Document:

Exhibit 10.6

 

 

2016
Annual Performance Incentive Award Plan – Mortgage Lenders

 

Section 1: Purpose
of the Plan

 

The purpose of the Performance Incentive
Award Plan ("the Plan") is to provide variable compensation to Citizens & Northern employees who are actively engaged
in interviewing residential real estate applicants, processing the applications and closing the loans. The Plan is designed to
reward mortgage lending employees who attain and sustain consistently high levels of performance by meeting and exceeding defined
goals and to provide a component of the compensation package essential to retaining and attracting quality employees in mortgage
lending positions. Incentive awards are not directly tied to Company/mortgage business profits nor the terms of the closed-end
mortgage transaction or a proxy for a transaction term. The expense of the plan is incorporated into the Company’s operating
budget. The objective is to align the interests of these employees with the interests of the Company in obtaining superior performance
results while being in compliance with the SAFE Act and 12 CFR Part 1026.36 (Regulation Z).

 

Section 2: General
Description

 

There are two components of the Plan: (1) unit/functional
performance; and (2) individual performance. 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 applicable branch or mortgage lending business unit,. To receive the unit/functional bonus payout, the participant
must achieve at least the threshold level.

 

In addition to goals based on production,
the Plan requires management to consider non-financial goals designed to improve operational and risk management effectiveness,
as appropriate for each participant’s position. The Plan permits future inclusion of additional positions during a Plan year,
if the need arises.

 

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 mortgage lending employees.

 

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 mortgage lending employees should vary depending upon the employee’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.

 

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.

 

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") 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. The Incentive Opportunity levels for individual and unit/functional
awards for attaining those targets may be changed in order 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.

 

Section 5: Plan
Participants

 

Executive management shall select and recommend
for participation in the Plan employees in those job positions that are responsible for mortgage lending functions. 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.

 

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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. 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, participants will receive their incentive payment.

 

Section 7: Incentive
Compensation Plan Operating Rules

 

Before the beginning of each Plan year,
the Committee may review and revise, if deemed appropriate, the 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.

 

		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 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.

 

Section 8: Performance
Progress Reporting

 

Participants and their direct supervisors
will meet periodically to review their performance relative to the established unit/functional and individual goals.

 

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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
will not 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 is not actively employed by the Corporation 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. Any Incentive Bonus earned by
the Participant at the time of amendment, alteration and/or termination shall remain due and payable as stated.

 

    	Page 4 of 4EXHIBIT 10.18

 

CHANGE IN CONTROL AGREEMENT

 

THIS CHANGE IN CONTROL
AGREEMENT (“Agreement”) is entered into as of the 20th day of January, 2005, by and among CITIZENS & NORTHERN
CORPORATION, a Pennsylvania corporation (the “Corporation”), CITIZENS & NORTHERN BANK, a Pennsylvania
bank (the “Bank”), and JOHN M. REBER, 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, 2005; 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.         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.

 

18.         Survival.
Notwithstanding any other provision of this Agreement to the contrary, Sections 9 and 15 shall survive the termination of this
Agreement and the termination of the Employee’s employment with the Employer.

 

19.         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.

 

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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/John M.Reber
	 	Printed Name:	JOHN M. REBER
	 	Address:	755 Brown Road
	 	 	Wellsboro, PA 16901
	 	Date:	1/27/05

 

	 	CORPORATION:
	 	 
	 	CITIZENS & NORTHERN CORPORATION
	 	 	 
	 	By:	/s/Craig G. Litchfield
	 	 	 
	 	Title:	Chairman, President and CEO
	 	 	 
	 	Date:	1/26/05

 

	 	BANK:
	 	 
	 	CITIZENS & NORTHERN BANK
	 	 	 
	 	By:	/s/Craig G. Litchfield
	 	 	 
	 	Title:	Chairman, President and CEO
	 	 	 
	 	Date:	1/26/05
	By:	 	 

 

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