EXHIBIT 2.2
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT ("Agreement"), effective as of this 23 day
of June, 2000, by and between Citizens & Northern Corporation, a Pennsylvania
corporation ("Grantee"); and Peoples Ltd., a Pennsylvania corporation
("Grantor");
WITNESSETH:
A. Grantor and Grantee have entered into an Agreement and Plan of Merger
dated as of June 22, 2000 (the "Merger Agreement"), providing for their
affiliation with one another.
B. As further inducement for the parties to consummate the transactions
contemplated by the Merger Agreement, Grantor wishes to grant Grantee the Option
described herein.
C. The Board of Directors of Grantor has approved the grant of the Option
and the Merger Agreement prior to the date hereof.
NOW, THEREFORE, the parties agree as follows:
1. DEFINITIONS.
Capitalized terms not defined herein shall have the meanings set forth
in the Merger Agreement.
"Applicable Price" shall mean the highest of (i) the highest price per
share of Grantor Common Stock paid for any such share by the person or groups
described in the definition of a Repurchase Event or (ii) the price per share of
Grantor Common Stock received by holders of Grantor Common Stock in connection
with any merger or other business combination transaction which is a Purchase
Event. If the consideration to be offered, paid or received pursuant to either
of the foregoing clauses (i) or (ii) shall be other than in cash, the value of
such consideration shall be determined in good faith by an independent
nationally recognized investment banking firm selected by Grantee and reasonably
acceptable to Grantor, which determination shall be conclusive for all purposes
of this Agreement.
"Bank" shall mean a financial institution subsidiary of a party.
"Burdensome Condition" shall mean, in connection with the grant of a
requisite regulatory approval or otherwise, imposition by a governmental entity
of any condition or restriction upon the party or one of its Subsidiaries (as
defined herein) which would reasonably be expected to either (i) have a material
adverse effect after the effective time of the Merger Agreement on the present
or prospective consolidated financial condition, business or operating results
of the party, or (ii) prevent the parties from realizing the major portion of
the economic benefits of the transactions contemplated by the Merger Agreement
that they currently anticipate obtaining.
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"Commission" shall mean the Securities and Exchange Commission.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Grantee" shall mean Citizens & Northern Corporation.
"Grantor" shall mean Peoples Ltd.
"Grantor Common Stock" shall mean the respective shares of common
stock of the same class for which Peoples Ltd. is granting an Option under this
Agreement.
"Merger Agreement" shall mean the definitive agreement executed by
Citizens & Northern Corporation and Peoples Ltd., pursuant to which the parties
hereto intend to affiliate.
"Option" shall mean the option granted by Peoples Ltd. to Citizens &
Northern Corporation under this Agreement.
"Person" shall have the meanings specified in Sections 3(a)(9) and
13(d)(3) of the Exchange Act.
"Purchase Event" shall mean any of the following events or
transactions occurring after the date of this Agreement with respect to the
Grantor:
(i) the Grantor or any of its Subsidiaries (as defined in Rule
1-02 of Regulation S-X promulgated by the Securities and Exchange Commission
(the "SEC") (each hereinafter individually referred to as a "Subsidiary" and
collectively, as the "Subsidiaries")), without having received the Grantee's
prior written consent, shall have entered into an agreement with, or the Board
of Directors of Grantor shall have recommended that the shareholders of Grantor
approve or accept a transaction with any person (x) to merge or consolidate, or
enter into any similar transaction, except as contemplated by the Merger
Agreement, (y) to purchase, lease or otherwise acquire all or substantially all
of the assets of the Grantor or any of its Subsidiaries, or (z) to purchase or
otherwise acquire (including by way of merger, consolidation, share exchange or
any similar transaction) securities representing 20% or more of the voting power
of such Grantor or any of its Subsidiaries (other than pursuant to this
Agreement);
(ii) any person (other than the Grantor or its Bank in a
fiduciary capacity, or Grantee or its Bank in a fiduciary capacity) shall have
acquired beneficial ownership or the right to acquire beneficial ownership of
20% or more of the outstanding shares of such Grantor Common Stock after the
date of this Agreement (the term "beneficial ownership" for purposes of this
Agreement having the meaning assigned thereto in Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder);
(iii) Grantor shall have materially breached this Agreement in
any material respect, which breach shall not have been cured within fifteen (15)
days after notice thereof is given by Grantee to Grantor;
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(iv) any person other than Grantee shall have made a bona fide
Takeover Proposal to the Grantor by public announcement or written communication
that is or becomes the subject of public disclosure, and following such bona
fide Takeover Proposal, the shareholders of the Grantor vote not to adopt the
Merger Agreement;
(v) Grantor shall have breached the Merger Agreement following
a bona fide Takeover Proposal to such Grantor or any of its Subsidiaries, which
breach would entitle Grantee to terminate the Merger Agreement and such breach
shall not have been cured prior to the Notice Date (as defined below);
(vi) the shareholders of Grantor shall have voted and failed to
approve the Merger Agreement and the Merger at a meeting which has been held for
that purpose or any adjournment or postponement thereof, or such meeting shall
not have been held in violation of the Merger Agreement or shall have been
canceled prior to termination of the Merger Agreement if, prior to such meeting
(or if such meeting shall not have been held or shall have been canceled, prior
to such termination), it shall have been publicly announced that any person
(other than Grantee or any of its Subsidiaries) shall have made a Takeover
Proposal; or
(vii) the Grantor Board of Directors shall have withdrawn or
modified (or publicly announced its intention to withdraw or modify) its
recommendation that the shareholders of Grantor approve the transactions
contemplated by the Merger Agreement, or Grantor or any Grantor Subsidiary or
group of Grantor Subsidiaries that is, or would on an aggregate basis
constitute, a Significant Subsidiary shall have authorized, recommended,
proposed (or publicly announced its intention to authorize, recommend or
propose) an agreement to engage in a Takeover Proposal with any person other
than Grantee or a Grantee Subsidiary.
If more than one of the transactions giving rise to a Purchase Event
under this Agreement is undertaken or effected, then all such transactions shall
be deemed to give rise only to one Purchase Event with respect to the Option,
which Purchase Event shall be deemed continuing for all purposes hereunder until
all such transactions are abandoned.
"Repurchase Event" shall mean if (i) any person (other than the
Grantee or any subsidiary of the Grantee) shall have acquired actual ownership
or control, or any "group" (as such term is defined under the Exchange Act)
shall have been formed which shall have acquired actual ownership or control, of
24.9% or more of the then outstanding shares of Grantor Common Stock, or (ii)
any Purchase Event shall be consummated.
"Takeover Proposal" shall mean any tender or exchange offer, bona fide
written offer for a merger, consolidation or other business combination
involving Grantor or any of its Subsidiaries or any bona fide written offer to
acquire in any manner 20% or more of the outstanding shares of any class of
voting securities, or 20% or more of the consolidated assets, of the Grantor or
any of its Subsidiaries, other than the transactions contemplated by the Merger
Agreement. If Grantor receives an unsolicited Takeover Proposal and it is
determined by the Grantor to be consistent with its fiduciary duties, it shall
notify Grantee promptly of the receipt of such Takeover Proposal, it being
understood, however, that the giving of such notice by Grantor shall not be a
condition to the right of Grantee to exercise the Option.
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2. GRANT OF OPTION.
Subject to the terms and conditions set forth herein, Grantor hereby
grants to Grantee an unconditional, irrevocable Option to purchase up to 81,655
shares of Grantor Common Stock as of the date of this Agreement (or such number
equaling 19.9% of Grantor Common Stock) at an exercise price of $47.00 per share
payable in cash as provided in Section 4. In the event that the Grantor issues
or agrees to issue any shares of Grantor Common Stock (other than as permitted
under the Merger Agreement) at a price less than the exercise price per share
set forth in this section (as adjusted pursuant to Section 6), the exercise
price of the Option shall be such lesser price.
3. EXERCISE OF OPTION.
(a) Unless the Grantee shall have breached in any material
respect any material covenant, representation or warranty contained in this
Agreement or the Merger Agreement and such breach shall not have been cured, the
Grantee may exercise the Option, in whole or part, at any time or from time to
time if a Purchase Event shall have occurred with respect to the Grantor and be
continuing; provided that to the extent the Option shall not have been
exercised, it shall terminate and be of no further force and effect (i) on the
effective date of the transaction contemplated by the Merger Agreement, or (ii)
upon termination of the Merger Agreement in accordance with the provisions
thereof (other than a termination resulting from a willful breach by the Grantor
of the Merger Agreement or following the occurrence of a Purchase Event, failure
of the Grantor's shareholders to approve the Merger Agreement by the vote
required under applicable law or under the respective Grantor's articles), or
(iii) 9 months after termination of the Merger Agreement due to a willful breach
by the Grantor of the Merger Agreement or, following the occurrence of a
Purchase Event, failure of the Grantor's shareholders to approve the Merger
Agreement by the vote required under applicable law or under the Grantor's
articles. Any exercise of the Option shall be subject to compliance with
applicable provisions of law.
(b) In the event the Grantee wishes to exercise the Option, it
shall send to the Grantor a written notice (the date of which being herein
referred to as the "Notice Date") specifying (i) the total number of shares it
will purchase pursuant to such exercise, and (ii) a place and date not earlier
than three (3) business days nor later than 60 business days after the Notice
Date for the closing of such purchase ("Closing Date"). If prior notification
to or approval of any federal or state regulatory agency is required in
connection with such purchase, the Grantee shall promptly file the required
notice or application for approval and shall expeditiously process the same and
the period of time that otherwise would run pursuant to this section shall run
instead from the date on which any required notification period has expired or
been terminated or any requisite approval has been obtained and any requisite
waiting period shall have passed.
4. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) At the closing referred to in Section 3, the Grantee shall
pay to the Grantor the aggregate purchase price for the shares of Grantor Common
Stock purchased pursuant to the exercise of the Option in immediately available
funds by a wire transfer to a bank account designated by the Grantor. Grantor
shall pay all expenses, and any and all United States federal, state and local
taxes and other charges that may be payable in connection with the preparation,
issue and delivery of stock certificates under this Section 4 in the name of the
Grantee or its assignee,
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transferee or designee.
(b) At such closing, simultaneously with the delivery of funds
as provided in Section 4(a), the Grantor shall deliver to the Grantee a
certificate or certificates representing the number of shares of Grantor Common
Stock purchased by the Grantee, and the Grantee shall deliver to the Grantor a
letter agreeing that Grantee will not offer to sell or otherwise dispose of such
shares in violation of applicable law or the provisions of this Agreement or
federal or state laws.
(c) Certificates for Grantor Common Stock delivered at a
closing hereunder shall be endorsed with a restrictive legend which shall read
substantially as follows:
The transfer of the shares represented by this certificate
is subject to certain provisions of a Stock Option Agreement
dated ____________, 2000, between the registered holder
hereof and [Grantor] (a copy of which agreement is on file
at the principal office of [Grantor]). A copy of such
agreement will be provided to the holder hereof without
charge within five days after receipt by [Grantor] of a
written request therefor. The shares evidenced by this
certificate have not been registered under the Securities
Act of 1933 and may not be sold, pledged, transferred, or
hypothecated except pursuant to an opinion of counsel
satisfactory to the corporation that such transfer is
lawful.
The above legend shall be removed or modified as appropriate by
delivery of substitute certificate(s) without such legend if the Grantee shall
have delivered to the Grantor a copy of a letter from the staff of the
Commission, or an opinion of counsel, in form and substance satisfactory to
Grantor, to the effect that such legend is not required for purposes of the
Securities Act of 1933, as amended.
5. REPRESENTATIONS.
The Grantor represents, warrants and covenants to the Grantee as
follows:
(a) Grantor agrees: (i) that it shall at all times maintain,
free from preemptive rights, sufficient authorized but unissued or treasury
shares of Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Grantor;
(iii) in the event, under the Bank Holding Company Act of 1956, as amended (the
"BHCA"), or the Change in Bank Control Act of 1978, as amended, or any state or
other federal banking law, prior approval of or notice of the Federal Reserve
Board or to any state or other federal regulatory authority is necessary before
the Option may be exercised, cooperating fully with the Grantee in preparing
such applications or notices and providing such information to the Federal
Reserve Board or such state or other federal regulatory authority as they may
require in order to permit the Grantee to exercise the Option and Grantor duly
and effectively to issue shares
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of Common Stock pursuant thereto; and (iv) promptly to take all action provided
herein to protect the rights of the Grantee against dilution.
(b) The shares to be issued upon due exercise, in whole or in
part, of the Option, when paid for as provided herein, will be duly authorized,
validly issued and fully paid.
(c) Grantor has full corporate power and authority to execute,
deliver and perform this Agreement and all corporate action necessary for
execution, delivery and performance of this Agreement has been duly taken by
such party.
(d) Neither the execution and delivery of this Agreement nor
consummation of the transactions contemplated hereby (assuming all appropriate
shareholder and regulatory approvals) will violate or result in any violation of
or be in conflict with or constitute a default under any term of the articles,
regulations or by-laws of such party or any agreement, instrument, judgment,
decree, statute, rule or order applicable to such party.
6. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
The Grantor agrees that, in the event of any change in its Grantor
Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, exchanges of shares or the like, the type and
number of shares subject to the Option, and the purchase price per share, as the
case may be, shall be adjusted appropriately. The Grantor agrees that, in the
event that any additional shares of its Grantor Common Stock are issued or
otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement), the number of shares of its Grantor Common Stock
subject to the Option shall be adjusted so that, after such issuance, it equals
the same percentage (as that on the date of this Agreement) of the number of
shares of Grantor Common Stock then issued and outstanding without giving effect
to any shares subject to or issued pursuant to the Option. Nothing contained in
this Section 6 shall be deemed to authorize the Grantor to breach any provision
of the Merger Agreement.
7. TERMINATION.
This Agreement may be terminated at any time prior to the effective
date of the transaction set forth in the Merger Agreement, by action taken or
authorized by the Board of Directors of the terminating party or parties,
whether before or after approval by the stockholders of the matters presented in
connection with the Merger Agreement:
(a) by mutual consent of Grantee and Grantor;
(b) by either Grantee or Grantor if the Federal Reserve Board
shall have issued an order denying approval of the transaction set forth in the
Merger Agreement or if any governmental entity of competent jurisdiction shall
have issued a final permanent order enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement or the Merger
Agreement, or imposing a Burdensome Condition, and in any such case the time for
appeal or petition for reconsideration of such order shall have expired without
such appeal or petition being granted;
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(c) by either Grantee or Grantor if the transactions
contemplated by the Merger Agreement shall not have been consummated on or
before December 31, 2000, unless such date is extended by mutual consent of the
parties hereto;
(d) by either Grantee or Grantor if no Purchase Event has
occurred and if any approval of their shareholders required for the consummation
of the transactions set forth in the Merger Agreement shall not have been
obtained by reason of the failure to obtain the required vote at a duly called
and held meeting of shareholders or at any adjournment thereof;
8. EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement by any party
as provided in Section 7, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of any party or their respective
officers or directors except (i) Sections 10, 11, 12, and 13 of this Agreement
shall survive the termination and (ii) with respect to any liabilities or
damages incurred or suffered by a party as a result of the breach by another
party of any of its representations, warranties, covenants or agreements set
forth in this Agreement.
(b) If a Purchase Event occurs with respect to the Grantor,
then in such event Grantor shall pay to the Grantee, within five business days
after a termination of this Agreement following such an event, the reasonable
expenses of Grantee incurred in connection with this Agreement and the
transactions set forth in the Merger Agreement, but not more than $250,000.
9. ACCESS TO INFORMATION.
During the term of this Agreement, each party will afford each of the
other parties full and free access during normal business hours to such party,
its personnel, properties, contracts, books and records, and all other documents
and data.
10. CONFIDENTIALITY.
Except as and to the extent required by law, no party will disclose or
use, and will direct its representatives not to disclose or use, any
Confidential Information (as defined below) with respect to the other parties
furnished or to be furnished by such other parties, or their respective
representatives to the party or its representatives at any time or in any manner
other than in connection with its evaluation of the transaction proposed in this
Agreement. For purposes of this section, "Confidential Information" means any
information about the Merger Agreement and this Agreement as well as any
information about a party stamped "confidential" or identified in writing as
such promptly following its disclosure, unless (i) such information is already
known to the party or its representatives or to others not bound by a duty of
confidentiality or such information becomes publicly available through no fault
of the party or its representatives, (b) the use of such information is
necessary in making any filing or obtaining any consent or approval required for
the consummation of the transactions set forth in the Merger Agreement, or (c)
the furnishing or use of such information is required by or necessary in
connection with legal proceedings. Upon the written request of a party, each of
the other parties will promptly return or destroy any Confidential Information
in its possession and certify in writing to the disclosing party that it has
done so.
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11. DISCLOSURE.
Except as and to the extent required by law, without the prior written
consent of the other parties, no party will, and each will direct its
representatives not to, make directly or indirectly any public comment,
statement or communication with respect to, or otherwise to disclose or to
permit the disclosure of the existence of discussions regarding, a possible
transaction among the parties or any of the terms, conditions or other aspects
of the transaction proposed in this Agreement. If a party is required by law to
make any such disclosure, it must first provide to the other parties the content
of the proposed disclosure, the reasons that such disclosure is required by law,
and the time and place that the disclosure will be made.
12. COSTS.
Except as otherwise expressly agreed, each party will be responsible
for and bear all of its own costs and expenses (including any broker's or
finder's fees and the expenses of its representatives) incurred at any time in
connection with this Agreement and in pursuing or consummating the Merger
Agreement.
13. SEVERABILITY.
If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that applicable law will not permit the Grantee to acquire the full number of
shares of Grantor Common Stock provided in Section 2 (as adjusted pursuant to
Section 6), it is the express intention of the Grantor to allow the Grantee to
acquire such lesser number of shares as may be permissible, without any
amendment or modification hereof.
14. MISCELLANEOUS.
(a) THIRD PARTIES. Nothing in this Agreement, expressed or
implied, is intended to confer upon any party, other than the parties hereto,
and their respective permitted successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as
expressly provided herein.
(b) ENTIRE AGREEMENT. Except as otherwise expressly provided
herein, this Agreement contains the entire agreement among the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereto, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective permitted successors and assigns.
(c) ASSIGNMENT. Neither of the parties hereto may assign any
of its rights or obligations under this Agreement or the Option created
hereunder to any other person, without the express written consent of the other
party, except that in the event a Purchase Event shall have occurred and be
continuing, the Grantee may assign in whole or in part its rights and
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obligations hereunder; provided, however, that Grantee may not assign its rights
under the Option except in (i) a widely dispersed public distribution, (ii) a
private placement in which no one party acquires the right to purchase in excess
of 2% of the Grantor Common Stock, (iii) an assignment to a single party (e.g.,
a broker or investment banker) for the purpose of conducting a widely dispersed
public distribution on the Grantee's behalf, or (iv) any other manner approved
by applicable regulatory authorities, so long as the Grantee is responsible for
all costs associated with the same and the assignment is in compliance with
federal and state law.
(d) NOTICES. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
by registered or certified mail, postage prepaid, express service, personal
delivery, telecopy or telefacsimile to the following addresses:
If to Citizens & Northern Corporation, to:
Citizens & Northern Corporation
00-00 Xxxx Xxxxxx
X.X. Xxx 00
Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxxx, President
With a copy to:
Squire, Xxxxxxx & Xxxxxxx L.L.P.
0000 Xxx Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attn: M. Xxxxxxxx Xxxxxxxx Xxxxxx
If to Peoples Ltd., to:
Peoples Ltd.
000 Xxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxx, XX00000
Attn: Xxxxxx Xxxxx, President
With a copy to:
Xxxxxxxx Xxxxxxxx, PC
The Pennsylvania Center
0000 Xxxxxxx Xxxxx Xxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxxxxx Xxxxx
(e) COUNTERPARTS. This Agreement may be executed in any
number of counterparts, and each such counterpart shall be deemed to be an
original instrument, but all such
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counterparts together shall constitute but one agreement.
(f) SPECIFIC PERFORMANCE. The parties agree that damages
would be an inadequate remedy for a breach of the provisions of this Agreement
by any party hereto and that this Agreement may be enforced by a party hereto
through injunctive or other equitable relief.
(g) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Pennsylvania applicable to
agreements made and entirely to be performed within such state and such federal
laws as may be applicable.
15. REPURCHASE AT THE OPTION OF GRANTEE.
(a) At the request of the Grantee at any time commencing upon
the first occurrence of a Repurchase Event and ending 9 months immediately
thereafter, Grantor shall repurchase from Grantee (i) the Option and (ii) all
shares of Grantor Common Stock purchased by Grantee pursuant hereto with respect
to which Grantee then has beneficial ownership. The date on which Grantee
exercises its rights under this Section 17 is referred to as the "Request Date."
Such repurchase shall be at an aggregate price (the "Repurchase Consideration")
equal to the sum of:
(i) the aggregate purchase price paid by Grantee for
any shares of Grantor Common Stock acquired pursuant to the Option with respect
to which Grantee then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price
for each share of Grantor Common Stock over (y) the purchase price (subject to
adjustment pursuant to Section 6 hereof), multiplied by the number of shares of
Grantor Common Stock with respect to which the Option has not been exercised;
and
(iii) the excess, if any, of the Applicable Price over
the purchase price (subject to adjustment pursuant to Section 6 hereof paid (or,
in the case of Option Shares with respect to which the Option has been exercised
but the Closing Date has not occurred, payable) by Grantee for each share of
Grantor Common Stock with respect to which the Option has been exercised and
with respect to which Grantee then has beneficial ownership, multiplied by the
number of such shares.
(b) If Grantee exercises its rights under this section,
Grantor shall, within 10 business days after the Request Date, pay the Grantor
Repurchase Consideration to Grantee in immediately available funds, and
contemporaneously with such payment Grantee shall surrender to Grantor the
Option and the certificates evidencing the shares of Grantor Common Stock
purchased thereunder with respect to which Grantee then has beneficial
ownership, and Grantee shall warrant that it has sole record and beneficial
ownership of such shares and that the same are then free and clear of all liens,
claims, charges and encumbrances of any kind whatsoever. Notwithstanding the
foregoing, to the extent that prior notification to or approval of the Federal
Reserve Board or other regulatory authority is required in connection with the
repayment of all or any portion of the Repurchase Consideration Grantee shall
have the ongoing option to revoke its request for repurchase pursuant to this
section, in whole or in part, or to require that Grantor deliver from time to
time that portion of the Repurchase Consideration that it is not then so
prohibited from paying and promptly file the required notice or application for
approval and expeditiously process
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the same (and each party shall cooperate with the other in the filing of any
such notice or application and the obtaining of any such approval). If the
Federal Reserve Board or any other regulatory authority disapproves of any part
of Grantor's proposed repurchase pursuant to the section, Grantor shall promptly
give notice of such fact to Grantee. If the Federal Reserve Board or other
agency prohibits the repurchase in part but not in whole, then Grantee shall
have the right (i) to revoke the repurchase request, or (ii) to the extent
permitted by the Federal Reserve Board or other agency, determine whether the
purchase should apply to the Option and or Option shares and to what extent to
each, and Grantee shall thereupon have the right to exercise the Option as to
the number of Option shares for wich the Option was exercisable at the Request
Date less the sum of the number of shares covered by the Option in respect of
which payment has been made pursuant to this section and the number of shares
covered by the portion of the Option (if any) that has been repurchased. Grantee
shall notify Grantor of its determination under the preceding sentence within
five (5) business days of receipt of notice of disapproval of the purchase.
Notwithstanding anything herein to the contrary, all of Grantee's
rights under this section shall terminate on the date of termination of this
Option.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement to be effective as of the day and year set forth in the first
paragraph above.
CITIZENS & NORTHERN CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxxx
-----------------------------
Xxxxx X. Xxxxxxxxxx, President and Chief
Executive Officer
PEOPLES LTD.
By: /s/ Xxxxxx X. Xxxxx
------------------------------
Xxxxxx X. Xxxxx, President and Chief
Executive Officer
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