SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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
/X/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Citizens & Northern Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/_/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2).
/_/ $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
/_/ 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:
_____________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_____________________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
_____________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________________
/_/ 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: _________________________________________________
2) Form, Schedule or Registration No. ______________________________________
3) Filing party: ___________________________________________________________
4) Date filed: _____________________________________________________________
___________
*Set forth the amount on which the filing fee is calculated and state how it was
determined.
<PAGE>
CITIZENS & NORTHERN CORPORATION
90-92 Main Street
Wellsboro, Pennsylvania 16901
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD TUESDAY, APRIL 15, 1997
TO THE HOLDERS OF THE COMMON STOCK OF THE CORPORATION:
Notice is hereby given that the Annual Meeting of the holders of the common
stock of Citizens & Northern Corporation (the "Corporation") will be held at the
Arcadia Theatre, located at 50 Main Street, Wellsboro, Pennsylvania, on Tuesday,
April 15, 1997 at 2:00 P.M., local time, for the following purposes:
1. To elect five directors to Class I to serve for a term of 3 years;
2. To approve and adopt the Citizens & Northern Corporation 1996
Independent Directors Stock Option Plan;
3. To ratify the action of the Board of Directors in the appointment of
the firm of Parente, Randolph, Orlando, Carey & Associates as
independent auditors of the Corporation; and
4. To transact such other business as may properly be brought before the
meeting or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on March 3, 1997, are
entitled to notice of, and to vote at, the meeting. Such stockholders may vote
in person or by proxy.
ALL STOCKHOLDERS ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED
PROXY IN THE ACCOMPANYING ENVELOPE, WHETHER OR NOT YOU EXPECT TO ATTEND THE
MEETING. If you do attend the meeting, you may, if you wish, withdraw your proxy
and vote your shares in person.
By Order of the Board of Directors,
Kathleen M. Osgood
Corporate Secretary
March 17, 1997
<PAGE>
CITIZENS & NORTHERN CORPORATION
90-92 Main Street
Wellsboro, Pennsylvania 16901
PROXY STATEMENT
Annual Meeting of Stockholders -- April 15, 1997
This proxy statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Citizens & Northern Corporation to be
used at the Annual Meeting of Stockholders of the Corporation to be held on
Tuesday, April 15, 1997, at 2:00 P.M. at the Arcadia Theatre, located at 50 Main
Street, Wellsboro, Pennsylvania, and at any adjournment thereof. The approximate
date upon which this Proxy Statement and proxy will first be mailed to
stockholders is March 17, 1997.
The Corporation's Board of Directors is soliciting proxies in
connection with the Meeting. Shares represented by properly completed proxies
will be voted in accordance with the instructions indicated thereon unless such
proxies have previously been revoked. If no direction is indicated, such shares
will be voted in favor of the election as directors of the nominees named below,
in favor of the approval and adoption of the Citizens & Northern Corporation
1996 Independent Directors Stock Option Plan, in favor of the ratification of
the appointment of the firm of Parente, Randolph, Orlando, Carey & Associates as
the Corporation's independent auditors, and in the discretion of the proxy
holder as to any other matters which may properly come before the Meeting or any
adjournment thereof. A proxy may be revoked at any time before it is voted by
written notice to the Secretary of the Corporation or by attending the Meeting
and voting in person.
The Corporation will bear the entire cost of soliciting proxies for the
Meeting. In addition to the use of the mails, proxies may be solicited by
personal interview, telephone, and telegram by the Corporation's directors,
officers and employees. Arrangements may also be made with custodians, nominees
and fiduciaries for forwarding proxy material to beneficial owners of stock held
of record by such persons, and the Corporation may reimburse such custodians,
nominees and fiduciaries for reasonable out-of-pocket expenses incurred by them
in connection therewith.
The Board of Directors has fixed the close of business on March 3,
1997, as the record date for the determination of stockholders entitled to
notice of and to vote at the Annual Meeting and at any adjournment thereof. On
the record date, there were outstanding and entitled to vote 5,062,453 shares of
Common Stock. Common stockholders will be entitled to one vote per share on all
matters to be submitted at the meeting. The Articles of Incorporation of the
Corporation do not permit cumulative voting.
No person is known by the Corporation to have beneficially owned 5% or
more of the outstanding common stock of the Corporation as of March 3, 1997.
PROPOSAL 1 -- ELECTION OF DIRECTORS
The Articles of Incorporation of the Corporation provide that the Board
of Directors shall consist of not less than five nor more than twenty-five
directors and that within these limits the numbers of directors shall be as
established by the Board of Directors. The Board of Directors has set the number
of directors at fifteen. The Articles further provide that the Board shall be
classified into three classes, as nearly equal in number as possible. One class
of directors is to be elected annually. Five directors to Class I are to be
elected at the Annual Meeting to serve for a three year term. It is the
intention of the persons named as proxyholders on the enclosed form of proxy,
unless other directions are given, to vote all shares which they represent for
the election of management's nominees named in the tabulation below. Any
stockholder who wishes to withhold authority from the proxyholders to vote for
the election of directors, or to withhold authority to vote for any individual
nominee, may do so by marking the proxy to that effect. Each director elected
will continue in office until a successor has been elected. The Board of
Directors recommends a vote "FOR" the election of the nominees listed below,
each of whom has consented to be named as a nominee and to serve if elected. If
for any reason any nominee named is not
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<PAGE>
a candidate (which is not expected) when the election occurs, proxies will be
voted for a substitute nominee determined by the Board of Directors.
The following table sets forth certain information about the nominees,
all of whom are presently members of the Board, and about the other directors
whose terms of office will continue after the Annual Meeting:
<TABLE>
<CAPTION>
Shares Percent of
Name and Principal Occupation Age as of First Became Beneficially Common Stock
for Last Five Years Record Date Director (1) Owned (2) Outstanding
- ------------------- ----------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
CLASS I - MANAGEMENT'S NOMINEES FOR A 3 YEAR TERM ENDING IN 2000:
R. Robert DeCamp 56 1988 774 .02
President of Patterson Lumber
Co., Inc.
Adelbert E. Eldridge 64 1989 5,032 .10
Retired Regional Director of
Susquehanna Region of Pennsylvania
Electric Co.
Robert J. Murphy 64 1988 6,534 .13
Retired, formerly Attorney in law firm
of Davis, Murphy, Niemiec & Smith
Edward H. Owlett, III 42 1994 5,886 .12
Attorney in law firm of
Owlett, Lewis & Ginn, P.C.
F. David Pennypacker 55 1993 2,947 .06
Certified Public Accountant in firm
of Pennypacker & Zeigler, P.C.
CLASS II -- CONTINUING DIRECTORS WITH TERMS EXPIRING IN 1998:
R. James Dunham 66 1960 3,643(5) .07
President of R.J. Dunham Inc.
Department Store
Edward L. Learn 49 1989 1,180 .02
Owner, Learn Hardware & Building
Supply, formerly Manager of
Purina Mills, Inc.
John H. Macafee 66 1974 16,314 .32
Owner and Operator of
Mapoval Farms, Inc.
Leonard Simpson 48 1989 15,812(6) .31
Attorney at Law, formerly Sullivan
County District Attorney
Donald E. Treat 63 1966 10,884 .21
Owner of Treat Hardware
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
CLASS III - CONTINUING DIRECTORS WITH TERMS EXPIRING IN 1999:
<S> <C> <C> <C> <C>
J. Robert Bower .............. 62 1967 33,705(7) .67
Pharmacist, formerly with
Fay's Drug Co., Inc. ........
William K. Francis ........... 65 1971 43,849(8) .87
Chairman of the Board of
Citizens & Northern Corporation
and Citizens & Northern Bank,
Retired President and Chief
Executive Officer of Citizens &
Northern Corporation and
Citizens & Northern Bank
Karl W. Kroeck ............... 57 1996 1,282 .03
Farmer
Craig G. Litchfield .......... 49 1996 7,499(9) .15
President & Chief Executive Officer
of Citizens & Northern Corporation
and Citizens & Northern Bank, formerly
Senior Vice President of Citizens &
Northern Corporation and Citizens &
Northern Bank
Lawrence F. Mase ............. 62 1990 5,023 .10
Retired, formerly
President of Mase's, Inc. ...
All Directors and Executive Officers
as a Group (17 persons) ..... -- -- 175,280 3.46
</TABLE>
(1) Includes service as director of the Corporation's predecessor, Citizens &
Northern Bank.
(2) Number of shares of Corporation common stock beneficially owned, directly
or indirectly, as of January 15, 1997. Unless otherwise indicated in a
footnote below, each individual holds sole voting and investment authority
with respect to the shares listed. This information has been furnished by
each individual.
(3) Includes 3,090 shares held in a self-directed IRA for the benefit of Mr.
Eldridge.
(4) Mr. Owlett disclaims beneficial ownership of a total of 4,751 shares
included above that are held for his nephews and niece.
(5) Includes 671 shares held in a trust for Mr. Dunham's children.
(6) Includes 1,582 shares held in a SEP-IRA Plan for the benefit of Mr.
Simpson's retirement plan.
(7) Mr. Bower disclaims beneficial ownership of 10,557 shares included above
that are held individually by his wife. Includes 1,020 shares held in an
IRA for the benefit of Mr. Bower.
(8) Mr. Francis disclaims beneficial ownership of 128 shares included above
that are held for his granddaughter.
3
<PAGE>
(9) Mr. Litchfield disclaims beneficial ownership of 1,036 shares held
individually by his wife and a total of 715 shares included above that are
held with his daughters.
No person named above as a nominee or director has any family
relationship with any other person so named.
BOARD OF DIRECTOR COMMITTEES,
ATTENDANCE AT MEETINGS AND COMPENSATION OF DIRECTORS
Both the Corporation's and the Bank's By-Laws provide that the Board
may create any number of committees of the Board as it deems necessary or
appropriate from time to time. As of the date hereof, no Board committees of the
Corporation have been established.
The Bank has an Audit Committee consisting of nine non-employee members
of the Board of Directors. The members of the Committee are Adelbert E.
Eldridge, Karl W. Kroeck, Edward L. Learn, John H. Macafee, Lawrence F. Mase,
Robert J. Murphy, Edward H. Owlett, III, F. David Pennypacker and Donald E.
Treat. The primary function of the Audit Committee is to review the internal
audit program as performed by the internal auditors, recommend to the Board of
Directors the independent auditors for the year, and review the examinations and
reports from those persons. The Audit Committee held three meetings in 1996.
The Bank has an Executive Committee consisting of eight members of the
Board of Directors who are as follows: R. Robert DeCamp, R. James Dunham,
William K. Francis, Craig G. Litchfield, John H. Macafee, Robert J. Murphy, F.
David Pennypacker and Leonard Simpson. The function of this committee is to
recommend policy procedures. During 1996, the Executive Committee held six
meetings. The Executive Committee also functions as a nominating committee and
an investment committee.
The Salary and Pension Committee of the Bank, which held five meetings
in 1996, consisted of the following six non-employee members of the Board of
Directors: R. Robert DeCamp, R. James Dunham, John H. Macafee, Robert J. Murphy,
F. David Pennypacker and Leonard Simpson. The committee is charged with
reviewing compensation for all officers and employees of the Bank and
administering the retirement and benefit plans.
The Trust Investment Committee of the Bank, which met eleven times in
1996, consists of four members of the Board of Directors; namely, J. Robert
Bower, R. James Dunham, Edward L. Learn and Leonard Simpson. Thomas L. Briggs,
Vice President and Senior Trust Officer of the Bank, is also a member of this
committee, which determines the policy and investments of the Trust Department,
the acceptance of all fiduciary relationships and relinquishments of all
fiduciary relationships. The committee keeps minutes of their meetings which are
reviewed monthly by the Board of Directors.
The Bank also has an Asset Liability Committee, which consisted of R.
Robert DeCamp, William K. Francis, Craig G. Litchfield, Robert J. Murphy and F.
David Pennypacker, five members of the Board of Directors, as well as James W.
Seipler, Treasurer of the Corporation. This committee met eleven times during
1996. The purpose of the committee is to stabilize and improve profitability by
balancing the relationship between risk and return over an extended period of
time.
The Board of Directors of the Corporation met twelve times and the
Board of Directors of the Bank met fourteen times in 1996. All of the directors
attended at least 75% or more of the combined number of meetings of the
Corporation, Bank and their committees of which they were members.
All directors of the Corporation are directors of the Bank. Each
director who is not an officer of the Corporation or Bank received an annual
retainer of $8,000 and an attendance fee of $100 for each meeting of the
4
<PAGE>
Board attended. In addition, each such director received a fee of $100 for
attendance at each committee meeting. The aggregate amount of directors'
retainers and fees paid during 1996 was $167,600.
CORPORATION'S AND BANK'S EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
current executive officers of the Corporation and the Bank.
Shares Percent of
Age as of Beneficially Common Stock
Name and Position for Last Five Years Record Date Owned (1) Outstanding
- ------------------------------------- ----------- ------------ ------------
Craig G. Litchfield 49 7,499 (2) .15
President and C.E.O.of the Corporation
and the Bank since January, 1997;
President of the Corporation and Bank
since 1996; formerly Senior Vice
President of the Corporation and the
Bank since 1994, and Vice President
of the Bank since 1982
Robert W. Anderson 58 5,860 .12
Vice President, Data Processing,
of the Bank since 1969
James W. Seipler 55 9,056 (3) .18
Treasurer of the Corporation
since 1987; Controller and
Cashier of the Bank since 1971
(1) Number of shares of Corporation common stock beneficially owned, directly
or indirectly, as of January 15, 1997. Unless otherwise indicated in a
footnote below, each individual holds sole voting and investment authority
with respect to the shares listed. This information has been furnished by
each individual.
(2) Mr. Litchfield disclaims beneficial ownership of 1,036 shares held
individually by his wife and a total of 715 shares included above that are
held with his daughters.
(3) Mr. Seipler disclaims beneficial ownership of 568 shares included above
that are held jointly with his sons.
None of the above executive officers has any family relationship with
any other executive officer or with any director of the Corporation.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Salary & Pension Committee ("Committee") of the Board of Directors
establishes compensation policies, plans and programs which are intended to
accomplish three objectives: to attract and retain highly capable and well
qualified executives; to focus executives' efforts on increasing long-term
stockholder value; and to reward executives at levels which are competitive with
the marketplace for similar positions and commensurate with the performance of
each executive and of Citizens & Northern. Each member of the Committee is an
independent non-employee director. The Committee establishes the salaries of the
other executive officers with input from the Chief Executive Officer and all
decisions relating to the compensation of the executive officers are reviewed by
the Board of Directors.
5
<PAGE>
With the lack of long-term incentive compensation plans in the past,
the Committee recognizes the need to adjust base compensation accordingly. The
key elements in Citizens & Northern's executive compensation program, all
determined by individual and corporate performance, are base salary
compensation, annual incentive compensation and equitable retirement benefits.
Annual compensation for the Chief Executive Officer is determined in
essentially the same way as for other executives, recognizing that the CEO has
overall responsibility for the performance of Citizens & Northern. The Committee
believes that the CEO compensation should be heavily influenced by the
performance of the Corporation. The Committee established the CEO's base salary
by considering the salaries of CEOs of comparably-sized banks and their
performance according to salary information compiled by both regional and
national benefit and salary surveys.
In establishing his base salary, the Committee reached the following
conclusions regarding company performance: Survey comparison of Citizens &
Northern established a survey Peer Group of 38 independent banks whose 1995
average asset size equaled C&N's and further narrowed their Peer Group to a Core
Group of 31 banks with an ROA of 1.00% or higher. Citizens & Northern's net
income was 10% higher than the average of the Peer Group. C&N's return on assets
for 1995 was 1.39%, 19% better than the Peer Group average and 2% better than a
Core Group average of high-performing banks. In 1996, Mr. Litchfield was
designated President of Citizens & Northern Bank, while Mr. Francis remained
Chief Executive Officer and Chairman of the Board. Mr. Litchfield will be named
Chief Executive Officer in 1997. Mr. Litchfield's 1996 base salary of $175,673
is 16% below CEO's who receive the same compensation package; however, his total
compensation with bonus and incentives falls to 79% of par behind Core Group
CEOs. In 1995, the Committee established the Chief Executive Officer's 1996 base
salary at $240,000 for Mr. Francis, representing a 9% increase over 1995. Mr.
Francis is retiring as Chief Executive Officer at the end of 1996. He will
remain a Director and Chairman of the Board of Citizens & Northern Corporation.
The annual compensation of the Chief Executive Officer and executive
officers is reviewed annually by the Committee, except for decisions about
awards under the Incentive Award Plan. These awards are made solely by the
attainment of specific measurable performance indicators, which are return on
assets, performance to budget, deposit growth and past-due reduction. If the
target is met, awards are calculated for each participant based upon the level
of corporate performance relative to the target. C&N's Incentive Award Plan caps
the award at 25% of base compensation, while the Peer Group awarded cash bonuses
to CEOs averaging 26%.
The Corporation approved a non-qualified Supplemental Income Plan
effective January 1, 1989. It was designed for the purpose of retaining talented
executives and to promote in these executives a strong interest in the
long-term, successful operation of the Corporation. The Plan supplements the
lower retirement benefits of executives in comparison with average total
retirement benefits paid non-executives. The Plan is an unfunded plan and is
subject to the general creditors of the Corporation.
The Corporation approved a Stock Incentive Plan effective January 1,
1995. The Stock Incentive Plan is designed to advance the development, growth
and financial condition of the Corporation while attracting, retaining and
rewarding executives.
The Committee believes that the concepts discussed above further the
stockholders' interests since a significant part of executive compensation is
based on obtaining results for the stockholders. The Committee bases its review
on experience of its own members, on information requested from management and
information compiled by various independent compensation consultants. The
Committee believes that the program encourages responsible management of the
Corporation.
Members of the Compensation Committee,
R. Robert DeCamp, Chairman John H. Macafee F. David Pennypacker
R. James Dunham Robert J. Murphy Leonard Simpson
6
<PAGE>
EXECUTIVE COMPENSATION
The summary compensation table contains information with respect to
annual compensation for services in all capacities to the Corporation and Bank
for the fiscal years ending December 31, 1996, 1995 and 1994 of those persons
who were, at December 31, 1996, (i) the Chief Executive Officer and (ii) the
three (3) other most highly compensated executives to the extent such persons'
total salary and bonus exceeded $100,000:
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other All
Annual Restricted Options/ Other
Compen- Stock SARs LTIP Compen-
Name and Salary(l) Bonus sation(2) Awards Awards Payouts sation(3)
Principal Position Year ($) ($) ($) (#) (#) ($) ($)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WILLIAM K. FRANCIS 1996 240,000 60,000 X 0 0 0 102,142
Chairman & CEO 1995 220,000 55,000 X 0 0 0 66,388
1994 200,000 50,000 X 0 0 0 55,796
CRAIG G. LITCHFIELD 1996 175,673 43,918 X 0 2,500 0 14,468
President 1995 140,000 35,000 X 0 2,500 0 13,379
1994 117,115 29,279 X 0 0 0 12,937
ROBERT W. ANDERSON 1996 110,850 27,500 X 0 1,700 0 21,218
Vice President 1995 100,000 25,000 X 0 1,700 0 18,494
1994 92,000 23,000 X 0 0 0 16,053
JAMES W. SEIPLER 1996 110,597 27,500 X 0 1,700 0 18,886
Controller and 1995 100,000 25,000 X 0 1,700 0 16,716
Cashier 1994 92,000 23,000 X 0 0 0 14,530
</TABLE>
(1) The amounts shown in this column represent annual base salary.
(2) The Bank provides automobiles and certain other benefits for certain of its
principal officers in connection with the business of the Bank. The value
of personal benefits to the officers individually is not included in the
table above because the aggregate amount of such other compensation is less
than 10% of the cash compensation paid to the individual as reported above.
(3) The amount indicated includes the Bank's contribution to the Savings &
Retirement Plan (401k) and the Non-Qualified Supplemental Executive
Retirement Plan.
STOCK INCENTIVE PLAN
In 1995, the Corporation's Board of Directors adopted and the
stockholders approved the Citizens & Northern Corporation Stock Incentive Plan.
On December 19, 1996 ("Grant Date"), the Board of Directors granted qualified
stock options for key officers of the Bank, the right to purchase shares of the
Corporation Common Stock at a price of $25.50. The period of the options shall
be ten (10) years, commencing from the date of the grant. Not more than twenty
percent (20%) of the shares optioned may be exercised in any one year during the
term of the option, commencing with the Grant Date. The Option shall not be
exercisable until one year from the date of the grant. Shares granted under
option in 1996 and 1995 were 11,000 and 12,100, respectively. At December 31,
1996, there were 46,900 shares reserved for future grants. No stock options were
awarded or are outstanding for Mr. Francis.
7
<PAGE>
OPTION / SAR GRANTS
The following table sets forth information concerning stock options
granted in 1996 under the Stock Incentive Plan to the Chief Executive Officer
and the four most highly compensated executives of the Corporation named in the
Summary Compensation Table:
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e) (f)
% of Total
Number of Options/
Securities SARs Granted Exercise Grant
Underlying to Employees or Base Date
Options/SARs in Fiscal Price Expiration Present
Name Granted Year ($/Share) Date Value ($)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
William K. Francis 0 0
Craig G. Litchfield 2,500 22.73% $25.50 12/19/2006 $63,750
Robert W. Anderson 1,700 15.45% $25.50 12/19/2006 $43,350
James W. Seipler 1,700 15.45% $25.50 12/19/2006 $43,350
</TABLE>
AGGREGATED STOCK OPTION EXERCISES DURING 1996
AND YEAR-END OPTION VALUES
The following table sets forth information concerning the exercise
during 1996 of options granted under the Stock Incentive Plan by three of the
most highly compensated executives of the Corporation named in the Summary
Compensation Table:
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of Securities
Value Underlying Unexercised Value of Unexercised
Shares Realized Options at In-the-Money Options on
Acquired on Shares December 31, 1996 December 31, 1996 (2)
Name On Exercise Acquired (1) Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Craig G. Litchfield 250 $1,375.00 250 4,500 $1,375.00 $11,000.00
Robert W. Anderson 0 0 340 3,060 $1,870.00 $ 7,480.00
James W. Seipler 0 0 340 3,060 $1,870.00 $ 7,480.00
</TABLE>
(1) Represents the difference between the market value on the date of exercise
of the shares acquired and the option price of those shares.
(2) Represents the difference between the aggregate market value at December
31, 1996 of the shares subject to the options and the aggregate option
price of those shares.
8
<PAGE>
PERFORMANCE GRAPH
Set forth below is a chart comparing the Corporation's cumulative
return to stockholders against the cumulative return of the S&P 500 Index and a
Peer Group Index of similar banking organizations selected by the Corporation
for the five year period commencing January 1, 1991 and ending December 31,
1996. The index values are market weighted, dividend reinvestment numbers which
measure the total return for investing $100.00 five years ago. This meets SEC
requirements for showing dividend reinvestment share performance over a five
year period and measures the return to an investor for placing $100.00 into a
group of bank stocks and reinvesting any and all dividends into the purchase of
more of the same stock for which dividends were paid.
COMPARISON OF 5 YEAR CUMULATIVE RETURN
[GRAPHIC OMITTED]
PERIOD ENDING
12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
C&N $ 100.00 $ 106.19 $ 175.16 $ 194.25 $ 223.67 $ 283.92
Peer Group $ 100.00 $ 127.24 $ 180.30 $ 209.88 $ 226.26 $ 246.67
S&P 500 Index $ 100.00 $ 104.46 $ 111.83 $ 110.11 $ 147.67 $ 177.60
All ten institutions in the peer group selected by the Corporation are
headquartered in Pennsylvania, have total assets of $200 to $600 Million, market
capitalization of at least $25 Million, and are not listed on the NASDAQ
National Market System. This peer group consists of ACNB Corporation,
Gettysburg; CNB Financial Corporation, Clearfield; Drovers Bancshares
Corporation, York; First West Chester Corporation, West Chester; Franklin
Financial Service Corporation, Chambersburg; Hanover Bancorp, Inc., Hanover;
Penn Security Bank and Trust Company, Scranton; Penn Rock Financial Services
Corporation, Blue Ball; Penns Woods Bancorp, Inc., Jersey Shore; and Sterling
Financial Corporation, Lancaster. This is the same peer group that was used in
1996.
PENSION PLAN
The Citizens & Northern Bank Pension Plan (the "Plan") is intended to
provide a defined retirement benefit to participants without regard to the
profits of the Bank. Employees are neither required nor permitted to contribute
to the Plan. Annual contributions by the Bank are determined actuarially. To
participate in the Plan, an employee must be 21 years of age and have completed
one year of service. A participant's retirement benefit, which becomes fully
vested after 5 years of service, is based on compensation and credited service
with the Bank. For purposes of determining a retirement benefit, the term
"compensation" is defined to include an employee's
9
<PAGE>
total remuneration received from the Bank, including base salary, bonus and
overtime. Benefits are a percentage of the average compensation for the five
consecutive years of highest compensation preceding retirement, multiplied by
the number of years of completed service, up to 25 years. The Bank's Trust
Department serves as Trustee under the Plan.
The following table indicates, for purposes of illustration, the
approximate amounts of annual retirement income which would be payable under the
terms of the Plan, in the form of a straight life annuity, to a participant who
retired as of December 31, 1996, at age 65, under various assumptions as to
compensation and years of credited service. For any plan year beginning after
December 31, 1993, the Pension Plan benefits are determined on only the first
$150,000 in compensation as determined by the Commissioner of the Internal
Revenue Service and as prescribed by law.
PENSION PLAN TABLE
Years of Credited Service
Average Annual Compensation 15 20 25 (or more)
---------------------------- -------------------------------------------
$ 75,000 $14,749 $19,665 $24,581
$100,000 $20,561 $27,415 $34,269
$125,000 $26,374 $35,165 $43,956
$150,000 $32,186 $42,915 $53,644
$175,000 $32,186 $42,915 $53,644
$200,000 $32,186 $42,915 $53,644
$225,000 $32,186 $42,915 $53,644
$250,000 $32,186 $42,915 $53,644
The credited years of service under the Plan as of December 31, 1996
for Francis, Litchfield, Anderson and Seipler were 25, 24, 25 and 31 years,
respectively.
In December, 1989, the Bank established a non-qualified supplemental
executive retirement plan for certain key executive employees ("Executive
Plan"). The Executive Plan provides a retirement benefit for executives who
retire after attaining age 62 and 5 years of plan service in an amount
determined annually by the Directors. The Executive Plan may be terminated by
the Board of Directors at any time. In 1994, the amounts accrued pursuant to the
Executive Plan for the accounts of the officers named in the Summary
Compensation Table set forth herein, is included as "All Other Long Term
Compensation". Future estimated benefits do not take compensation into
consideration.
SAVINGS PLAN
The Citizens & Northern Savings and Retirement Plan ("Savings Plan") is
qualified under Section 401(k) of the Internal Revenue Code. It allows a
participant to authorize the deposit into the Plan of before tax earnings of
from 1% to 15% of his compensation. Under the Tax Reform Act, the maximum amount
of elective contributions that could be made by a participant during 1996 was
Nine Thousand Five Hundred Dollars ($9,500.00), also subject to the $150,000
compensation limit. All officers and employees of Citizens & Northern Bank,
including the officers named in the Summary Compensation Table set forth herein,
are eligible to participate in the 401(k) Plan. A participant may also make
voluntary contributions to the Plan from after tax savings of up to 10% of his
compensation. The Bank is required to contribute a basic employer contribution
equal to at least 2% of each eligible participant's compensation; in addition,
the Bank may make a discretionary basic contribution. The total actual basic
employer contribution for 1996 was equal to 4%. In addition, the Bank makes
matching contributions equal to 100% of a participant's before tax contributions
up to 3% of compensation and equal to 50% of such contributions between 3% and
5% of compensation. The Bank's basic employer contributions are invested in the
common stock of the Corporation. All participants' contributions and the Bank's
matching contributions, at the participants' election, are invested in a choice
of nine investment funds maintained by the Bank as Trustee. In
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1996, the Bank's contribution to the Savings Plan for the accounts of the
officers named in the Summary Compensation Table set forth herein is included as
"All Other Long Term Compensation". Substantially all officers and employees of
the Bank are eligible to participate in the Savings Plan.
INCENTIVE AWARD PLAN
The Board of Directors of the Bank has adopted an Incentive Award Plan
for certain members of the management group of the Bank in order to promote a
superior level of performance relating the Bank's financial goals. Under the
Incentive Award Plan, if predetermined performance goals are realized by the
Bank in a given fiscal year, the participants will receive awards ranging up to
a maximum of 25% of their base salaries (i.e., salary before reduction for the
Savings Plan and without regard to incentive award payments).
Under the Incentive Award Plan, immediately before the beginning of
each year the Salary Committee of the Board of Directors of the Bank will
designate the participants in the Plan and set a minimum and maximum level of
awards for each class of participants and the individual performance and
financial goals of the Bank or appropriate unit to be achieved. The Salary
Committee, at its discretion, may adjust award payments under the Incentive
Award Plan based on extraordinary circumstances, conflicts with long-term
financial and development objectives, or below standard individual participant
performance. All awards under the Incentive Award Plan will be paid in cash and
are paid as soon as practical after the end of a plan year.
CERTAIN TRANSACTIONS
Certain directors and officers of the Corporation and Bank and their
associates (including corporations of which such persons are officers or 10%
beneficial owners) were customers of, and had transactions with the Bank in the
ordinary course of business during the year ended December 31, 1996. Similar
transactions may be expected to take place in the future. Such transactions
included the purchase of certificates of deposit and extensions of credit in the
ordinary course of business on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with other persons and did not involve more than the normal risks
of collectibility or present other unfavorable features. The Bank expects that
any other transactions with directors and officers and their associates in the
future will be conducted on the same basis.
The law firm of Owlett, Lewis & Ginn, P.C., of which Director Owlett is
an employee and in which he has an interest, acts as legal counsel for the
Corporation and the Bank.
PROPOSAL 2 -- APPROVAL AND ADOPTION OF CITIZENS & NORTHERN
CORPORATION 1996 INDEPENDENT DIRECTORS STOCK OPTION PLAN
On December 19, 1996, the Board of Directors of the Corporation (the
"Board") approved and adopted the Citizens & Northern Corporation 1996
Independent Directors Stock Option Plan (the "Stock Option Plan"). The Board
directed and ordered that the Stock Option Plan be submitted to the stockholders
of the Corporation for their approval and adoption at the 1997 Annual Meeting of
Stockholders to be held on April 15, 1997.
The stated purpose of the Stock Option Plan is to advance the
development, growth and financial condition of the Corporation by providing
incentives through participation in the appreciation of capital stock of the
Corporation so as to secure, retain and motivate individuals who are not
officers or employees of the Corporation or any subsidiary thereof to serve as
members of the Board ("non-employee Directors").
Generally, the Stock Option Plan will become effective as of the date
it is approved by the Corporation's stockholders. The shares of stock that may
be issued under the Stock Option Plan will not exceed in the aggregate 25,000
shares of the Corporation's common stock, par value $1.00 per share (the
"Stock") provided that this amount may be increased by an amount not to exceed
1,000 shares of Stock for each new non-employee director admitted to the Board
at any time within the next 5 years. The Stock utilized by the Stock Option Plan
may be authorized and unissued capital stock of the Corporation or it may be
such capital stock issued and subsequently reacquired by the Corporation as
treasury stock.
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Under the Stock Option Plan, current non-employee directors will be
granted for each of the next five years an annual option to purchase 200 shares
of the Stock (the "Stock Option"). Non-employee directors who are elected or
appointed to the Board at any time within a five year period after the effective
date of the Stock Option Plan will be granted a Stock Option on the date he or
she is elected or appointed to the Board and then annually for the four years
thereafter. Each Stock Option may be exercised within ten years from the date of
the grant. The purchase price of the Stock under the Stock Option will be the
"fair market value" of the stock which will be determined by the average between
the bid and asked quotations of the Stock for the five days prior to the date of
the annual meeting of stockholders for the year in which the Stock Option is
granted. If the director ceases to be a member of the Board, he or she will not
be entitled to receive any subsequent Stock Options under the Stock Option Plan.
Also, if the director ceases to be a director for any reason other than
retirement pursuant to the mandatory age requirement under the Corporation's
by-laws, all Stock Options then held must be exercised within 12 months of such
date.
As of January 1, 1997, there were 14 non-employee directors, each of
whom will participate in the Stock Option Plan.
Certain terms and conditions of the Stock Option Plan are discussed
below. A copy of the Stock Option Plan is attached to this Proxy Statement as
Exhibit "A" and is deemed to be an integral part hereof and incorporated in its
entirety by reference. The summary description of the Stock Option Plan
contained herein is qualified in its entirety by reference to the express
provisions of the Stock Option Plan attached as Exhibit "A".
Term
The Stock Option Plan shall be effective as of the date it is approved
by the Corporation's stockholders. If the Stock Option Plan is so approved by
the shareholders, it shall continue in effect until all awards either have
lapsed, been satisfied or canceled according to the terms under the Stock Option
Plan.
Stock
The shares that may be issued under the Stock Option Plan shall not
exceed in the aggregate 25,000 shares of the Stock provided that this amount may
be increased by an amount not to exceed 1,000 shares of Stock for each
individual, who has not previously served as a member of the Board, is elected
as a non-employee director at any time within the next 5 years. The number of
shares of Stock subject to the Stock Option Plan shall be adjusted for stock
splits, dividends, or any other change in the capital structure of the
Corporation.
Eligibility
Persons who will receive Stock options shall be all current
non-employee directors and any other individuals, who have not previously served
as a member of the Board, elected or appointed to the Board as non-employee
directors within the five year period after the effective date of the Stock
Option Plan.
Federal Income Tax Consequences of Stock Options
The Stock Option is considered a "Non-Qualified Option" under the
Internal Revenue Code of 1986, as amended. A non-employee director who receives
a Stock Option will not recognize taxable income upon the grant of the option.
However, upon the exercise of a Stock Option, the non-employee director will
recognize taxable income in an amount equal to the excess of the fair market
value of the Stock on the date that the option is exercised over the purchase
price paid for the Stock. The Corporation will be entitled to an income tax
deduction in the year of exercise in an amount equal to the amount of income
recognized by the director.
The foregoing discussion is intended as a summary only. The federal
income tax consequences to a non-employee director and the Corporation may vary
from those described above, depending upon the particular facts and
circumstances.
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The resolution being voted upon is as follows:
RESOLVED, that the stockholders of the Corporation approve, adopt and
ratify the establishing of the Citizens & Northern Corporation 1996
Independent Directors Stock Option Plan.
The ratification and approval of the Independent Directors Stock Option
Plan requires the affirmative vote of at least a majority of the shares of
common stock present in person or by proxy and entitled to vote at the meeting.
Proxies solicited by the Board of Directors will be voted for the foregoing
resolution unless stockholders specify a contrary choice in their proxies.
The Board of Directors recommends a vote "FOR" the resolution ratifying
and approving the establishment of the Citizens & Northern Corporation 1996
Independent Directors Stock Option Plan.
PROPOSAL 3 -- RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Parente, Randolph, Orlando, Carey & Associates has been the independent
public accounting firm appointed by the Bank since 1981, and has been selected
by the Board as the independent public accounting firm for the Corporation and
the Bank for 1997. No member of the firm or any of its associates has a
financial interest in the Corporation. Parente, Randolph, Orlando, Carey &
Associates provides, in addition to audit services, non-audit professional
services such as preparation of income tax returns, consultations, and various
other services. Non-audit services are considered to have no effect on the
independence of accountants. A representative of Parente, Randolph, Orlando,
Carey & Associates is expected to be present at the Annual Meeting to answer
appropriate questions from stockholders and will be afforded an opportunity to
make any statement that the firm desires.
The Board of Directors recommends a vote "FOR" ratification of the
appointment of Parente, Randolph, Orlando, Carey & Associates as independent
auditors of the Corporation.
STOCKHOLDER PROPOSALS
Any proposal intended to be presented by a stockholder of the
Corporation at the Corporation's 1998 Annual Meeting must be received by the
Corporation no later than December 21, 1997 to be considered for inclusion in
the Corporation's proxy statement for such meeting. Any proposal should be
addressed to the Secretary of the Corporation, 90-92 Main Street, Wellsboro,
Pennsylvania 16901.
OTHER MATTERS
The management of the Corporation does not intend to bring any other
matters before the Annual Meeting and is not presently informed of any other
business which others may bring before such meeting. However, if any other
matters should properly come before such meeting or any adjournment thereof, it
is the intention of the persons named in the accompanying proxy to vote on such
matters as they, in their discretion, determine.
ADDITIONAL INFORMATION
The Corporation's Annual Report for the year 1996, including financial
statements as certified by Parente, Randolph, Orlando, Carey & Associates, was
mailed with this Proxy Statement on or about March 17, 1997, to the stockholders
of record as of the close of business on March 3, 1997.
A COPY OF THE CORPORATION'S 1996 ANNUAL REPORT ON FORM 10-K FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE FINANCIAL STATEMENTS AND
SCHEDULES THERETO, WILL BE FURNISHED FREE OF CHARGE TO STOCKHOLDERS. WRITTEN
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REQUEST SHOULD BE DIRECTED TO THE TREASURER, CITIZENS & NORTHERN CORPORATION,
90-92 MAIN STREET, WELLSBORO, PA, 16901, OR BY PHONE AT 717-724-3411.
By Order of the Board of Directors,
Kathleen M. Osgood
Corporate Secretary
Dated: March 17, 1997
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Exhibit A
CITIZENS & NORTHERN CORPORATION
1996 INDEPENDENT DIRECTORS STOCK OPTION PLAN
1. Purpose. The purpose of this Stock Option Plan (the "Plan") is to advance
the development, growth and financial condition of Citizens & Northern
Corporation (the "Corporation"), by providing incentives through
participation in the appreciation of capital stock of the Corporation so as
to secure, retain and motivate members of the Corporation's Board of
Directors (the "Board") who are not officers and employees of the
Corporation or any subsidiary thereof ("non-employee directors"). This Plan
shall be interpreted and implemented in a manner so that non-employee
directors will not fail, by reason of this Plan or their participation in
it, to be "disinterested persons" within the meaning of Rule 16b-3 under
the Securities Exchange Act of 1934, as amended, as to any employee benefit
plan of the Corporation or its subsidiaries.
2. Term. The Plan shall become effective as of the date the Corporation's
stockholders duly approve the Plan (the "Effective Date"). If the Plan is
so approved, it shall continue in effect until any stock options granted
under the Plan either have lapsed or been exercised, satisfied or canceled
according to their terms under the Plan.
3. Stock. The shares of stock that may be issued under the Plan shall not
exceed, in the aggregate, 25,000 shares of the Corporation's common stock,
par value $1.00 per share (the "Stock"), provided that said shares of Stock
may be increased by an amount not to exceed 1,000 shares of Stock for each
individual who becomes a non-employee director, other than current or prior
members of the Board, at any time within a five- year period after the
Effective Date. In addition, the aggregate amount of Stock under the Plan
may be adjusted pursuant to paragraph 10. Such shares of Stock may be
either authorized and unissued shares of Stock, or authorized shares of
Stock issued by the Corporation and subsequently reacquired by it as
treasury stock. Under no circumstances shall any fractional shares of Stock
be issued under the Plan. The Corporation shall reserve and keep available,
and shall duly apply for any requisite governmental authority to grant the
stock options under this Plan, and issue or sell the number of shares of
Stock needed to satisfy the requirements of the Plan while in effect. The
Corporation's failure to obtain any such governmental authority deemed
necessary by the Corporation's legal counsel for the proper grant of the
stock options under this Plan and/or the issuance and sale of Stock under
the Plan shall relieve the Corporation of any duty, or liability for the
failure to grant the stock options under this Plan and/or issue or sell the
Stock as to which such authority has not been obtained.
4. Stock Options. Stock options shall be granted under the Plan to all current
non-employee directors of the Corporation, and any non-employee director,
other than current or prior members of the Board, who becomes a member of
the Board at any time within a five-year period after the Effective Date
(such directors shall be referred to under this Plan as a "Director").
Every stock option granted to a Director shall be exercisable during his or
her lifetime only by the Director, and shall not be salable, transferable
or assignable by the Director except by his or her Will or pursuant to
applicable laws of descent and distribution. Commencing on the Effective
Date and then annually for the four (4) years thereafter, or in the case of
a Director who becomes a member of the Board at any time within a five-year
period after the Effective Date, commencing on the date he or she is
elected or appointed to the Board and then annually for the four (4) years
thereafter, a Director shall be granted a stock option to purchase 200
shares of Stock (the "Stock Option") under the following terms and
conditions:
(a) The time period during which any Stock Option is exercisable shall be
ten (10) years after the date the Stock Option is granted to the
Director.
(b) If the Director ceases to be a member of the Board for any reason
other than his or her mandatory retirement because of age pursuant to
the Corporation's By-Laws, the Director may exercise the Stock Option
not more than twelve (12) months after such cessation; if the Director
dies at any time, the Directors qualified personal representative or
any persons who acquire the Stock Options pursuant to his or her Will
or laws of descent and distribution, may exercise any Stock Options
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during their remaining terms for a period of not more than twelve (12)
months after the Director's death to the extent that the Stock Options
would then and remain exercisable; if the Director retires because of
the aforesaid mandatory age requirement, he or she may exercise any
Stock Options granted to him or her for their remaining terms; in all
of the above events, the Director shall not receive any further grants
of Stock Options under the Plan.
(c) The purchase price of a share of Stock shall be the fair market value
of the Stock as determined under paragraph 6 hereof.
(d) The Stock Option shall be made by a written agreement.
5. Exercise. Except as otherwise provided in the Plan, the Stock Option may be
exercised in whole or in part by giving written notice thereof to the
Secretary of the Corporation, or his or her designee, identifying the Stock
Option being exercised, the number of shares of Stock with respect thereto,
and other information pertinent to the exercise of the Stock Option. The
purchase price of the shares of Stock with respect to which a Stock Option
is exercised shall be paid with the written notice of exercise, either in
cash or in Stock which has been held by the Director for at least six (6)
months at its then current fair market value, or in any combination
thereof. Funds received by the Corporation from the exercise of any Stock
Option shall be used for its general corporate purposes. The number of
shares of Stock subject to a Stock Option shall be reduced by the number of
shares of Stock with respect to which the Director has exercised rights
under the Stock Option.
If the Corporation or its stockholders execute an agreement to dispose of
all or substantially all of the Corporation's assets or capital stock by
means of sale, merger, consolidation, reorganization, liquidation or
otherwise, as a result of which the Corporation's stockholders as of
immediately before such transaction will not own at least fifty percent
(50%) of the total combined voting power of all classes of voting capital
stock of the surviving entity (be it the Corporation or otherwise)
immediately after the consummation of such transaction, thereupon any and
all Stock Options which the Director would be entitled to receive under the
Plan shall be immediately granted to the Director until the consummation of
such transaction, or if not consummated, until the agreement therefor
expires or is terminated, in which case thereafter all Stock Options shall
be treated as if said agreement never had been executed. If during any
period of two (2) consecutive years, the individuals who at the beginning
of such period constituted the Board, cease for any reason to constitute at
least a majority of the Board, unless the election of each director of the
Board, who was not a director of the Board at the beginning of such period,
was approved by a vote of at least two-thirds of the directors then still
in office who were directors at the beginning of such period, thereupon any
and all Stock Options which the Director would be entitled to receive under
the Plan shall be immediately granted to the Director. If there is an
actual, attempted or threatened change in the ownership of at least
twenty-five percent (25%) of any classes of voting capital stock of the
Corporation through the acquisition of, or an offer to acquire such
percentage of the Corporation's voting capital stock by any person or
entity, or persons or entities acting in concert or as a group, and such
acquisition or offer has not been duly approved by the Board, thereupon any
and all Stock Options which the Director would be entitled to receive under
the Plan shall be immediately granted.
6. Value. Where used in the Plan, the "fair market value" of Stock shall mean
and be determined as follows: (i) in the event that the Stock is listed on
an established exchange, the closing price of the Stock on the date of the
annual meeting of shareholders for the year when the Stock Option is
granted to the Director (the "Relevant Date") or, if no trade did occur on
that day, on the next preceding day on which a trade occurred; or (ii) in
the event that the Stock is not listed on an established exchange, but is
then quoted on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), the average of the closing bid and asked
quotations of the Stock for the five (5) trading days immediately preceding
the Relevant Date. In either case, in the event that no closing bid or
asked quotation is available on one (1) or more of such trading days, the
fair market value shall be determined by reference to the five (5) trading
days immediately preceding the Relevant Date on which closing bid and asked
quotations are available.
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7. Continued Relationship. Nothing in the Plan or any Stock Option shall
confer upon any Director or any right to continue his or her relationship
with the Corporation as a director, or limit or affect any rights, powers
or privileges that the Corporation or its affiliates may have to supervise,
discipline and terminate such Director, and the relationships thereof.
8. General Restrictions. Each Stock Option shall be subject to the requirement
and provision that if at any time the Board determines it necessary or
desirable as a condition of or in consideration of making such Stock
Option, or the purchase or issuance or Stock thereunder, (a) the listing,
registration or qualification of the Stock subject to the Stock Option, or
the Stock Option itself, upon any securities exchange or under any federal
or state securities or other laws, (b) the approval of any governmental
authority, or (c) an agreement by the Director with respect to disposition
of any Stock (including without limitation that at the time of the
Director's exercise of the Stock Option, any Stock thereby acquired is
being and will be acquired solely for investment purposes and without any
intention to sell or distribute such Stock), then such Stock Option shall
not be consummated in whole or in part unless such listing, registration,
qualification, approval or agreement shall have been appropriately effected
or obtained to the satisfaction of the Board and legal counsel for the
Corporation. Notwithstanding anything to the contrary herein, a Director
shall not sell, transfer or otherwise dispose of any shares of Stock
acquired pursuant to a Stock Option unless at least six (6) months have
elapsed from the date the Stock Option was granted, if at the time of such
disposition the Director is subject to Section 16 of the Securities
Exchange Act of 1934, as amended.
9. Rights. Except as otherwise provided in the Plan, the Director shall have
no rights as a holder of the Stock subject thereto unless and until one or
more certificates for the shares of such Stock are issued and delivered to
the Director. No adjustments shall be made for dividends, either ordinary
or extraordinary, or any other distributions with respect to Stock, whether
made in cash, securities or other property, or any rights with respect
thereto, for which the record date is prior to the date that any
certificates for Stock subject to a Stock Option are issued to the Director
pursuant to his or her exercise thereof. No Stock Option, or the grant
thereof, shall limit or affect the right or power of the Corporation or its
affiliates to adjust, reclassify, recapitalize, reorganize or otherwise
change its or their capital or business structure, or to merge,
consolidate, dissolve, liquidate or sell any or all of its or their
business, property or assets.
10. Adjustments. In the event of any change in the number of issued and
outstanding shares of Stock which results from a stock split, reverse stock
split, payment of a stock dividend or any other change in the capital
structure of the Corporation, the maximum number of shares subject to each
outstanding Stock Option, and (where appropriate) the purchase price per
share thereof (but not the total purchase price), shall be proportionately
adjusted so that upon exercise or realization of such Stock Option, the
Director shall receive the same number of shares he or she would have
received had he or she been the holder of all shares subject to his or her
outstanding Stock Option and immediately before the effective date of such
change in the number of issued and outstanding shares of Stock. Such
adjustments shall not, however, result in the issuance of fractional
shares.
In the event the Corporation is a party to any merger, consolidation or
other reorganization, any and all outstanding Stock Options shall apply and
relate to the securities to which a holder of Stock is entitled after such
merger, consolidation or other reorganization. Upon any liquidation or
dissolution of the Corporation, any and all outstanding Stock Options shall
terminate upon consummation of liquidation or dissolution, but prior to
such consummation shall be exercisable to the extent that the same
otherwise are exercisable under the Plan.
11. Forfeiture. Notwithstanding anything to the contrary in this Plan, if the
involved Director has been engaged in fraud, embezzlement, theft,
commission of a felony, or dishonesty in the course of his or her
relationship with the Corporation or its affiliates that has damaged them,
or that the Director has disclosed trade secrets of the Corporation or its
affiliates, the Director shall forfeit all rights under and to all
unexercised Stock Options, and all exercised Stock Options under which the
Corporation has not yet delivered certificates for shares of Stock (as the
case may be), and all rights to receive Stock Options shall be
automatically canceled.
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<PAGE>
12. Miscellaneous. Any reference contained in this Plan to a particular section
or provision of law, rule or regulation, including but not limited to the
Internal Revenue Code of 1986 and the Securities Exchange Act of 1934, both
as amended, shall include any subsequently enacted or promulgated section
or provision of law, rule or regulation, as the case may be, of similar
import. With respect to persons subject to Section 16 of the Securities
Exchange Act of 1934, as amended, (the "Exchange Act") transactions under
this Plan are intended to comply with all applicable conditions of Rule
16b-3 or any successor rule that may be promulgated by the Securities and
Exchange Commission. To the extent any provision of this Plan fails to so
comply, it shall be deemed null and void, to the extent permitted by
applicable law and subject to the provisions of paragraph 13 below. Where
used in this Plan: the plural shall include the singular, and unless the
context otherwise clearly requires, the singular shall include the plural;
and, the term "affiliates" shall mean each and every subsidiary and any
parent of the Corporation. The captions of the numbered paragraphs
contained in this Plan are for convenience only, and shall not limit or
affect the meaning, interpretation or construction of any of the provisions
of the Plan.
13. Amendment. The Plan may not be amended, suspended or terminated except as
may be provided for herein, or as may be required under the provisions of
the Internal Revenue Code of 1986, as amended, and Section 16 of the
Securities Exchange Act of 1934, as amended, and Rule 16b-3 of the
Securities and Exchange Commission. If any provision of the Plan would
cause a non-employee director not to be a "disinterested person" within the
meaning of Rule 16b-3 under the Exchange Act as then applicable to any
employee benefit plan of the Corporation, such provision shall be construed
or deemed amended to the extent necessary to preserve such non-employee
director's status as a "disinterested person".
14. Taxes. The issuance of shares of Stock under the Plan shall be subject to
any applicable taxes or other laws or regulations of the United States of
America and any state or local authority having jurisdiction thereover.
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CITIZENS & NORTHERN CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 15, 1997
The undersigned hereby appoints Edward L. Learn and Lawrence F. Mase, and each
or either of them, as the attorneys and proxies of the undersigned, with full
power of substitution in each, to vote all shares of the common stock of
Citizens & Northern Corporation which the undersigned would be entitled to vote
if personally present at the Annual Meeting of Stockholders to be held on
Tuesday, April 15, 1997 at 2:00 P.M. (local time), at the Arcadia Theatre, 50
Main Street, Wellsboro, Pennsylvania 16901, and at any adjournments thereof, and
to vote as follows:
1. ELECTION OF CLASS I DIRECTORS.
Nominees: R. Robert DeCamp, Adelbert E. Eldridge, Robert J. Murphy,
Edward H. Owlett, III, and F. David Pennypacker.
|_| VOTE FOR all nominees listed above |_| VOTE WITHHELD from all
(except as marked to the contrary below) nominees listed above.
______________________________________________________________________
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name on the space provided above.)
2. APPROVAL AND ADOPTION OF THE CITIZENS & NORTHERN CORPORATION 1996
INDEPENDENT DIRECTORS STOCK OPTION PLAN.
|_| VOTE FOR |_| VOTE AGAINST |_| ABSTAIN
3. APPROVAL OF THE APPOINTMENT OF THE FIRM OF PARENTE, RANDOLPH, ORLANDO,
CAREY & ASSOCIATES AS INDEPENDENT AUDITORS.
|_| VOTE FOR |_| VOTE AGAINST |_| ABSTAIN
4. OTHER MATTERS. In their discretion, to vote with respect to any other
matters that may properly come before the Meeting or any adjournments
thereof.
(over)
- --------------------------------------------------------------------------------
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DIRECTED HEREIN BY THE
STOCKHOLDER. UNLESS OTHERWISE INDICATED, THIS PROXY WILL BE VOTED FOR THE
ELECTION AS DIRECTORS OF THE NOMINEES LISTED IN PROPOSAL I AND FOR PROPOSALS 2
AND 3.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. When shares are held as joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated:________________________________
________________________________________
Signature
________________________________________
Signature
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED POSTAGE-PAID ENVELOPE.
