CITIZENS & NORTHERN CORPORATION — FORM 10-Q
EXHIBIT 10.3
CITIZENS & NORTHERN CORPORATION
1995 STOCK INCENTIVE PLAN (As Amended)
RESTRICTED STOCK AGREEMENT
RESTRICTED STOCK AGREEMENT dated as of the 3rd day of January, 2008, by and
between Citizens & Northern Corporation (the “Corporation”) and
                    , 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, ___Restricted Shares of the Corporation’s
common stock and hereby grants such Restricted Shares. It is intended that the
Restricted Shares qualify as an “Incentive Stock Option” within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

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-third 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. For the first year of this award, 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

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CITIZENS & NORTHERN CORPORATION — FORM 10-Q
be directed to be held in a custodial account designated by the Recipient. The
peer group of holding companies to be used for this award is as follows:

      Bank Holding Company    
Citizens & Northern Corporation
  First Keystone Corporation
ACNB Corporation
  First National Community Bancorp Inc.
American Bank Incorporated
  Franklin Financial Services Corporation
AmeriServ Financial, Inc.
  IBT Bancorp, Inc.
Bryn Mawr Bank Corporation
  Leesport Financial Corp
CNB Financial Corporation
  Orrstown Financial Services, Inc.
Chemung Financial Corporation
  Penns Woods Bancorp, Inc.
Citizens Financial Services, Inc.
  Penseco Financial Services Corporation
Comm Bancorp, Inc.
  QNB Corp
Fidelity D & D Bancorp, Inc.
  Republic First Bancorp, Inc.
First Chester County Corporation
  Royal Bancshares of Pennsylvania, Inc.

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.

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CITIZENS & NORTHERN CORPORATION — FORM 10-Q

12.   Amendments. This Option 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            
 
                              Craig G. Litchfield, Chairman, 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 -    
 
               

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