Document:

EXHIBIT 10.4

 

 

CITIZENS
& NORTHERN
CORPORATION 

1995 STOCK INCENTIVE
PLAN (As Amended)

RESTRICTED
STOCK AGREEMENT

RESTRICTED
STOCK AGREEMENT dated
as of the
5th
day of February,
2015, by and between Citizens
& Northern Corporation (the
"Corporation") and Mark A.
Hughes, an employee of
the Corporation or of a
subsidiary (the "Recipient").

 

Pursuant to the
Citizens & Northern Corporation
1995 Stock Incentive Plan (the
"Plan"), as amended, the Compensation
Committee of
the Board of
Directors (the "Committee") has
determined that
the Recipient is
to be granted, on
the terms and
conditions set forth
herein, 3,408 Restricted
Shares of the
Corporation's common stock and hereby
grants such Restricted
Shares.

 

		1.	Number of Shares and Price.
Restricted Stock shall
consist of
shares of
Stock that
will be acquired
by and issued
to the
Recipient at a
designated time approved
by the board
of directors, for no purchase price, and under and subject to
such transfer,
forfeiture and other restrictions, conditions or terms as
shall be determined by
the Committee, including but
not limited
to prohibitions against transfer
and substantial risks
of forfeiture within
the meaning of
Section 83 of
the Code.

 

		2.	Rights of Recipient.
Except as otherwise provided
in the Plan or the Restricted
Stock Agreement, a Recipient of shares of
Restricted Stock shall have
all the rights as
does a holder of Stock,
including without limitation
the right
to vote
such shares
and receive dividends with respect
thereto; however,
during the time period
of any restrictions, conditions
or terms applicable
to such Restricted
Stock, the shares thereof and
the right to vote the
same and receive
dividends thereon shall not be
sold, assigned,
transferred, exchanged, pledged, hypothecated,
encumbered or otherwise
disposed of except as permitted
by the Plan or
the Restricted Stock Agreement.
Cash dividends shall be paid
out and shall not participate in
Dividend Reinvestment. Stock dividends
resulting in whole shares shall be
added to
the shares held
in the Restricted
Account and shall be distributed
to the Recipient
with subsequent distributions
of any Award
for which they accrued.
Partial shares that
result from any
stock dividend shall
be paid to the
Recipient in cash at
the time of
the payment of the stock dividend.
If the Restricted Shares
expire prior
to the satisfaction of
performance standards set
forth in
section 4 or
due to forfeiture as set
forth in
section 5, all
shares accrued by virtue
of stock dividends shall
be forfeited.

 

		3.	Holding of Restricted Shares.
 Each certificate
for shares of Restricted
Stock shall be
deposited with the Secretary
of the Corporation,
or the office thereof, and
shall bear
a legend in
substantially the following
form and
content:

 

This
Certificate and the
shares of Stock hereby represented
are subject to the
provisions of the Corporation’s
Stock Incentive
Plan and a certain agreement entered
into between the owner and the
Corporation pursuant to said
Plan.  The
release of the Certificate and
the shares of Stock hereby represented
from such provision shall
occur only as
provided by said Plan and
Agreement, a copy
of which are
on file in the office
of the Secretary of the Corporation.

 

Upon the
lapse or satisfaction of
the restrictions, conditions
and terms applicable
to such
Restricted Stock, a
certificate for
the shares of
Stock free thereof with such
legend shall be issued
to the
Recipient.

 

		4.	Release and Lapse of Restricted
Shares. One-fourth of the
total shares
will be distributed
on the
anniversary date
of this
award based on the
Recipient’s satisfactory performance
of his or her job
and the Corporation’s attainment
of an earnings-
based performance standard.
The performance
standard will be based on
achieving 100% or more of
the Return on
Equity of a defined peer
group of bank holding companies,
herein defined (adjusting for the difference between the
Corporation’s and
the peer
group’s equity to
asset ratios), for
the four consecutive
calendar quarters ending
with the third quarter of each
calendar year following
the Award Date,
until all Restricted
Shares awarded herewith
are distributed.
If all
the Restricted
Shares awarded by
this agreement are not
distributed within the
ten (10) year
period following the date
of this Agreement,
they shall expire
and revert
back to
the Corporation. 
No partial shares may be
released, thus an
amount equal to
the next whole share
amount will be released subject
to the specified performance criteria
at each anniversary.
The shares released
may be in
certificate form, or
may be directed
to be held
in a custodial account
designated by the Recipient.
The peer group consists
of banks
headquartered in
Pennsylvania with total
assets of
$750 million to
$2.0 billion with the
addition of Chemung
Financial Corporation in Elmira, NY.

 

The Committee
reserves the right to change the composition of
the peer group, as well as the method of evaluating the
Corporation’s earnings
performance as compared to the peer group,
based on mergers or acquisitions involving members of the
peer group, changes in size of the
Corporation or members of the peer group, or
other factors deemed appropriate by
the Committee.

 

    	 

    	 

    

 

		5.	Terms of Forfeiture.
If a Recipient’s employment
with the Corporation, or a subsidiary,
ceases for any reason
prior to the
lapse of the restrictions, conditions
or terms applicable to his or
her Restricted Stock, all
of the Recipient’s Restricted
Stock still subject
to unexpired restrictions,
conditions or terms shall
be forfeited absolutely by the
Recipient to the
Corporation without
payment or delivery
of any consideration or other
thing of value
by the Corporation
or its affiliates, and
thereupon  and
thereafter neither the Recipient
nor his or her heirs, personal or
legal representatives, successors,
assigns, beneficiaries, or
any claimants
under the Recipient’s
Last Will
or laws of
descent and distribution,
shall have
any rights or
claims to
or  interests in
the forfeited Restricted
Stock or any certificates
representing shares thereof, or
claims against the Corporation
or its affiliates
with respect thereto.
Except in the
case of disability, employment ceases
with the Corporation,
or its Subsidiary,
on the day the Recipient’s
employment is terminated
with or without
cause, or on
their date of
death. In the
event of disability, the
Recipient’s employment is considered
terminated on
the date
for which
the Recipient
receives the final
 payment of the Corporation’s,
or Subsidiary’s, short-term
disability.

 

		6.	Non-Transferability of Restricted
Stock. The
Restricted Stock and this
Restricted Stock Agreement shall not
be transferable.

 

		7.	Change in Control.
If any
of the change
in control events
described in Section 11 of the
Plan occur, all
shares of Restricted
Stock shall fully vest and all restrictions on
the shares of Restricted
Stock shall lapse
as follows: In
the case of
an event
specified in clause (a) of
the second sentence of the third paragraph of
Section 11, the
lapse of all restrictions on the
shares of
Restricted Stock shall
occur immediately prior to the
consummation of the
described transaction and, in
the case of an
event specified in
clause (b) or (c) of said
sentence, the full
vesting and
lapse of
restrictions shall occur upon
occurrence of the
described event.

 

		8.	Notices. Any notice required
or permitted under this
Restricted Stock Agreement shall be deemed
given when delivered personally,
or when
deposited in a
United States Post
Office, postage prepaid,
addressed, as appropriate, to the
Recipient either at
his or her
address herein above set
forth or such other address as
he or she
may designate
in writing to
the Corporation.

 

		9.	Failure to Enforce Not a
Waiver. The
failure of the
Corporation to
enforce at any time
any provision of this Restricted
Stock Agreement shall in no way
be construed to be
a waiver of such provision or
of any other
provision hereof.

 

		10.	Governing Law. This
Restricted Stock Agreement shall be
governed by and construed according
to the
laws of the State of Pennsylvania.

 

		11.	Incorporation of Plan.
The Plan is hereby
incorporated by reference and made
a part hereof,
and the Restricted Stock and
this Restricted Stock Agreement
are subject
to all
terms and
conditions of
the Plan.

 

		12.	Amendments. This Restricted
Stock Agreement
may be amended or
modified at any
time by an
instrument in writing
signed by
the parties hereto, provided that no such
amendment or modification shall
be made which would cause the
Restricted Stock
to fail to continue
to qualify as "incentive
restricted stock."

 

IN WITNESS WHEREOF,
the parties have
executed this Option Agreement
on the day and
year first
above written.

 

	 	By	
	 	Mark A. Hughes, Interim President & CEO
	 	 
	 	The undersigned hereby accepts and
    agrees to all the terms and
    provisions of the foregoing Restricted Stock Agreement and to all the terms and provisions of
    the Citizens & Northern Corporation
    1995 Stock Incentive Plan herein incorporated by reference.
	 	
	 	 
	 	Recipient – Mark A. HughesEXHIBIT 10.9

 

INDEMNIFICATION AGREEMENT

 

This Agreement made this 11th
day of February, 2015, between Citizens & Northern Corporation, a bank holding
company registered under the Bank Holding Company Act of 1956, as amended, and a Pennsylvania corporation (the “Company”)
and Stan R. Dunsmore, a director, officer or representative (as hereinafter defined) of the Company (the “Indemnitee”);

 

WHEREAS, the Company and the
Indemnitee are each aware of the exposure to litigation of officers, directors and representatives of the Company as such persons
exercise their duties to the Company;

 

WHEREAS, the Company and the
Indemnitee are also aware of conditions in the insurance industry that have affected and may continue to affect the Company’s
ability to obtain appropriate directors’ and officers’ liability insurance on an economically acceptable basis;

 

WHEREAS, the Company desires
to continue to benefit from the services of highly qualified, experienced and competent persons such as the Indemnitee;

 

WHEREAS, the Indemnitee desires
to serve or to continue to serve the Company as a director, officer or as a director, officer or trustee of another corporation,
joint venture, trust or other enterprise in which the Company has a direct or indirect ownership interest, for so long as the Company
continues to provide on an acceptable basis adequate and reliable indemnification against certain liabilities and expenses which
may be incurred by the Indemnitee.

 

NOW, THEREFORE, in consideration
of the foregoing premises and the mutual covenants herein contained, the parties hereto agree as follows:

 

1.          Indemnification.
Subject to the terms of this Agreement, the Company shall indemnify the Indemnitee with respect to his activities as a director
or officer of the Company and/or as a person who is serving or has served on behalf of the Company (“representative”)
as a director, officer, or trustee of another corporation, joint venture, trust or other enterprise, domestic or foreign, in which
the Company has a direct or indirect ownership interest (an “affiliated entity”) against expenses (including, without
limitation, attorneys’ fees, judgments, fines, and amounts paid in settlement) actually and reasonably incurred by him (“Expenses”)
in connection with any claim against Indemnitee which is the subject of any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, investigative or otherwise and whether formal or informal (a “Proceeding”),
to which Indemnitee was, is, or is threatened to be made a party by reason of facts which include Indemnitee’s being or having
been such a director, officer or representative, to the extent of the highest and most advantageous to the Indemnitee, as determined
by the Indemnitee, of one or any combination of the following:

 

(a)          The
benefits provided by the Company’s Articles of Incorporation in effect on the date hereof;

 

(b)          The
benefits provided by the Articles of Incorporation or By-Laws or their equivalent of the Company in effect at the time Expenses
are incurred by Indemnitee;

 

(c)          The
benefits allowable under Pennsylvania law in effect at the date hereof;

 

(d)          The
benefits allowable under the law of the jurisdiction under which the Company exists at the time Expenses are incurred by the Indemnitee;

 

(e)          The
benefits available under liability insurance obtained by the Company;

 

(f)          The
benefits available under the $5,000,000 D&O Selectplus Insurance Policy obtained by the Company from The Fidelity and Deposit
Companies in effect for 2004; and

 

    	 

    	 

    

 

(g)          Such
other benefits as are or may be otherwise available to Indemnitee.

 

Combination of two or more
of the benefits provided by (a) through (g) shall be available to the extent that the Applicable Document, as hereafter defined,
does not require that the benefits provided therein be exclusive of other benefits. The document or law providing for the benefits
listed in items (a) through (g) above is called the “Applicable Document” in this Agreement. Company hereby undertakes
to use its best efforts to assist Indemnitee, in all proper legal ways, to obtain the benefits selected by Indemnitee under items
(a) through (g) above.

 

For purposes of this Agreement,
references to “other enterprises” shall include employee benefit plans for employees of the Company or of any affiliated
entity without regard to ownership of such plans; references to “fines” shall include any excise taxes assessed on
the Indemnitee with respect to any employee benefit plan; references to “serving on behalf of the company” shall include
any services as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, the Indemnitee
with respect to an employee benefits plan, its participants or beneficiaries; references to the singular shall include the plural
and vice versa; and if the Indemnitee acted in good faith and in a manner he or she reasonably believed to be in the interest
of the participants and beneficiaries of an employee benefit plan Indemnitee shall be deemed to have acted in a manner consistent
with the standards required for indemnification by the Company under the Applicable Documents.

 

2.          Insurance.
The Company shall maintain directors’ and officers’ liability insurance for so long as Indemnitee’s services
are covered hereunder, provided and only to the extent that such insurance is available in amounts and on terms and conditions
determined by the Company to be acceptable. However, the Company agrees that the provisions hereof shall remain in effect regardless
of whether liability or other insurance coverage is at any time obtained or retained by the Company; except that any payments in
fact made to Indemnitee under an insurance policy obtained or retained by the Company shall reduce the obligation of the Company
to make payments hereunder by the amount of the payments made under any such insurance policy.

 

3.          Payment
of Expenses. At Indemnitee’s request, the Company shall pay the Expenses as and when incurred by Indemnitee, after receipt
of written notice pursuant to Section 6 hereof and an undertaking in the form of Exhibit I attached hereto by or on behalf of Indemnitee
(i) to repay such amounts so paid on Indemnitee’s behalf if it shall ultimately be determined under the Applicable Document
or applicable law that Indemnitee is required to repay such amounts and (ii) to reasonably cooperate with the Company concerning
such Proceeding. That portion of Expenses which represents attorneys’ fees and other costs incurred in defending any Proceeding
shall be paid by the Company within thirty (30) days of its receipt of such request, together with reasonable documentation (consistent,
in the case of attorneys’ fees, with Company practice in payment of legal fees for outside counsel generally) evidencing
the amount and nature of such Expenses, subject to its also having received such notice and undertaking.

 

It is understood and agreed
before the Company pays the Expenses incurred in a Proceeding brought by a banking agency in which a final order has not been entered,
the following conditions must be met:

 

(a)          The
Board of Directors, in good faith, shall determine in writing after due investigation and consideration that the Indemnitee acted
in a manner believed to be in the best interests of the Company;

 

(b)          The
Board of Directors, in good faith, shall determine after due investigation and consideration that the payment of such Expenses
will not materially or adversely affect the Company’s safety and soundness.

 

(c)          The
Indemnitee shall agree in writing to reimburse the Company for Expenses which subsequently are deemed “prohibited indemnification
payments”, as defined in 12 C.F.R. § 359.1(1).

 

    	- 2 –

    	 

    

 

The Indemnitee shall not participate
in any way in the Board’s discussion and approval of Expenses, provided however, that the Indemnitee may present his or her
request to the Board and respond to any inquiries from the Board concerning his or her involvement in the circumstances giving
rise to the banking agency Proceeding or civil action.

 

4.          Escrow.
The Company may dedicate such amounts as the Board of Directors of the Company may from time to time authorize, as collateral security
for the funding of its obligations hereunder (and under similar agreements with other directors, officers and representatives)
by depositing assets or bank letters of credit in escrow or reserving lines of credit that may be drawn down by an escrow agent
in the dedicated amount (the “Escrow Reserve”). The Company shall promptly provide Indemnitee with a true and complete
copy of the agreement relating to the establishment and operation of the Escrow Reserve, together with such additional documentation
or information with respect to the escrow as Indemnitee may from time to time reasonably request. The Company shall promptly deliver
an executed copy of the Agreement to the escrow agent for the Escrow Reserve to evidence to that agent that Indemnitee is a beneficiary
of that Escrow Reserve and shall deliver to Indemnitee the escrow agent’s signed receipt evidencing that delivery.

 

5.          Additional
Rights. The indemnification provided in this Agreement shall not be exclusive of any other indemnification or right to which
Indemnitee may be entitled and shall continue after Indemnitee has ceased to occupy a position as an officer, director or representative
as described in Paragraph 1 above with respect to Proceedings relating to or arising out of Indemnitee’s acts or omissions
during his or her service in such position.

 

6.          Notice
to Company. Indemnitee shall provide to the Company prompt written notice of any Proceeding brought, threatened, asserted or
commenced against Indemnitee with respect to which Indemnitee may assert a right to indemnification hereunder; provided that failure
to provide such notice shall not in any way limit Indemnitee’s rights under this Agreement.

 

7.          Cooperation
in Defense and Settlement. Indemnitee shall not make any admission or effect any settlement of any Proceeding without the Company’s
written consent unless Indemnitee shall have determined to undertake his or her own defense in such matter and has waived the benefits
of this Agreement. The Company shall not settle any Proceeding to which Indemnitee is a party in any manner which would impose
any Expense on Indemnitee without his written consent. Neither Indemnitee nor the Company will unreasonably withhold consent to
any proposed settlement. Indemnitee and the Company shall cooperate to the extent reasonably possible with each other and with
the Company’s insurers, in attempts to defend and/or settle such Proceeding.

 

8.          Assumption
of Defense. Except as otherwise provided below, to the extent that it may wish, the Company (jointly with any other indemnifying
party similarly notified), will be entitled to assume Indemnitee’s defense in any Proceeding, with counsel mutually satisfactory
to Indemnitee and the Company. Indemnitee shall have the right to employ counsel in such Proceeding, but the fees and expenses
of such counsel incurred after notice from the Company of its assumption of the defense thereof shall be at Indemnitee’s
expense unless:

 

(a)          the
employment of counsel by Indemnitee has been authorized by the Company;

 

(b)          counsel
employed by the Company initially is unacceptable or later becomes unacceptable to Indemnitee and such unacceptability is reasonable
under then existing circumstances;

 

(c)          Indemnitee
shall have reasonably concluded that there may be a conflict of interest between Indemnitee and the Company in the conduct of the
defense of such Proceeding; or

 

(d)          the
Company shall not have employed counsel promptly to assume the defense of such Proceeding,

 

    	- 3 –

    	 

    

 

in each of which case fees and expenses of counsel
shall be at the expense of the Company and subject to payment pursuant to this Agreement. The Company shall not be entitled to
assume the defense of Indemnitee in any Proceeding brought on behalf of the Company or as to which Indemnitee shall have drawn
either of the conclusions provided for in clauses (b) or (c) above.

 

9.          Enforcement.
In the event that any dispute or controversy shall arise under this Agreement between Indemnitee and the Company with respect to
whether the Indemnitee is entitled to indemnification in connection with any Proceeding or with respect to the amount of Expenses
incurred, then with respect to each such dispute or controversy Indemnitee may seek to enforce the Agreement through legal action
or, at Indemnitee’s sole option and written request, through arbitration. If arbitration is requested, such dispute or controversy
shall be submitted by the parties to binding arbitration in the Borough of Wellsboro in the Commonwealth of Pennsylvania, before
a single arbitrator agreeable to both parties. If the parties cannot agree on a designated arbitrator within fifteen (15) days
after arbitration is requested in writing by Indemnitee, the arbitration shall proceed in the Borough of Wellsboro in the Commonwealth
of Pennsylvania, before an arbitrator appointed by the American Arbitration Association. In either case, the arbitration proceeding
shall commence promptly under the rules then in effect of that Association and the arbitrator agreed to by the parties or appointed
by that Association shall be an attorney other than an attorney who has, or is associated with a firm having associated with it
an attorney which has been retained by or performed services for the Company or Indemnitee at any time during the five years preceding
the commencement of arbitration. The award shall be rendered in such form that judgment may be entered thereon in any court having
jurisdiction thereof. The prevailing party shall be entitled to prompt reimbursement of any costs and expenses (including, without
limitation, reasonable attorneys’ fees) incurred in connection with such legal action or arbitration; provided that Indemnitee
shall not be obligated to reimburse the Company unless the arbitrator or court which resolves the dispute determines that Indemnitee
acted in bad faith in bringing such action or arbitration.

 

10.         Exclusions.
Notwithstanding the scope of indemnification which may be available to Indemnitee from time to time under any Applicable Document,
no indemnification, reimbursement or payment shall be required of the Company hereunder with respect to:

 

(a)          Any
claim or any part thereof as to which Indemnitee shall have been determined by a court of competent jurisdiction from which no
appeal is or can be taken, by clear and convincing evidence, to have acted or failed to act with deliberate intent to cause injury
to the Company or with reckless disregard for the best interest of the Company;

 

(b)          Any
claim or any part thereof arising under Section 16(b) of the Securities Exchange Act of 1934 pursuant to which Indemnitee shall
be obligated to pay any penalty, fine, settlement or judgment;

 

(c)          Any
civil money penalty or judgment resulting from any Proceeding instituted by any federal banking agency, or any other liability
or legal expense with regard to any administrative proceeding or civil action by any banking agency that results in a final order
or settlement pursuant to which Indemnitee:

 

(1)         is
assessed a civil money penalty;

(2)         is
removed from office or prohibited from participating in the conduct of the affairs of the Company or its affiliates;

(3)         is
required to cease and desist from taking any affirmative action described under the Federal Deposit Insurance Act or other applicable
banking laws with respect to the Company and its affiliates;

 

(d)          Any
obligation of Indemnitee based upon or attributable to the Indemnitee gaining in fact any personal gain, profit or advantage to
which he was not entitled; or

 

    	- 4 –

    	 

    

 

(e)          Any
Proceeding initiated by Indemnitee without the consent or authorization of the Board of Directors of the Company, provided that
this exclusion shall not apply with respect to any claims brought by Indemnitee (i) to enforce his rights under this Agreement
or (ii) in any Proceeding initiated by another person or entity whether or not such claims were brought by Indemnitee against a
person or entity who was otherwise a party to such Proceeding.

 

Nothing in this Section 10
shall eliminate or diminish Company’s obligations to advance that portion of Indemnitee’s Expenses which represent
attorneys’ fees and other costs incurred in defending any Proceeding pursuant to Section 3 of this Agreement; subject however
to the undertaking by Indemnitee in the form attached hereto as Exhibit 1 and incorporated by reference herein.

 

11.         Extraordinary
Transactions. The Company covenants and agrees that, in the event of any merger, consolidation or reorganization in which the
Company is not the surviving entity, any sale of all or substantially all of the assets of the Company or any liquidation of the
Company (each such event is hereinafter referred to as an “extraordinary transaction”), the Company shall:

 

(a)          have
the obligations of the Company under this Agreement expressly assumed by the survivor, purchaser or successor, as the case may
be, in such extraordinary transaction; or

 

(b)          otherwise
adequately provide for the satisfaction of the Company’s obligations under this Agreement in a manner acceptable to Indemnitee.

 

12.         No
Personal Liability. Indemnitee agrees that neither the directors nor any officer, employee, representative or agent of the
Company shall be personally liable for the satisfaction of the Company’s obligations under this Agreement, and Indemnitee
shall look solely to the assets of the Company and the escrow the Company may establish, as referred to in Section 4 hereof, for
satisfaction of any claims hereunder.

 

13.         Severability.
If any provision, phrase, or other portion of this Agreement should be determined by any court of competent jurisdiction to be
invalid, illegal or unenforceable, in whole or in part, and such determination should become final, such provision, phrase or other
portion shall be deemed to be severed or limited, but only to the extent required to render the remaining provisions and portions
of the Agreement enforceable, and the Agreement as thus amended shall be enforced to give effect to the intention of the parties
insofar as that is possible.

 

14.         Subrogation.
In the event of any payment under this Agreement, the Company shall be subrogated to the extent thereof to all rights to indemnification
or reimbursement against any insurer or other entity or person vested in the Indemnitee, who shall execute all instruments and
take all other actions as shall be reasonably necessary for the Company to enforce such rights.

 

15.         Governing
Law. The parties hereto agree that this Agreement shall be construed and enforced in accordance with and governed by the laws
of the Commonwealth of Pennsylvania.

 

16.         Notices.
All notices, requests, demands and other communications hereunder shall be in writing and shall be considered to have been duly
given if delivered by hand and receipted for by the party to whom the notice, request, demand or other communication shall have
been directed, or mailed by certified mail, return receipt requested, with postage prepaid:

 

(a)          If
to the Company, to:

Citizens & Northern Corporation

90-92 Main Street

P.O. Box 58

Wellsboro, PA 16901

 

    	- 5 –

    	 

    

 

(b)          If
to Indemnitee, to:

Stan R. Dunsmore

314 Meadow Road

Emporium, PA 15834

 

or to such other or further address as shall be
designated from time to time by the Indemnitee or the Company to the other.

 

17.         Termination.
This Agreement may be terminated by either party upon not less than sixty (60) days prior written notice delivered to the other
party, but such termination shall not in any way diminish the obligations of Company hereunder with respect to the Indemnitee’s
activities prior to the effective date of termination.

 

18.         Amendments
and Binding Effect. This Agreement and the Undertaking and the rights and duties of Indemnitee and the Company hereunder and
thereunder may not be amended, modified or terminated except by written instrument signed and delivered by the parties hereto.
This Agreement is and shall be binding upon and shall inure to the benefits of the parties thereto and their respective heirs,
executors, administrator, successors and assigns.

 

In
Witness Whereof, the undersigned have executed this Agreement in triplicate as of the date first above written.

 

	INDEMNITEE	 	CITIZENS & NORTHERN CORPORATION
	 	 	 	 	 
	 	 	 	 	 
	By:	/s/ Stan R. Dunsmore	 	By:	/s/Mark A. Hughes
	Title: 	Executive Vice President and Chief	 	Title:	Interim President and Chief Executive
	 	Credit Officer	 	 	Officer

 

    	- 6 –

    	 

    

 

EXHIBIT 1

 

FORM OF UNDERTAKING

 

THIS UNDERTAKING has been
entered into by ___________________ (hereinafter “Indemnitee”) pursuant to an Indemnification Agreement dated ___________
___, 20__ (the “Indemnification Agreement”), by and between Citizens & Northern
Corporation, a bank holding company registered under the Bank Holding Company Act of 1956, as amended, and a Pennsylvania
corporation (the “Company”), and Indemnitee.

 

WITNESSETH:

 

WHEREAS, pursuant to the Indemnification
Agreement, Company agreed to pay Expenses (within the meaning of the Indemnification Agreement) as and when incurred by Indemnitee
in connection with any claim against Indemnitee which is the subject of any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative or investigative, to which Indemnitee was, is, or is threatened to be made
a party by reason of facts which include Indemnitee’s being or having been a director, officer or representative (within
the meaning of the Indemnification Agreement) of the Company;

 

WHEREAS, such a claim has
arisen against Indemnitee and Indemnitee has notified Company thereof in accordance with the terms of Section 6 of the Indemnification
Agreement (hereinafter the “Proceeding”);

 

NOW, THEREFORE, Indemnitee
hereby agrees that in consideration of Company’s advance payment of Indemnitee’s Expenses incurred prior to a final
disposition of the Proceeding, Indemnitee hereby undertakes to reimburse Company for any and all Expenses paid by Company on behalf
of Indemnitee prior to a final disposition of the Proceeding in the event that Indemnitee is determined under the Applicable Document
(within the meaning of the Indemnification Agreement) or applicable law to be required to repay such amounts to the Company, provided
that if Indemnitee is entitled under the Applicable Document or applicable law to indemnification for some or a portion of such
Expenses, Indemnitee’s obligation to reimburse Company shall only be for those Expenses for which Indemnitee is determined
to be required to so repay such amounts to the Company pursuant to the Indemnification Agreement or applicable law.

 

If the Indemnitee is involved
in an administrative proceeding or action instituted by an appropriate banking agency and requests the Company to pay the Expenses
incurred before a final order is entered, the Indemnitee shall reimburse the Company for all Expenses paid by the Company if a
final order is entered (i) assessing civil money penalties; (ii) removing Indemnitee from office or prohibiting Indemnitee from
participating in the conduct of the affairs of the Company or its affiliates; or (iii) requiring Indemnitee to cease and desist
from taking any affirmative action described under the Federal Deposit Insurance Act or other applicable banking laws with respect
to the Company and its affiliates. The Indemnitee hereby agrees to reimburse the Company for Expenses which subsequently are deemed
“prohibited indemnification payments”, as defined in 12 C.F.R. § 359.1(1).

 

Further, the Indemnitee agrees
to reasonably cooperate with the Company concerning such Proceeding.

 

In
Witness Whereof, the undersigned has set his hand this _____ day of ______________, 20__.

 

	 	INDEMNITEE
	 	 
	 	The Form Provided for Informational Purposes Only
	 	(In the event this form is needed, a blank to be signed and returned will be provided upon request.)

 

    	- 7 –

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