Preview | Agreement and Plan of Merger |


BACKGROUND			1
AGREEMENT			1
ARTICLE I THE MERGERS			1
Section 1.01 Definitions			1
Section 1.02 The Merger			5
Section 1.03 The Bank Merger			11


ARTICLE II REPRESENTATIONS AND WARRANTIES OF CITIZENS			11
Section 2.01 Organization			11
Section 2.02 Capitalization			12
Section 2.03 Authority; No Violation			12
Section 2.04 Consents			13
Section 2.05 Financial Statements			13
Section 2.06 Taxes			14
Section 2.07 No Material Adverse Effect			14
Section 2.08 Contracts			14
Section 2.09 Ownership of Property; Insurance Coverage			15
Section 2.10 Legal Proceedings			15
Section 2.11 Compliance With Applicable Law			15
Section 2.12 ERISA			16
Section 2.13 Brokers, Finders and Financial Advisors; Fairness Opinion			16
Section 2.14 Environmental Matters			17
Section 2.15 Allowance for Losses			17
Section 2.16 Information to be Supplied			17
Section 2.17 Related Party Transactions			17
Section 2.18 Schedule of Termination Benefits			17
Section 2.19 Loans			18
Section 2.20 Takeover Laws			18
Section 2.21 Labor and Employment Matters			18
Section 2.22 CRA, Anti-Money Laundering and Customer Information Security			18
Section 2.23 Non-Registration Under the Exchange Act and the Securities Act			19
Section 2.24 Regulatory Capital			19
Section 2.25 Quality of Representations			19


ARTICLE III REPRESENTATIONS AND WARRANTIES OF C&N			19
Section 3.01 Organization			19
Section 3.02 Capital Structure			19
Section 3.03 Authority; No Violation			20
Section 3.04 Consents			21
Section 3.05 Financial Statements			21
Section 3.06 Taxes			21
Section 3.07 No Material Adverse Effect			21
Section 3.08 Ownership of Property; Insurance Coverage			22
Section 3.09 Legal Proceedings			22
Section 3.10 Compliance With Applicable Law			22
Section 3.11 ERISA			22
Section 3.12 Brokers, Finders and Financial Advisors			23
Section 3.13 Environmental Matters			23
Section 3.14 Allowance for Losses			23
Section 3.15 Information to be Supplied			23
Section 3.16 Related Party Transactions			23


Section 3.17 Loans			24
Section 3.18 CRA, Anti-Money Laundering and Customer Information Security			24
Section 3.19 Securities Documents			24
Section 3.20 Regulatory Capital			24
Section 3.21 Financing			24
Section 3.22 Tax Matters			24
Section 3.23 Quality of Representations			24


ARTICLE IV COVENANTS OF THE PARTIES			24
Section 4.01 Conduct of Citizens Business			24
Section 4.02 Access; Confidentiality			26
Section 4.03 Regulatory Matters and Consents			27
Section 4.04 Taking of Necessary Action			27
Section 4.05 Certain Agreements			28
Section 4.06 No Other Bids and Related Matters			28
Section 4.07 Duty to Advise; Duty to Update Disclosure Schedule			29
Section 4.08 Conduct of C&Ns Business			29
Section 4.09 Current Information			29
Section 4.10 Undertakings by C&N and Citizens			30
Section 4.11 Employee Benefits and Termination Benefits			32
Section 4.12 Citizens Division; Advisory Board			33
Section 4.13 Affiliate Letter			33
Section 4.14 Nasdaq Listing			33


ARTICLE V CONDITIONS			33
Section 5.01 Conditions to Citizens Obligations under this Agreement			33
Section 5.02 Conditions to C&Ns Obligations under this Agreement			34


ARTICLE VI TERMINATION, WAIVER AND AMENDMENT			35
Section 6.01 Termination			35
Section 6.02 Effect of Termination			37


ARTICLE VII MISCELLANEOUS			37
Section 7.01 Expenses and Other Fees			37
Section 7.02 Non-Survival of Representations and Warranties			38
Section 7.03 Amendment, Extension and Waiver			38
Section 7.04 Entire Agreement			38
Section 7.05 No Assignment			38
Section 7.06 Notices			39
Section 7.07 Captions			39
Section 7.08 Counterparts			39
Section 7.09 Severability			39
Section 7.10 Governing Law			39
EXHIBITS:
Exhibit 1 Form of Bank Plan of Merger			41
Exhibit 2 Form of Affiliate Letter			45
Exhibit 3 Form of Tax Opinion			48
Exhibit 4 Form of Opinion of C&N Counsel			49
Exhibit 5 Form of Opinion of Citizens Counsel			50
Exhibit 6 Index Group			51

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER, dated as of December 21, 2006, is made by and between CITIZENS & NORTHERN CORPORATION (C&N), a Pennsylvania corporation having its principal place of business in Wellsboro, Pennsylvania, and CITIZENS BANCORP, INC. (Citizens), a Pennsylvania corporation having its principal place of business in Coudersport, Pennsylvania.

BACKGROUND

1. C&N and Citizens desire for Citizens to merge with and into C&N, with C&N surviving such merger, in accordance with the laws of the Commonwealth of Pennsylvania and the plan of merger set forth herein.

2. The respective Boards of Directors of C&N and Citizens have each approved this Agreement (as hereinafter defined) and the Merger (as hereinafter defined) in accordance with their respective articles of incorporation and bylaws and the provisions of the Pennsylvania Business Corporation Law of 1988, as amended (the BCL) and determined that the Merger is advisable.

3. Simultaneously with the execution and delivery of this Agreement, the directors and executive officers of Citizens are executing and delivering to C&N a Letter Agreement in the form attached hereto as Exhibit 2.

4. It is the intention of the parties to this Agreement that the Merger provided for herein be treated as a reorganization under Section 368(a) of the Internal Revenue Code.

5. Concurrently with the Merger, the Parties desire to merge Citizens Trust Company (CTC), a Pennsylvania bank and trust company and wholly-owned subsidiary of Citizens, with and into Citizens & Northern Bank (C&N Bank), a Pennsylvania bank and trust company and wholly-owned subsidiary of C&N, with C&N Bank surviving such merger in accordance with the Bank Plan of Merger (as hereinafter defined).

6. C&N and Citizens desire to provide the terms and conditions governing the transactions contemplated herein.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and of the mutual covenants, agreements, representations and warranties herein contained, the parties hereto, intending to be legally bound, do hereby agree as follows:

ARTICLE I

THE MERGERS

Section 1.01 Definitions. As used in this Agreement, the following terms shall have the indicated meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

Acquisition Proposal shall have the meaning given to that term in Section 4.06 of this Agreement.

Affiliate means, with respect to any Person, any other Person who directly, or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person and, without limiting the generality of the foregoing, includes any executive officer or director of such Person.

Agreement means this Agreement and Plan of Merger, together with the exhibits referenced herein, and any amendment or supplement hereto.

Applications means the applications for regulatory approval which are required in connection with the transactions contemplated hereby.

Articles of Merger means the articles of merger to be executed by C&N and Citizens and to be filed in the PDS in accordance with the laws of the Commonwealth of Pennsylvania.

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