EXHIBIT 10.4
CITIZENS&NORTHERNCORPORATION
1995STOCKINCENTIVEPLAN(AsAmended)
RESTRICTEDSTOCKAGREEMENT
RESTRICTED STOCKAGREEMENTdatedasofthe5thday ofFebruary,2015,by and betweenCitizens& Northern Corporation(the"Corporation")andMarkA. Hughes,an employee oftheCorporation orof a subsidiary (the "Recipient").
Pursuant to the Citizens & NorthernCorporation 1995Stock Incentive Plan (the"Plan"),asamended, theCompensationCommitteeoftheBoardof Directors (the "Committee")hasdeterminedthattheRecipientistobe granted, onthetermsandconditionssetforthherein,3,408RestrictedSharesofthe Corporation'scommon stockand herebygrantssuchRestricted Shares.
| 1. | Number of Shares andPrice.Restricted StockshallconsistofsharesofStockthatwillbeacquiredby andissuedtotheRecipientat a designatedtimeapprovedbytheboard of directors, for no purchase price, and underand subject tosuchtransfer, forfeiture and other restrictions, conditions ortermsasshall be determinedby theCommittee,includingbutnotlimitedto prohibitionsagainsttransferand substantialrisksof forfeiturewithinthemeaningofSection83of theCode. |
| 2. | Rightsof Recipient.Exceptasotherwise provided inthe Plan ortheRestrictedStock Agreement, a Recipient ofsharesofRestrictedStockshallhave alltherights asdoes a holderofStock,includingwithoutlimitationtherighttovotesuchsharesandreceive dividends with respectthereto;however, duringthetimeperiod ofany restrictions,conditions ortermsapplicabletosuchRestrictedStock,the shares thereofandthe rightto votethesameandreceive dividendsthereon shallnot besold,assigned,transferred,exchanged, pledged, hypothecated,encumbered or otherwisedisposedofexceptaspermitted by thePlanor theRestrictedStock Agreement.Cash dividendsshallbepaid outand shall not participatein Dividend Reinvestment.Stock dividends resulting in wholeshares shallbeaddedtothe sharesheld intheRestricted Accountand shall be distributedtotheRecipientwithsubsequentdistributionsofanyAwardfor whichtheyaccrued.Partialsharesthat resultfromany stockdividendshall be paidtothe Recipientincashatthetimeof the paymentof thestock dividend.If the RestrictedSharesexpirepriorto thesatisfactionofperformancestandardssetforthinsection 4 ordue to forfeitureassetforthinsection 5,allsharesaccruedbyvirtueofstock dividendsshallbe forfeited. |
| 3. | Holdingof RestrictedShares.Eachcertificateforshares ofRestrictedStock shallbe deposited withtheSecretaryof theCorporation, orthe officethereof,andshallbear alegendinsubstantiallythefollowingformandcontent: |
ThisCertificateandthe sharesofStock herebyrepresentedaresubject tothe provisionsoftheCorporation’sStockIncentivePlan andacertain agreement enteredinto betweenthe owner andtheCorporation pursuant tosaid Plan.Thereleaseof the Certificateand theshares of Stock herebyrepresented from suchprovisionshalloccuronlyas providedbysaid Plan andAgreement,acopy ofwhichareon file intheoffice oftheSecretary of theCorporation.
Upon thelapse or satisfactionoftherestrictions,conditions andtermsapplicabletosuchRestricted Stock,acertificatefor thesharesof Stockfreethereofwithsuchlegend shall beissuedtotheRecipient.
| 4. | Release andLapse of Restricted Shares.One-fourthofthetotalshareswill be distributedontheanniversarydateofthisaward based onthe Recipient’ssatisfactoryperformance of hisor her joband theCorporation’s attainment ofanearnings-based performancestandard.Theperformancestandard will be basedon achieving 100%ormoreoftheReturnon Equity ofadefinedpeergroup of bank holdingcompanies, herein defined (adjusting forthe difference betweentheCorporation’sandthepeergroup’sequitytoassetratios),forthefourconsecutivecalendarquartersending withthe third quarter of eachcalendaryearfollowing theAward Date,untilallRestrictedSharesawarded herewitharedistributed.IfalltheRestrictedSharesawardedby thisagreementarenotdistributed withintheten (10)yearperiod following thedateof thisAgreement,theyshallexpireandrevertbacktotheCorporation.No partialshares maybe released,thusanamountequaltothe nextwholeshare amount will bereleasedsubjectto the specifiedperformancecriteriaateach anniversary.Thesharesreleasedmaybeincertificateform, ormaybedirectedtobe heldinacustodial accountdesignatedby theRecipient.The peer groupconsistsofbanksheadquarteredinPennsylvaniawithtotalassetsof$750 millionto$2.0billion withtheaddition ofChemung Financial Corporation in Elmira, NY. |
TheCommittee reservestheright tochangethecompositionof the peergroup, aswellasthemethodofevaluatingthe Corporation’searnings performance as comparedtothepeergroup, basedonmergersoracquisitionsinvolvingmembersofthe peer group, changesin sizeofthe Corporationor membersof thepeergroup,or other factors deemedappropriateby theCommittee.
| 5. | TermsofForfeiture.If aRecipient’semploymentwith theCorporation, or asubsidiary,ceases foranyreasonpriortothelapseofthe restrictions,conditionsor termsapplicable to his or herRestrictedStock, allof theRecipient’sRestricted Stockstillsubjectto unexpiredrestrictions,conditions ortermsshallbeforfeited absolutely by theRecipienttotheCorporationwithoutpayment ordeliveryof any considerationor otherthing ofvaluebytheCorporationor itsaffiliates,andthereuponandthereafter neithertheRecipientnor hisor her heirs, personalorlegalrepresentatives,successors,assigns, beneficiaries, oranyclaimantsundertheRecipient’sLastWill orlawsofdescentanddistribution,shallhave anyrightsorclaimstoorinterestsinthe forfeitedRestrictedStock oranycertificates representingsharesthereof,or claims againsttheCorporationoritsaffiliateswithrespectthereto.Exceptinthecase of disability,employmentceaseswiththeCorporation,oritsSubsidiary,on theday the Recipient’semployment isterminatedwithorwithoutcause,or ontheirdateof death.Intheevent ofdisability,the Recipient’semployment isconsideredterminated onthedateforwhichtheRecipientreceivesthefinalpayment oftheCorporation’s,orSubsidiary’s,short-termdisability. |
| 6. | Non-Transferabilityof RestrictedStock.TheRestricted Stockandthis RestrictedStock Agreement shallnotbetransferable. |
| 7. | Changein Control.Ifanyofthechangeincontroleventsdescribedin Section11 ofthePlanoccur,allshares ofRestrictedStock shall fully vest and all restrictions onthe sharesofRestrictedStockshalllapseas follows:Inthecaseofaneventspecifiedin clause (a)ofthe second sentence ofthe third paragraph ofSection11,thelapse of allrestrictionsonthesharesofRestrictedStockshall occur immediately prior totheconsummationofthe describedtransactionand,in the caseofaneventspecifiedinclause (b)or (c) of said sentence,thefullvestingandlapseofrestrictions shall occuruponoccurrence ofthedescribed event. |
| 8. | Notices.Any noticerequiredor permittedunderthisRestrictedStock Agreement shall bedeemedgiven when deliveredpersonally,orwhen depositedin aUnitedStatesPostOffice, postageprepaid, addressed,as appropriate, tothe Recipienteither athisorher address hereinabove setforthor such other address asheorshemaydesignatein writingtotheCorporation. |
| 9. | Failure toEnforceNotaWaiver.ThefailureoftheCorporationtoenforceat anytime anyprovision ofthisRestrictedStock Agreement shall innowaybe construedtobea waiverof such provisionor ofanyother provision hereof. |
| 10. | GoverningLaw.ThisRestrictedStock Agreement shallbegovernedby and construedaccordingtothe lawsof the State ofPennsylvania. |
| 11. | IncorporationofPlan.The Planis herebyincorporated by reference andmade aparthereof,and the RestrictedStockandthisRestricted StockAgreementaresubjecttoalltermsandconditionsof thePlan. |
| 12. | Amendments.ThisRestrictedStockAgreementmay beamendedormodifiedatanytime by aninstrument inwritingsignedby the partieshereto, provided that no suchamendmentor modificationshallbemade which wouldcausetheRestrictedStockto failtocontinue toqualifyas"incentiverestrictedstock." |
IN WITNESS WHEREOF,thepartieshave executedthis Option Agreement on thedayandyearfirstabove written.
| | By |  |
| | Mark A. Hughes, Interim President & CEO |
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| | 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 &NorthernCorporation 1995 Stock IncentivePlan hereinincorporatedbyreference. |
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| | Recipient – Mark A. Hughes |
