SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1998.
OR
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ________ to ________.
COMMISSION FILE NUMBER 0-14703
NBT BANCORP INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 16-1268674
(State of Incorporation) (I.R.S. Employer Identification No.)
52 SOUTH BROAD STREET, NORWICH, NEW YORK 13815
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (607) 337-6000
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for shorter periods that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
As of April 30, 1998, there were 9,429,963 shares outstanding, including 387,044
shares held in the treasury, of the Registrant's common stock, No Par, Stated
Value $1.00. There were no shares of the Registrant's preferred stock, No Par,
Stated Value $1.00, outstanding at that date.
An index to exhibits follows the signature page of this FORM 10-Q.
NBT BANCORP INC.
FORM 10-Q--Quarter Ended March 31, 1998
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1 Financial Statements (Unaudited)
Consolidated Balance Sheets at March 31, 1998, December 31, 1997,
and March 31, 1997
Consolidated Statements of Income for the three month periods ended
March 31, 1998 and 1997
Consolidated Statements of Stockholders' Equity for the three month
periods ended March 31, 1998 and 1997
Consolidated Statements of Cash Flows for the three month periods
ended March 31, 1998 and 1997
Consolidated Statements of Comprehensive Income for the three month
periods ended March 31, 1998 and 1997
Notes to Consolidated Financial Statements at March 31, 1998
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations
Item 3 Quantitative and Qualitative Disclosures About Market Risk
Information called for by Item 3 is contained on page 17 of the
Management Discussion and Analysis.
PART II OTHER INFORMATION
Item 1 Legal Proceedings
Item 2 Changes in Securities
Item 3 Defaults Upon Senior Securities
Item 4 Submission of Matters to a Vote of Security Holders
Item 5 Other Information
Item 6 Exhibits and Reports on FORM 8-K
SIGNATURES
INDEX TO EXHIBITS
-2-
NBT BANCORP INC. AND SUBSIDIARY MARCH 31, December 31, March 31,
CONSOLIDATED BALANCE SHEETS 1998 1997 1997
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(dollars in thousands) (UNAUDITED) (See Notes) (Unaudited)
ASSETS
Cash and cash equivalents $ 39,708 $ 37,446 $ 44,968
Loans available for sale 3,652 3,286 4,289
Securities available for sale, at fair value 432,997 440,632 404,022
Securities held to maturity (fair value-$36,034,
$36,139 and $44,378) 36,035 36,139 44,380
Loans:
Commercial and agricultural 339,192 326,491 296,123
Real estate mortgage 140,229 135,475 121,005
Consumer 268,965 273,516 251,681
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Total loans 748,386 735,482 668,809
Less allowance for loan losses 11,984 11,582 10,677
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Net loans 736,402 723,900 658,132
Premises and equipment, net 19,462 18,761 16,547
Intangible assets, net 8,352 8,642 9,616
Other assets 12,691 11,779 20,628
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TOTAL ASSETS $1,289,299 $1,280,585 $1,202,582
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LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand (noninterest bearing) $ 125,873 $ 138,985 $ 104,479
Savings, NOW, and money market 359,884 358,366 360,452
Time 553,293 516,832 507,529
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Total deposits 1,039,050 1,014,183 972,460
Short-term borrowings 106,563 134,527 93,283
Other borrowings 10,180 183 20,192
Other liabilities 6,642 8,349 8,791
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Total liabilities 1,162,435 1,157,242 1,094,726
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Commitments and contingencies
Stockholders' equity:
Preferred stock, no par, stated value $1.00; shares
authorized-2,500,000 - - -
Common stock, no par, stated value $1.00; shares
authorized-12,500,000; issued 9,429,963,
9,429,963 and 9,452,590 9,430 9,430 9,002
Capital surplus 96,915 96,494 85,233
Retained earnings 25,782 22,249 26,369
Accumulated other comprehensive income 1,786 2,373 (5,374)
Common stock in treasury at cost, 390,534,
415,871, and 439,710 shares (7,049) (7,203) (7,374)
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Total stockholders' equity 126,864 123,343 107,856
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,289,299 $1,280,585 $1,202,582
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See notes to consolidated financial statements.
-3-
NBT BANCORP INC. AND SUBSIDIARY Three months ended March 31,
CONSOLIDATED STATEMENTS OF INCOME 1998 1997
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(dollars in thousands, except per share data) (Unaudited)
Interest and fee income:
Loans and loans available for sale $17,038 $15,198
Securities - taxable 7,891 6,685
Securities - tax exempt 274 351
Other 53 49
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Total interest and fee income 25,256 22,283
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Interest expense:
Deposits 9,491 8,393
Short-term borrowings 1,675 985
Other borrowings 55 281
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Total interest expense 11,221 9,659
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Net interest income 14,035 12,624
Provision for loan losses 1,100 715
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Net interest income after provision for loan losses 12,935 11,909
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Noninterest income:
Trust 802 686
Service charges on deposit accounts 869 904
Securities gains 218 17
Other 679 413
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Total noninterest income 2,568 2,020
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Noninterest expense:
Salaries and employee benefits 4,687 4,351
Occupancy 686 654
Equipment 480 436
FDIC assessments 41 28
Amortization of intangible assets 291 378
Other operating 3,217 2,712
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Total noninterest expense 9,402 8,559
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Income before income taxes 6,101 5,370
Income taxes 1,029 1,925
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NET INCOME $ 5,072 $ 3,445
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Earnings per share:
Basic $ 0.56 $ 0.39
Diluted $ 0.55 $ 0.38
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See notes to consolidated financial statements.
-4-
NBT BANCORP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
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Accumulated
Other
Common Capital Retained Comprehensive Treasury
Stock Surplus Earnings Income Stock Total
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(in thousands, except per share data) (Unaudited)
BALANCE AT DECEMBER 31, 1996 $8,838 $82,731 $24,208 $(1,529) $(7,984) $106,264
Net income 3,445 3,445
Cash dividends - $0.143 per share (1,284) (1,284)
Issuance of 164,030 shares
to stock plan 164 2,476 2,640
Purchase of 52,900 treasury shares (966) (966)
Sale of 94,639 treasury shares to
employee benefit plans and other
stock plans 26 1,576 1,602
Unrealized loss on securities
available for sale, net of
reclassification adjustment,
and deferred taxes of $2,655 (3,845) (3,845)
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BALANCE AT MARCH 31, 1997 $9,002 $85,233 $26,369 $(5,374) $(7,374) $107,856
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BALANCE AT DECEMBER 31, 1997 $9,430 $96,494 $22,249 $ 2,373 $(7,203) $123,343
Net income 5,072 5,072
Cash dividends - $0.170 per share (1,539) (1,539)
Purchase of 31,100 treasury shares (835) (835)
Sale of 56,437 treasury shares to
employee benefit plans and other
stock plans 421 989 1,410
Unrealized loss on securities
available for sale, net of
reclassification adjustment,
and deferred taxes of $405 (587) (587)
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BALANCE AT MARCH 31, 1998 $9,430 $96,915 $25,782 $ 1,786 $(7,049) $126,864
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See notes to consolidated financial statements.
-5-
NBT BANCORP INC. AND SUBSIDIARY Three Months Ended March 31,
CONSOLIDATED STATEMENTS OF CASH FLOWS 1998 1997
- ----------------------------------------------------------------------------------------
(dollars in thousands) (Unaudited)
OPERATING ACTIVITIES:
Net income $ 5,072 $ 3,445
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses 1,100 715
Depreciation and amortization of premises and equipment 463 357
Amortization of premiums and accretion of discounts on
securities (444) 183
Amortization of intangible assets 291 378
Proceeds from sale of loans originated for sale 1,009 1,090
Loans originated for sale (1,375) (1,244)
Realized gains on sales of securities (218) (17)
(Increase) in interest receivable (360) (829)
Increase in interest payable 724 576
Other, net (2,362) 487
- ----------------------------------------------------------------------------------------
Net cash provided by operating activities 3,900 5,141
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INVESTING ACTIVITIES:
Securities available for sale:
Proceeds from maturities 15,080 11,217
Proceeds from sales 52,053 30,976
Purchases (60,046) (83,696)
SECURITIES HELD TO MATURITY:
Proceeds from maturities 4,124 2,663
Purchases (4,019) (4,804)
Net increase in loans (13,602) (14,727)
Purchase of premises and equipment, net (1,164) (597)
- ----------------------------------------------------------------------------------------
Net cash used in investing activities (7,574) (58,968)
- ----------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Net increase in deposits 24,867 56,141
Net increase (decrease) in short-term borrowings (27,964) 5,039
Proceeds from issuance of other borrowings 10,000 -
Repayments of other borrowings (3) (3)
Common stock issued, including treasury shares reissued 1,410 4,078
Purchase of treasury stock (835) (966)
Cash dividends and payment for fractional shares (1,539) (1,284)
- ----------------------------------------------------------------------------------------
Net cash provided by financing activities 5,936 63,005
- ----------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 2,262 9,178
Cash and cash equivalents at beginning of year 37,446 35,790
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $39,708 $ 44,968
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the
period for:
Interest $10,497 $ 9,083
Income taxes 1,836 134
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See notes to consolidated financial statements.
-6-
NBT BANCORP INC. AND SUBSIDIARY Three Months Ended March 31,
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 1998 1997
- --------------------------------------------------------------------------------------
(dollars in thousands) (Unaudited)
Net Income $5,072 $ 3,445
- --------------------------------------------------------------------------------------
Other comprehensive income, net of tax Unrealized gains
(losses) on securities:
Unrealized holding gains (losses) arising during
period (pre-tax amounts of $774 and $6,484) (458) (3,835)
Less: Reclassification adjustment for gains included
in net income (pre-tax amounts of $218 and $17) (129) (10)
- --------------------------------------------------------------------------------------
Total other comprehensive income (loss) (587) (3,845)
- --------------------------------------------------------------------------------------
Comprehensive income (loss) $4,485 $ (400)
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-7-
NBT BANCORP INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1998
BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements include the
accounts of NBT Bancorp Inc. (the Registrant) and its wholly-owned subsidiary,
NBT Bank, N.A. (Bank). All intercompany transactions have been eliminated in
consolidation. Certain amounts previously reported in the financial statements
have been reclassified to conform with the current presentation.
The determination of the allowance for loan losses is a material estimate
that is particularly susceptible to significant change in the near term. In
connection with the determination of the allowance for loan losses, management
obtains independent appraisals for significant properties.
Net income per common share is computed based on the weighted average
number of common shares and common share equivalents outstanding during each
period after giving retroactive effect to stock dividends. Cash dividends per
common share are computed based on declared rates adjusted retroactively for
stock dividends.
The balance sheet at December 31, 1997 has been derived from audited
financial statements at that date. The accompanying unaudited consolidated
financial statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to FORM 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three month period ended March 31, 1998 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1998. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Registrant's annual report on FORM 10-K for the year
ended December 31, 1997.
RECENT ACCOUNTING PRONOUNCEMENTS AND DEVELOPMENTS
Effective January 1, 1998 the Company adopted the remaining provisions of
Statement of Financial Accounting Standards ("SFAS") No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities",
which relate to the accounting for securities lending, repurchase agreements,
and other secured financing activities. These provisions, which were delayed for
implementation by SFAS No. 127, are not expected to have a material impact on
the Company. In addition, the Financial Accounting Standards Board is
considering certain amendments and interpretations of SFAS No. 125 which, if
enacted in the future, could affect the accounting transactions within their
scope.
On January 1, 1998, the Company adopted the provisions of SFAS No. 130,
"Reporting Comprehensive Income". This statement establishes standards for the
reporting and display of comprehensive income and its components. Comprehensive
income includes the reported net income adjusted for items that are currently
accounted for as direct entries to equity, such as the mark to market adjustment
on securities available for sale, foreign currency items and minimum pension
liability adjustments. At the Company, comprehensive income represents the net
income plus other comprehensive income, which consists of the net change in
unrealized gains or losses on securities available for sale for the period.
Accumulated other comprehensive income represents the net unrealized gains or
losses on securities available for sale as of the balance sheet dates.
In June 1997, the FASB issued SFAS No. 131 "Disclosures about Segments of
an Enterprise and Related Information". SFAS No. 131 requires public business
enterprises to report financial and other information about key
revenue-producing segments of the entity for which such information is available
and is utilized by the chief operating decision maker's. Specific information to
be reported for individual segments includes profit or loss, certain revenue and
expense items and total assets. A reconciliation of segment financial
information to amounts reported in the financial statements would be provided.
SFAS No. 131 is effective for periods beginning after December 15, 1997 and the
impact of its adoption has not been determined.
In February 1998, the FASB issued SFAS No. 132 "Employers' Disclosures
about Pensions and Other Postretirement Benefits". This statement revises
employers' disclosures about pension and other post retirement benefit plans. It
does not change the measurement or recognition of these plans. The statement is
effective for reporting periods beginning after December 15, 1997 and will not
impact the Company's financial position or results of operations.
-8-
COMMITMENTS AND CONTINGENT LIABILITIES
In the normal course of business, various commitments and contingent liabilities
arise, including commitments to extend credit and standby letters of credit.
Also, off balance sheet financial instruments such as interest rate swaps,
forward contracts, futures, options on financial futures, and interest rate
caps, collars and floors bear risk-based on financial market conditions. The
following table summarizes the Registrant's exposure to these off balance sheet
commitments and contingent liabilities as of March 31, 1998:
Contractual or
Notional Value
at March 31, 1998
Financial instruments with off-balance sheet credit risk:
Commitments to extend credit $141,280,000
Standby letters of credit 1,785,000
Financial instruments with off-balance sheet market risk None
-9-
NBT BANCORP INC. AND SUBSIDIARY
Item 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The purpose of this discussion and analysis is to provide the reader with a
concise description of the financial condition and results of operations of NBT
Bancorp Inc. (Bancorp) and its wholly owned subsidiary, NBT Bank, N.A. (Bank)
collectively referred to herein as the Company. This discussion will focus on
Results of Operations, Financial Position, Capital Resources and Asset/Liability
Management. Reference should be made to the Company's consolidated financial
statements and footnotes thereto included in this FORM 10-Q as well as to the
Company's 1997 FORM 10-K for an understanding of the following discussion and
analysis. The Company has a long history of distributing stock dividends; in
December 1997, a 5% stock dividend was distributed for the thirty-eighth
consecutive year. Throughout this discussion and analysis, amounts per common
share have been adjusted retroactively for stock dividends and splits for
purposes of comparability.
On April 28, 1998, NBT Bancorp Inc. announced the declaration of a four-
for-three stock split effected in the form of a dividend and a regular quarterly
cash dividend of $0.17 per share. The stock and cash dividends will be paid on
June 15, 1998 to shareholders of record as of June 1, 1998. The cash dividend
will be paid on the increased number of shares. Amounts per common share have
not been adjusted for the prospective June 15, 1998 stock dividend. The
adjustment for purposes of comparability will occur after the payment date.
In March of 1998, the Company relocated its Oxford branch to an upgraded
facility on Route 12. In addition, the Company recently announced the plans to
relocate two of its existing branches in the Plattsburgh market with anticipated
opening dates of May 1998.
OVERVIEW
Net income of $5.1 million ($0.55 per diluted share) was realized in the first
quarter of 1998, representing a 47.2% increase from first quarter 1997 net
income of $3.4 million ($0.38 per diluted share). One of the major contributing
factors for the increase in net income was increased net interest income. The
increase in net interest income was a result of an increase in average earning
assets, primarily loans and investment securities. Also contributing to the
increased operating results for the first quarter of 1998 was a $1.0 million tax
benefit arising from a corporate realignment within the Company.
Table 1 depicts several measurements of performance on an annualized basis.
Returns on average assets and equity measure how effectively an entity utilizes
its total resources and capital, respectively. Both the return on average assets
and the return on average equity ratios increased for the quarter compared to
the same period a year previous.
Net interest margin, net federal taxable equivalent (FTE) interest income
divided by average interest-earning assets, is a measure of an entity's ability
to utilize its earning assets in relation to the interest cost of funding.
Taxable equivalency adjusts income by increasing tax exempt income to a level
that is comparable to taxable income before taxes are applied. The positive
trend in net interest margin is critical to the improved profitability of the
Company.
TABLE 1
PERFORMANCE MEASUREMENTS
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First Second Third Fourth Twelve FIRST
Quarter Quarter Quarter Quarter Months QUARTER
1997 1997 1997 1997 1997 1998
- --------------------------------------------------------------------------------------------------
Return on average assets 1.19% 1.33% 1.17% 1.11% 1.20% 1.60%
Return on average common equity 12.82% 14.78% 12.74% 11.71% 12.97% 16.49%
Net interest margin 4.71% 4.65% 4.64% 4.68% 4.67% 4.75%
- --------------------------------------------------------------------------------------------------
NET INTEREST INCOME
Net interest income is the difference between interest income on earning assets,
primarily loans and securities, and interest expense on interest-bearing
liabilities, primarily deposits and borrowings. Net interest income is affected
by the interest rate spread, the difference between the yield on earning assets
and cost of interest-bearing liabilities, as well as the volumes of such assets
and liabilities. Table 2 represents an analysis of net interest income on a
federal taxable equivalent basis.
Federal taxable equivalent (FTE) net interest income increased $1.4 million
for the first quarter of 1998 compared to the same period of 1997. This increase
was primarily a result of the $108.1 million increase in average earning assets,
less the $81.2 million increase in average interest bearing liabilities.
Total FTE interest income increased $2.9 million over first quarter 1997.
This increase is also primarily a result of the increase in average earning
assets. Also contributing to the increase in interest income was a 25 basis
point (0.25%) increase in the yield on average earning assets, primarily driven
by a 44 basis point increase in the yield earned on the securities available for
-10-
sale portfolio. During the same time period, total interest expense increased
$1.6 million. The cost of interest bearing liabilities increased 29 basis
points, as certificates of deposits and short-term borrowing costs increased.
The increase in average interest bearing liabilities also contributed to the
increase in overall interest expense, as certificates of deposits and short-term
borrowings experienced volume increases.
Another important performance measurement of net interest income is the net
interest margin. This is computed by dividing annualized FTE net interest income
by average earning assets for the period. Net interest margin increased to 4.75%
for first quarter 1998, up from 4.71% for the comparable period in 1997. The
increase in the net interest margin is a function of the increased funding of
earning assets from noninterest bearing sources.
TABLE 2
COMPARATIVE ANALYSIS OF FEDERAL TAXABLE EQUIVALENT NET INTEREST INCOME
Three months ended March 31,
ANNUALIZED
YIELD/RATE AMOUNTS VARIANCE
1998 1997 (dollars in thousands) 1998 1997 TOTAL VOLUME RATE
---- ---- ---- ---- ----- ------ ----
5.09% 4.26% Interest bearing deposits $ 1 $ 2 $ (1) $ (1) $ -
5.51% 5.27% Federal funds sold 1 6 (5) (5) -
5.44% 5.16% Other short-term investments 51 41 10 7 3
7.15% 6.71% Securities available for sale 7,659 6,500 1,159 711 448
7.82% 7.69% Loans available for sale 72 82 (10) (12) 2
Securities held to maturity:
7.57% 6.72% Taxable 254 206 48 21 27
7.19% 6.64% Tax exempt 399 518 (119) (159) 40
9.36% 9.28% LOANS 17,024 15,171 1,853 1,734 119
---------------------------------------------------------------------------------
8.49% 8.24% Total interest income 25,461 22,526 2,935 2,296 639
2.91% 2.89% Money Market Deposit Accounts 638 678 (40) (44) 4
1.68% 1.65% NOW accounts 504 472 32 25 7
2.85% 2.86% Savings accounts 1,069 1,086 (17) (16) (1)
5.50% 5.24% Certificates of deposit 7,280 6,157 1,123 803 320
5.67% 4.97% Short-term borrowings 1,675 985 690 536 154
5.33% 5.64% OTHER BORROWINGS 55 281 (226) (211) (15)
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4.45% 4.16% TOTAL INTEREST EXPENSE 11,221 9,659 1,562 1,093 469
---------------------------------------------------------------------------------
Net interest income $14,240 $12,867 $1,373 $1,203 $170
=================================================================================
4.04% 4.09% Interest rate spread
4.75% 4.71% Net interest margin
FTE adjustment $ 205 $ 243
============== ======= =======
PROVISION AND ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is a valuation allowance established to provide
for the estimated possible losses related to the collection of the Bank's loan
portfolio. The allowance is maintained at a level considered adequate to provide
for loan loss exposure based on management's estimate of potential future losses
considering an evaluation of portfolio risk, prevailing and anticipated economic
factors, and past loss experience. Management determines the provision and
allowance for loan losses based on a number of factors including a comprehensive
in-house loan review program conducted throughout the year. The loan portfolio
is continually evaluated in order to identify potential problem loans, credit
concentration, and other risk factors such as current and projected economic
conditions. The allowance for loan loss to outstanding loans at March 31, 1998
and 1997 was 1.60%. Management considers the allowance for loan losses to be
adequate based on evaluation and analysis of the loan portfolio.
Table 3 reflects changes to the allowance for loan loss for the periods
presented. The allowance is increased by provisions for losses charged to
operations and is reduced by net charge-offs. Charge-offs are made when the
collectability of loan principal within a reasonable time is unlikely. Any
recoveries of previously charged-off loans are credited directly to the
allowance for loan losses. Net charge-offs for the first quarter of 1998 were
$0.7 million, or 0.38% of average loans, compared to $0.5 million, or 0.31% of
average loans for the same period of 1997. The rise in net charge-offs was
concentrated in the commercial and consumer portfolios. The increase in
commercial charge-offs can be attributed to two customers. Personal bankruptcies
have resulted in an increase to consumer charge-offs.
-11-
TABLE 3
ALLOWANCE FOR LOAN LOSSES
- ----------------------------------------------------------------------------------------------
Three months ended March 31,
(dollars in thousands) 1998 1997
- ----------------------------------------------------------------------------------------------
Balance, beginning of period $11,582 $10,473
Recoveries 188 190
Charge-offs (886) (701)
- ----------------------------------------------------------------------------------------------
Net (charge-offs) (698) (511)
Provision for loan losses 1,100 715
- ----------------------------------------------------------------------------------------------
Balance, end of period $11,984 $10,677
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COMPOSITION OF NET (CHARGE-OFFS) RECOVERIES
Commercial and agricultural $ (316) 45% $ (252) 49%
Real estate mortgage (21) 3% 7 (1%)
Consumer (361) 52% (266) 52%
- ----------------------------------------------------------------------------------------------
Net (charge-offs) recoveries $ (698) 100% $ (511) 100%
- ----------------------------------------------------------------------------------------------
Annualized net charge-offs to average loans 0.38% 0.31%
- ----------------------------------------------------------------------------------------------
Annualized net charge-offs to average loans for the year ended
December 31, 1997 0.34%
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NONINTEREST INCOME
Table 4 below presents quarterly and period to date noninterest income.
Noninterest income for the first quarter of 1998, excluding security gains,
increased $0.3 million or 17.3% when compared to first quarter 1997.
Contributing to the increase in noninterest income was increases in trust and
other income. Trust income continued its growth trend as managed assets have
steadily increased. Other income increased as a result of increases in the loan
fee, ATM and other operating categories. The increase in loan fee income is a
result of loan processing income generated by increased mortgage lending
activity. The increased ATM income can be attributed to greater customer use and
the installation of additional machines throughout our market areas.
Security gains increased $0.2 million for the first quarter 1998 as
compared to first quarter 1997. This increase can be attributed to the change in
market conditions between the two periods.
TABLE 4
NONINTEREST INCOME
- ----------------------------------------------------------------------------------------------------
First Second Third Fourth Twelve FIRST
Quarter Quarter Quarter Quarter Months QUARTER
(dollars in thousands) 1997 1997 1997 1997 1997 1998
- ----------------------------------------------------------------------------------------------------
Trust income $ 686 $ 687 $ 687 $ 615 $2,675 $ 802
Deposit service charges 904 933 926 932 3,695 869
Securities gains (losses) 17 1 (90) (265) (337) 218
Other income 413 650 457 513 2,033 679
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Total noninterest income $2,020 $2,271 $1,980 $1,795 $8,066 $2,568
- ----------------------------------------------------------------------------------------------------
NONINTEREST EXPENSE AND OPERATING EFFICIENCY
Table 5 presents components of noninterest expense as well as selected operating
efficiency ratios. Total noninterest expense experienced a $0.8 million increase
between the quarter ended March 31, 1998 and the same period for 1997.
Employee benefits for the first quarter ended March 31, 1998 experienced a
$0.2 million increase compared to the same period in 1997. The increase can be
attributed to a rise in the accrual for executive incentive compensation based
on current year's income performance.
Legal, audit , and outside services for the first quarter of 1998
experienced a $0.4 million increase compared to the first quarter of 1997. The
increase can be attributed to the outsourcing of the Company's item processing
function during 1997, as well as increased audit and outside service fees
associated with the corporate realignment.
Two important operating efficiency measures that the Company closely
monitors are the efficiency and expense ratios. The efficiency ratio is computed
as total noninterest expense (excluding nonrecurring charges) divided by net
interest income plus noninterest income (excluding net security gains and losses
and nonrecurring income). The efficiency ratio declined to 56.7% in the first
-12-
quarter of 1998 from 57.6% in the same period of 1997. This favorable decline
was a result of the increases in net interest income and noninterest income. The
expense ratio is computed as total noninterest expense (excluding nonrecurring
charges) less noninterest income (excluding net security gains and losses and
nonrecurring income) divided by average assets. The expense ratio declined to
2.2% for the first quarter 1998, from 2.3% for the same period of 1997. This
favorable decline is a result of the increase in average assets between the
reporting periods. Continuing expense control efforts have had a favorable
impact on operating efficiency ratios, as both of the measures reflect.
TABLE 5
NONINTEREST EXPENSE AND PRODUCTIVITY MEASUREMENTS
- ------------------------------------------------------------------------------------------------------
First Second Third Fourth Twelve FIRST
Quarter Quarter Quarter Quarter Months QUARTER
(dollars in thousands) 1997 1997 1997 1997 1997 1998
- ------------------------------------------------------------------------------------------------------
Salaries and wages $3,042 $3,150 $3,196 $3,248 $12,636 $3,170
Employee benefits 1,309 1,097 1,360 1,503 5,269 1,517
Occupancy expense 654 654 584 706 2,598 686
Equipment expense 436 408 435 421 1,700 480
FDIC assessments 28 29 30 29 116 41
Legal, audit, and outside services 930 891 1,013 1,217 4,051 1,305
Loan collection and other
loan related expenses 423 375 552 474 1,824 480
Amortization of intangible assets 378 359 314 300 1,351 291
Other operating expense 1,359 1,303 1,420 1,543 5,625 1,432
- ------------------------------------------------------------------------------------------------------
Total noninterest expense $8,559 $8,266 $8,904 $9,441 $35,170 $9,402
- ------------------------------------------------------------------------------------------------------
Efficiency ratio 7.56% 53.38% 55.56% 57.86% 56.09% 56.67%
Expense ratio 2.27% 2.05% 2.16% 2.30% 2.20% 2.23%
Average full-time equivalent
employees 498 496 495 488 494 488
Average assets per average
full-time equivalent employee
(millions) $ 2.3 $ 2.5 $ 2.5 $ 2.6 $ 2.5 $ 2.6
- ------------------------------------------------------------------------------------------------------
INCOME TAXES
Income tax expense was $1.0 million for the first quarter of 1998 compared to
$1.9 million for the first quarter of 1997. The reduction in income taxes during
the first quarter of 1998 can be attributed to the $1.0 million tax benefit
resulting from a corporate realignment within the Company.
The following table highlights the changes in the balance sheet. Since
period end balances can be distorted by one day fluctuations, the discussion and
analysis concentrates on average balances when appropriate to give a better
indication of balance sheet trends.
TABLE 6
AVERAGE BALANCES
- --------------------------------------------------------------------------------
Three months ended
March 31,
(dollars in thousands) 1998 1997
- --------------------------------------------------------------------------------
Cash and cash equivalents $ 37,207 $ 35,063
Securities available for sale, at fair value 438,750 390,002
Securities held to maturity 36,162 44,082
Loans available for sale 3,743 4,346
Loans 738,012 662,818
Deposits 1,024,102 951,950
Short-term borrowings 119,746 80,351
Other borrowings 4,182 20,194
Stockholders' equity 124,700 108,980
Assets 1,281,520 1,170,072
Earning assets 1,216,253 1,108,194
Interest bearing liabilities $1,023,795 $ 942,615
- --------------------------------------------------------------------------------
-13-
SECURITIES
Average total securities increased 9.4% for the first quarter of 1998 over the
same period of 1997. The majority of this increase was in the available for sale
portfolio. During the first quarter of 1998, the securities portfolio
represented 38.7% of average earning assets. Investments are primarily U.S.
Governmental agencies guaranteed securities classified as available for sale.
Held to maturity securities are obligations of the State of New York political
subdivisions and do not include any direct obligations of the State of New York.
At March 31, 1998, the securities portfolio was comprised of 92% available for
sale and 8% held to maturity securities.
LOANS
Average loan's for the first quarter of 1998 was $75.2 million, or 11.3% greater
than the first quarter 1997 average. Loan growth has been present in all major
categories, with increases in the commercial, consumer and mortgage portfolios
of $39.4 million, $19.1 million and $16.7 million, respectively.
The company has experienced an increase in the demand for commercial loans
with growth of $12.7 million since year-end 1997, primarily in the business and
real estate categories. The increase in consumer loans can be attributed to a
rise in homequity loans, primarily revolving lines of credit secured by the
borrowers primary residence. The Company does not engage in highly leveraged
transactions or foreign lending activities.
NONPERFORMING ASSETS AND PAST DUE LOANS
Nonperforming assets consist of nonaccrual loans and other real estate owned
(OREO). Loans are generally placed on nonaccrual when principal or interest
payments become ninety days past due, unless the loan is well secured and in the
process of collection. Loans may also be placed on nonaccrual when circumstances
indicate that the borrower may be unable to meet the contractual principal or
interest payments. OREO represents property acquired through foreclosure and is
valued at the lower of the outstanding loan balance or fair market value, less
any estimated disposal costs.
Total nonperforming assets increased $2.4 million at March 31, 1998
compared to March 31, 1997. Increases of $2.3 million in impaired commercial and
agricultural loans and $0.2 million in nonperforming consumer loans were
partially offset by a decrease in other real estate owned of $0.2 million. A
significant portion of the increase in impaired commercial loans can be
attributed to one customer. The changes in nonperforming assets are presented in
Table 7 below.
At March 31, 1998, the recorded investment in impaired loans was $4.5
million. Included in this amount is $2.7 million of impaired loans for which the
specifically allocated allowance for loan loss is $0.4 million. In addition,
included in impaired loans is $1.8 million of impaired loans that, as a result
of the adequacy of collateral values and cash flow analysis do not have a
specific reserve. At December 31, 1997, the recorded investment in impaired
loans was $4.3 million, of which $1.9 million had a specific allowance
allocation of $0.6 million and $2.4 million for which there was no specific
reserve. At March 31, 1997, the recorded investment in impaired loans was $2.6
million, of which $0.2 million had a specific allowance allocation of $0.02
million and $2.4 million of which there was no specific reserve. The Company
classifies all nonaccrual loans as impaired loans, except smaller-balance
homogeneous loans that are collectively evaluated for impairment.
-14-
TABLE 7
NONPERFORMING ASSETS AND RISK ELEMENTS
- -----------------------------------------------------------------------------------------------------------
MARCH 31, December 31, March 31,
(in thousands) 1998 1997 1997
- -----------------------------------------------------------------------------------------------------------
Impaired commercial and agricultural loans $4,546 78% $3,856 73% $2,209 68%
Other nonaccrual loans:
Real estate mortgage 425 7% 692 13% 400 12%
Consumer 852 15% 708 14% 649 20%
- -----------------------------------------------------------------------------------------------------------
Total nonaccrual loans 5,823 100% 5,256 100% 3,258 100%
- -----------------------------------------------------------------------------------------------------------
Other real estate owned 564 530 732
- -----------------------------------------------------------------------------------------------------------
Total nonperforming assets 6,387 5,786 3,990
- -----------------------------------------------------------------------------------------------------------
Loans 90 days or more past due and still accruing:
Commercial and agricultural 515 57% 176 24% 181 29%
Real estate mortgage 122 14% 244 33% 248 40%
Consumer 263 29% 325 43% 196 31%
- -----------------------------------------------------------------------------------------------------------
Total 900 100% 745 100% 625 100%
- -----------------------------------------------------------------------------------------------------------
Total assets containing risk elements $7,287 $6,531 $4,615
- -----------------------------------------------------------------------------------------------------------
Total nonperforming assets to loans 0.85% 0.79% 0.60%
Total assets containing risk elements to loans 0.97% 0.89% 0.69%
Total nonperforming assets to assets 0.50% 0.45% 0.33%
Total assets containing risk elements to assets 0.57% 0.51% 0.38%
- -----------------------------------------------------------------------------------------------------------
TABLE 8
CHANGES IN NONACCRUAL LOANS
- ------------------------------------------------------------
Three months ended
March 31,
(in thousands) 1998 1997
- ------------------------------------------------------------
Balance at beginning of period $5,256 $3,320
Loans placed on nonaccrual 2,388 1,125
Charge-offs (611) (388)
Payments (900) (739)
Transfers to OREO (304) (60)
Loans returned to accrual (6) -
- ------------------------------------------------------------
Balance at end of period $5,823 $3,258
- ------------------------------------------------------------
CHANGES IN OREO
- ------------------------------------------------------------
Balance at beginning of period $ 530 $1,242
Additions 304 66
Sales (265) (487)
Write-downs (5) (89)
- ------------------------------------------------------------
Balance at end of period $ 564 $ 732
- ------------------------------------------------------------
DEPOSITS
Customer deposits represent the greatest source of funding assets. Average total
deposits for the quarter ended March 31, 1998, increased $72.2 million, or 7.6%
from the same period in 1997. The majority of this increase was time deposits,
which increased $60.1 million between the reporting periods. This increase can
be attributed to municipal time deposits. The Company also experienced a $14.4
million increase in average demand deposits, while average savings deposits
experienced a minimal decline between quarters.
BORROWED FUNDS
The Company's borrowed funds consist of short-term borrowings and other
borrowings. Short-term borrowings include federal funds purchased, securities
sold under agreement to repurchase, and other short-term borrowings which
consist primarily of Federal Home Loan Bank (FHLB) advances with an original
maturity of one day up to one year. Other borrowings consist of fixed rate FHLB
advances with an original maturity greater than one year. Average borrowings for
the three months ended March 31, 1998 increased $23.4 million, or 23.3% compared
to the same period of 1997.
-15-
CAPITAL AND DIVIDENDS
Stockholders' equity of $127 million represents 9.8% of total assets at March
31, 1998, compared with $108 million, or 9.0% a year previous, and $123 million,
or 9.6% at December 31, 1997. The increased capital since year-end 1997 is a
result of earnings retention.
In December of 1997, the Company distributed a 5% stock dividend for the
thirty-eighth consecutive year. The Company does not have a target dividend
payout ratio, rather the Board of Directors considers the Company's earnings
position and earnings potential when making dividend decisions.
Capital is an important factor in ensuring the safety of depositors'
accounts. During both 1997 and 1996, the Company earned the highest possible
national safety and soundness rating from two national bank rating services,
Bauer Financial Services and Veribanc, Inc. Their ratings are based on capital
levels, loan portfolio quality and security portfolio strength.
As the capital ratios in Table 9 indicate, the Company remains well
capitalized. Capital measurements are significantly in excess of regulatory
minimum guidelines and meet the requirements to be considered well capitalized
for all periods presented. Tier 1 and Risk-based Capital ratios have regulatory
minimum guidelines of 4% and 8% respectively, with requirements to be considered
well capitalized of 6% and 10%, respectively.
TABLE 9
CAPITAL MEASUREMENTS
- ----------------------------------------------------------------------------------------------
First Second Third Fourth FIRST
Quarter Quarter Quarter Quarter QUARTER
1997 1997 1997 1997 1998
- ----------------------------------------------------------------------------------------------
Tier 1 leverage ratio 8.91% 8.75% 8.76% 8.91% 9.19%
Tier 1 capital ratio 14.53% 14.46% 14.47% 14.88% 15.30%
Total risk-based capital ratio 15.78% 15.71% 15.73% 16.13% 16.56%
Cash dividends as a percentage
of net income 36.46% 34.27% 35.90% 37.72% 30.33%
Per common share:
Book value $12.00 $12.70 $13.24 $13.68 $14.03
Tangible book value $10.92 $11.66 $12.24 $12.72 $13.11
- ----------------------------------------------------------------------------------------------
The accompanying Table 10 presents the high, low and closing sales price for the
common stock as reported on the NASDAQ National Market System, and cash
dividends declared per share of common stock. At March 31, 1998, total market
capitalization of the Company's common stock was approximately $253 million
compared with $167 million at March 31, 1997. The change in market
capitalization is due to an increase in the market price, as well as a slight
increase in the number of shares outstanding. The Company's price to book value
ratio was 2.00 at March 31, 1998 and 1.55 a year ago. The Company's price was 13
times annualized earnings at March 31, 1998, compared to 12 times a year
previous.
TABLE 10
QUARTERLY COMMON STOCK AND DIVIDEND INFORMATION
- ----------------------------------------------------------------
Cash
Dividends
Quarter Ending High Low Close Declared
- ----------------------------------------------------------------
1997
- ----------------------------------------------------------------
March 31 $19.05 $16.79 $18.57 $0.143
June 30 25.60 18.57 25.60 0.143
September 30 25.48 21.19 25.12 0.162
December 31 27.69 22.86 27.00 0.170
- ----------------------------------------------------------------
1998
- ----------------------------------------------------------------
MARCH 31 $28.00 $23.50 $28.00 $0.170
- ----------------------------------------------------------------
-16-
LIQUIDITY AND INTEREST RATE SENSITIVITY MANAGEMENT
The primary objectives of asset and liability management are to provide for the
safety of depositor and investor funds, assure adequate liquidity, and maintain
an appropriate balance between interest sensitive earning assets and interest
bearing liabilities. Liquidity management involves the ability to meet the cash
flow requirements of customers who may be depositors wanting to withdraw funds
or borrowers needing assurance that sufficient funds will be available to meet
their credit needs. The Asset/Liability Management Committee (ALCO) is
responsible for liquidity management and has developed guidelines which cover
all assets and liabilities, as well as off balance sheet items that are
potential sources or uses of liquidity. Liquidity must also provide the
flexibility to implement appropriate strategies and tactical actions.
Requirements change as loans grow, deposits and securities mature, and payments
on borrowings are made. Interest rate sensitivity management seeks to avoid
widely fluctuating net interest margins and to ensure consistent net interest
income through periods of changing economic conditions.
The Company's primary measure of liquidity is called the basic surplus,
which compares the adequacy of cash sources to the amounts of volatile funding
sources. This approach recognizes the importance of balancing levels of cash
flow liquidity from short and long-term securities with the availability of
dependable borrowing sources. Accordingly, the Company has established borrowing
agreements with other banks (Federal Funds), the Federal Home Loan Bank of New
York (short and long-term borrowings which are denoted as advances), and
repurchase agreements with investment companies.
At March 31, 1998 and 1997, the Company's basic surplus ratios (net access
to cash and secured borrowings as a percentage of total assets) were
approximately 7% and 9%, respectively. The Company has set a present internal
minimum guideline range of 5% to 7%. As these ratios indicate, the Company's
liquidity is within management standards. In addition, the Asset/Liability
Management Committee has determined that liquidity is adequate to meet the cash
flow requirements of the Company.
Interest rate risk is determined by the relative sensitivities of earning
asset yields and interest bearing liability costs to changes in interest rates.
The method by which banks evaluate interest rate risk is to look at the interest
sensitivity gap, the difference between interest sensitive assets and interest
sensitive liabilities repricing during the same period, measured at a specific
point in time. Through analysis of the interest sensitivity gap, the Company
attempts to position its assets and liabilities to maximize net interest income
in several different interest rate scenarios. As of March 31, 1998, the interest
sensitivity gap indicates that the Company is liability sensitive in the short
term and supports management's contention that the Company is positioned to
benefit from a declining interest rate environment over the next twelve months.
The nature and timing of the benefit will be initially impacted by the extent to
which core deposit and borrowing rates are lowered as rates decline. The Company
becomes asset sensitive after the one-year time frame and, therefore, would
benefit in the long-term from rising interest rates.
While the static gap evaluation of interest rate sensitivity is useful, it
is not indicative of the impact of fluctuating interest rates on net interest
income. Once the Company determines the extent of gap sensitivity, the next step
is to quantify the potential impact of the interest sensitivity on net interest
income. The Company utilizes a simulation model which measures the effect
certain assumptions will have on net interest income over a short period of
time, usually one or two years. These assumptions include, but are not limited
to prepayments, potential call options of the investment portfolio and various
interest rate environments. The following table presents the impact on net
interest income of a gradual twelve-month increase or decrease in interest rates
compared to a stable interest rate environment. The simulation projects net
interest income over the next year using the March 31, 1998 balance sheet
position.
TABLE 11
INTEREST RATE SENSITIVITY ANALYSIS
- -------------------------------------------------------------
Change in interest rates Percent change in
(in basis points) net interest income
- -------------------------------------------------------------
+200 (4.81%)
+100 (2.98%)
-100 1.45%
-200 1.43%
- -------------------------------------------------------------
-17-
- -------------------------------------------------------------------------------------------------------------------
SELECTED FIVE YEAR DATA 1997 1996 1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------
(dollars in thousands, except per share data)
Net income $ 14,749 $ 12,179 $ 9,329 $ 6,508 $ 8,505
Return on average assets 1.20% 1.10% 0.90% 0.64% 0.93%
Return on average equity 12.97% 11.80% 9.18% 6.53% 8.79%
Net interest margin 4.67% 4.69% 4.43% 4.81% 5.26%
Efficiency ratio 56.09% 60.74% 65.92% 70.22% 71.05%
Expense ratio 2.20% 2.41% 2.51% 2.96% 3.21%
Tier 1 leverage ratio 8.91% 8.70% 8.80% 9.05% 9.24%
Tier 1 risk-based capital ratio 14.88% 14.06% 15.21% 16.09% 15.40%
Total risk-based capital ratio 16.13% 15.31% 16.46% 17.35% 16.66%
Cash dividend per share payout 37.91% 36.50% 42.61% 56.13% 39.19%
Earnings per share:
Basic $ 1.65 $ 1.37 $ 1.01 $ 0.70 $ 0.92
Diluted $ 1.63 $ 1.36 $ 1.01 $ 0.69 $ 0.91
Cash dividends paid $ 0.618 $ 0.497 $ 0.429 $ 0.388 $ 0.357
Book value $ 13.68 $ 12.11 $ 11.85 $ 10.59 $ 10.87
Tangible book value $ 12.72 $ 10.97 $ 10.58 $ 9.53 $ 9.46
Stock dividends distributed 5.00% 5.00% 5.00% 5.00% 5.00%
Market price:
High $ 27.69 $ 18.10 $ 16.32 $ 15.22 $ 15.22
Low $ 16.79 $ 14.29 $ 13.61 $ 12.34 $ 10.38
End of year $ 27.00 $ 17.14 $ 15.88 $ 14.25 $ 15.01
Price/earnings ratio (assumes dilution) 16.56X 12.59x 15.73x 20.49x 16.59x
Price/book value ratio 1.97X 1.42x 1.34x 1.35x 1.38x
Total assets $1,280,585 $1,138,986 $1,106,266 $1,044,557 $953,907
Total stockholders' equity $ 123,343 $ 106,264 $ 108,044 $ 98,307 $101,108
Average diluted common shares
outstanding (thousands) 9,072 8,939 9,240 9,386 9,341
- -------------------------------------------------------------------------------------------------------------------
-18-
PART II. OTHER INFORMATION
Item 1 -- Legal Proceedings
In the normal course of business, there are various outstanding legal
proceedings. In the opinion of management, the aggregate amount involved in such
proceedings is not material to the financial condition or results of operations
of the Company.
Item 2 -- Changes in Securities
Following are listed changes in the Company's Common Stock outstanding during
the quarter ended March 31, 1998 as well as certain actions which have been
taken which may affect the number of shares of Common Stock (shares) outstanding
in the future. There was no Preferred Stock outstanding during the quarter ended
March 31, 1998.
The Company has Stock Option Plans covering key employees. In January 1998,
non-qualified stock options were granted for 120,700 shares of common stock at
an option price of $26.70 per share. These options vest over a four year period
with the first vesting date one year from the date of grant. Outstanding at
March 31, 1998 are non-qualified stock options covering 461,565 shares at
exercise prices ranging between $8.58 and $26.70 with expiration dates between
February 12, 1999, and January 27, 2008. There are 591,527 shares of authorized
common stock designated for possible issuance under the Plans, including the
aforementioned shares. The number of shares designated for the Plans, the number
of shares under existing options and the option price per share may be adjusted
upon certain changes in capitalization, such as stock dividends, stock splits
and other occurrences as enumerated in the Plans. (FORMs S-8, Registration
Statement Nos. 33-18976 and 33-77410, filed with the Commission on December 9,
1987 and April 6, 1994, respectively).
In 1995, the Company granted its then Chairman stock options in connection
with the discharge of severance obligations of the Company and the Bank under
his employment agreement. The agreement issued options covering 143,311 and
30,024 shares with exercise prices of $13.99 and $14.60, respectively, and an
expiration date of January 31, 1997 (the number of shares under option and the
option price per share have been adjusted for stock dividends). The Company
filed a registration statement relating to these option shares which were issued
January 23, 1997, upon payment of the exercise price, from authorized, but
unissued common stock. These stock options did not reduce the number available
under the previously mentioned Plans.
The Company has a Dividend Reinvestment Plan for stockholders under which
no new shares of common stock were issued for the quarter ended March 31, 1998.
There are 525,762 shares of authorized but unissued common stock designated for
possible issuance under the Plan (the number of shares available has been
adjusted for stock dividends and splits). (FORM S-3, Registration Statement No.
33-12247, filed with the Commission on February 26, 1987).
The Company's Board of Directors has reserved 25,000 of authorized but
unissued shares for future payment of an annual Board retainer. In January 1998,
each Director was granted 112 shares which are restricted from one to three
years for payment of their 1998 Board retainer. Shares were purchased from
treasury therefore the number of authorized and unissued shares was not
effected.
The Company's Board of Directors has authorized the purchase on the open
market by the Company of additional shares of treasury stock. These treasury
shares are to be used for a variety of corporate purposes, primarily to meet the
needs of the Company's Employee Stock Ownership Plan, Automatic Dividend
Reinvestment and Stock Purchase Plan, Stock Option Plans, Retirement Savings
Plan, Restricted Stock Agreements and Bank Trust Department directed IRA and
HR-10 accounts. Purchases and sales during the first quarter of 1998 totalled
31,100 and 56,437, respectively, with 390,534 shares in treasury at March 31,
1998. Purchases were made at the prevailing market price in effect at the dates
of the transactions. Subsequent sales to both the Company's Employee Stock
Ownership Plan and Dividend Reinvestment and Stock Purchase Plan, if any, were
made at the five day average of the highest and lowest quoted selling price of
the Company's common stock on the National Market System of NASDAQ.
The Company currently is authorized to issue 2.5 million shares of
preferred stock, no par value, $1.00 stated value. The Board of Directors is
authorized to fix the particular designations, preferences, rights,
qualifications, and restrictions for each series of preferred stock issued. The
Company has a Stockholder Rights Plan (Plan) designed to ensure that any
potential acquiror of the Company negotiate with the Board of Directors and that
all Company stockholders are treated equitably in the event of a takeover
attempt. When the Plan was adopted, the Company paid a dividend of one Preferred
Share Purchase Right (Right) for each outstanding share of common stock of the
Company. Similar Rights are attached to each share of the Company's common stock
issued after November 15, 1994, the date of adoption subject to adjustment.
Under the Plan, the Rights will not be exercisable until a person or group
acquires beneficial ownership of 20 percent or more of the Company's outstanding
common stock, begins a tender or exchange offer for 25 percent or more of the
Company's outstanding common stock, or an adverse person, as declared by the
Board of Directors, acquires 10 percent or more of the Company's outstanding
common stock. Additionally, until the occurrence of such an event, the Rights
-19-
are not severable from the Company's common stock and therefore, the Rights will
be transferred upon the transfer of shares of the Company's common stock. Upon
the occurrence of such events, each Right entitles the holder to purchase one
one-hundredth of a share of Series R Preferred Stock, no par value, and $1.00
stated value per share of the Company at a price of $100.
The Plan also provides that upon the occurrence of certain specified
events, the holders of Rights will be entitled to acquire additional equity
interests in the Company or in the acquiring entity, such interests having a
market value of two times the Right's exercise price of $100. The Rights, which
expire November 14, 2004, are redeemable in whole, but not in part, at the
Company's option prior to the time they are exercisable, for a price of $0.01
per Right.
Item 3 -- Defaults Upon Senior Securities
This item is omitted because there were no defaults upon the Company's senior
securities during the quarter ended March 31, 1998.
Item 4 -- Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Stockholders was held on April 18, 1998. Two
directors were elected and three proposals were voted upon by the stockholders,
as described below. A copy of the Notice of Annual Stockholders' Meeting and
Proxy Statement is incorporated by Reference to this FORM 10-Q as Exhibit No.
99.1. A complete description of each proposal is included in the Proxy
Statement.
a. Daryl R. Forsythe and Everett A. Gilmour were elected as directors at
the Annual Meeting with terms of office to expire at the 2001 Annual
Meeting of Stockholders. There are four other directors whose terms of
office continued after the Annual Meeting. The terms of Peter B. Gregory
and Paul O. Stillman will expire at the 1999 Annual Meeting. The terms of
Andrew S. Kowalczyk, Jr. and John C. Mitchell will expire at the 2000
Annual Meeting.
Daryl R. Forsythe was elected, with 7,457,774 votes FOR, and 35,110 votes
WITHHELD. Everett A. Gilmour was elected, with 7,394,956 votes FOR, and
97,931 votes WITHHELD.
b. Proposal to Ratify the Board of Directors Action in Selection of KPMG Peat
Marwick LLP as Independent Public Auditors for the Company.
The proposal was approved, with 7,594,405 votes FOR, 24,302 votes AGAINST,
and 31,452 votes ABSTAINING.
c. Proposal to increase the number of authorized shares of common stock to
15,000,000.
The proposal was approved, with 7,330,378 votes FOR, 253,813 votes AGAINST,
and 65,961 votes ABSTAINING.
d. Proposal to amend the 1993 Stock Option Plan.
The proposal was approved, with 6,668,620 votes FOR, 369,000 votes AGAINST,
and 98,759 votes ABSTAINING.
Item 5 -- Other Information
Not Applicable
Item 6 -- Exhibits and Reports on FORM 8-K
An index to exhibits follows the signature page of this FORM 10-Q.
No reports on FORM 8-K were filed by the Company during the quarter ended March
31, 1998.
-20-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report on FORM 10-Q to be signed on its behalf
by the undersigned thereunto duly authorized, this 15th day of May, 1998.
NBT BANCORP INC.
By: /S/ JOE C. MINOR
Joe C. Minor
Executive Vice President
Chief Financial Officer and Treasurer
INDEX TO EXHIBITS
The following documents are attached as Exhibits to this FORM 10-Q or, if
annotated by the symbol *, are incorporated by reference as Exhibits as
indicated by the page number or exhibit cross-reference to the prior filings of
the Registrant with the Commission.
FORM 10-Q
Exhibit Exhibit
Number Coss-Reference
- --------- -------------
10.1 Restricted Stock Agreement between NBT Bancorp Inc. and (Director) Herein
made January 1, 1998.
Substantially identical contracts for the following directors have
been omitted:
Andrew S. Kowalczyk, Jr.; Paul O. Stillman; John C. Mitchell;
Everett A. Gilmour and Peter B. Gregory.
10.2 Restricted Stock Agreement between NBT Bank, National Association and Herein
(Director) made January 1, 1998.
Substantially identical contracts for the following directors have
been omitted:
Dan B. Marshman; Kenneth M. Axtell; J. Peter Chaplin; Andrew S.
Kowalczyk, Jr.; Paul O. Stillman; William L. Owens; John C.
Mitchell; Janet H. Ingraham; Everett A. Gilmour; Richard F.
Monroe and Peter B. Gregory.
10.3 Certificate of Incorporation of NBT Bancorp Inc. as amended through Herein
April 18, 1998
10.4 NBT Bancorp Inc. 1993 Stock Option Plan as amended through April Herein
18, 1998
10.5 Lease of Oxford Office. Herein
27. Financial Data Schedule Herein
99.1 NBT BANCORP INC. Notice of Annual Stockholders Meeting and Proxy *
dated March 17, 1998.
Filed on March 2, 1998 pursuant to Section 14 of the Exchange Act,
File No. 0-14703.
EXHIBIT 10.1
Restricted Stock Agreement between NBT Bancorp Inc. and (Director)
RESTRICTED STOCK AGREEMENT
BETWEEN
NBT BANCORP INC. AND
AGREEMENT made as of January 1, 1998 by and between NBT Bancorp Inc.
("Company") and ("Participant"):
WHEREAS, the Participant is a Director of the Company and, as such,
receives an annual retainer fee in addition to fees for meeting attendance. The
Company and Participant agree that the Participant is entitled to receive the
retainer fee in Company Stock subject to the conditions specified below.
THEREFORE, in consideration of the mutual promises and covenants
contained herein, it is hereby agreed as follows:
1. AWARD OF SHARES.
Under the terms of this Agreement, the Company has awarded the Participant a
Restricted stock award on January 1, 1998 ("Award Date"), covering 112 shares of
NBT Bancorp Inc. Common Stock, with a fair market value equal to $3,002.72
(annual director's retainer), subject to the terms, conditions and restrictions
set forth in this agreement.
2. AWARD RESTRICTIONS.
The shares covered by restricted stock award shall vest in accordance with the
schedule set forth below:
Full Years Elapsed from Award Date Percent Vested
---------------------------------- --------------
1 33%
2 66%
3 100%
Upon the vesting of any part of the restricted stock award by virtue of the
lapse of the restriction period set forth above or under Section 4 of this
Agreement, the Company shall cause a stock certificate covering the requisite
number of shares in the name of the Participant or beneficiary(ies) to be
distributed within 30 days after vesting. Upon receipt of such stock
certificate(s), the Participant or beneficiary(ies) are free to hold or dispose
of such certificate at will.
1
During the restriction period, the shares covered by the restricted stock award
not already vested are not transferable by the Participant by means of sale,
assignment, exchange, pledge, or otherwise. However, the restriction period will
lapse upon a change of ownership control within the meaning of Internal Revenue
Code ss.368(c) of Company or NBT Bancorp Inc. The lapse of the restriction
period will cause the restricted stock award to be fully vested.
3. STOCK CERTIFICATES.
The stock certificate(s) evidencing the restricted stock award shall be
registered in the name of the Participant as of the Award Date. Physical
possession or custody of such stock certificate(s) shall be retained by the
Company until such time as the shares are vested (i.e. the restriction period
lapses). The Company reserves the right to place a legend on the stock
certificate(s) restricting the transferability of such certificate(s).
During the restriction period, except as otherwise provided in Section 2 of this
Agreement, the Participant shall be entitled to all rights of a stockholder of
the Company, including the right to vote the shares and receive cash dividends.
Stock dividends declared by the Company will be characterized as restricted
stock, and distributed with the principle restricted stock.
4. TERM OF DIRECTORSHIP.
If the Participant terminates board membership with the Company due to death,
disability, retirement, or failure to be re-elected or re-appointed, the
restricted stock award, to the extent not already vested, shall vest in full as
of the date of such termination. Voluntary resignation or removal for cause will
result in forfeiture of the non-vested grants. The Participant may designate a
beneficiary(ies) to receive the stock certificate representing that portion of
the restricted stock award automatically vested upon death. The participant has
the right to change such beneficiary designation at will.
5. DUTY TO NOTIFY.
It is the Participant's duty to notify the Company in the event an Internal
Revenue Code ss.83(b) election is made in the year of the award.
6. WITHHOLDING TAXES.
The Company shall have the right to retain and withhold from any payment under
the restricted stock awarded the amount of taxes required by any government to
be withheld or otherwise deducted and paid with respect to such payment. At its
discretion, the Company may require a Participant receiving shares of Common
Stock under a restricted stock award to reimburse the Company for any such taxes
required to be withheld by the Company and withhold any distribution in whole or
in part until the Company is so reimbursed. In lieu thereof, the Company shall
2
have the right to withhold from any other cash amounts due or to become due from
the Company to the Participant an amount equal to such taxes required to be
withheld by the Company to reimburse the Company for any such taxes or retain
and withhold a number of shares having a market value not less than the amount
of such taxes and cancel (in whole or in part) any such shares so withheld in
order to reimburse the Company for any such taxes.
7. IMPACT ON OTHER BENEFITS.
The value of the restricted stock award (either on the Award Date or at the time
the shares are vested) shall not be includable as compensation or earnings for
purposes of any other benefit plan offered by the Company.
8. ADMINISTRATION.
The Compensation Committee shall have full authority and discretion to decide
all matters relating to the administration and interpretation of this Agreement.
The Compensation Committee shall have full power and authority to pass and
decide upon cases in conformity with the objectives of this Agreement under such
rules as the Board of Directors of the Company may establish.
Any decision made or action taken by the Company, the Board of Directors, or the
Compensation Committee arising out of, or in connection with, the
administration, interpretation, and effect of this Agreement shall be at their
absolute discretion and will be conclusive and binding on all parties. No member
of the Board of Directors, Compensation Committee, or employee of the Company
shall be liable for any act or action hereunder, whether of omission or
commission, by the Participant or by any agent to whom duties in connection with
the administration of this Agreement have been delegated in accordance with the
provision of this Agreement.
9. COMPANY RELATION WITH PARTICIPANTS.
Nothing in this Agreement shall confer on the Participant any right to continue
as a director of the Company.
10. FORCE AND EFFECT.
The various provisions of this Agreement are severable in their entirety. Any
determination of invalidity or unenforceability of any one provision shall have
no effect on the continuing force and effect of the remaining provisions.
11. GOVERNING LAWS.
Except to the extent pre-empted under federal law, the provisions of this
Agreement shall be construed, administered and enforced in accordance with the
domestic internal law of the State of New York.
3
12. ENTIRE AGREEMENT.
This Agreement contains the entire understanding of the parties and shall not be
modified or amended except in writing and duly signed by the parties. No waiver
by either party of any default under this Agreement shall be deemed a waiver of
any later default.
IN WITNESS WHEREOF, the parties have executed this Agreement on this
_____ day of ________, ________
NBT BANCORP INC.
By_______________________________
President
And
by_______________________________
CFO and Treasurer
_________________________________
Signature of Participant
_________________________________
Name of Participant
(please print)
4
EXHIBIT 10.2
Restricted Stock Agreement between
NBT Bank, National Association and (Director)
RESTRICTED STOCK AGREEMENT
BETWEEN
NBT BANK, N.A. AND
AGREEMENT made as of January 1, 1998 by and between NBT Bank, N.A.
("Company") and ("Participant"):
WHEREAS, the Participant is a Director of the Company and, as such,
receives an annual retainer fee in addition to fees for meeting attendance. The
Company and Participant agree that the Participant is entitled to receive the
retainer fee in Company Stock subject to the conditions specified below.
THEREFORE, in consideration of the mutual promises and covenants
contained herein, it is hereby agreed as follows:
1. AWARD OF SHARES.
Under the terms of this Agreement, the Company has awarded the Participant a
Restricted stock award on January 1, 1998 ("Award Date"), covering 112 shares of
NBT Bancorp Inc. Common Stock, with a fair market value equal to $3,002.72
(annual director's retainer), subject to the terms, conditions and restrictions
set forth in this agreement.
2. AWARD RESTRICTIONS.
The shares covered by restricted stock award shall vest in accordance with the
schedule set forth below:
Full Years Elapsed from Award Date Percent Vested
---------------------------------- --------------
1 33%
2 66%
3 100%
Upon the vesting of any part of the restricted stock award by virtue of the
lapse of the restriction period set forth above or under Section 4 of this
Agreement, the Company shall cause a stock certificate covering the requisite
number of shares in the name of the Participant or beneficiary(ies) to be
distributed within 30 days after vesting. Upon receipt of such stock
certificate(s), the Participant or beneficiary(ies) are free to hold or dispose
of such certificate at will.
1
During the restriction period, the shares covered by the restricted stock award
not already vested are not transferable by the Participant by means of sale,
assignment, exchange, pledge, or otherwise. However, the restriction period will
lapse upon a change of ownership control within the meaning of Internal Revenue
Code ss.368(c) of Company or NBT Bancorp Inc. The lapse of the restriction
period will cause the restricted stock award to be fully vested.
3. STOCK CERTIFICATES.
The stock certificate(s) evidencing the restricted stock award shall be
registered in the name of the Participant as of the Award Date. Physical
possession or custody of such stock certificate(s) shall be retained by the
Company until such time as the shares are vested (i.e. the restriction period
lapses). The Company reserves the right to place a legend on the stock
certificate(s) restricting the transferability of such certificate(s).
During the restriction period, except as otherwise provided in Section 2 of this
Agreement, the Participant shall be entitled to all rights of a stockholder of
the Company, including the right to vote the shares and receive cash dividends.
Stock dividends declared by the Company will be characterized as restricted
stock, and distributed with the principle restricted stock.
4. TERM OF DIRECTORSHIP.
If the Participant terminates board membership with the Company due to death,
disability, retirement, or failure to be re-elected or re-appointed, the
restricted stock award, to the extent not already vested, shall vest in full as
of the date of such termination. Voluntary resignation or removal for cause will
result in forfeiture of the non-vested grants. The Participant may designate a
beneficiary(ies) to receive the stock certificate representing that portion of
the restricted stock award automatically vested upon death. The participant has
the right to change such beneficiary designation at will.
5. DUTY TO NOTIFY.
It is the Participant's duty to notify the Company in the event an Internal
Revenue Code ss.83(b) election is made in the year of the award.
6. WITHHOLDING TAXES.
The Company shall have the right to retain and withhold from any payment under
the restricted stock awarded the amount of taxes required by any government to
be withheld or otherwise deducted and paid with respect to such payment. At its
discretion, the Company may require a Participant receiving shares of Common
Stock under a restricted stock award to reimburse the Company for any such taxes
required to be withheld by the Company and withhold any distribution in whole or
in part until the Company is so
2
reimbursed. In lieu thereof, the Company shall have the right to withhold from
any other cash amounts due or to become due from the Company to the Participant
an amount equal to such taxes required to be withheld by the Company to
reimburse the Company for any such taxes or retain and withhold a number of
shares having a market value not less than the amount of such taxes and cancel
(in whole or in part) any such shares so withheld in order to reimburse the
Company for any such taxes.
7. IMPACT ON OTHER BENEFITS.
The value of the restricted stock award (either on the Award Date or at the time
the shares are vested) shall not be includable as compensation or earnings for
purposes of any other benefit plan offered by the Company.
8. ADMINISTRATION.
The Compensation Committee shall have full authority and discretion to decide
all matters relating to the administration and interpretation of this Agreement.
The Compensation Committee shall have full power and authority to pass and
decide upon cases in conformity with the objectives of this Agreement under such
rules as the Board of Directors of the Company may establish.
Any decision made or action taken by the Company, the Board of Directors, or the
Compensation Committee arising out of, or in connection with, the
administration, interpretation, and effect of this Agreement shall be at their
absolute discretion and will be conclusive and binding on all parties. No member
of the Board of Directors, Compensation Committee, or employee of the Company
shall be liable for any act or action hereunder, whether of omission or
commission, by the Participant or by any agent to whom duties in connection with
the administration of this Agreement have been delegated in accordance with the
provision of this Agreement.
9. COMPANY RELATION WITH PARTICIPANTS.
Nothing in this Agreement shall confer on the Participant any right to continue
as a director of the Company.
10. FORCE AND EFFECT.
The various provisions of this Agreement are severable in their entirety. Any
determination of invalidity or unenforceability of any one provision shall have
no effect on the continuing force and effect of the remaining provisions.
11. GOVERNING LAWS.
Except to the extent pre-empted under federal law, the provisions of this
Agreement shall be construed, administered and enforced in accordance with the
domestic internal law of the State of New York.
3
12. ENTIRE AGREEMENT.
This Agreement contains the entire understanding of the parties and shall not be
modified or amended except in writing and duly signed by the parties. No waiver
by either party of any default under this Agreement shall be deemed a waiver of
any later default.
IN WITNESS WHEREOF, the parties have executed this Agreement on this
_____ day of ________, ________
NBT BANK, N.A.
By_______________________________
President
And
by_______________________________
CFO and Treasurer
_________________________________
Signature of Participant
_________________________________
Name of Participant
(please print)
4
EXHIBIT 10.3
Certificate of Incorporation of NBT Bancorp Inc. as amended
CERTIFICATE OF INCORPORATION
OF
NBT BANCORP INC.
AS AMENDED THROUGH
APRIL 18, 1998
FIRST: The name of the corporation (hereinafter called the Corporation) is
NBT BANCORP INC.
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 229 South State Street, City of Dover, County of Kent; and
the name of the registered agent of the Corporation in the State of Delaware at
such address is The Prentice-Hall Corporation System, Inc.
THIRD: The nature of the business and the purpose to be conducted and
promoted by the Corporation shall be to conduct any lawful business, to promote
any lawful purpose, and to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware.
(A) FOURTH: The total number of shares of all classes of capital stock
which the Corporation shall have the authority to issue is Seventeen Million
Five Hundred Thousand (17,500,000) shares, consisting of Fifteen Million
(15,000,000) shares of Common Stock having no par value, stated value $1.00 per
share and Two Million Five Hundred Thousand (2,500,000) shares of Preferred
Stock having no par value, stated value $1.00 per share.
FIFTH: The Board of Directors is authorized, subject to limitations
prescribed by law and the provisions of the Article FOURTH, to provide for the
issuance of the shares of Preferred Stock in series, and by filing a certificate
pursuant to the applicable law of the State of Delaware, to establish from time
to time the number of shares to be included in each such series, and to fix the
designation, powers, preferences and rights of the shares of each such series
and the qualifications, limitations or restrictions thereof.
The authority of the Board with respect to each series shall include, but
not to be limited to, determination of the following:
(a) The number of shares constituting that series and the distinctive
designation of that series;
(b) The dividend rate on the shares of that series, whether dividends
shall be cumulative, and, if so, from which date or dates, and the relative
rights of priority, if any, of payment of dividends shares of that series;
(c) Whether that series shall have voting rights, in addition to the
voting rights provided by law, and, if so, the terms of such voting rights;
1
A) AS LAST AMENDED APRIL 18, 1998
(d) Whether that series shall have conversion privileges, and, if so,
the terms and conditions of such conversion, including provisions for
adjustment of the conversion rate in such events as the Board of Directors
shall determine;
(e) Whether or not the shares of that series shall be redeemable, and,
if so, the terms and conditions of such redemption, including the date or
dates upon or after which they shall be redeemable, and the amount per
share payable in case of redemption, which amount may vary under different
conditions and at different redemption dates;
(f) Whether that series shall have a sinking fund for the redemption
or purchase of shares of that series, and, if so, the terms and amount of
such sinking fund;
(g) The right of the shares of that series in the event of voluntary
or involuntary liquidation, dissolution or winding up of the Corporation,
and the relative rights of priority, if any, of payment of shares of that
series;
(h) Any other relative rights, preferences and limitations of that
series.
Dividends on outstanding shares of Preferred Stock shall be paid or
declared and set apart for payment, before any dividends shall be paid or
declared and set apart for payment on the Common Stock with respect to the same
dividend period.
If upon any voluntary or involuntary liquidation, dissolution or winding up
of the Corporation, the assets available for distribution to holders of shares
of Preferred Stock of all series shall be insufficient to pay such holders the
full preferential amount to which they are entitled, then such assets shall be
distributed ratably among the shares of all series of Preferred Stock in
accordance with the respective preferential amounts (including unpaid cumulative
dividends, if any) payable with respect thereto.
SIXTH: The Corporation is have perpetual existence.
SEVENTH: The name and the mailing address of the incorporator are as
follows:
NAME MAILING ADDRESS
Everett A. Gilmour 52 South Broad Street
Norwich, New York 13815
EIGHTH: For the management of the business and for the conduct of the
affairs of the Corporation, and in further definition, limitation and regulation
of the powers of the Corporation and of its directors and of its stockholders or
any class thereof, as the case may be, it is further provided:
A. The management of the business and the conduct of the affairs of
the Corporation shall be vested in its Board of Directors. The number of
directors shall be fixed by, or in the manner provided in, the By-Laws.
2
Directors need not be elected by written ballot, unless so required by the
By-Laws of the Corporation.
B. After the original or other By-Laws of the Corporation have been
adopted, amended, or repealed, as the case may be, in accordance with the
provisions of Section 109 of the General Corporation Law of the State of
Delaware, and after the Corporation has received any payment for any of its
stock, the power to adopt, amend, or repeal the By-Laws of the Corporation may
be exercised by the Board of Directors of the Corporation.
NINTH: Meetings of stockholders may be held within or without the State of
Delaware, as the By-Laws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statute) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the By-Laws of the Corporation.
TENTH: From time to time, any of the provisions of this Certificate of
Incorporation may be amended, altered or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted, all in the manner now or hereafter prescribed by the laws of
the State of Delaware, and all rights and powers at any time conferred upon the
stockholders and the directors of the Corporation by this Certificate of
Incorporation are granted, subject to the provisions of this Article TENTH. The
provisions set forth in Article ELEVENTH may not be repealed or amended in any
respect, unless such action is approved by the affirmative vote of the holders
of not less than eighty percent (80%) of the outstanding shares of Voting Stock
(as defined in Article ELEVENTH) of the Corporation; provided, however, if there
is a Major Stockholder as defined in Article ELEVENTH, such eighty percent (80%)
vote must include the affirmative vote of at least eighty percent (80%) of the
outstanding shares of voting stock held by shareholders other than the Major
Stockholder.
(B) ELEVENTH:
(a) The affirmative vote of the holders of not less than eighty percent
(80%) of the total voting power of all outstanding shares entitled to vote in
the election of any particular Class of Directors (as defined in Section (c) of
this Article ELEVENTH) and held by disinterested shareholders (as defined below)
shall be required for the approval or authorization of any "Business
Combination," as defined and set forth below:
(1) Any merger, consolidation or other business reorganization or
combination of the Corporation or any of its subsidiaries with any other
corporation that is a Major Stockholder of the Corporation;
(2) Any sale, lease or exchange by the Corporation of all or a
substantial part of its assets to or with a Major Stockholder;
(3) Any issue of any stock or other security of the Corporation or any
of its subsidiaries for cash, assets or securities of a Major Stockholder;
3
(4) Any reverse stock split of, or exchange of securities, cash or
other properties or assets of any outstanding securities of the Corporation
or any of its subsidiaries or liquidation or dissolution of the Corporation
or any of its subsidiaries in any such case in which a Major Stockholder
receives any securities, cash or other assets whether or not different from
those received or retained by any holder of securities of the same class as
held by such Major Shareholder.
(B) AS AMENDED FEBRUARY 21, 1986
The affirmative vote required by this Article ELEVENTH shall be in addition to
the vote of the holders of any class or series of stock of the Corporation
otherwise required by law, by any other Article of this Certificate of
Incorporation, or as this Certificate of Incorporation may be amended, by any
resolution of the Board of Directors providing for the issuance of a class or
series of stock, or by any agreement between the Corporation and any national
securities exchange.
(b) For the purpose of this Article ELEVENTH:
(1) The term "Major Stockholder" shall mean and include any
person, corporation, partnership, or other person or entity which, together
with its "Affiliates" and "Associates" (as defined at Rule 12b-2 under the
Securities Exchange Act of 1934), "beneficially owns" (as hereinafter
defined) in the aggregate five percent (5%) or more of the outstanding
shares of Voting Stock, and any Affiliates or Associates of any such
person, corporation, partnership, or other person or entity.
(2) The term "Substantial Part" shall mean more than twenty-five
percent (25%) of the fair market value of the total consolidated assets of
the Corporation in question, or more than twenty-five percent (25%) of the
aggregate par value of authorized and issued Voting Stock of the
Corporation in question, as of the end of its most recent fiscal quarter
ending prior to the time the determination is being made.
(3) The term "Voting Stock" shall mean the stock of Corporation
entitled to vote in the election of directors.
(4) The term "Beneficial Owner" shall mean any person and certain
related parties, directly, or indirectly who own shares or have the right
to acquire or vote shares of the company.
(5) The term "Disinterested Shareholder" shall mean any holder of
voting securities of the company other then (i) a Major Stockholder if it
or any of them has a financial interest in the transaction being voted on
(except for a financial interest attributable solely to such person's
interest as a stockholder of the company which is identical to the
interests of all stockholders of the same class) and (ii) in the context of
a transaction described in (a) (4) above, any Major Stockholder (whether or
not having a financial interest described in clause (i) of this sentence)
if it or any of them has directly or indirectly proposed the transaction,
4
solicited proxies to vote in favor of the transaction, financed any such
solicitation of proxies or entered into any contract, arrangement, or
understanding with any person for the voting of securities of the company
in favor of the transaction.
(c) The provisions of this Article shall not apply to a Business
Combination which is approved by sixty-six and two-thirds percent (66-2/3%)
of those members of the Board of Directors who were directors prior to the
time when the Major Stockholder became a Major Stockholder. The provisions
of this Article shall not apply to a Business Combination which (i) does
not change any stockholder's percentage ownership in the shares of stock
entitled to vote in the election of directors of any successor of the
Corporation from the percentage of the shares of Voting Stock owned by such
stockholder; (ii) provides for the provisions of this Article without any
amendment, change, alteration, or deletion, to apply to any successor to
the Corporation; and (iii) does not transfer all or a Substantial Part of
the Corporation's assets or Voting Stock other than to a wholly-owned
subsidiary of the Corporation.
(d) Nothing contained in the Article shall be construed to relieve a
Major Stockholder from any fiduciary obligation imposed by law. In
addition, nothing contained in this Article hall prevent any stockholders
of the Corporation from objecting to any Business Combination and from
demanding any appraisal rights which may be available to such stockholder.
(C)
(e) The Board of Directors of the Corporation shall be divided into
three classes: Class 1,Class 2 and Class 3, which shall be as nearly equal
as possible. Each Director shall serve for a term ending on the date of the
third Annual Meeting of Stockholders following the Annual Meeting at which
such Director was elected; provided, however, that each initial Director in
Class 1 shall hold office until the Annual Meeting of Stockholders in 1987;
each initial Director in Class 2 shall hold office until the Annual Meeting
of Stockholders in 1988; and each initial Director in Class 3 shall hold
office until the Annual Meeting of Stockholders in 1989. Such initial
Directors for each of the three Classes of Directors shall be as follows:
Class 1 - John M. Kolbas and Paul O. Stillman; Class 2 - Donald E. Stone,
Darryl R. Gregson and Paul R. Enggaard; Class 3 - Everett A. Gilmour, J.K.
Weinman and Thomas J. Mirabito. In the event of any increase or decrease in
the authorized number of Directors, (1) each Director then serving as such
nevertheless continue as a Director of the Class of which he is a member
until the expiration of his current term, or his earlier resignation,
removal from office or death, and (2) the newly created or eliminated
directorships resulting from such increase or decrease shall be appointed
by the Board of Directors among the three Classes of Directors so as to
maintain such classes as nearly equal as possible. Notwithstanding any of
the foregoing provisions of this Article ELEVENTH, each Director shall
serve until his successor is elected and qualified or until his earlier
resignation, removal from office or death.
(D) TWELTH: A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of
fiduciary duty as director except for liability (i) for any breach of the
director's duty of loyalty to the Corporation of its stockholders, (ii) for
5
acts of omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the Delaware
General Corporation Law, as the same exists or hereafter may be amended, or
(iv) for any transaction from which the director derived an improper
personal benefit. If the Delaware General Corporation Law hereafter is
amended to authorize the further elimination or limitation of the liability
of directors, then the liability of a director of the Corporation, in
addition to the limitation on personal liability provided herein, shall be
limited to the fullest extent permitted by the amended Delaware General
Corporation Law. Any repeal or modification of this paragraph by the
stockholders of the Corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director of
the Corporation existing at the time of such repeal or modification.
(C) PARAGRAPH (e) ADDED BY AMENDMENT FEBRUARY 21, 1986.
(D) ARTICLE TWELFTH ADDED BY AMENDMENT FEBRUARY 28, 1987.
6
EXHIBIT 10.4
NBT Bancorp Inc. 1993 Stock Option Plan as amended
NBT BANCORP INC.
1993 STOCK OPTION PLAN
1. Purposes. (a) The purposes of the 1993 Stock Option Plan (the
"Plan") are (a) to attract and retain outstanding key management employees, (b)
to further the growth, development, and financial success of NBT Bancorp Inc.
(the "Company") by recognizing and rewarding those key employees responsible
therefore, (c) to provide an incentive to, and encourage stock ownership in the
Company, by those employees responsible for the policies and operations of the
Company or its subsidiaries, and (d) to revise and amend the Company's stock
option plan dated November 25, 1986, as amended January 12, 1988 (referred to
herein as the "1986 Plan"), in the manner set forth in Section 22, below.
(b) In furtherance of these purposes, all stock options to be granted
pursuant to the Plan shall be non-statutory ("non-qualified") stock options.
2. Administration. (a) This Plan shall be administered by the Board of
Directors of the Company, the Compensation and Benefits Committee of the Board
of Directors of the Company (or successor committee) or a subcommittee thereof
(the "Committee"). The Committee shall consist of not fewer than three members
of the Board of Directors. It is intended that the Committee at all times comply
with the disinterested administration provisions of Rule 16b-3 promulgated under
Section 16(b) of the Securities Exchange Act of 1934, as amended.
(b) The Committee shall have full authority and discretion to
determine, consistent with the provisions of this Plan, the employees to be
granted options; the times at which options will be granted; the option price of
the shares subject to each option (subject to Section 6); the number of options
to be granted to each employee; the period during which each option becomes
exercisable (subject to Section 8); and the terms to be set forth in each option
agreement. The Committee shall also have full authority and discretion to adopt
and revise such rules and procedures as it shall deem necessary for the
administration of this Plan. The Committee shall act by majority vote of all
members taken at a meeting of the Committee or by the written affirmation of a
majority of its members without a meeting.
(c) The Committee's interpretation and construction of any provisions
of this Plan or any option granted hereunder shall be final, conclusive, and
binding.
3. Eligibility. The Committee shall from time to time determine the key
management employees of the Company and its subsidiaries who shall be granted
options under this Plan. For purposes of this Plan, key management employees
shall be deemed to be those employees who are responsible for the policies and
operation of the Company and its subsidiaries, including its president, chief
executive officer, other executive officers, department heads, branch managers,
and division managers of the Company or its subsidiaries. A person who has been
granted an option may be granted additional options under this Plan if the
Committee shall so determine. The granting of an option under this Plan shall
not affect any outstanding stock option previously granted to an optionee under
this Plan or any other plan of the Company.
4. Shares of stock subject to this Plan. The number of shares which may
be issued pursuant to options granted under this Plan shall not exceed 1,207,753
shares of the no par value, stated value $1.00 per share, common stock of the
Company (the "Common Stock"). Such shares may be authorized and unissued shares
or shares previously acquired or to be acquired by the Company and held in
treasury. The Company shall reserve a sufficient number of shares for options
granted under the Plan. Any shares subject to an option which expires for any
reason or is terminated unexercised as to such shares may again be subject to an
option under this Plan.
5. Issuance and terms of option certificates. Each optionee shall be
entitled to receive an appropriate certificate evidencing his option and
referring to the terms and conditions of this Plan.
6. Granting price of options. (a) The grant of each option shall state
the number of shares to which it pertains and shall state the exercise price,
which shall not be less than 100% of the fair market value of the Common Stock.
"Fair Market Value," as used in this Plan, shall mean the average between the
highest and lowest quoted selling prices of the Common Stock on the National
Market System of NASDAQ on the date of grant and the five preceding trading days
prior to the date of grant. If there is no sale reported on the National Market
1
System of NASDAQ on the appropriate date, the Fair Market Value shall be
determined by taking the average between the highest and lowest sales for the
five most recent preceding trading days.
(b) The option price shall be payable in United States dollars and be
paid in full upon the exercise of the option and may be paid in cash or by
check, provided, however, that subject to the discretion of the Committee and
provided that all required regulatory approvals, if any, have been obtained, the
optionee may deliver certificates of the Common Stock of the Company in part or
in full payment of the purchase price (including the payment of all applicable
federal and state taxes due upon exercise) in which event such certificates
shall be valued at their Fair Market Value upon exercise of the option.
7. Use of proceeds. The proceeds from the sale of the Common Stock upon
exercise of options shall be added to the general funds of the Company and used
for its corporate purposes.
8. Term and exercise of options. (a) Each option granted under this
Plan shall be exercisable on the dates, for the number of shares and on such
other terms as shall be provided in the agreement evidencing the option granted
by the Committee. An option granted under the Plan shall become exercisable in
installments as follows: to the extent of forty percent (40%) of the number of
shares originally covered thereby with respect to each particular grant of
options, at any time after the expiration of one year from the date of grant,
and to the extent of an additional twenty percent (20%) of such number of shares
upon the expiration of each succeeding year, so that upon the expiration of four
years from the date of grant one hundred percent (100%) of such number of shares
will be eligible for exercise by the optionee; and such installments shall be
cumulative.
(b)An option may be exercised at any time or from time to time during
the term of the option as to any or all full shares which have become
purchasable under the provisions of the option and this Plan. However, no option
shall be exercisable until after one year from the date of grant, nor after the
expiration of ten years from the date of grant.
(c) An option shall be exercised by written notice of intent to
exercise the option with respect to a specified number of shares delivered to
the Company's secretary or treasurer at its principal office in Norwich, New
York and payment in full to the Company at such office of the amount of the
option price for the number of shares of Common Stock with respect to which the
option is then being exercised. In addition to and at the time of payment of the
option price, the optionee shall pay to the Company in cash or in Common Stock
of the Company the full amount of all federal and state withholding or other
taxes applicable to the taxable income of such optionee resulting from such
exercise.
(d) (i) Except as otherwise provided herein, for each share of Common
Stock purchased by an optionee upon the exercise of a stock option pursuant to
the Plan, the optionee upon the approval of the Board or the Committee shall
receive a replacement option (a "Reload Option") to purchase another share of
Common Stock at the Fair Market Value, determined in accordance with Section
6(a), on the date of exercise of such original option.
(ii) A Reload Option shall become exercisable two years after the date
of its grant, provided the optionee is then an employee or retired employee of
the Company, shall be exercisable for the same number of years that was
originally assigned to the option which such Reload Option replaced, and shall
be subject to such other terms and conditions as the Committee may determine.
(iii) No Reload Option shall be granted upon exercise of a Reload
Option.
(iv) If an optionee shall sell shares of Common Stock without Board or
Committee approval (which approval shall not be withheld in the case of an
optionee's financial hardship) within two years after the grant of a Reload
Option, then the number of shares of Common Stock available for purchase by an
optionee upon the exercise of a Reload Option shall be reduced by that number of
shares of Common Stock that the optionee shall have sold without such approval
within such two-year period after the grant date of the Reload Option.
9. Nontransferability. All options granted under this Plan shall be
nontransferable by the optionee, otherwise than by will or the laws of descent
and distribution, and shall be exercisable during his lifetime, only by him, nor
may any option be assigned, pledged, hypothecated, or otherwise disposed of in
any other way. Upon any attempt to sell, transfer, assign, pledge, hypothecate
or otherwise dispose of an option or any other right or privilege conferred
2
under this Plan, such option and any other rights or privileges conferred
hereunder shall be deemed forfeited, immediately terminated, and rendered null
and void.
10. Requirements of law. The granting of options and the issuance of
shares of Common Stock upon the exercise of an option shall be subject to all
applicable laws, rules, and regulations and shares shall not be issued except
upon approval of proper government agencies or stock exchanges as may be
required.
11. Termination of Employment. (a) Except as otherwise provided herein
and in Section 12, if an optionee's employment with the Company or its
subsidiaries shall terminate for any reason, he may, but only within a period of
30 days beginning the day following the date of such termination of employment,
exercise his option, to the extent that he was entitled to exercise it at the
date of such termination.
(b)(i) If an optionee's employment with the Company or its subsidiaries
shall terminate for "cause," as defined below, all options held by such optionee
at the date of such termination of employment shall be deemed forfeited,
immediately terminated, and rendered null and void.
(ii) Termination of an optionee's employment by the Company for "cause"
shall mean termination because, and only because, the optionee committed an act
of fraud, embezzlement, or theft constituting a felony or an act intentionally
against the interests of the Company which causes the Company material injury.
Notwithstanding the foregoing, the optionee shall not be deemed to have been
terminated for cause unless and until there shall have been delivered to the
optionee a copy of a resolution duly adopted by the affirmative vote of not less
than three-quarters of the entire membership of the Board at a meeting of the
Board called and held for the purpose (after reasonable notice to the optionee
and an opportunity for the optionee, together with optionee's counsel, to be
heard before the Board), finding that in the good faith opinion of the Board the
optionee was guilty of conduct constituting cause as defined above and
specifying the particulars thereof in detail.
12. Retirement, disability, or death of optionee. (a) In the event that
the optionee shall retire, the option shall become exercisable in full on the
date of retirement, shall otherwise continue in full force and effect as if the
optionee were still employed by the Company or its subsidiaries, and shall be
exercisable in accordance with its terms.
(b) In the event that the optionee shall become permanently and totally
disabled, as determined by the Committee in accordance with applicable Company
personnel policies, such option shall become exercisable in full on the date of
such disability and shall otherwise remain exercisable in accordance with its
terms for the remaining term of the option as established upon grant of such
option.
(c) In the event of the death of an optionee while in the employ of the
Company or its subsidiaries, the option theretofore granted to him shall be
exercisable only by the proper personal representative of the optionee's estate
within a period of six months after the date of death and such option shall
become exercisable in full on the date of such death.
13. Acceleration of Vesting. (a) Immediately upon the occurrence of a
Change in Control of the Company, all options shall immediately vest and become
exercisable in full, including that portion of any option that had not
theretofore become vested and exercisable.
(b) A "Change of Control" of the Company shall mean:
(i) A change in control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A as
in effect on the date hereof pursuant to the Securities Exchange Act of
1934 (the "Exchange Act"); provided that, without limitation, such a
change in control shall be deemed to have occurred at such time as any
Person hereafter becomes the "Beneficial Owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of 30 percent or
more of the combined voting power of the Company's Voting Securities;
or
(ii) During any period of two consecutive years, individuals who at the
beginning of such period constitute the Board cease for any reason to
constitute at least a majority thereof unless the election, or the
nomination for election by the Company's shareholders, of each new
director was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of the
period; or
3
(iii) There shall be consummated (x) any consolidation or merger of the
Company in which the Company is not the continuing or surviving
corporation or pursuant to which Voting Securities would be converted
into cash, securities, or other property, other than a merger of the
Company in which the holders of Voting Securities immediately prior to
the merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger, or (y) any sale,
lease, exchange, or other transfer (in one transaction or a series of
related transactions), of all, or substantially all of the assets of
the Company, provided that any such consolidation, merger, sale, lease,
exchange or other transfer consummated at the insistence of an
appropriate banking regulatory agency shall not constitute a change in
control; or
(iv) Approval by the shareholders of the Company of any plan or
proposal for the liquidation or dissolution of the Company.
(c) For purposes of these "Change in Control" provisions, the term
"Person" shall mean and include any individual, corporation, partnership, group,
association, or other "person," as such term is used in Section 14(d) of the
Exchange Act, other than the Company or any employee benefit plan(s) sponsored
by the Company.
(d) The term "Voting Securities" shall mean the Company's outstanding
securities ordinarily having the right to vote at elections of directors.
14. Adjustments. In the event of any change in the outstanding shares
of Common Stock by reason of any stock dividend or split, recapitalization,
reclassification, merger, consolidation, combination or exchange of shares, or
other similar corporate change, then if the Committee shall determine, in its
sole discretion, that such change necessarily or equitably requires an
adjustment in the number of shares subject to each outstanding option and the
option prices or in the maximum number of shares subject to this Plan, such
adjustments shall be made by the Committee and shall be conclusive and binding
for all purposes of this Plan. No adjustment shall be made in connection with
the sale by the Company of its Common Stock in the open market in an
SEC-registered offering or in a privately-placed exempt offering or the issuance
by the Company of Common Stock pursuant to the Company's Automatic Dividend
Reinvestment and Stock Purchase Plan or the Employees' Stock Ownership Plan or
of any warrants, rights, or options to acquire additional shares of Common Stock
or of securities convertible into Common Stock.
15. Extraordinary transactions. Upon (i) the dissolution or liquidation
of the Company, (ii) a reorganization, merger or consolidation of the Company
with one or more corporations or other entity as a result of which the Company
is not the surviving corporation, or (iii) a sale of substantially all the
assets of the Company to another corporation or other entity, the Board of
Directors shall cause written notice of the proposed transaction to be given to
the optionee or grantee not less than 40 days prior to the anticipated effective
date of the proposed transaction, and the option shall be accelerated and, prior
to a date specified in such notice, which shall be not more than ten days prior
to the anticipated effective date of the proposed transaction, the optionee
shall have the right to exercise the stock option to purchase any or all shares
then subject to the option, including those, if any, which have not become
available for purchase under other provisions of the Plan. The optionee, by so
notifying the Company in writing, may, in exercising the stock options,
condition such exercise upon, and provide that such exercise shall become
effective at the time of but immediately prior to, the consummation of the
transaction, in which event the optionee need not make payment for the shares of
Common Stock to be purchased upon exercise of the option until five days after
written notice by the Company to the optionee that the transaction is
consummated. Each option, to the extent not previously exercised prior to the
date specified in the foregoing notice, shall terminate on the effective date of
such consummation. If the proposed transaction is abandoned, any shares of
Common Stock not purchased upon exercise of the option shall continue to be
available for exercise in accordance with the other provisions of the Plan, and
the shares of Common Stock, if any, purchased upon exercise of an option
pursuant to this subsection shall be deemed to have been purchased in the order
in which they first become available for purchase under other provisions of the
plan.
16. Claim to stock option, ownership, or employment rights. No employee
or other person shall have any claim or right to be granted options under this
Plan. No optionee, prior to issuance of the stock, shall be entitled to voting
rights, dividends, or other rights of stockholders except as otherwise provided
in this Plan. Neither this Plan nor any other action taken hereunder shall be
construed as giving any employee any right to be retained in the employ of the
Company or a subsidiary.
17. Unsecured obligation. Optionees under this Plan shall not have any
interest in any fund or specific asset of the Company by reason of this Plan. No
trust fund shall be created in connection with this Plan or any award
thereunder, and there shall be no required funding of amounts which may become
payable to any optionee.
4
18. Expenses of plan. The expenses of administering the Plan shall be
borne by the Company.
19. Reliance on reports. Each member of the Committee and each member
of the Board of Directors shall be fully justified in relying or acting in good
faith upon any report made by the independent public accountants of the Company
and its subsidiaries and upon any other information furnished in connection with
the Plan by any person or persons other than himself. In no event shall any
person who is or shall have been a member of the Committee or of the Board of
Directors be liable for any determination made or other action taken or any
omission to act in reliance upon any such report or information or for any
action, including the furnishing of information, taken or failure to act, if in
good faith.
20. Indemnification. Each person who is or shall have been a member of
the Committee or of the Board of Directors shall be indemnified and held
harmless by the Company against and from any loss, cost, liability, or expense
that may be imposed upon or reasonably incurred by him in connection with or
resulting from any claim, action, suit, or proceeding to which he may be a party
or in which he may be involved by reason of any action taken or failure to act,
in good faith, under the Plan and against and from any and all amounts paid by
him in settlement thereof, with the Company's approval, or paid by him in
satisfaction of judgment in any such action, suit, or proceeding against him,
provided he shall give the Company an opportunity, at its own expense, to handle
and defend the same before he undertakes to handle and defend it on his own
behalf. The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such person may be entitled under the
Company's Articles of Incorporation or Bylaws, as a matter of law, or otherwise,
or any power than the Company may have to indemnify them or hold them harmless.
21. Amendment and termination. Unless this Plan shall theretofore have
been terminated as hereinafter provided, no options may be granted after April
18, 2008. The Board of Directors may terminate this Plan or modify or amend this
Plan in such respect as it shall deem advisable, provided, however, that the
Board of Directors may not without further approval by the Company's
shareholders, (a) increase the aggregate number of shares of Common Stock as to
which options may be granted under the Plan except as provided in Section 14,
(b) change the class of persons eligible to receive options, (c) change the
provisions of the Plan regarding the option price, (d) extend the period during
which options may be granted, (e) extend the maximum period after the date of
grant during which options may be exercised or (f) change the provision in the
Plan as to the qualification for membership on the Committee. No termination or
amendment of the Plan may, without the consent of a person to whom an option
shall theretofore have been granted, adversely affect the rights of such person
under such option.
22. Revision and amendment of 1986 Plan. (a) Upon the adoption of the
Plan, the Board of Directors and the Committee shall have no authority to grant
additional options or SARs pursuant to the 1986 Plan, except as otherwise
provided in this Section.
(b) Article VI of the 1986 Plan is hereby amended to authorize the
Board of Directors or the Committee to (i) dissolve the in tandem feature of
previously-granted options and SARs and (ii) cancel previously granted SARs and
grant replacement options on the basis of seven-tenths (.7) options for each SAR
and such replacement options having terms similar to those of the canceled SARS,
the Board of Directors having determined that this was the amount necessary to
induce holders of SARs to surrender such SARS.
23. Gender. Any masculine terminology used in this Plan shall also
include the feminine gender.
24. Effective date of plan. The Plan was approved by a majority of the
shareholders of the Company at its annual meeting on April 24, 1993 (or
adjournment thereof) and shall become effective as of April 24, 1993.
25. Plan binding on successors. The Plan shall be binding upon the
successors and assigns of the Company.
26. Ratification of actions. By accepting any option or other benefit
under the Plan, each participant in the Plan and each person claiming under or
through such participant shall be conclusively deemed to have indicated such
person's acceptance and ratification of, and consent to, any action taken under
the Plan by the Company, the Board, or the Committee.
27. Invalidity or unenforceability. If any term or provision of the
Plan is held by a court of competent jurisdiction to be invalid, void, or
unenforceable, the remainder of the terms and provisions will remain in full
force and effect and will in no way be affected, impaired, or invalidated.
5
NBT BANCORP INC.
/s/DARYL R. FORSYTHE
Daryl R. Forsythe
President and Chief Executive Officer
/s/JOHN D. ROBERTS
John D. Roberts
Secretary
6
EXHIBIT 10.5
Lease of Oxford Office
LEASE
BETWEEN
JAMES MIRABITO & SONS, INC.
(LANDLORD)
AND
NBT BANK, N.A.
(TENANT)
TABLE OF CONTENTS
PAGE
Premises .................................................................. 1
Term ...................................................................... 1
Rent ...................................................................... 3
Improvements ........................................................... 3
Utilities ................................................................... 4
Restrooms ............................................................... 4
Taxes ..................................................................... 4
Parking ................................................................... 5
Maintenance and Modification ........................................ 6
Repairs by Tenant ........................................ 6
Repairs by Landlord ........................................ 6
Alterations by Tenant .................................................. 7
Personal Property ........................................................ 8
Compliance with Law .................................................. 8
Use of Premises ......................................................... 9
Assignment and Sublease .............................................. 9
Fire and Casualty ........................................................ 10
Landlord's Access to Premises ........................................ 11
Tenant's Default ......................................................... 12
Damage to Premises .................................................... 14
i
TABLE OF CONTENTS
PAGE
Access to Premises .................................................... 14
Signs ...................................................................... 14
Exemption from Liability .................................................... 15
Subordination to Mortgages................................................... 15
No Waiver of Rights .................................................... 16
Eminent Domain ......................................................... 17
Removal of Trade Fixtures.................................................... 17
Continued Liability for Rent................................................. 17
Waiver of Right to Redeem.................................................... 18
Governmental Preemption .................................................... 18
No Abatement or Diminution of Rent........................................... 19
Failure to Deliver Possession................................................ 20
Insurance ................................................................ 20
Indemnification .......................................................... 22
Limitation on Tenant's Remedies.............................................. 22
Environmental ........................................................... 22
Late Fee .................................................................. 25
Quiet Enjoyment of Premises.................................................. 25
Representations and Warranties............................................... 25
Obstructions ............................................................. 27
ii
TABLE OF CONTENTS
PAGE
Cessation of Business........................................................ 27
Memorandum of Lease.......................................................... 28
Force Majeure ............................................................. 28
Approvals ................................................................ 28
Right of First Refusal....................................................... 29
Confidentiality ............................................................. 30
New York Law ............................................................. 30
Headings .................................................................. 30
Notices .................................................................... 30
Miscellaneous ............................................................. 31
EXHIBITS
Exhibit "A" - Description of Improvments
Exhibit "B" - Tenant's Signage
iii
LEASE
THIS AGREEMENT between JAMES MIRABITO & SONS, INC., a New York business
corporation having its principal office at 44 Grand Street, Sidney, New York
13838 ("Landlord"), and NBT BANK, N.A., a national banking corporation having
its principal office at 52 S. Broad Street, Norwich, New York ("Tenant").
Landlord hereby leases to Tenant and Tenant rents from Landlord, the
Premises described below, upon the terms and conditions hereinafter set forth.
PREMISES
The premises which are the subject of this Lease are approximately
2000 square feet of office space located at Canal Street in the Village of
Oxford, Chenango County, New York being a portion of the Quickway for the
purpose of installing and operating a branch of Tenant as shown on the floor
plan, plans and specifications attached as part of Exhibit "A" ("Premises").
TERM
(a) The term of this Lease is ten (10) years and shall commence
on the date hereof and continue to and including a date, which is ten (10) years
after the Rent Commencement Date. The Rent Commencement Date shall be the date
on which Tenant opens the Demised Premises to the public for business, or the
date which is sixty (60) days after the date the Demised Premises are ready for
Occupancy as hereinafter defined.
Landlord shall give Tenant notice in writing at least sixty (60) days
prior to the date on which the Demised Premises will be Ready for Occupancy.
The term "Ready for Occupancy" shall mean that (1) the Demised Premises
and Common Area are substantially complete in accordance with the plans and
specifications and description of improvements attached hereto and incorporated
herein as "Exhibit A;" (2) all tools, scaffolding, surplus building materials,
waste, debris and rubbish of every sort in or about the Demised Premises have
been removed; exclusive possession of the Demised Premises have been delivered
to Tenant; the Common Area is fit and suitable for use; and the parking lot is
paved, striped and ready for use; (3) Landlord and Tenant shall have obtained
all necessary approvals for Tenant signage, as hereinafter set forth; (4) Tenant
may accept delivery from Landlord of the Demised Premises in a condition which
is not "Ready for Occupancy" provided, however, that Landlord shall not be
relieved of its duty to satisfy its obligations as set forth within this
section.
(b) In the event Tenant remains in possession of the Premises after
the expiration of the original term of the Lease or any extension thereof, the
Landlord may, at its option, upon fifteen (15) days' written notice to the
Tenant, treat the holdover as an agreement on the part of the Tenant to an
additional lease term on the same terms as set forth herein commencing as of the
expiration of the previous Lease term.
(c) Option to Renew: In the event Tenant has well and truly
complied with each and every term, condition and covenant of this Lease, the
Landlord grants to the Tenant the right to renew the Term of this Lease for
three (3) additional terms of five (5) years each. The Tenant shall give the
Landlord not less than six (6) months notice of its election to exercise each
renewal option.
2
RENT
Tenant shall pay without abatement, deduction or offset of any nature
the rental amounts set forth below which rent shall be paid in advance on the
first day of each month:
Years 1 - 5; $2000.00 per month
Years 6 - 10; $2500.00 per month
Years 11 - 15; (1st Option Period) $2625.00 per month
Years 16 - 20; (2nd Option Period) $2756.25 per month
Years 21 - 25; (3rd Option Period) $2894.06 per month
IMPROVEMENTS
The Landlord shall, at its own cost and expense, construct the
improvements to the Premises as detailed in Exhibit "A". It shall be the
responsibility of the Landlord to insure that the Demised Premises and the
Common Area, when completed, will be well-built in a workmanlike manner, using
accepted industry standards and practices, properly constructed, free of
Hazardous Substances and Asbestos (as hereinafter defined) and ready for
installation of all Tenants, fixtures and equipment.
Landlord, at its own cost, agrees to construct the Demised Premises and
Common Area pursuant to drawings prepared as set forth upon Exhibit "A" in
compliance with all state and local building, health, fire and other codes
pertaining thereto, and a temporary or permanent Certificate of Occupancy or its
equivalent has been issued and a copy thereof given to Tenant. Tenant shall be
responsible for the construction of the interior of the Premises and the
furnishing of the same as also detailed in Exhibit "A".
3
UTILITIES
Tenant shall be responsible for the payment of all utilities or
services used in the Premises including but not limited to telephone, electric,
gas and heating oil. Said payments shall be made by Tenant directly to the
provider of such utility or service. Landlord shall provide separate utility
meters to measure Tenant's actual consumption of such utilities as are used by
Tenant on the Demised Premises, or obtain separate utility meters from utility
companies furnishing such services.
RESTROOMS
During normal business hours, Tenant's employees, customers and
invitees shall be entitled to use the restroom facilities maintained by Landlord
located in the building of which the Premises are a part.
TAXES
Tenant covenants and agrees to pay the Landlord, within 20 days of
receiving notice from Landlord and a copy of the tax bill, Tenant's pro rata
share of the county, town, village and school taxes and assessments on the
premises during the term of this Lease and any renewals hereof. The Tenant's pro
rata share shall be thirty percent (30%) of the total tax or assessment and
shall constitute additional rent.
Appropriate credit shall be given Tenant for any real estate tax refund
obtained by reason of any reduction in the taxable assessed valuation of the
real property of which the Demised Premises form a part. The original
computations, as well as payments of additional rent, if any, or allowances, if
4
any, under the provisions of this paragraph, shall be based on the original
assessed valuations, with adjustments to be made at a later date when the tax
refund, if any, shall be paid to Landlord by the taxing authorities.
Before computing the amount of any allowance or credit to be made
to Tenant pursuant to this paragraph, there shall be deducted from the gross
amount of the real estate taxes refunded to Landlord, all reasonable expenses
paid by Landlord in connection with obtaining the refund (including, without
limitation, reasonable appraisal and counsel fees), and the refund to tenant
shall be determined by the net amount of the refund received by Landlord
multiplied by the percentage of real estate taxes imposed on assessed upon the
land and building comprising the real property of which the Demised Premises
form a part in respect of the tax year (as for years or parts thereof) covered
by the real estate tax in respect of which Landlord shall have received the
refund.
PARKING
Tenant and its customers shall have the right to use the parking area
adjacent to the Premises in common with other tenants of the building. The
parking area shall contain not less than twenty-one (21) parking spaces for
automobiles with dimensions to be not less than 9 feet X 18 feet during the term
and all renewals, and Tenant shall have five (5) spaces immediately adjacent and
contiguous to the Demised Premises, identified upon the Plot Plan, and
identified upon the Premises by Tenant at its sole cost and expense as "Reserved
Parking for NBT Customers." Landlord and Tenant shall, during the term of this
Lease and all renewals, require that each of their respective employees park
5
vehicles in the rear of the building of which the Demised Premises form a part.
MAINTENANCE AND MODIFICATIONS
A. Repairs by Tenant:
Tenant shall at its own cost and expense, maintain and repair the
interior of the Demised Premises (including, without limitations, any dropped
ceiling) and Tenant's entrance and exit doors. It shall be the Tenant's
responsibility and obligation to maintain, repair and/or replace all utility and
service pipes and lines inside the point of entry into the Demised Premises.
Tenant shall also make all repairs and/or replacements on the Demised
Premises necessitated by the negligence of the Tenant, its agents and/or
employees.
Tenant agrees to make all repairs, modifications and improvements to
the Demised Premises as may be required by the Americans with Disabilities Act
(or similar federal, state or local disability laws) for the Tenant to be in
compliance with the aforementioned disability laws. Tenant shall also he
responsible for its own janitorial services and supplies.
B. Repairs by Landlord:
Landlord shall, at its sole cost and expense, maintain and repair the
exterior roof, interior roof structure (which shall not include any dropped
ceiling), roof membrane, foundation walls, sprinkler system, sidewalks, exterior
paint, all floors (excluding floor coverings), and the Heating, Ventilation, and
Air-Conditioning System of the Demised Premises. In addition, Landlord shall
maintain, repair and/or replace all utilities to the point of entry to the
Demised Premises. Landlord shall have responsibility for snow and garbage
6
removal and for maintenance and repair of the parking area and the exterior of
the building in which the Premises are located.
Within twenty-four (24) hours after written notice from Tenant of the
failure or other malfunction of the HVA system, Landlord shall commence to
repair or replace the HVA system, and such work shall be completed within a
reasonable time thereafter. If Landlord fails to commence such repairs of
replacement within such twenty-four (24) hour period, Tenant may repair or
replace the HVA system and deduct the cost and expense therefrom from all rents
and other charges thereafter payable by Tenant to Landlord.
Landlord shall also make all repairs and/or replacements to the Demised
Premises necessitated by the negligence of it, its agents and employee.
Landlord agrees to maintain the Common Area, including the entire
bituminous parking area, at all times, and to comply with and conform to the
requirements prescribed by governmental laws, rules and regulations and/or
directives as may exist or may hereafter be enacted subsequent to the execution
of this Lease, excluding the Americans with Disabilities Act as affecting
Tenant's Premises.
ALTERATIONS BY TENANT
Tenant, at its sole cost and expense, may make any and all
interior non-structural alterations, additions or improvements to the Demised
Premises, including but not limited to, doors and windows. Any such alterations
shall be made in a good, workmanlike manner and shall not weaken the structure
thereof. In addition, Tenant shall take all necessary steps to comply with all
7
lawful requirements associated with such alterations or improvements, including
but not limited to, procuring any and all required governmental permits.
Tenant shal1 not have the right to make any structural or exterior,
alterations, additions or improvements to the Demised Premises which increase
the perimeter of the building over the Demised Premises, or which changes its
exterior appearance without first obtaining, in each instance, Landlord's prior
written consent, which consent shall not be unreasonably withheld or delayed.
PERSONAL PROPERTY
All fixtures and equipment of whatsoever nature placed or installed
upon the Demised Premises by Tenant shall remain the property of Tenant, and
Tenant shall have the right to release such fixtures and equipment to Landlord
or at Tenant's sole option remove the same at any time provided, however, that
upon removal of such fixtures or equipment, Tenant shall repair, at its own cost
and expense, all damage to the Demised Premises caused by such removal.
COMPLIANCE WITH LAW
Tenant shall promptly execute and comply with all statutes, ordinances,
rules, orders, regulations and requirements of the Federal, State and Local
Governments and of any and all their Departments and Bureaus applicable to the
Premises, for the correction, prevention, and abatement of nuisances or other
grievances, in, upon, or connected with the Premises during said term; and shall
also promptly comply with and execute all rules, orders and regulations of the
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New York Board of Fire Underwriters, or any other similar body, at the Tenant's
own cost and expense.
USE OF PREMISES
Tenant may use the Demised Premises for a full and complete Bank Branch
office, or for any other lawful purpose, so long as such lawful purpose does not
violate any applicable law, and upon the condition precedent that such use does
not compete with any other existing use of the Premises of which the Demised
Premises form a part.
ASSIGNMENT AND SUBLEASE
Tenant may assign this Agreement or sublet the Premises, upon the
condition precedent that the sub-lessee or assignee may not use the Demised
Premises for any business that competes with a use then existing upon the
Premises of which the Demised Premises form a part; however, in the event Tenant
assigns the Lease, Tenant shall continue to remain liable hereunder. If Tenant
assigns this Lease, Landlord when giving notice to the assignee or any future
assignee with respect to any default, shall also serve a copy of such notice
upon Tenant, and no notice of default shall be effective until a copy thereof is
received by Tenant. Tenant shall have the same period after receipt of notice to
cure such default as is given to such assignee under the terms of this Lease.
Tenant shall have the option, to be exercised by notifying Landlord within
thirty (30) days after receipt by Tenant of Landlord's notice, to cure any
default and become Tenant under a new Lease for the remainder of the Term of
this Lease upon all of the same terms and conditions as then remain under this
9
Lease as it may have been amended by agreement between Landlord and Tenant.
FIRE AND CASUALTY
(a) Tenant must given Landlord prompt notice of fire, accident,
damage or dangerous or defective conditions. If the Premises cannot be used
because of fire or other casualty, Tenant shall not be required to pay rent for
the time the Premises are unusable. If part of the Premises cannot be used,
Tenant must pay rent for the usable part, unless such part is too small to
accommodate Tenant's business. Landlord shall have the right to decide which
part of the Premises is usable. Landlord is not required to repair or replace
any equipment, fixtures, furnishings or decorations unless originally installed
by Landlord, unless such replacement is included in Landlord's insurance
recovery. Landlord is not responsible for delays due to settling insurance
claims, obtaining estimates, labor and supply problems or any other cause not
fully under Landlord's control.
(b) In the event of any damage or destruction by fire, casualty
or other causes (hereinafter refined to as "Destruction") to all or any part of
the Demised Premises, including but not limited to, the Common Area, Landlord
shall commence promptly to restore the same to substantially the same condition
as existed immediately preceding the Destruction. If Destruction is partial,
Landlord shall complete restoration within ninety (90) days after the
Destruction. If the Destruction is total, Landlord shall complete the
restoration within one hundred eight (180) days after the Destruction.
If, the result of any Destruction, fifty percent (50%) or more of the
total floor area of the Demised Premises is damaged, destroyed, or in Tenant's
reasonable opinion, rendered untenantable, and less than two (2) years remain
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under the term of this Lease, Landlord or Tenant may elect to terminate this
Lease by giving notice to the other of such election on or before the date which
is ninety (90) days after the Destruction, stating the date of termination,
which shall not be more than thirty (30) days after the date of which such
notice of termination shall have been given, and (1) upon the date specified in
such notice, this Lease and the term hereof shall cease and expire, and (2) any
base rent and additional rents and other charges paid for a period after the
date of Destruction shall be apportioned as of the date and refunded promptly to
Tenant.
LANDLORD'S ACCESS TO PREMISES
(a) Tenant agrees that Landlord and the Landlord's agents and
other representatives shall have the right to enter into and upon the Premises,
or any part thereof, at all reasonable hours for the purpose of examining the
same, or making such repairs or alterations therein as may be necessary for the
safety and preservation thereof. Reasonable hours for the purpose of this
sub-paragraph shall be during the Tenant's normal business hours to the public,
unless an emergency arises. In the event an emergency arises, Tenant agrees that
its Branch Manager shall accompany Landlord or Landlord's agents upon any such
entry.
(b) Tenant agrees to permit Landlord or the Landlord's agent to
show the Premises to persons wishing to hire or purchase the same; and Tenant
further agrees that on and after the sixth month, next preceding the expiration
of the term hereby granted, Landlord or Landlord's agents shall have the right
to place notices on the front of the Premises, or any part thereof, offering the
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Premises "To Let" or "For Sale", and Tenant hereby agrees to permit the same to
remain thereon without hindrance or molestation.
TENANT'S DEFAULT
(a) If Tenant is in default as hereinafter set forth, Landlord may:
(1) At any time thereafter terminate this Lease and the
term thereof upon giving to Tenant ninety-six (96)
hours notice in writing of the default and Landlord's
intention to terminate this Lease, and upon giving
such notice, unless Tenant cures said default within
said period, this Lease and the term thereof shall
terminate on the date fixed in such notice as if said
date were the date originally fixed in this Lease for
the termination or expiration thereof, and on such
termination, Landlord may enter the Premises or any
part thereof, either with or without process of law,
and expel Tenant or any person occupying the
Premises, using such force as may be reasonably
necessary to do so; or
(2) Maintain an action for monies due and to become due
to the end of the term of this Lease; or
(3) Relet the Premises or any part thereof, either in the
name of Landlord or otherwise, for such term or terms
as Landlord may determine, which may be more than or
less than the period which otherwise would have
constituted the balance of the term of this Lease,
and in connection therewith, Landlord may grant
concessions or free rent, or charge a lower rent than
that in this Lease. Tenant shall pay to Landlord as
liquidated damages any deficiency between the rent
hereby reserved and the net amount of the rent
received, if any, after deducting for legal expenses,
attorneys' fees, brokerage, advertising, for keeping
the Demised Premises in good order and for preparing
the same for reletting and for any other expense
incurred in reletting the Premises. The failure or
refusal of Landlord to relet the Premises or any part
or parts thereof shall not release or affect Tenant's
liability for damages; or
(4) Exercise any other legal right or remedy available
to Landlord under law.
(b) If any default shall occur, other than in the payment of
money, which cannot with due diligence be cured within a period of ninety-six
(96) hours, and Tenant, prior to the expiration of such period, commences to
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eliminate the cause of such default and proceeds diligently to cure such
default, subject to the force majeure provisions hereinafter defined, and such
default is thereafter cured, Landlord shall not have the right to exercise any
of its rights or remedies hereunder.
(c) All rights herein given to Landlord for the recovery of the
Premises or for money damages because of the default of Tenant are hereby
reserved and conferred upon Landlord as distinct, separation, and cumulative
remedies, and no one of the, whether exercised by Landlord or not, shall be
deemed to be in exclusion of any other right or remedy which Landlord may have
at law or in equity.
(d) Tenant shall be considered in default hereunder upon the
happening of any of the following events:
(1) Tenant shall fail to pay the rent or any part thereof
or any other financial obligation of Tenant to Landlord.
(2) Tenant shall default in the performance of any of the
covenants and agreements in this Lease contained on the
part of Tenant to be kept and performed.
(3) Tenant shall fail to comply with any of the statutes,
ordinances, rules, orders, regulations and requirements
of the federal, state and local government, or of any
and all of their departments and bureaus, or of the
Board of Fire Underwriters, applicable to the Premises.
(4) Proceedings in Bankruptcy shall be instituted by or
against Tenant which result in any adjudication of
bankruptcy, or if Tenant shall file or any creditor
of Tenant shall file, or any other person or persons
shall file any Petition under the Bankruptcy Laws of
the United States, as the same are now in force or
may hereafter be amended, and Tenant be adjudicated a
bankrupt, or if a receiver of the business or assets of
Tenant be appointed and such appointment not be vacated
within sixty (60) days after notice thereof to Tenant,
or the Tenant makes an assignment for the benefit of
creditors, or any sheriff, marshall, constable or keeper
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takes possession thereof by virtue of any attachment
of execution proceedings and offers same for sale
publicly.
DAMAGE TO PREMISES
Tenant shall replace, at the expense of Tenant, any and all broken
glass in and about the Premises. Tenant shall insure, and keep insured, all
plate glass in the Premises for and in the name of Landlord. Damage and injury
to the Premises, caused by the carelessness, negligence or improper conduct on
the part of Tenant or Tenant's agents or employees shall be repaired as speedily
as possible by the Tenant at the Tenant's own cost and expense.
ACCESS TO PREMISES
Tenant shall neither encumber nor obstruct the sidewalk in front of,
entrance to, or halls and stairs of the Premises, nor allow the same to be
obstructed or encumbered in any manner.
SIGNS
Tenant shall neither place, or cause or allow to be placed, any sign or
signs of any kind whatsoever at, in or about the entrance to the Premises or any
other part of same, except in or at such place or places as may be indicated by
the Landlord and consented to by the Landlord in writing. Landlord acknowledges
that Tenant shall be entitled, at its expense, to erect and maintain the signs
as are described in Exhibit "B" attached hereto during the term and all
renewals, and Landlord consents to the size and/or placement of such signs. In
the event that Landlord or the Landlord's representatives shall deem it
necessary to remove any such sign or signs in order to paint the Premises or the
Building or make any other repairs, alterations or improvements in or upon the
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the Premises or Building or any part thereof, Landlord shall have the right to
do so, providing the same be removed and replaced at Landlord's expense,
whenever the said repairs, alterations or improvements shall be completed.
EXEMPTION FROM LIABILITY
Landlord is exempt from any and all liability for any damage or injury
to person or property caused by or resulting from steam, electricity, gas,
water, rain, ice or snow, or any leak or flow from or into any part of the
Building or from any damage or injury resulting or arising from any other cause
or happening whatsoever unless said damage or injury be caused by or be due to
the negligence of Landlord.
SUBORDINATION TO MORTGAGES
This instrument shall not be a lien against the Premises in respect
to any mortgages that are now on or that hereafter may be placed against the
Premises, and that the recording of such mortgage or mortgages shall have
preference and precedence and be superior and prior in lien of this Lease,
irrespective of the date of recording and Tenant agrees to execute without cost,
any such instrument which may be deemed necessary or desirable to further effect
the subordination of this Lease to any such mortgage or mortgages, and a refusal
to execute such instrument shall entitle Landlord, or Landlord's assigns and
legal representatives to the option of canceling this Lease without incurring
any expense or damage and the term hereby granted is expressly limited
accordingly. Nothing herein shall prevent Tenant from enjoyment and possession
of the Premises upon payment of the rent as it becomes due and owing and
15
performance of all the covenants herein.
As a condition of such subordination, the Lender shall execute and
deliver to Tenant a non-disturbance agreement. The non-disturbance agreement
shall include lender's agreement that the Lease and renewal terms thereof shall
not be cut off, nor shall Tenant's possession and any rights of Tenant under the
Lease be disturbed by any proceedings taken by reason of default of the
mortgage, so long as there shall be no default by Tenant under the Lease
existing for a period of time by reason of which Landlord would be entitled to
terminate the Lease.
Tenant will, upon the request of a lender signing such non-disturbance
agreement, agree that if such lender succeeds to the interest of Landlord,
Tenant will attorn to and recognize such lender as its Landlord under the terms
of this Lease so as to establish direct privity between lender and Tenant.
NO WAIVER OF RIGHTS
The failure of Landlord to insist upon a strict performance of any of
the terms, conditions and covenants herein, shall not be deemed a waiver of any
rights or remedies that Landlord may have, and shall not be deemed a waiver of
any subsequent breach or default in the terms, conditions and covenants herein
contained. This instrument may not be changed, modified, discharged, or
terminated orally.
EMINENT DOMAIN
If the whole or any substantial part of the Premises shall be acquired
or condemned by Eminent Domain or by deed in lieu thereof, for any public or
quasi public use or purpose, then and in that event, the term of this Lease
16
shall cease and terminate from the date of title vesting in such proceeding and
Tenant shall have no claim against Landlord for the value of any unexpired term
of this Lease. No part of any award shall belong to Tenant. Tenant shall,
however, have the right to proceed independently against the condemning
authority for the cost of relocation and fixtures owned by Tenant upon the
expiration of the term.
REMOVAL OF TRADE FIXTURES
If after default in payment of rent or violation of any other provision
of this Lease, or upon the expiration of this Lease, the Tenant moves out or is
dispossessed and fails to remove any trade fixtures or other property prior to
such said default, removal, expiration of Lease, or prior to the issuance of the
final order or execution of the warrant, then and in that event, the said
fixtures and property shall at Landlord's election either be deemed abandoned by
Tenant and shall become the property of Landlord or removed by Landlord at
Tenant's expense.
CONTINUED LIABILITY FOR RENT
In the event that the relation of Landlord and Tenant may cease or
terminate by reason of the re-entry of Landlord under the terms and covenants
contained in this Lease or by the ejectment of Tenant by summary proceedings or
otherwise, or after the abandonment of the Premises by Tenant, it is hereby
agreed that Tenant shall remain liable and shall pay in monthly payments the
rent which accrues subsequent to the re-entry by Landlord, and Tenant expressly
agrees to pay as damages for the breach of the covenants herein contained, the
difference between the rent reserved and the rent collected and received, if
any, by Landlord during the remainder of the unexpired term, such difference or
17
deficiency between the rent herein reserved and the rent collected if any, shall
become due and payable, in monthly payments during the remainder of the
unexpired term, as the amounts of such difference or deficiency shall from time
to time be ascertained; and it is mutually agreed between Landlord and Tenant
that the respective parties hereto shall and hereby do waive trial by jury in
any action, proceeding or counterclaim brought by either of the parties against
the other on any matters whatsoever arising out of or in any way connected with
this Lease, Tenant's use or occupancy of said Premises, and/or any claim by
injury or damage.
WAIVER OF RIGHTS TO REDEEM
Tenant waives all rights to redeem under any law of the State of New
York.
GOVERNMENTAL PREEMPTION
This Lease and the obligation of Tenant to pay rent hereunder and
perform all of the other covenants and agreements hereunder on part of Tenant to
be performed shall in no way be affected, impaired or excused because Landlord
is unable to supply or is delayed in supplying any service expressly or
impliedly to be supplied or is unable to make, or is delayed in making any
repairs, additions, alterations or decorations or is unable to supply or is
delayed in supplying any equipment or fixtures if Landlord is prevented or
delayed from so doing by reason of governmental preemption in connection with a
national emergency or in connection with any rule, order or regulation of any
department or subdivision thereof of any governmental agency or by reason of the
18
condition of supply and demand which have been or are affected by war or other
emergency.
NO ABATEMENT OR DIMINUTION OF RENT
No diminution or abatement of rent, or other compensation, shall be
claimed or allowed for inconvenience or discomfort arising from the making of
repairs or improvements to the building or to its appliances, nor for any space
taken to comply with any law, ordinance or order of a governmental authority. In
respect to the various "services", if any, herein expressly or impliedly agreed
to be furnished by Landlord to Tenant, it is agreed that there shall be no
diminution or abatement of the rent, or any other compensation, for interruption
or curtailment of such "service" when such interruption or curtailment shall be
due to accident, alterations or repairs desirable or necessary to be made or to
inability or difficulty in securing suppliers or labor for the maintenance of
such "service" or to some other cause, not negligence on the part of Landlord.
No such interruption or curtailment of any such "service" shall be deemed a
constructive eviction unless such interruption or curtailment of any such
"service" shall be caused by the negligence of the Landlord, its agents,
servants or employees, or a refusal of the Landlord to provide such services.
Landlord shall not be required to furnish, and Tenant shall not be entitled to
receive, any of such "services" during any period wherein Tenant shall be in
default in respect to the payment of rent. Neither shall there be any abatement
or diminution of rent because of making of repairs, improvements or decorations
to the Demised Premises after the date above fixed for the commencement of the
term, it being understood that rent shall, in any event, commence to run at such
date so above fixed.
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FAILURE TO DELIVER POSSESSION
Landlord shall not be liable for failure to give possession of the
Demised Premises on the Rent Commencement Date by reason of the fact that the
Premises are not Ready for Occupancy. The Rent shall not commence until the
Premises are "Ready for Occupancy," or Tenant accepts delivery from Landlord in
a condition which is not "Ready for Occupancy." The Rent shall not commence
until the Rent Commencement Date, but the term herein shall not be extended.
INSURANCE
(a) Tenant shall provide and keep in effect during the term of
this Lease for the benefit of Landlord and Tenant a policy for public liability
insurance, property damage insurance and fire legal liability insurance with
respect to the Premises covering both Tenant and Landlord in the minimum amount
of at least $1,000,000.00. Landlord shall be named as an additional insured on
such policy.
(b) Tenant agrees to provide Landlord with certificates of
insurance evidencing the coverage described in this paragraph containing a
waiver of subrogation endorsement. Such certificate shall provide for ten (10)
days' prior written notice to Landlord in the event of cancellation,
modification, termination or non-renewal.
(c) The Landlord, during the term of this lease, will insure and
keep insured against damage by fire in a full replacement value policy all
buildings erected on the Demised Premises including loss of rent insurance.
Tenant shall immediately pay Landlord for its thirty percent (30%) share of the
20
cost of said insurance upon receipt of a statement from Landlord showing the
amount due.
Landlord shall have no responsibility to provide insurance
coverage for the personal property, equipment or furnishings of Tenant, its
employees, contractors or agents or for Tenant's business interruption and
Landlord shall have no responsibility for loss of or damage to any such personal
property, equipment, furnishings or business interruption.
(d) Landlord shall provide and keep in effect during the term of
this Lease, a policy for public liability insurance, with respect to the
property of which the Premises are a part, naming the Tenant as an additional
named insured, in the minimum amount of at least One Million Dollars
($1,000,000.00). Landlord agrees to provide Tenant with Certificates of
Insurance evidencing the coverage described herein. Such Certificates shall
provide for ten (10) days prior written notice to Tenant in the event of
cancellation, modification, termination or non-renewal.
Landlord agrees to indemnify and hold Tenant harmless from any losses
suffered by Tenant as a result of Landlord's failure to obtain such insurance or
should Landlord permit said insurance to lapse.
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INDEMNIFICATION
Tenant agrees to indemnify and hold harmless Landlord of and from all
claims, demands, and other actions arising out of the operation of the business
of Tenant at the Premises or by reason of any violations or non-performance of
any provision, covenant, or condition on the part of Tenant or its agents,
employees, or invitees, or by reason of any act or omission on the part of
Tenant or its agents, employees, or invitees.
LIMITATION ON TENANT'S REMEDIES
Notwithstanding anything to the contrary provided in this Lease, it is
specifically understood and agreed that there shall be absolutely no personal
liability on the part of the Landlord, its successors and assigns, with respect
to any of the terms, covenants, and conditions of this Lease, and Tenant shall
look solely to the equity of Landlord in the Premises for satisfaction of each
and every remedy of Tenant in the event of any breach by Landlord of any of the
terms, covenants, and conditions of this Lease to be performed by Landlord, such
exculpation of liability to be absolute and without exception whatsoever.
ENVIRONMENTAL
(a) As used herein, "Environmental Laws" means all federal, state,
local, environmental, health and safety laws, codes and ordinances and all rules
and regulations promulgated thereunder, including, without limitation laws
relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment (including, without limitations, air,
22
surface water, ground water, land surface or subsurface strata) or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, chemicals or
industrial, solid, toxic or hazardous substances or wastes. As used in this
Agreement, the term "Hazardous Substances" includes, without limitations, (i)
all substances which are designated pursuant to Section 311(b)(2)(A) of the
Federal Water Pollution Control Act ("FWPCA"), 33 U.S.C. Section 1251, et seq.;
(ii) any element, compound, mixture, solution, or substance which is designated
pursuant to Section 102 of the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), 42 U.S.C. Section 9601 et seq.; (iii)
any hazardous waste having the characteristics which are identified under or
listed pursuant to Section 3001 of the Resource Conservation and Recovery Act
("RCRA"), 42 U.S.C. Section 6901 et seq.;(iv) any toxic pollutant listed under
Section 307(a) of the FWPCA; (v) any hazardous air pollutant which is listed
under Section 112 of the Clean Air Act, 42 U.S.C. Section 7401 et seq.; (vi) any
imminently hazardous chemical substance or mixture with respect to which action
has been taken pursuant to Section 7 of the Toxic Substances Control Act, 15
U.S.C. Section 2601 et seq.; and (vii) petroleum and waste oil.
(b) Tenant shall comply with all Environmental Laws and regulations
applicable to Tenant's use and/or activities at the Leased Premises.
(c) Tenant agrees to defend, indemnify and hold harmless the Landlord from
any and all claims, damages, fines, judgments, penalties, costs, liabilities, or
losses (including, without limitation, any and all sums paid for settlement of
claims, attorneys' fees, consultant, and expert fees) arising during or after
the lease term from or in connection with the presence or suspected presence of
23
Hazardous Substances in or on the Premises, which are present as a result of any
negligence, misconduct, or other acts of Tenant, Tenant's agents, employees,
contractors, or invitees. Without limitation of the foregoing, this
indemnification shall include any and all costs incurred due to any
investigation of the site or any cleanup, removal, or restoration mandated by a
federal, state, or local agency or political subdivision, which are present as a
result of any negligence, misconduct or other acts of Tenant, Tenant's agents,
employees, contractors, or invitees.
(d) Landlord shall provide and keep in effect during the term of this
Lease a policy of environmental liability insurance with respect to the property
of which the Premises are a part naming the Tenant as an additional insured in
the minimum amount of at least One Million Dollars ($1,000,000.00). Landlord
agrees to provide Tenant with a Certificate of Insurance evidencing the coverage
described herein. Such Certificate shall provide for ten (10) days prior written
notice to Tenant in the event of cancellation, modification, termination or
non-renewal. In the event of Landlord's failure to obtain such insurance or
should Landlord permit said insurance to lapse, Landlord agrees to defend,
indemnify and hold harmless the Tenant from any and all claims, damages, fines,
judgments, penalties, costs, liabilities, or losses (including, without
limitation, any and all sums paid for settlement of claims, attorneys' fees,
consultant, and expert fees) arising during or after the lease term from or in
connection with the presence or suspected presence of Hazardous Substances in or
on the Premises. Without limitations of the foregoing, this indemnification and
covenant to provide insurance shall include any and all costs incurred due to
any investigation of the site or any cleanup, removal, or restoration mandated
by a federal, state, or local agency or political subdivision, which are present
24
as a result of any negligence, misconduct or other acts of Landlord, Landlord's
agents, employees, contractors, or invitees.
LATE FEE
In the event Tenant is late in the payment of rent or other sums of
money required to be paid under this Lease, Tenant agrees to pay Landlord a late
charge of $.04 for each dollar of each payment ten (10) days or more in arrears.
Said payment shall be to cover extra expenses incurred by Landlord in handling
delinquent payments. The provisions of this paragraph are cumulative and shall
in no way restrict the other remedies available to Landlord.
QUIET ENJOYMENT OF PREMISES
Landlord covenants that Tenant on paying the said yearly rent, and
performing the covenants aforesaid, shall and may peacefully and quietly have,
hold and enjoy the Premises for the term aforesaid.
REPRESENTATIONS AND WARRANTIES
As a material inducement for Tenant to enter into this Lease, Landlord
warrants, represents and covenants to Tenant as follows:
(a) Landlord has lawful title and the right to enter into this
Lease for the term aforesaid and will provide Tenant with evidence thereof prior
to the time at which Tenant takes possession of the Premises, and will put
Tenant into complete and exclusive possession of the Premises, including joint
use of the Common Area, free from all orders, restrictions, and notices of any
public or quasi-public authority.
25
(b) The entrances and exits to and from the Premises of which the
Demised Premises form a part shall not be altered or changed without the prior
written consent of Tenant.
(c) The entire Premises of which the Demised Premises form a part
are owned by Landlord in fee simple title and are free and clear of any and all
encumbrances excepting real estate taxes and assessments for the current year
and thereafter which are assumed and will be paid by Landlord as they become due
and payable.
(d) With respect to any mortgage or other encumbrance now or
hereafter encumbering the Premises or any portion thereof, Landlord shall within
thirty (30) days of the date, thereof, or the filing of such encumbrance,
whichever is later, provide Tenant with a non-disturbance agreement executed by
the holder thereof and Landlord.
(e) During the term of this Lease, Landlord shall not lease any
portion of the property of which the Premises are a part to a bank other than
Tenant, nor will Landlord permit said property to be used as a banking facility
or rent, occupy, suffer, or permit to be occupied any other premises owned or
controlled, directly or indirectly, by Landlord, its successors or assigns,
which are within the Village of Oxford, New York for the purpose of conducting
therein, or for use as a banking facility, and further that if Landlord owns any
land or hereafter during the term of this Lease acquires any land within the
Village of Oxford, Landlord will not convey said property within imposing
thereon a restriction to secure compliance with the foregoing restriction in the
use thereof.
(f) This Lease has been entered into by Tenant in reliance upon
the foregoing representations and warranties of Landlord. In the event of a
breach of this section, in addition to any other remedies available to Tenant,
26
Tenant shall be entitled at its option to cancel this Lease or seek specific
performance, of the obligations contained herein.
(g) During the term of this Lease, Tenant shall not lease, rent,
occupy, suffer or permit to be occupied the premises owned by Tenant known as
the Bank Building, Village of Oxford, New York for the purpose of conducting
therein, or for the retail sale of petroleum products or as a convenience store.
Tenant also agrees that it will not convey said property without imposing
thereon a restriction to secure compliance with the foregoing restriction in the
use thereof.
OBSTRUCTIONS
Landlord shall not permit anything to be done upon the Premises of
which the Demised Premises form a part which (a) obstructs the free passage of
vehicles on the Common Area to and from the drive-thru facility of the Tenant;
(b) obstructs the entrance doors to Tenant's building on the Demised Premises;
(c) obstructs or changes the exits or entrances to the Demised Premises, except
as may be duly required by governmental authority; (d) obstructs or in any way
changes the Common Area.
CESSATION OF BUSINESS
Tenant may at any time cease operation of its business upon the Demised
Premises and Tenant's sole and exclusive liability hereunder shall be limited to
the rent, real estate taxes, and any other obligations of the Tenant hereunder.
If Tenant closes the Bank to the general public for 120 consecutive days, for
reasons other than repair, restoration, remodeling, casualty, eminent domain,
assignment, sub-letting, and/or governmental required closure, Landlord shall
27
have the option, to be exercised within thirty (30) days after said 120
consecutive days following Tenant's cessation of business, to terminate this
Lease upon thirty (30) days written notice to Tenant. If Tenant elects to
terminate this Lease, Tenant shall surrender the Demised Premises, as herein
provided, and shall be released and relieved of any and all further obligations
hereunder effective as of the date of Lease termination.
MEMORANDUM OF LEASE
The parties agree to execute and deliver within ten (10) days of its
receipt, at the request of either party hereto, a Memorandum of Lease suitable
for recording, containing such matters as they may deem appropriate.
FORCE MAJEURE
If either party shall be delayed or hindered in or prevented from the
timely performance of its obligations under this Lease, by reason of failure of
power, riots, insurrections, war, national emergency, or Acts of God, then
performance of such obligations shall be excused for the period of such delay
and the period granted herein for the performance of such act shall be extended
for a period equivalent of such delay.
APPROVALS
The commencement of this Lease is contingent upon the Tenant obtaining
approval of the location and facility from the Controller of the Currency of the
United States of America within a period of sixty (60) days from execution of
the Lease. In the event the Tenant has promptly filed such application and is
diligently pursuing the application, if not approved within such sixty (60) day
28
period. Tenant shall have two (2) additional periods of thirty (30) days each to
continue the application process.
RIGHT OF FIRST REFUSAL
Should the Landlord during the term or any renewal or extension
thereof, elect to sell the Premises of which the Demised Premises form a part,
the Tenant shall have the right of first refusal to meet any bonafide offer of
sale upon the same terms and conditions of such offer, Landlord shall submit a
written copy of such offer to Tenant, giving Tenant thirty (30) days within
which to elect to meet such offer. If Tenant elects to meet the offer, it shall
give Landlord written notice thereof, and the closing thereof shall be held
within ninety (90) days thereafter, whereupon Landlord shall convey to Tenant
good and marketable title to the Premises in fee simple absolute, free and clear
of all liens, encumbrances and restrictions.
In the event the Tenant fails. to meet such bonafide offer within the
time set forth herein after notice from the Landlord, the Landlord shall be free
to sell the Premises to such third person in accordance with the terms and
conditions of the offer.
In the event the Landlord does not sell the Premises to such third
person, then and in such event, the right of first refusal shall continue during
the term of this Lease and any renewals or extensions thereof.
29
CONFIDENTIALITY
Landlord and Tenant agree not to disclose the fact that they have
entered into this Lease until such time as they have mutually agreed to a news
release announcing the details of this Lease and shall have also agreed to the
time and date when such release is to be made public.
NEW YORK LAW
This Lease shall be construed in accordance with the laws of the State
of New York without regard to conflict of law principles.
HEADINGS
The headings used herein are for convenience only and shall not be
deemed to be part of this Agreement. These headings shall be of no legal
significance.
NOTICES
All notices, requests, demands or other communications with respect to
this Lease, whether or not herein expressly provided for, shall be in writing
and shall be deemed to have been duly given when mailed by United States
First-Class, certified or registered mail, postage prepaid, return receipt
requested, to the parties at their respective addresses as first above written.
Notice to Landlord shall include also the mailing of a copy thereof to its
counsel, Hinman, Howard & Kattell, LLP (John G. Dowd, Esq.), 700 Security Mutual
Building, 80 Exchange Street, Binghamton, New York 13901-3490.
30
Miscellaneous
It is mutually understood and agreed that the covenants and agreements
contained in the within Lease shall be binding upon the parties hereto and upon
their respective successors, heirs, executors and administrators. If any term or
provision of this Lease shall to any extent be held invalid or enforceable, the
remaining terms and provisions of this Lease shall be valid and be enforced to
the fullest extent permitted by law. This instrument contains the entire
agreement made between the parties and may not be modified orally or in any
manner other than by an agreement in writing, signed by all the parties hereto,
or their respective successors in interest.
31
IN WITNESS WHEREOF, the parties have set their hands and seals (or caused
these presents to be signed by their proper corporate officers and caused their
proper corporate seal to be hereto affixed) this 6th day of November, 1997.
Signed, sealed and delivered in the presence of
JAMES MIRABITO & SONS, INC.
By /s/Joseph P. Mirabito
Title President
NBT BANK, N.A.
By /s/Marty Dietrich
Title S.V.P.
32
9
1,000
U.S.Dollars
3-MOS
DEC-31-1998
JAN-1-1998
MAR-31-1998
1
34,680
5,028
0
0
432,997
36,035
36,034
748,386
11,984
1,289,299
1,039,050
106,563
6,642
10,180
0
0
9,430
117,434
1,289,299
17,038
8,165
53
25,256
9,491
11,221
14,035
1,100
218
9,402
6,101
5,072
0
0
5,072
0.56
0.55
4.75
5,823
900
0
29,126
11,582
886
188
11,984
8,469
0
3,515
