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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
CNB Financial Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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LOGO CNB FINANCIAL CORPORATION
P.O. Box 42
Clearfield, PA 16830
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of CNB
FINANCIAL CORPORATION will be held at the County National Bank, One South Second
Street, Clearfield, Pennsylvania 16830 on Tuesday, April 20, 1999, at 2:00 P.M.
for the following purposes:
1. ELECTION OF DIRECTORS: The election of five Class 1 directors
to serve until the Annual Meeting in the year 2002 or until their
respective successors are elected and qualified.
2. AMENDMENT TO ARTICLES OF INCORPORATION AND BY-LAWS: To consider and act on
a proposed amendment to the Articles of Association and By-Laws to change
the restrictions on the number of directors from 15, 18, 21 or 24 to 9 thru
24.
3. AMENDMENT TO ARTICLES OF INCORPORATION AND BY-LAWS: To consider and act on
a proposed amendment to the Articles of Association and By-Laws to
eliminate cumulative voting for director elections.
4. PROPOSAL TO APPROVE the Corporation's Long-Term Incentive Stock Plan
5. TRANSACTION OF OTHER BUSINESS: To transact such other business as
may properly come before the meeting or any adjournment thereof.
The Board of Directors has fixed March 10, 1999, as the record date for the
determination of shareholders entitled to notice of and to vote at the meeting.
The annual report to shareholders for the year ended December 31, 1998 and a
form of proxy are enclosed.
YOU ARE URGED TO SIGN, DATE, AND RETURN THE ENCLOSED PROXY WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING IN PERSON. PLEASE RETURN THE PROXY AS PROMPTLY AS
POSSIBLE. IF YOU ATTEND THE MEETING, YOU MAY WITHDRAW YOUR PROXY BY SO
NOTIFYING THE SECRETARY AND VOTE YOUR SHARES IN PERSON.
By Order of the Board of Directors,
/s/ William A. Franson
William A. Franson
Secretary
Clearfield, Pennsylvania
March 25, 1999
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PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
TUESDAY, APRIL 20, 1999
CNB Financial Corporation (the "Corporation") is a Pennsylvania business
corporation and a bank holding company registered with the Federal Reserve Board
having its principal offices at County National Bank, Clearfield, Pennsylvania
16830. The only subsidiary of the Corporation is County National Bank (the
"Bank").
The enclosed proxy is being solicited by the Board of Directors of the
Corporation for use at the Annual Meeting of Shareholders to be held April 20,
1999. The cost of preparing, assembling and mailing the notice of annual
meeting, proxy statement and form of proxy is to be borne by the Corporation. In
addition to the solicitation of proxies by use of the mails, directors, officers
or other employees of the Corporation may solicit proxies personally or by
telephone and the Corporation may request certain persons holding stock in their
names or in the names of their nominees to obtain proxies from and send proxy
material to the principals and will reimburse such persons for their expenses in
so doing. The date on which this proxy statement and the accompanying form of
proxy was mailed to shareholders was March 25, 1999.
A quorum for the transaction of business at the annual meeting will require
the presence, in person or by proxy, of shareholders entitled to cast at least a
majority of the total number of votes entitled to be cast on a particular matter
to be acted upon at the meeting. Abstentions and broker non-votes are counted
as shares present for determination of a quorum but are not counted as
affirmative or negative votes and are not counted in determining the number of
votes cast on any matter.
The enclosed proxy is revocable at any time prior to the actual voting of such
proxy, by the filing of an instrument revoking it, or a duly executed proxy
bearing a later date, with the Secretary of the Corporation. In the event your
proxy is mailed and you attend the meeting, you have the right to revoke your
proxy and cast your vote personally. All properly executed proxies delivered
pursuant to this solicitation will be voted at the meeting and in accordance
with the instructions, if any. Unless otherwise directed, proxies will be voted
in "FAVOR" of (1) the election as directors of the five nominees named under the
caption "Election of Directors" herein, (2) amending the Articles of
Incorporation and By-Laws as set forth in item 2 in the Notice of Meeting (3)
amending the Articles of Incorporation and By-Laws as set forth in item 3 in the
Notice of Meeting and (4) the Proposal to approve the Corporation's Long-Term
Incentive Stock Plan. The Board of Directors is not aware of any other matters
which will be presented for action at the meeting, but the persons named in the
proxies intend to vote or act according to their discretion with respect to any
other proposal which may be presented for action.
The Board of Directors has fixed the close of business on March 10, 1999, as
the record date (the "Record Date") for determining shareholders entitled to
notice of, and to vote at, the meeting. The only securities of the Corporation
entitled to vote at the meeting consist of 3,444,894 shares of common stock
outstanding on the Record Date.
In the election of directors, each shareholder or a duly authorized proxy will
have the right to vote the number of shares owned for each of the directors to
be elected or to cumulate such votes and give one candidate as many votes as the
number of directors to be elected multiplied by the number of owned shares, or
to distribute these votes among as many candidates in such numbers as the owner
deems fit. The affirmative vote of a majority of the outstanding shares on the
matter is required for the approval of all other matters.
To the knowledge of the Corporation, only the Trust Department of County
National Bank, a wholly owned subsidiary of the Corporation, owned of record or
beneficially on the record date more than five percent (5%) of the outstanding
common stock of the Corporation. At the Record Date, all officers and directors
of the Corporation as a group beneficially owned 246,935 shares or 7.17%.
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1. ELECTION OF DIRECTORS
The By-Laws of the Corporation provide that the Board of Directors shall
consist of no more than twenty-four persons. The Board of Directors has acted to
fix the number of directors for the ensuing year at fifteen.
Directors are elected for three year terms with one-third of the total
normally elected each year. Of the persons named below, all of whom are members
of the present Board of Directors, five are nominated to serve as Class 1
directors to hold office for a three year term expiring at the third succeeding
annual meeting (in the year 2002) or until their respective successors have been
duly elected and have qualified. The persons named in the enclosed proxy will
vote for the election of the nominees named below unless authority is withheld.
Each nominee has consented to be named as a nominee and has agreed to serve if
elected. If, for any reason, any of the nominees named below should become
unavailable to serve, the enclosed proxy will be voted for the remaining
nominees and such other person or persons as the Board of Directors may
designate.
<TABLE>
<CAPTION>
NOMINEES: Class 1 directors for a three year term expiring at annual shareholders meeting in the
year 2002.
Shares Percent of
Business Experience Director Beneficially Beneficial Ownership
Name Age (Past Five Years) Since Owned (1) (2) if 1.00% or More
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
William F. Falger 51 Executive Vice President 4/16/96 1,833 (3) (5) --
CNB Financial Corporation 4,133 (6)
President and Chief
Executive Officer
County National Bank
James J. Leitzinger 60 President 10/4/83 46,089 (3) (4) (5) 1.34%
Leitzinger Realty
(Real Estate Investments)
Jeffrey S. Powell 34 President 12/27/94 13,220 (3) --
J. J. Powell, Inc.
(Petroleum Wholesaler-Retailer)
Peter F. Smith 44 Attorney at Law 9/12/89 11,300 --
James B. Ryan 51 Vice President, Sales & Marketing 2/9/99 1,500 --
Windfall Products, Inc.
<CAPTION>
The following Class 3 directors terms expire at the time of the annual meeting in 2000.
<S> <C> <C> <C> <C> <C>
Robert E. Brown 57 President 2/15/83 16,256 (3) --
E. M. Brown, Inc.
(Coal Producer)
James P. Moore 63 President and 4/13/82 10,653 (3) (5) --
Chief Executive Officer
CNB Financial Corporation
Chairman of the Board
County National Bank
Robert C. Penoyer 64 President 2/15/83 12,084 (3) (4) (5) --
Penoyer Contracting Co., Inc.
(Contractor)
Edward B. Reighard 85 Retired 2/15/83 11,850 (4) (5) --
Joseph L. Waroquier, Sr. 65 President 5/13/86 23,880 (3) --
Waroquier Coal, Inc.
(Coal Producer)
<CAPTION>
The following Class 2 directors terms expire at the time of the annual meeting in 2001.
<S> <C> <C> <C> <C> <C>
Richard D. Gathagan 57 President & Owner of 11/8/88 29,764 (3) --
Pharmaceutical & Medical
Companies (Health Care)
Formerly Owner-Life Support
Products (Health Care)
Dennis L. Merrey 50 President, Clearfield 6/4/91 10,882 (4) (5) --
Powdered Metals, Inc.
(Manufacturer)
</TABLE>
3
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<TABLE>
<S> <C> <C> <C> <C> <C>
William R. Owens 61 Retired, Formerly 2/15/83 18,000 --
V. Pres., Sec., and Treas.
CNB Financial Corporation
Formerly President and
Chief Executive Officer
County National Bank
Carl J. Peterson 61 Assistant Secretary 1/28/92 11,156 (3) (6) --
CNB Financial Corporation
Senior Vice President
& Trust Officer
County National Bank
Robert G. Spencer 67 President 2/15/83 21,470 (4) --
Hepburnia Coal Sales Corp.
(Coal Producer)
<CAPTION>
Beneficial Ownership of Other Named Executive Officers:
<S> <C> <C> <C> <C> <C>
William A. Franson 55 Secretary 2,160 (5) --
CNBFinancial Corporation 4,133 (6)
Executive Vice President and Cashier
Chief Operating Officer
County National Bank
Joseph B. Bower, Jr. 35 Treasurer 705 (3) (4) --
CNB Financial Corporation
Senior Vice President
Chief Financial Officer
County National Bank
</TABLE>
(1) Information furnished by directors and executive officers.
(2) The shares "beneficially owned" by an individual are determined in
accordance with the definition of "beneficial ownership" set forth in the
regulations of the Securities and Exchange Commission and include shares as
to which the individual has or shares voting or investment power on the
Record Date or has the right to acquire beneficial ownership within 60 days
after the Record Date.
(3) This figure includes joint ownership with relatives as to which the director
has joint voting or investment powers.
(4) This figure includes indirect ownership of shares as to which the director
or officer has voting or investment powers.
(5) This figure includes shares through a trust or pension plan agreement.
(6) This figure includes shared voting rights for shares indirectly held in
trust for the Bank's 401(k) employees' savings plan.
2. AMENDMENTS TO ARTICLES OF ASSOCIATION AND BY-LAWS TO CHANGE THE RESTRICTIONS
ON THE NUMBER OF DIRECTORS
The Board of Directors proposes to amend Articles 9.A. and 9.B. of the
Articles of Association and Article 5, Sections 1 and 8 of the By-Laws. The
affirmative vote of the holders of the majority of outstanding shares of the
common stock entitled to vote is necessary for adoption of this proposal.
The proposed amendments were unanimously approved by the Directors at their
meeting on February 9, 1999.
If adopted by the shareholders, Articles 9.A. and 9.B. of the Articles of
Association and Article 5, Sections 1 and 8 of the By-Laws, will be amended to
read as follows:
ARTICLES OF ASSOCIATION
- -----------------------
9.A. The Board of Directors shall consist of not less than nine (9) nor more
than twenty four (24) members. The exact number of Directors shall be fixed from
time to time by resolution of the majority of the Board of Directors. All
directors shall have equal vote. They shall be elected by classes as follows:
Class 1, Class 2, Class 3, with the numbers in each class to be no less than
three (3) directors nor more than eight (8) directors. The exact number of each
class shall be fixed from time to time by resolution of the majority of the
Board of Directors.
The initial Directors of Class 1 shall serve until the third (3rd) annual
meeting of the shareholders. At the third (3rd) annual meeting of the
shareholders, the directors of Class 1 shall be elected for a term of three (3)
years and, after expiration of such term, shall thereafter be elected every
three (3) years for three (3) year terms. The initial directors of Class 2 shall
serve until the second (2nd) annual meeting of shareholders. At the second (2nd)
annual meeting of the shareholders, the directors of Class 2 shall be elected
for a term of three (3) years and, after expiration of such term, shall
thereafter be elected every three (3) years for three (3) year terms. The
initial directors of Class 3 shall serve until the first (1st) annual meeting of
the shareholders. At the first (1st) annual meeting of the shareholders, the
directors of Class 3 shall be elected for a term of three (3) years and, after
the expiration of such term, shall thereafter be elected every three (3) years
for three (3) year terms.
Each director shall serve until his or her successor has been elected and
qualified, even though his or her term of
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office as provided herein as otherwise expired, except in the event of his or
her earlier resignation, removal or disqualification.
9.B. By-Law Qualifications: The Board of Directors of the Corporation may,
----------------------
subject to the provisions contained in Article V of the By-Laws, change the
number of directors in any class between the minimum and maximum number per
class as described in 9.A. and at the time affect the total number of directors
in all classes between the minimum of nine (9) and the maximum of twenty four
(24) directors. Any additional nominee shall then stand for election consistent
with the principles of 9.A. above at the next annual meeting.
BY-LAWS
-------
Article V. Board of Directors
------------------
SECTION 1
The affairs of this Corporation shall be managed by no less than
nine (9) nor more than twenty four (24) directors elected as set forth in the
Articles of Association. Directors shall serve until their successors are duly
elected and qualified.
SECTION 8
The Board may, in its discretion, decrease the number of directors
to no less than nine (9) or increase the number of directors to no more than
twenty four (24) between annual meetings without shareholder approval. The Board
shall appoint an individual to fill any vacancy so created until the next annual
meeting at which time the appointee shall stand for election as set forth in the
Articles of Association.
The texts of 9.A. and 9.B. of the Articles of Association and of Sections 1
and 8 of Article V of the By-Laws in their present form, which will remain in
effect if this proposal is not approved, follows:
OTHER PROVISIONS AS PERMITTED UNDER THE ACT:
--------------------------------------------
9.A. NUMBER, TERM AND QUALIFICATION OF DIRECTORS:
All Directors shall have equal vote but shall be elected by classes as
follows: Known as Class 1, consisting of not more than five (5) Directors; Class
2, consisting of not more than five (5) Directors; and Class 3, consisting of
not more than five (5) Directors. The initial Directors of Class 1 shall serve
until the third (3rd) annual meeting of the shareholders. At the third (3rd)
annual meeting of the shareholders, the Directors of Class 1 shall be elected
for a term of three (3) years and, after expiration of such term, shall
thereafter be elected every three (3) years for three (3) year terms. The
initial Directors of Class 2 shall serve until the second (2nd) annual meeting
of shareholders. At the second (2nd) annual meeting of the shareholders, the
Directors of Class 2 shall be elected for a term of three (3) years for three
(3) year terms. The initial Directors of Class 3 shall serve until the first
(1st) annual meeting of the shareholders. At the first (1st) annual meeting of
the shareholders, the Directors of Class 3 shall be elected for a term of three
(3) years and, after expiration of such term, shall thereafter be elected every
three (3) years for three (3) year terms. Each Director shall serve until his or
her successor shall have been elected and shall qualify, even though his or her
term of office as provided herein has otherwise expired, except in the event of
his or her resignation, removal or disqualification.
Annual Meeting shall mean the first (1st) annual meeting after the
organizational meeting and for this purpose, the initial terms of all Classes of
Directors shall in the first instance not necessarily be in even twelve month
increments.
9.B. BY-LAW QUALIFICATIONS:
The Board of Directors of the Corporation may subject to the provisions
contained in Article V of the By-Laws, increase the number of Directors to
eighteen (18) twenty one (21) or twenty four (24) members. Any proposed nominee
shall then stand for election consistent with the principles of A above at the
next annual meeting.
BY-LAWS
-------
Article V. Board of Directors
------------------
SECTION 1 The affairs of the Corporation shall be managed by no more than
twenty four (24) Directors elected as set forth in the Articles of Incorporation
who shall serve until their successors are duly elected and qualified.
SECTION 8 The Board may if it determines in the best interests of the
Corporation, increase the number of Directors to eighteen (18), twenty one (21)
or twenty four (24) between annual meetings without shareholder approval and
fill the vacancy so created until the next annual meeting at which time such
Directors shall stand for election for terms as set forth for the Initial
Directors in the Articles of Incorporation.
These changes to the Articles of Association and the By-Laws will grant the
Board of Directors greater flexibility in the formulation of policy, direction
of the Corporation and achievement of its goals. These changes will also allow
the Board greater opportunity to identify and recruit suitable candidates in the
Corporation's new market areas.
Unanticipated vacancies on the Board occasionally occur through resignations
and retirements. Mergers and acquisitions can also necessitate adjustments to
the number of directors. Timing is often critical in these matters. Corporate
preparedness requires that the Board have the authority to move quickly in some
instances and the discretion to wait in others.
The current Articles and By-Laws require that expansions or reductions of the
Board must be made in multiples of three. This multiple often exceeds the number
which would be appropriate and adversely affects the Board's ability to make
timely appointments. This multiple also hampers the Board's ability to control
situations as opportunities arise.
The Board will still be subject to the minimum of 9 and the maximum number of
24 directors. The shareholders will also retain the ultimate voice of approval
because all interim appointees must stand for election at the next annual
meeting.
Management and the Board of Directors recommend that the shareholders vote for
these changes in the Articles of Association and the By-Laws of this
Corporation. The directors and management believe the amendments to be in the
best interest of the Corporation.
5
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3. AMENDMENT TO THE ARTICLES OF ASSOCIATION AND BY-LAWS TO ELIMINATE CUMULATIVE
VOTING FOR DIRECTORS
The Board of Directors recommends amendments to Article 5 of the Articles of
Association and to Section 3 of Article 1 of the By-Laws. These changes will
eliminate cumulative voting for directors. If adopted, the affirmative vote of
the holders of the majority of the outstanding shares of common stock entitled
to vote will be necessary to elect a candidate to the Board of Directors.
This proposed amendment was unanimously approved by the Directors at their
meeting on February 9, 1999.
If adopted by the shareholders, Article 5 of the Articles of Incorporation and
Section 3 of Article 1 of the By-Laws will be amended to read as follows:
ARTICLES OF ASSOCIATION
- -----------------------
Article 5. NUMBER OF SHARES:
-----------------
The total number of authorized shares shall be 10,000,000 with a par value of
$1.00. The shares of stock of this Corporation shall not have preemptive rights
or the right to cumulative voting on any issues.
BY-LAWS
- -------
Article 1. Section 3: At all meetings of the shareholders, each shareholder
----------
shall be entitled to one vote for each share of stock held by the shareholder.
The current texts of Article 5 of the Articles of Association and of Article
1, Section 3 of the By-Laws in their present form, which would remain in effect
if this proposal is not approved, follows:
ARTICLES OF ASSOCIATION
- -----------------------
Article 5. NUMBER OF SHARES:
-----------------
The total number of authorized shares shall be 10,000,000 with a par value of
$1.00. The shares of the Corporation shall not have preemptive rights but shall
have the right of cumulative voting in regard to the election of Directors only
as hereinafter set forth.
BY-LAWS
- -------
Article I, Section 3: At all meetings of the shareholders, each shareholder
----------
shall be entitled to one vote for each share of stock held by the shareholder.
However, in the election of Directors, each shareholder shall have the right of
cumulative voting.
Management and the Board of Directors believe that the elimination of
cumulative voting for Directors is in the best interest of the Corporation. This
change will simplify voting procedures. If adopted, Directors will be elected by
a simple majority of shares voting in each election.
This change will also make it difficult for a small minority of shares to
assert a disproportionate or disruptive influence on the Corporation by gaining
board membership. Corporate democracy will be fostered by assuring that the
majority of shares will determine board membership and corporate policy. It is
also believed that this change will assure corporate stability and reduce the
potential for future conflict in this area.
The Board of Directors and management recommend to the shareholders that they
vote for these changes in the Articles of Association and the By-Laws.
4. PROPOSAL TO APPROVE LONG TERM STOCK PLAN
Introduction
On February 9, 1999, the Board of Directors adopted, subject to shareholder
approval, the 1999 Stock Incentive Plan. The 1999 Plan provides stock options
to purchase shares of the Company's Common Stock at fair market value, and
provides awards of restricted shares of the Company's Common Stock, to non-
employee directors and to individuals whose service is believed to be crucial to
the continued success of the Company. The purpose of the 1999 Plan is to
enhance the long-term performance of the Company and to provide these directors
and selected individuals with an opportunity to acquire a proprietary interest
in the success of the Company.
Shareholder Approval
In order for the income that is realized under the 1999 Plan upon the exercise
of stock options to be qualified under Section 162(m) of the Internal Revenue
Code, and to be deductible by the Company as a result, the material terms of the
program must be approved by shareholders. In addition, shareholder approval of
the 1999 Plan is required under Rule 16b-3 of the Securities Exchange Act of
1934. Rule 16b-3 provides certain exemptions from the short-swing profit
recovery provisions of Section 16(b) of the Exchange Act. As a result, if the
1999 Plan meets all of the requirements of Rule 16b-3, including the requirement
that the program be approved by the Company's shareholders, the recipients may
sell shares of Common Stock within a six-month period after the grant of the
options without matching any such sale with the grant of the options.
In order to obtain the required shareholder approval, there will be presented
at the Annual Meeting a proposal to approve the 1999 Plan and the following
material terms of the Plan:
. Eligibility under the Plan includes all key employees (in addition to all
non-employee directors) of the Company and any corporation owned more than
50% by the Company. The selection of key employees will be based upon a
subjective evaluation of each individual's performance and expected future
contribution to the Company. In granting awards the Compensation Committee
will also give consideration to the amount and nature of similar awards
granted by peer companies.
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. The maximum number of stock options that may be granted to a participant
under the 1999 Plan for any one calendar year is limited to options with
respect to 5,000 shares of Company stock.
. Awards of restricted stock will not be qualified under Section 162(m) of the
Internal Revenue Code and are not considered part of any qualifying awards
of stock options. The maximum number of shares of restricted stock that may
be awarded to a participant under the 1999 Plan for any one calendar year is
limited to 30,000 shares.
Summary of the Long Term Incentive Plan
This section contains a summary of key terms of the 1999 Plan. The complete
1999 Plan is attached hereto as EXHIBIT A. This summary description of the 1999
Plan does not purport to be complete and is qualified in its entirety by
reference to the complete document attached hereto as Exhibit A.
Shares Available
The maximum number of shares of Company stock that may be issued under the
1999 Plan is 250,000 shares. If any awards under the 1999 Plan expire without
stock being issued, the shares subject to the expired awards will be added to
the remaining shares available.
The 1999 Plan contains anti-dilution provisions, which allow the Compensation
Committee to increase the number of shares available under the 1999 Plan and the
number and price of shares subject to outstanding awards if an event such as a
stock dividend, stock split, merger or recapitalization occurs.
Administration
The 1999 Plan will be administered by the Compensation Committee of the
Company. This administration is intended to comply with the requirements of
Securities and Exchange Commission Rule 16b-3, which provides an exemption from
the short-swing profit liability rules of Section 16(b) of the Securities
Exchange Act of 1934, and to satisfy the requirements for exemption from Section
162(m) of the Internal Revenue Code, which denies the Company an income tax
deduction for individual compensation above $1 million per year. The 1999 Plan
will be administered by the Board of Directors of the Company at any time that
the administration by the Compensation Committee does not comply with the
foregoing requirements.
The Compensation Committee has authority to do all or any of the following in
administering the 1999 Plan: to determine the non-employee directors and key
employees to whom awards may from time to time be granted; to determine the type
of award granted; determine the terms and conditions of any award granted
(including the share price and any restriction or limitation or any vesting),
based on such factors as the Compensation Committee shall determine, in its sole
discretion; to amend the terms of any outstanding award; to interpret the terms
and provisions of the 1999 Plan and any award granted thereunder; and to
correct, supply and reconcile any defect, omission or inconsistency in the Plan
and otherwise to settle all claims and disputes arising under the 1999 Plan.
Eligibility
The directors who are eligible to participate in the 1999 Plan are members of
the Board of Directors of the Company (or any corporation that is owned more
than 50% by the Company). The employees who are eligible to participate in the
1999 Plan are officers and other key employees of the Company (or any
corporation that is owned more than 50% by the Company) who are responsible for
or contribute to the management, growth and/or profitability of the Company.
Participation is determined by selection by the Compensation Committee.
Awards
The 1999 Plan authorizes the Compensation Committee to grant stock options
that do not qualify as "incentive stock options" under the Internal Revenue Code
and shares of restricted stock. The Compensation Committee determines the time
or times at which awards are granted, the number of shares subject to such
awards, the price (if any) to be paid upon receipt of Company stock under the
1999 Plan, the time or times when Company stock can be received or forfeited,
and all other conditions of awards. The specific terms of each award may be
different for different employees.
Stock Option Terms
Each employee receiving a stock option under the 1999 Plan will enter into an
agreement with the Company stating the terms and conditions on which the option
can be exercised. The Compensation Committee will determine the exercise or
purchase price per share of any stock option granted under the 1999 Plan, but
the exercise price may not be less than 100% of the fair market value of the
stock on the date of the option is granted. The Compensation Committee will
define the term of each option. Options will be exercisable at such time or
times as determined by the Compensation Committee, subject to immediate vesting
upon death, disability, retirement, or a "change in control" of the Company (as
defined below). Options will expire automatically at the end of a period
specified by the Compensation Committee, which cannot be more than ten (10)
years from the date granted. Options may be exercised by paying the purchase
price, which may be paid at the discretion of the Compensation Committee, (a) in
cash, (b) in stock of the Company that has been owned for a least six months, or
(c) by means of a "cashless exercise," with the delivery of payment as permitted
under Federal Reserve Board Regulation T, subject to applicable securities law
restrictions.
Options will be exercisable at such time or times as determined by the
Compensation Committee. The right of any employee-participant to exercise any
option will expire and terminate at the following times: (a) immediately, if
the employee is
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terminated from the Company's services for cause; (b) one month after
termination, if the employee is terminated from the Company's services without
cause, provided that the recipient adheres to a non-competition agreement; (c)
twelve months after termination, if the participant is terminated from the
Company's services due to death; (d) twelve months after a change in control of
the Company; and (e) 36 months after termination if the employee is terminated
from the Company's services due to retirement or disability. The right or any
director-participant to exercise any option will expire and terminate at the
following times: (a) twelve months after termination, if the participant is
terminated from the Company's services due to death or resignation; (b) twelve
months after a change in control of the Company; and (c) 36 months after
termination if the employee is terminated from the Company's services due to
retirement or disability. If a participant in the 1999 Plan fails to comply with
any noncompetition agreement during a twelve-month period following termination
of service, any vested and unexercised options outstanding at the time of such
breach will expire and terminate immediately.
For this purpose, a "change in control" of the Company will have occurred upon
the occurrence of any of the following: (1) a person or entity becomes the
beneficial owner of 30% or more of the Company's voting shares, (2) the current
Directors (and any successor directors nominated by the current Directors or by
their successors) comprise less than a majority of the members of Board, (3) the
shareholders of the Company approve of a merger or consolidation of the Company
with another corporation with less than 50% of the outstanding voting securities
of the surviving or resulting corporation being owned by the former shareholders
of the Company, (4) a sale of substantially all of the assets of the Company to
another corporation; or (5) a majority of the Board determines that there has
been a change in control of the Company.
Transfer
No stock option under the 1999 Plan may be transferred other than (a) by will
or by the laws of descent and distribution and (b) by transfer of the vested
portion of such Option to an Optionee's immediate family members or trusts or
partnerships for the benefit of such family members, but only if expressly
authorized by the Committee at the time an Option is granted.
Restricted Stock
The Compensation Committee may grant awards to participants consisting of
shares of restricted stock. The Compensation Committee may condition the vesting
of such stock on continued employment for a specified period of time, on the
attainment of specified performance goals, or on such other factors as the
Compensation Committee may determine. Subject to the terms of any particular
grant, shares of restricted stock granted under the 1999 Plan will be subject to
the restrictions that the grantee not sell, transfer, pledge, assign or
otherwise encumber the shares of restricted stock for a specified period of
time. Within these limits, and subject to the terms of the 1999 Plan, the
Compensation Committee is authorized to provide for the lapse, waiver or
acceleration of such restrictions, in whole or in part, based on such factors,
including performance criteria, which the Compensation Committee determines.
The Committee will also determine when certificates will be issued in a
participant's name for restricted stock and the rights of a holder of restricted
stock, including the right to vote the shares and to receive any dividends and
other distributions declared with respect to such shares. Upon termination of a
participant's employment with the Company for any reason during the restriction
period, all shares still subject to restrictions will be forfeited by the
participant.
Effective Date
The 1999 Plan will become effective upon approval by the shareholders. The
1999 Plan will terminate on the tenth anniversary of Board adoption, February 9,
2009. No award may be granted after such tenth anniversary and awards granted
before such tenth anniversary may continue beyond that date.
Amendment and Discontinuance
The Board of Directors may at any time amend, suspend or discontinue the 1999
Plan, provided that certain amendments may not be made by the Board of Directors
without approval of the shareholders. Amendments may not alter the outstanding
options without the consent of the optionee.
Federal Income Tax Consequences of Awards.
The following is a brief general discussion of the anticipated income tax
treatment of the deferral of incentive awards and the grant and exercise of
awards to participants and to Commercial under current provisions of the
Internal Revenue Code.
Non-qualified Stock Options. The grant of a non-qualified stock option
generally will have no immediate tax consequences to the Company or the
optionee. An optionee generally will recognize compensation income at the time
of exercise of a non-qualified option in an amount equal to the difference
between the exercise price and the fair market value on the exercise date of the
acquired shares. The Company generally will be entitled to a deduction in the
year of exercise and in the amount the optionee includes in income as a result
of the exercise of a non-qualified option, provided that the Company satisfies
applicable reporting requirements.
Restricted Stock. Unless a participant makes an election under Section 83(b)
of the Internal Revenue Code, a participant generally will recognize no income
and the Company will be entitled to no deduction at the time restricted stock is
awarded to a participant. As and when the restrictions on restricted stock lapse
or are otherwise removed, the participant will recognize compensation income
equal to the excess of the fair market value of the restricted stock on the date
the restrictions lapse or are otherwise removed over the amount paid by the
participant for the restricted stock, if any, and the Company will be entitled
to a corresponding deduction for compensation paid, provided that the Company
satisfies applicable reporting requirements. Dividends paid on restricted stock
during the restriction period will constitute compensation income to the
participant receiving the dividend and will give rise to a deduction for the
8
<PAGE>
Company. Upon disposition of common stock of the Company after the restrictions
lapse or are otherwise removed, any gain or loss realized by a participant will
be treated as short-term or long term capital gain or loss depending upon the
period of time between the disposition and the earlier lapse or removal of the
restrictions on those shares of common stock.
If a participant files an election under Section 83(b) with the Internal
Revenue Service within 30 days after the grant of restricted stock, the
participant will recognize compensation income on the date of the grant, equal
to the excess of the fair market value of the shares of common stock of the
Company on that date over the price paid for those shares and the Company will
be entitled to a corresponding deduction, provided Commercial satisfies
applicable reporting requirements. Dividends paid on restricted stock after an
election under Section 83(b) of the Internal Revenue Code has been made will be
taxed as dividends and will not be deductible by the Company. Any gain or loss
realized by a participant upon a disposition of restricted stock after an
election under Section 83(b) of the Internal Revenue Code has been made will be
treated as short-term or long term capital gain or loss depending upon the
period of time between the disposition and the earlier date of grant.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INTENDED FOR GENERAL
INFORMATION ONLY AND DOES NOT PURPORT TO BE A COMPLETE ANALYSIS OR LISTING OF
ALL POTENTIAL TAX CONSEQUENCES. THE DISCUSSION DOES NOT ADDRESS THE TAX
CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCALITY, OR FOREIGN
JURISDICTION. THE DISCUSSION IS BASED UPON THE INTERNAL REVENUE CODE OF 1986,
AS AMENDED, TREASURY REGULATIONS THEREUNDER, AND ADMINISTRATIVE RULINGS AND
COURT DECISIONS AS OF THE DATE HEREOF. ALL OF THE FOREGOING ARE SUBJECT TO
CHANGE AND ANY SUCH CHANGE COULD AFFECT THE CONTINUING VALIDITY OF THE
DISCUSSION. PLAN PARTICIPANTS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE
PARTICULAR TAX CONSEQUENCES TO THEM.
Vote Required
An affirmative vote of the holders of a majority of the outstanding shares of
the Company's Common Stock is required to adopt the 1999 Plan. Shares voted
"Abstain" and shares not voted will have the same effect as if the shares were
voted "against" approval of the plan.
The Company's Board of Directors recommends, by the vote indicated above, that
the shareholders vote FOR adoption of the 1999 Plan.
5. OTHER MATTERS
The Boards of Directors does not intend to bring any other matters before the
annual meeting and does not know of any matter which anyone proposes to present
for action at the meeting. However, if any other matters properly come before
the meeting, the persons named in the accompanying proxy, or their duly
constituted substitutes acting at the meeting, will be authorized to vote or
otherwise act thereon in accordance with their judgment.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held thirty-four meetings during 1998.
The Board of Directors of the Corporation and the Board of Directors of the
Bank have a number of joint committees that serve both the Corporation and the
Bank. These include an Examining Committee (audit committee), a Personnel
Committee, an Executive Compensation Committee and a Nominating Committee.
The Examining Committee met four times during 1998. This Committee consisted
of Edward B. Reighard, Chairman; Dennis L. Merrey; Robert C. Penoyer; Jeffrey S.
Powell; Robert G. Spencer and Joseph L. Waroquier, Sr. It meets quarterly with
the internal auditor and, periodically, with the Corporation's independent
public accountants to review accounting, auditing and financial reporting
matters, including the review of audit plans.
The Personnel Committee met three times in 1998 before consolidating with the
Executive Compensation Committee and consisted of Robert G. Spencer, Chairman;
Richard D. Gathagan; Dennis L. Merrey and Peter F. Smith. This Committee reviews
personnel policies and makes recommendations to the Boards of Directors
regarding all salary ranges and benefit programs.
The Executive Compensation Committee consisted of William R. Owens, Chairman;
Robert E. Brown; Richard D. Gathagan; Dennis L. Merrey; Peter F. Smith and
Robert G. Spencer. The Committee met eight times during 1998. See "Executive
Compensation - Executive Compensation Committee."
The Nominating Committee met twice during 1998. The Committee consists of
Peter F. Smith, Chairman; Robert E. Brown; Richard D. Gathagan; and Jeffrey S.
Powell. Its function is to recommend candidates for nomination for election to
the Board of Directors. Any shareholder who wishes to have the committee
consider a candidate should submit the name of the candidate, along with any
biographical or other relevant information that the shareholder wishes the
Committee to consider and the consent of such candidate evidencing his or her
willingness to serve as a director, to the President of the Corporation at the
address appearing on the first page of this Proxy Statement. Any nomination is
subject to Article V, Section 2 of the By-Laws.
Directors William R. Owens, James P. Moore and William F. Falger are ex
officio members of all committees if not otherwise named, except the Examining
Committee as to Messrs. Moore and Falger.
9
<PAGE>
EXECUTIVE COMPENSATION
Report of the Executive Compensation Committee
The Executive Compensation Committee ("Committee") is composed of six non-
employee, independent directors selected from the Boards of Directors of the
Corporation and the Bank.
The Committee has the overall responsibility for reviewing, establishing, and
administering policies which govern executive compensation programs. In
discharging these responsibilities, the Committee seeks to maintain a position
of "equity" with respect to the balancing of interests of the shareholder with
those of the executive officers.
At the request of the Committee, executive officers of the Corporation or Bank
may be present at Committee meetings for discussion purposes. However, they have
no involvement in the decisions made by the Committee, nor do they have a vote
on any matters brought before the group. Independent, outside advisors and
consultants may also be used from time to time by the Committee in a similar
manner.
Executive Compensation Philosophy & Policy
The written executive compensation philosophy is an integral part of the
Executive Compensation Program since it reflects the attitudes of the Board(s)
of Directors toward program participation, peer group comparisons, plan design,
etc. Within the overall objectives of equity and regulatory compliance, the
philosophy serves to guide the deliberations of the Committee and acts as a
standard against which plan performance may be measured.
Executive compensation programs are designed to encourage executive decisions
and actions that have a positive impact on the Corporation's overall
performance. For that reason, program participation is limited to those
individuals who have the greatest opportunity to influence the achievement of
strategic corporate objectives.
The pay philosophy defines what the organization will pay for, e.g.,
performance, job worth, etc. The Committee has established the following
parameters for the pay philosophy under the current program:
1. Base compensation levels for the Corporation's executive officers that are
competitively set relative to companies in the banking industry of
comparable size within Pennsylvania as well as the United States. The
committee also takes into account individual experience and performance of
executive officers relative to the specific needs of the Corporation.
2. Compensation adjustments that are subjective and discretionary on the part
of the Committee and the Board(s) of Directors. However, these
discretionary adjustments will be made taking into account the overall
performance of the Corporation and the individual performance appraisals of
the executive officers.
3. Incentive compensation that is based on overall bank and individual
performance. This form of compensation is in addition to base salary and is
intended to focus executive management on key performance factors leading
to successful performance by the Corporation.
4. The utilization of "qualified" programs, as defined by the Internal Revenue
Code, where these programs are appropriate in meeting shareholder,
Corporation, and executive officer interests.
This executive compensation philosophy and policy has been developed to help
the Executive Compensation Committee meet the objective of the executive
compensation plan. To the extent necessary, it will be regularly evaluated and
revised in order to meet this objective on an ongoing basis.
Executive Compensation Programs
The primary components of the executive compensation program are base salaries
and base benefits. Base salaries are defined by taking into account the job
responsibilities of the positions, characteristics of the organization, and
comparative salary information compiled and reviewed on an annual basis. The
Committee regularly reviews the job assignments of the executive officers and
analyzes a variety of annually-developed compensation salary survey information
in order to maintain executive officer salaries that are equitable and
competitive.
Executive officers participate in the normal benefits programs available to
employees of the Bank, e.g., pension plan, savings plan, group life, disability,
hospitalization, major medical plans, etc. which do not discriminate in favor of
officers and are available to all salaried employees.
In 1995, the Committee established an Executive Incentive Compensation Plan
for executive officers. The purpose of this plan is to provide a direct
financial incentive in the form of an annual cash bonus to executives to achieve
the Corporation's annual goals set at the beginning of the fiscal year. The
primary measure utilized in the plan is return on average assets with additional
measures for asset growth, operating efficiency, loan growth and quality and
trust asset growth and profitability.
Beyond the payment of dues to certain service and social organizations,
executive officers do not receive any additional perquisites.
10
<PAGE>
Chief Executive Officer Compensation
The 1998 salary for the Corporation's Chief Executive Officer, James P. Moore,
was $180,100.00 which was an increase of 6.7% over 1997. In setting Mr. Moore's
salary, the Committee considered the Corporation's prior year and long-term
performance along with Mr. Moore's role in the achievement of these performance
levels.
1998 Executive Compensation Actions
The Committee utilizes a peer group of thirty single bank holding companies
and banks in Pennsylvania for comparison purposes when evaluating the
Corporation's financial performance and the salary and benefits of the three
highest paid executives. This peer group was also utilized to establish the
performance targets under the 1998 Executive Incentive Compensation Plan.
Incentive awards for 1998 are determined and awarded in the first quarter of the
following year.
Submitted by the Executive Compensation Committee:
William R. Owens, Chairman Richard D. Gathagan Peter F. Smith
Robert E. Brown Dennis L. Merrey Robert G. Spencer
Summary Compensation Table
The following table shows, for the fiscal years ended December 31, 1996, 1997
and 1998, the cash compensation paid by the Corporation and its subsidiaries, as
well as certain other compensation paid or accrued for those years, to each
executive officer of the Corporation whose total annual salary and bonus
exceeded $100,000 for any of these years.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Long-Term Compensation
-------------------------------------
Annual Compensation Awards Payouts
- ------------------------------------------------------------------------------------------------------------------------------------
Name and Other Annual Restricted Options/ LTIP All Other
Principal Salary Bonus Compensation Stock Award(s) SARs Payouts Compensation
Position Year ($) ($) ($) [1] ($) (#) ($) ($) [2]
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James P. Moore, 1998 169,600 10,500 0 0 0 0 35,224
President and CEO of 1997 164,800 4,000 0 0 0 0 22,410
CNB Financial Corp. 1996 159,300 0 0 0 0 0 21,031
Chairman of the Board of
County National Bank
- ------------------------------------------------------------------------------------------------------------------------------------
William F. Falger, 1998 144,600 16,000 0 0 0 0 37,526
Executive Vice- 1997 133,900 13,000 0 0 0 0 18,312
President of 1996 128,949 0 0 0 0 0 18,073
CNB Financial Corp.
President and CEO of
County National Bank
- ------------------------------------------------------------------------------------------------------------------------------------
William A. Franson, 1998 111,300 10,500 0 0 0 0 37,289
Secretary of 1997 108,150 9,188 0 0 0 0 14,256
CNB Financial Corp. 1996 104,550 0 0 0 0 0 13,997
Executive Vice President,
Cashier and COO of
County National Bank
- ------------------------------------------------------------------------------------------------------------------------------------
Carl J. Peterson, 1998 95,000 12,676 0 0 0 0 17,458
Assistant Secretary 1997 92,185 13,984 0 0 0 0 11,688
CNB Financial Corp. 1996 89,149 0 0 0 0 0 11,353
Senior Vice President,
& Trust Officer of
County National Bank
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[1] It is the policy of the Corporation to pay dues to certain service and
social organizations for the executive officers. The incremental costs of these
items were minimal and did not exceed the lesser of 10% of total compensation or
$50,000 for any named executive officer.
[2] Figures stated in this column include contributions to the County National
Bank Money Purchase Pension Plan, 401(K) Savings Plan and term life insurance
premiums.
11
<PAGE>
Pension Plan
The Corporation does not have a retirement plan. The Bank maintains a non-
contributory pension plan called The County National Bank Money Purchase Pension
Plan. All active officers and employees, 21 years of age or over, employed by
the Bank for one year, are participants in the Plan. The salary contribution
per participant is 9% of total salary plus 5.7% of salary in excess of $72,600,
but subject to a $160,000 salary limit. The total annual contribution to the
retirement plan for the year 1998 was $405,000. Employees become vested after
five years service with the Bank. Directors other than active officers are not
covered by any retirement plan. Retirement funds are held in trust for each
employee. Benefits are determined by the employer's contribution over the years
and the plan earnings. At the time of retirement, the total value is distributed
in one lump sum.
Savings Plan
The County National Bank Savings Plan is qualified under Section 401(k) of the
Internal Revenue Code. Participants can elect to deposit up to 10% of their
annual salary into the Plan. Under the Tax Reform Act, participants'
contributions are limited to $10,000.00, and also subject to the $160,000
compensation limit. All officers and employees of County National Bank,
including those named in the Summary Compensation Table set forth herein, are
eligible to participate in the Plan. The Bank makes matching contributions equal
to 25% of the participant's contribution up to 4% of the participant's salary in
the form of corporation stock. The Bank's total contribution to the savings plan
was $30,132 for the year. All participant's contributions, at the participant's
election, are invested among several mutual fund options maintained by the Bank
as Trustee during 1998. The Bank's contributions to the Savings Plan in 1998 for
the accounts of the officers named in the Summary Compensation Table set forth
herein is included as All Other Compensation.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Executive Compensation Committee is composed of Chairman Owens and Messrs.
Brown, Gathagan, Merrey, and Smith. Mr. Owens was formally an officer of the
Corporation and the Bank. Mr. Smith is general counsel for the Corporation and
the Bank.
COMPENSATION OF DIRECTORS
Members of the Corporation's Board of Directors who are not employees of the
Corporation or the Bank are paid a quarterly retainer fee of $125 and also $200
for attendance at each board and $265 for each committee meeting. Non-Executive
Corporate Board Chairperson is also paid a $417 monthly retainer fee. Members of
the Bank's Board of Directors who are not employees of the Corporation or the
Bank are paid $425 for attendance at each Board meeting and $265 for attendance
at each committee meeting. Committee Chairpersons were paid $315 for each
meeting attended. All Bank Board of Director members are paid a $500 monthly
retainer.
CERTAIN TRANSACTIONS
Directors and officers of The Corporation and certain business organizations
and individuals associated with them have been customers of and have had normal
banking transactions with County National Bank. All such transactions have been
made in the ordinary course of business, on terms substantially equivalent,
including interest rates and collateral, to those which prevailed in similar
transactions with unrelated persons and do not involve more than the normal risk
of collectability or present other unfavorable features.
From time to time, The Corporation and the Bank may purchase materials or
services from directors or from companies with which directors are associated.
The disclosures that apply in this regard appear under the section of
Compensation Committee Interlocks.
DIRECTORS AND EXECUTIVES DEFERRED COMPENSATION PLAN
The Directors approved a Directors and Executive Deferred Compensation Plan.
Annually, outside directors can elect the level of participation of their
director compensation to be deferred. Executive deferrals can be elected
throughout the year up to 10% of base compensation and 100% of all bonuses. All
deferred compensation will be a general liability of this Corporation and Bank,
respectively. This is a phantom stock plan whereby any appreciation or
depreciation in each participants account value will reflect precisely CNB
Financial Corporation common stock performance including cash dividends.
Deferred compensation will serve as a funding source for a trust. Investments
are expected to closely match the appreciated or depreciated liability. Any
variance will be adjusted by an expense or gain to the Corporation or Bank. In
addition to the tax advantages to the participants, they are each additionally
incented toward the general performance of the Corporation's common stock.
Accounting treatment for this plan is subject to the Financial Accounting
Standards Board Statement #123.
12
<PAGE>
PERFORMANCE GRAPH
The following graph illustrates the performance pattern of the common stock of
CNB Financial Corporation as compared to the NASDAQ bank stock index and all
NASDAQ U.S. stocks. The index values are market weighted, dividend reinvestment
numbers which measure the total return for investing $100 five years ago. This
index meets all SEC requirements for showing dividend reinvestment share
performance over a five year period. The bank index values qualify as industry
specific peer groups for reporting purposes and measure the return to an
investor for placing $100 into a basket of stocks and letting that money set
with all dividends being reinvested into the stock paying the dividend.
- --------------------------------------------------------------------------------
CNB Financial Corporation
Stock Price Performance
Total Return Performance
[GRAPH APPEARS HERE]
Period Ending
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
12-31-93 12-31-94 12-31-95 12-31-96 12-31-97 12-31-98
- ---------------------------------------------------------------------------------------
CNB Financial Corp. $ 100.00 $ 124.17 $ 123.84 $ 159.46 $ 188.20 $315.32
- ---------------------------------------------------------------------------------------
Nasdaq - Total US $ 100.00 $ 97.75 $ 138.26 $ 170.01 $ 208.58 $293.21
- ---------------------------------------------------------------------------------------
Nasdaq Bank Index $ 100.00 $ 99.64 $ 148.38 $ 195.91 $ 328.02 $324.90
- ---------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
SNL Securities LC
Charlottesville, VA
13
<PAGE>
CONCERNING THE INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has engaged the firm of Ernst & Young LLP, Pittsburgh,
PA Certified Public Accountants as independent auditors to examine the financial
statements of the Corporation and its subsidiary for the year ending December
31, 1999. The firm has acted in this capacity since August 24, 1993.
Representatives of the accounting firm are expected to be present at the Annual
Meeting and will have an opportunity to make a statement and answer appropriate
questions regarding the Corporation and the Bank.
SHAREHOLDER PROPOSALS
The Board of Directors will consider shareholder proposals for the year 2000
annual meeting. Any shareholder wishing to make a proposal to be considered for
inclusion in the proxy statement for the year 2000 annual meeting of
shareholders should forward a written copy of such proposal to James P. Moore,
President, CNB Financial Corporation, P.O. Box 42, Clearfield, PA 16830 by
certified mail, return receipt requested, no later than November 24, 1999.
By Order of the Board of Directors,
/s/ William A. Franson
William A. Franson
Secretary
Clearfield, Pennsylvania
March 25, 1999
14
<PAGE>
EXHIBIT A
CNB Financial Corporation
1999 Stock Incentive Plan
TABLE OF CONTENTS
Section Page
1. Purpose 1
2. Definitions 1
3. Administration 5
4. Shares Available 5
5. Eligibility 6
6. Stock Options 6
7. Stock Awards 9
8. Taxes 10
9. No Rights as a Stockholder 10
10. Consents and Approvals 10
11. Right to Discharge Reserved 11
12. Amendment 11
13. Term of the Plan 11
14. Indemnification 11
15. Successors 12
16. Severability 12
17. Assignment and Alienation 12
18. Governing Law 12
15
<PAGE>
CNB FINANCIAL CORPORATION
1999 Stock Incentive Plan
1. Purpose
The CNB Financial Corporation 1999 Stock Incentive Plan (the "Plan") provides
for the grant of options to purchase Common Stock of CNB Financial Corporation
(the "Company") and the grant of awards of Common Stock of the Company to
Directors and key Employees of the Company and its subsidiaries. The purpose of
the Plan is to enhance the long-term performance of the Company by providing
selected individuals with an opportunity to acquire a proprietary interest in
the Company as an incentive to improve the growth and profitability of the
Company.
2. Definitions
Whenever used in the Plan, the masculine pronoun shall be deemed to include the
feminine, the singular to include the plural, unless the context clearly
indicates otherwise, and the following capitalized words and phrases shall have
the meaning set forth below unless the context plainly requires a different
meaning:
(a) "Agreement" means the written agreement between the Company and a
---------
Participant described in Sections 6.1 or 8, or other documentation evidencing a
Stock Option or a Stock Award.
(b) "Beneficiary" The person or persons designated by a Participant to
-----------
exercise any rights granted by the terms of the Plan or an Agreement in the
event of the Participant's death while employed by the Company, or in the
absence of such designation, the executor or administrator of the Participant's
estate.
(c) "Board" means the Board of Directors of the Company.
-----
(d) "Cause" means conduct by a Participant amounting to (1) fraud or
-----
dishonesty against the Company, (2) willful misconduct, repeated refusal to
follow the reasonable directions of the Board, or knowing violation of law in
the course of performance of the duties of Participant's employment with the
Company, (3) repeated absences from work without a reasonable excuse, (4)
intoxication with alcohol or drugs while on the Company's premises during
regular business hours, (5) a conviction or plea of guilty or no contest to a
felony or a crime involving dishonesty, or (6) a breach or violation of any
Company policies regarding Employee conduct, or a breach or violation of the
terms of any employment or other agreement between Participant and the Company.
(e) "Change in Control" means the occurrence of any of the following:
-----------------
(i) any person (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")),
other than any employee benefit plan that is sponsored or maintained
by the Company (or any trustee of such plan acting as trustee) (an
"Acquiring Person" ), becomes the beneficial owner (as such term is
defined in Rule 13d-3 promulgated under the Exchange Act), directly
or indirectly, of securities of the Company representing 30% or more
of the combined voting power of the Company's then outstanding
securities;
(ii) a change in the composition of the Board such that individuals who,
as of the effective date of the Plan specified in Section 13,
constitute the Board (the "Continuing Directors") cease for any
reason to constitute at least a majority thereof, provided that any
person becoming a Director after such date whose nomination for
election was approved by a vote of at least a majority of the
Continuing Directors (other than a nomination of an individual whose
initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the
Directors, as such terms are used in Rule 14a-11 of Regulation 14A
under the Exchange Act) shall be deemed to be a Continuing Director.
(iii) the Company's stockholders approve an agreement to merge or
consolidate the Company with another corporation and as a result of
such merger or consolidation less than 50% of the outstanding voting
securities of the surviving or resulting corporation shall be owned
in the aggregate by the former stockholders of the Company;
16
<PAGE>
(iv) the Company shall sell substantially all of its assets to another
corporation which corporation is not wholly owned by the Company; or
(v) a majority of the Board determines in its sole and absolute
discretion that there has been a Change in Control of the Company or
that there will be a Change in Control of the Company upon the
occurrence of certain specified events and such events occur.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
----
(g) "Committee" means the Compensation Committee of the Board.
---------
(h) "Common Stock" means the Common Stock, par value $1.00 per share of the
------------
Company.
(i) "Company" means CNB Financial Corporation, a Pennsylvania corporation, or
-------
any successor organization.
(j) "Constructive Discharge" means a Termination of Employment by the
----------------------
Participant on account of (i) any material reduction in the Participant's
compensation, (ii) any material reduction in the level or scope of job
responsibility or status of the Participant occurring without the consent of the
Participant, or (iii) any relocation to an office of the Company which is more
than fifty (50) miles from the office where the Participant was previously
located to which the Participant has not agreed.
(k) "Director" means a member of the Board or the board of directors of any
--------
Subsidiary who is not an Employee.
(l) "Disability" means, for any Participant who is an Employee, a disability
----------
as defined in the long-term disability plan maintained by the Company and
applicable to such Employee. For any Participant who is a Director, and for any
Participant who is an Employee at any time during the period that this Plan is
in operation that the Company does not maintain a long-term disability plan,
Disability shall mean a physical or mental condition which, in the judgment of
the Committee, permanently prevents a Participant from performing his usual
duties for the Company or such other position or job which the Company makes
available to him and for which the Participant is qualified by reason of his
education, training and experience. In the event of a dispute, the determination
of Disability shall be made by the Committee. In making its determination the
Committee may, but is not required to, rely on advice of a physician competent
in the area to which such Disability relates. The Committee may make the
determination in its sole discretion and any decision of the Committee will be
binding on all parties.
(m) "Employee" means a full-time, nonunion, salaried employee, as that term is
--------
understood under the common law, of the Company or any Subsidiary.
(n) "Exercise Price" means the price per share at which Common Stock may be
--------------
purchased upon exercise of a Stock Option.
(o) "Expiration Date" means the last day of the stated duration of a Stock
---------------
Option, as described in Section 6.2.
(p) "Fair Market Value" means, for any particular date, (i) for any period
-----------------
during which the Common Stock shall be listed for trading on a national
securities exchange or the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), the closing price per share of Common Stock on such
exchange or the NASDAQ closing bid price as of the close of such trading day,
or (ii) the market price per share of Common Stock as determined by a qualified
valuation expert selected by the Board in the event (i) above shall not be
applicable. If the Fair Market Value is to be determined as of a day when the
securities markets are not open, the Fair Market Value on that day shall be the
Fair Market Value on the next succeeding day when the markets are open. In the
event that the Fair Market Value cannot be thus determined, it shall be
determined in good faith by the Committee.
(q) "Involuntary Termination" means a Termination of Employment but does not
-----------------------
include a Termination of Employment for Cause or a Voluntary Resignation.
(r) "Participant" means an eligible Employee or Director to whom a Stock
-----------
Option or Stock Award is granted pursuant to the Plan.
(s) "Plan" means the CNB Financial Corporation 1999 Stock Incentive Plan.
----
17
<PAGE>
(t) "Retirement" means, in the case of a Participant who is an Employee, a
----------
Termination of Employment from the Company or a Subsidiary, with the consent of
the Company, on or after the "normal retirement age" defined under any tax-
qualified retirement plan maintained by the Company; and, in the case of a
Participant who is a Director, termination of service on the Board or a board of
directors of a subsidiary with the consent of the Company on or after age 62.
(u) "Stock Award" means a right to acquire shares of Common Stock granted
-----------
pursuant to Section 8 of this Plan, subject to such restrictions and conditions
as determined by the Committee.
(v) "Stock Option" or "Option" means a right to purchase shares of Common
------------ ------
Stock granted pursuant to Section 6 of this Plan, which shall not be treated as
an incentive stock option under section 422A of the Code.
(w) "Subsidiary" means any corporation (other than the Company) in an unbroken
----------
chain of corporations beginning with the Company if each of the corporations
other than the last corporation in the unbroken chain owns stock equal to 51% or
more of the total combined voting power of all classes of stock in one of the
other corporations in the chain.
(x) "Termination of Employment" means the termination of the Employee-employer
-------------------------
relationship between a Participant and the Company or a Subsidiary, regardless
of the fact that severance or similar payments are made to the Participant, for
any reason, including, but not limited to, a Voluntary Resignation, Involuntary
Termination, Termination for Cause, Constructive Discharge, death, Disability or
Retirement. The Committee shall, in its absolute discretion, determine the
effect of all matters and questions relating to a Termination of Employment,
including, but not by way of limitation, the question of whether a leave of
absence constitutes a Termination of Employment, or whether a Termination of
Employment is for Cause or is a Constructive Discharge.
(y) "Vested" means that an award is nonforfeitable and exercisable with regard
------
to a designated number of shares of Common Stock.
(z) "Voluntary Resignation" means, in the case of a Participant who is an
---------------------
Employee, a Termination of Employment as a result of the Participant's
resignation and, in the case of a Participant who is a Director, a Participant's
resignation from service as a Director.
3. Administration
3.1 The Plan shall be administered by the Committee, whose members shall be
appointed by, and serve at the pleasure of, the Board. To the extent required
for transactions under the Plan to qualify for the exemptions available under
Rule 16b-3 promulgated under the Securities Exchange Act of 1934, the members of
the Committee shall consist solely of two or more Directors who are "Non-
Employee Directors", within the meaning of Rule 16b-3. To the extent required
for compensation realized from Stock Options to be deductible by the Company
pursuant to section 162(m) of the Code, the members of the Committee shall be
"outside Directors" within the meaning of section 162(m). If at any time the
Committee does not consist solely of "Non-Employee Directors" for purposes of
Rule 16b-3, the Plan shall be administered by the full Board and all references
to the "Committee" in this Plan shall mean the full Board; provided, that any
members of the Board at such time who are not "outside Directors" within the
meaning of Code section 162(m) shall abstain from participation in the
administration of the Plan with respect to Employees whose compensation is
subject to the limit in Code section 162(m).
3.2 The Committee shall have full authority, in its discretion, (a) to
determine the Employees and Directors of the Company or any Subsidiary to whom
awards shall be granted and the terms and provisions of awards, subject to the
provisions of this Plan, (b) to exercise all of the powers granted to it under
this Plan, (c) to construe, interpret and implement the Plan and any Agreement,
(d) to prescribe, amend and rescind rules and regulations relating to this Plan,
including rules governing its own operations, (e) to determine the terms and
provisions of the respective Agreement with each Participant, (f) to make all
determinations necessary or advisable in administering the Plan, and (g) to
correct any defect, supply any omission and reconcile any inconsistency in the
Plan. The Committee's determination under the Plan need not be uniform and may
be made by it selectively among persons who receive, or are eligible to receive,
awards under the Plan (whether or not such persons are similarly situated). The
Committee's decisions shall be final and binding on all Participants.
3.3 Action of the Committee shall be taken by the vote of a majority of its
members. The determination of the Committee on all matters relating to the Plan
or any Agreement (including, without limitation, the determination as to whether
an event has occurred resulting in a forfeiture or a termination or
18
<PAGE>
reduction of the Company's obligations in accordance with the terms of this
Plan) shall be final, binding and conclusive. No member of the Committee shall
be liable for any action or determination made in good faith with respect to the
Plan or any award thereunder.
4. Shares Available
4.1 Subject to adjustment in accordance with Section 4.2, the number of
shares of Common Stock for which Stock Options and Stock Awards may be granted
under this Plan is 250,000, which may consist of treasury shares or authorized
but unissued shares. For purposes of satisfying the requirements for Stock
Options to be deductible by the Company pursuant to section 162(m) of the Code,
the maximum number of shares of Common Stock subject to Stock Options granted
under this Plan to any participating Employee or Director for any year shall not
exceed 5,000 shares, subject to adjustment in accordance with Section 4.2,
below, and any Stock Awards made hereunder shall be treated as separate awards
from Stock Options and shall not count toward this annual limit. The maximum
number of shares of Common Stock subject to all Stock Awards granted under this
Plan for any year shall not exceed 30,000 shares in the aggregate, subject to
adjustment in accordance with Section 4.2, below. To the extent permitted by
law, any shares of Common Stock attributable to the nonvested, unexercised or
otherwise unsettled portion of any Stock Option or Stock Award that is
forfeited, canceled, expires or terminates for any reason without becoming
vested, exercised or otherwise settled in full shall again be available for the
grant of Stock Options and Stock Awards under this Plan, and any shares of
Common Stock tendered to the Company in payment of the Exercise Price of a Stock
Option shall also be available for the grant of Stock Options and Stock Awards
under this Plan, provided that no more than 250,000 shares of Common Stock
cumulatively shall be available under this Plan at any time.
4.2 If there is any change in the outstanding shares of Common Stock by
reason of a stock dividend or distribution, or stock split-up, or by reason of
any merger, consolidation, spinoff or other corporate reorganization in which
the Company is the surviving corporation, the number of shares that may be
delivered under the Plan and the number of shares subject to each outstanding
award, and, if appropriate, the Exercise Price under each Stock Option, shall be
equitably adjusted by the Committee, whose determination shall be final, binding
and conclusive. After any adjustment made pursuant to this Section 4.2, the
number of shares subject to each outstanding Stock Option and Stock Award shall
be rounded up to the nearest whole number.
5. Eligibility
Employees and Directors of the Company or a Subsidiary who are responsible for
or contribute to the management, growth, and profitability of the business of
the Company or a Subsidiary are eligible for participation in this Plan. The
selection of Employees and Directors for participation in the Plan shall be made
solely by the Committee, based on a subjective evaluation of each individual's
performance and expected future contribution to the Company and its
Subsidiaries, but may take into consideration the opinions of the Chief
Executive Officer of the Company.
6. Stock Options
6.1 The Committee, in its discretion, may grant Stock Options during any year
that this Plan is in effect to any eligible Employee or Director. The terms of
each Stock Option shall be contained in an Agreement, which shall contain the
number of shares of Common Stock covered by the Option, the period during which
the Option may be exercised, the Exercise Price, and any additional terms and
conditions not inconsistent with this Plan that the Committee deems to be
appropriate. The Committee shall have complete discretion in determining the
number of shares of Common Stock subject to each Option grant (subject to the
share limitations set forth in Section 4.1) and, consistent with the provisions
of this Plan, the terms, conditions and limitations pertaining to each Option.
The terms of Options need not be uniform among Participants. By accepting a
Stock Option, a Participant thereby agrees that the Option shall be subject to
all of the terms and conditions of this Plan and the applicable Agreement.
6.2 The duration of each Option shall be specified in the Agreement and shall
not exceed ten (10) years.
6.3 The Exercise Price of the Common Stock purchasable under any Stock Option
shall be determined by the Committee and set forth in each Agreement, subject to
adjustment in accordance with Section 4.2. The Exercise Price shall not be less
than the Fair Market Value of a share of Common Stock on the date the Option is
granted.
6.4 Each Agreement shall contain a vesting schedule, which shall specify when
the Stock Option shall become vested and thus exercisable. Notwithstanding the
existence of a vesting schedule for an Option, the Committee may provide in any
Agreement relating to an Option at the time the Option is granted for
19
<PAGE>
acceleration of the time or times at which such Option may be exercised in whole
or in part upon an optionee's death, Disability or Retirement, or upon a Change
in Control in the Company, if the Committee determines that it is in the best
interests of the Company and Participant to do so, and may permit the
Participant or any other designated person acting for the benefit of the
Participant to exercise all or any part of the Option during all or part of the
remaining Option term specified in Section 6.2, notwithstanding any provision of
the Agreement to the contrary. Notwithstanding any vesting schedule which may
be specified in an Agreement, or any determination made by the Committee, no
Option shall vest if to do so would create a situation in which the
exercisability of any such Option would result in an "excess parachute payment"
within the meaning of Section 280G of the Code.
6.5 Termination of Service.
(a) Death. Upon the death of an Optionee while performing services to the
-----
Company as an Employee or Director, the Option shall expire and terminate on the
earlier of the Expiration Date or on the last day of the 12th month following
the month of the Optionee's death. Any exercise of an Option following an
Optionee's death shall be made only by the Optionee's Beneficiary. An Optionee's
Beneficiary shall be bound by all the terms and conditions of the Plan and the
applicable Agreement which would have applied to the Optionee.
(b) Disability or Retirement. Upon an Optionee's Disability or
------------------------
Retirement, the Option shall expire and terminate on the earlier of the
Expiration Date or the last day of the 36th month after the month of the
Optionee's Disability or Retirement.
(c) Termination by Voluntary Resignation. If an Optionee who is an
------------------------------------
Employee terminates service by Voluntary Resignation, all Options held by the
Optionee (including any vested portion thereof) will lapse and terminate
immediately and the Optionee will have no further right to exercise any Options
granted under this Plan. If an Optionee who is a Director terminates service by
Voluntary Resignation, the Option shall expire and terminate on the earlier of
the Expiration Date or the last day of the 12th month after the month of the
Optionee's termination.
(d) Termination without Cause or by Constructive Discharge. If an
------------------------------------------------------
Optionee is Terminated from Employment without Cause or by Constructive
Discharge, the Option shall expire and terminate on the earlier of the
Expiration Date or the last day of the month after the month of the Optionee's
Termination without Cause or Constructive Discharge.
(e) Termination for Cause. If the Optionee has a Termination of
---------------------
Employment for Cause or terminates his or her service by Voluntary Resignation,
all Options held by the Optionee (including any vested portion thereof) will
lapse and terminate immediately and the Optionee will have no further right to
exercise any Options granted under this Plan.
(f) Change in Control. If the Optionee ceases to be Director or an
-----------------
Employee within 24 months following a Change in Control (other than an
Employee's Termination of Employment for Cause), any Option shall expire and
terminate on the earlier of the Expiration Date or the last day of the 12th
month after the month the Optionee ceases to be an Employee or Director of the
Company.
(g) Other Termination. If an Optionee ceases to be an Employee or a
-----------------
Director for reasons other than as provided in subsections (a) through (e)
above, the Committee may specify that the unexercised portion of any Option
shall expire and terminate on the earlier of the Expiration Date of the Option
or on the last day of the month after the Optionee's termination. Any
authorization described in the preceding sentence must be written in the
Agreement at the time that the Option is granted.
Notwithstanding a vesting schedule or any of the foregoing terms, in the case of
an Optionee who is an Employee, all Options and shares of Common Stock issued to
the holder under the Plan shall be forfeited if the Company in its sole
discretion determines that the Optionee has, at any time during the earlier of
the Expiration Date or the last day of the 12-month period following Termination
of Employment, violated the terms of any agreement with the Company or a
Subsidiary regarding (i) engaging in a business that competes with the business
of the Company or any Subsidiary, (ii) interfering in any material respect with
any contractual or business relationship of the Company or any Subsidiary, or
(iii) soliciting the employment of any person who was during such period, a
Director, officer, partner, Employee, agent or consultant of the Company or a
Subsidiary.
6.6 Transfers. No Option granted under the Plan shall be assignable or
---------
transferable other than by will or by the laws of descent and distribution, and
all such options shall be exercisable during the life of the Optionee only by
the Optionee or his legal representative; provided, however, that the Committee
may
20
<PAGE>
expressly authorize at the time an Option is granted transfer of the vested
portion of such Option to an Optionee's immediate family members or trusts or
partnerships for the benefit of such family members. Any authorization described
in the preceding sentence must be written in the Agreement at the time that the
Option is granted.
6.7 Substitute Stock Options. Notwithstanding anything to the contrary in
------------------------
this Section 6, any Option issued in substitution for an Option previously
issued by another entity, which substitution occurs in connection with a
transaction to which Code Section 424(a) is applicable, may provide for an
exercise price computed in accordance with such Code Section and the regulations
thereunder and may contain such other terms and conditions as the Committee may
prescribe to cause such substitute Option to contain as nearly as possible the
same terms and conditions (including the applicable vesting and termination
provisions) as those contained in the previously issued Option being replaced
thereby.
6.8. Exercise of Stock Options
-------------------------
A Stock Option shall be exercised by the delivery of a written notice of
exercise to the Vice President and Secretary of the Company, or such other
person specified by the Committee, setting forth the number of shares of Common
Stock with respect to which the Option is to be exercised, accompanied by full
payment of the Exercise Price and any required withholding taxes. Payment of
the Exercise Price for the shares of Common Stock being purchased shall be made:
(a) by certified or official bank check (or the equivalent thereof acceptable to
the Company), or (b) by delivery of shares of Common Stock acquired at least six
months prior to the Option exercise date and having a Fair Market Value
(determined as of the exercise date) equal to all or part of the Exercise Price
and a certified or official bank check (or the equivalent thereof acceptable to
the Company) for any remaining portion of the Exercise Price; or (c) at the
discretion of the Committee and to the extent permitted by law, by such other
provision as the Committee may from time to time prescribe. The Committee may
allow exercises to be made by means of a "cashless exercise," with the delivery
of payment as permitted under Federal Reserve Board Regulation T, subject to
applicable securities law restrictions, or by any other means which the
Committee determines to be consistent with the Plan's purpose and applicable
law. Payment shall be made on the date that the Option or any part thereof is
exercised, and no shares shall be issued or delivered upon exercise of an Option
until full payment has been made by the Participant. Promptly after receiving
payment of the full Exercise Price, the Company shall, subject to the provisions
of Section 11, deliver to the Participant, or to such other person as may then
have the right to exercise the Option, a certificate for the shares of Common
Stock for which the Option has been exercised.
7. Stock Awards
7.1 The Committee, in its discretion, may grant Stock Awards during any year
that this Plan is in effect to any eligible Employee or Director. The Committee
may require a cash payment from the Participant in exchange for the grant of a
Stock Award in an amount not greater than the aggregate Fair Market Value of the
shares of Common Stock awarded (determined at the date of grant) or may grant a
Stock Award without the requirement of a cash payment. The Committee may
provide in any Agreement a vesting schedule, which shall specify when such
Awards shall become Vested and thus exercisable. The Committee may provide in
any Agreement at the time Stock Awards are made for the acceleration of the
vesting schedule set forth in the Agreement if the Committee determines that it
is in the best interests of the Company and Participant to do so.
Notwithstanding any vesting schedule which may be specified in an Agreement, or
any determination made by the Committee no award will vest if to do so would
create a situation in which the exercisability of any such Award would result in
an "excess parachute payment" within the meaning of Section 280G of the Code.
7.2 The terms of each Stock Award shall be contained in an Agreement, which
shall contain the number of shares of Common Stock covered by the Stock Award,
the cash payment required (if any), the vesting schedule and any other
restrictions and conditions on the shares of Common Stock that the Committee
deems to be appropriate. The Committee shall have complete discretion in
determining the number of shares of Common Stock subject to each Stock Award
(subject to the share limitations set forth in Section 4.1) and, consistent with
the provisions of this Plan, the terms, conditions and limitations pertaining to
each Stock Award. The terms of Stock Awards need not be uniform among
Participants. The Committee shall also determine when certificates shall be
issued in the Participant's name and the rights of a holder of a Stock Award,
including the right to vote the shares and to receive any dividends and other
distributions declared with respect to such shares.
8. Taxes
The Company shall withhold any taxes required to be withheld by federal, state
or local government. The Company shall have the right to require a Participant
to remit to the Company an amount sufficient to satisfy any federal, state and
local withholding tax requirements prior to the delivery of any certificate or
certificates for
21
<PAGE>
shares of Common Stock. A Participant may pay the withholding tax in cash, or,
if the Agreement provides, a Participant may also elect to transfer a sufficient
number of shares or other securities or to reduce the number of shares of Common
Stock he is to receive by the smallest number of whole shares of Common Stock
which, when multiplied by the Fair Market Value of the shares determined as of
the date on which the amount of tax required to be withheld is determined, is
sufficient to satisfy federal, state and local, if any, withholding taxes. Any
such election must be made on or before the date on which the required tax
withholding is determined.
9. No Rights as a Stockholder
No Participant (or Beneficiary or other person having rights under this Plan)
shall have any of the rights of a stockholder of the Company with respect to
shares subject to an Option or Stock Award until the issuance of a stock
certificate to such person for such shares, except as otherwise provided in
Section 4.2.
10. Consents and Approvals
If the Committee shall at any time determine that any consent is necessary or
desirable as a condition of, or in connection with, the issuance of shares under
the Plan or the taking of any other action thereunder, then such action shall
not be taken, in whole or in part, unless and until such consent shall have been
effected or obtained to the full satisfaction of the Committee. The term
"consent" as used herein with respect to any such action means (a) any and all
listings, registrations or qualifications in respect thereof upon any securities
exchange or under any federal, state or local law, rule or regulation, (b) any
and all written agreements and representations by the Participant with respect
to the disposition of shares, or with respect to any other matter, which the
Committee shall deem necessary or desirable to comply with the terms of any such
listing, registration or qualification or to obtain an exemption from the
requirement that any such listing, qualification or registration be made and (c)
any and all consents, clearances and approvals by any governmental or other
regulatory bodies in respect of the issuance of shares under the Plan or the
taking of any other action under the Plan.
11. Right of Discharge Reserved
Nothing in the Plan or in any Agreement shall confer upon any Participant the
right to continue as an Employee or Director of the Company or any Subsidiary,
or affect any right which the Company may have to terminate such Employee or
Director.
12. Amendment
The Board may amend the Plan, and the Committee may amend any outstanding
Agreement, in any respect whatsoever, except that no amendment to an outstanding
Agreement shall materially impair any rights or materially increase any
obligations of any Participant under any Option or Stock Award without the
consent of the Participant (or, after the Participant's death, the Beneficiary
or other person having the right to exercise the option). An amendment shall be
subject to stockholder approval to the extent necessary for compliance with Rule
16b-3 and Code section 162(m).
13. Term of the Plan
This Plan shall be effective on February 9, 1999, the date adopted by the Board,
subject to approval by the stockholders of the Company. The Plan shall
terminate upon the earlier of (i) the date on which all Common Stock available
under this Plan have been issued pursuant to the exercise of Stock Options and
the satisfaction of Stock Award conditions, (ii) the tenth anniversary of the
effective date, or (iii) the termination of this Plan by the Committee subject
to approval of the Board. No Stock Option or Stock Award may be granted after
the termination of the Plan. Any outstanding Stock Options and Stock Awards as
of the date the Plan terminates shall remain in full force and effect, subject
to the terms of the Plan and the relevant Agreement relating to such Stock
Option and Stock Award.
14. Indemnification
Each person who is or shall have been a member of the Committee, or of the
Board, shall be indemnified and held harmless by the Company from and against
any loss, cost, liability or expense that may be imposed upon or reasonably
incurred by such person in connection with or resulting from any claim, action,
suit or proceeding to which such person may be a party or in which such person
may be involved by reason of any action taken or failure to act under the Plan
and against and from any and all amounts paid by such person in settlement
thereof with the Company's approval, or paid by such person in satisfaction of
any judgment in any such action, suit or proceeding against such person,
provided such person shall give the Company an opportunity, at its own expense,
to handle and defend the same before such person undertakes to handle and defend
it on such
22
<PAGE>
person's own behalf. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such persons may be
entitled from the Company, as a matter of law, or otherwise.
15. Successors
All obligations of the Company under the Plan, with respect to any Stock Options
and Stock Awards granted hereunder, shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger consolidation or otherwise, of all or substantially
all of the business and/or assets of the Company.
16. Severability
In the event any provision of the Plan shall be held illegal or invalid for any
reason, such illegality or invalidity shall not affect the remaining parts of
the Plan, and the Plan shall be construed and enforced as if the illegal or
invalid provision had not been included.
17. Assignment and Alienation
17.1 Any transfer or disposition of the Options or Common Stock issued under
the Plan by the Participant not made in accordance with the Plan or the
Agreement shall be void. The Company shall not recognize, or have the duty to
recognize, any transfer or disposition not made in accordance with the Plan and
the Agreement, and the shares so transferred shall continue to be bound by the
Plan and the Agreement.
17.2 Other than as specifically provided with regard to the death of a
Participant, no benefit under the Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge; and any attempt to do so shall be void. No such benefit shall, prior to
receipt by the Participant, be in any manner liable for or subject to the debts,
contracts, liabilities, engagements or torts of the Participant.
18. Governing Law
This Plan and any grant of Stock Options and Stock Awards made and any action
taken hereunder shall be subject to and construed and interpreted in accordance
with the laws of the Commonwealth of Pennsylvania, without giving effect to
principles of conflict of laws.
The undersigned, pursuant to approval of the Board on February 9, 1999, has
executed this CNB Financial Corporation 1999 Stock Incentive Plan.
CNB Financial Corporation
By: /s/ James P. Moore
________________________________
James P. Moore
President and CEO
23
<PAGE>
PROXY LOGO CNB PROXY
FINANCIAL CORPORATION
THIS PROXY IS SOLICITED ONBEHALFOF THE BOARD OF DIRECTORS
PROXY FOR ANNUAL MEETING
OF SHAREHOLDERS APRIL 20, 1999
The undersigned hereby appoint Mr. L. Albert Hubler and Mr. J. Carl Ogden and
each of them the undersigned's true and lawful attorneys and proxies (with full
power of substitution in each) to vote all stock of CNB Financial Corporation
standing in the undersigned's name(s) at the Annual Meeting of Shareholders to
be held at the office of CNBFinancial Corporation/County National Bank, One
South Second Street, Clearfield, PA 16830 on April 20, 1999 or at any
adjournment thereof.
1. ELECTION OF DIRECTORS:
To elect the persons named below to serve as Class 1 Directors until the
Annual Meeting in the year 2002 or until their successors are duly elected.
o FOR o FOR o WITHHOLD
all nominees all nominees for all nominees
except those
which I/we with-
hold authority
*(see INSTRUCTION
below)
William F. Falger James J. Leitzinger Jeffrey S. Powell
Peter F. Smith James B. Ryan
*INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL NOMINEE(S), WRITE NOMINEE'S NAME(S)
IN THIS SPACE.
----------------------------------------------------
----------------------------------------------------
2. AMENDMENT TO ARTICLES OF INCORPORATION AND BY-LAWS: To consider and act on a
proposed amendment to the Articles of Association and By-Laws to change the
restrictions on the number of directors from 15, 18, 21 or 24 to 9 thru 24.
o FOR o AGAINST o ABSTAIN
3. AMENDMENT TO ARTICLES OF INCORPORATION AND BY-LAWS: To consider and act on a
proposed amendment to the Articles of Association and By-Laws to eliminate
cumulative voting for director elections.
o FOR o AGAINST o ABSTAIN
4. PROPOSAL TO APPROVE the Corporation's Long-Term Incentive Stock Plan
o FOR o AGAINST o ABSTAIN
5. Transact such other business as may properly come before said meeting. IF
ANY OTHER BUSINESS IS PRESENTED AT SAID MEETING, THE NAMED PROXIES ARE
AUTHORIZED TO VOTE THEREON AT THEIR DISCRETION.
This proxy confers discretionary authority to vote FOR the proposals in the
absence of contrary directions. The action of a majority of said attorneys and
proxies present and acting at said meeting or adjournment (or the one thereof so
present and acting if only one shall be present and acting) shall be the action
of said attorneys and proxies.
Number of shares
of record on
March 10, 1999 Dated __________________________ 19_____
______________ ________________________________________
SIGNATURE
________________________________________
SIGNATURE
Please sign exactly as printed hereon. When signing as attorney, executor,
administrator, trustee, guardian, etc., give full title as such. If stock is
held jointly, each joint owner should sign.
