under the Plan. The following provisions shall apply with
respect to the Deferred Contribution Credits of a Participant:

 

a. Deferred
Contribution Credits shall be made to the Plan only pursuant to an executed Participation Agreement delivered by the Participant
to the Committee. The Participant’s Account shall be credited by the Employer based on the amounts deferred by the Participant
for the applicable period. Subject to the provisions applicable to new Participants below, the Participation Agreement shall become
effective with respect to such Participant as of the first day of January following the date such Participation Agreement is received
by the Committee. A Participation Agreement regarding Deferred Contribution Credits shall remain in effect for subsequent Plan
Years unless modified by the Participant as permitted herein.

 

b. A Participant
may modify his Participation Agreement by providing such written modification of his Participation Agreement to the Committee.
The modification may terminate, decrease or increase his Deferred Contribution Credit election provided however, such modification
may only be effective as of the first day of January following the date the executed modification is delivered to the Committee.

 

c. A newly
eligible Participant may execute and deliver a Participation Agreement to the Committee within 30 days after the date the Participant
first becomes eligible to participate in the Plan, such election shall be effective as of the first payroll period next following
the date the Participation Agreement is executed and delivered to the Committee.

 

d. The
Committee may from time to time establish policies or rules consistent with the requirements of Section 409A of the Code to govern
the manner in which Participant Deferred Credits shall be made pursuant to policies and procedures established by the Committee
which are not inconsistent with the rules under Section 409A of the Code.

 

4.2.       Account.
All Deferred Contribution Credits shall be credited to the Account of the Participant as provided in this Article IV. The Employer
reserves the right to make contributions to a rabbi trust in conjunction with this Plan, such trust and its assets will be subject
to the claims of the Company's creditors.

 

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ARTICLE
V. VESTING/BENEFICIARY:

 

5.1.       Vesting.
A Participant shall at all times be fully vested in his Account.

 

5.2.       Designated
Beneficiary. The Participant may designate any person, persons, entity or entities as the beneficiary of the Participant’s
Account under the Plan on forms provided by and filed with the Committee. If no beneficiary is designated by the Participant, the
beneficiary shall be the Participant’s Surviving Spouse. If the Participant does not designate a beneficiary and has no Surviving
Spouse and has not designated any beneficiary or all such beneficiaries have predeceased the Participant, the beneficiary shall
be the Participant's estate. A beneficiary designation may be changed or revoked at any time by filing a new beneficiary designation
form with the Committee. If the primary beneficiary is receiving or is entitled to receive payments under the Plan and dies prior
to receiving or before receiving all of the payments due, the balance to which the beneficiary is entitled shall be paid to the
contingent beneficiary, if any, named in the Participant's current beneficiary designation form. If no contingent beneficiary is
designated, the contingent beneficiary shall be the Participant’s estate. Any beneficiary may disclaim all or any part of
any benefit to which such beneficiary shall be entitled hereunder by filing a written disclaimer with the Committee.

 

ARTICLE
VI.NO ACCOUNT INVESTMENTS:

 

6.1.       Deemed
Investments for Account. The Account of a Participant shall be credited based on investment returns determined as if the Account
was invested in one or more investment options made available under the Plan. The Participant may, as determined by the Committee,
elect the investment funds in which his Account is deemed to be invested. The Participant’s investment election will remain
in effect until the Participant changes the election. If no election is made by the Participant, the investment return to be credited
to the Participant’s Account shall be determined by the Committee and such investment return shall be communicated to the
Participant.

 

6.2.       Account
Balance Adjustments. A Participant’s Account shall be credited with the total amount of any Deferred Contribution Credits
since the last credit date and shall be credited or debited with the amount of the deemed investment gain or loss attributable
thereto resulting from the performance of the deemed investment funds elected by the Participant. The amount of such deemed investment
gain or loss shall be determined by the Committee and such determination shall be final.

 

ARTICLE
VII.QUALIFYING DISTRIBUTION EVENTS:

 

7.1.       Separation
from Service. If the Participant Separates from Service with the Employer the vested balance in the Participant’s Account
shall be paid to the Participant as provided in Article VIII. However, no distribution from the Plan shall be made earlier than
six months after the date of Separation from Service or, if earlier, the date of death, with respect to a Participant who is a
Specified Employee of a corporation which is traded on an established securities market. If the Participant qualifies as a Specified
Employee of a corporation specified above, all payments which would otherwise have been made during the first six months following
the date of Separation from Service shall be paid on the first day of the seventh month following the date of Separation from Service
in addition to any payment which may be due on the seventh month.

 

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7.2.       Disability.
If the Participant becomes Disabled prior to Separation from Service, the Participant’s Account shall be paid to the Participant
by the Employer as provided in Article VIII.

 

7.3.       Death.
If the Participant dies prior to Separation from Service, the Employer shall pay the Participant’s Account to the Participant's
Beneficiary as provided in Article VIII.

 

ARTICLE
VIII.DISTRIBUTION PROCEDURES:

 

8.1.       Timing
of Payments. Subject to the provisions of this ARTICLE VIII, a Participant may elect under his Participation Agreement, in
accordance with Section 409A of the Code, whether to have his benefit paid to him in monthly or annual installments over a period
selected by the Participant or in a lump sum. The Participant may also elect different payment option forms for each Qualifying
Distribution Event.

 

8.2.       Distribution
Election Changes. With the prior consent of the Committee, a Participant may delay the payment of any separate equal monthly
or annual installment or lump sum of his Account subject to the following:

 

(a)       The
new payment election may not take effect until at least 12 months after the date on which the new election is made.

 

(b)       If
the new election relates to a payment for a Qualifying Distribution Event other than the death of the Participant or the Participant
becoming Disabled, the new election must commence not earlier than at least five years from the date such payment would otherwise
have been made.

 

8.3.       Timing
of Payments. Payment(s) shall be made in the form elected by the Participant and shall commence
as soon as soon as administratively feasible following the Qualifying Distribution Event, but not in any event later than ninety
(90) days following the Qualifying Distribution Event unless prohibited by Section 409A.

 

8.4.       Installment
Payments. Payment of each monthly or annual installment shall be made on the anniversary of the date of the first installment
payment, and the amount of the annual installment shall be adjusted on such anniversary for credits or debits to the Participant's
Account pursuant to Article VI of the Plan.

 

8.5.       Acceleration
of Payments. Except as may be permitted under Section 409A of the Code and regulations, notices or announcements pertaining
to Section 409A of the Code, the acceleration of the time or schedule of any payment due under the Plan shall be prohibited.

 

    	 	5	 

     

    

  

ARTICLE
IX.ADMINISTRATION:

 

9.1.       Membership
of Committee. The Committee shall consist of not less than three (3) individuals appointed by the Board. Any member of the
Committee may resign or be replaced by the Board, and his successor, if any, shall be appointed by the Board.

 

9.2.       Committee
Responsibilities. The Committee shall be responsible for the operation and administration of the Plan and for carrying out
its provisions. The Committee shall have the full authority and discretion to make, amend, interpret, and enforce all appropriate
rules and regulations for the administration of this Plan. The Committee shall have the authority to designate employees eligible
to participate in the Plan, to direct the Company as to the payment of benefits, to file such reports as requested from time to
time, to administer the Plan’s claims procedure and to administer and interpret the Plan. Action of the Committee shall be
final and conclusive as to any matter pertaining to the Plan. The Committee may rely upon information furnished by any representative
of the Company or any actuary, accountant or legal counsel. The Committee may, from time to time, employ agents and delegate to
such agents, including employees of the Employer, such administrative or other duties as it sees fit.

 

9.3.       Indemnification/Hold
Harmless. The Employer shall indemnify and hold harmless each member of the Committee and its agents, against any and all liabilities
or expenses, including all legal fees relating thereto, arising in connection with the exercise of their duties and responsibilities
with respect to the Plan, excluding, however, gross negligence or willful misconduct of such Committee member or its agents.

 

ARTICLE
X.COMPOSITION OF THE COMMITTEE/

AMENDMENT AND TERMINATION OF PLAN:

 

10.1.       The
Board shall have the exclusive authority to appoint or remove members of the Committee at any time. The Board may amend any provision
of the Plan or terminate the Plan at any time; provided, that in no event shall such amendment or termination reduce the balance
in any Participant's Account as of the date of such amendment or termination, nor shall any such amendment affect the terms of
the Plan relating to the payment of such Account. The Employer shall make sure that this Plan is maintained in compliance with
Section 409A of the Code. Notwithstanding the foregoing, the Company may, in its discretion, terminate the Plan and distribute
benefits to Participants subject to Section 409A of the Code and the following requirements:

 

(a)         No
payments are made within 12 months of the termination date other than payments that would have normally been payable under the
terms of the Plan if the termination had not occurred and all benefits under the Plan are paid within 24 months of the termination
date.

 

(b)        The
termination of the Plan is not occurring as a result of a downturn or expected downturn in the Company’s financial status.

 

    	 	6	 

     

    

 

(c)         All
employer arrangements/plans that would be aggregated with this Plan under Section 409A regulations are terminated.

 

(d)         The
Company does not adopt, within 3 years following the termination of the Plan, a new program that would be aggregated with the Plan
under Section 409A of the Code.

 

ARTICLE
XI.CLAIMS PROCEDURE:

 

11.1.       All
claims under this Plan must be filed by a Participant or Beneficiary pursuant to this Article XI. If any Participant or Beneficiary
(the "claimant") believes that he is entitled to benefits under the Plan which are not being paid to him or which are
not being accrued for his benefit, the Participant must first file a written claim with the Committee pursuant to this Claims Procedure.
A Participant may appoint a representative to act on his behalf pursuant to the presentation of the claim.

 

11.2.       Notice
of Decision. Within 90 days after receipt of a claim by the Committee, the Committee shall notify the claimant of the decision
with regard to the claim. If the claim is wholly or partially denied, the claimant shall be informed, in writing, of: (i) the specified
reason or reasons for the denial; (ii) specific reference to pertinent provisions of the Plan on which the denial is based; (iii)
a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why
such material or information is necessary; and (iv) an explanation of the procedure for review of the denial and the time limits
applicable to such procedures, including a statement of the claimant's right to bring a civil action under ERISA following an adverse
benefit determination on review.

 

11.3.       Review
of Decision.

 

(a)         Within
60 days following receipt by the claimant of notice denying his claim, in whole or in part, or, if such notice shall not be given,
within 60 days following the latest date on which such notice could have been timely given, the claimant may appeal denial of the
claim by filing a written application for review with the Committee. Following such request for review, the Committee shall fully
and fairly review the decision denying the claim. Prior to the decision of the Committee, the claimant shall be given an opportunity
to review pertinent documents and to submit issues and comments in writing.

 

(b)         The
decision on review of a claim denied in whole or in part by the Committee shall be made in the following manner:

 

(i)       Within
60 days following receipt by the Committee of the request for review, the Committee shall notify the claimant in writing of its
decision with regard to the claim.

 

(ii)       With
respect to a claim that is denied in whole or in part, the decision on review shall set forth specific reasons for the decision,
shall be written in a manner calculated to be understood by the claimant, and shall set forth:

 

    	 	7	 

     

    

 

(A)       the
specific reason or reasons for the adverse determination;

 

(B)       specific
reference to pertinent Plan provisions on which the adverse determination is based;

 

(C)       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 to the claimant's claim for benefits; and

 

(D)       a
statement describing any voluntary appeal procedures offered by the Plan and the claimant's right to obtain the information about
such procedures, as well as a statement of the claimant's right to bring an action under ERISA section 502(a).

 

		(c)	The decision of the Committee shall be final and conclusive.

 

ARTICLE
XII.MISCELLANEOUS:

 

12.1.       Assignability
Prohibition. No portion of any benefit credited or paid under the Plan with respect to any Participant shall be payable to
any party other than the Participant or Beneficiary nor shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, and any attempt so to anticipate, alienate, sell, transfer, assign, pledge, encumber
or charge the same shall be void. Provided, however, if all or any portion of the benefit of a Participant is transferred by approved
court order to the former Spouse of the Participant incident to a divorce, the Committee shall maintain such amount for the benefit
of the former Spouse until distributed in the manner required by an order of any court having jurisdiction over the divorce, and
the former Spouse shall be entitled to the same rights as the Participant with respect to such benefit.

 

12.2.       Payment
Obligations. The Company shall be obligated to make all payments due the Participant under the Plan. This obligation shall
merely constitute a contractual liability of the Company to a Participant with such payments being made from the general funds
of the Company. The Company shall not be required to establish or maintain any special or separate fund, or otherwise to segregate
assets to assure that such payments shall be made. A Participant shall never have any interest in any particular assets of the
Company by reason of its obligations hereunder. To the extent that any Participant or Beneficiary acquires a right to receive payment
from the Company, such right shall be no greater than the right of an unsecured creditor of the Company.

 

    	 	8	 

     

    

  

12.3.       Trust.
The Company may establish a trust to assist it in meetings its obligations under the Plan. Any such trust would be treated as a
grantor trust for purposes of the Code. No trust asset may be held outside the United States.

 

12.4.       Construction/Gender.
The provisions of this Plan shall be governed under the laws of the Commonwealth of Pennsylvania, except to the extent that such
laws are superseded by ERISA and the applicable requirements of the Code. As used in this Plan, references to one gender shall
include the other.

 

12.5.       Notices.
Each Participant who Separates from Service and each Beneficiary shall be responsible for furnishing the Committee or its designee
with his current address for the mailing of notices and benefit payments. Any notice required or permitted to be given to such
Participant or Beneficiary shall be deemed given if directed to such address and mailed by regular United States mail, first class,
postage prepaid.

 

12.6.       Set
off. Notwithstanding any other provision of this Plan, the Employer may reduce the amount of any payment otherwise payable
to or on behalf of a Participant hereunder (net of any required withholdings) at the time payment is due by the amount of any loan,
cash advance, extension of credit or other obligation of the Participant to the Employer that is then due and payable.

 

12.7.       Reliance
on Information. The Employer and the Committee shall have the right to rely on any data provided by the Participant or by any
Beneficiary and the Employer and the Committee shall have no obligation to inquire into the accuracy of any representation made
at any time by a Participant or Beneficiary.

 

12.8.       Release.
Except otherwise provided, any payment made from the Plan to or with respect to any Participant or Beneficiary, or pursuant to
a disclaimer by a Beneficiary, shall, to the extent thereof, be in full satisfaction of all claims hereunder against the Plan and
the Employer. The recipient of any payment from the Plan may be required by the Committee, as a condition precedent to such payment,
to execute a receipt and release with respect thereto in such form as shall be acceptable to the Committee.

 

12.9.       Continuation
of Employment. The establishment of the Plan shall not be construed as conferring any legal or other rights upon any Employee
or any persons for continuation of employment, nor shall it interfere with the right of the Employer to discharge any Employee
or to deal with him without regard to the effect thereof under the Plan.

 

12.10.      Headings.
The headings and subheadings of the Plan have been inserted for convenience of reference and are to be ignored in any construction
of the provisions hereof.

 

12.11.      Merger
or Consolidation. No Employer shall consolidate or merge into or with another corporation or entity, or transfer all or substantially
all of its assets to another corporation, partnership, trust or other entity (a "Successor Entity") unless such Successor
Entity shall assume the rights, obligations and liabilities of the Employer under the Plan and upon such assumption, the Successor
Entity shall become obligated to perform the terms and conditions of the Plan. Nothing herein shall prohibit the assumption of
the obligations and liabilities of the Employer under the Plan by any Successor Entity.

 

    	 	9	 

     

    

  

12.12.      Withholding
Taxes. The Employer or other payor may withhold a benefit payment under the Plan or a Participant's wages, or the Employer
may reduce a Participant's Account balance, in order to meet any federal, state, or local tax withholding obligations with respect
to Plan benefits, as permitted under Section 409A of the Code.

 

12.13.      Legal
Action. If Participant determines in good faith that the Employer or any successor has failed to comply with its obligations
under this Plan, or if the Employer or any successor or any other person takes any action to declare this Plan void or unenforceable,
or institutes any legal action or arbitration proceeding with respect to the foregoing, and as a result thereof, Participant is
compelled to retain legal counsel, the Participant shall be reimbursed for his legal fees and expenses by the Employer provided
an arbitrator or court of competent jurisdiction should find in favor of Participant in enforcing his rights hereunder.

 

The Plan is hereby
adopted, upon authority of the Company authorized officers, this 21st day of December, 2015.

 

CITIZENS &
NORTHERN CORPORATION

 

	 	By:	/s/ Tracy E. Watkins, VP Director of HR

 

    	 	10

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