Document:

Exhibit 10.4

 

 

CITIZENS & NORTHERN CORPORATION

1995 STOCK INCENTIVE PLAN (As Amended)

 

RESTRICTED STOCK AGREEMENT –
EXECUTIVE OFFICER

 

RESTRICTED STOCK AGREEMENT dated as of the 2nd day of February,
2016, by and between Citizens & Northern Corporation (the "Corporation") and J. Bradley Scovill, 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, 177 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 without such legend shall be issued
to the Recipient.

 

		4.	Release and Lapse of Restricted Shares. The release of restrictions or expiration of restricted shares awarded under
this agreement shall occur over a period of three years. On each anniversary date of this award, one-sixth of the total
shares will be distributed based on the Recipient’s satisfactory performance of his or her job. Additionally, on each anniversary
date of this award, one-sixth of the total shares will be distributed 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 the Corporation achieving Return on Average Equity (ROAE) with a percent ranking of at least 50% of the
ROAE achieved by a defined peer group of bank holding companies, herein defined, for the four consecutive calendar quarters ending
with the third quarter of each calendar year following the Award Date. All Restricted Shares not distributed due to the Recipient’s
unsatisfactory performance of his or her job or due to the Corporation failing to achieve an ROAE with a percent ranking of at
least 50% of that of the defined peer group shall expire and revert back to the Corporation as of the anniversary date on which
such determinations are made. 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 all publicly traded Commercial Banks
and Thrifts headquartered in New Jersey, New York, Ohio and Pennsylvania with total assets of $750 million to $3.5 billion as of
the end of the four consecutive calendar quarters ending with the third quarter of each calendar year following the Award Date.

 

     

     

    

 

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.

 

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

 

	 	By	 
	 	 	/s/ J. Bradley Scovill
	 	 	J. Bradley Scovill - 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.
	 	 	 
	 	 	/s/ J. Bradley Scovill
	 	 	Recipient – J. Bradley ScovillExhibit 10.5

 

 

 

2016
Annual Performance Incentive Award Plan (*)

 

Part I:
Plan Administration

 

Section 1: Purpose
of the Plan

 

The purpose of the Performance Incentive Award
Plan ("the Plan") is to provide variable compensation to those employees in key positions who attain and sustain consistently
high levels of performance by meeting and exceeding goals and expectations that contribute to the success, profitability, and return
to the shareholders of Citizens & Northern Corporation and affiliated Employer(s). The Plan is designed to support operational
objectives and financial goals as defined by the long-range and short-range strategic and financial Plans. Additionally, the Plan
is designed to provide a component of the management compensation package essential to retaining and attracting quality employees
to key positions that contribute significantly to the bank’s financial performance. A key position for the purpose of this
plan is a job role that is typically, within the community banking and financial services industries, eligible for performance-based
incentive compensation.

 

Section 2: General
Description

 

There are three components of the Plan: (1)
corporate performance; (2) unit/functional performance; and (3) individual performance. The corporate performance
component will be subject to the Corporation’s attainment of financial goals relative to a defined peer group. Further,
in order for a participant to earn the corporate performance component, the participant must attain at least the threshold performance
level for the aggregate of composite unit/functional and individual goals. The individual performance component will be
subject to an evaluation of the participants’ overall contributions to the “team”. To earn the individual component,
the participant must attain at least the threshold performance level.

 

The unit/functional component is based
on the attainment of pre-established goals by the participant and often a team of participants in a given business unit, e.g.,
retail branch system, commercial lending team. Depending upon the participant’s function, attainment of goals for the participant’s
region also may be evaluated to determine a portion of the unit/functional bonus. For example, a Community Office Manager’s
unit/functional component goals for deposit growth, loan growth, non-interest income growth, FTE management, et cetera could
be a combination of group performances by the Retail Unit as a whole and individual achievement by the manager in his/her own territory/office.
To receive the unit/functional bonus payout, the participant must achieve at least the threshold level. Even after attaining
at least the Threshold performance, the plan permits the participant’s supervisor or the executive officer for the participant’s
area to recommend no bonus payout, or a reduced amount (Corporate, Unit/Functional or Individual) if aspects of the participant’s
performance are deemed unsatisfactory.

 

(*) Employees who are actively engaged in interviewing residential
real estate mortgage applicants, processing the applications and closing the loans are excluded from this plan. The Corporation
has a separate incentive award plan for such employees.

 

    	 	 	 

     

    

 

The Plan protects shareholders' interests by
requiring that the goals established will enhance bottom line performance while not encouraging excessive risk-taking and that
a minimum level of performance is achieved before any incentive award can be made. At the same time the Plan provides management
with a means to retain and attract top performers who increase the organization’s financial performance by attaining their
performance goals. The Plan requires that management perform an annual assessment and establishment of goals and provides a performance
review and measurement system. The Plan requires management to consider non-financial goals designed to improve operational and
risk management effectiveness, as well as financial goals, as appropriate for each participant’s position. The Plan permits
future inclusion of additional positions during a Plan year, if the need arises.

 

The calculation of the bonus to be distributed
to the Plan participants, and the incentive formulas, are constructed to provide awards consistent with strong corporate financial
performance and the participant’s exceptional performance in his/her unit/functional area. The incentive formulas ensure
a level of incentive award that is competitive with comparable positions and job levels in similar financial institutions, thus
enabling Citizens & Northern to attract, retain, and motivate high-performing personnel and support continued growth and profitability.
The determination of the bonus payable is described in Part II of this Plan.

 

The Plan is established to augment regular
salary and benefit programs already in existence. The Incentive Plan is not meant to be a substitute for salary increases but supplemental
to salary and as stated earlier, a reward for “exceptional" performance.

 

The Plan has been developed to recognize that
the amount of incentive bonus award attainable by key executives should vary depending upon the executive’s position with
the company and the competitive levels of incentive bonus for those positions within the banking and financial service industry.
Thus threshold, target and maximum Incentive Opportunities are established for each position.

 

Section 3: Other Payment
Conditions

 

Termination for Reasons Other Than Death, Permanent
Disability or Retirement – In the event of termination of employment for reasons other than death, permanent
disability or retirement, the participant, at the discretion of the committee, may forfeit all unpaid incentive awards.

 

The Compensation Committee of the Board, and
management, reserve the right to deny or modify an award to any participant. Such action may be due to, but not limited to, the
failure of the participant to properly perform during the Plan year. Economic or other circumstances and considerations may dictate
that incentive bonuses be reduced or eliminated in any given year. Accordingly, the Board of Directors may amend, alter or terminate
the Plan at any time.

 

In the event a participant becomes disabled
for a period greater than two (2) weeks, any salary continuation as a result of the Corporation’s short and long-term disability
programs will not be included in the base salary used for the incentive bonus calculation.

 

    	Page 2 of 6	 	 

     

    

 

Section 4: Administration
of the Plan

 

Throughout this Plan, reference to the actions and authority of
the Compensation Committee of the Board of Directors ("the Committee") also presumes that the Committee will recommend,
and the board of directors will approve or disapprove, final disposition of all matters pertaining to administration of the Plan.
The Committee, with board approval, has the responsibility to interpret, administer, and amend the Plan as necessary. The recommendations
of the Committee as approved by the board, affecting the construction, interpretation, and administration of the Plan shall be
final and binding on all parties, including the Corporation, its subsidiaries and employees.

 

At or before the beginning of each Plan year,
the Committee will review and may revise the operating rules. Performance targets the Incentive Bonus Plan Performance Matrix,
and the Incentive Opportunity levels for corporate, individual and unit/functional awards for attaining those targets may be changed
in order to emphasize specific goals and objectives of the Plan and to maintain a competitive incentive program. However, it is
expected that the Plan will require modification only when significant changes in the organization, goals, personnel, or performance
occur. The Chief Executive Officer shall be the Plan czar with the power to control and oversee proper administration of the Plan,
and may recommend to the Committee proposed changes to the operating rules. Additionally, the Committee may engage a third party
expert to review and amend the plan.

 

An individual or individuals designated by
the Chief Executive Officer will perform the computation of incentive awards. Maintenance of participant payment records shall
be the responsibility of the Human Resource Director.

 

Finally, the committee, with board approval,
may exclude extraordinary occurrences, which could affect the performance awards, either positively or negatively, but are by their
nature outside the significant influence of Plan participants. The characteristics of such extraordinary occurrences are generally
that they involve the senior management and the board of directors in:

 

		·	The original decision to take some action.

 

		·	Mission-driven strategic Initiatives that sacrifice short-term income for long-term gain.

 

		·	Issues most related to a restructuring of assets, or unusual expense or income realization.

 

Extraordinary occurrences may be excluded when
calculating performance results to ensure that the best interests of the shareholders are protected and are not brought into conflict
with the intent of the Plan. When and if extraordinary occurrences are excluded from the calculation of corporate performance measures,
they should also be excluded in calculating the bonus.

 

Section 5: Plan Participants

 

Executive management shall select and recommend
for participation in the Plan employees in those job positions that are responsible for directing, implementing and performing
functions that have a significant influence on the profitability and operational performance of the bank (key employees). Those
job positions which are selected for participation in the Plan will be in positions that normally include an incentive bonus component
in the compensation package offered by similar financial institutions.

 

    	Page 3 of 6	 	 

     

    

 

At or before the beginning of each Plan year,
the Committee shall review the recommendations of management on the selection of those positions eligible for participation in
the Plan for that year. Management shall recommend the Incentive Bonus Plan Performance Matrix for the year. Additionally, management
shall recommend a threshold, target and maximum Incentive Opportunity percentage of base salary for each position. Participants
shall be notified of their eligibility as soon as selection is completed and the board of directors has adopted the Plan. The Committee
shall review and recommend the inclusion of participants to the full board for their approval.

 

Positions and thus participants may be added
during the Plan year at the discretion of management and the Committee, and the incentive award will be prorated from date of entry
into the Plan.

 

Section 6: Payment
of Individual Incentive Compensation Awards

 

Within 60 days following the end of the Plan
year and as soon as the participant’s performance has been evaluated and the financial and operating results are known, participants
will receive their incentive payment as determined by the Incentive Bonus Plan Performance Matrix.

 

Section 7: Incentive
Compensation Plan Operating Rules

 

Before the beginning of each Plan year, the
Committee may review and revise, if deemed appropriate, Part II: Operating Rules of the Plan for the year then beginning. The operating
rules shall include the following:

 

		a)	Identification of positions selected for participation in the Plan

 

		b)	The method for determining the amount of the total bonus to be paid to Plan participants, including the Incentive Bonus Plan
Performance Matrix.

 

		c)	Schedules and formulas for determining the amount of the incentive compensation awards to Plan participants for the Plan year
then beginning, including threshold, target and maximum performance measures and the percentage of bonus award determined by corporate,
functional/unit and individual performances. Participants will be informed at or before the Plan year of the manner in which performance
will be evaluated.

 

		d)	Other administrative and procedural rules, which the committee considers appropriate.

 

After approval by the Committee and the board
of directors, management shall, as soon as practical, inform each of the participants of the operating rules for the Plan year
then beginning.

 

    	Page 4 of 6	 	 

     

    

 

Section 8: Performance
Progress Reporting

 

Semi-annually the Plan czar will be responsible
for communicating attainment of corporate goals during the course of the Plan year. Participants and their direct supervisors will
meet periodically to review their performance relative to the established unit/functional and individual goals.

 

Section 9: Amendment
or Termination of Plan

 

The committee, with concurrence of the board
of directors, may terminate, amend, or modify this Plan at any time. The termination, amendment, or modification of the Plan may
affect a participant's right to unpaid incentive compensation awards under this Plan.

 

Section 10: Other Considerations

 

Recoupment-  Amounts allocated or paid pursuant to this
Plan shall be subject to recovery by the Corporation under any claw back, recovery, recoupment or similar policy hereafter adopted
by the Corporation, whether in connection with Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, as
amended from time to time, or otherwise, whether or not required by law.

 

Active Employment Contingency- Except in the case of a retirement,
if a participant voluntarily terminates his or her employment with the Corporation or Bank prior to the date of bonus payout, the
bonus will be forfeited.

 

Right of Assignment - No right or interest of any participant
in the Plan shall be assignable or transferable, or subject to any lien, directly, by operation of law, or otherwise, including
levy, garnishment, attachment, pledge, or bankruptcy.

 

Right of Employment - The participation in or the receipt
of an award under this Plan shall not guarantee any employee any right to continued employment; the right to dismiss any employee
is specifically reserved to the organization. The receipt of an award for any one year shall not guarantee an employee the right
to receive an award for any subsequent year.

 

Change of Position – If a participant transfers to
another position in the organization that is not included in the Incentive Compensation Plan, they will cease being a Plan participant.
At the time of the position change a determination will be made as to whether the participant will be eligible for a bonus for
the period during which they were a participant.

 

Withholding for Taxes - The organization shall have the right
to deduct from all payments under this Plan any federal, state or local taxes required by law to be withheld with respect to such
payments.

 

Salary - Salary is defined as base earnings for the year,
which includes any increase in weekly rate of pay but not including any referral awards, brokerage or insurance commissions, golden
nugget payments, taxable fringe benefits or prior bonus payments.

 

Board Prerogatives – It will be the right of the Board
of Directors to amend, alter and/or terminate the plan in its sole discretion at any time.

 

    	Page 5 of 6	 	 

     

    

 

Part II: Operating Rules

  

Section l: General

 

The following Incentive Compensation Plan Operating
Rules will be in effect during 2016 and until revised. These operating rules are subject to change by the Committee before the
start of the Plan year, with the approval of the board of directors. It is anticipated that the rules for 2016 will be revised
only if significant changes occur in organization, operations, industry compensation practices, or other pertinent factors.

 

Section 2: Corporate
Performance Component - Incentive Bonus Plan Performance Matrix for 2016

 

The corporate performance component of the Incentive Bonus is calculated
based on comparison of C&N’s Return on Average Equity (ROAE) to that of a Peer Group. The chart below will determine
the Incentive Opportunity percentage of base salary from which the corporate performance component of a participant’s bonus
would be paid:

 

	C&N's	 	Corporate	 
	Percent	 	Award as	 
	ROAE Rank	 	% of	 
	vs Peer	 	Target	 
	25	 	 	33	%
	30	 	 	46.4	%
	35	 	 	59.8	%
	40	 	 	73.2	%
	45	 	 	86.6	%
	50	 	 	100	%
	55	 	 	110.0	%
	60	 	 	120.0	%
	65	 	 	130.0	%
	70	 	 	140.0	%
	75	 	 	150	%
	80	 	 	150	%
	85	 	 	150	%
	90	 	 	150	%
	95	 	 	150	%
	100	 	 	150	%
	>100	 	 	150	%

 

****************************************************************

*The Peer Group shall include all publicly traded commercial banks
and thrifts within NJ, NY, OH and PA with total assets between $750 million and $3.5 Billion.

 

    	Page 6 of 6

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