As filed with the Securities and Exchange Commission on December 21, 1999
Registration Statement No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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NBT BANCORP INC.
(Exact Name of Registrant as specified in its Charter)
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DELAWARE 6712 16-1268674
(State or Other (Primary Standard Industrial (I.R.S. Employer
Jurisdiction of Classification Code Number) Identification No.)
Incorporation
or Organization)
52 South Broad Street
Norwich, New York 13815
(607) 337-2265
(Address, Including Zip Code, and Telephone Number, Including
Area Code of Registrant's Principal Executive Offices)
DARYL R. FORSYTHE
President and Chief Executive Officer
NBT Bancorp Inc.
52 South Broad Street
Norwich, New York 13815
(607) 337-2265
(Name, Address, Including Zip Code, and Telephone
Number, Including Area Code, of Agent for Service)
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Copies to:
Brian D. Alprin, Esq. John B. Lampi, Esq.
Laurence S. Lese, Esq. Saul, Ewing, Remick & Saul LLP
Duane, Morris & Heckscher LLP Penn National Insurance Tower
1667 K Street, NW, Suite 700 Seventh Floor - Two North Second Street
Washington, DC 20006 Harrisburg, PA 17101
(202) 776-7800 (717) 257-7500
Approximate date of commencement of proposed sale to the public: Upon
consummation of the merger of Lake Ariel Bancorp, Inc. with and into NBT Bancorp
Inc., pursuant to an Agreement and Plan of Merger, dated as of August 16, 1999,
and amended as of December 13, 1999, which is described in the enclosed Joint
Proxy Statement/Prospectus.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [_]
CALCULATION OF REGISTRATION FEE
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Title of Each Class of Proposed Maximum
Securities to be Amount to be Offering Price Per Maximum Aggregate Amount of
Registered (1) Registered (2) Unit Offering Price Registration Fee
Common Stock, no par 5,125,000 (3) (4) $69,251,736 (5) $19,252
value, stated value
$1.00 per share
Common Stock, $.01 per 5,125,000(3) (4) $69,251,736 (5) (6)
value per share
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(1) This Registration Statement relates to a special meeting of
stockholders of the Registrant, at which meeting the stockholders will
consider and vote upon, in addition to the proposal on the subject
merger, a proposal to change the par value of the Registrant's common
stock from no par value, $1.00 stated value per share to $.01 par value
per share. Depending upon the outcome of the vote on such proposal, the
Registrant will issue, in the alternative, upon completion of the
subject merger its shares of common stock of either no par value, $1.00
stated value per share or $.01 par value per share. If the Registrant's
stockholders approve the proposal to change the par value of the
Registrant's common stock, the Registrant will thereupon amend its
Certificate of Incorporation to reflect the change. The Registrant,
upon the closing of the subject merger, will issue its common stock to
complete the merger; this issuance will occur at a point in time
subsequent to its amendment of its Certificate of Incorporation (if the
Registrant's stockholders approve the par value amendment proposal).
(2) This Registration Statement also relates to such additional number of
shares of the Registrant's common stock as may be issuable as a result
of a stock dividend, stock split, split-up, recapitalization or other
similar event.
(3) Represents the estimated maximum number of shares of NBT common stock,
no par value, stated value $1.00 per share, or $.01 par value per
share, as the case may be, to be issued to stockholders of Lake Ariel
in connection with the merger.
(4) Not applicable.
(5) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(f)(1) and based on the average of the high and
low sales price per share of Lake Ariel common stock, par value $.21
per share, on December 16, 1999 on the Nasdaq National Market,
multiplied by an aggregate of 4,859,771 shares of Lake Ariel common
stock to be acquired by NBT.
(6) In view of footnote (1) above, the Registrant will issue, in the
alternative, in the subject merger its common stock of either no par
value, $1.00 stated value per share or $.01 par value per share.
Consequently, the Registrant has submitted one registration fee.
---------
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
[NBT [LAKE ARIEL
LOGO APPEARS HERE] LOGO APPEARS HERE]
MERGER PROPOSED -- YOUR VOTE IS VERY IMPORTANT
The boards of directors of NBT Bancorp Inc. and Lake Ariel Bancorp,
Inc. have unanimously agreed on a merger of Lake Ariel and NBT. Following the
merger, NBT will be the surviving corporation. The board of directors of each
company believes that the merger is in the best interests of its stockholders
and unanimously recommends that its stockholders vote to approve the merger
agreement. Each of us will hold a special meeting of our stockholders to
consider and vote on the merger agreement and related matters. On December 7,
1999, NBT agreed to acquire Pioneer American Holding Company Corp. NBT will
present that transaction to its stockholders for approval at a future NBT
stockholders' meeting.
Lake Ariel stockholders will receive as merger consideration between
0.8731 of a share and 0.9961 of a share of NBT common stock for each share of
Lake Ariel common stock owned. Because the merger consideration represents a
variable amount, based upon the market price of NBT common stock during a set
time period prior to the effective time of the merger, stockholders of Lake
Ariel will be unable to determine the precise exchange rate and the precise
number of shares of NBT common stock they will receive in the merger until the
effective time of the merger. We expect the merger to be a tax-free transaction
for Lake Ariel stockholders, except for any cash they receive instead of
fractional shares of NBT common stock. After completion of the merger, NBT
stockholders and former Lake Ariel stockholders will own approximately 74% and
26%, respectively, of the combined company. If NBT completes its merger with
Pioneer American, the stockholders of NBT and the former stockholders of Lake
Ariel and Pioneer American will own, respectively, approximately 57%, 21% and
22% of the outstanding stock of the combined company. NBT common stock trades on
the Nasdaq National Market under the symbol "NBTB."
We cannot complete the merger unless the stockholders of both companies
approve it. Approval of the merger requires the affirmative vote of the holders
of a majority of the outstanding shares of NBT common stock entitled to vote and
two-thirds of the outstanding shares of Lake Ariel common stock entitled to
vote. PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN
THE ENCLOSED POSTAGE-PAID ENVELOPE.
The dates, times and places of the stockholders' meetings are as
follows:
FOR NBT STOCKHOLDERS: FOR LAKE ARIEL STOCKHOLDERS:
February 10, 2000 at February 10, 2000 at
2:00 p.m. local time 10:00 a.m. local time
Howard Johnson Holiday Inn-Scranton East
75 North Broad Street 200 Tigue Street
Norwich, New York Dunmore, Pennsylvania
This Joint Proxy Statement/Prospectus provides you with detailed
information about the merger and the other matters that we will submit for
stockholder approval at NBT's and Lake Ariel's stockholders' meetings. We
encourage you to read this entire document carefully.
/s/ Daryl R. Forsythe /s/ John G. Martines
Daryl R. Forsythe John G. Martines
President and Chief Executive Officer of Chief Executive Officer of
NBT Bancorp Inc. Lake Ariel Bancorp, Inc.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED OF THE NBT SHARES TO BE ISSUED UNDER THIS JOINT PROXY
STATEMENT/PROSPECTUS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS JOINT PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OF NBT COMMON STOCK OFFERED BY THIS JOINT PROXY STATEMENT/PROSPECTUS
ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK OR NON-BANK
SUBSIDIARY OF ANY OF THE PARTIES. THE FDIC OR ANY OTHER GOVERNMENTAL AGENCY DOES
NOT INSURE OR GUARANTEE ANY LOSS TO YOU OF YOUR INVESTMENT VALUE IN THE NBT
COMMON STOCK.
Joint Proxy Statement/Prospectus dated _________, 1999, and first
mailed to stockholders on or about __________, 1999.
QUESTIONS AND ANSWERS ABOUT THE MERGER AND RELATED TRANSACTIONS
Q: WHAT DO I NEED TO DO NOW?
A: After you have carefully read this joint proxy statement/prospectus, just
indicate on your proxy card how you want your shares to be voted, then sign and
mail it in the enclosed postage-paid envelope as soon as possible so that your
shares may be represented and voted at the NBT special meeting or the Lake Ariel
special meeting.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
A: No. Your broker will vote your shares only if you provide instructions on how
to vote. You should follow the directions provided by your broker. Your failure
to instruct your broker to vote your shares will be the equivalent of voting
against the adoption of the merger agreement and, for NBT stockholders, the
other proposals described in this joint proxy statement/prospectus.
Q: CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD?
A: Yes. There are three ways for you to revoke your proxy and change your vote.
First, you may send a written notice to the person to whom you submitted your
proxy stating that you would like to revoke your proxy. Second, you may complete
and submit a new proxy card. Third, you may vote in person at the special
meeting. If you have instructed a broker to vote your shares, you must follow
directions received from your broker to change your vote.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. You should not send in your stock certificates at this time. NBT
stockholders will not exchange their certificates in the merger. The
certificates currently representing shares of NBT common stock will represent an
equal number of shares of common stock of the combined company after the merger.
Lake Ariel stockholders will exchange their certificates representing Lake Ariel
common stock as a result of the merger and related transactions and Lake Ariel
stockholders will receive instructions for exchanging those certificates after
we have completed the merger.
Q: WHEN DO YOU EXPECT TO MERGE?
A: We are working towards completing the merger as quickly as possible. We
expect to complete the merger in the first quarter of 2000.
Q: WHOM SHOULD I CALL WITH QUESTIONS OR TO OBTAIN ADDITIONAL COPIES OF THIS
JOINT PROXY STATEMENT/PROSPECTUS?
NBT Bancorp Inc. Lake Ariel Bancorp, Inc.
52 South Broad Street 409 Lackawanna Avenue, Suite 201
Norwich, New York 13815 Scranton, Pennsylvania 18503-2045
Attention: Michael J. Chewens, CPA Attention: Joseph J. Earyes, CPA
Phone Number: (607) 337-6520 Phone Number: (570) 343-8200
2
NBT BANCORP INC.
52 SOUTH BROAD STREET
NORWICH, NEW YORK 13815
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
NBT Bancorp Inc., a Delaware corporation, will hold a Special Meeting
of Stockholders at the Howard Johnson, 75 North Broad Street, Norwich, New York
on February 10, 2000 at 2:00 p.m. local time for the following purposes:
1. To consider and vote upon a proposal to amend NBT's Certificate of
Incorporation to change its common stock and preferred stock from no par value,
$1.00 stated value per share to shares having a par value of $.01 per share.
2. To consider and vote upon a proposal to amend NBT's Certificate of
Incorporation to increase the number of authorized shares of NBT common stock
from 15 million to 30 million.
3. To consider and vote upon a proposal to ratify a change to Article
III, Section 2 of NBT's By-laws, relating to the number, classification and
qualification of directors, previously approved by the NBT Board.
4. To consider and vote upon a proposal to approve the Agreement and
Plan of Merger, dated as of August 16, 1999, and amended as of December 13,
1999, by and between NBT and Lake Ariel Bancorp, Inc., a Pennsylvania
corporation, and all of the matters contemplated by the merger agreement under
which, among other things, (a) Lake Ariel will merge with and into NBT, with NBT
being the surviving corporation, upon the terms and subject to the conditions
set forth in the merger agreement, and (b) NBT will issue approximately 4.8
million shares of common stock to the Lake Ariel stockholders upon completion of
the merger.
5. To transact such other business as may properly come before the NBT
special meeting.
We describe more fully the amendments to the Certificate of
Incorporation and the bylaws, the merger agreement, the merger and related
matters in the attached Joint Proxy Statement/Prospectus, which includes as
Appendix A a copy of the merger agreement, as amended.
We have fixed the close of business on , [1999] as the record date for
determining those stockholders of NBT entitled to vote at the NBT special
meeting and any adjournments or postponements of the meeting. Only holders of
record of NBT common stock at the close of business on that date are entitled to
notice of and to vote at the NBT special meeting.
The board of directors of NBT unanimously recommends that you vote
"FOR" approval of each of the three amendment proposals as well as the merger
agreement, the merger and the other matters contemplated by the merger
agreement. The affirmative vote of a majority of the outstanding shares of NBT
common stock entitled to vote at the meeting is required to approve each of the
three amendment proposals and the merger agreement and related matters. NBT
stockholders are not entitled to appraisal rights under Delaware law.
The board of directors of NBT requests that you fill in and sign the
enclosed proxy card and mail it promptly in the enclosed postage-prepaid
envelope. You may revoke any proxy that you deliver prior to the NBT meeting by
delivering a writing to NBT stating that you have revoked your proxy or by
delivering a later dated proxy. Stockholders of record of NBT common stock who
attend the NBT meeting may vote in person, even if they have previously
delivered a signed proxy.
By Order of the Board of Directors of
NBT Bancorp Inc.
Daryl R. Forsythe
President and Chief Executive Officer
Norwich, New York
________, 1999
3
LAKE ARIEL BANCORP, INC.
P.O. BOX 67
ROUTE 191
LAKE ARIEL, PENNSYLVANIA 18436
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
Lake Ariel Bancorp, Inc., a Pennsylvania corporation, will hold a
Special Meeting of Stockholders at Holiday Inn-Scranton East, 200 Tigue Street,
Dunmore, Pennsylvania on February 10, 2000 at 10:00 a.m. local time for the
following purposes:
1. To consider and vote upon a proposal to approve the Agreement and
Plan of Merger, dated as of August 16, 1999, and amended as of December 13,
1999, by and between Lake Ariel and NBT Bancorp Inc., a Delaware corporation,
and all of the matters contemplated by the merger agreement. Upon completion of
the merger, Lake Ariel will merge with and into NBT, with NBT being the
surviving corporation.
2. To transact such other business as may properly come before the Lake
Ariel special meeting.
We describe more fully the merger and related matters and transactions
in the attached Joint Proxy Statement/Prospectus, which includes as Appendix A a
copy of the merger agreement, as amended.
We have fixed the close of business on December 29, 1999 as the record
date for determining the stockholders of Lake Ariel entitled to vote at the Lake
Ariel special meeting and any adjournments or postponements of the meeting. Only
holders of record of Lake Ariel common stock at the close of business on that
date are entitled to notice of and to vote at the Lake Ariel special meeting.
The board of directors of Lake Ariel recommends that you vote "FOR"
approval of the merger agreement, the merger and the other matters contemplated
by the merger agreement. The affirmative vote of two-thirds of the outstanding
shares of Lake Ariel common stock entitled to vote at the meeting is required to
approve the merger agreement and related matters. Lake Ariel stockholders have a
right to dissent to the merger agreement and to obtain payment in cash of the
fair value of their Lake Ariel shares by complying with the procedures described
in the accompanying Joint Proxy Statement/Prospectus.
The board of directors of Lake Ariel requests that you fill in and sign
the enclosed proxy card and mail it promptly in the enclosed postage-prepaid
envelope. You may revoke any proxy that you deliver prior to the Lake Ariel
meeting by delivering a writing to Lake Ariel stating that you have revoked the
proxy or by delivering a later dated proxy. Stockholders of record of Lake Ariel
common stock who attend the Lake Ariel meeting may vote in person, even if they
have previously delivered a signed proxy.
By Order of the Board of Directors of
Lake Ariel Bancorp, Inc.
John G. Martines
Chief Executive Officer
Lake Ariel, Pennsylvania
_________, 1999
4
TABLE OF CONTENTS
PAGE
MERGER PROPOSED -- YOUR VOTE IS VERY IMPORTANT.........................................................................1
QUESTIONS AND ANSWERS ABOUT THE MERGER AND RELATED TRANSACTIONS .......................................................2
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS..............................................................................3
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS..............................................................................4
SUMMARY................................................................................................................9
The Companies.................................................................................................9
The Stockholders' Meetings....................................................................................9
The Merger...................................................................................................11
Our Reasons for the Merger...................................................................................14
You May Change Your Vote If You Wish.........................................................................18
Additional Information.......................................................................................18
Selected Historical and Pro Forma Combined Financial Data....................................................19
Unaudited Comparative Per Share Data.........................................................................26
Proposed Merger with Pioneer American Holding Company Corp...................................................27
THE STOCKHOLDERS' MEETINGS............................................................................................28
The NBT Special Meeting......................................................................................28
The Lake Ariel Special Meeting...............................................................................31
PROPOSED AMENDMENTS TO NBT'S CERTIFICATE OF INCORPORATION.............................................................33
RATIFICATION OF AMENDMENT TO NBT'S BY-LAWS............................................................................33
PROPOSAL 1............................................................................................................34
PROPOSAL TO CHANGE NBT'S AUTHORIZED COMMON STOCK AND PREFERRED STOCK TO
SHARES HAVING A PAR VALUE OF $.01 PER SHARE.............................................................34
PROPOSAL 2............................................................................................................35
PROPOSAL TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF NBT COMMON STOCK
FROM 15 MILLION TO 30 MILLION...........................................................................35
PROPOSAL 3............................................................................................................37
PROPOSAL TO RATIFY AN AMENDMENT TO CERTAIN PROVISIONS OF NBT'S BY-LAWS
RELATING TO THE NUMBER, QUALIFICATION AND ELECTION OF DIRECTORS.........................................37
5
PROPOSAL 4............................................................................................................38
THE MERGER ..................................................................................................38
General......................................................................................................38
Background of the Merger.....................................................................................38
Recommendation of the NBT Board and NBT's Reasons for the Merger.............................................41
Recommendation of the Lake Ariel Board and Lake Ariel's Reasons for the Merger...............................43
Recommendation of Lake Ariel's Board of Directors ...........................................................44
Merger Consideration.........................................................................................44
Opinion of NBT's Financial Advisor...........................................................................45
Opinion of Lake Ariel's Financial Advisor....................................................................51
Other Interests of Officers and Directors in the Merger......................................................54
Stock Option Agreement.......................................................................................58
Accounting Treatment.........................................................................................60
Dissenters' or Appraisal Rights..............................................................................61
Inclusion of NBT's Common Stock on Nasdaq National Market....................................................61
Dividends....................................................................................................61
Exchange of Lake Ariel Certificates..........................................................................62
Lake Ariel Stock Options.....................................................................................62
Representations and Warranties...............................................................................62
Conduct of Business Pending Completion of the Merger.........................................................63
Conditions to Complete the Merger............................................................................66
Termination and Termination Fees ............................................................................67
Amendment and Waiver.........................................................................................69
Survival of Certain Provisions...............................................................................69
Restrictions on Resales by Affiliates........................................................................70
Fees for Financial Advisory Services.........................................................................70
Allocation of Costs and Expenses.............................................................................71
THE COMPANIES.........................................................................................................71
NBT Following the Merger.....................................................................................72
REGULATION AND SUPERVISION............................................................................................72
Support of Subsidiary Banks..................................................................................73
Liability of Commonly Controlled Banks.......................................................................74
Depositor Preference Statute.................................................................................74
Capital Requirements.........................................................................................74
Brokered Deposits............................................................................................76
Dividend Restrictions........................................................................................76
Deposit Insurance Assessments................................................................................76
Interstate Banking and Branching.............................................................................77
Control Acquisitions.........................................................................................77
Financial Modernization......................................................................................78
Future Legislation...........................................................................................78
6
MATERIAL FEDERAL INCOME TAX CONSEQUENCES..............................................................................78
PRICE RANGE OF COMMON STOCK AND DIVIDENDS.............................................................................79
DESCRIPTION OF NBT CAPITAL STOCK .....................................................................................80
Authorized Capital Stock.....................................................................................80
Common Stock.................................................................................................81
Preferred Stock..............................................................................................81
Stockholder Rights Plan......................................................................................81
Registrar and Transfer Agent.................................................................................82
COMPARISON OF STOCKHOLDERS' RIGHTS....................................................................................82
Special Meetings of Stockholders.............................................................................85
Inspection of Voting List of Stockholders....................................................................85
Cumulative Voting............................................................................................86
Preemptive Rights............................................................................................86
Classification of the Board of Directors.....................................................................86
Election of the Board of Directors...........................................................................86
Removal of Directors.........................................................................................86
Additional Directors and Vacancies on the Board of Directors.................................................86
Liability of Directors.......................................................................................87
Indemnification of Directors, Officers, Employees and Agents.................................................87
Restrictions upon Certain Business Combinations..............................................................88
Mergers, Share Exchanges or Asset Sales......................................................................90
Amendments to Certificate and Articles of Incorporation......................................................90
Amendments to Bylaws.........................................................................................91
Appraisal/Dissenters' Rights.................................................................................91
RIGHTS OF DISSENTING STOCKHOLDERS.....................................................................................91
OTHER MATTERS.........................................................................................................94
Stockholder Proposals for Annual Meetings....................................................................94
Other Matters................................................................................................94
LEGAL MATTERS.........................................................................................................94
EXPERTS...............................................................................................................94
7
WHERE YOU CAN FIND MORE INFORMATION...................................................................................95
NBT Bancorp Inc. SEC Filings.................................................................................95
Lake Ariel Bancorp, Inc. SEC Filings.........................................................................95
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS ....................................................................96
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS...........................................................110
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS ..........................................................112
Appendix A -- Agreement and Plan of Merger, as amended
Appendix B -- Article FOURTH of NBT's Certificate of Incorporation
Appendix C -- Opinion of McConnell, Budd & Downes, Inc.
Appendix D -- Opinion of Janney Montgomery Scott Inc.
Appendix E -- Sections 1571 through 1580 of the Pennsylvania Business Corporation Law, regarding dissenters' rights
8
SUMMARY
This brief summary does not contain all of the information that is
important to you. You should carefully read this entire document and the
documents to which we have referred you to fully understand the amendments to
NBT's Certificate of Incorporation and the merger. See "Where You Can Find More
Information" on page 95.
THE COMPANIES
NBT BANCORP INC.
52 South Broad Street
Norwich, New York 13815
(607) 337-2265
NBT, a registered bank holding company incorporated in the State of
Delaware, is the parent holding company of NBT Bank, N.A., a national bank. NBT
Bank is a full service commercial bank providing a broad range of financial
products and services in central and northern New York. In fiscal year 1998,
NBT's net income was $19.1 million; in fiscal year 1997, NBT's net income was
$14.7 million; and for the nine months ended September 30, 1999, NBT's net
income was $14.4 million. As of September 30, 1999, NBT's total assets were
approximately $1.4 billion, total deposits were approximately $1.1 billion and
stockholders' equity was approximately $127.9 million.
LAKE ARIEL BANCORP, INC.
P.O. Box 67, Route 191
Lake Ariel, Pennsylvania 18436
(570) 698-5695
Lake Ariel, a registered bank holding company incorporated in the
Commonwealth of Pennsylvania, is the parent holding company of LA Bank, National
Association. LA Bank provides commercial banking products and services in
northeastern Pennsylvania. In fiscal year 1998, Lake Ariel's net income was $3.8
million; in fiscal year 1997, Lake Ariel's net income was $3.4 million; and for
the nine months ended September 30, 1999, Lake Ariel's net income was $3.0
million. As of September 30, 1999, Lake Ariel's total assets were approximately
$552.9 million, total deposits were approximately $342.0 million and
stockholders' equity was approximately $34.8 million.
THE STOCKHOLDERS' MEETINGS
NBT. NBT will hold its special meeting of stockholders at the Howard Johnson, 75
North Broad Street, Norwich, New York on February 10, 2000 at 2:00 p.m. local
time. At the NBT special meeting, NBT stockholders will consider and vote upon
the following proposals:
1. A proposal to amend Article FOURTH of NBT's Certificate of
Incorporation to change the authorized shares of common stock and
preferred stock from no par value, $1.00 stated value per share to
shares having a par value of $.01 per share;
2. A proposal to amend Article FOURTH of NBT's Certificate of
Incorporation to increase the number of shares of common stock NBT
is authorized to issue from 15 million to 30 million;
3. A proposal to ratify a change to Article III, Section 2 of NBT's
By-laws, relating to the number, classification and qualification
of directors, previously approved by the NBT Board; and
4. A proposal to approve the merger agreement, which, if completed,
authorizes and effects the merger and the other matters
contemplated by the merger agreement.
The effects of the merger include the following:
9
|X| If the NBT stockholders have not approved the proposal to
increase the number of shares of common stock that NBT is
authorized to issue from 15 million to 30 million, NBT will
amend its Certificate of Incorporation to provide for the
authorization of an additional five million shares of common
stock by increasing the authorized shares to 20 million. We
attach copies of the various possible forms of the amended
Article FOURTH of the Certificate of Incorporation as Appendix
B to this Joint Proxy Statement/Prospectus;
|X| NBT will issue approximately 4.8 million shares of its common
stock to the stockholders of Lake Ariel in the merger; and
|X| The NBT Board will expand from nine to twelve members, and
three directors from the current Lake Ariel Board will join
the NBT Board.
Only holders of record of NBT common stock at the close of
business on , [1999], which is the record date for the NBT special meeting, will
be entitled to vote at the NBT special meeting and any adjournments or
postponements of the meeting. You can cast one vote for each share of NBT common
stock that you owned on the record date.
Approval of each of the two amendments to NBT's Certificate of
Incorporation and of ratification of the bylaw change requires the approval by
the holders of a majority of the outstanding shares of NBT common stock entitled
to vote. Completion of the merger requires, among other things, its approval by
the holders of (1) a majority of the outstanding shares of NBT common stock
entitled to vote and (2) two-thirds of the outstanding shares of Lake Ariel
common stock entitled to vote.
As of , 1999, directors and executive officers of NBT and their
affiliates were the beneficial owners of approximately % of the outstanding
shares of NBT common stock, and a total of shares of NBT common stock were
eligible to be voted at the NBT special meeting. These directors and executive
officers have indicated their intention to vote their shares of NBT common stock
in favor of the merger agreement and the two proposals to amend NBT's
Certificate of Incorporation.
Lake Ariel. Lake Ariel will hold its special meeting of stockholders at Holiday
Inn-Scranton East, 200 Tigue Street, Dunmore, Pennsylvania on February 10, 2000
at 10:00 a.m. local time. At the Lake Ariel special meeting, Lake Ariel
stockholders will vote upon a proposal to approve the merger agreement, the
merger and the other matters contemplated by the merger agreement.
Only holders of record of Lake Ariel common stock at the close of
business on December 29, 1999, which is the record date for the Lake Ariel
special meeting, will be entitled to vote at the Lake Ariel special meeting and
any adjournments or postponements of the meeting. You can cast one vote for each
share of Lake Ariel common stock that you owned on the record date.
Completion of the merger requires, among other things, its approval by
the holders of (1) two-thirds of the outstanding shares of Lake Ariel common
stock entitled to vote and (2) a majority of the outstanding shares of NBT
common stock entitled to vote.
As of September 30, 1999, directors and executive officers of Lake
Ariel and their affiliates were the beneficial owners of approximately 18.94% of
the outstanding shares of Lake Ariel common stock, and a total of 4,859,771
shares of Lake Ariel common stock were eligible to be voted at the Lake Ariel
meeting. These directors and executive officers of Lake Ariel have indicated
their intention to vote their shares of Lake Ariel common stock in favor of the
merger agreement.
On December 7, 1999, NBT entered into a plan of merger with Pioneer
American Holding Company Corp. See "Summary -- Proposed Merger with Pioneer
American Holding Company Corp." At their respective special meetings the
stockholders of NBT and Lake Ariel will not consider and vote upon NBT's
proposed merger with Pioneer American. NBT will request that its stockholders
vote upon that merger at the next annual meeting of NBT stockholders or else
will call a meeting of its stockholders in the future to consider and vote upon
that merger.
10
THE MERGER
Lake Ariel will merge with and into NBT. The name of the combined
company will be NBT Bancorp Inc. The combined company's principal executive
offices will be in Norwich, New York. We expect to complete the merger during
the first quarter of 2000.
We have attached the merger agreement, as amended, to this Joint Proxy
Statement/Prospectus as Appendix A. Please read the merger agreement. It is the
legal document that governs the merger.
EACH LAKE ARIEL SHARE WILL CONVERT INTO THE RIGHT TO RECEIVE BETWEEN 0.8731 AND
0.9961 OF A SHARE OF NBT COMMON STOCK (SEE PAGE 44)
In the merger, Lake Ariel stockholders will receive between 0.8731 and
0.9961 of a share of NBT common stock for each share of Lake Ariel common stock
that they own. We will determine the actual exchange ratio by dividing $18.50 by
the average closing bid and asked price per share of NBT common stock for each
of the 20 consecutive trading days ending on the eighth trading day before the
effective date of the merger. However, NBT and Lake Ariel have agreed that the
exchange ratio will only fluctuate between 0.8731 and 0.9961. For example, if
the average closing price per share of NBT common stock were $16.50, then we
would divide $18.50 by $16.50 to arrive at 1.1212. However, in this case, the
exchange ratio would go no higher than 0.9961. Conversely, if the average
closing price per share of NBT common stock were $22.875, then we would divide
$18.50 by $22.875 to arrive at 0.8087. In this case, the exchange ratio would go
no lower than 0.8731.
Following the merger, the former Lake Ariel stockholders will own
approximately 26% of the outstanding common stock of NBT, assuming no Lake Ariel
stockholder exercises dissenters' rights. Upon completion of NBT's proposed
merger with Pioneer American, the former Lake Ariel stockholders will own
approximately 21% of the outstanding shares of the combined company.
The merger agreement provides for adjustment of the exchange ratio:
|X| either upwards or downwards if a stock dividend, split-up,
merger, recapitalization, combination, conversion, exchange of
shares or similar transaction occurs with respect to either
NBT common stock or Lake Ariel common stock; or
|X| upwards but not downwards if:
(1) the price of a share of NBT common stock declines below
$16.1905, and
(2) the NBT stock price decline, expressed as a percentage, is
more than 15 percentage points greater than the weighted
average stock price decline of the index group, and
(3) Lake Ariel exercises its right to terminate the merger as
a result of NBT's price decline, subject to NBT's right to
require Lake Ariel to complete the merger if NBT increases the
exchange ratio as provided in the merger agreement, and
(4) NBT elects to increase the exchange ratio in that manner.
See "The Merger -- Termination and Termination Fees -- Termination Upon
a Decline in the Value of NBT Common Stock" for a more comprehensive discussion
of this termination provision.
11
We will not issue fractional shares of NBT common stock in the merger.
Any Lake Ariel common stockholder who would otherwise be entitled to receive a
fraction of a share of NBT common stock will instead receive cash for such
fractional share.
Lake Ariel stockholders should not send in their stock certificates for
exchange until instructed to do so after we complete the merger (see page 62).
NBT STOCKHOLDERS WILL NOT EXCHANGE THEIR NBT SHARES
Stockholders of NBT will continue to own their existing shares after
the merger. Following the merger, the stockholders of NBT will own approximately
74% of the outstanding common stock of NBT. Upon completion of NBT's proposed
merger with Pioneer American, the stockholders of NBT will own approximately 57%
of the outstanding shares of the combined company.
WHEN WE EXPECT THE MERGER TO CLOSE (SEE PAGE 38)
We expect completion of the merger as soon as practicable following
approval of the merger by the stockholders of NBT and Lake Ariel at their
stockholders meetings and satisfaction of all other conditions to the merger. We
anticipate completion of the merger during the first quarter of 2000.
NBT WILL EXPAND ITS BOARD OF DIRECTORS FOLLOWING THE MERGER (SEE PAGE 72)
In connection with the merger, NBT will increase the size of its board
of directors from nine directors to twelve directors. The present NBT Board will
appoint three individuals who are presently directors of Lake Ariel to serve on
the NBT Board following the merger.
After the merger, the current executive officers of NBT will continue
to hold the same offices. Mr. John G. Martines, Chief Executive Officer of Lake
Ariel, will be chief executive officer of LA Bank, National Association, which
will be a wholly-owned subsidiary of NBT following the merger.
The plan of merger between NBT and Pioneer American provides that
conditionally upon completion of that proposed merger NBT will increase the size
of its board of directors by three directors and will appoint three individuals
who are presently directors of Pioneer American to serve on the NBT Board. See
"Summary -- Proposed Merger with Pioneer American Holding Company Corp."
COMPARATIVE PER SHARE MARKET PRICE INFORMATION (SEE PAGE 79)
Shares of NBT common stock trade on the Nasdaq National Market as do
the shares of Lake Ariel common stock. On August 13, 1999, the last full trading
day prior to the public announcement of the signing of the merger agreement, and
on , 1999, the last trading day prior to the printing of this document, the
closing prices of NBT common stock and Lake Ariel common stock were as follows
AUGUST 13, 1999 , 1999
--------------- -----------------
NBT................................. $19.29 $
---------
Lake Ariel.......................... $13.00 $
---------
Equivalent Market Value Per
Share of Lake Ariel............. $19.21 $
---------
On December 7, 1999, the last full trading day prior to the public announcement
of the proposed merger between NBT and Pioneer American, the closing price of
NBT common stock on the Nasdaq National Market was $16.25.
12
If the exchange ratio at the effective time of the merger is at or
between the low and high exchange ratios provided by the merger agreement of
0.8731 and 0.9961 of a share of NBT common stock for each share of Lake Ariel
common stock, the market value of the consideration that Lake Ariel stockholders
will receive in the merger for each share of Lake Ariel common stock,
irrespective of the specific exchange ratio, would be $18.50. Because the
valuation period for determining the average closing price of NBT's common stock
and the effective exchange ratio for Lake Ariel shares ends on the eighth
trading day before the effective time of the merger, it is possible that the
market price of NBT common stock might increase or decrease between the
valuation period and the effective time of the merger. Should that occur, the
stockholders of Lake Ariel would receive shares of NBT common stock in the
merger with a market value of more or less than the $18.50 per share value
agreed by the parties.
The market prices of NBT common stock and Lake Ariel common stock will
fluctuate prior to the merger in the normal course of trading on a day-to-day
basis. You should obtain current stock price quotations for NBT common stock and
Lake Ariel common stock. You can get these quotations from a newspaper, on the
Internet, or by calling your broker.
OUR FINANCIAL ADVISORS BELIEVE THE EXCHANGE RATIO IS FAIR TO STOCKHOLDERS (SEE
PAGES 45 AND 51)
NBT. McConnell, Budd & Downes, Inc. has acted as financial advisor to NBT in
connection with the merger. McConnell, Budd & Downes delivered to the NBT Board
an oral opinion on August 16, 1999, which McConnell, Budd & Downes confirmed and
updated by its written opinion dated as of the date of this Joint Proxy
Statement/Prospectus. The opinion states that, as of the date of such opinion
and based upon and subject to various assumptions and limitations, the exchange
ratio was fair to the stockholders of NBT from a financial point of view.
McConnell, Budd & Downes provided its opinion for the information and assistance
of the NBT Board and it addresses only the fairness of the exchange ratio to the
NBT stockholders from a financial point of view. It does not address either the
merits of the underlying decision by NBT to engage in the transaction or
constitute a recommendation to any stockholder as to how a stockholder should
vote on the merger agreement. We attach a copy of the McConnell, Budd & Downes
opinion as Appendix C. NBT has agreed to pay McConnell, Budd & Downes $475,000
for its services rendered to NBT.
Lake Ariel. Janney Montgomery Scott Inc. has acted as financial advisor to Lake
Ariel in connection with the merger. Janney Montgomery Scott delivered to the
Lake Ariel Board a written opinion on August 16, 1999, and an updated written
opinion on , 1999. The opinion and its update state that, based upon and subject
to certain matters stated in the opinion and its update, the financial
consideration which Lake Ariel stockholders will receive in the merger was fair
to the Lake Ariel stockholders from a financial point of view. We attach the
written opinion of Janney Montgomery Scott, which sets forth various assumptions
and limitations, as Appendix D to this Joint Proxy Statement/Prospectus. Janney
Montgomery Scott provided its opinion and update for the information and
assistance of the Lake Ariel Board, and it addresses only the fairness from a
financial point of view of the financial consideration to be received by the
Lake Ariel stockholders and neither addresses the merits of the underlying
decision by Lake Ariel to engage in the transaction nor constitutes a
recommendation to any stockholder as to how a stockholder should vote on the
merger agreement. Lake Ariel has agreed to pay Janney Montgomery Scott a fee of
$125,000 for its services rendered to Lake Ariel.
We recommend that each NBT stockholder and each Lake Ariel stockholder
read each opinion carefully in their entirety to understand the assumptions
made, matters considered, and limitations on review undertaken by each financial
advisor.
TRANSACTION GENERALLY TAX-FREE TO LAKE ARIEL STOCKHOLDERS (SEE PAGE 78)
Lake Ariel Stockholders. We expect the merger to be tax-free to Lake
Ariel stockholders who receive shares of NBT common stock. Cash received by Lake
Ariel stockholders instead of fractional shares in the merger generally will be
taxable.
NBT Stockholders. Neither NBT nor its stockholders will recognize gain
or loss as a result of the merger.
NBT and Lake Ariel will have no obligation to complete the merger
unless we receive a legal opinion that the merger will qualify as a transaction
that is generally tax-free for federal income tax purposes. In that case, the
federal income tax treatment of the merger will be as we have described it
above. The legal opinion will not bind the Internal Revenue Service, however,
which could take a different view.
13
OUR REASONS FOR THE MERGER
NBT. THE NBT BOARD BELIEVES THAT THE MERGER IS ADVISABLE AND UNANIMOUSLY
RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO APPROVE THE MERGER AGREEMENT, WHICH
AUTHORIZES AND EFFECTS THE MERGER AND THE OTHER MATTERS CONTEMPLATED BY THE
MERGER AGREEMENT, INCLUDING THE ISSUANCE BY NBT OF APPROXIMATELY 4.8 MILLION
SHARES OF ITS COMMON STOCK IN THE MERGER TO THE LAKE ARIEL STOCKHOLDERS. The
shares of NBT common stock which NBT will issue to the Lake Ariel shareholders
in the merger will represent approximately 26% of the outstanding NBT common
stock after the merger.
We recommend the merger because:
|X| the merger will permit NBT to expand its operations into new
markets and beyond New York State into Pennsylvania and will
allow NBT to diversify its operations
|X| the merger will afford NBT an opportunity to expand the
delivery of its financial services, especially its trust
services, to a broader and more disparate customer base
|X| the financial resources of the combined company following the
merger will permit NBT to broaden its product capabilities and
services, respond to changes in the financial services
industry, and compete more effectively with other financial
institutions within its expanded geographical service area
|X| the anticipated positive financial impact of the merger upon
NBT's future financial performance will enhance stockholder
return by achieving operating efficiencies and cost savings
To review the NBT Board's reasons for the merger in greater detail, see
page 41.
Lake Ariel. THE LAKE ARIEL BOARD BELIEVES THAT THE MERGER IS ADVISABLE AND
UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO APPROVE THE MERGER
AGREEMENT, THE MERGER AND THE OTHER MATTERS CONTEMPLATED BY THE MERGER
AGREEMENT.
We recommend the merger because:
|X| NBT offers a broader range of products and services and the
merger would provide Lake Ariel's customers with access to
these products and services without Lake Ariel's having to
undergo the expense of introducing them on its own
|X| the exchange ratio resulted in a value of $18.50 per share or
31.4% premium to the closing price of Lake Ariel common stock
on August 13, 1999 and would result in an increase of
dividends per share of approximately $.062 ($.248 annualized)
or approximately 62% on August 13, 1999
|X| the anticipated cost savings and efficiencies available to the
combined company could result in a better return to Lake Ariel
stockholders
To review the Lake Ariel Board's reasons for the merger in greater
detail, see page 43.
WE RECOMMEND THAT STOCKHOLDERS APPROVE THE MERGER (SEE PAGES 41 AND 43)
NBT. The NBT Board believes that the merger is fair to you and is in your best
interests, and unanimously recommends that you vote FOR the proposal to approve
the merger agreement, the merger and the related matters.
14
Lake Ariel. The Lake Ariel Board believes that the merger is fair to you and is
in your best interests, and unanimously recommends that you vote FOR the
proposal to approve the merger agreement, the merger and the related matters.
OTHER INTERESTS OF LAKE ARIEL OFFICERS AND DIRECTORS IN THE MERGER (SEE PAGE 54)
Certain officers and directors, who are also stockholders, of Lake
Ariel will receive benefits as a result of the merger that are different from,
or in addition to, the benefits you will receive. These benefits include the
following:
|X| John G. Martines, Chief Executive Officer of Lake Ariel, will
receive an employment agreement with NBT, which becomes
effective only upon completion of the merger;
|X| certain Lake Ariel officers will receive change-in-control
agreements with NBT, which provide for severance benefits upon
termination of their employment upon a covered change in
control (see "The Merger -- Other Interests of Officers and
Directors in the Merger -- Change-in-Control Agreements"); and
|X| upon completion of the merger, NBT will assume and continue in
effect certain salary continuation agreements between LA Bank
and Messrs. Martines, Martarano and Earyes and a supplementary
retirement benefit agreement between LA Bank and Mr. Martines.
The merger agreement provides that following the merger NBT will take
no action to abrogate or diminish any right to indemnification accorded under
Lake Ariel's Articles of Incorporation or bylaws existing in favor of the
current or former directors or officers of Lake Ariel. The merger agreement also
provides that following the effective time of the merger and to the extent
permitted by law, all rights to such indemnification will survive completion of
the merger, and NBT will honor such obligations in accordance with their terms
with respect to events, acts, or omissions occurring prior the effective time of
the merger.
COMPLETION OF THE MERGER REQUIRES SATISFACTION OF VARIOUS CONDITIONS (SEE PAGE
66)
We must satisfy a number of conditions before completion of the merger,
including that:
|X| the stockholders of NBT and Lake Ariel approve the merger
agreement;
|X| the Board of Governors of the Federal Reserve System and the
Department of Banking of the Commonwealth of Pennsylvania
approve the merger; we have received the requisite approvals
from these agencies;
|X| the Nasdaq authorizes the inclusion on the Nasdaq National
Market of the NBT common stock to be issued to Lake Ariel
stockholders;
|X| the Securities and Exchange Commission declares effective the
registration statement relating to the issuance of NBT common
stock to holders of Lake Ariel common stock, and the
registration statement is not subject to a stop-order or a
threatened stop-order;
|X| NBT and Lake Ariel receive a legal opinion regarding treatment
of the merger as a tax-free reorganization under Section
368(a) of the Internal Revenue Code of 1986, as amended; and
|X| NBT receives a letter from its independent public accountants
stating that the merger will qualify for "pooling of
interests" accounting treatment.
15
Where the law permits, NBT or Lake Ariel may waive some of the
conditions to the merger if it deems such a waiver to be in the best interests
of its stockholders. Although we anticipate completing the merger during the
first quarter of 2000, we cannot be certain when (or if) the conditions to the
merger will be satisfied or when we will complete the merger.
WE MAY DECIDE NOT TO COMPLETE THE MERGER (SEE PAGE 66)
We can agree to terminate the merger agreement before completion of the
merger. Either of us may terminate the merger agreement if any of the following
occurs:
|X| failure to complete the merger by April 15, 2000;
|X| a determination that the other party has materially breached
any of its covenants contained in the merger agreement, and
has not cured the breach within the specified time period, or
a determination that the representations and warranties of the
other party were materially incorrect when made; or
|X| a decline in the price of NBT common stock absolutely and
relative to the weighted average price of the common stock of
other selected bank holding companies exceeds limits specified
in the merger agreement and Lake Ariel exercises its right to
cancel the merger, subject to NBT's right to increase the
exchange ratio as provided in the merger agreement and NBT
elects not to increase the exchange ratio.
WE MAY AMEND THE TERMS OF THE MERGER AND WAIVE SOME CONDITIONS (SEE PAGE 69)
We may jointly amend the terms of the merger, and each of us may waive
our right to require the other party to adhere to those terms, to the extent
legally permissible. However, after our stockholders approve the merger
agreement and the merger, they must approve any amendment or waiver that would
reduce or change the consideration that they will receive upon completion of the
merger.
LAKE ARIEL HAS GRANTED NBT AN OPTION TO PURCHASE 19.9% OF ITS STOCK (SEE PAGE
58)
As a condition to NBT's willingness to enter into the merger agreement,
and to discourage other companies from attempting to acquire Lake Ariel, Lake
Ariel granted NBT an option to purchase up to 19.9% of the Lake Ariel common
stock outstanding immediately before the exercise of such option at an exercise
price of $11.375 per share. The option is exercisable only upon occurrence of
specified events that would be ordinarily associated with an acquisition or
potential acquisition of Lake Ariel by a third party.
WE HAVE RECEIVED THE REQUIRED REGULATORY APPROVALS
Completion of the merger requires the approval by the Federal Reserve
Board and the Pennsylvania Department of Banking. The Federal Reserve Board
approved the merger on November 19, 1999. The Pennsylvania Department of Banking
approved the merger on December 1, 1999.
WE EXPECT "POOLING OF INTERESTS" ACCOUNTING TREATMENT (SEE PAGE 60)
We expect the merger to qualify as a "pooling of interests." This means
that, for accounting and financial reporting purposes, we will treat our
companies as if they had always been one company. We will not be required to
complete the merger unless we receive a letter from our independent accountants
telling us that the merger will qualify as a pooling of interests.
LAKE ARIEL STOCKHOLDERS WILL HAVE DISSENTERS' RIGHTS (SEE PAGES 61 AND 91)
16
Lake Ariel. By resolution, as permitted by Pennsylvania law, the Lake Ariel
Board has extended to its stockholders dissenters' rights to the payment in cash
of the fair value of their shares of Lake Ariel common stock in connection with
the merger. TO PERFECT THEIR DISSENTERS' RIGHTS, HOLDERS OF THESE SHARES OF LAKE
ARIEL COMMON STOCK MUST FOLLOW REQUIRED STATUTORY PROCEDURES, INCLUDING FILING
NOTICES WITH LAKE ARIEL, AND EITHER ABSTAINING OR VOTING AGAINST THE MERGER
AGREEMENT AND THE MERGER. If you hold shares of Lake Ariel common stock and you
dissent from the merger agreement and the merger and follow the required
procedures, your shares of Lake Ariel common stock will not become shares of NBT
common stock upon completion of the merger. Instead, your only right will be to
receive the value of your shares in cash. We have attached the applicable
provisions of Pennsylvania law related to dissenters' rights to this Joint Proxy
Statement/Prospectus as Appendix E.
NBT. Under Delaware law, the NBT stockholders will not have dissenters' rights
or appraisal rights in connection with the merger.
INCLUSION OF SHARES OF NBT STOCK FOR TRADING ON THE NASDAQ NATIONAL MARKET (SEE
PAGE 61)
NBT will list the shares of common stock to be issued to holders of
Lake Ariel common stock in connection with the merger for inclusion on the
Nasdaq National Market. After completion of the merger, NBT will delist the Lake
Ariel common stock from the Nasdaq National Market and deregister the Lake Ariel
common stock for purposes of the Securities Exchange Act of 1934.
NBT PLANS TO CONTINUE ITS DIVIDEND POLICY FOLLOWING THE MERGER (SEE PAGE 61)
The current annualized rate of cash dividends on the shares of NBT
common stock is $0.648 per share. Upon completion of the merger, NBT expects
that it will continue to pay quarterly cash dividends in a manner that is
consistent with its past practices, subject to approval and declaration by its
board. The payment of cash dividends by NBT in the future will depend on its
financial condition and earnings, business conditions and other factors.
COMPARISON OF LAKE ARIEL STOCKHOLDERS' RIGHTS BEFORE AND AFTER THE MERGER (SEE
PAGE 82)
We have summarized below the material differences in the rights of the
stockholders of Lake Ariel and NBT. Upon completion of the merger, Lake Ariel
stockholders will have the same rights as NBT stockholders.
|X| NBT is a Delaware corporation and the rights of its
stockholders are generally subject to the corporate law of
Delaware. Lake Ariel is a Pennsylvania corporation and the
rights of its stockholders are generally subject to the
corporate law of Pennsylvania.
|X| Under NBT's bylaws, NBT stockholders have the right to call a
special stockholders' meeting at the written request of at
least 50% of all shares entitled to vote at the meeting. Under
Lake Ariel's bylaws, Lake Ariel stockholders have the right to
call a special stockholders' meeting at the written request of
holders of at least 20% of all shares entitled to vote at the
meeting.
|X| Each company's governing instruments provide for restrictions
upon certain business combinations. NBT's Certificate of
Incorporation and Delaware law limit the ability of a Delaware
corporation to enter into a business combination with a major
stockholder or an interested stockholder and require a
supermajority vote to accomplish such transactions. The Lake
Ariel Articles of Incorporation require a supermajority vote
of the stockholders to approve any merger or consolidation,
liquidation or dissolution, or any sale or other disposition
of all or substantially all of the assets of the corporation.
Moreover, Pennsylvania law restricts business combinations
with interested stockholders.
|X| Under Delaware law, NBT stockholders may have appraisal rights
to dissent from a statutory merger or consolidation and obtain
the fair value in cash of their shares of NBT common stock,
depending upon the type of consideration they receive in
exchange for their shares. No appraisal or dissenters' rights
are available to NBT stockholders in the merger. Under
Pennsylvania law, Lake Ariel stockholders have dissenters'
rights to dissent from a merger, consolidation, a sale, lease,
exchange or disposition of all or substantially all of the
property or assets of a Pennsylvania corporation, or for other
fundamental changes in the corporation and to obtain the fair
value in cash of their shares of Lake Ariel common stock.
17
YOU MAY CHANGE YOUR VOTE IF YOU WISH
You may change your vote at any time before the voting of your proxy at
the stockholders' meeting. You can change your vote in any of the following
ways:
|X| You can send a written notice dated after your proxy stating
that you would like to revoke your proxy. If you are an NBT
stockholder, you should send your written notice to the Chief
Executive Officer of NBT at the address below. If you are a
Lake Ariel stockholder, you should send your written notice to
the Secretary of Lake Ariel at the address below;
|X| You can complete a new proxy card and send it to NBT or Lake
Ariel, and the new proxy card will automatically replace any
earlier dated proxy card that you previously returned; or
|X| You can attend your stockholders' meeting and vote in person.
Attending the special meeting will not by itself revoke your
proxy.
You should send any written notice of revocation, request for a new
proxy card or a completed new proxy card to NBT Bancorp Inc. at 52 South Broad
Street, Norwich, New York 13815, Attention: Chief Executive Officer, if you are
an NBT stockholder; or Lake Ariel Bancorp, Inc. at 409 Lackawanna Avenue, Suite
201, Scranton, Pennsylvania 18503-2045, Attention: Secretary, if you are a Lake
Ariel stockholder.
ADDITIONAL INFORMATION
If you have questions about the merger or would like additional copies
of this Joint Proxy Statement/Prospectus, you should contact:
For NBT Stockholders: For Lake Ariel Stockholders:
NBT Bancorp Inc. Lake Ariel Bancorp, Inc.
52 South Broad Street 409 Lackawanna Avenue, Suite 201
Norwich, New York 13815 Scranton, Pennsylvania 18503-2045
Attention: Michael J. Chewens, CPA Attention: Joseph J. Earyes, CPA
Phone Number: (607) 337-6520 Phone Number: (570) 343-8200
18
SELECTED HISTORICAL AND PRO FORMA COMBINED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE INFORMATION)
The following tables set forth selected historical financial data for
NBT and Lake Ariel, and selected unaudited pro forma combined financial data for
the combined company. The selected historical financial data have been derived
from consolidated financial statements of NBT and Lake Ariel included elsewhere
in this document. Stockholders of each of NBT and Lake Ariel should read this
information in conjunction with the historical financial statements and related
notes of each of NBT and Lake Ariel and the unaudited pro forma condensed
consolidated financial statements and related notes of NBT presented on pages 96
through 110. The NBT and Lake Ariel combined results of operations give effect
to NBT's proposed acquisition of Lake Ariel as a pooling of interests, as if
such transaction had been completed as of the beginning of each of the periods
presented.
The pro forma information does not reflect estimated non-recurring
charges that will be incurred in connection with the mergers. The combined
company expects to achieve certain merger benefits in the form of operating
expense reductions and revenue enhancements. The pro forma information does not
reflect potential operating expense reductions or revenue enhancements that are
expected to result from the merger, and therefore may not be indicative of the
results of future operations. No assurance can be given with respect to the
ultimate level of operating expense reductions or revenue enhancements.
Accordingly, the unaudited selected pro forma condensed combined financial data
of the combined company as of the effective time and thereafter may be
materially different from the data reflected in the pro forma information below.
19
NBT BANCORP INC.
SELECTED FINANCIAL DATA
(in thousands, except per share data) SEPT. 30, 1999 SEPT. 30, 1998 1998 1997 1996
-------------- -------------- ---- ---- ----
FOR PERIOD ENDED
Interest and fee income $ 75,369 $ 75,980 $ 101,080 $ 96,181 $ 84,387
Interest expense 30,324 33,274 43,677 42,522 36,365
Net interest income 45,045 42,706 57,403 53,659 48,022
Provision for loan losses 2,925 3,550 4,599 3,505 3,175
Noninterest income excluding securities gains (losses) 7,699 7,015 9,355 8,403 7,683
Securities gains (losses) 1,507 613 624 (337) 1,179
Noninterest expense 27,940 28,648 39,128 35,170 34,422
Income before income taxes 23,386 18,136 23,655 23,050 19,287
Net income 14,356 14,513 19,102 14,749 12,179
PER COMMON SHARE*
Basic earnings $ 1.10 $ 1.10 $ 1.45 $ 1.12 $ 0.93
Diluted earnings $ 1.09 $ 1.07 $ 1.42 $ 1.11 $ 0.93
Cash dividends paid $ 0.486 $ 0.425 $ 0.587 $ 0.421 $ 0.338
Stock dividends distributed --% --% 5% 5% 5%
Book value at period-end $ 9.80 $ 10.08 $ 10.02 $ 9.30 $ 8.24
Tangible book value at period-end $ 9.28 $ 9.49 $ 9.44 $ 8.66 $ 7.47
Average common shares outstanding 13,022 13,241 13,198 13,176 13,058
Average diluted common shares outstanding 13,165 13,509 13,474 13,335 13,140
PERIOD ENDED
Assets available for sale $ 358,648 $ 395,836 $ 358,645 $ 443,918 $ 373,337
Securities held to maturity 41,216 36,203 35,095 36,139 42,239
Loans 898,668 797,604 821,505 735,482 654,593
Allowance for loan losses 13,555 12,611 12,962 11,582 10,473
Assets 1,378,259 1,302,943 1,290,009 1,280,585 1,138,986
Deposits 1,094,473 1,033,107 1,044,205 1,014,183 916,319
Short-term borrowings 113,163 120,215 96,589 134,527 88,244
Long-term debt 35,161 10,174 10,171 183 20,195
Stockholders' equity 127,879 132,506 130,632 123,343 106,264
AVERAGE BALANCES
Assets $ 1,317,448 $ 1,285,576 $1,288,334 $ 1,228,643 $1,110,968
Earning assets 1,255,445 1,221,737 1,223,635 1,167,460 1,043,425
Loans 858,937 762,338 774,640 695,552 617,810
Deposits 1,043,439 1,031,842 1,029,817 973,641 916,683
Stockholders' equity 129,045 126,805 127,937 113,691 103,240
KEY RATIOS
Return on average assets 1.46% 1.51% 1.48% 1.20% 1.10%
Return on average equity 14.87% 15.30% 14.93% 12.97% 11.80%
Average equity to average assets 9.80% 9.86% 9.93% 9.25% 9.29%
Net interest margin 4.88% 4,74% 4.76% 4.67% 4.69%
Efficiency 53.22% 56.92% 57.92% 56.09% 60.74%
Cash dividend per share payout 44.74% 39.72% 41.34% 37.91% 36.50%
Tier 1 leverage 9.37% 9.36% 9.33% 8.91% 8.70%
Tier 1 risk-based capital 14.39% 14.95% 14.69% 14.88% 14.06%
Total risk-based capital 15.64% 16.21% 15.94% 16.13% 15.31%
20
NBT BANCORP INC.
SELECTED FINANCIAL DATA
(in thousands, except per share data) 1995 1994
---- ----
FOR PERIOD ENDED
Interest and fee income $ 77,400 $ 70,438
Interest expense 34,840 25,742
Net interest income 42,560 44,696
Provision for loan losses 1,553 3,071
Noninterest income excluding securities gains (losses) 6,957 6,484
Securities gains (losses) 145 555
Noninterest expense 33,024 38,674
Income before income taxes 15,085 9,990
Net income 9,329 6,508
PER COMMON SHARE*
Basic earnings $ 0.69 $ 0.48
Diluted earnings $ 0.69 $ 0.47
Cash dividends paid $ 0.292 $ 0.264
Stock dividends distributed 5% 5%
Book value at period-end $ 8.07 $ 7.20
Tangible book value at period-end $ 7.20 $ 6.49
Average common shares outstanding 13,520 13,642
Average diluted common shares outstanding 13,582 13,797
PERIOD ENDED
Assets available for sale $ 399,625 $ 119,398
Securities held to maturity 40,311 272,466
Loans 588,385 574,718
Allowance for loan losses 9,120 9,026
Assets 1,106,266 1,044,557
Deposits 873,032 791,443
Short-term borrowings 115,945 140,587
Long-term debt 3,012 8,734
Stockholders' equity 108,044 98,307
AVERAGE BALANCES
Assets $1,042,198 $1,009,572
Earning assets 977,738 942,989
Loans 575,736 565,841
Deposits 848,289 817,401
Stockholders' equity 101,630 99,710
KEY RATIOS
Return on average assets 0.90% 0.64%
Return on average equity 9.18% 6.53%
Average equity to average assets 9.75% 9.88%
Net interest margin 4.43% 4.81%
Efficiency 65.92% 70.22%
Cash dividend per share payout 42.61% 56.13%
Tier 1 leverage 8.80% 9.05%
Tier 1 risk-based capital 15.21% 16.09%
Total risk-based capital 16.46% 17.35%
*All share and per share data has been restated to give retroactive effect to
stock dividends and splits.
21
LAKE ARIEL BANCORP, INC.
SELECTED FINANCIAL DATA
(in thousands, except per share data) SEPT. 30, 1999 SEPT. 30, 1998 1998 1997 1996
-------------- -------------- ---- ---- ----
FOR PERIOD ENDED
Interest and fee income $ 24,109 $ 21,692 $ 29,220 $ 24,650 $ 20,275
Interest expense 13,705 12,359 16,740 13,525 10,183
Net interest income 10,404 9,333 12,480 11,125 10,092
Provision for loan losses 655 490 1,130 780 650
Noninterest income excluding securities gains (losses) 3,377 3,153 4,502 3,187 2,663
Securities gains (losses) 208 80 432 214 43
Noninterest expense 9,354 8,038 11,452 9,210 7,997
Income before income taxes 3,980 4,038 4,832 4,536 4,151
Net income 3,025 3,108 3,771 3,431 3,031
PER COMMON SHARE*
Basic earnings $ 0.63 $ 0.65 $ 0.79 $ 0.88 $ 0.78
Diluted earnings $ 0.61 $ 0.64 $ 0.77 $ 0.84 $ 0.78
Cash dividends paid $ 0.300 $ 0.280 $ 0.410 $ 0.380 $ 0.320
Stock dividends distributed --% --% 5% 5% 5%
Book value at period-end $ 7.16 $ 7.96 $ 7.87 $ 7.50 $ 5.45
Tangible book value at period-end $ 6.60 $ 7.38 $ 7.29 $ 7.32 $ 5.25
Average common shares outstanding 4,840 4,791 4,796 3,935 3,860
Average diluted common shares outstanding 4,971 4,911 4,906 4,073 3,870
PERIOD ENDED
Assets available for sale $ 173,878 $ 69,899 $ 83,301 $ 57,166 $ 60,714
Securities held to maturity 47,297 104,471 111,826 58,245 26,601
Loans 280,868 215,434 224,404 209,724 177,505
Allowance for loan losses 2,546 1,971 2,360 2,109 1,830
Assets 552,917 444,706 474,689 368,073 297,906
Deposits 342,034 302,851 312,742 280,450 253,196
Short-term borrowings 32,614 2,127 3,283 200 300
Long-term debt 138,204 96,188 115,459 47,656 20,023
Stockholders' equity 34,808 38,293 37,940 35,815 21,172
AVERAGE BALANCES
Assets $ 495,937 $ 417,760 $ 429,209 $ 344,066 $ 276,954
Earning assets 449,365 379,761 389,043 313,079 253,913
Loans 245,331 215,462 218,629 194,064 165,348
Deposits 322,121 281,695 288,664 268,112 233,475
Stockholders' equity 36,515 36,508 36,724 22,515 20,242
KEY RATIOS
Return on average assets 0.81% 0.99% 0.88% 1.00% 1.09%
Return on average equity 11.05% 11.35% 10.27% 15.24% 14.97%
Average equity to average assets 7.36% 8.74% 8.56% 6.54% 7.31%
Net interest margin 3.36% 3.52% 3.43% 3.81% 4.20%
Efficiency 63.83% 62.78% 66.30% 60.88% 60.02%
Cash dividend per share payout 49.18% 43.75% 53.25% 45.24% 41.03%
Tier 1 leverage 7.26% 8.51% 7.72% 10.26% 7.46%
Tier 1 risk-based capital 12.33% 14.58% 14.07% 17.12% 11.72%
Total risk-based capital 13.15% 15.36% 14.96% 18.12% 12.72%
22
LAKE ARIEL BANCORP, INC.
SELECTED FINANCIAL DATA
(in thousands, except per share data) 1995 1994
---- ----
FOR PERIOD ENDED
Interest and fee income $ 18,548 $ 14,157
Interest expense 9,514 5,967
Net interest income 9,034 8,190
Provision for loan losses 810 375
Noninterest income excluding securities gains (losses) 2,150 1,567
Securities gains (losses) 331 112
Noninterest expense 7,763 6,831
Income before income taxes 2,942 2,663
Net income 2,307 2,128
PER COMMON SHARE*
Basic earnings $ 0.60 $ 0.56
Diluted earnings $ 0.60 $ 0.56
Cash dividends paid $ 0.270 $ 0.250
Stock dividends distributed --% --%
Book value at period-end $ 5.34 $ 4.37
Tangible book value at period-end $ 5.28 $ 4.29
Average common shares outstanding 3,823 3,775
Average diluted common shares outstanding 3,823 3,775
PERIOD ENDED
Assets available for sale $ 53,985 $ 34,261
Securities held to maturity 22,589 42,535
Loans 150,558 136,395
Allowance for loan losses 1,657 1,496
Assets 251,859 236,125
Deposits 208,759 192,187
Short-term borrowings 5,400 10,750
Long-term debt 15,156 15,219
Stockholders' equity 19,509 15,799
AVERAGE BALANCES
Assets $ 251,102 $ 203,677
Earning assets 229,673 185,917
Loans 145,783 122,582
Deposits 207,291 169,726
Stockholders' equity 17,512 16,279
KEY RATIOS
Return on average assets 0.92% 1.04%
Return on average equity 13.17% 13.07%
Average equity to average assets 6.97% 7.99%
Net interest margin 4.15% 4.71%
Efficiency 65.04% 66.08%
Cash dividend per share payout 45.00% 44.64%
Tier 1 leverage 7.59% 8.51%
Tier 1 risk-based capital 12.75% 12.47%
Total risk-based capital 13.82% 13.55%
*All share and per share data has been restated to give retroactive effect to
stock dividends and splits.
23
PRO FORMA COMBINED
SELECTED FINANCIAL DATA
(in thousands, except per share data) SEPT. 30, 1999 SEPT. 30, 1998 1998 1997
-------------- -------------- ---- ----
FOR PERIOD ENDED
Interest and fee income $ 99,478 $ 97,672 $ 130,300 $ 120,831
Interest expense 44,029 45,633 60,417 56,047
Net interest income 55,449 52,039 69,883 64,784
Provision for loan losses 3,580 4,040 5,729 4,285
Noninterest income excluding securities gains (losses) 11,076 10,168 13,857 11,590
Securities gains (losses) 1,715 693 1,056 (123)
Noninterest expense 37,294 36,686 50,580 44,380
Income before income taxes 27,366 22,174 28,487 27,586
Net income 17,381 17,621 22,873 18,180
PER COMMON SHARE*
Basic earnings $ 0.97 $ 0.98 $ 1.27 $ 1.06
Diluted earnings $ 0.96 $ 0.96 $ 1.25 $ 1.05
Cash dividends paid $ 0.486 $ 0.425 $ 0.587 $ 0.421
Stock dividends distributed --% --% 5% 5%
Book value at period-end $ 9.10 $ 9.52 $ 9.45 $ 8.84
Tangible book value at period-end $ 8.56 $ 8.93 $ 8.87 $ 8.31
Average common shares outstanding 17,843 18,014 17,976 17,095
Average diluted common shares outstanding 18,117 18,401 18,361 17,393
PERIOD ENDED
Assets available for sale $ 532,526 $ 465,735 $ 441,946 $ 501,084
Securities held to maturity 88,513 140,674 146,921 94,384
Loans 1,179,536 1,013,038 1,045,909 945,206
Allowance for loan losses 16,101 14,582 15,322 13,691
Assets 1,931,176 1,747,649 1,764,698 1,648,658
Deposits 1,436,507 1,335,958 1,356,947 1,294,633
Short-term borrowings 145,777 122,342 99,872 134,727
Long-term debt 173,365 106,362 125,630 47,839
Stockholders' equity 162,687 170,799 168,572 159,158
AVERAGE BALANCES
Assets $ 1,813,385 $ 1,703,336 $ 1,717,543 $ 1,572,709
Earning assets 1,704,810 1,601,498 1,612,678 1,480,539
Loans 1,104,268 977,800 993,269 889,616
Deposits 1,365,560 1,313,537 1,318,481 1,241,753
Stockholders' equity 165,560 163,313 164,661 136,206
KEY RATIOS
Return on average assets 1.28% 1.38% 1.33% 1.16%
Return on average equity 14.04% 14.43% 13.89% 13.35%
Average equity to average assets 9.13% 9.59% 9.59% 8.66%
Net interest margin 4.48% 4.45% 4.44% 4.49%
Efficiency 55.50% 58.11% 59.63% 57.03%
Cash dividend per share payout 50.63% 44.27% 46.96% 40.10%
Tier 1 leverage 8.79% 9.15% 8.90% 9.20%
Tier 1 risk-based capital 13.86% 14.87% 14.54% 15.36%
Total risk-based capital 15.00% 16.01% 15.71% 16.56%
24
PRO FORMA COMBINED
SELECTED FINANCIAL DATA
(in thousands, except per share data) 1996 1995 1994
---- ---- ----
FOR PERIOD ENDED
Interest and fee income $ 104,662 $ 95,948 $ 84,595
Interest expense 46,548 44,354 31,709
Net interest income 58,114 51,594 52,886
Provision for loan losses 3,825 2,363 3,446
Noninterest income excluding securities gains (losses) 10,346 9,107 8,051
Securities gains (losses) 1,222 476 667
Noninterest expense 42,419 40,787 45,505
Income before income taxes 23,438 18,027 12,653
Net income 15,210 11,636 8,636
PER COMMON SHARE*
Basic earnings $ 0.90 $ 0.67 $ 0.50
Diluted earnings $ 0.89 $ 0.67 $ 0.49
Cash dividends paid $ 0.338 $ 0.292 $ 0.264
Stock dividends distributed 5% 5% 5%
Book value at period-end $ 7.60 $ 7.48 $ 6.62
Tangible book value at period-end $ 6.96 $ 6.79 $ 6.03
Average common shares outstanding 16,903 17,328 17,403
Average diluted common shares outstanding 16,995 17,390 17,558
PERIOD ENDED
Assets available for sale $ 434,051 $ 453,610 $ 153,659
Securities held to maturity 68,840 62,900 315,001
Loans 832,098 738,943 711,113
Allowance for loan losses 12,303 10,777 10,522
Assets 1,436,892 1,358,125 1,280,682
Deposits 1,169,515 1,081,791 983,630
Short-term borrowings 88,544 121,345 151,337
Long-term debt 40,218 18,168 23,953
Stockholders' equity 127,436 127,553 114,106
AVERAGE BALANCES
Assets $ 1,387,922 $1,293,300 $ 1,213,249
Earning assets 1,297,338 1,207,411 1,128,906
Loans 783,158 721,519 688,423
Deposits 1,150,158 1,055,580 987,127
Stockholders' equity 123,482 119,142 115,989
KEY RATIOS
Return on average assets 1.10% 0.90% 0.71%
Return on average equity 12.32% 9.77% 7.45%
Average equity to average assets 8.90% 9.21% 9.56%
Net interest margin 4.60% 4.38% 4.80%
Efficiency 60.60% 65.76% 69.53%
Cash dividend per share payout 37.98% 43.58% 53.88%
Tier 1 leverage 8.46% 8.57% 8.96%
Tier 1 risk-based capital 13.59% 14.73% 15.39%
Total risk-based capital 14.79% 15.95% 16.61%
*All share and per share data has been restated to give retroactive effect to
stock dividends and splits.
25
UNAUDITED COMPARATIVE PER SHARE DATA
We have summarized below the per common share combined information for
NBT and Lake Ariel on an historical and pro forma combined and pro forma
equivalent basis. The pro forma information gives effect to the merger accounted
for as a pooling of interests, on the assumption that our companies had always
been combined for accounting and financial reporting purposes. In presenting the
pro forma information for the time periods shown in the table, we assumed that
we had been merged throughout those periods. You should read this information in
conjunction with our historical financial statements and related notes contained
in the reports and other information that we have filed with the SEC. See "Where
You Can Find More Information." You should also read this information in
conjunction with the pro forma combined financial information set forth under
the heading "Unaudited Pro Forma Combined Financial Statements." You should not
rely on the pro forma information as being indicative of the results that we
will achieve after the merger.
The combined company unaudited pro forma data represent the effect of
the merger on a share of NBT common stock. The Lake Ariel pro forma equivalent
data represent the combined company pro forma data before rounding, multiplied
by the conversion ratio, and thereby reflect the effect of the merger on a share
of Lake Ariel common stock.
HISTORICAL PRO FORMA
--------------------------------- ----------------------------
NBT LAKE ARIEL COMBINED LAKE ARIEL
BANCORP INC. BANCORP, INC. COMPANY EQUIVALENT
Per Common Share
BASIC EARNINGS
For the nine months ended September 30, 1999 $ 1.10 $ 0.63 $ 0.97 $ 0.97
Year - Ended:
December 31, 1998 1.45 0.79 1.27 1.27
December 31, 1997 1.12 0.88 1.06 1.06
December 31, 1996 0.93 0.78 0.90 0.90
DILUTED EARNINGS
For the nine months ended September 30, 1999 $ 1.09 $ 0.61 $ 0.96 $ 0.96
Year - Ended:
December 31, 1998 1.42 0.77 1.25 1.25
December 31, 1997 1.11 0.84 1.05 1.05
December 31, 1996 0.93 0.78 0.89 0.89
CASH DIVIDEND PAID
For the nine months ended September 30, 1999 $ 0.486 $ 0.300 $ 0.486 $ 0.484
Year - Ended:
December 31, 1998 0.587 0.410 0.587 0.585
December 31, 1997 0.421 0.380 0.421 0.419
December 31, 1996 0.338 0.320 0.338 0.337
BOOK VALUE
As of:
September 30, 1999 $ 9.80 $ 7.16 $ 9.10 $ 9.06
December 31, 1998 10.02 7.87 9.45 9.41
TANGIBLE BOOK VALUE
As of:
September 30, 1999 $ 9.28 $ 6.60 $ 8.56 $ 8.53
December 31, 1998 9.44 7.29 8.87 8.84
26
PROPOSED MERGER WITH PIONEER AMERICAN HOLDING COMPANY CORP.
NBT and Pioneer American Holding Company Corp. (OTC BB: PAHC.OB), a
Pennsylvania corporation, the parent company of Pioneer American Bank, N.A.,
entered into a merger agreement on December 7, 1999. Under this merger agreement
Pioneer American will merge with and into NBT with NBT being the surviving
corporation. Pioneer American Bank will ultimately merge with LA Bank. The
merger between NBT and Pioneer American is subject to the approval of each
company's stockholders and of banking regulators. The parties expect the merger
to close in the second quarter of 2000.
In the merger, stockholders of Pioneer American will receive a fixed
ratio of 1.805 shares of NBT common stock for each share of Pioneer American
common stock exchanged. The parties intend the merger to qualify for
pooling-of-interests accounting treatment and as a tax-free exchange for Pioneer
American stockholders. Upon completion of the merger, NBT will issue
approximately 5.2 million shares and share equivalents in exchange for all of
the Pioneer American common stock and share equivalents outstanding. The
transaction is valued at $84.48 million or $29.33 per share for the outstanding
common shares of Pioneer American based upon the December 7, 1999 closing price
of $16.25 for NBT common stock. Using the closing price of NBT common stock of $
on
, 1999, the last trading day prior to the printing of this
document, the transaction has a value of $ million or $ per share of Pioneer
American common stock. Pioneer American has provided NBT an option to acquire up
to 569,997 shares of Pioneer American's common stock (equivalent to 19.9% of
Pioneer American's common stock currently outstanding). The option is
exercisable in the event of certain circumstances involving transactions with
third parties, acts of third parties, or break-up of the merger agreement.
Pioneer American has approximately 1,460 stockholders and approximately 2.9
million common shares outstanding.
Pioneer American Bank, a national bank, is a full service commercial
bank with total assets of approximately $420 million. Pioneer American Bank has
18 branches in five counties in northeastern Pennsylvania. Pioneer American and
Pioneer American Bank are headquartered in Carbondale, Pennsylvania.
Daryl R. Forsythe, President and Chief Executive Officer of NBT, will
continue as President and Chief Executive Officer of the combined company, NBT
Bancorp Inc. John G. Martines, Chief Executive Officer of Lake Ariel, will
become Chairman and Chief Executive Officer of the Pennsylvania bank, and John
W. Reuther, President and Chief Executive Officer of Pioneer American, will
become President and Chief Operating Officer of the Pennsylvania bank. The plan
of merger between NBT and Pioneer American provides that upon completion of that
proposed merger NBT will increase the size of its board of directors by three
(which would be from twelve to fifteen if the merger with Lake Ariel has already
taken place, otherwise from nine to twelve), and NBT will appoint three
individuals who are presently directors of Pioneer American to serve on the NBT
Board.
27
THE STOCKHOLDERS' MEETINGS
We furnish this Joint Proxy Statement/Prospectus to you in connection
with the solicitation of proxies from the holders of (1) NBT common stock by the
NBT Board for use at the NBT special meeting and (2) Lake Ariel common stock by
the Lake Ariel Board for use at the Lake Ariel special meeting. We first mailed
this Joint Proxy Statement/Prospectus together with a proxy and notice of
special meeting to the respective stockholders of NBT and Lake Ariel on or about
, 1999.
THE NBT SPECIAL MEETING
MATTERS FOR CONSIDERATION
NBT will hold a Special Meeting of Stockholders at the Howard Johnson,
75 North Broad Street, Norwich, New York on February 10, 2000, at 2:00 p.m.
local time for the following purposes:
|X| To consider and vote upon a proposal to amend NBT's
Certificate of Incorporation to change its common stock and
preferred stock from no par value, $1.00 stated value per
share to a par value of $.01 per share. We refer to this
proposal as the par value amendment in the following pages of
this Joint Proxy Statement/Prospectus.
|X| To consider and vote upon a proposal to amend NBT's
Certificate of Incorporation to increase the number of
authorized shares of common stock from 15 million to 30
million. We refer to this proposal as the share increase
amendment in the following pages of this Joint Proxy
Statement/Prospectus.
|X| To consider and vote upon a proposal to ratify a change to
Article III, Section 2 of NBT's By-laws, relating to the
number, classification and qualification of directors,
previously approved by the NBT Board.
|X| To consider and vote upon the merger agreement, which, if
completed, authorizes and effects the merger and the other
matters contemplated by the merger agreement, including the
issuance of approximately 4.8 million shares of NBT common
stock to the holders of Lake Ariel common stock.
|X| To transact such other business as may properly come before
the NBT special meeting.
We may take action on the foregoing matters at the NBT special meeting
on the date specified above, or on any date or dates to which we may postpone
the special meeting or to which, by original or later adjournment, we may
adjourn the NBT special meeting.
The NBT Board is unaware of other matters that may come before the NBT
special meeting. If other matters do properly come before the NBT special
meeting, including consideration of a motion to adjourn the special meeting to
another time and/or place for such purposes as soliciting additional proxies,
NBT intends that the persons named in the proxies will vote, or not vote, in
their discretion the shares represented by proxies in the accompanying form. The
named agents will not vote any proxy voted against approval of the merger
agreement in favor of any adjournment or postponement of the NBT special meeting
for the purpose of soliciting additional proxies.
We are not asking you at this time to conside and vote upon our
proposed merger with Pioneer American. We will call a stockholders' meeting at
a future time for our stockholders to consider and vote upon that merger. See
"Summary -- Proposed Merger with Pioneer American Holding Company Corp."
28
RECORD DATE AND VOTING RIGHTS
NBT has fixed the close of business on , 1999 as the record date for
determining the holders of shares of NBT common stock entitled to receive notice
of and to vote at the NBT special meeting. Only holders of NBT common stock at
the close of business on the NBT record date will be entitled to receive notice
of and to vote at the NBT special meeting. As of September 30, 1999, there were
13,046,565 outstanding shares of NBT common stock. Each holder of record of NBT
common stock on the NBT record date is entitled to one vote per share, which the
stockholder may cast either in person or by properly executed proxy.
BECAUSE APPROVAL OF EACH OF THE TWO CERTIFICATE OF INCORPORATION
AMENDMENTS, RATIFICATION OF THE BYLAW CHANGE, AND THE MERGER AGREEMENT AND
RELATED MATTERS REQUIRES THE AFFIRMATIVE VOTE OF A MAJORITY OF THE OUTSTANDING
SHARES OF NBT COMMON STOCK ENTITLED TO VOTE AT THE NBT SPECIAL MEETING,
ABSTENTIONS AND BROKER NON-VOTES WILL HAVE THE SAME EFFECT AS VOTES AGAINST
APPROVAL OF THE TWO CERTIFICATE OF INCORPORATION AMENDMENTS, RATIFICATION OF THE
BYLAW CHANGE, AND THE MERGER AGREEMENT AND THE RELATED MATTERS. ACCORDINGLY, THE
NBT BOARD URGES NBT STOCKHOLDERS TO COMPLETE, DATE AND SIGN THE ACCOMPANYING
PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
QUORUM
The presence, in person or by proxy, of shares of NBT common stock
representing a majority of the NBT shares outstanding entitled to vote is
necessary to constitute a quorum at the NBT special meeting.
PROXIES
The named agents will vote all shares of NBT common stock which are
entitled to vote and are represented at the NBT special meeting by properly
executed proxies received prior to or at the NBT special meeting, and not
revoked, at such meeting in accordance with the specified instructions. IF YOU
MAKE NO SPECIFICATION ON YOUR PROXY CARD THAT YOU HAVE OTHERWISE PROPERLY
EXECUTED, THE NAMED AGENT WILL VOTE FOR APPROVAL OF EACH OF THE TWO CERTIFICATE
OF INCORPORATION AMENDMENTS, RATIFICATION OF THE BYLAW CHANGE, AND THE MERGER
AGREEMENT AND THE OTHER MATTERS CONTEMPLATED IN THE MERGER AGREEMENT.
We will count as present at the NBT special meeting for purposes of
determining the presence or absence of a quorum for the transaction of business
at the NBT special meeting those shares of NBT common stock held by persons
attending the NBT special meeting but not voting, and those shares of NBT common
stock for which NBT has received proxies but with respect to which holders of
those shares have abstained from voting. Stock exchange rules prohibit brokers
who hold shares of NBT common stock in nominee or "street name" for customers
who are the beneficial owners of those shares from giving a proxy to vote shares
held for those customers on the matters to be considered and voted upon at the
NBT special meeting without specific instructions from those customers. We will
count these so called "broker non-votes," which we receive, for purposes of
determining whether a quorum exists.
Any NBT stockholder giving a proxy may revoke the proxy at any time
before the vote at the special meeting in one or more of the following ways:
|X| filing with NBT, at or before the taking of the vote at the
NBT special meeting, a written notice of revocation bearing a
later date than the proxy;
|X| executing a later dated proxy relating to the same shares and
delivering it to NBT before the taking of the vote at the NBT
special meeting;
29
|X| voting in person at the meeting, although attendance at the
NBT special meeting will not by itself constitute a revocation
of a proxy.
You should send any written notice of revocation or subsequent proxy to
52 South Broad Street, Norwich, New York 13815, Attention: Chief Executive
Officer, or hand deliver the notice of revocation or subsequent proxy to the
Chief Executive Officer at or before the taking of the vote at the NBT special
meeting.
INDEPENDENT AUDITORS TO BE PRESENT AT THE SPECIAL MEETING
NBT has selected KPMG LLP as its principal independent auditors for the
current fiscal year. NBT expects representatives of KPMG LLP to be present at
the NBT special meeting and to have the opportunity to make a statement if they
desire to do so. NBT also expects such representatives to be available to
respond to appropriate questions.
SOLICITATION OF PROXIES
NBT will bear its own costs of solicitation of proxies. NBT will
reimburse brokerage houses, fiduciaries, nominees and others for their
out-of-pocket expenses in forwarding proxy materials to owners of shares of NBT
common stock held in their names. In addition to the solicitation of proxies by
use of the mails, NBT may solicit proxies from NBT stockholders by directors,
officers and employees acting on behalf of NBT in person or by telephone,
telegraph, facsimile or other appropriate means of communications. NBT will not
pay any additional compensation, except for reimbursement of reasonable
out-of-pocket expenses, to these directors, officers and employees of NBT in
connection with the solicitation. You may direct any questions or requests for
assistance regarding this Joint Proxy Statement/Prospectus and related proxy
materials to Michael J. Chewens, CPA, Executive Vice President of NBT, by
telephone at (607) 337-6520.
REQUIRED VOTE
The vote required for approval of each of the par value amendment, the
share increase amendment, ratification of the bylaw change, and the merger
agreement presented in this Joint Proxy Statement/Prospectus is a majority of
the issued and outstanding shares of NBT common stock entitled to vote at the
special meeting.
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS IMPORTANT TO
NBT. PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN
THE ENCLOSED POSTAGE-PAID ENVELOPE.
RECOMMENDATIONS OF NBT BOARD
The NBT Board has unanimously approved the amendments to the NBT
Certificate of Incorporation (1) changing its shares from no par value, $1.00
stated value to $.01 par value per share and (2) increasing the number of
authorized shares of common stock from 15 million to 30 million. The NBT Board
believes that each of these amendments is in the best interest of NBT and the
NBT stockholders and recommends that the NBT stockholders vote FOR approval of
each of the par value amendment and the share increase amendment. See "Proposal
1 -- Proposal to Change NBT's Authorized Common Stock and Preferred Stock to
Shares Having a Par Value of $.01 Per Share" and "Proposal 2 -- Proposed
Amendment to Increase the Number of Authorized Shares of Common Stock from 15
million to 30 million."
The NBT Board is proposing that stockholders ratify an amendment to the
NBT By-laws reducing the vote required to amend Article III, Section 2 from 80%
to 66 2/3% of the outstanding shares of NBT's voting stock. The NBT Board
believes that this Amendment is in the best interest of NBT and the NBT
stockholders and recommends that the NBT stockholders vote FOR its approval. The
reduction in the vote required will be rescinded if the requisite vote of
stockholders is not obtained. See "Proposal 3 -- Proposal to Ratify an Amendment
to Certain Provisions of NBT's By-laws Relating to the Number, Qualification and
Election of Directors."
30
The NBT Board has unanimously approved the merger agreement and the
related matters. The NBT Board believes that the merger agreement and the merger
as well as the issuance of approximately 4.8 million shares of NBT common stock
to the Lake Ariel stockholders upon completion of the merger are in the best
interests of NBT and the NBT stockholders, and recommends that the NBT
stockholders vote FOR approval of the merger agreement. See "The Merger --
Recommendation of the NBT Board and NBT's Reasons for the Merger."
THE LAKE ARIEL SPECIAL MEETING
MATTERS FOR CONSIDERATION
Lake Ariel will hold a Special Meeting of Stockholders at Holiday
Inn-Scranton East, 200 Tigue Street, Dunmore, Pennsylvania on February 10, 2000
at 10:00 a.m. local time for the following purposes:
|X| To consider and approve the merger agreement, which authorizes
and effects the merger and the other matters contemplated by
the merger agreement.
|X| To transact such other business as may properly come
before the Lake Ariel special meeting.
We may take action on the foregoing matters at the Lake Ariel special
meeting on the date specified above, or on any date or dates to which we may
postpone the special meeting or to which, by original or later adjournment, we
may adjourn the Lake Ariel special meeting.
The Lake Ariel Board is unaware of other matters that may come before
the Lake Ariel special meeting. If other matters do properly come before the
Lake Ariel special meeting, including consideration of a motion to adjourn the
special meeting to another time and/or place for such purposes as soliciting
additional proxies, Lake Ariel intends that the persons named in the proxies
will vote, or not vote, in their discretion the shares represented by proxies in
the accompanying form. The named agents will not vote any proxy voted against
approval of the merger agreement in favor of any adjournment or postponement of
the Lake Ariel special meeting for the purpose of soliciting additional proxies.
If we complete the merger, you will become stockholders of NBT. If the
record date for the NBT stockholders' meeting regarding the Pioneer American
merger is after the effective time of the merger, you will be entitled to notice
of and to vote your NBT shares at that meeting.
RECORD DATE AND VOTING RIGHTS
Lake Ariel has fixed the close of business on December 29, 1999 as the
record date for determining the holders of shares of Lake Ariel common stock
entitled to receive notice of and to vote at the Lake Ariel special meeting.
Only holders of record of Lake Ariel common stock at the close of business on
the Lake Ariel record date will be entitled to receive notice of and to vote at
the Lake Ariel special meeting. As of September 30, 1999, there were 4,859,771
issued and outstanding shares of Lake Ariel common stock. Each holder of record
of Lake Ariel common stock on the Lake Ariel record date is entitled to one vote
per share, and may cast such votes either in person or by properly executed
proxy.
BECAUSE APPROVAL OF THE MERGER AGREEMENT AND RELATED MATTERS REQUIRES
THE AFFIRMATIVE VOTE OF TWO-THIRDS OF THE OUTSTANDING SHARES OF LAKE ARIEL
COMMON STOCK ENTITLED TO VOTE AT THE LAKE ARIEL SPECIAL MEETING, ABSTENTIONS AND
BROKER NON-VOTES WILL HAVE THE SAME EFFECT AS VOTES AGAINST APPROVAL OF THE
MERGER AGREEMENT AND THE RELATED MATTERS. ACCORDINGLY, THE LAKE ARIEL BOARD
URGES LAKE ARIEL STOCKHOLDERS TO COMPLETE, DATE AND SIGN THE ACCOMPANYING PROXY
AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
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QUORUM
The presence, in person or by proxy, of shares of Lake Ariel common
stock representing a majority of the Lake Ariel shares outstanding and entitled
to vote will constitute a quorum at the Lake Ariel meeting.
PROXIES
The named agents will vote all shares of Lake Ariel common stock which
are entitled to vote and are represented at the Lake Ariel special meeting by
properly executed proxies received prior to or at such meeting, and not revoked,
at the Lake Ariel special meeting in accordance with the specified instructions.
IF YOU MAKE NO SPECIFICATION ON YOUR PROXY CARD THAT YOU HAVE OTHERWISE PROPERLY
EXECUTED, THE AGENT WILL VOTE THE SHARES FOR APPROVAL OF THE MERGER AGREEMENT
AND THE OTHER MATTERS CONTEMPLATED IN THE MERGER AGREEMENT.
We will count as present at the Lake Ariel meeting for purposes of
determining the presence or absence of a quorum for the transaction of business
at the Lake Ariel special meeting those shares of Lake Ariel common stock held
by persons attending the Lake Ariel special meeting but not voting, and shares
of Lake Ariel common stock for which Lake Ariel has received proxies but with
respect to which holders of those shares have abstained from voting. Stock
exchange rules prohibit brokers who hold shares of Lake Ariel common stock in
nominee or "street name" for customers who are the beneficial owners of those
shares from giving a proxy to vote shares held for those customers on the
matters to be considered and voted upon at the Lake Ariel meeting without
specific instructions from those customers. We will count these so called
"broker non-votes," which we receive, for purposes of determining whether a
quorum exists.
Any Lake Ariel stockholder may revoke the proxy at any time before the
vote at the meeting in one or more of the following ways:
|X| filing with the Secretary of Lake Ariel, at or before the
taking of the vote at the Lake Ariel special meeting, a
written notice of revocation bearing a later date than the
proxy;
|X| executing a later dated proxy relating to the same shares and
delivering it to the Secretary before the taking of the vote
at the Lake Ariel special meeting;
|X| voting in person at the meeting, although attendance at the
Lake Ariel special meeting will not by itself constitute a
revocation of a proxy.
You should send any written notice of revocation or subsequent proxy to
Lake Ariel Bancorp, Inc., 409 Lackawanna Avenue, Suite 201, Scranton,
Pennsylvania 18503-2045, Attention: Secretary, or hand deliver the notice of
revocation or subsequent proxy to the Secretary of Lake Ariel at or before the
taking of the vote at the Lake Ariel special meeting.
INDEPENDENT AUDITORS TO BE PRESENT AT THE SPECIAL MEETING
PricewaterhouseCoopers LLP is Lake Ariel's principal independent
auditors. Lake Ariel expects representatives of PricewaterhouseCoopers LLP to be
present at the Lake Ariel special meeting and to have the opportunity to make a
statement if they desire to do so. Lake Ariel also expects such representatives
of PricewaterhouseCoopers LLP to be available to respond to appropriate
questions.
SOLICITATION OF PROXIES
Lake Ariel will bear its own costs of solicitation of proxies. Lake
Ariel will make arrangements with brokerage houses, custodians, nominees and
fiduciaries for forwarding of proxy solicitation materials to beneficial owners
32
of shares held of record by such brokerage houses, custodians, nominees and
fiduciaries, and Lake Ariel will reimburse such brokerage houses, custodians,
nominees and fiduciaries for their reasonable expenses incurred in connection
with the solicitation. In addition to solicitation by use of the mails, Lake
Ariel may solicit from the Lake Ariel stockholders by directors, officers and
employees acting on behalf of Lake Ariel in person or by telephone, telegraph,
facsimile or other means of communications. Lake Ariel will not compensate such
directors, officers and employees but may reimburse them for reasonable
out-of-pocket expenses in connection with such solicitation. You may direct any
questions or requests for assistance regarding this Joint Proxy
Statement/Prospectus and related proxy materials to Joseph J. Earyes, CPA,
Treasurer of Lake Ariel, by telephone at (570) 343-8200.
REQUIRED VOTE
The vote required for approval of the merger agreement, presented in
this Joint Proxy Statement/Prospectus, is two-thirds of the Lake Ariel common
stock outstanding and entitled to vote on the Lake Ariel record date.
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS IMPORTANT TO
LAKE ARIEL. PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY
CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
RECOMMENDATION OF LAKE ARIEL BOARD
The Lake Ariel Board has unanimously approved the merger agreement and
the related matters. The Lake Ariel Board believes that the merger agreement,
the merger and related matters are in the best interests of Lake Ariel and the
Lake Ariel stockholders, and recommends that the Lake Ariel stockholders vote
FOR approval of the merger agreement and the related matters. See "The Merger --
Recommendation of the Lake Ariel Board and Lake Ariel's Reasons for the Merger."
PROPOSED AMENDMENTS TO NBT'S CERTIFICATE OF INCORPORATION
The NBT Board is proposing two amendments to Article FOURTH of NBT's
certificate of incorporation relating to the authorized shares of NBT stock. The
first proposed amendment, if approved, would change the shares of common stock
and preferred stock of NBT from shares having no par value and $1.00 per share
stated value to shares having a par value of $.01 per share. The change to par
value would significantly reduce the filing fee taxes NBT pays to the State of
Delaware whenever it increases its authorized capital stock.
The second amendment would increase the number of shares of common
stock NBT is authorized to issue from 15 million to 30 million. The NBT Board
would, with certain limited exceptions, be permitted to issue these newly
authorized shares for any purpose the Board deemed appropriate without further
stockholder approval. The increased number of shares would be used for the
merger, the Pioneer American merger and for general corporate purposes.
Each of the proposed amendments requires the affirmative vote of a
majority of the outstanding shares of NBT common stock for approval.
Accordingly, abstentions and broker non-votes will have the effect of a vote
against each of these proposals.
The NBT Board recommends a vote FOR both amendments.
RATIFICATION OF AMENDMENT TO NBT'S BY-LAWS
The NBT Board is proposing that stockholders ratify an amendment to
NBT's By-laws adopted by the NBT Board decreasing the stockholder vote required
to amend Article III, Section 2 from 80% to 66 2/3% of the outstanding voting
stock of NBT. The NBT Board recommends a vote FOR ratification of the Board's
action.
33
PROPOSAL 1
(ONLY STOCKHOLDERS OF NBT)
PROPOSAL TO CHANGE NBT'S AUTHORIZED COMMON STOCK AND PREFERRED STOCK
TO SHARES HAVING A PAR VALUE OF $.01 PER SHARE
By resolution adopted November 22, 1999, the NBT Board of Directors
declared it advisable and in the best interests of NBT to amend NBT's
Certificate of Incorporation to reclassify the shares of common stock and
preferred stock of NBT from shares having no par value, $1.00 per share stated
value to shares having a par value of $.01 per share, and directed that the
amendment to the Certificate be submitted to a vote of the NBT stockholders at
the NBT special meeting. If the proposal is adopted, Article FOURTH of the
Certificate, as amended, will be further amended to read as follows:
"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, par value $.01 per share and Two Million Five Hundred
Thousand (2,500,000) shares of Preferred Stock, par value $.01
per share.
"Each share of Common Stock having no par value, stated value
$1.00 per share ('Existing Common Stock') outstanding on the
effective date of the amendment including this paragraph shall
be reclassified as and changed into one share of Common Stock,
par value $.01 per share ("New Common Stock"), upon the
effectiveness of such amendment. The certificates that prior
to the effectiveness of such amendment represented Existing
Common Stock shall remain outstanding and shall thereafter
represent the shares of New Common Stock into which the shares
of Existing Common Stock have been reclassified as provided
herein."
NBT's Certificate of Incorporation currently authorizes the issuance
of 15,000,000 shares of common stock and 2,500,000 shares of preferred stock,
each class having no par value and a stated value of $1.00 per share. As of
_____, 1999, there were ______ shares of common stock outstanding (including the
stock dividend payable to NBT stockholders on December 15, 1999); NBT held _____
shares of common stock in its treasury; and no shares of preferred stock were
outstanding. In addition, as of the same date, NBT had reserved _____ shares of
common stock for issuance as follows: ________ shares for issuance under NBT's
stock option plans, _____shares for issuance under NBT's board of directors
retainer plan, and shares for issuance under NBT's employee stock purchase and
dividend reinvestment plan. Upon filing the respective certificate of merger
with the Secretary of State of Delaware in connection with the merger and the
Pioneer American merger, respectively, NBT will reserve 5.125 million shares for
issuance in the merger and 5.2 million shares for issuance in the proposed
merger with Pioneer American. Moreover, NBT has reserved sufficient shares of
preferred stock for possible issuance pursuant to NBT's stockholder rights plan
adopted in November 1994. NBT has also historically declared a 5% common stock
dividend each December, including a dividend payable on December 15, 1999. No
shares of preferred stock are outstanding as of the date of this Joint Proxy
Statement/Prospectus.
The primary reason the NBT Board is proposing this amendment is to
reduce the filing fee taxes payable by NBT to the State of Delaware whenever it
increases its authorized capital stock. The tax is calculated based on the par
value of the shares being increased. However, where the shares have no par
value, Delaware law effectively assumes that the stock has a par value of $100
per share for purposes of calculating the filing fee tax. Thus, the use of stock
having a low par value can substantially reduce the filing fee tax payable when
NBT effects a share increase. In the case of NBT, these savings would be
immediate. The NBT Board has proposed that stockholders approve an increase of
15 million shares in NBT's authorized common stock at the NBT special meeting.
34
This increase will result in filing fee taxes of $60,000 if the NBT stockholders
do not approve the proposal to change to $.01 par value. If the NBT stockholders
approve the proposal to change to $.01 par value, the filing fee taxes on this
increase will be only $30. NBT would realize similar savings on any future
increases in the number of authorized shares of its common stock. While the NBT
Board has no plans for proposing such increases at the present time, other than
the increases proposed in the share increase amendment or in connection with the
merger, the need for such increases may arise in the future in connection with
the payment of stock dividends, the adoption or expansion of employee benefit
programs, acquisitions or other financing transactions, among other things.
The rights of the holders of NBT common stock would remain the same
after the adoption of the change to par value, except as provided below. First,
the change to par value would cause the "paid-in-capital" of NBT to decrease
from $1.00 times the number of issued shares to $.01 times the number of issued
shares. The resulting decrease would be reclassified as capital surplus.
Accordingly, total stockholder equity would not be affected. However, the
decrease in paid-in-capital would increase the NBT Board's ability under
Delaware law to pay dividends and to repurchase or redeem shares of NBT's stock
by permitting the NBT Board to decrease NBT's "capital" as defined under
Delaware law. The NBT Board has no current plans to change its dividend policy.
Moreover, the change to par value would not affect NBT Bank's ability to pay
dividends to NBT. These dividends are the primary source by which NBT funds its
dividend payments. Second, the change to par value could affect the kind or
amount of consideration NBT receives in connection with future share issuances.
Under Delaware law, a corporation must receive cash or other appropriate
consideration having a value at least equal to the par value of the shares being
issued. No minimum payment is required for no par stock, although the
corporation must receive some consideration in an appropriate form. The NBT
Board believes this distinction is not a material one, given the low par value
proposed by the NBT Board and the need for NBT to receive value for any issuance
of shares.
Approval of the amendment requires the approval of a majority of the
shares of NBT common stock outstanding and entitled to vote at the NBT special
meeting. Abstentions and broker non-votes, therefore, will have the effect of a
vote against the proposal. THE NBT BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE
PROPOSAL TO AMEND THE CERTIFICATE TO CHANGE THE AUTHORIZED SHARES OF STOCK FROM
SHARES WITHOUT PAR VALUE TO SHARES WITH A PAR VALUE OF $.01 PER SHARE. Proxies
will be voted FOR this proposal unless stockholders specify otherwise in their
proxies. If the stockholders approve this proposal, it will become effective
upon the filing of a Certificate of Amendment of the Company's Certificate of
Incorporation with the Secretary of State of the State of Delaware, which will
occur as soon as reasonably practicable after approval.
PROPOSAL 2
(ONLY STOCKHOLDERS OF NBT)
PROPOSAL TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF NBT
COMMON STOCK FROM 15 MILLION TO 30 MILLION.
By resolution adopted November 22, 1999, the NBT Board of Directors
declared it advisable and in the best interests of NBT to amend NBT's
Certificate of Incorporation to increase the number of shares of stock that NBT
has the authority to issue to an aggregate of 32,500,000 shares, of which
30,000,000 shares would be common stock and 2,500,000 shares would be preferred
stock, and directed that the amendment to the Certificate be submitted to a vote
of the NBT stockholders at the NBT special meeting. If both Proposal 2 and
Proposal 1 are adopted, Article FOURTH of the Certificate, as amended, would be
further amended to read as follows:
"FOURTH: The total number of shares of all classes of capital
stock which the Corporation shall have the authority to issue
is Thirty-two Million, Five Hundred Thousand (32,500,000)
shares consisting of Thirty Million (30,000,000) shares of
Common Stock, par value $.01 per share and Two Million Five
Hundred Thousand (2,500,000) shares of Preferred Stock, par
value $.01 per share."
If Proposal 2 is adopted but Proposal 1 is not adopted, Article FOURTH
will be amended in the same manner as set forth above except that the references
to "par value $.01 per share" will be changed to "having no par value, stated
value $1.00 per share."
35
The Certificate currently authorizes the issuance of up to 17,500,000
shares, consisting of 15,000,000 shares of common stock and 2,500,000 shares of
preferred stock. As of _____, 1999, NBT had _____ shares of common stock
outstanding and held _____ shares of its common stock in its treasury; and no
shares of preferred stock were outstanding. In addition, as of the same date,
NBT had reserved _____ shares of common stock for issuance as follows: _____
shares for issuance under NBT's stock option plans, _____ shares for issuance
under NBT's board of directors retainer plan, and _____ shares for issuance
under NBT's employee stock purchase and dividend reinvestment plan. Upon filing
the respective certificate of merger with the Secretary of State of Delaware in
connection with the merger and the Pioneer American merger, respectively, NBT
will reserve 5.125 million shares for issuance in the merger and 5.2 million
shares for issuance in the proposed merger with Pioneer American. As of _____,
1999, these outstanding shares, treasury shares, and shares reserved and to be
reserved for future issuance totaled _____. Moreover, NBT has reserved
sufficient shares of preferred stock for possible issuance pursuant to NBT's
stockholder rights plan adopted in November 1994. NBT has also historically
declared a 5% common stock dividend each December, including a dividend payable
on December 15, 1999.
In 1998, NBT's stockholders approved an increase in the number of
authorized shares of common stock from 12,500,000 to 15,000,000. At that time,
the NBT Board stated its belief that it was in the best interests of NBT and its
stockholders to increase the number of authorized shares of common stock in
order to have additional shares available for issuance to meet a variety of
business needs as they may arise and to enhance NBT's flexibility in connection
with possible future actions. The NBT Board indicated that these business needs
and actions may include stock dividends, stock splits, employee benefit
programs, corporate business combinations, funding of business acquisitions, and
other corporate purposes. These issuances and proposed issuances will again
leave NBT without additional authorized shares for the purposes described above.
The NBT Board continues to believe that having additional shares available for
these purposes is in NBT's best interest. Therefore, it has proposed to increase
the number of authorized shares of common stock by an additional 15 million
shares. Although the NBT Board periodically considers transactions such as those
listed above, it currently does not have plans to issue any significant amount
of such common stock or preferred stock, except as described in the preceding
paragraph in this Joint Proxy Statement/Prospectus and except for issuances
resulting from the merger and the Pioneer American merger.
The authorized shares of NBT common stock in excess of those presently
issued and those that NBT will issue upon completion of the merger will be
available for issuance at such times and for such purposes as the NBT Board may
deem advisable without further action by NBT's stockholders, except as may be
required by applicable laws or regulations. In this regard, the rules of the
National Association of Securities Dealers, Inc. with respect to securities of
companies approved for trading on the Nasdaq National Market, upon which the NBT
common stock trades, currently require stockholder approval of (a) acquisition
transactions where the present or potential issuance of shares could result in
an increase of 20% or more in the number of shares of common stock outstanding,
(b) a stock option or purchase plan to be established pursuant to which officers
or directors may acquire stock, and (c) a transaction pursuant to which the
issuance would result in a change of control. The NBT Board does not intend to
issue any stock except on terms or for reasons that the NBT Board deems to be in
the best interests of NBT and except as stated elsewhere in this Joint Proxy
Statement/Prospectus, including the issuance of NBT common stock to former Lake
Ariel stockholders in the merger. Because the holders of NBT common stock do not
have preemptive rights, the issuance of NBT common stock otherwise than on a
pro-rata basis to all current NBT stockholders would reduce the current NBT
stockholders' proportionate interests. However, in any such event, stockholders
wishing to maintain their interests may be able to do so through normal market
purchases. Any future issuance of NBT common stock or preferred stock will be
subject to the rights of holders of outstanding shares of any preferred stock
that NBT may issue in the future. While the issuance of shares in certain
instances may have the effect of forestalling a hostile takeover, the NBT Board
does not intend or view the increase in authorized common stock or preferred
stock as an anti-takeover measure, nor is NBT aware of any proposed or
contemplated transaction of a hostile type, and NBT is not recommending this
amendment to the Certificate in response to any specific effort of which NBT is
aware to obtain control of NBT.
36
In accordance with the regulations of the Nasdaq National Market, we
will call a stockholders' meeting in the future for our stockholders to consider
and vote upon our proposed merger with Pioneer American. See "Summary --
Proposed Merger with Pioneer American Holding Company Corp."
Adoption of the share increase amendment to the Certificate requires
the affirmative vote of the holders of a majority of the outstanding shares of
NBT common stock entitled to vote on the proposal. Abstention from voting on
this amendment and broker non-votes have the same legal effect as a vote
"against" this amendment. THE NBT BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE
PROPOSAL TO AMEND THE CERTIFICATE TO INCREASE THE NUMBER OF SHARES OF COMMON
STOCK THAT NBT IS AUTHORIZED TO ISSUE. Proxies will be voted FOR this proposal
unless stockholders specify otherwise in their proxies. If this proposal is
approved by the stockholders, it will become effective upon the filing of the
Certificate of Amendment of NBT's Certificate of Incorporation with the
Secretary of State of the State of Delaware, which will occur as soon as
reasonably practicable after approval.
PROPOSAL 3
(ONLY STOCKHOLDERS OF NBT)
PROPOSAL TO RATIFY AN AMENDMENT TO CERTAIN PROVISIONS OF NBT'S BY-LAWS
RELATING TO THE NUMBER, QUALIFICATION AND ELECTION OF DIRECTORS.
On November 22, 1999, as part of a general update of NBT's bylaws, the
NBT Board approved amendments to Article III, Section 2. Article III, Section 2
provides that the NBT Board is divided into three Classes, each Class to serve
for a term of office ending on the date of the third annual meeting of
stockholders following the annual meeting at which such Director is elected. The
bylaws also set forth qualifications for persons proposed to be elected as
directors, including residency and stock ownership requirements, and set forth
the minimum and maximum number of directors constituting the NBT Board.
The last paragraph of Section 2 previously provided that Section 2
"shall not be altered, amended or repealed except by an affirmative vote of at
least eighty percent (80%) of the total number of shareowners." The 80% vote
required by this provision makes it difficult for stockholders to take action to
remove the staggered board or to increase the number of members of the NBT Board
in order to gain control of the NBT Board notwithstanding the existence of the
staggered board. While the NBT Board continues to believe that such a
supermajority vote requirement is necessary in order to deter a potential
hostile acquiror of NBT from attempting to take control of NBT without
negotiating with the NBT Board or offering any consideration to NBT's
stockholders, the NBT Board also believes that the deterrent effect of the
supermajority vote requirement may be accomplished by setting it at 66 2/3%
rather than 80%. This is particularly true in light of the parallel provisions
in paragraph (e) of Article ELEVENTH of the NBT Certificate of Incorporation,
which also authorize the staggered board and require an 80% stockholder vote for
their amendment, alteration or repeal. Accordingly, the NBT Board amended
Article III, Section 2 to change the last sentence of that Section to provide
for a 66 2/3% vote of the outstanding shares, rather than the vote of 80% of the
"shareowners" as provided in the current provision. The NBT Board also approved
an amendment to that Section increasing from 100 miles to 200 miles from the
location of NBT's principal office the radius within which Directors must
reside. While the NBT Board believes that it had the power to make the
amendments described above, because the reduction in the vote required deals
with stockholder approval rights, the NBT Board conditioned the effectiveness of
that change on obtaining stockholder ratification. If stockholders do not ratify
the decrease from 80% to 66 2/3%, the NBT Board will rescind its approval of
that change.
The vote required for the adoption of Proposal 3 is the vote of a
majority of the shares of NBT common stock outstanding on the record date for
the special meeting and entitled to vote at the meeting. The NBT Board
recommends that NBT Stockholders vote FOR Proposal 3.
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PROPOSAL 4
(ALL STOCKHOLDERS OF NBT AND ALL STOCKHOLDERS OF LAKE ARIEL)
THE MERGER
The following summary describes the material terms and provisions of
the merger agreement and the merger. We have attached a copy of the merger
agreement, as amended, to this Joint Proxy Statement/Prospectus as Appendix A,
and we have incorporated it into this document by reference. We urge all
stockholders to read the merger agreement, as amended, carefully in its
entirety. We qualify this summary in its entirety by reference to the merger
agreement, as amended.
GENERAL
We expect to complete the merger in the first quarter of 2000. NBT will
be the surviving corporation in the merger. Each share of NBT common stock
issued and outstanding immediately prior to the effective time of the merger
will remain issued and outstanding as one share of common stock of NBT. Each
share of Lake Ariel common stock issued and outstanding at the effective time of
the merger will convert into the right to receive between 0.8731 and 0.9961 of a
share of NBT common stock upon completion of the merger.
Under the merger agreement, Lake Ariel will merge with and into NBT,
the separate corporate existence of Lake Ariel will cease, and NBT will survive
and continue its corporate existence under the laws of the State of Delaware.
Subject to the satisfaction or waiver of conditions set forth in the merger
agreement and described in "The Merger -- Conditions to Complete the Merger,"
the merger of Lake Ariel with and into NBT will become effective upon the filing
of the Certificate of Merger with the Secretary of State of the State of
Delaware or at such later time specified in the Certificate of Merger. We refer
below to the time of effectiveness of the merger as the effective time of the
merger.
The NBT Certificate of Incorporation will be the Certificate of
Incorporation of the combined company upon completion of the merger, except that
if the NBT stockholders do not approve the proposal to increase the number of
shares of NBT common stock from 15 million to 30 million, then under the merger
agreement NBT will amend its Certificate of Incorporation to reflect the
increase in the number of authorized shares of NBT common stock by five million.
The NBT bylaws will be the bylaws of the combined company.
BACKGROUND OF THE MERGER
The senior managements of NBT and Lake Ariel have from time to time
considered the possibility of acquisitions of and strategic combinations with
other financial institutions, including other bank holding companies. As part of
their long term planning, the NBT Board and the Lake Ariel Board have
periodically reviewed and evaluated various strategic options and alternatives
available to maximize the economic return to their stockholders. In considering
and engaging in these transactions, NBT and Lake Ariel have taken into account
various factors, including their potential strategic fit with these institutions
based upon their businesses (both banking and non-banking), their management and
employee cultures, and the geographic location and breadth of their businesses.
In addition, in view of recent trends toward consolidation in the financial
services industry regionally and nationally, the senior managements of NBT and
Lake Ariel have from time to time had informal discussions with senior
managements of other comparably-sized financial institutions regarding potential
business combination transactions. Prior to the time when NBT and Lake Ariel
began their initial discussions, NBT and Lake Ariel had never conducted
discussions between themselves.
Prior to its discussions with Lake Ariel, all of NBT's previous
discussions to explore growth opportunities through acquisitions of branches
and/or banks related to New York financial institutions and during the 1997-1999
period had not culminated in an acquisition that NBT deemed of merit. The Lake
Ariel Board has recognized the need for Lake Ariel to be larger in order to
respond to the demands of the financial industry market and to better compete
within the industry. From time to time, the Lake Ariel Board has considered
38
acquisitions, both as a seller and buyer, but these considerations have not
materialized to the point where serious potential mergers could be negotiated.
In early 1999, the NBT Board authorized senior NBT management to
explore acquisition possibilities to include banks/branches in Pennsylvania and
other neighboring states. In conjunction with the NBT Board's consideration of
its expansion goals, NBT retained McConnell, Budd & Downes, Inc. as its
investment banker to evaluate NBT's strategic alternatives. In early May 1999,
Peter Moriarty, the president and chief executive officer of TTG, Inc., a
financial advisor in the banking industry, called John G. Martines, Chief
Executive Officer of Lake Ariel, to ascertain any interest in talking to a
company that wanted to acquire a bank in northeastern Pennsylvania. Mr. Martines
responded that Lake Ariel would continue to explore all of its options with
potential merger candidates and would be interested in listening to a merger
discussion with another company. Lake Ariel and TTG signed a financial advisory
contract on May 27, 1999, in order to initiate contacts between Lake Ariel and
NBT.
In late May 1999, TTG contacted Daryl R. Forsythe, President and Chief
Executive Officer of NBT, to inform him of an opportunity in the
Scranton/Wilkes-Barre, Pennsylvania area. After a few days of discussion with
TTG, NBT signed a customary confidentiality agreement with respect to the
exchange of information in connection with its consideration of a potential
business combination. At this point, TTG brought the Lake Ariel opportunity
forward for consideration by NBT. TTG thereafter introduced Mr. Martines to Mr.
Forsythe for the purpose of discussing the advantages of a merger between NBT
and Lake Ariel. Between late May 1999 and mid-June 1999, the parties exchanged
financial information. Each company determined that it was interested in
pursuing the opportunity to begin preliminary discussions about a possible
combination.
In June 1999, Mr. Forsythe visited Mr. Martines at the Lake Ariel
office in Scranton. The meeting was an informal discussion of preliminary
interest. For the next two weeks, informal discussions continued between Lake
Ariel and NBT. These discussions were exploratory in nature and did not result
in any agreement with respect to the terms of a business combination of the two
companies. On July 2, 1999, Mr. Martines visited Mr. Forsythe at NBT's
headquarters in Norwich, New York. Discussions continued regarding the possible
merger.
During the ensuing weeks, conversations continued between Messrs.
Forsythe and Martines. Throughout the discussions, Lake Ariel consulted with its
financial advisors and counsel. Lake Ariel's advisors reviewed, in general, the
merger and acquisition market, NBT's financial condition, operating performance
and common stock trading history, and the proposed exchange ratio. Mr. Forsythe
informed the NBT Board of the proceedings and it authorized Mr. Forsythe to
continue his efforts toward an agreement. NBT consulted with McConnell, Budd &
Downes concerning a possible merger with Lake Ariel. NBT authorized McConnell,
Budd & Downes and NBT's corporate counsel, Duane, Morris & Heckscher LLP, to
initiate discussion of formal merger terms with their Lake Ariel counterparts.
On July 13, 1999, the Lake Ariel Board held its regularly scheduled
meeting. At the meeting, Mr. Martines discussed with the board members general
banking activities and acquisition strategies and the discussions that had taken
place with NBT and TTG. At this meeting, the board gave Mr. Martines
authority to proceed with the discussions.
On July 19, 1999, Mr. Forsyth met with Mr. Martines, Bruce D. Howe,
Chairman of the Lake Ariel Board, and two other Lake Ariel directors, Kenneth M.
Pollock, Jr. and Donald E. Chapman, to discuss the business, operations and
prospects of their respective companies and to further assess compatibility
between the companies and their personnel. Messrs. Forsythe and Martines agreed
that they should continue with the exploratory process.
Between July 13 and July 27, 1999, the discussions between NBT and its
counsel and Lake Ariel and its counsel and advisors continued. On July 21, 1999,
Janney Montgomery Scott Inc. and Lake Ariel entered into an agreement for Janney
Montgomery Scott to act as a financial advisor to Lake Ariel in connection with
the issuance of a fairness opinion related to the proposed acquisition of Lake
Ariel by NBT. On July 21, 1999, Lake Ariel counsel prepared a due diligence
checklist for use by the Lake Ariel due diligence team.
39
On July 26, 1999, Mr. Forsythe reviewed with the NBT Board the status
of the discussions with Lake Ariel and the issues relating to a possible
business combination and received its approval to proceed with the merger
process. The NBT Board on July 26, 1999, submitted a terms letter to Lake Ariel,
outlining the general requirements of a possible agreement.
On July 27, 1999, the Lake Ariel Board held a special meeting to
discuss the developments regarding NBT. Counsel addressed the fiduciary duties
of the directors in general and in particular in connection with mergers and
acquisitions. Counsel reviewed with the Lake Ariel Board the financial aspects
of the NBT proposal and the strategic alternatives available, including
remaining independent. TTG was also present at the meeting to discuss the
anticipated timetable of the merger process and to review the proposed exchange
ratio, including the maximum and minimum amount of NBT stock to be exchanged,
based upon NBT's stock price at closing, and the termination provision if there
were a precipitous decline in the price of NBT stock. The Lake Ariel Board
authorized management, counsel and financial advisors to continue exploratory
discussions with NBT. During the next two weeks, management of Lake Ariel and
NBT, as well as the financial and legal advisors, held numerous discussions
regarding a possible acquisition of Lake Ariel by NBT in a stock for stock
transaction. Among the issues discussed were the possible timing, pricing and
structure for any transaction, and the accounting treatment of the merger.
The parties determined to begin negotiating terms of a possible merger
in earnest with the goal of arriving at a definitive agreement of merger. At
this time, the parties proposed that each company conduct due diligence
investigations in the near future with respect to the other's operations. On
August 2 and 3, 1999, Lake Ariel's due diligence team visited the corporate
office of NBT to perform the necessary due diligence as suggested by counsel and
mandated by the Lake Ariel Board. Items reviewed were corporate documents;
financial reports and similar statements; regulatory and legal compliance
reports; tax returns and related matters; board of directors and management
information; transactions between directors, officers, employees and their
affiliates; compensation committee interlocks and insider participation
information; personnel policies, procedures and benefits; schedule of office
locations, facilities and related matters; lending activities; major
non-performing assets and reserve policy information; lawsuits, assessments and
claims; savings activities; insurance coverage; investment and liquidity policy;
and various other matters. On August 4, 1999, the NBT due diligence team visited
Lake Ariel in Scranton to perform their review, which they completed on August
6, 1999; the NBT team reviewed similar types of information of Lake Ariel.
On August 6, 1999, counsel for NBT, Duane, Morris & Heckscher LLP,
distributed to the parties a first draft of the definitive agreement for review
by both parties. The parties at this time and during the following days
discussed with their respective financial and legal advisors the terms of the
draft of the merger agreement. Each company authorized its respective legal
counsel to refine certain provisions of the draft and further authorized their
legal counsel to discuss revisions to the agreement with the intent of
expediting the review process. Legal counsel for NBT circulated a second draft
of the definitive agreement incorporating the negotiated revisions on August 12,
1999.
Mr. Forsythe called a special meeting of the NBT Board for August 16,
1999, to review the draft definitive agreement with all directors present. All
but one of the NBT Bank directors attended the meeting. Representatives of
McConnell, Budd & Downes attended the meeting to review and answer any questions
the directors might have regarding the financial terms of the proposed merger
agreement. After consideration and discussion of the proposed definitive
agreement at the August 16, 1999, special board meeting, the NBT Board voted
unanimously to accept the August 12, 1999, draft of the agreement and authorized
Mr. Forsythe to execute the merger agreement.
40
The Lake Ariel Board held a special meeting on August 16, 1999. At the
meeting, Lake Ariel's advisors reviewed the terms of the draft merger and
related agreements, including the stock option agreement, the potential
financial and strategic benefits of the transaction, and the financial and
valuation analyses of the proposed transaction. The members of the Lake Ariel
due diligence team reported on the results of their due diligence review. TTG
described the exchange ratio; how it was negotiated; and the mechanism for a
termination in the event of an extraordinary decline in the price of NBT stock.
Representatives of Janney Montgomery Scott gave an analysis of the transaction
and delivered their opinion that the exchange ratio was fair from a financial
point of view to the Lake Ariel stockholders. The board discussed the merits of
a fixed compared to a floating exchange ratio and the appropriate mechanism for
providing Lake Ariel with a termination right in the event of a precipitous
decline in the market price of NBT's common stock prior to closing. The Lake
Ariel Board agreed to such a termination provision. The Lake Ariel Board
authorized the execution of the merger agreement on the terms reviewed and
discussed by the Lake Ariel Board.
On August 16, 1999, the parties executed the merger agreement and made
a public announcement.
RECOMMENDATION OF THE NBT BOARD AND NBT'S REASONS FOR THE MERGER
The NBT Board believes that the terms of the merger agreement are fair
to, and in the best interests of, NBT and the NBT stockholders. Accordingly, the
NBT Board has unanimously approved the merger agreement and determined that the
merger and the other matters contemplated in the merger agreement are advisable.
The NBT Board recommends unanimously that NBT's stockholders vote FOR approval
and adoption of the merger agreement.
In reaching its determination and recommendation, the NBT Board
consulted with NBT's management, as well as its financial advisors, legal
counsel and accountants, and considered a variety of factors. The material
factors considered by the NBT Board in reaching the foregoing determination and
recommendation, all of which the NBT Board deemed favorable, are described as
follows:
|X| NBT's strategic expansion plans and acquisition objectives:
|X| its growth into new markets, in New York and other
states; extension of its franchise to the south,
towards and into northeastern Pennsylvania's largest
city, the effect of which would be a diversification
of NBT's banking operations, and the anticipated
improved stability of the combined company's
businesses and earnings in varying economic and
market climates relative to NBT on a stand-alone
basis made possible by the merger as a result of
substantially greater geographic and asset
diversification;
|X| expansion of its opportunities for the delivery of
its financial services, especially its trust
services, and the belief that the larger size of the
combined company would place the combined company in
a stronger position to satisfy the financial needs of
its expanded customer base, with increased product
capabilities and services, respond to changes
affecting the banking and financial services
industries, and compete more effectively with
financial institutions within its expanded
geographical service area;
|X| the anticipated financial impact of the merger on the
combined company's future financial performance,
including the expectation of the NBT Board that the
merger will be accretive to the earnings of the
combined company;
|X| the anticipated effectiveness of the merger in
allowing NBT to enhance stockholder returns by
achieving efficiencies and cost savings through the
leveraging of NBT's technology, management,
infrastructure, products, marketing, and lines of
business over a larger customer base, and ongoing
operational cost savings, including general and
administrative cost savings in areas such as
information and accounting systems,
telecommunications and professional fees, and
operational efficiencies due to critical mass in
areas such as bulk purchasing and insurance;
41
|X| the familiarity of the NBT Board with and review of Lake
Ariel's business, operations, financial condition, earnings
and prospects, as well as those of NBT; in making its
determination, the NBT Board took into account the results of
NBT's due diligence review of Lake Ariel's business;
|X| the knowledge of the NBT Board of the current financial
services industry environment, characterized by rapid
consolidation, increased opportunities for cross-industry
expansion, evolving trends in technology, and the need to
anticipate and to best position NBT in light of industry
trends;
|X| the complementary nature of the businesses of NBT and Lake
Ariel, and the compatibility between the operational
functions of the two companies' banking subsidiaries, NBT
Bank and LA Bank, especially in commercial and community
banking, asset management services, automobile lending, and
mortgage banking, and the belief that the merger should enable
the combined company to achieve many of its long-range goals
more easily and with less risk than NBT could achieve without
the merger;
|X| the financial terms of the merger and the belief of the NBT
Board that the cost of the merger in financial terms
represents a reasonable investment by NBT in its determination
to expand its banking franchise and the anticipated value to
be received by NBT and its stockholders as a result of its
investment in acquiring Lake Ariel;
|X| the likelihood of the merger being approved by the appropriate
regulatory authorities;
|X| the belief of the NBT Board that, while no assurances can be
given, it was likely that the merger would be completed and
that the business and financial benefits contemplated in
connection with the merger are likely to be achieved within a
reasonable time frame;
|X| the structure of the merger and the terms of the merger
agreement and the option agreement, including the fact that
the exchange ratio given the high and low collars provides
reasonable certainty as to the number of shares of NBT's
common stock NBT will issue in the merger and that NBT intends
the merger to qualify as a transaction of the type that is
generally tax-free for federal income tax purposes and as a
pooling of interests for accounting purposes;
|X| the opinion of McConnell, Budd & Downes to the NBT Board that,
based on and subject to the considerations set forth in the
opinion, the exchange ratio was fair from a financial point of
view to the NBT stockholders;
|X| consideration of the effect of the merger upon NBT's other
constituencies, including the customers and communities served
by NBT and its employees, including management of NBT, and the
fact that the merger would allow the combined company to
continue its significant presence in the regions currently
served by NBT, including maintaining its headquarters in
Norwich.
NBT does not intend this discussion of the information and factors
considered by the NBT Board to be exhaustive, although this discussion does
include all material factors the NBT Board considered. In reaching its
determination to approve and recommend the merger agreement to the NBT
stockholders for their approval, the NBT Board did not assign any relative or
specific weights to the various factors considered, and individual directors of
NBT might have weighed factors differently. The NBT Board is unanimous in its
recommendation that NBT stockholders vote FOR approval of the merger agreement
and the merger.
42
RECOMMENDATION OF THE LAKE ARIEL BOARD AND LAKE ARIEL'S REASONS FOR THE MERGER
The Lake Ariel Board believes that the terms of the merger agreement
are fair and in the best interests of Lake Ariel and its stockholders. In the
course of reaching its determination, the Lake Ariel Board consulted with legal
counsel with respect to its legal duties and the terms of the merger agreement.
The Lake Ariel Board consulted with its financial advisors with respect to the
financial aspects of the transaction and fairness of the exchange ratio from a
financial point of view, and with senior management regarding, among other
things, operations matters.
The following discussion of the information and factors considered by
the Lake Ariel Board is not intended to be exhaustive, but does include all
material factors considered by the board. In reaching its decision to approve
the merger agreement, the Lake Ariel Board considered the following:
|X| NBT serves the upstate New York market and the expanded reach
of the combined company would benefit existing customers and
make the combined company more attractive to potential
customers;
|X| NBT offers a broader range of products and services and the
merger would provide Lake Ariel's customers with access to
these products and services without Lake Ariel's having to
undergo the expense of introducing them on its own;
|X| financial condition, results of operations, cash flow,
businesses and prospects of Lake Ariel. In this regard, the
Lake Ariel Board analyzed the options of selling Lake Ariel or
continuing on a stand-alone basis. Based on financial
forecasts developed by Lake Ariel and analyzed by its
financial advisors, the value of Lake Ariel's common stock, on
August 16, 1999, on a stand-alone basis and discounted to
present value, ranged from a low of $9.96 to a high of $17.99;
|X| the value of the shares of NBT common stock to be received for
each share of Lake Ariel common stock was $18.50 based on the
last trade of NBT common stock on August 13, 1999, the last
trading day prior to the date of the execution of the merger
agreement;
|X| the $18.50 value of the shares of NBT common stock compared
favorably with the $13.00 price of the last trade of Lake
Ariel common stock on August 13, 1999, and compared favorably
with the range of values of Lake Ariel common stock on August
16, 1999, on a stand-alone basis and discounted to present
value based on the forecasts developed by Lake Ariel and
analyzed by its financial advisors;
|X| the exchange ratio resulted in a value of $18.50 per share, or
approximately 31.4%, premium to the then trading price of Lake
Ariel common stock. The board determined this premium by
comparing $13.00, the last trade of Lake Ariel common stock on
August 13, 1999;
|X| the exchange ratio would result in an increase of dividends
per share of approximately $.062 ($.248 annualized) or
approximately 62% on August 13, 1999;
|X| Lake Ariel's equity to assets ratio and its impact on Lake
Ariel's ability to generate a market rate of return on equity.
In this regard, the board reviewed Lake Ariel's prior efforts
to use its capital and generate additional profitability
through acquisitions;
|X| the written opinion of Janney Montgomery Scott that, as of
August 16, 1999, the exchange ratio was fair to Lake Ariel's
stockholders from a financial point of view;
43
|X| current operating environment, including the continued
consolidation and increasing competition in the banking and
financial services industries and the prospect for further
changes in these industries;
|X| results of the due diligence investigations of NBT, including
assessments of credit policies, asset quality, interest rate
risk, litigation and adequacy of loan loss reserves;
|X| other terms of the merger agreement and exhibits, including
the opportunity for Lake Ariel's stockholders to receive
shares of NBT common stock in a tax-free exchange;
|X| anticipated cost savings and efficiencies available to the
combined company as a result of the merger. These anticipated
cost savings were based on the assumption that employee
related cost savings and non-employee related expense savings
would be reduced;
|X| the detailed financial analyses, pro forma and other
information, with respect to Lake Ariel and NBT discussed by
the financial advisors, as well as the Lake Ariel Board's
knowledge of Lake Ariel, NBT and their respective businesses;
|X| likelihood of the merger and related transactions being
approved by the appropriate regulatory authorities, including
factors such as market share analyses, NBT's Community
Reinvestment Act rating at that time and the estimated pro
forma financial impact of the transaction on NBT;
|X| the board believed that a tax-free transaction pursuant to
which Lake Ariel stockholders receive NBT shares would be
desired by most stockholders; and
|X| Lake Ariel Board's review of the status of NBT's preparations
to be Year 2000 compliant.
In reaching its determination to approve and recommend the merger
agreement, the Lake Ariel Board did not assign any relative or specific weights
to the foregoing factors, and individual directors may have weighed factors
differently.
RECOMMENDATION OF LAKE ARIEL'S BOARD OF DIRECTORS
The Lake Ariel Board believes that the merger is in the best interests
of Lake Ariel and its stockholders. ACCORDINGLY, THE LAKE ARIEL BOARD RECOMMENDS
THAT STOCKHOLDERS VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
MERGER CONSIDERATION
In the merger, holders of Lake Ariel common stock will receive shares
of NBT common stock as described in detail below.
With the exception of shares held by NBT (other than in a fiduciary
capacity), at the effective time of the merger each share of Lake Ariel common
stock issued and outstanding immediately prior to the effective time will
automatically convert into and become the right to receive between 0.8731 and
0.9961 of a share of NBT common stock. The merger agreement provides for the
calculation of the precise exchange ratio at the effective time of the merger as
follows: each share of Lake Ariel common stock at the effective time will
convert into the right to receive, in exchange for each share of Lake Ariel
common stock held of record as of the effective time, that number of shares of
NBT common stock calculated by dividing $18.50 by the average of the closing bid
and closing asked price per share of NBT common stock as reported on the Nasdaq
National Market for each of the twenty consecutive trading days ending on and
including the eighth trading day before the effective time. Notwithstanding the
44
previous sentence, however, (a) if the ratio so computed is less than 0.8731,
then the exchange ratio will be 0.8731; and (b) if the ratio so computed is more
than 0.9961, then the exchange ratio will be 0.9961.
We will determine the actual exchange ratio by dividing $18.50 by the
average closing bid and asked price per share of NBT common stock for each of
the 20 consecutive trading days ending on the eighth trading day before the date
chosen as the effective date of the merger. However, NBT and Lake Ariel have
agreed that the exchange ratio will only fluctuate between 0.8731 and 0.9961.
For example, if the average closing price per share of NBT common stock were
$16.50, then we would divide $18.50 by $16.50 to arrive at 1.1212. However, in
this case, the exchange ratio would go no higher than 0.9961. Conversely, if the
average closing price per share of NBT common stock were $22.875, then we would
divide $18.50 by $22.875 to arrive at 0.8087. In this case, the exchange ratio
would go no lower than 0.8731.
The merger agreement provides for adjustment of the exchange ratio:
|X| either upwards or downwards to adjust for any NBT or Lake
Ariel stock dividends, split-ups, mergers, recapitalizations,
combinations, conversions, exchanges of shares or the like;
|X| upwards but not downwards if all of the following occur:
(1) the average price per NBT share during the 20-day
trading period ending on the eighth day prior to the
day chosen as the effective date of the merger is
less than $16.1905 and the NBT stock price decline,
expressed as a percentage, is more than 15 percent
greater than the weighted average stock price decline
of the index group, and
(2) Lake Ariel exercises its right to cancel the merger
as a result of such price decline, subject to NBT's
right to require Lake Ariel to complete the merger if
NBT agrees to increase the exchange ratio so that a
Lake Ariel stockholder will receive at least $17.00
worth of NBT stock for each Lake Ariel share, and
(3) NBT so elects to increase the exchange ratio.
We have provided some examples of how these termination provisions
would work using the stock prices of NBT, Lake Ariel, and the index group on
August 16, 1999. See "The Merger -- Termination Upon a Decline in the Value of
NBT Common Stock."
At the effective time of the merger, holders of Lake Ariel common stock
will cease to be stockholders of Lake Ariel and will no longer have any rights
as Lake Ariel stockholders, other than the right to receive any dividend or
other distribution with respect to Lake Ariel common stock with a record date
occurring prior to the effective time and to receive the applicable
consideration in the merger. After the effective time, there will be no
transfers on Lake Ariel's stock transfer books of any shares of Lake Ariel
common stock.
OPINION OF NBT'S FINANCIAL ADVISOR
On August 16, 1999, McConnell, Budd & Downes, Inc. ("MB&D") delivered
its oral opinion (the "Oral Opinion") to the Board of Directors of NBT, that as
of that date, the Floating Exchange Ratio was fair, from a financial point of
view, to NBT stockholders. The basis for its Opinion, which is unchanged, has
been updated for the purposes of this Joint Proxy Statement/Prospectus and
appears in Appendix C. The Floating Exchange Ratio with a maximum of 0.9961 and
a minimum of 0.8731 shares of NBT common stock in exchange for each share of
Lake Ariel common stock, was negotiated based on consideration of numerous
factors, including the following:
|X| An analysis of the historical and projected future contribu-
tions of recurring earnings by the parties.
45
|X| An analysis of the possible future EPS results for the parties
on both a combined and a stand-alone basis.
|X| Anticipated dilutive or accretive effects of the prospective
transaction to the earnings per share of NBT.
|X| Probable impact on dividends payout ratio as a result of the
contemplated transaction.
|X| Loan portfolios and relative asset quality as disclosed by the
parties.
|X| Adequacy of reserves for loan and lease losses of the parties.
|X| Composition of the deposit bases of each of the parties.
|X| Analysis of the historical trading range, trading pattern and
relative liquidity of the common shares of each of the
parties.
|X| Accounting equity capitalization, the tangible equity capital-
ization and the market capitalization of each of the parties.
|X| Contemplation of other factors, including certain intangible
factors.
MB&D has acted as financial advisor to NBT on a contractual basis since
October 20, 1994 in connection with NBT's development and implementation of its
strategic plan and has assisted NBT in the evaluation of numerous hypothetical
affiliation opportunities with banks, thrifts and other financial institutions
since that date. With respect to the pending transaction involving Lake Ariel,
MB&D advised NBT during the evaluation and negotiation process leading up to the
execution of the merger agreement and provided NBT with a number of analyses as
to a range of financially feasible exchange ratios. The determination of the
applicable Floating Exchange Ratio was arrived at in an arms-length negotiation
between NBT and Lake Ariel in a process in which MB&D advised NBT and
participated directly in the negotiations.
MB&D was retained based on its qualifications and experience in the
financial analysis of banking and thrift institutions generally, its knowledge
of the New York and Pennsylvania banking markets in particular as well as its
experience with merger and acquisition transactions involving banking
institutions. As a part of its investment banking business, which is focused
exclusively on financial services industry participants, MB&D is continually
engaged in the valuation of financial institutions and their securities in
connection with its equity brokerage business generally and mergers and
acquisitions in particular. Members of the Corporate Finance Advisory Group of
MB&D have extensive experience in advising financial institution clients on
mergers and acquisitions. In the ordinary course of its business as a NASD
broker-dealer, MB&D may, from time to time, purchase securities from or sell
securities to NBT or Lake Ariel and as a market maker in securities, MB&D may
from time to time have a long or short position in, and buy or sell debt or
equity securities of, NBT or Lake Ariel for its own account or for the accounts
of its customers. In addition, in the ordinary course of business, the employees
of MB&D may have direct or indirect investments in the debt or equity securities
of either or both NBT and Lake Ariel.
The full text of the Opinion, which sets forth assumptions made,
matters considered and limits on the review undertaken is attached hereto as
Appendix C. MB&D urges that all NBT stockholders read the Opinion in its
entirety and the Joint Proxy Statement/Prospectus in its entirety. The Opinion
of MB&D is directed only to the Floating Exchange Ratio at which shares of Lake
Ariel common stock may be exchanged for shares of NBT common stock. The Opinion
of MB&D does not constitute a recommendation to any holder of NBT common stock
as to how such holder should vote at the NBT special meeting. The summary of the
Opinion and the matters considered in its analysis set forth in this Joint Proxy
Statement/Prospectus is qualified in its entirety by reference to the text of
the Opinion itself. The Opinion is necessarily based upon conditions as of the
date of the Opinion and upon information made available to MB&D through the date
thereof. No limitations were imposed by the NBT Board upon MB&D with respect to
the investigations made, matters considered or procedures followed in the course
of rendering its opinions.
46
MATERIALS REVIEWED AND ANALYSES PERFORMED BY MB&D:
In connection with the rendering and updating of its Opinion, MB&D
reviewed the following documents and considered the following subjects:
|X| The merger agreement detailing the pending transaction;
|X| The Joint Proxy Statement/Prospectus in substantially the form
to be mailed to NBT stockholders;
|X| Lake Ariel Annual Reports to stockholders for 1996, 1997 and
1998;
|X| Lake Ariel Annual Reports on Form 10-K for 1996, 1997 and
1998;
|X| Related financia information for the three calendar years
ended December 31, 1996, 1997, and 1998 for Lake Ariel;
|X| Lake Ariel Quarterly Report on Form 10-Q and related unaudited
financial information for the first three quarters of 1999;
|X| Lake Ariel's press release concerning unaudited results for
the first three quarters of 1999 and calendar year 1998;
|X| NBT Annual Reports to Stockholders for 1996, 1997 and 1998;
|X| NBT Annual Reports on Form 10-K and related financial informa-
tion for the calendar years ended 1996, 1997 and 1998;
|X| NBT Quarterly Reports on Form 10-Q and related unaudited
financial information for the first three quarters of 1999;
|X| NBT's press release concerning unaudited results for the first
three quarters of 1999 and calendar year 1998;
|X| Internal financial information and financial forecasts,
relating to the business, earnings, cash flows, assets and
prospects of the respective companies furnished to MB&D by
Lake Ariel and NBT respectively;
|X| MB&D held discussions with members of the senior management of
Lake Ariel concerning the past and current results of
operations of Lake Ariel, its current financial condition and
management's opinion of its future prospects;
|X| MB&D also held discussions with members of the senior
management of NBT concerning the past and current results of
operations of NBT, its current financial condition and
management's opinion of its future prospects;
|X| MB&D reviewed the historical record of reported prices,
trading volume and dividend payments for both Lake Ariel and
NBT common stock;
47
|X| Based primarily on anecdotal information, MB&D gave
consideration to the current state of and future prospects for
the economy of New York and Northeast Pennsylvania generally
and the relevant market areas for Lake Ariel and NBT in
particular;
|X| MB&D employed specific merger analysis models developed by
MB&D to evaluate potential business combinations of financial
institutions using both historical reported information and
projected information for both Lake Ariel and NBT and reviewed
the results;
|X| MB&D reviewed the reported financial terms of selected recent
business combinations of financial institutions for
purposes of comparison to the pending transaction;
|X| MB&D performed such other studies and analyses as MB&D
considered appropriate under the circumstances associated with
this particular transaction.
The Opinion of MB&D takes into account its assessment of general
economic, market and financial conditions and its experience in other
transactions involving participants in the financial services industry, as well
as its experience in securities valuation and its knowledge of the banking
industry generally. For purposes of reaching its Opinion, MB&D has assumed and
relied upon the accuracy and completeness of the information provided to it or
made available by Lake Ariel and NBT and does not assume any responsibility for
the independent verification of such information. With respect to financial
forecasts made available to MB&D it is assumed by MB&D that they were prepared
on a reasonable basis and reflect the best currently available estimates and
good faith judgments of the management of Lake Ariel and NBT respectively, as to
the future performance of Lake Ariel and NBT. MB&D has also relied upon
assurances of the management of Lake Ariel and NBT that they were not aware of
any facts or of the omission of any facts that would make the information or
financial forecasts provided to MB&D incomplete or misleading. In the course of
rendering its Opinion, MB&D has not completed any independent valuation or
appraisal of any of the assets or liabilities of either Lake Ariel or NBT and
has not been provided with such valuations or appraisals from any other source.
The following is a summary of the material analyses employed by MB&D in
connection with rendering its written Opinion. Given that it is a summary, it
does not purport to be a complete and comprehensive description of all the
analyses performed, or an enumeration of every matter considered by MB&D in
arriving at its Opinion. The preparation of a fairness opinion is a complicated
process, involving a determination as to the most appropriate and relevant
methods of financial analysis and the application of those methods to the
particular circumstances. Therefore, such an opinion is not readily susceptible
to a summary description. In arriving at its fairness Opinion, MB&D did not
attribute any particular weight to any one specific analysis or factor
considered by it and made qualitative as well as quantitative judgments as to
the significance of each analysis and factor. Therefore, MB&D believes that its
analyses must be considered as a whole and feels that attributing undue weight
to any single analysis or factor considered could create a misleading or
incomplete view of the process leading to the formation of its Opinion. In its
analyses, MB&D has made certain assumptions with respect to banking industry
performance, general business and economic conditions and other factors, many of
which are beyond the control of management of either Lake Ariel or NBT.
Estimates, which are referred to in its analyses are not necessarily indicative
of actual values or predictive of future results or values, which may vary
significantly from those set forth. In addition, analyses relating to the values
of businesses do not purport to be appraisals or to reflect the prices at which
businesses might actually be sold. Accordingly, such analyses and estimates are
inherently subject to uncertainty and MB&D does not assume responsibility for
the accuracy of such analyses or estimates.
ANALYSIS OF THE FLOATING EXCHANGE RATIO
The consideration for each share of Lake Ariel's common stock to be
rendered by NBT will be the number of shares of NBT common stock with a market
value (based on the average closing bid price and the closing asked price per
share for NBT common stock as reported on the Nasdaq National Market for each of
the twenty consecutive trading days on and including the eighth trading day
before the Effective Time (Average Closing Price)) of $18.50 constrained by a
MINIMUM EXCHANGE OF 0.8731 SHARES of NBT Common Stock and a MAXIMUM EXCHANGE OF
0.9961 SHARES of NBT common stock ("Exchange Ratio Collar"). MB&D analyzed the
financial impact to NBT stockholders of the entire range of possible exchange
ratios.
48
CONTRIBUTION ANALYSIS
Based on reported financial data for Lake Ariel and NBT as of September
30, 1999 and the per share price of NBT as of August 12, 1999, the relative
contributions of the parties to the proforma NBT on a pooling basis would have
been approximately as follows:
PROFORMA CONTRIBUTION TABLE
@ 09-30-99
- ------------------------------------------------------------- ---------------------------- -------------------------
ITEM NBT LAKE ARIEL
- ------------------------------------------------------------- ---------------------------- -------------------------
- ------------------------------------------------------------- ---------------------------- -------------------------
Proposed Ownership 73.6% 26.4%
- ------------------------------------------------------------- ---------------------------- -------------------------
Assets 71.4% 28.6%
- ------------------------------------------------------------- ---------------------------- -------------------------
Loans 76.2% 23.8%
- ------------------------------------------------------------- ---------------------------- -------------------------
Deposits 76.2% 23.8%
- ------------------------------------------------------------- ---------------------------- -------------------------
Equity 78.6% 21.4%
- ------------------------------------------------------------- ---------------------------- -------------------------
Tangible Equity 79.1% 20.9%
- ------------------------------------------------------------- ---------------------------- -------------------------
1999 Managements Estimated Net Income of Combined Company 81.8% 18.2%
- ------------------------------------------------------------- ---------------------------- -------------------------
2000 Managements Estimated Net Income of Combined Company 73.7% 26.3%
- ------------------------------------------------------------- ---------------------------- -------------------------
SPECIFIC ACQUISITION ANALYSIS: MB&D employs a proprietary analytical model to
examine transactions involving banking companies. The model uses forecast
earnings data, selected current period balance sheet and income statement data,
current market and trading information and a number of assumptions as to
interest rates for borrowed funds, the opportunity costs of funds, discount
rates, dividend streams, effective tax rates and transaction structures. The
model inquires into the likely economic feasibility of a given transaction at a
given price level or specified exchange rate while employing a specified
transaction structure. The model also permits evaluation of various levels of
potential non-interest expense savings which might be achieved along with
various potential implementation time tables for such savings, as well as the
possibility of revenue enhancement opportunities which may arise in a given
transaction.
Utilizing this model, MB&D prepared pro forma analyses of the financial
impact of the merger to the NBT stockholders. MB&D compared estimated earnings
per share of NBT on a stand alone basis for fiscal year 2000 and 2001 to the
estimated earnings per share of the common stock of the combined company on a
pro forma basis for fiscal year 2000 and 2001. MB&D's analysis illustrates that
the merger will be neutral to stockholders of NBT on an earnings per share basis
in fiscal year 2000, and becomes accretive to NBT stockholders in fiscal year
2001.
ANALYSIS OF OTHER COMPARABLE TRANSACTIONS: MB&D is reluctant to place emphasis
on the analysis of comparable transactions ("Comparable Analysis") as a
valuation methodology due to what it considers to be inherent limitations of the
application of the results to specific cases. MB&D believes that such analysis
fails to adequately take into consideration such factors as:
49
|X| material differences in the underlying capitalization of the
comparable institutions which are being acquired;
|X| differences in the historic earnings (or loss) patterns
recorded by the compared institutions which can depict a very
different trend than might be implied by examining only recent
financial results;
|X| failure to exclude non-recurring profit or loss items from the
last twelve months' earnings streams of target companies which
can distort apparent earnings multiples;
|X| material differences in the form or forms of consideration
used to complete the transaction;
|X| differences between the planned method of accounting for the
completed transaction;
|X| such less accessible factors as the relative population,
business and economic demographics of the acquired entities
markets as compared or contrasted to such factors for the
markets in which comparable companies are doing business.
With these serious reservations in mind, MB&D nonetheless examined
statistics associated with 51 transactions (excluding the subject transaction)
involving commercial banks. The following criteria was utilized to create the
sample:
|X| Acquired institutions are all commercial banks.
|X| Announced between January 1, 1998 and August 12, 1999.
|X| Announced deal value greater than $50 million and less than
$100 million.
The table which follows permits a comparison of the mean and median
values for two selected statistics arising from the list of 51 transactions
evaluated with the "comparable" statistics calculated for the transaction which
is described in this Joint Proxy Statement/Prospectus.
"COMPARABLE" STATISTICS AS OF THE ANNOUNCEMENT DATE:
- ---------------------------------------- -------------------------------- ------------------------------------------
ANNOUNCED TRANSACTION ANNOUNCED TRANSACTION PRICE/TRAILING 12
COMPARED STATISTICS PRICE/TANGIBLE BOOK VALUE MONTHS EARNINGS
- ---------------------------------------- -------------------------------- ------------------------------------------
- ---------------------------------------- -------------------------------- ------------------------------------------
NBT/Lake Ariel 2.77x 25.0x
- ---------------------------------------- -------------------------------- ------------------------------------------
Sample (51 transactions)
Mean 3.14x 25.3x
Median 3.14x 23.0x
- ---------------------------------------- -------------------------------- ------------------------------------------
1999 (17 transactions)
Mean 2.79x 22.6x
Median 2.81x 21.8x
- ---------------------------------------- -------------------------------- ------------------------------------------
1998 (34 transactions)
Mean 3.31x 26.5x
Median 3.22x 23.7x
- ---------------------------------------- -------------------------------- ------------------------------------------
PA, NJ & NY (8 transactions)
Mean 3.20x 33.2x
Median 3.17x 32.0x
- ---------------------------------------- -------------------------------- ------------------------------------------
50
PIONEER AMERICAN AGREEMENT
On December 7, 1999, NBT agreed to acquire Pioneer American Holding
Company Corp. MB&D has reviewed the agreement with Pioneer American. MB&D acted
as NBT's financial advisor throughout the negotiations with Pioneer American.
The agreement with Pioneer American does not alter MB&D's opinion concerning the
NBT/Lake Ariel transaction. MB&D continues to maintain the opinion that as of
the date of this Joint Proxy Statement/Prospectus, the Floating Exchange Ratio
is fair, from a financial point of view, to NBT stockholders.
COMPENSATION OF MB&D
Pursuant to a letter agreement with NBT dated August 16, 1999, MB&D
will receive a fixed fee of $475,000. This fee will be divided into several
payments, which correspond with the successful completion of specific events.
MB&D was paid $150,000 after the execution of the merger agreement for the
pending transaction with Lake Ariel and will be paid a further $150,000 upon
issuance of its Opinion to be included as an exhibit to this Joint Proxy
Statement/Prospectus. Payment of the balance of the fee will be conditioned on
the closing of the pending transaction.
The fee payable to MB&D represents compensation for services rendered
in connection with the analysis of the transaction, support of the negotiations,
and participation in the drafting of documentation, and for the rendering of the
Opinion. In addition, NBT has agreed to reimburse MB&D for its reasonable
out-of-pocket expenses incurred in connection with the transaction. NBT also has
agreed to indemnify MB&D and its directors, officers and employees against
certain losses, claims, damages and liabilities relating to or arising out of
its engagement, including liabilities under the federal securities laws.
MB&D has filed a written consent with the SEC relating to the inclusion
of its fairness opinion and the reference to such opinion and to MB&D in the
registration statement in which this Joint Proxy Statement/Prospectus is
included. In giving such consent, MB&D did not admit that it comes within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933 or the rules and regulations of the Securities and Exchange
Commission thereunder, nor did MB&D thereby admit that it is an expert with
respect to any part of such Registration Statement within the meaning of the
term "expert" as used in the Securities Act of 1933 as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder.
OPINION OF LAKE ARIEL'S FINANCIAL ADVISOR
Lake Ariel retained Janney Montgomery Scott Inc. ("JMS") to render a
fairness opinion. As part of its engagement, JMS delivered its opinion to Lake
Ariel's board of directors that as of August 16, 1999, based upon and subject to
the various considerations set forth therein, the exchange ratio was fair from a
financial point of view . JMS has updated and confirmed its opinion as of the
date of this Joint Proxy Statement/Prospectus.
The full text of JMS' opinion, which sets forth the assumptions made,
matters considered and limitations of the review undertaken, is attached as
Appendix D, is incorporated herein by reference, and should be read in its
entirety. The summary of the opinion of JMS set forth below is qualified in its
entirety by reference to the full text of such opinion attached as Appendix D.
The opinion of JMS is directed only to the exchange ratio and does not
constitute a recommendation to any holder of Lake Ariel common stock as to how
such stockholder should vote at the Lake Ariel special meeting.
JMS was selected to render its opinions based upon its qualifications,
expertise and experience. JMS has knowledge of, and experience with,
Pennsylvania and New York banking markets and banking organizations in those
markets and was selected by Lake Ariel because of its knowledge of, experience
with, and reputation in the financial services industry. In addition, JMS
sole-managed a common stock offering for Lake Ariel in December 1997.
51
In arriving at its opinion, JMS, among other things:
|X| reviewed the historical financial performances, current finan-
cial positions and general prospects of Lake Ariel and NBT;
|X| considered the proposed financial terms of the merger and
examined the projected consequences of the merger with respect
to, among other things, market value, earnings per share and
book value per share of Lake Ariel common stock;
|X| to the extent it was relevant, analyzed selected public
information of certain other banks and bank holding companies
and compared Lake Ariel and NBT from a financial point of view
to those other banks and bank holding companies;
|X| reviewed the historical market price ranges and trading activ-
ity performance of the common stocks of Lake Ariel and NBT;
|X| reviewed publicly available information such as annual
reports, SEC filings and research reports of Lake Ariel and
NBT;
|X| compared the terms of the merger with the terms of other com-
parable transactions to the extent information concerning
those acquisitions was publicly available;
|X| discussed with members of senior management of Lake Ariel and
NBT the strategic aspects of the merger, including estimated
cost savings from the merger;
|X| reviewed the merger agreement; and
|X| performed other analyses and examinations as it deemed
necessary.
JMS relied without independent verification upon the accuracy and
completeness of all of the financial and other information reviewed by and
discussed with it for purposes of its opinions. With respect to Lake Ariel's
financial forecasts reviewed by JMS in rendering its opinion, JMS assumed that
such financial forecasts were reasonably prepared on bases reflecting the best
currently available estimates and judgments of the management of Lake Ariel as
to the future financial performance of Lake Ariel. JMS did not make an
independent evaluation or appraisal of the assets (including loans) or
liabilities of Lake Ariel or NBT nor was it furnished with any such appraisal.
JMS also did not independently verify and has relied on and assumed that all
allowances for loan and lease losses set forth in the balance sheets of Lake
Ariel and NBT were adequate and complied fully with applicable law, regulatory
policy and sound banking practice as of the date of such financial statements.
The following is a summary of selected analyses prepared and analyzed
by JMS in connection with its opinion, but does not purport to be a complete
description of such analyses undertaken by JMS. The preparation of a fairness
opinion is a complex process involving subjective judgments and is not
necessarily susceptible to a partial analysis or summary description. JMS
believes that its analyses must be considered as a whole and that selecting
portions of such analyses and the factors considered therein, without
considering all factors and analyses, could create an incomplete view of the
analyses and processes underlying its opinion. In performing its analyses, JMS
made numerous assumptions with respect to industry performance, business and
economic conditions and various other matters, many of which cannot be predicted
and are beyond the control of Lake Ariel, NBT and JMS. Any estimates contained
in JMS' analyses are not necessarily indicative of future results or values,
which may be significantly more or less favorable than such estimates. Estimates
on the values of companies do not purport to be appraisals or necessarily
reflect the prices at which companies or their securities may actually be sold.
Because such estimates are inherently subject to uncertainty, neither Lake Ariel
nor JMS assumes responsibility if future results or actual values are materially
different from these estimates.
52
COMPARABLE COMPANY ANALYSIS. JMS compared selected financial and
operating data for Lake Ariel with those of a peer group of selected banks and
bank holding companies located in New Jersey, New York and Pennsylvania with
assets between $250 and $750 million. The analysis compared loans as a
percentage of deposits, equity as a percentage of assets, tangible equity as a
percentage of assets, non-performing assets and loans 90 days past due as a
percentage of assets, loan loss reserves as a percentage of non-performing
assets and loans 90 days past due, return on average assets, return on average
equity, net interest margin, efficiency ratios and net charge-offs as a
percentage of average loans. The analysis also compared price per share as a
percentage of book value per share, price per share as a percentage of tangible
book value per share, price per share as a multiple of earnings per share, cash
dividend yields and dividend payout ratio.
In addition, JMS also compared selected financial and operating data
for NBT with those of a peer group of selected bank holding companies located in
New Jersey, New York and Pennsylvania with assets between $1 billion and $5
billion. The analysis compared loans as a percentage of deposits, equity as a
percentage of assets, tangible equity as a percentage of assets, non-performing
assets and loans 90 days past due as a percentage of assets, loan loss reserves
as a percentage of non-performing assets and loans 90 days past due, return on
average assets, return on average equity, net interest margin, efficiency ratios
and net charge-offs as a percentage of average loans. The analysis also compared
price per share as a percentage of book value per share, price per share as a
percentage of tangible book value per share, price per share as a multiple of
earnings per share, cash dividend yields and dividend payout ratio.
ANALYSIS OF STOCK PRICE AND VOLUME. JMS compared the stock price per
share performance of Lake Ariel to the performance of the Nasdaq Bank Index and
the S&P 500 from August 11, 1994 through August 11, 1999. The analysis indicated
that the Nasdaq Bank Index and the S&P 500 outperformed Lake Ariel. JMS also
compared the stock price per share performance of NBT to the performance of the
Nasdaq Bank Index and the S&P 500 from August 11, 1994 through August 11, 1999.
The analysis indicated that the Nasdaq Bank Index and the S&P 500 outperformed
NBT.
PRO FORMA MERGER ANALYSIS. Using earnings estimates for Lake Ariel and
NBT as reported by First Call and based on conversations with the respective
managements, JMS analyzed certain pro forma effects resulting from the merger
based on the proposed exchange ratio. Based on this information, the analysis
indicated NBT will experience estimated earnings per share dilution of between
2% and 3%. The analysis also indicated that, relative to Lake Ariel on a
stand-alone basis, the merger would be accretive to Lake Ariel's earnings per
share, book value per share, tangible book value per share and cash dividends
per share.
ANALYSIS OF SELECTED MERGER AND ACQUISITION TRANSACTIONS. JMS analyzed
certain financial aspects of selected mergers and acquisitions of bank holding
companies since August 5, 1998, where the sellers had assets between $200
million and $1.0 billion and were located in the United States. JMS examined the
results in three ways. The first looked at all transactions that met the
aforementioned criteria. The second method looked at sellers located in New
Jersey, New York, Ohio and Pennsylvania. The third method was to compare bank
holding companies that had reasonably-similar performance characteristics (which
in this case were defined as an equity as a percentage of assets ratio of less
than 8.0% and a return on average equity of less than 10.0%). In each group, JMS
compared equity as a percentage of assets, return on average assets, return on
average equity, non-performing assets as a percentage of total assets, price per
share as a percentage of book value per share, price per share as a multiple of
earnings per share, price as a percentage of deposits, price as a percentage of
assets and the tangible book premium as a percentage of core deposits. In
summary, the indicated value to be received by stockholders of Lake Ariel
compared favorably to the values received in the transactions examined.
53
DISCOUNTED DIVIDEND ANALYSIS. Using the discounted dividend analysis,
JMS estimated the present value of the future dividend streams that Lake Ariel
could produce on a stand-alone basis over a five-year period under different
assumptions, if Lake Ariel performed in accordance with various earnings growth
forecasts. JMS also estimated the terminal value for Lake Ariel's common stock
after the five year period by applying a range of earnings multiples from 15 to
19 times Lake Ariel's terminal year earnings and by applying a range of book
value valuations from 170% to 210%. The range of multiples used reflected a
variety of scenarios regarding the growth and profitability prospects of Lake
Ariel. The dividend streams and terminal values were then discounted to present
value using discount rates ranging from 10% to 15%, reflecting different
assumptions regarding the rates of return required by holders or prospective
buyers of Lake Ariel's common stock. In summary, the range of prices imputed by
the analysis described herein were less than the price being offered by NBT.
JMS stated that the discounted dividend analysis is a widely used
valuation methodology, but noted that it relies on numerous assumptions,
including earnings growth rates, terminal values and discount rates. The
analysis did not purport to be indicative of the actual values or expected
values of Lake Ariel common stock.
In reaching its opinion as to fairness, none of the analyses performed
by JMS was assigned a greater significance by JMS than any another. As a result
of its consideration of the aggregate of all factors present and analyses
performed, JMS reached the conclusion, and opined, that the exchange ratio, as
set forth in the merger agreement, is fair from a financial point of view to
holders of Lake Ariel common stock.
In connection with delivering its opinion dated as of the date of this
Joint Proxy Statement/Prospectus, JMS updated certain analyses described above
to reflect current market conditions and events occurring since the date of the
merger agreement. Such reviews and updates led JMS to conclude that it was not
necessary to change the conclusions it had reached in connection with its
initial opinion.
JMS, as part of its investment banking business, is regularly engaged
in the valuation of assets, securities and companies in connection with various
types of asset and security transactions, including mergers, acquisitions,
private placements, and valuation for various other purposes and in the
determination of adequate consideration in such transactions.
The opinion of JMS was based solely upon the information available to
it and the economic, market and other circumstances as they existed as of the
date hereof; events occurring after the date hereof could materially affect the
assumptions used in preparing its opinion. JMS has not undertaken to reaffirm or
revise its opinion or otherwise comment upon any events occurring after the date
hereof.
In delivering its opinion, JMS assumed that in the course of obtaining
the necessary regulatory and governmental approvals for the merger, no
restrictions will be imposed on NBT that would have a material adverse effect on
the contemplated benefits of the merger. JMS also assumed that there would not
occur any change in applicable law or regulation that would cause a material
adverse change in the prospects or operations of Lake Ariel and NBT after the
merger.
Pursuant to the terms of the engagement letter dated July 19, 1999,
Lake Ariel paid JMS $25,000 upon the signing of the engagement agreement. Lake
Ariel paid $50,000 to JMS upon the signing of the merger agreement. In addition,
Lake Ariel has also agreed to pay JMS an additional $50,000 upon the issuance of
its opinion dated as of the date of this Joint Proxy Statement/Prospectus and to
reimburse JMS for its reasonable out-of-pocket expenses. Whether or not the
merger is completed, Lake Ariel has agreed to indemnify JMS and certain related
persons against certain liabilities relating to or arising out of its
engagement.
OTHER INTERESTS OF OFFICERS AND DIRECTORS IN THE MERGER
In considering the independent recommendations of the NBT Board and the
Lake Ariel Board with respect to the merger, Lake Ariel stockholders should be
aware that officers and directors of Lake Ariel have interests in the merger
that are different from, or in addition to, the interests of the stockholders of
Lake Ariel generally. The NBT Board and the Lake Ariel Board were aware of such
interests and considered them, among other matters, in approving the merger
agreement and the matters contemplated by the merger agreement, including the
merger.
54
As of September 30, 1999, the directors and executive officers of Lake
Ariel owned an aggregate of approximately 920,632 shares of Lake Ariel common
stock and held options to purchase an aggregate of approximately 246,138 shares
of Lake Ariel common stock at a weighted average exercise price of approximately
$7.01. Under the terms of the merger agreement, Lake Ariel's directors and
executive officers will receive the same consideration for their shares of Lake
Ariel common stock as the other Lake Ariel stockholders. Upon completion of the
merger, all outstanding options to purchase Lake Ariel common stock will convert
into options to purchase shares of NBT common stock as described under "The
Merger -- Lake Ariel Stock Options."
MARTINES EMPLOYMENT AGREEMENT. NBT, as the surviving corporation in the
merger, will enter into an employment agreement with John G. Martines, President
of LA Bank and Chief Executive Officer and a director of Lake Ariel, under which
NBT will cause LA Bank, which will be a wholly-owned subsidiary of NBT following
the merger, to employ Mr. Martines as its President and Chief Executive Officer.
In carrying out his duties, Mr. Martines will report to the President and Chief
Executive Officer of NBT and will oversee and direct the operations of LA Bank.
The employment agreement becomes effective when the merger is completed and
terminates three years later unless Mr. Martines has extended the agreement for
an additional year.
Mr. Martines' employment agreement provides that he will receive a
salary of not less than $230,000 per year, subject to increases in accordance
with NBT's compensation policies. During the employment term, Mr. Martines will
be entitled to participate in all of the compensation and benefit plans made
available generally to senior executives of NBT. During the term of Mr.
Martines' employment, he will be entitled to the use of an automobile owned by
LA Bank, the make, model and year of which automobile is appropriate to an
officer of Mr. Martines' rank employed by NBT or its affiliates; NBT or an
affiliate of NBT will reimburse Mr. Martines for dues and assessments incurred
by him in relation to his membership at the Country Club of Scranton; and NBT or
an affiliate of NBT will maintain the life insurance paid by LA Bank on Mr.
Martines' life for the benefit of his designated beneficiary(ies) at no less
than the level of insurance maintained as of June 30, 1999. In addition, NBT
will assume and continue in effect with respect to Mr. Martines the LA Bank,
N.A. Salary Continuation Agreement, dated March 7, 1997, the Supplementary
Retirement Benefit Agreement with LA Bank, dated January 6, 1995, and the Salary
Continuation Agreement with LA Bank, dated May 5, 1989. In return, Mr. Martines
has renounced any entitlement to benefits under any supplemental executive
retirement plan to which he would otherwise be entitled as an executive or
affiliate of NBT. Additionally, Mr. Martines will be eligible to be considered
for performance bonuses of up to 75% of salary, primarily on the basis of the
performance of LA Bank and secondarily on the basis of the performance of NBT.
The benefits described in this paragraph will continue throughout the employment
term unless NBT terminates Mr. Martines' employment for cause, Mr. Martines
terminates the agreement without good reason, or Mr. Martines dies or becomes
disabled. Mr. Martines will agree that from the commencement date of his
employment agreement until the second anniversary of the termination date of the
agreement he will not compete with NBT, LA Bank, or their affiliates within a
composite area defined by radii of 25 miles from the head office of LA Bank, the
authorized branches of LA Bank as they may exist from time to time, and each
branch of a depository institution affiliated with LA Bank for which Mr.
Martines has or has had significant executive or managerial responsibilities.
RELEASES. At the effective time of the merger, Messrs. Martines, Louis
M. Martarano, Vice President of Lake Ariel and Executive Vice President and
Chief Operating Officer of LA Bank, and Joseph J. Earyes, Vice President and
Treasurer of Lake Ariel and Executive Vice President and Chief Financial Officer
of LA Bank, will execute unconditional releases in favor of NBT, Lake Ariel, and
LA Bank from any claims, actions, or liabilities they, respectively, might have
against NBT, Lake Ariel or LA Bank. In exchange for the releases, NBT will
tender to each a change-in-control agreement, and in the case of Mr. Martines,
in addition an employment agreement, described in preceding paragraphs.
CHANGE-IN-CONTROL AGREEMENTS. The agreements provide that Messrs.
Martines, Martarano, and Earyes will serve, following the merger, as employees
of LA Bank or its affiliate. Each of the agreements has a term of three years,
55
which extends for an additional year on each successive anniversary of the
agreement. The agreements provide that if, within 24 months from the date of an
event constituting a change in control of NBT, NBT Bank, or LA Bank, the
employment of the named employee is terminated (1) by NBT because of the
employee's disability, (2) by NBT without cause, or (3) by the employee with
good reason (as defined below), the terminated employee will be entitled to a
severance payment and other benefits. If terminated because of disability, the
employee will be entitled to receive benefits in accordance with NBT's long-term
disability income insurance plan. If terminated without cause or with good
reason, NBT will pay the terminated employee his full base salary plus
year-to-date accrued vacation through the date of termination plus severance pay
in an amount equal to the product of his base salary multiplied by 2.99, in the
case of Mr. Martines, or 2.0, in the cases of Messrs. Martarano and Earyes. Base
salary means the employee's average annual compensation includible in gross
income for federal income tax purposes for the five years preceding the year in
which the change in control occurs.
The agreement further provides that, in the event that any payments or
benefits the named executive becomes entitled to under the agreement or any
other payments or benefits received or to be received by the named executive in
connection with a change in control of NBT or the named executive's termination
of employment will be subject to an excise tax under section 4999 of the
Internal Revenue Code of 1986, NBT will pay the named executive an additional
amount so that the net amount retained by the named executive, after deduction
of the excise tax on the severance benefits and after deduction for the
aggregate of any federal, state, or local income tax and excise tax upon such
additional payment amount, will equal the severance payments under the
change-in-control agreement.
A change in control of NBT means:
|X| a change in control 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 of the agreement under the Securities
Exchange Act of 1934;
|X| at any time as any person 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 NBT's voting securities;
|X| during any period of two consecutive years, individuals who at
the beginning of such period constitute the NBT Board cease
for any reason to constitute at least a majority of the Board
unless the election, or the nomination for election by the NBT
stockholders, 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;
|X| there shall be consummated any consolidation or merger of NBT
in which NBT is not the continuing or surviving corporation or
any sale, lease, exchange, or other transfer of all, or
substantially all of the assets of NBT; or
|X| approval by the stockholders of NBT of any plan or proposal
for the liquidation or dissolution of NBT.
The change in control agreements define termination for cause as
termination because, and only because, the named employee committed an act of
fraud, embezzlement, or theft constituting a felony or an act intentionally
against the interests of NBT which causes NBT material injury.
Termination of the named employee for good reason means:
|X| a change in the employee's status or position(s) with NBT,
which in the employee's reasonable judgment, does not
represent a promotion from the employee's status or position
as in effect immediately prior to the change in control, or a
change in the employee's duties or responsibilities which, in
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the employee's reasonable judgment, is inconsistent with such
status or position, or any removal of the employee from, or
any failure to reappoint or reelect the employee to, such
position;
|X| a reduction by NBT in the employee's base salary as in effect
immediately prior to the change in control;
|X| the failure by NBT to continue in effect any employee benefit
plan in which the employee was participating at the time of
the change in control of NBT other than as a result of the
normal expiration of the plan in accordance with its terms as
in effect at the time of the change in control, or the taking
of any action, or the failure to act, by NBT which would
adversely affect the employee's continued participation in the
plan on at least as favorable a basis to the employee as is
the case on the date of the change in control or which would
materially reduce the employee's benefits in the future under
any of the plans or deprive the employee of any material
benefit enjoyed by the employee at the time of the change in
control;
|X| the failure by NBT to provide and credit the employee with the
number of paid vacation days to which the employee was then
entitled in accordance with NBT's normal vacation policy as in
effect immediately prior to the change in control;
|X| NBT's requiring the employee to be based anywhere other than
where his office is located immediately prior to the change in
control, except for required business travel;
|X| NBT's failure to obtain from any successor its express assent
to assume and agree to perform the change in control agreement
in the same manner and to the same extent as NBT would be
required to perform if no succession had taken place;
|X| any purported termination by NBT of the employee's employment
which is not effected in accordance with the express notice
provisions of the change in control agreement; or
|X| any refusal by NBT to continue to allow the employee to attend
to matters or engage in activities not directly related to the
business of NBT which, prior to the change in control, the
employee was permitted by the board to attend or engage in.
STOCK OPTIONS. Options to purchase Lake Ariel common stock, which their
holders have not exercised prior the effective time of the merger, will
automatically convert into options to purchase shares of common stock of NBT
following the merger, and NBT will assume each such option subject to the terms
and conditions set forth in Lake Ariel's stock option plans.
Each such converted stock option will convert into a replacement option
to acquire a number of shares of NBT common stock equal to (rounded down to the
nearest whole number of shares) (a) the number of shares of Lake Ariel common
stock subject to such converted option as of the effective time multiplied by
(b) the exchange ratio for the merger. The exercise price per share (rounded
down to the nearest whole cent) will equal (x) the aggregate exercise price
under such converted option for all of the shares of Lake Ariel common stock
subject to such converted option at the effective time divided by (y) the number
of shares of NBT common stock subject to such replacement option.
Each Lake Ariel option will, in accordance with its terms, be subject
to further adjustment as appropriate to reflect any stock split, stock dividend,
recapitalization, or other similar transaction with respect to NBT's common
stock on or subsequent to the completion of the merger. NBT has agreed to
register with the SEC the shares of NBT common stock that are subject to the
replacement options. We describe the treatment of options more fully under "The
Merger -- Lake Ariel Stock Options."
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COMPOSITION OF NBT'S BOARD FOLLOWING THE MERGER. Following the merger,
NBT will have a Board of Directors composed of twelve individuals. The Board
will include the nine current members of the NBT Board plus three current Lake
Ariel Board members, Messrs. John G. Martines, Bruce D. Howe, and William C.
Gumble. In the merger agreement NBT has agreed to use its best efforts to cause
these three individuals to be elected or appointed directors of NBT.
DIRECTORS AND OFFICERS INDEMNIFICATION. As described in "The Merger --
Conduct of Business Pending Completion of the Merger -- Indemnification," the
merger agreement provides that following the merger NBT will take no action to
abrogate or diminish any right to indemnification accorded under Lake Ariel's
Articles of Incorporation or bylaws existing in favor of the current or former
directors or officers of Lake Ariel. The merger agreement also provides that
following the effective time of the merger and to the extent permitted by law,
all rights to such indemnification will survive completion of the merger, and
NBT will honor such obligations in accordance with their terms with respect to
events, acts, or omissions occurring prior the effective time of the merger.
STOCK OPTION AGREEMENT
The following is a description of the material terms of the stock
option agreement. We urge all stockholders of NBT and Lake Ariel to read the
stock option agreement in its entirety for a complete description of the terms
of the agreement. We have previously filed a copy of the stock option agreement
with the SEC.
As a condition to NBT's willingness to enter into the merger agreement,
Lake Ariel entered into the Stock Option Agreement, dated as of August 16, 1999,
with NBT. Under the stock option agreement, Lake Ariel granted NBT an option to
purchase up to 965,300 shares of Lake Ariel common stock, which was
approximately 19.9% of the number of shares of Lake Ariel common stock
outstanding as of August 16, 1999. The exercise price of the stock option is
$11.375 per share, subject to adjustment under specified circumstances.
Parties to merger agreements often enter into arrangements such as the
stock option agreement in connection with corporate mergers and acquisitions in
an effort to increase the likelihood of completion of the transactions in
accordance with their terms, and to compensate the recipient of the option for
its efforts and expenses, losses and opportunity costs in connection with the
transactions if the merger does not occur due to circumstances involving an
acquisition or potential acquisition of the option issuer by a third party. The
stock option agreement may have the effect of discouraging offers by third
parties to acquire Lake Ariel prior to the merger even if such persons are
prepared to pay more than the current market price of the shares of NBT's common
stock to be received by the stockholders of Lake Ariel pursuant to the merger
agreement.
The stock option will become exercisable in whole or in part only if a
triggering event occurs with respect to Lake Ariel before the stock option
terminates. For purposes of the stock option agreement, the term "triggering
event" means any of the following events or transactions occurring after August
16, 1999:
|X| Lake Ariel or LA Bank, without having received NBT's prior
written consent, shall have entered into an agreement to
engage in an acquisition transaction (as defined below) with
any person other than NBT or any of its subsidiaries, or the
Lake Ariel Board or the LA Bank Board shall have recommended
that the stockholders of Lake Ariel approve or accept any
acquisition transaction other than as contemplated by the
merger agreement;
|X| any person other than the NBT or NBT Bank shall have acquired
beneficial ownership or the right to acquire beneficial
ownership of 10 percent of more of the outstanding shares of
Lake Ariel's common stock;
|X| the stockholders of Lake Ariel shall have voted on and failed
to approve the merger agreement at a special meeting held for
that purpose or any adjournment or postponement of the
meeting, if prior to the meeting there was a public
announcement that any person (other than NBT or NBT Bank)
shall have made a bona fide proposal to engage in an
acquisition transaction;
58
|X| Lake Ariel's Board shall have withdrawn or modified (or
publicly announced its intention to withdraw or modify) in any
manner adverse to NBT its recommendation that the stockholders
of Lake Ariel approve the transactions contemplated by the
merger agreement, or Lake Ariel or LA Bank shall have
authorized, recommended or proposed (or publicly announced its
intention to authorize, recommend or propose) an agreement to
engage in an acquisition transaction with any person other
than NBT or NBT Bank;
|X| any person other than NBT or NBT Bank shall have made a bona
fide proposal to Lake Ariel or its stockholders to engage in
an acquisition transaction and there was a public announcement
of such proposal;
|X| any person other than NBT or NBT Bank shall have filed with
the Securities and Exchange Commission a registration
statement or tender offer materials with respect to a
potential exchange or tender offer that would constitute an
acquisition transaction;
|X| Lake Ariel shall have breached any covenant or obligation
contained in the merger agreement in anticipation of engaging
in an acquisition transaction with any person other than NBT
or NBT Bank, and following such breach, NBT would be entitled
to terminate the merger agreement as provided by section
11.2(b) of the merger agreement; or
|X| any person other than NBT or NBT Bank shall have filed an
application or notice with the Federal Reserve Board or other
federal or state bank regulatory or antitrust authority, which
application or notice such authority has accepted for
processing, for approval to engage in an acquisition
transaction.
The stock option agreement defines the term acquisition transaction as
any transaction under which a person proposes to or will acquire a majority of
the stock of, merge or consolidate with, or acquire all or substantially all of
the assets of Lake Ariel or LA Bank, or otherwise engage in any substantially
similar transaction with Lake Ariel or LA Bank.
The stock option will terminate upon the earliest to occur of:
|X| completion of the merger;
|X| termination of the merger agreement in accordance with its
terms, except a termination by NBT due to a breach by Lake
Ariel of a representation, warranty or covenant or a
termination due to a determination in good faith by the Lake
Ariel Board, on the advice of counsel, that the termination is
required for the Lake Ariel Board to comply with its fiduciary
duties to its stockholders imposed by law by reason of a
proposal by a person other than NBT or NBT Bank to acquire
more than one percent of the Lake Ariel common stock; or
|X| passage of eighteen months after termination of the merger
agreement following the two excepted events cited in the item
above.
Upon the occurrence of a triggering event that occurs prior to the
termination of the stock option, NBT will have registration rights under the
Securities Act with respect to the shares of Lake Ariel common stock issued or
issuable under the stock option.
The stock option agreement also provides that at any time after the
occurrence of a repurchase event (as defined below), upon request, Lake Ariel
will repurchase the stock option from the holder of the stock option. The
purchase price of the repurchase will equal the amount by which the market/offer
price exceeds the stock option price multiplied by the number of shares then
subject to the stock option. To the extent NBT previously acquired shares of
59
Lake Ariel common stock upon the exercise of part of the stock option, Lake
Ariel will repurchase such shares at the market/offer price. The term
market/offer price means the highest of the following:
|X| the highest price per share paid by any person that acquires
beneficial ownership of 50% or more of the Lake Ariel common
stock;
|X| the price per share of Lake Ariel common stock that any third
party is to pay under an agreement with Lake Ariel in
connection with the repurchase event;
|X| the highest closing price per share of Lake Ariel common stock
within the six-month period immediately preceding the date
that notice to repurchase is given; or
|X| in the event of a sale of all or a substantial portion of Lake
Ariel's or LA Bank's net assets or deposits, the sum of the
net price paid for such assets or deposits and the current
market value of the remaining net assets (as determined by a
nationally recognized investment banking firm), divided by the
number of shares of Lake Ariel common stock outstanding at the
time of such sale.
The stock option agreement defines repurchase event as (1) the
acquisition by any third party of beneficial ownership of 50% or more of the
then outstanding shares of Lake Ariel's common stock or (2) the consummation of
an acquisition transaction (as defined above) by any person other than NBT or
NBT Bank.
Under the terms of the stock option agreement, if, prior to the
termination of the stock option, Lake Ariel or LA Bank enters into an
extraordinary transaction, such as a merger, consolidation or agreement to sell
all or substantially all of its assets or deposits, in which Lake Ariel or LA
Bank is effectively not the surviving corporation, the holder of the stock
option may convert or exchange the stock option into or for an option with terms
similar to those of the stock option being converted or exchanged to purchase
stock of the entity that is the effective successor to Lake Ariel or LA Bank.
The stock option agreement generally provides that neither NBT nor Lake
Ariel may assign any of its respective rights or obligations under the stock
option agreement without the express written consent of the other party.
However, if a triggering event occurs before termination of the stock option,
NBT may, subject to limitations, assign its rights and obligations under the
stock option in whole or in part. However, until fifteen days after the Federal
Reserve Board has approved an application by NBT under the Bank Holding Company
Act of 1956 to acquire the option shares, NBT may not assign its rights under
the NBT option except in one of the following ways:
|X| a widely dispersed public distribution;
|X| a private placement in which no one party acquires the right
to purchase in excess of 2% of the voting shares of Lake
Ariel;
|X| an assignment to a single party (e.g., a broker or investment
banker) for the sole purpose of conducting a widely dispersed
public distribution on NBT's behalf; or
|X| any other manner approved by the Federal Reserve Board.
To the best knowledge of Lake Ariel and NBT, no event giving rise to
any rights to exercise the stock option has occurred as of the date of this
Joint Proxy Statement/Prospectus.
ACCOUNTING TREATMENT
We expect the merger to be accounted for as a pooling of interests in
accordance with generally accepted accounting principles ("GAAP"). Under this
method of accounting, NBT stockholders and Lake Ariel stockholders will be
deemed to have combined their existing voting stock interests by virtue of the
exchange of shares of Lake Ariel common stock for shares of NBT common stock.
60
Accordingly, the book value of the assets, liabilities and stockholders' equity
of each of NBT and Lake Ariel, as reported on their respective consolidated
balance sheets, will be carried over to the consolidated balance sheet of the
combined company, and no goodwill will be created. The combined company will be
able to include in its consolidated net income the combined net income of both
companies for the entire fiscal year in which the merger occurs. However, the
combined company must treat certain expenses incurred to effect the merger as
current charges against income, rather than adjustments to the combined company
balance sheet.
It is a condition to consummation of the merger that NBT receive a
letter from its independent auditors, KPMG LLP, that the merger will qualify for
pooling of interests accounting treatment. See "The Merger -- Conditions to
Complete the Merger."
As described in "Rights of Dissenting Stockholders," Lake Ariel
stockholders have a right to dissent to the merger. As such, if the holders of
more than 10% of the outstanding shares of Lake Ariel common stock receive cash
in the exercise of their dissenters' rights, the merger will not qualify for
pooling of interests accounting treatment.
The parties have prepared the unaudited pro forma financial information
contained in this Joint Proxy Statement/Prospectus using the pooling of
interests accounting method to account for the merger. See "Summary -- Selected
Unaudited Pro Forma Combined Financial Data" and "The Merger -- Unaudited
Comparative Per Common Share Data."
DISSENTERS' OR APPRAISAL RIGHTS
Holders of NBT common stock are not entitled to dissenters' and
appraisal rights under Delaware law in connection with the merger. By Board
resolution, as permitted by Pennsylvania law, Lake Ariel has extended to its
stockholders dissenters' or appraisal rights in connection with the merger. See
"Rights of Dissenting Stockholders" and "Comparison of Stockholders' Rights --
Appraisal/Dissenters' Rights."
INCLUSION OF NBT'S COMMON STOCK ON NASDAQ NATIONAL MARKET
A condition to the merger requires that the Nasdaq shall have
authorized the shares of NBT common stock to be issued in the merger for
inclusion on the Nasdaq National Market. NBT's common stock is listed on the
Nasdaq National Market under the symbol "NBTB." Upon completion of the merger,
we will delist the Lake Ariel common stock from the Nasdaq National Market and
deregister the Lake Ariel common stock under the Securities Exchange Act. See
"Price Range of Common Stock and Dividends."
DIVIDENDS
NBT, as the surviving corporation, expects that after completion of the
merger, subject to approval and declaration by its Board, it will continue its
current dividend policy and declare regularly scheduled quarterly cash dividends
and annual stock dividends on the shares of its common stock consistent with
past practices. The current annualized rate of cash dividends on the shares of
NBT common stock is $0.68 per share.
Lake Ariel expects to continue to declare regularly scheduled dividends
on the Lake Ariel common stock until the merger closes, including regular
quarterly cash dividends of $0.10 per share and a special December cash dividend
of $0.03 per share, subject to the terms of the merger agreement. The right of
holders of Lake Ariel common stock to receive dividends from Lake Ariel will end
upon the completion of the merger when the separate corporate existence of Lake
Ariel will cease. See "Price Range of Common Stock and Dividends."
61
EXCHANGE OF LAKE ARIEL CERTIFICATES
Promptly after the effective time, NBT will deposit with the exchange
agent, American Stock Transfer and Trust Company, New York, New York,
certificates representing the shares of NBT common stock that are issuable in
connection with the merger for shares of Lake Ariel common stock. NBT will also
deposit with the exchange agent an estimated amount of cash payable instead of
fractional shares. Promptly after the effective time, NBT will cause the
exchange agent to send to each holder of record of shares of Lake Ariel common
stock at the effective time of the merger transmittal materials for use in the
exchange of the merger consideration for certificates representing Lake Ariel
common stock. NBT will deliver to holders of Lake Ariel common stock who
surrender their certificates to the exchange agent, together with properly
executed transmittal materials and any other required documentation,
certificates representing the number of shares of NBT common stock to which such
holders are entitled. NBT will not issue any fractional shares. Instead, NBT
will pay each holder of Lake Ariel common stock who would otherwise be entitled
to a fractional share of NBT common stock an amount in cash, without interest,
calculated by multiplying such fraction by the average closing price as
determined in the merger agreement.
Until properly surrendering their certificates, holders of unexchanged
shares of Lake Ariel common stock will not be entitled to receive any dividends
or distributions with respect to NBT common stock. After surrender of the
certificates representing Lake Ariel common stock, the record holder of such
shares will be entitled to receive any such dividends or other distributions,
without interest, which had previously become payable with respect to shares of
NBT common stock represented by such certificate.
HOLDERS OF LAKE ARIEL COMMON STOCK SHOULD NOT SEND IN CERTIFICATES
REPRESENTING LAKE ARIEL COMMON STOCK UNTIL THEY RECEIVE TRANSMITTAL MATERIALS
FROM THE EXCHANGE AGENT.
LAKE ARIEL STOCK OPTIONS
At the effective time, all outstanding and unexercised Lake Ariel stock
options will no longer represent a right to acquire shares of Lake Ariel common
stock and will convert automatically into options to purchase shares of NBT
common stock. NBT will assume such Lake Ariel stock options subject to the terms
and conditions of Lake Ariel stock option or similar plans and related option
agreements as in effect immediately prior to the effective time under which Lake
Ariel issued the assumed stock options.
After the effective time of the merger, the number of shares of NBT
common stock purchasable upon exercise of any such Lake Ariel option will equal
the number of shares of Lake Ariel common stock that were purchasable under such
Lake Ariel option immediately prior to the effective time multiplied by the
exchange ratio established for the merger, rounding down to the nearest whole
share. The per share exercise price under each such Lake Ariel stock option,
rounding down to the nearest whole cent, will equal the aggregate exercise price
under the stock options divided by the number of shares of NBT common stock
issuable under the assumed Lake Ariel stock option plans. The duration and other
terms of each new NBT stock option will be substantially the same as the prior
Lake Ariel stock option. The terms of each Lake Ariel option will be subject to
further adjustment as appropriate to reflect any stock split, stock dividend,
recapitalization or other similar transaction with respect to NBT common stock
on or after the effective time of the merger. NBT has agreed to register with
the SEC the shares of NBT common stock into which the options are exercisable
and to maintain the current status of the prospectus relating to these shares.
REPRESENTATIONS AND WARRANTIES
The merger agreement contains representations and warranties made by
NBT and/or Lake Ariel relating to the following matters:
|X| due organization, corporate power, good standing and due
registration as a bank holding company
|X| capitalization
|X| subsidiaries
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|X| corporate power and authority to conduct business, own
property and enter into the merger agreement, the stock
option agreement and related transactions
|X| non-contravention of certain organizational documents,
agreements or governmental orders
|X| reports and other documents filed with the SEC and certain
bank holding company and bank regulatory authorities, and the
accuracy of the information contained in such documents
|X| financial statements
|X| examinations by bank regulatory agencies
|X| undisclosed liabilities
|X| litigation and regulatory action
|X| compliance with laws
|X| contractual defaults
|X| brokers and financial advisers
|X| tax and accounting matters
|X| insurance
|X| labor matters
|X| environmental matters
|X| absence of certain material changes and events
|X| required regulatory approvals
|X| loans and non-performing and classified assets
|X| allowances for loan losses
|X| administration of fiduciary accounts
|X| Year 2000 readiness
|X| deposit insurance
CONDUCT OF BUSINESS PENDING COMPLETION OF THE MERGER
The merger agreement contains various covenants and agreements that
govern Lake Ariel's and NBT's actions prior to the effective time of merger,
including the following:
Conduct of Business. Lake Ariel has agreed that it and LA Bank will
conduct their respective businesses diligently and substantially in the same
manner as previously and to use commercially reasonable efforts to preserve
intact their business organizations, and to maintain their existing relations
with customers, employees and business associates.
Capital Stock. Lake Ariel has agreed to restrictions on its ability to
authorize, issue or make any distribution of its capital stock or any other
securities, or grant any options to acquire additional securities, or declare or
distribute any stock dividend or authorize a stock split. Lake Ariel has agreed
not to make any direct or indirect redemption, purchase or other acquisition of
its capital stock. Lake Ariel has further agreed not to take any action which
would prevent or impede the merger from qualifying for pooling of interests
accounting.
Dividends. Lake Ariel has agreed not to declare or pay any dividend
other than (i) customary periodic cash dividends paid by Lake Ariel to holders
of its common stock in amounts not exceeding $0.1025 per calendar quarter and at
intervals that are not shorter than past practice, (ii) customary periodic
special cash dividends typically declared by Lake Ariel in November and paid to
holders of its common stock the following December, in amounts not exceeding
$0.03 per year and at intervals that are not shorter than past practice, and
(iii) customary cash dividends paid by LA Bank whose amounts have not exceeded
past practice and at intervals that are not shorter than past practice. In
addition, Lake Ariel has agreed to cause its regular quarterly dividend record
dates and payment dates for Lake Ariel common stock to be the same as the
regular dividend record dates and payment dates for NBT common stock.
63
Compensation; Employment Agreements; Benefit Plans. Lake Ariel has
agreed not to:
|X| increase the rate of compensation of any employee or enter
into any agreement to increase the rate of compensation of any
employee, except for increases in the ordinary course of
business in accordance with past practices, which together
with all other compensation rate increases do not exceed 4.5
percent per annum of the aggregate payroll as of June 30,
1999, and except as explicitly contemplated by the merger
agreement; nor
|X| create or modify any pension or profit sharing plan, bonus,
deferred compensation, death benefit, or retirement plan, or
the level of benefits under any such plan, nor increase or
decrease any severance or termination pay benefit or any other
fringe benefit, except as required by law; nor
|X| enter into any employment or personal services contract with
any person or firm, except directly to facilitate the
transactions contemplated by the merger agreement.
Dispositions, Acquisitions and Capital Expenditures. Lake Ariel has
agreed not to:
|X| either (i) merge into, consolidate with, or sell or otherwise
dispose of its assets to any other corporation or person, or
enter into any other transaction or agree to effect any other
transaction not in the ordinary course of its business or (ii)
engage in any discussions concerning such a possible
transaction unless the Lake Ariel Board, based upon the advice
of its counsel, determines in good faith that such action is
required for the Lake Ariel Board to comply with its fiduciary
duties to stockholders imposed by law; nor
|X| incur any liability or obligation, make any commitment or
disbursement, acquire or dispose of any property or asset,
make any contract or agreement, pay or become obligated to pay
any legal, accounting, or miscellaneous other expense, or
engage in any transaction, except in the ordinary course of
its business or to accomplish the transactions contemplated by
the merger agreement; nor
|X| subject any of its properties or assets to any lien, claim,
charge, option, or encumbrance, other than in the ordinary
course of business; nor
|X| enter into or assume any commitment to make capital
expenditures, any of which individually exceeds $20,000 or
which in the aggregate exceed $50,000.
Amendments. The merger agreement provides that neither Lake Ariel nor
LA Bank will amend its respective charter or bylaws, nor convert the charter or
form of entity of LA Bank.
Preservation of Business. Lake Ariel has agreed that it and LA Bank
will:
|X| carry on their business and manage their assets and properties
diligently and substantially in the same manner as
before the execution of the merger agreement;
|X| maintain the ratio of their loans to their deposits at
approximately the same level as existed at June 30, 1999, as
adjusted to allow for seasonal fluctuations of loans and
deposits of a kind and amount experienced traditionally by
them;
|X| manage their investment portfolio in substantially the same
manner and under substantially the same investment policies as
in 1997 and 1998, and take no action to change to any material
extent the percentage which their investment portfolio bears
to their total assets, or to lengthen to any material extent
64
the average maturity of their investment portfolio, or of any
significant category of their portfolio;
|X| use commercially reasonable efforts to continue in effect
their present insurance coverage on all properties, assets,
business, and personnel;
|X| use commercially reasonable efforts to preserve their business
organization intact, to keep available their present
employees, and to preserve their present relationships with
customers and others having business dealings with them;
|X| not do anything and not fail to do anything which will cause a
breach of or default in any contract, agreement, commitment,
or obligation to which they are a party or by which they may
be bound; and
|X| conduct their affairs so that at the effective time of the
merger none of their representations and warranties will be
inaccurate, none of their covenants and agreements will be
breached, and no condition in the merger agreement will remain
unfulfilled by reason of their actions or omissions.
Acquisition Proposals. Lake Ariel and LA Bank have agreed that they
will not
|X| solicit any inquiries or proposals to acquire more than one
percent of Lake Ariel common stock or any capital stock of LA
Bank or any significant portion of the assets of either of
them;
|X| afford any third party which may be considering such a
transaction access to its properties, books or records except
as required by mandatory provisions of law;
|X| enter into any discussions or negotiations for, or enter into
any agreement or understanding which provides for such a
transaction; or
|X| authorize or permit any of its directors, officers, employees
or agents to do or permit any of the activities referred to in
this paragraph.
Lake Ariel, however, may participate in discussions or negotiations
with, or furnish information to, any person if, after consultation with and
consideration of the advice of outside counsel, its board of directors has
determined in good faith that such action is required for the board of directors
to comply with its fiduciary duty to stockholders imposed by law. Lake Ariel has
agreed to keep NBT informed of the status and all material information regarding
any such discussions or negotiations.
Employee Benefit Matters. Employees of Lake Ariel and LA Bank who
become employees of NBT immediately after the effective time of the merger will
receive credit for prior service with Lake Ariel or LA Bank for purposes of
eligibility and vesting of employee benefits under the benefit plans of NBT as
long as such crediting of service does not result in duplication of benefits. If
necessary, NBT has generally agreed to cause the waiver of any pre-existing
condition limitations and eligibility waiting periods under group health plans
with respect to such participants and their eligible dependents.
Termination Benefits and Severance Obligations. NBT has agreed that any
employee of Lake Ariel or LA Bank who becomes an employee of NBT or any of its
subsidiaries immediately following the effective time of the merger whose
employment is terminated subsequent to the effective time will be entitled to
severance pay, if any, in accordance with the general severance policy of NBT.
Regulatory Applications and Filings. NBT and Lake Ariel have agreed
that they will cooperate and use their best efforts to effect all filings and
obtain all necessary government approvals to complete the transactions
contemplated by the merger agreement.
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Indemnification. The merger agreement provides that, after the
effective time of the merger, NBT will take no action to abrogate or diminish
any right accorded under the Articles of Incorporation or bylaws of Lake Ariel
as they existed immediately prior to the effective time to any person who, on or
prior to the effective time, was a director or officer of Lake Ariel to
indemnification from or against losses, expenses, claims, demands, damages,
liabilities, judgments, fines, penalties, costs, expenses, and amounts paid in
settlement pertaining to or incurred in connection with any threatened or actual
action, suit, claim, or proceeding (whether civil, criminal, administrative,
arbitration, or investigative) arising from events, matters, actions, or
omissions occurring on or prior to the effective time of the merger. To the
extent permitted by law, all rights to such indemnification accorded under the
Articles of Incorporation and bylaws of Lake Ariel to any person who, on or
prior to the effective time, was a director or officer of Lake Ariel will
survive the effective time and, following the merger, to the extent permitted by
law, NBT will honor such obligations in accordance with their terms with respect
to events, acts, omissions occurring prior to the effective time.
Post-Closing Governance. NBT has agreed as promptly as practicable
after the effective time of the merger to use its best efforts to increase the
size of the NBT Board to twelve members and to cause three members of the Lake
Ariel Board to be elected to the NBT Board, with Mr. Martines to serve in the
class whose term expires in 2000, Mr. William C. Gumble to serve in the class
whose term expires in 2001, and Mr. Bruce D. Howe to serve in the class whose
term expires in 2002. See "The Companies -- NBT Following the Merger."
Certain Other Covenants. The merger agreement contains other covenants
of the parties relating to:
|X| the preparation and distribution of this Joint Proxy Statement
/Prospectus;
|X| the respective NBT and Lake Ariel stockholders' meetings and
the recommendations of the respective boards of directors;
|X| cooperation in issuing public announcements;
|X| access to information;
|X| confidentiality;
|X| inclusion of the NBT common stock issuable to the holders of
shares of Lake Ariel common stock for trading on the Nasdaq
National Market; and
|X| the delivery of financial statements of Lake Ariel to NBT.
CONDITIONS TO COMPLETE THE MERGER
The obligations of each of NBT and Lake Ariel to complete the merger
are subject to the satisfaction or waiver, subject to compliance with applicable
law, of conditions, including:
|X| obtaining the requisite votes of approval from the respective
stockholders of Lake Ariel and NBT;
|X| obtaining all governmental approvals required to complete the
merger, which we have received;
|X| obtaining all other necessary third party consents and
approvals to complete the merger;
|X| the absence of injunctions, decrees, orders, laws, statutes
or regulations enjoining, preventing or making illegal the
completion of the merger;
|X| the declaration of effectiveness of the registration statement
on Form S-4 by the SEC and the absence of any stop order or
proceedings seeking a stop order;
66
|X| the delivery of an opinion to NBT and Lake Ariel to the effect
that the merger will be treated for federal income tax
purposes as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code;
|X| the approval for inclusion on the Nasdaq National Market of
the NBT common stock issuable to Lake Ariel's stockholders in
the merger; and
|X| the receipt by NBT of an opinion from KPMG LLP stating that
the merger qualifies for "pooling of interests" accounting
treatment.
The obligations of each of NBT and Lake Ariel to complete the merger
are further subject to satisfaction or waiver of the following conditions:
|X| the representations and warranties of the other party in the
merger agreement are to be materially true and correct as of
the effective time of the merger, except for representations
and warranties made as of a specified date which will be true
and correct as of such specified date;
|X| all of the agreements and covenants of the other party to be
performed and complied with on or prior to the effective time
of the merger are to have been performed and complied with in
all material respects; and
|X| each of NBT and Lake Ariel is to have received a certificate
dated the effective time of the merger signed by designated
executive officers of the other party to the effect that the
above two conditions have been satisfied.
TERMINATION AND TERMINATION FEES
General Termination Rights. The parties may terminate the merger
agreement at any time prior to the effective time, whether before or after
approval by the Lake Ariel stockholders or NBT stockholders:
|X| by mutual written consent of the parties;
|X| by either NBT or Lake Ariel if any of the following occurs:
(1) the merger has not been completed by April 15, 2000,
except to the extent that the failure to complete the
merger results from the failure of the party seeking
termination to perform or observe the agreements and
covenants of such party in the merger agreement;
(2) the Lake Ariel stockholders fail to approve the merger
agreement at the Lake Ariel special meeting;
(3) the NBT stockholders fail to approve the merger agree-
ment at the NBT special meeting; or
(4) any governmental entity has issued a final,
non-appealable order denying an approval or consent
that is required to complete the merger.
|X| by Lake Ariel if any of the following occur:
(1) the material incorrectness when made of any of NBT's
representations and warranties;
(2) a material breach or a material failure by NBT of its
covenants under the merger agreement, and NBT has not
cured the breach or failure; or
67
(3) if the Lake Ariel Board, based upon the advice of its
counsel, determines in good faith that termination is
required in order for the Board to comply with its
fiduciary duties to stockholders imposed by law by
reason of having received from a third party a proposal
to acquire more than one percent of the Lake Ariel
common stock or any capital stock of LA Bank or any
significant portion of the assets of Lake Ariel or LA
Bank.
|X| by NBT if either of the following occurs:
(1) the material incorrectness when made of any of Lake
Ariel's representations and warranties; or
(2) a material breach or a material failure by Lake Ariel
of its covenants under the merger agreement, and Lake
Ariel has not cured the breach or failure.
Termination Upon a Decline in the Value of NBT Common Stock. Lake Ariel
has the right to cancel the merger if: (1) the price of a share of NBT common
stock declines below $16.1905 and (2) the NBT stock price decline, expressed as
a percentage, is more than 15 percentage points greater than the weighted
average stock price decline of the index group. The price per NBT share of
$16.1905 represents a 17.82% decline in the price per NBT share of $19.7024,
which is the share price used by NBT and Lake Ariel in their negotiation of the
merger agreement as subsequently adjusted to take into account the 5% stock
dividend. Even if both of these two conditions are present and Lake Ariel
decides to cancel the merger, NBT can require Lake Ariel to complete the merger
by increasing the number of shares of NBT common stock to be issued to Lake
Ariel's stockholders, so that a Lake Ariel stockholder will receive at least
$17.00 worth of NBT stock.
In order to determine the price and percentage decline in the value of
the NBT common stock and of the weighted average stock price of the index group,
we will take the average of the closing bid and asked prices per share for NBT
common stock and for the companies in the index group for each of the 20
consecutive trading days ending on the eighth trading day before the day chosen
to be the effective date of the merger.
The following two examples illustrate how this termination provision in
the merger agreement would work:
Example One: Assume that the average price per NBT share during the
20-day trading period is $16.00, which is a decline of $3.7024 from $19.7024,
or, expressed as a percentage, of 18.79%; and assume that the decline in the
weighted average price per share of the index group during the 20-day trading
period, expressed as a percentage, is 4.25%. We subtract 4.25% from 18.79% to
arrive at 14.54%. Under this example only the first of the two conditions is
present and Lake Ariel would not have the right to cancel the merger agreement.
Example Two: Assume that the average price per NBT share during the
20-day trading period is again $16.00; however, assume that the decline in the
weighted average price per share of the index group, expressed as a percentage,
is 3.05%. We subtract 3.05% from 18.79% and arrive at 15.74%. The first and
second conditions of the termination provision are present and Lake Ariel has
the right to cancel the merger agreement. However, NBT can still require Lake
Ariel to effect the merger by increasing the number of shares it will issue to
Lake Ariel stockholders. Under Example Two, NBT would have to increase the
exchange ratio from 0.9961 to 1.0625 in order to require Lake Ariel to complete
the merger.
In the event Lake Ariel terminates the merger agreement, under the
provisions referenced above relating to a decline in the price of NBT common
stock, stockholder action would not be required. Neither the NBT Board nor the
Lake Ariel Board has made a decision as to whether it would exercise its rights
under the merger agreement under such circumstances. The respective boards of
NBT and Lake Ariel would make such a decision in light of the circumstances
existing at the time that the respective board has the opportunity to make such
an election, if any. Prior to making any determination to exercise their
respective rights under the merger agreement, the Boards would consult their
respective financial and other advisors and would consider all financial and
other information deemed relevant to their respective decisions. There can be no
assurance that the Boards would exercise their respective rights under the
68
merger agreement if the conditions set forth above were applicable. If the Lake
Ariel Board does not elect to exercise its right to terminate the merger
agreement under the circumstances discussed in this section, the exchange ratio
would be 0.9961 and the dollar value of the consideration which the stockholders
of Lake Ariel would receive for each share of Lake Ariel common stock would be
the value of 0.9961 of a share of NBT common stock at the effective time of the
merger.
Termination and Damages for Breach of the Merger Agreement. If
termination of the merger agreement is the result of material incorrectness of
any representation or warranty or the material breach or material failure of a
covenant, the party whose representations or warranties were materially
incorrect or which materially breached the covenant will be liable to the other
party in the amount of $500,000. If termination of the merger agreement is the
result of a determination by the Lake Ariel Board that its fiduciary duty to
Lake Ariel's stockholders requires termination of the merger agreement because
of a proposal to acquire stock or assets of Lake Ariel or LA Bank, or if
termination of the merger agreement is the result of material incorrectness of
any representation or warranty of Lake Ariel or the material breach or material
failure of a Lake Ariel covenant, and Lake Ariel or LA Bank signs a definitive
agreement with respect to a proposal to acquire stock or assets of Lake Ariel or
LA Bank within one year after termination of the merger agreement, then Lake
Ariel will be liable to NBT for liquidated damages in the further amount of $3
million.
AMENDMENT AND WAIVER
Subject to compliance with applicable law, the party to the merger
agreement benefited by a particular provision may, prior to the effective time
of the merger, waive that provision of the merger agreement. The parties to the
merger agreement may amend or modify any provision at any time by an agreement
in writing between the parties.
SURVIVAL OF CERTAIN PROVISIONS
If the Merger Agreement Becomes Effective. After the effective time of
the merger, various provisions of the merger agreement regarding the following
matters will survive and remain effective:
|X| procedures for the issuance of NBT common stock and NBT stock
options in exchange for Lake Ariel common stock and
outstanding Lake Ariel stock options;
|X| indemnification of Lake Ariel directors and officers;
|X| employment of Mr. Martines; and
|X| appointment or election of three Lake Ariel directors as
directors of NBT.
If the Merger Agreement Terminates before the Effective Time. If
the merger agreement terminates before the effective time, various provisions of
the merger agreement regarding the following matters will survive and remain
effective:
|X| confidentiality of information obtained in connection with the
merger agreement;
|X| provisions regarding information provided for applications and
the registration statement;
|X| liability of the companies to each other as a result of the
termination of the merger agreement; and
|X| expenses incurred in connection with the proposed merger.
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RESTRICTIONS ON RESALES BY AFFILIATES
NBT has registered the shares of common stock issuable to the Lake
Ariel stockholders in the merger under the Securities Act. Holders of these
securities who are not deemed to be "affiliates," as defined in the rules
promulgated under the Securities Act, of NBT or Lake Ariel may trade their
shares freely without restriction.
Any subsequent transfer of shares by any person who is an affiliate of
Lake Ariel at the time of submission of the merger agreement to the Lake Ariel
stockholders for their vote will, under existing law, require either:
|X| the further registration under the Securities Act of the
shares of NBT common stock to be transferred;
|X| compliance with Rule 145 promulgated under the Securities Act,
which permits limited sales under certain circumstances; or
|X| the availability of another exemption from registration of the
shares.
An affiliate of Lake Ariel is a person who directly, or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with Lake Ariel. We expect these restrictions to apply to the
directors and executive officers of Lake Ariel and the holders of 10% or more of
the Lake Ariel common stock. The same restrictions apply to certain relatives or
the spouse of those persons and any trusts, estates, corporations or other
entities in which those persons have a 10% or greater beneficial or equity
interest. NBT will give stop transfer instructions to the transfer agent with
respect to those shares of NBT common stock held by persons subject to these
restrictions, and NBT will place a legend on the certificates for their shares
accordingly.
SEC guidelines regarding qualifying for the "pooling of interests"
method of accounting limit sales of shares of NBT and Lake Ariel by affiliates
of either company in a business combination. SEC guidelines also indicate that
the pooling of interests method of accounting generally will not be challenged
on the basis of sales by affiliates of NBT and Lake Ariel if such affiliates do
not dispose of any of the shares of the corporation they own, or shares of a
corporation they receive in connection with a merger, during the period
beginning thirty days before completion of the merger and ending when NBT has
published financial results covering at least thirty days of post-merger
operations of NBT.
Lake Ariel has agreed in the merger agreement to use commercially
reasonable efforts to cause each person who is an affiliate of Lake Ariel for
purposes of Rule 145 under the Securities Act and for purposes of qualifying the
merger for pooling of interests accounting treatment to deliver to NBT a written
agreement intended to ensure compliance with the Securities Act and to preserve
NBT's ability to treat the merger as a pooling of interests.
FEES FOR FINANCIAL ADVISORY SERVICES
NBT and Lake Ariel have each retained the services of financial
advisors in connection with evaluation of the merger and the terms associated
with the merger consideration. See "The Merger -- Opinion of NBT's Financial
Advisor" and " -- Opinion of Lake Ariel's Financial Advisor." Additionally, in
May 1999 Lake Ariel retained the services of TTG, Inc., a financial advisory
firm which assisted Lake Ariel in identifying potential merger partners. In this
regard, TTG established sales criteria for Lake Ariel, prepared marketing
materials regarding Lake Ariel and analyses regarding potential purchasers,
discussed valuation issues and marketing trends with Lake Ariel, and assisted
Lake Ariel in developing the requirements of the merger agreement. TTG
identified NBT to Lake Ariel and introduced Lake Ariel to NBT. For its services,
Lake Ariel agreed to pay TTG $40,000 for organization and development assistance
and a closing fee equal to .30% of that portion of the purchase price
representing up to two times Lake Ariel's book value plus .50% of the remaining
purchase price representing the amount exceeding two times Lake Ariel's book
value as paid by the buyer for the acquisition of Lake Ariel less $25,000. Lake
Ariel is obligated also to pay TTG for its out-of-pocket expenses in connection
with the merger and due diligence investigation expenses of TTG and any TTG
efforts, concerning settlement issues associated with the buyer's assimilation
70
of Lake Ariel activities and the identification and resolution of post-closing
settlement matters associated with regulatory and other ownership-transition
requirements, occurring after thirty days following closing of the merger at the
rate of $125 per hour. In the event that Lake Ariel causes the termination of
the merger agreement, Lake Ariel has agreed to pay TTG a fee of .05% of the
total consolidated deposits of Lake Ariel. The agreement further provides that,
for a period of three years from the date of the agreement with TTG, Lake Ariel
agrees either to employ TTG's services on the terms summarized above or to pay
TTG a fee of .75% of the purchase price paid for Lake Ariel, should Lake Ariel
be sold to the buyer identified by TTG to Lake Ariel.
ALLOCATION OF COSTS AND EXPENSES
The merger agreement provides that each party to the merger agreement
will be responsible for paying its own costs and expenses, including the fees
and expenses of its own counsel, financial advisors, accountants and tax
advisors, incurred in connection with the merger agreement. However, the merger
agreement expressly allocates certain specified expenses as follows:
|X| each party will pay its proportionate share of the cost of
printing the Joint Proxy Statement/Prospectus based upon the
number of copies each shall request for printing;
|X| NBT will pay the cost of delivering the Joint Proxy Statement/
Prospectus and other material to the NBT stockholders;
|X| Lake Ariel will pay the cost of delivering the Joint Proxy
Statement/Prospectus and other material to the Lake Ariel
stockholders;
|X| NBT will pay the cost of registering under the federal and
state securities laws the shares of NBT common stock that NBT
will issue to the Lake Ariel stockholders upon completion of
the merger; and
|X| Lake Ariel will pay the cost of procuring the required tax
opinion.
THE COMPANIES
NBT BANCORP INC.
NBT Bancorp Inc. is a registered bank holding company headquartered in
Norwich, New York. NBT is the parent holding company of NBT Bank, N.A., a
national bank. The principal asset of NBT is all of the outstanding shares of
common stock of NBT Bank, and its principal source of revenue is dividends it
receives from NBT Bank.
NBT Bank is a full service commercial bank providing a broad range of
financial products and services. NBT Bank has thirty-six locations serving a
nine county area in central and northern New York. As of September 30, 1999, NBT
Bank had 436 full-time and 71 part-time employees. NBT Bank is not a party to
any collective bargaining agreements, and employee relations are considered to
be good.
The banking business is extremely competitive, and NBT Bank encounters
intense competition from other financial institutions located within its market
area. NBT Bank competes not only with other commercial banks but also with other
financial institutions such as thrifts, credit unions, money market and mutual
funds, insurance companies, brokerage firms, and a variety of other companies
offering financial services.
NBT's principal executive offices are located at 52 South Broad Street,
Norwich, New York 13815, and its telephone number is (607) 337-2265.
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LAKE ARIEL BANCORP, INC.
Lake Ariel is a registered bank holding company and Pennsylvania
business corporation and is headquartered in Scranton, Pennsylvania. Lake Ariel
has one wholly-owned subsidiary which is LA Bank.
LA Bank was founded in 1910 and is a national banking association and
member of the Federal Reserve System. LA Bank is a full-service commercial bank
providing a range of services and products, including time and demand deposit
accounts, consumer, commercial and mortgage loans, and credit cards to
individuals and small to medium-sized businesses in its northeastern
Pennsylvania market area. LA Bank has 22 locations located in Lackawanna,
Luzerne, Monroe, Pike and Wayne Counties, Pennsylvania.
LA Bank has two subsidiaries, LA Lease, Inc., a business unit that
engages in consumer and commercial leasing; and Ariel Financial Services, Inc.,
a business unit that offers stocks, bonds, annuities and other insurance-related
products.
As of September 30, 1999, LA Bank had 148 full-time and 34 part-time
employees. LA Bank is not a party to any collective bargaining agreements, and
employee relations are considered to be good.
The banking business in LA Bank's 5-county market is considered to be
extremely competitive. In addition, LA Bank competes with other financial
services providers that are located outside its market area. Some of these
providers are thrifts, credit unions, money market and mutual funds, insurance
companies, brokerage firms and consumer discount companies.
Lake Ariel's principal executive offices are located at its Financial
Center in the historic Oppenheim Building at 409 Lackawanna Avenue in downtown
Scranton, Pennsylvania. Its telephone number is (570) 343-8200.
NBT FOLLOWING THE MERGER
NBT has agreed in the merger agreement and the merger that NBT, as the
surviving corporation, will expand its board of directors to twelve members.
NBT's bylaws provide for a classified board of directors. The board is divided
into three equal classes. Each class holds office for a staggered term of three
years, but only one class comes up for election each year. The merger agreement
provides that NBT will use its best efforts to cause Messrs. Martines, Gumble,
and Howe, currently directors of Lake Ariel, to be elected or appointed as
directors of NBT following the merger, with Mr. Martines to serve as a director
of the class whose term expires in 2000, Mr. Gumble to serve as a director of
the class whose term expires in 2001, and Mr. Howe to serve as a director of the
class whose term expires in 2002. The merger agreement further provides that
NBT, at its next annual meeting of stockholders, will propose to its
stockholders that Mr. Martines be re-elected to the NBT Board as a member of the
class whose term expires in 2003. Thus, after completion of the merger, NBT
expects that its board of directors will consist of the three Lake Ariel
directors elected to the newly-created directorships and the nine current
members of the NBT Board.
On December 7, 1999, NBT and Pioneer American entered into a plan of
merger. The merger agreement between NBT and Pioneer American provides that
following their merger NBT will increase the size of its board by three member
and will appoint three current members of the Pioneer American board to the NBT
Board. See "Summary -- Proposed Merger with Pioneer American Holding Company
Corp."
REGULATION AND SUPERVISION
The following discussion sets forth the material elements of the
regulatory framework applicable to bank holding companies and national banks and
provides certain specific information relevant to NBT and Lake Ariel. This
72
regulatory framework primarily is intended for the protection of depositors and
the deposit insurance funds that insure bank deposits, and not for the
protection of security holders. To the extent that the following information
describes statutory and regulatory provisions, it is qualified in its entirety
by reference to those provisions. A change in the statutes, regulations, or
regulatory policies applicable to NBT and Lake Ariel or to NBT Bank and LA Bank
may have a material effect on the business of NBT or Lake Ariel.
Various governmental requirements, including Sections 23A and 23B of
the Federal Reserve Act, limit borrowings by NBT from NBT Bank and by Lake Ariel
from LA Bank and also limit various other transactions between NBT and NBT Bank
and between Lake Ariel and LA Bank. For example, Section 23A of the Federal
Reserve Act limits to no more than 10 percent of its total capital the aggregate
outstanding amount of any insured bank's loans and other "covered transactions"
with any particular non-bank affiliate and limits to no more than 20 percent of
its total capital the aggregate outstanding amount of any insured bank's covered
transactions with all of its non-bank affiliates. At September 30, 1999,
approximately $13,021,000 was available for loans to NBT from NBT Bank and
approximately $3,452,000 was available for loans to Lake Ariel from LA Bank.
Section 23A of the Federal Reserve Act also generally requires that an insured
bank's loans to its non-bank affiliates be secured, and Section 23B of the
Federal Reserve Act generally requires that an insured bank's transactions with
its non-bank affiliates be on arm's-length terms. Also, NBT and Lake Ariel and
their subsidiaries are prohibited from engaging in certain "tie-in" arrangements
in connection with extensions of credit or provision of property or services.
As national banks, NBT Bank and LA Bank are subject to primary
supervision, regulation, and examination by the OCC and secondary regulation by
the FDIC and the Federal Reserve Board. NBT Bank and LA Bank are subject to
extensive federal statutes and regulations that significantly affect their
business and activities. NBT Bank and LA Bank must file reports with their
regulators concerning their activities and financial condition and obtain
regulatory approval to enter into certain transactions. NBT Bank and LA Bank are
also subject to periodic examinations by the OCC to ascertain compliance with
various regulatory requirements. Other applicable statutes and regulations
relate to insurance of deposits, allowable investments, loans, acceptance of
deposits, trust activities, mergers, consolidations, payment of dividends,
capital requirements, reserves against deposits, establishment of branches and
certain other facilities, limitations on loans to one borrower and loans to
affiliated persons, and other aspects of the business of banks. Recent federal
legislation has instructed federal agencies to adopt standards or guidelines
governing banks' internal controls, information systems, loan documentation,
credit underwriting, interest rate exposure, asset growth, compensation and
benefits, asset quality, earnings and stock valuation, and other matters.
Legislation adopted in 1994 gives the federal banking agencies greater
flexibility in implementing standards on asset quality, earnings, and stock
valuation. Regulatory authorities have broad flexibility to initiate proceedings
designed to prohibit banks from engaging in unsafe and unsound banking
practices.
NBT, Lake Ariel, and their respective subsidiaries are also affected by
various other governmental requirements and regulations, general economic
conditions, and the fiscal and monetary policies of the federal government and
the Federal Reserve Board. The monetary policies of the Federal Reserve Board
influence to a significant extent the overall growth of loans, investments,
deposits, interest rates charged on loans, and interest rates paid on deposit.
The nature and impact of future changes in monetary policies are often not
predictable.
SUPPORT OF SUBSIDIARY BANKS
Under current Federal Reserve Board policy, a bank holding company is
expected to act as a source of financial and managerial strength to each of its
subsidiary banks by standing ready to use available resources to provide
adequate capital funds to its subsidiary banks during periods of financial
adversity and by maintaining the financial flexibility and capital-raising
capacity to obtain additional resources for assisting its subsidiary banks. The
support expected by the Federal Reserve Board may be required at times when the
bank holding company may not have the resources or inclination to provide it.
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Section 55 of the National Bank Act permits the OCC to order the
pro-rata assessment of stockholders of a national bank whose capital has become
impaired. NBT and Lake Ariel are the sole stockholders of NBT Bank and LA Bank,
respectively. If a stockholder fails, within three months, to pay that
assessment, the OCC can order the sale of the stockholder's stock to cover the
deficiency. In the event of a bank holding company's bankruptcy, any commitment
by the bank holding company to a federal bank regulatory agency to maintain the
capital of a subsidiary bank would be assumed by the bankruptcy trustee and
entitled to priority of payment.
If a default occurred with respect to a bank, any capital loans to the
bank from its parent holding company would be subordinate in right of payment to
payment of the bank's depositors and certain of its other obligations.
LIABILITY OF COMMONLY CONTROLLED BANKS
Any depository institution insured by the FDIC can be held liable for
any loss incurred, or reasonably expected to be incurred, by the FDIC in
connection with:
|X| the default of a commonly controlled FDIC-insured depository
institution or
|X| any assistance provided by the FDIC to a commonly controlled
FDIC-insured depository institution in danger of default.
"Default" generally is defined as the appointment of a conservator or
receiver, and "in danger of default" generally is defined as the existence of
certain conditions indicating that a default is likely to occur in the absence
of regulatory assistance.
DEPOSITOR PREFERENCE STATUTE
In the "liquidation or other resolution" of an institution by any
receiver, federal legislation provides that deposits and certain claims for
administrative expenses and employee compensation against an insured bank are
afforded a priority over other general unsecured claims against that bank,
including federal funds and letters of credit.
CAPITAL REQUIREMENTS
NBT and Lake Ariel are subject to risk-based capital requirements and
guidelines imposed by the Federal Reserve Board, which are substantially similar
to the capital requirements and guidelines imposed by the OCC on national banks.
For this purpose, a bank's or bank holding company's assets and certain
specified off-balance sheet commitments are assigned to four risk categories,
each weighted differently based on the level of credit risk that is ascribed to
those assets or commitments. In addition, risk-weighted assets are adjusted for
low-level recourse and market-risk equivalent assets. A bank's or bank holding
company's capital, in turn, includes the following tiers:
|X| core ("Tier 1") capital, which includes common equity,
non-cumulative perpetual preferred stock, a limited amount of
cumulative perpetual preferred stock, and minority interests
in equity accounts of consolidated subsidiaries, less
goodwill, certain identifiable intangible assets, and certain
other assets; and
|X| supplementary ("Tier 2") capital, which includes, among other
items, perpetual preferred stock not meeting the Tier 1
definition, mandatory convertible securities, subordinated
debt and allowances for loan and lease losses, subject to
certain limitations, less certain required deductions.
74
NBT and Lake Ariel, like other bank holding companies, are required to
maintain Tier 1 and "Total Capital" (the sum of Tier 1 and Tier 2 capital, less
certain deductions) equal to at least 4 percent and 8 percent of their total
risk-weighted assets (including certain off-balance-sheet items, such as unused
lending commitments and standby letters of credit), respectively. At September
30, 1999, NBT and Lake Ariel each met both requirements, with Tier 1 and total
capital equal to 14.39 percent and 15.64 percent (in the case of NBT) and 12.33
percent and 13.15 percent (in the case of Lake Ariel) of total risk-weighted
assets. On an NBT-and-Lake-Ariel combined basis, these ratios at September 30,
1999 would have been 13.86 percent for Tier 1 capital and 15.00 percent for
total capital.
The Federal Reserve Board and the OCC have adopted rules to incorporate
market and interest rate risk components into their risk-based capital
standards. Amendments to the risk-based capital requirements, incorporating
market risk, became effective January 1, 1998. Under the new market-risk
requirements, capital will be allocated to support the amount of market risk
related to a financial institution's ongoing trading activities.
The Federal Reserve Board also requires bank holding companies to
maintain a minimum "Leverage Ratio" (Tier 1 capital to adjusted total assets) of
3 percent if the bank holding company has the highest regulatory rating and
meets certain other requirements, or of 3 percent plus an additional cushion of
at least 1 to 2 percentage points if the bank holding company does not meet
these requirements. At September 30, 1999, NBT's leverage ratio was 9.37 percent
and Lake Ariel's leverage ratio was 7.26 percent. On an NBT-and-Lake-Ariel
combined basis, the leverage ratio at September 30, 1999 would have been 8.79
percent.
The Federal Reserve Board may set capital requirements higher than the
minimums noted above for holding companies whose circumstances warrant it. For
example, bank holding companies experiencing or anticipating significant growth
may be expected to maintain strong capital positions substantially above the
minimum supervisory levels without significant reliance on intangible assets.
Furthermore, the Federal Reserve Board has indicated that it will consider a
"Tangible Tier 1 Leverage Ratio" (deducting all intangibles) and other indicia
of capital strength in evaluating proposals for expansion or new activities or
when a bank holding company faces unusual or abnormal risks. The Federal Reserve
Board has not advised NBT or Lake Ariel of any specific minimum leverage ratio
applicable to it.
NBT Bank and LA Bank are subject to similar risk-based capital and
leverage requirements adopted by the OCC. Both NBT Bank and LA Bank were in
compliance with the applicable minimum capital requirements as of September 30,
1999. The OCC has not advised NBT Bank or LA Bank of any specific minimum
leverage ratio applicable to it.
Failure to meet capital requirements could subject a bank to a variety
of enforcement remedies, including the termination of deposit insurance by the
FDIC, and to certain restrictions on its business. The Federal Deposit Insurance
Corporation Improvements Act of 1991 ("FDICIA"), among other things, identifies
five capital categories for insured banks -- well capitalized, adequately
capitalized, undercapitalized, significantly undercapitalized, and critically
undercapitalized -- and requires federal bank regulatory agencies to implement
systems for "prompt corrective action" for insured banks that do not meet
minimum capital requirements based on these categories. The FDICIA imposes
progressively more restrictive constraints on operations, management, and
capital distributions, depending on the category in which an institution is
classified. Unless a bank is well capitalized, it is subject to restrictions on
its ability to offer brokered deposits, on "pass-through" insurance coverage for
certain of its accounts, and on certain other aspects of its operations. FDICIA
generally prohibits a bank from paying any dividend or making any capital
distribution or paying any management fee to its holding company if the bank
would thereafter be undercapitalized. An undercapitalized bank is subject to
regulatory monitoring and may be required to divest itself of or liquidate
subsidiaries. Holding companies of such institutions may be required to divest
themselves of such institutions or divest themselves of or liquidate other
affiliates. An undercapitalized bank must develop a capital restoration plan,
and its parent bank holding company must guarantee the bank's compliance with
the plan up to the lesser of 5 percent of the bank's assets at the time it
75
became undercapitalized or the amount needed to comply with the plan. Critically
undercapitalized institutions are prohibited from making payments of principal
and interest on subordinated debt and are generally subject to the mandatory
appointment of a conservator or receiver.
Rules adopted by the OCC under FDICIA provide that a national bank is
deemed to be well capitalized if the bank has a total risk-based capital ratio
of 10 percent or greater, a Tier 1 risk-based capital ratio of 6 percent or
greater, and a leverage ratio of 5 percent or greater and the institution is not
subject to a written agreement, order, capital directive, or prompt corrective
action directive to meet and maintain a specific level of any capital measure.
As of September 30, 1999, NBT Bank and LA Bank were both well-capitalized, based
on the prompt corrective action ratios and guidelines described above. It should
be noted, however, that a national bank's capital category is determined solely
for the purpose of applying the OCC's prompt corrective action regulations, and
that the capital category may not constitute an accurate representation of the
bank's overall financial condition or prospects.
BROKERED DEPOSITS
Under FDIC regulations, no FDIC-insured bank can accept brokered
deposits unless it (1) is well capitalized, or (2) is adequately capitalized and
receives a waiver from the FDIC. In addition, these regulations prohibit any
bank that is not well capitalized from paying an interest rate on brokered
deposits in excess of three-quarters of one percentage point over certain
prevailing market rates.
DIVIDEND RESTRICTIONS
NBT is a legal entity separate and distinct from NBT Bank. Similarly,
Lake Ariel is a legal entity separate and distinct from LA Bank. In general,
under the law of their state of incorporation, NBT and Lake Ariel cannot pay a
cash dividend if such payment would render them insolvent. The revenues of NBT
and Lake Ariel consist primarily of dividends paid by NBT Bank and LA Bank
respectively. Various federal and state statutory provisions limit the amount of
dividends NBT Bank and LA Bank can pay to NBT and Lake Ariel without regulatory
approval. Dividend payments by national banks are limited to the lesser of:
|X| the level of undivided profits, and
|X| absent regulatory approval, an amount not in excess of net
income for the current year combined with retained net income
for the preceding two years.
At September 30, 1999, approximately $20.2 million and $5.5 million of
the total stockholders' equity of NBT Bank and LA Bank were available for
payment of dividends to NBT and Lake Ariel, respectively, without approval by
the OCC.
In addition, federal bank regulatory authorities have authority to
prohibit NBT Bank and LA Bank from engaging in an unsafe or unsound practice in
conducting their business. Depending upon the financial condition of the bank in
question, the payment of dividends could be deemed to constitute an unsafe or
unsound practice. The ability of NBT Bank and LA Bank to pay dividends in the
future is currently influenced, and could be further influenced, by bank
regulatory policies and capital guidelines.
DEPOSIT INSURANCE ASSESSMENTS
The deposits of NBT Bank and LA Bank are insured up to regulatory
limits by the FDIC and, accordingly, are subject to deposit insurance
assessments to maintain the Bank Insurance Fund (the "BIF") administered by the
FDIC. The FDIC has adopted regulations establishing a permanent risk-related
deposit insurance assessment system. Under this system, the FDIC places each
insured bank in one of nine risk categories based on the bank's capitalization
and supervisory evaluations provided to the FDIC by the institution's primary
76
federal regulator. Each insured bank's insurance assessment rate is then
determined by the risk category in which it is classified by the FDIC.
In the light of the recent favorable financial situation of the federal
deposit insurance funds and the recent low number of depository institution
failures, effective January 1, 1997 the annual insurance premiums on bank
deposits insured by the BIF vary between $0.00 per $100 of deposits for banks
classified in the highest capital and supervisory evaluation categories to $0.27
per $100 of deposits for banks classified in the lowest capital and supervisory
evaluation categories. BIF assessment rates are subject to semi-annual
adjustment by the FDIC within a range of up to five basis points without public
comment. The FDIC also possesses authority to impose special assessments from
time to time.
The Deposit Insurance Funds Act provides for assessments to be imposed
on insured depository institutions with respect to deposits insured by the BIF
(in addition to assessments currently imposed on depository institutions with
respect to BIF-insured deposits) to pay for the cost of Financing Corporation
("FICO") funding. The FDIC established the FICO assessment rates effective for
the fourth quarter 1999 at approximately $0.012 per $100 annually for
BIF-assessable deposits. The FICO assessments are adjusted quarterly to reflect
changes in the assessment bases of the FDIC insurance funds and do not vary
depending upon a depository institution's capitalization or supervisory
evaluations. In 1998, NBT Bank and LA Bank paid FICO assessments of $120,228 and
$33,666, respectively.
INTERSTATE BANKING AND BRANCHING
Under the Riegle-Neal Interstate Banking and Branching Efficiency Act
("Riegle-Neal"), subject to certain concentration limits and other requirements:
|X| bank holding companies such as NBT and Lake Ariel are permit-
ted to acquire banks and bank holding companies located
in any state;
|X| any bank that is a subsidiary of a bank holding company is
permitted to receive deposits, renew time deposits, close
loans, service loans, and receive loan payments as an agent
for any other depository institution subsidiary of that bank
holding company; and
|X| banks are permitted to acquire branch offices outside their
home states by merging with out-of-state banks, purchasing
branches in other states, and establishing de novo branch
offices in other states.
The ability of banks to acquire branch offices through purchase or opening of
other branches is contingent, however, on the host state having adopted
legislation "opting in" to those provisions of Riegle-Neal. In addition, the
ability of a bank to merge with a bank located in another state is contingent on
the host state not having adopted legislation "opting out" of that provision of
Riegle-Neal.
CONTROL ACQUISITIONS
The Change in Bank Control Act prohibits a person or group of persons
from acquiring "control" of a bank holding company, unless the Federal Reserve
Board has been notified and has not objected to the transaction. Under a
rebuttable presumption established by the Federal Reserve Board, the acquisition
of 10 percent or more of a class of voting stock of a bank holding company with
a class of securities registered under Section 12 of the Exchange Act, such as
NBT or Lake Ariel, would, under the circumstances set forth in the presumption,
constitute acquisition of control of the bank holding company.
In addition, a company is required to obtain the approval of the
Federal Reserve Board under the BHC Act before acquiring 25 percent (5 percent
in the case of an acquiror that is a bank holding company) or more of any class
77
of outstanding common stock of a bank holding company, such as NBT or Lake
Ariel, or otherwise obtaining control or a "controlling influence" over that
bank holding company.
FINANCIAL MODERNIZATION
On November 12, 1999, the President signed into law the
Gramm-Leach-Bliley Act (the "Act") which will, effective March 11, 2000, permit
qualifying bank holding companies to become financial holding companies and
thereby affiliate with securities firms and insurance companies and engage in
other activities that are financial in nature or complementary thereto, as
determined by the Federal Reserve Board. A bank holding company may elect to
become a financial holding company if each of its subsidiary banks (a) is well
capitalized under the prompt corrective action provisions of FDICIA, (b) is well
managed, and (c) has at least a satisfactory rating under the Community
Reinvestment Act. The Act identifies several activities as "financial in
nature," including, among others, insurance underwriting and agency, investment
advisory services, and underwriting, dealing in or making a market in
securities. Under the Act, subject to limitations on investment, a national bank
may, through a financial subsidiary of the bank, engage in activities that are
financial in nature, or incidental thereto, excluding, among others, insurance
underwriting, insurance company portfolio investment, real estate development
and real estate investment if the bank is well capitalized, well managed and has
at least a satisfactory CRA rating. Subsidiary banks of a financial holding
company or national banks with financial subsidiaries must continue to be well
capitalized and well managed in order to continue to engage in activities that
are financial in nature without regulatory actions or restrictions, which could
include divestiture of a non-banking subsidiary or subsidiaries. A bank holding
company which does not elect to become a financial holding company may continue
to engage in activities approved for bank holding companies by the Federal
Reserve Board prior to enactment of the Act.
The Act does not significantly alter the regulatory regimes under which
NBT, Lake Ariel, NBT Bank or LA Bank currently operate, as we describe above.
While certain business combinations not currently permissible will be possible
after March 11, 1990, we cannot predict at this time resulting changes in the
competitive environment or the financial condition of NBT, Lake Ariel, NBT Bank
or LA Bank. Using the financial holding company structure, insurance companies
and securities firms may acquire bank holding companies, such as NBT, Lake Ariel
or the combined company, and may compete more directly with banks or bank
holding companies. Neither NBT nor Lake Ariel have, at this time, made any
decisions with respect to whether they or the combined company will elect to
become a financial holding company under the Act.
FUTURE LEGISLATION
Various legislation, including proposals to substantially change the
financial institution regulatory system and to expand or contract the powers of
banking institutions and bank holding companies, is from time to time introduced
in the Congress. This legislation may change banking statutes and the operating
environment of the combined company and its subsidiaries in substantial and
unpredictable ways. If enacted, such legislation could increase or decrease the
cost of doing business, limit or expand permissible activities or affect the
competitive balance among banks, savings associations, credit unions, and other
financial institutions. Neither NBT nor Lake Ariel can accurately predict
whether any of this potential legislation will ultimately be enacted, and, if
enacted, the ultimate effect that it, or implementing regulations, would have
upon the financial condition or results of operations of the combined company or
any of its subsidiaries.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
We requested Saul, Ewing, Remick & Saul LLP, counsel to Lake Ariel, to
deliver an opinion as to the anticipated material federal income tax
consequences of the merger. In rendering its opinion, Saul, Ewing, Remick & Saul
LLP assumed, among other things, that the merger and related transactions will
take place as described in the merger agreement.
78
In that case, in the opinion of Saul, Ewing, Remick & Saul LLP, the
following would be the material federal income tax consequences of the merger:
|X| the merger will be treated for federal income tax purposes as
a reorganization within the meaning of Section 368(a)(1)(A) of
the Internal Revenue Code;
|X| no gain or loss will be recognized by Lake Ariel or NBT in the
merger;
|X| no gain or loss will be recognized by the stockholders of Lake
Ariel upon their receipt of NBT common stock in exchange for
their Lake Ariel common stock, except that the cash proceeds
received for fractional interests in NBT common stock will be
treated as having been received as a distribution in full
payment in exchange for the fractional share interests
redeemed, as provided in Section 302(a) of the Internal
Revenue Code;
|X| the tax basis of the shares of NBT common stock (including
fractional interests) received by the Lake Ariel stockholders
will be the same as the tax basis of their Lake Ariel common
stock exchanged for the NBT stock; and
|X| the holding period of the NBT common stock in the hands of
former Lake Ariel stockholders will include the holding period
of their Lake Ariel common stock exchanged for the NBT stock,
provided the Lake Ariel common stock is held as a capital
asset at the effective date of the merger.
We include the above discussion for general information only. The
discussion does not address the state, local or foreign tax aspects of the
merger. The discussion is based on currently existing provisions of the Internal
Revenue Code, existing and proposed treasury regulations and current
administrative rulings and court decisions. All of the foregoing are subject to
change and any such change could affect the continuing validity of this
discussion. Each Lake Ariel stockholder should consult his or her own tax
advisor with respect to the specific tax consequences of the merger to him or
her, including the application and effect of state, local and foreign tax laws.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
NBT common stock trades on the Nasdaq National Market under the symbol
"NBTB." Following the merger, the shares of NBT common stock will continue to
trade on the Nasdaq National Market under that symbol. Lake Ariel common stock
trades on the Nasdaq National Market under the symbol "LABN." Following the
merger, NBT will delist the Lake Ariel common stock from the Nasdaq National
Market and will deregister the Lake Ariel common stock under the Exchange Act.
The following table has been restated to reflect the payment by NBT on
December 15, 1999 of a 5% stock dividend and sets forth for the periods
indicated (1) the range of high and low sales prices of the NBT common stock and
the Lake Ariel common stock, and (2) the amount of cash dividends declared per
share by each company:
NBT BANCORP INC. LAKE ARIEL BANCORP, INC.
------------------------------------ ------------------------------------
SALES PRICES SALE PRICE
--------------------- ----------------------
HIGH LOW DIVIDENDS HIGH LOW DIVIDENDS
1997
First Quarter $12.96 $11.42 $ 0.097 $10.76 $ 9.29 $ 0.080
Second Quarter 17.42 12.64 0.097 9.29 9.05 0.080
Third Quarter 17.33 14.41 0.111 13.38 9.05 0.090
Fourth Quarter 18.84 15.55 0.116 20.95 13.24 0.130
1998
First Quarter $19.05 $15.99 $ 0.117 $16.55 $14.76 $ 0.090
Second Quarter 23.48 18.37 0.154 16.19 14.88 0.090
Third Quarter 23.81 17.58 0.154 16.00 11.43 0.100
Fourth Quarter 24.29 19.72 0.162 13.25 11.75 0.130
1999
First Quarter $23.33 $19.89 $ 0.162 $12.50 $ 9.94 $ 0.100
Second Quarter 21.19 19.05 0.162 12.75 10.06 0.100
Third Quarter 20.90 16.43 0.162 17.25 10.63 0.100
4th Quarter (through , 1999)
79
The timing and amount of future dividends will depend upon earnings,
cash requirements, the financial condition of NBT and its subsidiaries (and,
prior to completion of the merger, of Lake Ariel and its subsidiaries insofar as
Lake Ariel dividends are concerned), applicable government regulations, and
other factors deemed relevant by the NBT Board (and by the Lake Ariel Board
prior to completion of the merger). As described under "Regulation and
Supervision -- Dividend Restrictions," various federal and state laws limit the
ability of affiliated banks to pay dividends to NBT and Lake Ariel. The merger
agreement restricts the cash dividends payable on Lake Ariel common stock
pending completion of the merger. See "The Merger -- Conduct of Business Pending
Completion the Merger."
On August 13, 1999, the last full trading day prior to the public
announcement of the proposed merger, the highest sales price of NBT common stock
was $20.00 per share, the lowest sales price of NBT common stock was $19.23 per
share and the last reported sales price of NBT common stock was $19.29 per
share. On , 1999, the most recent practicable date prior to the printing of this
Joint Proxy Statement/Prospectus, the last reported sales price of NBT common
stock was $ per share. The preceding stock quotations reflect NBT's payment on
December 15, 1999 of a 5% stock dividend. We urge stockholders to obtain current
market quotations prior to making any decisions with respect to the merger.
On August 13, 1999, the last full trading day prior to the public
announcement of the proposed merger, the highest sales price of Lake Ariel
common stock was $14.50 per share, the lowest sales price of Lake Ariel common
stock was $13.00 per share and the last reported sales price of Lake Ariel
common stock was $13.00 per share. On , 1999, the most recent practicable date
prior to the printing of this Joint Proxy Statement/ Prospectus, the last
reported sales price of Lake Ariel common stock was $ per share. We urge
stockholders to obtain current market quotations prior to making any decisions
with respect to the merger.
As of , 1999, there were holders of record of NBT common stock and
holders of record of Lake Ariel common stock.
DESCRIPTION OF NBT CAPITAL STOCK
AUTHORIZED CAPITAL STOCK
NBT's current authorized stock consists of 15,000,000 shares of common
stock, no par value, stated value $1.00 per share, and 2,500,000 shares of
preferred stock, no par value, stated value $1.00 per share, none of which are
outstanding. If we complete the merger and the NBT stockholders approve the par
value amendment and the share increase amendment also being considered at the
NBT special meeting, the amended Certificate of Incorporation of NBT, as the
surviving corporation, will authorize the issuance by NBT of (A) 30,000,000
shares of common stock, par value $.01 per share, and (B) 2,500,000 shares of
preferred stock, par value $.01 per share. The NBT Board is authorized to issue,
80
without further stockholder approval, preferred stock from time to time in one
or more series, and to determine the provisions applicable to each series,
including, the number of shares, dividend rights, dividend rate, conversion
rights, voting rights, rights and terms of redemption, sinking fund provisions,
redemption price or prices, and liquidation preferences. As of September 30,
1999, 13,046,565 shares of NBT common stock were outstanding.
COMMON STOCK
Under Delaware law, stockholders generally are not personally liable
for a corporation's acts or debts. Subject to the preferential rights of any
other shares or series of capital stock, holders of shares of NBT common stock
are entitled to receive dividends on shares of common stock if, as and when
authorized and declared by the NBT Board out of funds legally available for
dividends and to share ratably in the assets of NBT legally available for
distribution to its stockholders in the event of its liquidation, dissolution or
winding-up after payment of, or adequate provision for, all known debts and
liabilities of NBT.
Each outstanding share of NBT common stock entitles the holder to one
vote on all matters submitted to a vote of stockholders, including the election
of directors. Unless a larger vote is required by law, the NBT certificate of
incorporation or the NBT bylaws, when a quorum is present at a meeting of
stockholders, a majority of the votes properly cast upon any question other than
the election of directors shall decide the question. A plurality of the votes
properly cast for the election of a person to serve as a director shall elect
such person. Except as otherwise required by law or except as provided with
respect to any other class or series of capital stock, the holders of NBT common
stock possess the exclusive voting power. There is no cumulative voting in the
election of directors. The NBT Board is classified into three categories with
each category equal in number. This means that one-third of the members of the
NBT Board are subject to reelection at each annual meeting of stockholders.
Holders of NBT common stock have no conversion, sinking fund or
redemption rights, or preemptive rights to subscribe for any of NBT's classes of
stock.
All shares of NBT common stock have equal dividend, distribution,
liquidation and other rights, and have no preference, appraisal or exchange
rights.
For a description of the provisions of the NBT Certificate of
Incorporation that may have the effect of delaying, deferring or preventing a
change in control of NBT, see "Comparison of Stockholders' Rights --
Restrictions upon Certain Business Combinations."
PREFERRED STOCK
The NBT Board is authorized, without any further vote or action by the
NBT stockholders, to issue shares of preferred stock in one or more series, to
establish the number of shares in each series and to fix the designation,
powers, preferences and rights of each such series and the qualifications,
limitations or restrictions of the series, in each case, if any, as are
permitted by Delaware law. Because the NBT Board has the power to establish the
preferences and rights of each class or series of preferred stock, it may afford
the stockholders of any series or class of preferred stock preferences, powers
and rights, voting or otherwise, senior to the rights of holders of shares of
NBT common stock. The issuance of shares of preferred stock could have the
effect of delaying, deferring or preventing a change in control of NBT.
STOCKHOLDER RIGHTS PLAN
In November 1994, NBT adopted a stockholder rights plan designed to
ensure that any potential acquiror of NBT would negotiate with the NBT Board and
that all NBT stockholders would be treated equitably in the event of a takeover
attempt. At that time, NBT paid a dividend of one Preferred Share Purchase Right
for each outstanding share of NBT common stock. Similar rights are attached to
each share of NBT common stock issued after November 15, 1994, including the
shares of common stock issuable in the merger. The rights will continue to trade
81
with the shares of NBT common stock following adoption of the par value
amendment. Under the rights plan, the rights will not be exercisable until a
person or group acquires beneficial ownership of 20 percent or more of the NBT
outstanding common stock, begins a tender or exchange offer for 25 percent or
more of the NBT common stock, or an adverse person, as declared by the NBT
Board, acquires 10 percent or more of the NBT common stock. Additionally, until
the occurrence of such an event, the rights are not severable from the NBT
common stock and therefore, the rights will transfer upon the transfer of shares
of the NBT common stock. Upon the occurrence of such events, each right entitles
the holder to purchase one one-hundredth of a share of NBT Series R Preferred
Stock, no par value, stated value $1.00 per share, at a price of $100. The
rights plan also provides that upon the occurrence of certain specified events
the holders of rights will be entitled to acquire additional equity interests in
NBT or in the acquiring entity, such interests having a market value of two
times the right's exercise price of $100. The rights expire November 14, 2004,
and are redeemable in whole, but not in part, at NBT's option prior to the time
they become exercisable, for a price of $0.01 per right. The rights have certain
anti-takeover effects. The rights may cause substantial dilution to a person or
group that attempts to acquire NBT on terms not approved by the NBT Board. The
rights should not interfere with any merger or other business combination
approved by the NBT Board.
REGISTRAR AND TRANSFER AGENT
NBT's registrar and transfer agent is American Stock Transfer and Trust
Company, New York, New York.
COMPARISON OF STOCKHOLDERS' RIGHTS
Upon completion of the merger, the stockholders of Lake Ariel will
become stockholders of NBT. The rights of Lake Ariel stockholders are presently
governed by Pennsylvania law, the Lake Ariel Articles of Incorporation and the
Lake Ariel bylaws. As stockholders of NBT following the merger, the rights of
former Lake Ariel stockholders will be governed by Delaware law, the NBT
Certificate of Incorporation and the NBT bylaws. The following chart summarizes
the material differences between the rights of holders of Lake Ariel common
stock prior to and after completion of the merger. You can obtain copies of the
governing corporate instruments of NBT and Lake Ariel, without charge, by
following the instructions listed under "Where You Can Find More Information."
LAKE ARIEL STOCKHOLDERS' LAKE ARIEL STOCKHOLDERS'
RIGHTS PRE-MERGER RIGHTS POST-MERGER
Special Meeting of Stockholders may call a special meeting Stockholders may call a special meeting of
Stockholders of stockholders at the written request stockholders at the written request of the
of holders of at least 20% of all shares holders of at least 50% of all shares
entitled to vote at the meeting. entitled to vote at the meeting.
Inspection of Voting List Stockholders may inspect a list of Stockholders may inspect a list of
of Stockholders stockholders entitled to vote at a stockholders at least ten days before the
meeting of stockholders at the time and meeting for which the list was prepared
place of the meeting and during the and at the time and place of the meeting
whole time of the meeting. and during the whole time of the meeting.
Classification of the The Lake Ariel Board is divided into The NBT Board is divided into three
Board of Directors three classes, with directors in each classes, with directors in each class
class being elected for staggered being elected for staggered three-year
three-year terms. terms.
Election of the Board of Directors are elected by a plurality of Directors are elected by a plurality of
Directors the votes cast. the votes cast.
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LAKE ARIEL STOCKHOLDERS' LAKE ARIEL STOCKHOLDERS'
RIGHTS PRE-MERGER RIGHTS POST-MERGER
Removal of Directors Stockholders may remove the entire board Stockholders may remove a director only
of directors, any class of directors or for cause by the affirmative vote of a
any individual director for cause by the majority in voting power of the
affirmative vote of a majority of the stockholders entitled to vote and to be
votes cast by all stockholders entitled present at the meeting called for such
to vote and to be present at the meeting. purpose.
Vacancies on the Board of Stockholders may fill vacancies at a Stockholders may fill vacancies at a
Directors stockholders' meeting. Directors may stockholders' meeting. Directors may fill
fill vacancies by a majority vote of the vacancies by a majority vote of the
directors then in office. The director directors then in office. The director
chosen by the current directors to fill chosen by the current directors to fill
the vacancy holds the office until the the vacancy holds the office until the
next annual meeting of the stockholders. time of the next election of directors, at
Stockholders determine the exact number which point the stockholders shall fill
of directors. Any directorship to be the vacancy for the remainder of the
filled by reason of an increase in the unexpired term of office. Directors may
number of directors may be filled by a also fill newly-created directorships
majority vote of the directors then in other than an increase by more than three
office. in the number of directors.
Liability of Directors Directors are not personally liable to Directors are not personally liable to NBT
Lake Ariel or its stockholders for or its stockholders for monetary damages
monetary damages for any action taken for breaches of fiduciary duty, except (1)
or for any failure to take any action, for breach of the director's duty of
unless the director has breached or loyalty, (2) for acts and omissions not in
failed to perform his or her fiduciary good faith or which involve intentional
duties of loyalty, good faith and due misconduct or a knowing violation of law,
care and the breach or failure to (3) for unlawful payments of dividends or
perform constitutes self-dealing, unlawful stock purchases or redemptions or
willful misconduct or recklessness. (4) for any transaction where the director
The foregoing does not apply to the received an improper personal benefit.
responsibility or liability of a
director pursuant to a criminal statute
or the liability of a director for
the payment of taxes pursuant to
local, state or federal law.
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LAKE ARIEL STOCKHOLDERS' LAKE ARIEL STOCKHOLDERS'
RIGHTS PRE-MERGER RIGHTS POST-MERGER
Indemnification of A Lake Ariel director, officer, An NBT director or officer is entitled to
Directors, Officers, employee or agent is entitled to indemnification if he or she acted in
Employees or Agents indemnification if he or she acted good faith and in a manner he or she
in good faith and in a manner he or reasonably believed to be in, or not
she reasonably believed to be in, opposed to, the best interest of NBT and,
or not opposed to, the best interest with respect to any criminal action or
of Lake Ariel and, with respect to proceeding, had no reasonable cause to
any criminal action or proceeding, believe his or her conduct was unlawful.
had no reasonable cause to believe
his or her conduct was unlawful.
Restrictions upon No merger, consolidation, liquidation Any business combination involving NBT
Certain Business or dissolution of Lake Ariel nor any or a subsidiary and a major stockholder or
Combinations action that would result in the sale affiliate requires the affirmative vote of
or other disposition of all or the holders of not less than 80% of the
substantially all of the assets of outstanding shares of NBT common stock,
Lake Ariel shall be valid unless excluding the shares owned by the major
first approved by the affirmative stockholder and its affiliates. The
vote of the holders of 66 2/3% of certificate defines "major stockholder"
the outstanding shares of Lake Ariel as any person who beneficially owns 5%
common stock. or more of NBT's voting stock. This
provision will not apply to a business
combination involving a major stockholder
or its affiliate if the business combination
is approved by two-thirds of directors who
were directors prior to the time when the
major stockholder became a major stockholder.
Mergers, Share No merger, consolidation, liquidation Any business combination that does not
Exchanges or Asset or dissolution of Lake Ariel nor any involve a major stockholder or an affiliate
Sales action that would result in the sale or requires such vote, if any, as may be
other disposition of all or substantially required by Delaware law.
all of the assets of Lake Ariel shall be
valid unless first approved by the
affirmative vote of the holders of 66
2/3% of the outstanding shares of Lake
Ariel common stock.
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LAKE ARIEL STOCKHOLDERS' LAKE ARIEL STOCKHOLDERS'
RIGHTS PRE-MERGER RIGHTS POST-MERGER
Amendments to Amendments generally require the Amendments generally require approval of
Certificate or Articles affirmative vote of a majority of the a majority of the outstanding stock entitled
of Incorporation votes cast by all stockholders entitled to vote upon the amendment. Any amendment
to vote on the amendment. Any to Article ELEVENTH relating to business
amendment to Article 15, relating to combinations requires the affirmative vote
business combinations, requires the of at least 80% of the outstanding shares
affirmative vote of the holders of 66 of voting stock, and if there is a major
2/3% of the outstanding shares of stockholder, such 80% vote must include the
Lake Ariel common stock. affirmative vote of at least 80% of the
outstanding shares of voting stock held by
stockholders other than the major stockholder
and its affiliates.
Amendments to Bylaws A majority of the directors or the A majority of the directors, or stockholders
affirmative vote of a majority of the holding a majority of the outstanding
votes cast by all stockholders entitled shares entitled to vote, may make, amend
to vote, may make, amend or repeal the or repeal the bylaws. The NBT bylaws
bylaws. permit the stockholders to adopt, approve
or designate bylaws that may not be
amended, altered or repealed except by a
specified percentage in interest of all the
stockholders or of a particular class of
stockholders.
Appraisal/Dissenters' Lake Ariel stockholders do have Stockholders generally do not have
Rights dissenters' rights to be paid in cash appraisal rights.
the fair value of their Lake Ariel
shares as a result of a business
combination.
The following discussion summarizes in further detail the material
differences between the rights of holders of Lake Ariel common stock and holders
of NBT common stock. This summary does not purport to be complete and we qualify
the summary in its entirety by reference to the Lake Ariel Articles of
Incorporation, the Lake Ariel bylaws, the NBT Certificate of Incorporation and
the NBT bylaws and the relevant provisions of Pennsylvania and Delaware law.
SPECIAL MEETINGS OF STOCKHOLDERS
The Lake Ariel bylaws provide that the board of directors or the
holders of at least 20% of the shares entitled to vote at a particular meeting
may call special meetings of the Lake Ariel stockholders.
The NBT bylaws provide that the board of directors, the chairman of the
board of directors, or the holders of not less than 50% of all the shares
entitled to vote at the meeting may call special meetings of the stockholders.
INSPECTION OF VOTING LIST OF STOCKHOLDERS
Pennsylvania law requires Lake Ariel's transfer agent to make a
complete list of the stockholders entitled to vote at any meeting of Lake Ariel
stockholders, arranged in alphabetical order, with the address of and number of
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shares held by each stockholder. This list shall be produced and kept open at
the time and place of the meeting and shall be subject to the inspection of any
stockholder during the whole time of the meeting.
The NBT bylaws provide that the secretary will make available a list of
stockholders entitled to notice of a stockholders meeting for inspection by any
stockholder, at least ten days before the meeting and continuing through the
meeting. In addition, any stockholder of record that is entitled to vote at that
meeting is entitled to inspect the list at any time during the meeting or at any
adjournment. Delaware law provides that any stockholder shall, upon written
demand under oath stating the purpose of the demand, have the right during usual
business hours to inspect for any proper purpose the corporation's stock ledger,
a list of stockholders, and its other books and records, and to make copies or
extracts from this material.
CUMULATIVE VOTING
Neither the Lake Ariel Articles of Incorporation nor the NBT
Certificate of Incorporation permits stockholders to cumulate their votes for
the election of directors.
PREEMPTIVE RIGHTS
Neither Lake Ariel stockholders nor NBT stockholders have a preemptive
right to acquire or subscribe to any or all additional issues of the
corporation's stock.
CLASSIFICATION OF THE BOARD OF DIRECTORS
Both the Lake Ariel Articles of Incorporation and the NBT Certificate
of Incorporation provide that their respective boards of directors are to be
classified and divided into three classes, as nearly equal in number as
possible, with the directors in each class being elected for staggered
three-year terms.
ELECTION OF THE BOARD OF DIRECTORS
Under Pennsylvania law, candidates for Lake Ariel director who receive
the highest number of votes shall be elected. If at a meeting of Lake Ariel
stockholders, directors of more than one class are to be elected, each class of
directors shall be elected in a separate election.
The NBT bylaws provide that a nominee for director is elected by a
plurality of the votes present in person or by proxy and entitled to vote in the
election at a stockholders meeting at which a quorum is present.
REMOVAL OF DIRECTORS
Under Pennsylvania law, the Lake Ariel stockholders may remove, for
cause, the entire board of directors, any class of directors or any individual
director by the affirmative vote of a majority of the shares cast by holders
entitled to vote at a meeting called for this purpose.
The NBT bylaws, together with applicable Delaware law, provide that the
stockholders may remove any director at any time, only for cause, by the
affirmative vote of a majority in voting power of the stockholders entitled to
vote and to be present in person or by proxy at a special meeting of such
stockholders for such purposes and at which a quorum is present.
ADDITIONAL DIRECTORS AND VACANCIES ON THE BOARD OF DIRECTORS
The Lake Ariel Articles of Incorporation grant the stockholders the
power to fix and determine the number of directors to be elected to each of the
three classes of director. If a vacancy on the board occurs, the majority vote
of the then directors can fill a vacancy. Any director so elected by the board
of directors shall hold office only until the next annual meeting of the
stockholders at which meeting his or her candidacy is submitted to the
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stockholders for a vote to continue until the term of office of that entire
class of directors has expired.
The NBT bylaws provide that the stockholders entitled to vote at an
annual meeting shall determine the number of directors. Between annual meetings,
the board of directors shall have the power to increase, by not more than three,
the number of directors. The bylaws provide that a majority of the directors
then in office may fill vacancies and newly-created directorships (but no more
than three in any one year) and if at the time of the next election of directors
by the stockholders the term of office of any vacancy or newly-created
directorship filled by the remaining directors has not expired, then the
stockholders shall fill such vacancy for the remainder of the unexpired term.
Stockholders also have the general power to fill vacancies and newly-created
directorships at a meeting called for that purpose.
LIABILITY OF DIRECTORS
The Lake Ariel bylaws provide that no director shall be personally
liable for monetary damages for any action taken or for any failure to take any
action, unless:
|X| the director has breached or failed to perform his fiduciary
duties of loyalty, good faith and due care, and
|X| the breach or failure to perform constitutes self-dealing,
willful misconduct or recklessness.
The above bylaw provisions do not apply to the responsibility or
liability of a director pursuant to a criminal statute or the liability of a
director for the payment of taxes pursuant to local, state or federal law.
The NBT Certificate of Incorporation provides that no director shall be
personally liable to the corporation or its stockholders for monetary damages
for breaches of fiduciary duty except where such exculpation is expressly
prohibited. The NBT Certificate of Incorporation provides that this limitation
does not apply to liability of a director in the following instances:
|X| breach of the director's duty of loyalty to the corporation or
its stockholders;
|X| acts and omissions not in good faith or which involve inten-
tional misconduct or a knowing violation of law;
|X| unlawful payments of dividends and unlawful stock purchases or
redemptions; or
|X| any transaction from which the director derived an improper
personal benefit.
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
The Lake Ariel Articles of Incorporation provide that every person who
is or was a director, officer, employee or agent of Lake Ariel or of any other
corporation which he served at the request of Lake Ariel shall be indemnified to
the fullest extent permitted by Pennsylvania law against all expenses and
liabilities incurred by or imposed upon him or her.
The NBT bylaws provide that NBT shall indemnify directors and officers
against liability incurred by reason of the fact of service as such with NBT, or
by reason of the fact that they served at the request of NBT as a director or
officer of another corporation or business entity, if the person acted (1) in
good faith and (2) with the reasonable belief that (A) his or her conduct when
acting in the official capacity was in the best interests of the corporation and
(B) in all other cases, the person's conduct was at least not opposed to the
best interests of the corporation, and (3) in any proceeding brought by a
governmental entity, the person had no reasonable cause to believe his or her
conduct was unlawful. NBT may not, however, indemnify a director or officer
against judgments, fines or amounts paid in settlement in connection with a
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proceeding by or in the right of the corporation, and may not pay expenses in
any such case in which the person was adjudged liable for negligence or
misconduct in the performance of his or her duty to the corporation, unless the
court shall determine that such person is fairly and reasonably entitled to
indemnity.
The NBT bylaws also provide for the mandatory advancement of expenses
incurred by an officer or director in defending a civil or criminal action, suit
or proceeding in advance of the final resolution of the matter upon receipt of
an undertaking by or on behalf of such officer or director to repay the amount
advanced if a court shall ultimately determine that such person is not entitled
to indemnification as authorized in the bylaws.
The NBT bylaws also provide specific deadlines for the payment by NBT
of indemnification and advancement obligations, and specifically contemplate the
filing of actions against NBT to enforce these obligations.
RESTRICTIONS UPON CERTAIN BUSINESS COMBINATIONS
The Lake Ariel Articles of Incorporation require the affirmative vote
of the holders of 66 2/3% of the outstanding shares of Lake Ariel common stock
to approve any of the following:
|X| any merger or consolidation
|X| the liquidation or dissolution
|X| any sale or other disposition of all or substantially all of
the assets
Lake Ariel is also subject to several provisions of the Pennsylvania
Business Corporation Law, which governs business combinations with interested
stockholders. Subject to exceptions:
|X| following any acquisition by any person or group of 20% of the
shares of Lake Ariel common stock, the remaining stockholders
have the right to receive payment for their shares, in cash,
from such person or group in an amount equal to the fair value
of the shares, including an increment representing a
proportion of any value payable for control of Lake Ariel
|X| prohibit for five years, a business combination which includes
a merger or consolidation or a sale, lease, or exchange of
assets, with a stockholder or group of stockholders who hold
20% or more of the shares of Lake Ariel common stock
One of the exceptions to the 5-year prohibition of a business combination is the
approval by the Lake Ariel Board of the business combination, such as was done
by the Board's approval of the merger agreement described in this Joint Proxy
Statement/Prospectus.
The NBT Certificate of Incorporation requires the affirmative vote of
not less than 80% of the voting power of all outstanding shares of capital stock
of NBT entitled to vote and held by disinterested stockholders to authorize or
to approve any of the following business combinations:
|X| any merger, consolidation or other business reorganization or
combination of NBT or any of its subsidiaries with any
other corporation that is a major stockholder of NBT;
|X| any sale, lease or exchange by NBT of all or a substantial
part of its assets to or with a major stockholder;
|X| any issue of any stock or other security of NBT or any of its
subsidiaries for cash, assets or securities of a major
stockholder; and
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|X| any reverse stock split of, or exchange of securities, cash or
other properties or assets or any outstanding securities of
NBT or any of its subsidiaries or liquidation or dissolution
of NBT 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 stockholder.
For these purposes, the term "major stockholder" means and includes any
person, corporation, partnership, or other person or entity which, together with
its affiliates and associates (as defined at Rule 12b-2 under the Exchange Act),
beneficially owns in the aggregate 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.
The term "substantial part" means more than 25% of the fair market
value of the total consolidated assets of the corporation in question, or more
than twenty-five percent 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.
The term "disinterested stockholder" means any holder of voting
securities of the company other than (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) 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, 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.
The certificate of incorporation further provides that the provision
shall not apply to a business combination which is approved by two-thirds of
those members of the NBT Board who were directors prior to the time when the
major stockholder became a major stockholder.
NBT is also subject to Section 203 of the Delaware General Corporation
Law, which governs business combinations with interested stockholders. Subject
to certain exceptions set forth in the law, Section 203 provides that a
corporation shall not engage in any business combination with any interested
stockholder for a three-year period following the time that such stockholder
becomes an "interested stockholder" unless:
|X| prior to such time, the board of directors of the corporation
approved either the business combination or the transaction
that resulted in the stockholder becoming an interested
stockholder;
|X| the interested stockholder acquires in the transaction in
which it became an interested stockholder at least 85% of the
voting stock of the corporation outstanding at the time the
transaction commenced (excluding certain shares); or
|X| at or subsequent to such time, the business combination is
approved by the board of directors of the corporation and by
the affirmative vote of at least two-thirds of the outstanding
voting stock which is not owned by the interested stockholder.
Except as specified in the law, Section 203 defines an interested
stockholder to mean any person that (A) is the owner of 15% or more of the
outstanding voting stock of the corporation or (B) is an affiliate or associate
of the corporation and was the owner of 15% or more of the outstanding voting
stock of the corporation at any time within three years immediately prior to the
relevant date, or any affiliate or associate of such person referred to in (A)
or (B) of this sentence. Under certain circumstances, Section 203 makes it more
difficult for an interested stockholder to effect various business combinations
with a corporation for a three-year period, although the stockholders may, by
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adopting an amendment to the corporation's charter or bylaws, elect not to be
governed by this section, effective one year after adoption. NBT has not made
this election.
MERGERS, SHARE EXCHANGES OR ASSET SALES
Other than as discussed in the previous section, the Lake Ariel
Articles of Incorporation are silent regarding a plan of merger, consolidation,
liquidation, dissolution or sale of substantially all of the assets.
Pennsylvania law requires the approval of the board of directors and the holders
of a majority of the outstanding shares of Lake Ariel common stock, for a
particular transaction to be effective, unless the Articles of Incorporation
require a higher stockholder vote.
Other than as discussed in the previous section, the NBT Certificate of
Incorporation is silent regarding a plan of merger, consolidation, share
exchange, sale of all or substantially all of NBT's assets, and the like. The
provisions of the Delaware General Corporation Law govern these transactions.
Delaware law generally requires the approval of the directors and the
affirmative vote of the holders of a majority of the outstanding stock entitled
to vote on the proposal for the particular transaction to be effective, unless
the certificate of incorporation requires a higher stockholder vote. In
addition, Delaware law provides that action by the stockholders of the surviving
corporation in a merger is not necessary if each of the following conditions is
satisfied:
|X| the agreement of merger does not amend in any respect the
certificate of incorporation of such constituent corporation;
|X| each share of stock of such constituent corporation
outstanding immediately prior to the effective date of the
merger is to be an identical outstanding or treasury share of
the surviving corporation after the effective date of the
merger; and
|X| either (x) no shares of common stock of the surviving
corporation and no shares, securities or obligations
convertible into such stock are to be issued or delivered
under the plan of merger, or (y) the authorized unissued
shares or the treasury shares of common stock of the surviving
corporation to be issued or delivered under the plan of merger
plus those initially issuable upon conversion of any other
shares, securities or obligations to be issued or delivered
under such plan do not exceed 20% of the shares of common
stock of such constituent corporation outstanding immediately
prior to the effective date of the merger.
Under Delaware law, the board of directors may also effect without a
stockholder vote a merger into NBT of a corporation of which 90% or more of the
outstanding stock entitled to vote on the merger is owned by NBT.
AMENDMENTS TO CERTIFICATE AND ARTICLES OF INCORPORATION
The Lake Ariel Articles of Incorporation provide that, except as stated
in the next succeeding sentence, Pennsylvania law shall govern an amendment to
the Lake Ariel Articles of Incorporation. The Pennsylvania Business Corporation
Law provides that amendments to the Articles of Incorporation require the
approval of the board of directors and the affirmative vote of a majority of the
votes cast by all stockholders entitled to vote on the amendment proposal.
However, Article 15 of Lake Ariel's Articles of Incorporation relates to
stockholder voting for a merger, consolidation, liquidation, dissolution or sale
of substantially all of the assets. Holders of 66 2/3% of the outstanding shares
of Lake Ariel common stock must approve any amendments to Article 15.
The NBT Certificate of Incorporation provides that, except as stated in
the next succeeding sentence, the laws of Delaware shall govern amendment of
NBT's Certificate of Incorporation. The Delaware General Corporation Law
provides that amendments to the certificate of incorporation require the
approval of the board of directors and the affirmative vote of a majority of the
outstanding stock entitled to vote on the amendment, together with the vote of a
majority of the outstanding shares of a particular class in certain
circumstances specified in the statute. NBT's Certificate of Incorporation
states that amendment or repeal of Article ELEVENTH (regarding business
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combinations with a major stockholder) requires the affirmative vote of not less
than 80% of the outstanding shares of NBT's voting stock; provided that if there
is a major stockholder as defined by Article ELEVENTH, such 80% vote must
include the affirmative vote of at least 80% of the outstanding shares of voting
stock held by stockholders other than the major stockholder.
AMENDMENTS TO BYLAWS
The Lake Ariel bylaws provide that a majority of the directors may
amend or repeal the bylaws. Under Pennsylvania law, the stockholders can change
any amendment to the bylaws made by the board of directors.
The NBT bylaws provide that a majority of the directors may amend or
repeal the NBT bylaws. The stockholders of NBT may amend or repeal the bylaws by
a vote of a majority of the total number of issued and outstanding shares
entitled to vote. The NBT bylaws state that the stockholders may provide that
certain bylaws adopted, approved or designated by them may not be amended,
altered or repealed except by a certain specified percentage in interest of all
the stockholders or of a particular class of stockholders. The enforceability of
that provision under Delaware law is unclear.
APPRAISAL/DISSENTERS' RIGHTS
The holders of record of Lake Ariel common stock as of the effective
time of the merger will have dissenters' rights with respect to the merger as a
result of a Lake Ariel Board resolution granting such rights to the Lake Ariel
stockholders. See "Rights of Dissenting Stockholders."
Under the Delaware General Corporation Law, appraisal rights are
available in connection with a statutory merger or consolidation except in
certain specified situations. Unless otherwise provided in the certificate of
incorporation, no appraisal rights are available to holders of shares of any
class of stock which is either: (1) listed on a national securities exchange or
designated as a national market system security on an inter-dealer quotation
system by the NASD or (2) held of record by more than 2,000 stockholders, unless
such stockholders are required by the terms of the merger to accept anything
other than: (A) shares of stock of the surviving corporation; (B) shares of
stock of another corporation which are or will be so listed on a national
securities exchange or designated as a national market system security on an
inter-dealer quotation system by the NASD or held of record by more than 2,000
stockholders; (C) cash in lieu of fractional shares of such stock; or (D) any
combination of the foregoing. NBT's Certificate of Incorporation makes no
provision for appraisal rights; thus, the provisions of Delaware law set forth
above are applicable to NBT and its stockholders.
RIGHTS OF DISSENTING STOCKHOLDERS
NBT stockholders will not be entitled to appraisal rights under
Delaware law.
In view of the action by the Lake Ariel Board, Lake Ariel stockholders
will have dissenters' rights to dissent from the merger agreement and obtain the
fair value of their Lake Ariel shares in cash in accordance with the procedures
established by Pennsylvania law.
Any Lake Ariel stockholder who contemplates exercising a holder's right
to dissent is urged to read carefully the provisions of Subchapter D of Chapter
15 of the Pennsylvania Business Corporation Law attached to this Joint Proxy
Statement/Prospectus as Appendix E. The following is a summary of the steps to
be taken if the right to dissent is to be exercised, and should be read in
connection with the full text of the law found at Appendix E. A dissenting
stockholder must take each step in the indicated order and in strict compliance
with the provisions of the law in order to perfect dissenters' rights. The
failure of a Lake Ariel stockholder to comply with these procedural steps will
result in the stockholder receiving NBT shares in exchange for Lake Ariel shares
based on the exchange ratio in the event that the merger is completed. See "The
Merger - Merger Consideration."
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Any written notice of demand which is required in connection with the
exercise of dissenters' rights, whether before or after the effective date of
the merger, must be sent to Lake Ariel Bancorp, Inc., c/o LA Bank, N.A., 409
Lackawanna Avenue, Suite 201, Scranton, Pennsylvania 18503-2045, Attention:
Secretary.
STEP ONE - NOTICE OF INTENTION TO DISSENT
A Lake Ariel stockholder must file with Lake Ariel, prior to the vote
on the merger agreement at the Lake Ariel special meeting, a written notice of
intention to demand payment in cash of the fair value of such holder's Lake
Ariel stock if the merger is consummated. Such stockholder cannot change in any
manner the ownership of the Lake Ariel stock from the date of this notice
through to the effective date of the merger and must refrain from voting his,
her or its Lake Ariel stock for approval of the merger agreement. Neither a
proxy nor a vote against approval of the merger will constitute the necessary
written notice of intention to dissent.
STEP TWO - NOTICE TO DEMAND PAYMENT
If the merger agreement is approved by the Lake Ariel stockholders,
Lake Ariel will mail a notice to all dissenters who gave notice under Step One
above and who refrained from voting for approval of the merger agreement. This
notice will state where and when: (1) a dissenter must send written demand for
payment; and (2) the dissenters' stock certificates are to be deposited. This
notice will include a form for this demand and another copy of the Pennsylvania
law that is found at Appendix E.
STEP THREE - FAILURE TO COMPLY WITH THE NOTICE TO DEMAND PAYMENT
A dissenter who fails to send back to Lake Ariel the notice to demand
payment and deposit his or her stock certificates by the deadline stated on the
form of notice to demand payment will forfeit his or her dissenters' rights for
a cash payment and receive NBT shares.
STEP FOUR - PAYMENT OF FAIR VALUE OF LAKE ARIEL SHARES
After the effective time of the merger, NBT will give to dissenters
notice of the estimated fair value of their Lake Ariel shares and pay such
amount or indicate that no remittance accompanies the notice. In addition, this
notice will include:
|X| a closing balance sheet and statement of income of Lake Ariel
for the most recent fiscal year and calendar quarterly
period;
|X| a statement expressing the estimate of the fair value of the
Lake Ariel shares; and
|X| a notice of the right of a dissenter to demand a supplemental
payment under Pennsylvania law and another copy of the
Pennsylvania law which we attach as Appendix E.
STEP FIVE - ESTIMATE BY DISSENTER OF FAIR VALUE OF SHARES
If a dissenter feels that the estimated value or the amount sent is
less than the fair value, a dissenter may send to NBT his or her own estimate of
the fair value of the Lake Ariel shares, which is deemed to be a demand for
payment of the amount of the deficiency. If NBT remits payment of its estimated
value and the dissenter does not file his or her own estimate within 30 days
after the mailing of such payment to the dissenter, then the dissenter will be
entitled to no more than the amount mailed to him or her.
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STEP SIX - VALUATION PROCEEDINGS
If any demands for payment remain unsettled within 60 days after the
latest to occur of:
|X| the effective date of the merger;
|X| receipt of Lake Ariel or NBT of any demands for payment; or
|X| receipt by Lake Ariel or NBT of any estimates by dissenters of
the fair value;
then NBT may file an application in the Court of Common Pleas of Wayne County,
Pennsylvania, requesting that the fair value of the Lake Ariel stock be
determined by the court. In such case, all dissenters, wherever residing, whose
demands have not been settled, shall be made parties to the proceeding. A copy
of this court application will be served on each dissenter who has not settled.
If NBT fails to file the application, then any dissenter, on behalf of
all dissenters who have made a demand and who have not settled their claims, may
file the application in the name of Lake Ariel within a 30-day period after the
expiration of the above 60-day period and request the fair value be determined
by the court. The fair value determined by the court need not equal the
dissenters' estimate of fair value. If no dissenter files such an application,
then each dissenter entitled to do so shall be paid Lake Ariel's estimate of the
fair value and may only start a legal action to recover any amount not
previously remitted plus interest at a rate that the court finds fair.
NBT, after the effective date of the merger, intends to negotiate in
good faith with any dissenting stockholders. If, after negotiation, a claim
cannot be settled, then NBT intends to file an application requesting that the
fair value be determined by the court.
The costs and expenses of any valuation proceeding in the court,
including the reasonable compensation and expenses of any appraiser appointed by
the court, will be determined by the court and assessed against NBT after the
merger, except that any part of the costs and expenses may be apportioned and
assessed against all or any of the dissenters who are parties to the proceeding
and whose actions the court funds to be dilatory, obdurate, arbitrary, vexatious
or in bad faith.
LAKE ARIEL STOCKHOLDERS CONSIDERING SEEKING APPRAISAL BY EXERCISING
THEIR DISSENTERS' RIGHTS SHOULD BE AWARE THAT THE FAIR VALUE OF THEIR LAKE ARIEL
COMMON STOCK DETERMINED UNDER PENNSYLVANIA LAW COULD BE MORE THAN, THE SAME AS,
OR LESS THAN THEIR PRO RATA SHARE OF THE MERGER CONSIDERATION THAT THEY ARE
ENTITLED TO RECEIVE UNDER THE MERGER AGREEMENT IF THEY DO NOT SEEK APPRAISAL OF
THEIR LAKE ARIEL COMMON STOCK.
The foregoing discussion is not a complete statement of the procedures
to be followed by Lake Ariel stockholders desiring to exercise appraisal rights
and, because exercise of such rights requires strict adherence to the relevant
provisions of the Pennsylvania Business Corporation Law, each stockholder
desiring to exercise appraisal rights is advised individually to consult the law
(as provided in Appendix E to this Joint Proxy Statement/ Prospectus) and comply
with the relevant provisions of the law.
Lake Ariel stockholders wishing to exercise their dissenters' rights
should consult their own counsel to ensure that they fully and properly comply
with the requirements of Pennsylvania law.
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OTHER MATTERS
STOCKHOLDER PROPOSALS FOR ANNUAL MEETINGS
Stockholder proposals submitted pursuant to Rule 14a-8 of the Exchange
Act for inclusion in NBT's proxy statement for the 2000 Annual Meeting of
Stockholders must be received by NBT by November 15, 1999. Each proposal must
comply with the requirements as to form and substance established by the SEC for
such a proposal to be included in the proxy statement and form of proxy. SEC
rules set forth standards as to what stockholder proposals corporations must
include in a proxy statement for an annual meeting.
Lake Ariel stockholder proposals for the 2000 annual meeting of
stockholders that the proponents do not desire to be included in the Lake Ariel
2000 proxy statement must be received by Lake Ariel by February 10, 2000. Such
proposals need to be addressed to the Lake Ariel Secretary. Under Lake Ariel's
bylaws, notice of a stockholder nomination for director must be given by mail or
by personal delivery to the Lake Ariel Secretary no later than 20 days in
advance of the annual meeting. Lake Ariel stockholders wishing to make a
nomination should contact the Lake Ariel Secretary as to information required to
be supplied in such notice. Lake Ariel will hold a 2000 annual meeting of
stockholders if the merger is not completed by April 15, 2000.
OTHER MATTERS
As of the date of this Joint Proxy Statement/Prospectus, the NBT Board
knows of no matters that will be presented for consideration at the NBT meeting
other than as described in this Joint Proxy Statement/Prospectus. We will not
present for consideration at the NBT special meeting our proposed merger with
Pioneer American. If any other matters shall properly come before the NBT
meeting and be voted upon, the enclosed proxies will be deemed to confer
discretionary authority on the individuals named as proxies therein to vote the
shares represented by such proxies as to any such matters. The persons named as
proxies intend to vote or not to vote in accordance with the recommendation of
the management of NBT.
As of the date of this Joint Proxy Statement/Prospectus, the Lake Ariel
Board knows of no matters that will be presented for consideration at the Lake
Ariel meeting other than as described in this Joint Proxy Statement/Prospectus.
If any other matters shall properly come before the Lake Ariel meeting and be
voted upon, the enclosed proxies will be deemed to confer discretionary
authority on the individuals named as proxies therein to vote the shares
represented by such proxies as to any such matters. The persons named as proxies
intend to vote or not to vote in accordance with the recommendation of the
management of Lake Ariel.
LEGAL MATTERS
The validity of the common stock to be issued in connection with the
merger will be passed upon by Duane, Morris & Heckscher LLP, Washington, D.C.
Saul, Ewing, Remick & Saul LLP, Harrisburg, Pennsylvania, counsel for Lake
Ariel, will pass on certain federal income tax consequences of the merger.
EXPERTS
The consolidated financial statements of NBT as of December 31, 1998
and 1997 and for each of the three years in the period ended December 31, 1998
have been incorporated by reference in this Joint Proxy Statement/Prospectus and
Registration Statement in reliance upon the report of KPMG LLP, independent
certified public accountants, incorporated herein by reference and upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
The consolidated financial statements of Lake Ariel as of December 31,
1998 and 1997 and for each of the three years in the period ended December 31,
1998 incorporated by reference in this Joint Proxy Statement/Prospectus and
94
Registration Statement have been audited by Parente, Randolph, Orlando, Carey &
Associates, independent auditors, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said reports.
WHERE YOU CAN FIND MORE INFORMATION
NBT and Lake Ariel file annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
reports, statements or other information we file at the SEC's public reference
room at 450 Fifth Street, NW, Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public from commercial document retrieval
services and at the web site maintained by the SEC at (http://www.sec.gov). In
addition, you may read and copy NBT's SEC filings and Lake Ariel's SEC filings
at the Nasdaq National Market, 1735 K Street, N.W., Washington, D.C. 20006-1506.
Our Internet addresses are (www.nbtbank.com) with respect to NBT and
(www.labank.com) with respect to Lake Ariel.
NBT has filed a Registration Statement on Form S-4 to register with the
SEC the NBT common stock to be issued to the holders of Lake Ariel common stock
in the merger. This Joint Proxy Statement/Prospectus is a part of that
Registration Statement and constitutes a prospectus of NBT in addition to being
a proxy statement of NBT and Lake Ariel for the NBT special meeting and the Lake
Ariel special meeting. As allowed by SEC rules, this Joint Proxy
Statement/Prospectus does not contain all the information you can find in the
Registration Statement or the exhibits to the Registration Statement.
The SEC allows us to "incorporate by reference" information into this
Joint Proxy Statement/Prospectus, which means that we can disclose important
information to you by referring you to another document filed separately with
the SEC. The information incorporated by reference is deemed to be part of this
Joint Proxy Statement/Prospectus, except for any information superseded by
information in this Joint Proxy Statement/Prospectus. This Joint Proxy
Statement/Prospectus incorporates by reference the documents set forth below
that we have previously filed with the SEC. These documents contain important
information about the companies, their finances and NBT common stock.
NBT BANCORP INC. SEC FILINGS
|X| Annual Report on Form 10-K for the year ended December 31,
1998;
|X| Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1999, June 30, 1999, and September 30, 1999; and
|X| Current Reports on Form 8-K, filed with the SEC on August 19,
1999, September 13, 1999, and December 16, 1999.
LAKE ARIEL BANCORP, INC. SEC FILINGS
|X| Annual Report on Form 10-K for the year ended December 31,
1998;
|X| Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1999, June 30, 1999, and September 30, 1999; and
|X| Current Reports on Form 8-K, filed with the SEC on January
15, 1999, and August 17, 1999.
We incorporate by reference additional documents that we file with the
SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act between
the date of this Joint Proxy Statement/Prospectus and the effective time of the
merger.
95
NBT has supplied all information contained or incorporated by reference
in this Joint Proxy Statement/Prospectus relating to NBT, and Lake Ariel has
supplied all such information relating to Lake Ariel.
If you are a stockholder, we may have sent you some of the documents
incorporated by reference, but you can obtain any of them through us or the SEC.
You can obtain documents incorporated by reference from us without charge,
excluding all exhibits unless we have specifically incorporated by reference an
exhibit in this Joint Proxy Statement/Prospectus. Stockholders may obtain
documents incorporated by reference in this Joint Proxy Statement/Prospectus by
requesting them in writing or by telephone from the appropriate party at the
following address:
NBT Bancorp Inc. Lake Ariel Bancorp, Inc.
52 South Broad Street 409 Lackawanna Avenue, Suite 201
Norwich, New York 13815 Scranton, PA 18503-2045
Attention: Michael J. Chewens, CPA Attention: Joseph J. Earyes, CPA
Tel: (607) 337-6520 Tel: (570) 343-8200
If you would like to request documents from us, please do so by ______,
1999 to receive them prior to the NBT and Lake Ariel special meetings.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS JOINT PROXY STATEMENT/PROSPECTUS TO VOTE ON THE NBT PROPOSAL
AND THE LAKE ARIEL PROPOSAL. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS. THIS JOINT PROXY STATEMENT/PROSPECTUS IS DATED , 1999. YOU
SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN SUCH DATE, AND
NEITHER THE MAILING OF THIS JOINT PROXY STATEMENT/PROSPECTUS TO STOCKHOLDERS NOR
THE ISSUANCE OF SHARES OF NBT COMMON STOCK IN THE MERGER SHALL CREATE ANY
IMPLICATION TO THE CONTRARY.
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined financial statements present
the financial position of NBT, Lake Ariel and Pioneer American as of September
30, 1999, and the combined statements of income for the nine months ended
September 30, 1999 and 1998, assuming that each merger had occurred as of
September 30, 1999, after giving effect to certain pro forma adjustments
described in the accompanying notes. The following unaudited pro forma combined
statements of income for the nine months ended September 30, 1999 and 1998, and
years ended December 31, 1998, 1997, and 1996 present the combined historical
results of operations of NBT, Lake Ariel and Pioneer American as if each merger
had been consummated as of the first day of the period presented. Pro forma
earnings per common share are based on the exchange ratio of 0.9961 with respect
to the Lake Ariel merger and 1.805 with respect to the Pioneer American merger.
The fiscal years of NBT, Lake Ariel and Pioneer American end December 31. The
unaudited pro forma combined financial statements do not reflect estimated
non-recurring charges that will be incurred in connection with the mergers.
The unaudited pro forma combined financial statements were prepared
giving effect to each merger on the pooling of interests accounting method.
Under this method of accounting, the recorded assets, liabilities, stockholders'
equity, income and expense of NBT, Lake Ariel and Pioneer American are combined
and reflected at their historical amounts, except as noted in the accompanying
notes. All adjustments necessary to arrive at a fair presentation of the
combined financial condition and results of operations of NBT, Lake Ariel and
Pioneer American, in the opinion of the managements of the respective companies,
have been included and are of a normal recurring nature.
The combined company expects to achieve certain merger benefits in the
form of operating expense reductions and revenue enhancements. The unaudited pro
forma combined statements of income do not reflect potential operating expense
96
reductions or revenue enhancements that are expected to result from the merger,
and therefore may not be indicative of the results of future operations. No
assurance can be given with respect to the ultimate level of operating expense
reductions or revenue enhancements.
The unaudited pro forma combined financial statements should be read in
conjunction with, and are qualified in their entirety by, the historical
consolidated financial statements and accompanying notes of NBT and Lake Ariel,
which we incorporate by reference herein, and of Pioneer American. The unaudited
pro forma combined financial statements are presented for informational purposes
only. These statements are not necessarily indicative of the combined financial
position and results of operations that would have occurred if the mergers had
been consummated on September 30, 1999 or at the beginning of the periods or
that may be attained in the future.
97
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AT SEPTEMBER 30, 1999
------------------------------------------------------------------
NBT
NBT LAKE ARIEL PRO FORMA LAKE ARIEL
BANCORP INC. BANCORP, INC. ADJUSTMENTS COMBINED
PRO FORMA
(in thousands)
ASSETS
Cash and cash equivalents $ 44,801 $ 12,940 $ -- $ 57,741
Loans held for sale 3,511 440 -- 3,951
Securities available for sale, at fair value 355,137 173,438 -- 528,575
Securities held to maturity (fair value-NBT Bancorp Inc
$41,215, Lake Ariel Bancorp, Inc. $44,944 and Pioneer
American Holding Company Corp. $36,750) 41,216 47,297 -- 88,513
Loans:
Commercial and agricultural 432,950 110,165 -- 543,115
Real estate mortgage 174,204 107,200 -- 281,404
Consumer 291,514 63,503 -- 355,017
------------------------------------------------------------------
Total loans 898,668 280,868 -- 1,179,536
Less allowance for loan losses 13,555 2,546 -- 16,101
------------------------------------------------------------------
Net loans 885,113 278,322 -- 1,163,435
Premises and equipment, net 20,853 19,408 -- 40,261
Intangible assets, net 6,828 2,731 -- 9,559
Other assets 20,800 18,341 -- 39,141
------------------------------------------------------------------
TOTAL ASSETS $ 1,378,259 $ 552,917 $ -- $ 1,931,176
==================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand (noninterest bearing) $ 157,618 $ 58,111 $ -- $ 215,729
Savings, NOW, and money market 386,245 100,114 -- 486,359
Time 550,610 183,809 -- 734,419
------------------------------------------------------------------
Total deposits 1,094,473 342,034 -- 1,436,507
Short-term borrowings 113,163 32,614 -- 145,777
Long-term debt 35,161 138,204 -- 173,365
Other liabilities 7,583 5,257 -- 12,840
------------------------------------------------------------------
Total liabilities 1,250,380 518,109 -- 1,768,489
------------------------------------------------------------------
Commitments and contingencies
Stockholders' equity:
Preferred stock -- -- -- --
Common stock 13,016 1,021 4,441 18,478
Capital surplus 111,221 30,012 7,174 148,407
Retained earnings 23,540 9,193 (11,615) 21,118
Accumulated other comprehensive income (loss) (7,117) (5,418) -- (12,535)
Common stock in treasury at cost (12,781) -- -- (12,781)
------------------------------------------------------------------
Total stockholders' equity 127,879 34,808 -- 162,687
------------------------------------------------------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,378,259 $ 552,917 $ -- $ 1,931,176
==================================================================
98
AT SEPTEMBER 30, 1999
---------------------------------------------------
NBT
PIONEER LAKE ARIEL
AMERICAN PRO FORMA PIONEER
HOLDING COMPANY ADJUSTMENTS COMBINED PRO
CORP. FORMA
(in thousands)
ASSETS
Cash and cash equivalents $ 15,844 $ -- $ 73,585
Loans held for sale -- -- 3,951
Securities available for sale, at fair value 115,547 -- 644,122
Securities held to maturity (fair value-NBT Bancorp Inc
$41,215, Lake Ariel Bancorp, Inc. $44,944 and Pioneer
American Holding Company Corp. $36,750) 37,444 -- 125,957
Loans:
Commercial and agricultural 101,464 -- 644,579
Real estate mortgage 79,376 -- 360,780
Consumer 59,726 -- 414,743
---------------------------------------------------
Total loans 240,566 -- 1,420,102
Less allowance for loan losses 3,000 -- 19,101
---------------------------------------------------
Net loans 237,566 -- 1,401,001
Premises and equipment, net 6,483 -- 46,744
Intangible assets, net 562 -- 10,121
Other assets 8,408 -- 47,549
---------------------------------------------------
TOTAL ASSETS $421,854 $ -- $2,353,030
===================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand (noninterest bearing) $ 48,808 $ -- $264,537
Savings, NOW, and money market 114,205 -- 600,564
Time 141,619 -- 876,038
---------------------------------------------------
Total deposits 304,632 -- 1,741,139
Short-term borrowings -- -- 145,777
Long-term debt 80,409 -- 253,774
Other liabilities 4,907 -- 17,747
---------------------------------------------------
Total liabilities 389,948 -- 2,158,437
---------------------------------------------------
Commitments and contingencies
Stockholders' equity:
Preferred stock -- -- --
Common stock 2,935 2,235 23,648
Capital surplus 11,913 (3,965) 156,355
Retained earnings 21,435 -- 42,553
Accumulated other comprehensive income (loss) (2,647) -- (15,182)
Common stock in treasury at cost (1,730) 1,730 (12,781)
---------------------------------------------------
Total stockholders' equity 31,906 -- 194,593
---------------------------------------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $421,854 $ -- $2,353,030
===================================================
See accompanying notes to the unaudited pro forma combined financial statements.
99
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
-------------------------------------------------------------------
NBT
NBT LAKE ARIEL PRO FORMA LAKE ARIEL
BANCORP INC. BANCORP, INC. ADJUSTMENTS COMBINED
PRO FORMA
Consolidated Statements of Income:
(in thousands, except per share data)
Interest and fee income:
Loans and loans held for sale $ 56,076 $ 14,664 $ -- $ 70,740
Securities - taxable 18,301 7,785 -- 26,086
Securities - tax-exempt 760 1,535 -- 2,295
Other 232 125 -- 357
-------------------------------------------------------------------
Total interest and fee income 75,369 24,109 -- 99,478
-------------------------------------------------------------------
Interest expense:
Deposits 25,344 8,219 -- 33,563
Short-term borrowings 3,882 425 -- 4,307
Long-term debt 1,098 5,061 -- 6,159
-------------------------------------------------------------------
Total interest expense 30,324 13,705 -- 44,029
-------------------------------------------------------------------
Net interest income 45,045 10,404 -- 55,449
Provision for loan losses 2,925 655 -- 3,580
-------------------------------------------------------------------
Net interest income after provision for loan losses 42,120 9,749 -- 51,869
-------------------------------------------------------------------
Noninterest income:
Trust 2,505 -- -- 2,505
Service charges on deposit accounts 3,108 1,492 -- 4,600
Net securities gains 1,507 208 -- 1,715
Other 2,086 1,885 -- 3,971
-------------------------------------------------------------------
Total noninterest income 9,206 3,585 -- 12,791
-------------------------------------------------------------------
Noninterest expense:
Salaries and employee benefits 14,166 4,223 -- 18,389
Office supplies and postage 1,330 431 -- 1,761
Occupancy 2,109 1,068 -- 3,177
Equipment 1,974 1,082 -- 3,056
Professional fees and outside services 2,010 408 -- 2,418
Data processing and communications 2,843 199 -- 3,042
Amortization of intangible assets 745 229 -- 974
Other operating 2,763 1,714 -- 4,477
-------------------------------------------------------------------
Total noninterest expense 27,940 9,354 -- 37,294
-------------------------------------------------------------------
Income before income taxes 23,386 3,980 -- 27,366
Income taxes 9,030 955 -- 9,985
-------------------------------------------------------------------
Net income $ 14,356 $ 3,025 $ -- $ 17,381
===================================================================
Weighted Average Shares Outstanding:
Basic 13,022 4,840 -- 17,843
Diluted 13,165 4,971 -- 18,117
Earnings per share:
Basic $ 1.10 $ 0.63 $ -- $ 0.97
Diluted $ 1.09 $ 0.61 $ -- $ 0.96
100
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
-----------------------------------------------
NBT
PIONEER LAKE ARIEL
AMERICAN PRO FORMA PIONEER
HOLDING ADJUSTMENTS COMBINED PRO
COMPANY CORP. FORMA
Consolidated Statements of Income:
(in thousands, except per share data)
Interest and fee income:
Loans and loans held for sale $ 14,642 $ -- $ 85,382
Securities - taxable 6,167 -- 32,253
Securities - tax-exempt 943 -- 3,238
Other 198 -- 555
---------------------------------------------
Total interest and fee income 21,950 -- 121,428
---------------------------------------------
Interest expense:
Deposits 7,918 -- 41,481
Short-term borrowings -- -- 4,307
Long-term debt 3,246 -- 9,405
---------------------------------------------
Total interest expense 11,164 -- 55,193
---------------------------------------------
Net interest income 10,786 -- 66,235
Provision for loan losses 280 -- 3,860
---------------------------------------------
Net interest income after provision for loan losses 10,506 -- 62,375
---------------------------------------------
Noninterest income:
Trust -- -- 2,505
Service charges on deposit accounts 1,199 -- 5,799
Net securities gains 88 -- 1,803
Other 829 -- 4,800
---------------------------------------------
Total noninterest income 2,116 -- 14,907
---------------------------------------------
Noninterest expense:
Salaries and employee benefits 4,038 -- 22,427
Office supplies and postage 409 -- 2,170
Occupancy 806 -- 3,983
Equipment 731 -- 3,787
Professional fees and outside services 738 -- 3,156
Data processing and communications 335 -- 3,377
Amortization of intangible assets 29 -- 1,003
Other operating 1,370 -- 5,847
---------------------------------------------
Total noninterest expense 8,456 -- 45,750
---------------------------------------------
Income before income taxes 4,166 -- 31,532
Income taxes 1,110 -- 11,095
---------------------------------------------
Net income $ 3,056 $ -- $ 20,437
=============================================
Weighted Average Shares Outstanding:
Basic 2,914 -- 23,104
Diluted 2,942 -- 23,427
Earnings per share:
Basic $ 1.05 $ -- $ 0.88
Diluted $ 1.04 $ -- $ 0.87
See accompanying notes to the unaudited pro forma combined financial statements.
101
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
------------------------------------------------------------------
NBT
NBT LAKE ARIEL PRO FORMA LAKE ARIEL
BANCORP INC. BANCORP, INC. ADJUSTMENTS COMBINED
PRO FORMA
Consolidated Statements of Income:
(in thousands, except per share data)
Interest and fee income:
Loans and loans held for sale $ 52,701 $ 13,765 $ -- $ 66,466
Securities - taxable 22,233 6,521 -- 28,754
Securities - tax-exempt 836 1,282 -- 2,118
Other 210 124 -- 334
------------------------------------------------------------------
Total interest and fee income 75,980 21,692 -- 97,672
------------------------------------------------------------------
Interest expense:
Deposits 28,423 8,077 -- 36,500
Short-term borrowings 4,525 102 -- 4,627
Long-term debt 326 4,180 -- 4,506
------------------------------------------------------------------
Total interest expense 33,274 12,359 -- 45,633
------------------------------------------------------------------
Net interest income 42,706 9,333 -- 52,039
Provision for loan losses 3,550 490 -- 4,040
------------------------------------------------------------------
Net interest income after provision for loan losses 39,156 8,843 -- 47,999
------------------------------------------------------------------
Noninterest income:
Trust 2,407 -- -- 2,407
Service charges on deposit accounts 2,725 1,114 -- 3,839
Net securities gains 613 80 -- 693
Other 1,883 2,039 -- 3,922
------------------------------------------------------------------
Total noninterest income 7,628 3,233 -- 10,861
------------------------------------------------------------------
Noninterest expense:
Salaries and employee benefits 14,214 3,663 -- 17,877
Office supplies and postage 1,406 443 -- 1,849
Occupancy 2,037 958 -- 2,995
Equipment 1,728 880 -- 2,608
Professional fees and outside services 1,987 332 -- 2,319
Data processing and communications 2,635 160 -- 2,795
Amortization of intangible assets 817 123 -- 940
Other operating 3,824 1,479 -- 5,303
------------------------------------------------------------------
Total noninterest expense 28,648 8,038 -- 36,686
------------------------------------------------------------------
Income before income taxes 18,136 4,038 -- 22,174
Income taxes 3,623 930 -- 4,553
------------------------------------------------------------------
Net income $ 14,513 $ 3,108 $ -- $ 17,621
==================================================================
Weighted Average Shares Outstanding:
Basic 13,241 4,791 -- 18,014
Diluted 13,509 4,911 -- 18,401
Earnings per share:
Basic $ 1.10 $ 0.65 $ -- $ 0.98
Diluted $ 1.07 $ 0.64 $ -- $ 0.96
102
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
-------------------------------------------------
NBT
PIONEER LAKE ARIEL
AMERICAN PRO FORMA PIONEER
HOLDING ADJUSTMENTS COMBINED PRO
COMPANY CORP. FORMA
Consolidated Statements of Income:
(in thousands, except per share data)
Interest and fee income:
Loans and loans held for sale $14,277 $ -- $ 80,743
Securities - taxable 5,824 -- 34,578
Securities - tax-exempt 828 -- 2,946
Other 253 -- 587
---------------------------------------------
Total interest and fee income 21,182 -- $118,854
---------------------------------------------
Interest expense:
Deposits 8,002 -- 44,502
Short-term borrowings 23 -- 4,650
Long-term debt 2,590 -- 7,096
---------------------------------------------
Total interest expense 10,615 -- 56,248
---------------------------------------------
Net interest income 10,567 -- 62,606
Provision for loan losses 450 -- 4,490
---------------------------------------------
Net interest income after provision for loan losses 10,117 -- 58,116
---------------------------------------------
Noninterest income:
Trust -- -- 2,407
Service charges on deposit accounts 1,035 -- 4,874
Net securities gains 298 -- 991
Other 757 -- 4,679
---------------------------------------------
Total noninterest income 2,090 -- 12,951
---------------------------------------------
Noninterest expense:
Salaries and employee benefits 3,989 -- 21,866
Office supplies and postage 382 -- 2,231
Occupancy 769 -- 3,764
Equipment 563 -- 3,171
Professional fees and outside services 797 -- 3,116
Data processing and communications 355 -- 3,150
Amortization of intangible assets 29 -- 969
Other operating 1,246 -- 6,549
---------------------------------------------
Total noninterest expense 8,130 -- 44,816
---------------------------------------------
Income before income taxes 4,077 -- 26,251
Income taxes 1,109 -- 5,662
---------------------------------------------
Net income $ 2,968 $ -- $ 20,589
=============================================
Weighted Average Shares Outstanding:
Basic 2,890 -- 23,230
Diluted 2,953 -- 23,730
Earnings per share:
Basic $ 1.03 $ -- $ 0.89
Diluted $ 1.01 $ -- $ 0.87
See accompanying notes to the unaudited pro forma combined financial statements.
103
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998
-----------------------------------------------------------------
NBT
NBT LAKE ARIEL PRO FORMA LAKE ARIEL
BANCORP INC. BANCORP, INC. ADJUSTMENTS COMBINED
PRO FORMA
Consolidated Statements of Income:
(in thousands, except per share data)
Interest and fee income:
Loans and loans held for sale $ 70,947 $ 18,452 $ -- $ 89,399
Securities - taxable 28,742 8,848 -- 37,590
Securities - tax-exempt 1,086 1,694 -- 2,780
Other 305 226 -- 531
-------------------------------------------------------------------
Total interest and fee income 101,080 29,220 -- 130,300
-------------------------------------------------------------------
Interest expense:
Deposits 37,201 10,857 -- 48,058
Short-term borrowings 6,014 139 -- 6,153
Long-term debt 462 5,744 -- 6,206
-------------------------------------------------------------------
Total interest expense 43,677 16,740 -- 60,417
-------------------------------------------------------------------
Net interest income 57,403 12,480 -- 69,883
Provision for loan losses 4,599 1,130 -- 5,729
-------------------------------------------------------------------
Net interest income after provision for loan losses 52,804 11,350 -- 64,154
-------------------------------------------------------------------
Noninterest income:
Trust 3,115 -- -- 3,115
Service charges on deposit accounts 3,749 1,576 -- 5,325
Net securities gains 624 432 -- 1,056
Other 2,491 2,926 -- 5,417
-------------------------------------------------------------------
Total noninterest income 9,979 4,934 -- 14,913
-------------------------------------------------------------------
Noninterest expense:
Salaries and employee benefits 19,202 5,013 -- 24,215
Office supplies and postage 1,912 609 -- 2,521
Occupancy 2,843 1,288 -- 4,131
Equipment 2,375 1,219 -- 3,594
Professional fees and outside services 2,836 539 -- 3,375
Data processing and communications 3,577 217 -- 3,794
Amortization of intangible assets 1,070 210 -- 1,280
Other operating 5,313 2,357 -- 7,670
-------------------------------------------------------------------
Total noninterest expense 39,128 11,452 -- 50,580
-------------------------------------------------------------------
Income before income taxes 23,655 4,832 -- 28,487
Income taxes 4,553 1,061 -- 5,614
-------------------------------------------------------------------
Net income $ 19,102 $ 3,771 $ -- $ 22,873
===================================================================
Weighted Average Shares Outstanding:
Basic 13,198 4,796 -- 17,976
Diluted 13,474 4,906 -- 18,361
Earnings per share:
Basic $ 1.45 $ 0.79 $ -- $ 1.27
Diluted $ 1.42 $ 0.77 $ -- $ 1.25
104
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998
-----------------------------------------------
NBT
PIONEER LAKE ARIEL
AMERICAN PRO FORMA PIONEER
HOLDING ADJUSTMENTS COMBINED PRO
COMPANY CORP. FORMA
Consolidated Statements of Income:
(in thousands, except per share data)
Interest and fee income:
Loans and loans held for sale $19,093 $ -- $108,492
Securities - taxable 7,615 -- 45,205
Securities - tax-exempt 1,114 -- 3,894
Other 480 -- 1,011
---------------------------------------------
Total interest and fee income 28,302 -- 158,602
---------------------------------------------
Interest expense:
Deposits 10,840 -- 58,898
Short-term borrowings 23 -- 6,176
Long-term debt 3,456 -- 9,662
---------------------------------------------
Total interest expense 14,319 -- 74,736
---------------------------------------------
Net interest income 13,983 -- 83,866
Provision for loan losses 420 -- 6,149
---------------------------------------------
Net interest income after provision for loan losses 13,563 -- 77,717
---------------------------------------------
Noninterest income:
Trust -- -- 3,115
Service charges on deposit accounts 1,404 -- 6,729
Net securities gains 511 -- 1,567
Other 1,046 -- 6,463
---------------------------------------------
Total noninterest income 2,961 -- 17,874
---------------------------------------------
Noninterest expense:
Salaries and employee benefits 5,071 -- 29,286
Office supplies and postage 506 -- 3,027
Occupancy 1,027 -- 5,158
Equipment 773 -- 4,367
Professional fees and outside services 1,027 -- 4,402
Data processing and communications 483 -- 4,277
Amortization of intangible assets 39 -- 1,319
Other operating 2,041 -- 9,711
---------------------------------------------
Total noninterest expense 10,967 -- 61,547
---------------------------------------------
Income before income taxes 5,557 -- 34,044
Income taxes 1,535 -- 7,149
---------------------------------------------
Net income $ 4,022 $ -- $ 26,895
=============================================
Weighted Average Shares Outstanding:
Basic 2,894 -- 23,199
Diluted 2,953 -- 23,691
Earnings per share:
Basic $ 1.39 $ -- $ 1.16
Diluted $ 1.36 $ -- $ 1.14
See accompanying notes to the unaudited pro forma combined financial statements.
105
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1997
-------------------------------------------------------------------
NBT
NBT LAKE ARIEL PRO FORMA LAKE ARIEL
BANCORP INC. BANCORP, INC. ADJUSTMENTS COMBINED
PRO FORMA
Consolidated Statements of Income:
(in thousands, except per share data)
Interest and fee income:
Loans and loans held for sale $ 64,781 $ 16,907 $ -- $ 81,688
Securities - taxable 29,887 5,892 -- 35,779
Securities - tax-exempt 1,179 1,578 -- 2,757
Other 334 273 -- 607
-------------------------------------------------------------------
Total interest and fee income 96,181 24,650 -- 120,831
-------------------------------------------------------------------
Interest expense:
Deposits 35,234 10,395 -- 45,629
Short-term borrowings 6,581 112 -- 6,693
Long-term debt 707 3,018 -- 3,725
-------------------------------------------------------------------
Total interest expense 42,522 13,525 -- 56,047
-------------------------------------------------------------------
Net interest income 53,659 11,125 -- 64,784
Provision for loan losses 3,505 780 -- 4,285
-------------------------------------------------------------------
Net interest income after provision for loan losses 50,154 10,345 -- 60,499
-------------------------------------------------------------------
Noninterest income:
Trust 2,675 -- -- 2,675
Service charges on deposit accounts 3,695 1,247 -- 4,942
Net securities gains (losses) (337) 214 -- (123)
Other 2,033 1,940 -- 3,973
-------------------------------------------------------------------
Total noninterest income 8,066 3,401 -- 11,467
-------------------------------------------------------------------
Noninterest expense:
Salaries and employee benefits 17,905 4,206 -- 22,111
Office supplies and postage 1,801 449 -- 2,250
Occupancy 2,598 1,156 -- 3,754
Equipment 1,700 932 -- 2,632
Professional fees and outside services 2,201 284 -- 2,485
Data processing and communications 2,789 177 -- 2,966
Amortization of intangible assets 1,351 154 -- 1,505
Other operating 4,825 1,852 -- 6,677
-------------------------------------------------------------------
Total noninterest expense 35,170 9,210 -- 44,380
-------------------------------------------------------------------
Income before income taxes 23,050 4,536 -- 27,586
Income taxes 8,301 1,105 -- 9,406
-------------------------------------------------------------------
Net income $ 14,749 $ 3,431 $ -- $ 18,180
===================================================================
Weighted Average Shares Outstanding:
Basic 13,176 3,935 -- 17,095
Diluted 13,335 4,073 -- 17,393
Earnings per share:
Basic $ 1.12 $ 0.88 $ -- $ 1.06
Diluted $ 1.11 $ 0.84 $ -- $ 1.05
106
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1997
----------------------------------------------
NBT
PIONEER LAKE ARIEL
AMERICAN PRO FORMA PIONEER
HOLDING ADJUSTMENTS COMBINED PRO
COMPANY CORP. FORMA
Consolidated Statements of Income:
(in thousands, except per share data)
Interest and fee income:
Loans and loans held for sale $18,101 $ -- $ 99,789
Securities - taxable 7,063 -- 42,842
Securities - tax-exempt 1,023 -- 3,780
Other 320 -- 927
----------------------------------------------
Total interest and fee income 26,507 -- 147,338
----------------------------------------------
Interest expense:
Deposits 11,337 -- 56,966
Short-term borrowings 10 -- 6,703
Long-term debt 1,498 -- 5,223
----------------------------------------------
Total interest expense 12,845 -- 68,892
----------------------------------------------
Net interest income 13,662 -- 78,446
Provision for loan losses 535 -- 4,820
----------------------------------------------
Net interest income after provision for loan losses 13,127 -- 73,626
----------------------------------------------
Noninterest income:
Trust -- -- 2,675
Service charges on deposit accounts 1,397 -- 6,339
Net securities gains (losses) 157 -- 34
Other 907 -- 4,880
----------------------------------------------
Total noninterest income 2,461 -- 13,928
----------------------------------------------
Noninterest expense:
Salaries and employee benefits 5,040 -- 27,151
Office supplies and postage 507 -- 2,757
Occupancy 1,026 -- 4,780
Equipment 685 -- 3,317
Professional fees and outside services 900 -- 3,385
Data processing and communications 456 -- 3,422
Amortization of intangible assets 39 -- 1,544
Other operating 1,427 -- 8,104
----------------------------------------------
Total noninterest expense 10,080 -- 54,460
----------------------------------------------
Income before income taxes 5,508 -- 33,094
Income taxes 1,500 -- 10,906
----------------------------------------------
Net income $ 4,008 $ -- $ 22,188
==============================================
Weighted Average Shares Outstanding:
Basic 2,850 -- 22,239
Diluted 2,939 -- 22,698
Earnings per share:
Basic $ 1.41 $ -- $ 1.00
Diluted $ 1.36 $ -- $ 0.98
See accompanying notes to the unaudited pro forma combined financial statements.
107
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1996
-------------------------------------------------------------------
NBT
NBT LAKE ARIEL PRO FORMA LAKE ARIEL
BANCORP INC. BANCORP, INC. ADJUSTMENTS COMBINED
PRO FORMA
Consolidated Statements of Income:
(in thousands, except per share data)
Interest and fee income:
Loans and loans held for sale $ 57,660 $ 14,592 $ -- $ 72,252
Securities - taxable 25,109 4,409 -- 29,518
Securities - tax-exempt 1,527 1,104 -- 2,631
Other 91 170 -- 261
-------------------------------------------------------------------
Total interest and fee income 84,387 20,275 -- 104,662
-------------------------------------------------------------------
Interest expense:
Deposits 31,942 8,957 -- 40,899
Short-term borrowings 3,745 83 -- 3,828
Long-term debt 678 1,143 -- 1,821
-------------------------------------------------------------------
Total interest expense 36,365 10,183 -- 46,548
-------------------------------------------------------------------
Net interest income 48,022 10,092 -- 58,114
Provision for loan losses 3,175 650 -- 3,825
-------------------------------------------------------------------
Net interest income after provision for loan losses 44,847 9,442 -- 54,289
-------------------------------------------------------------------
Noninterest income:
Trust 2,642 -- -- 2,642
Service charges on deposit accounts 3,372 1,217 -- 4,589
Net securities gains 1,179 43 -- 1,222
Other 1,669 1,446 -- 3,115
-------------------------------------------------------------------
Total noninterest income 8,862 2,706 -- 11,568
-------------------------------------------------------------------
Noninterest expense:
Salaries and employee benefits 17,817 3,684 -- 21,501
Office supplies and postage 1,796 483 -- 2,279
Occupancy 2,391 909 -- 3,300
Equipment 1,765 824 -- 2,589
Professional fees and outside services 2,382 337 -- 2,719
Data processing and communications 2,280 144 -- 2,424
Amortization of intangible assets 1,580 108 -- 1,688
Other operating 4,411 1,508 -- 5,919
-------------------------------------------------------------------
Total noninterest expense 34,422 7,997 -- 42,419
-------------------------------------------------------------------
Income before income taxes 19,287 4,151 -- 23,438
Income taxes 7,108 1,120 -- 8,228
-------------------------------------------------------------------
Net income $ 12,179 $ 3,031 $ -- $ 15,210
===================================================================
Weighted Average Shares Outstanding:
Basic 13,058 3,860 -- 16,903
Diluted 13,140 3,870 -- 16,995
Earnings per share:
Basic $ 0.93 $ 0.78 $ -- $ 0.90
Diluted $ 0.93 $ 0.78 $ -- $ 0.89
108
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1996
----------------------------------------------
NBT
PIONEER LAKE ARIEL
AMERICAN PRO FORMA PIONEER
HOLDING ADJUSTMENTS COMBINED PRO
COMPANY CORP. FORMA
Consolidated Statements of Income:
(in thousands, except per share data)
Interest and fee income:
Loans and loans held for sale $ 18,345 $ -- $ 90,597
Securities - taxable 5,144 -- 34,662
Securities - tax-exempt 595 -- 3,226
Other 274 -- 535
----------------------------------------------
Total interest and fee income 24,358 -- 129,020
----------------------------------------------
Interest expense:
Deposits 10,799 -- 51,698
Short-term borrowings 57 -- 3,885
Long-term debt 18 -- 1,839
----------------------------------------------
Total interest expense 10,874 -- 57,422
----------------------------------------------
Net interest income 13,484 -- 71,598
Provision for loan losses 500 -- 4,325
----------------------------------------------
Net interest income after provision for loan losses 12,984 -- 67,273
----------------------------------------------
Noninterest income:
Trust -- -- 2,642
Service charges on deposit accounts 1,227 -- 5,816
Net securities gains -- -- 1,222
Other 785 -- 3,900
----------------------------------------------
Total noninterest income 2,012 -- 13,580
----------------------------------------------
Noninterest expense:
Salaries and employee benefits 5,061 -- 26,562
Office supplies and postage 536 -- 2,815
Occupancy 857 -- 4,157
Equipment 622 -- 3,211
Professional fees and outside services 738 -- 3,457
Data processing and communications 408 -- 2,832
Amortization of intangible assets 39 -- 1,727
Other operating 1,488 -- 7,407
----------------------------------------------
Total noninterest expense 9,749 -- 52,168
----------------------------------------------
Income before income taxes 5,247 -- 28,685
Income taxes 1,543 -- 9,771
----------------------------------------------
Net income $ 3,704 $ -- $ 18,914
==============================================
Weighted Average Shares Outstanding:
Basic 2,812 -- 21,979
Diluted 2,932 -- 22,287
Earnings per share:
Basic $ 1.32 $ -- $ 0.86
Diluted $ 1.26 $ -- $ 0.85
See accompanying notes to the unaudited pro forma combined financial statements.
109
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
(1) Pro forma earnings per common share (EPS) have been calculated
based on the weighted average number of shares of NBT plus additional shares of
NBT assumed to be issued in the merger in exchange for the weighted average
outstanding shares of Lake Ariel for each applicable period based on the
exchange ratio of .9961.
(2) The pro forma entries to record the issuance of .9961 shares of NBT
Common Stock in exchange for each share of Lake Ariel Common Stock and to record
the adjustment of the stated value of Lake Ariel Common Stock from $.21 to $1.00
as of September 30, 1999 were determined as follows:
NBT Common Shares issued 13,015,789
Lake Ariel Common Shares issued
(4,859,771 common shares times exchange ratio of .9961) 4,840,818
---------------
Combined pro forma total common shares issued 17,856,607
Stated value per common share $ 1.00
---------------
Combined pro forma total stated value $ 17,856,607
Actual par value of common stock at September 30, 1999:
NBT $ 13,015,789
Lake Ariel 1,020,552 $ 14,036,341
------------- ---------------
Entry to record increase in stated value:
Capital Surplus $ 3,820,266
Common Stock $ 3,820,266
Entry to record 5% stock dividend to NBT Bancorp Inc. shareholders of record at
December 1, 1999 payable on December 15, 1999. To record issuance of 621,112
shares at a value of $18.70 per share.
Retained Earnings $ 11,614,794
Common Stock $ 621,112
Surplus $ 10,993,682
Summary of pro forma entries above
Retained Earnings $ 11,614,794
Common Stock $ 4,441,378
Surplus $ 7,173,416
For purposes of the above calculations, it is assumed that no dissenters' shares
existed.
110
(3) Authorized, issued and outstanding share information is as follows
at September 30, 1999:
- --------------------------------------- ---------------------- --------------------- -------------------------------
NBT LAKE ARIEL NBT/LAKE ARIEL PRO FORMA
- --------------------------------------- ---------------------- --------------------- -------------------------------
Preferred
- --------------------------------------- ---------------------- --------------------- -------------------------------
Authorized 2,500,000 1,000,000 2,500,000
- --------------------------------------- ---------------------- --------------------- -------------------------------
Issued and Outstanding ----- ----- -----
- --------------------------------------- ---------------------- --------------------- -------------------------------
Common
- --------------------------------------- ---------------------- --------------------- -------------------------------
Stated Value $1.00 $.21 $1.00
- --------------------------------------- ---------------------- --------------------- -------------------------------
Authorized 15,000,000 10,000,000 15,000,000 (A)
- --------------------------------------- ---------------------- --------------------- -------------------------------
Issued 13,636,901 4,859,771 18,477,719
- --------------------------------------- ---------------------- --------------------- -------------------------------
Outstanding 13,046,565 4,859,771 17,887,383
- --------------------------------------- ---------------------- --------------------- -------------------------------
(A) In conjunction with the merger, NBT will amend its Certificate of
Incorporation to provide for the authorization of an additional 15 million
shares of common stock by increasing the authorized shares from 15 million to 30
million.
(4) Pro forma entry to issue 1.805 shares of NBT Bancorp Inc. Common
Stock in exchange for each share of Pioneer American Holding Company Corp Common
Stock. The stated value of NBT Bancorp Inc. Common Stock to be issued is
determined as follows:
NBT Bancorp Inc.\Lake Ariel Combined common shares issued 18,477,719
Pioneer American Holding Company Corp common shares issued, after
retirement of treasury stock
(2,864,307 common shares times conversion
ratio of 1.805) 5,170,074
-----------------
Combined pro forma total common share issued 23,647,793
Stated value per common share $ 1.00
-----------------
Combined pro froma total stated value $ 23,647,793
Actual stated value of common stock at September 30, 1999:
NBT Bancorp Inc.\Lake Ariel Combined $ 18,477,719
Pioneer American Holding Company Corp
(after retirement of treasury shares) 2,864,307 $ 21,342,026
---------------- ----------------
Required increase in stated value $ 2,305,767
=================
Entry to conform to stated value of common stock:
Surplus $ 2,305,767
Common stock $ 2,305,767
Pro forma entry to retire treasury stock held by Pioneer (approximately
71,060 shares having a par value of $1.00 per share)
Common Stock $ 71,060
Surplus $ 1,658,739
Treasury Stock $ 1,729,799
Summary of pro forma entries above
Surplus $ 3,964,506
Common stock $ 2,234,707
Treasury Stock $ 1,729,799
111
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
NBT and Lake Ariel have used and incorporated by reference "forward-looking
statements" in this Joint Proxy Statement/Prospectus. Words such as "will
permit," "will afford," "believes," "expects," "may," "should," "projected,"
"contemplates," or "anticipates" may constitute forward-looking statements.
These statements are within the meaning of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934 and are subject to
risks and uncertainties that could cause our actual results to differ
materially. NBT and Lake Ariel have used these statements to describe our
expectations and estimates in various sections of this Joint Proxy
Statement/Prospectus, including:
|X| Summary -- Our Reasons for the Merger;
|X| Summary -- Selected Historical and Pro Forma Combined Financial Data;
|X| The Merger -- Background of the Merger;
|X| The Merger -- Recommendation of the NBT Board and NBT's Reasons for the
Merger;
|X| The Merger -- Recommendation of the Lake Ariel Board and Lake Ariel's
Reasons for the Merger;
|X| The Merger -- Opinion of NBT's Financial Advisor; and
|X| The Merger -- Opinion of Lake Ariel's Financial Advisor;
|X| Unaudited Pro Forma Combined Financial Statements.
Factors that might cause such differences include, but are not limited to:
the timing of closing the proposed merger being delayed; competitive pressures
among financial institutions increasing significantly; economic conditions,
either nationally or locally in areas in which NBT and Lake Ariel conduct their
operations, being less favorable than expected; the cost and effort required to
integrate aspects of the operations of the companies being more difficult than
expected; expected cost savings from the proposed merger not being fully
realized or realized within the expected time frame; legislation or regulatory
changes which adversely affect the ability of the combined company to conduct
its current and future operations; and the impact of the transition to the year
2000 on the operations of NBT, Lake Ariel, or the combined company. NBT and Lake
Ariel disclaim any obligation to update any such factors or to publicly announce
the result of any revisions to any of the forward-looking statements included in
this Joint Proxy Statement/Prospectus to reflect future events or developments.
NBT's actual results could differ materially from those set forth in the
forward-looking statements because of many reasons, including the risk factors
listed above. This list may not be exhaustive.
112
NBT BANCORP INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints [ ] and [ ], and either of them, with full
power of substitution, proxies to represent the undersigned at the Special
Meeting of Stockholders of NBT Bancorp Inc. ("NBT") to be held at the Howard
Johnson, 75 North Broad Street, Norwich, New York on February 10, 2000 at 2:00
p.m. local time, or at any adjournment or postponement thereof (the "Meeting"),
with all power which the undersigned would possess if personally present, and to
vote all shares of NBT's common stock which the undersigned may be entitled to
vote at said meeting upon the following proposals described in the accompanying
Joint Proxy Statement/Prospectus, dated , 1999, in accordance with the following
instructions and, at their discretion, upon any other matters that may properly
come before the Meeting. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS
DIRECTED BY THE UNDERSIGNED AND, IF NO DIRECTION IS INDICATED, IT WILL BE VOTED
FOR THE FOLLOWING PROPOSALS.
1.To approve the amendment to Article FOURTH of NBT's Certificate of
Incorporation to change NBT's authorized common stock and preferred stock
from no par value, stated value $1.00 per share to a par value of $.01 per
share.
[_] FOR [_] AGAINST [_] ABSTAIN
2.To approve the amendment to Article FOURTH of NBT's Certificate of
Incorporation to increase the number of authorized shares of common stock
from 15 million to 30 million.
[_] FOR [_] AGAINST [_] ABSTAIN
3.To approve a proposal to ratify a change to Article III, Section 2 of NBT's
bylaws, relating to the number, classification and qualification of directors,
previously approved by the NBT Board.
[_] FOR [_] AGAINST [_] ABSTAIN
4.To approve the Agreement and Plan of Merger, dated as of August 16, 1999, by
and between NBT and Lake Ariel Bancorp, Inc., which, if completed, would
result in (a) the merger of Lake Ariel into NBT and (b) the issuance of
between 0.8731 and 0.9961 of a share of NBT common stock in exchange for
each share of Lake Ariel common stock, and all of the matters contemplated
by the merger agreement.
[_] FOR [_] AGAINST [_] ABSTAIN
5.The proxies are authorized to vote in their discretion upon such other
business that may properly come before the Meeting.
X Please mark your votes as in this example.
(Continued and to be signed on reverse side) SEE REVERSE SIDE
(Continued from other side)
[_] Check here for address change and note change below
[_] Check here if you plan to attend the Meeting
New address: _______________________________________________________
Date: _________________ Signature(s)
__________________________
__________________________
__________________________
Please sign here exactly
as name(s) appear(s) on
the left. When signing as
attorney, executor,
administrator, trustee,
guardian, or in any other
fiduciary capacity, give
full title. If more than
one person acts as
trustee, all should sign.
All joint owners must
sign.
LAKE ARIEL BANCORP, INC.
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints _________ and _________, either of
them, with full power of substitution, proxies, to vote all of the stock of Lake
Ariel Bancorp, Inc. which the undersigned is entitled to vote at the Special
Meeting of Stockholders of Lake Ariel to be held at Holiday Inn-Scranton East,
200 Tigue Street, Dunmore, Pennsylvania on February 10, 2000 at 10:00 a.m. local
time and at any adjournment or postponement thereof. THIS PROXY, WHEN PROPERLY
EXECUTED, WILL BE VOTED, AS DIRECTED BY THE UNDERSIGNED.
IF NO DIRECTION IS MADE, IT WILL BE VOTED FOR THE FOLLOWING PROPOSAL.
1. To approve the Agreement and Plan of Merger, dated as of August 16, 1999,
by and between Lake Ariel and NBT Bancorp Inc. ("NBT") which would result
in the merger of Lake Ariel into NBT and the issuance of between 0.8731 and
0.9961 of a share of NBT common stock in exchange for each share of Lake
Ariel's common stock, and all of the matters contemplated by the merger
agreement.
[_] FOR [_] AGAINST [_] ABSTAIN
2. The proxies are authorized to vote in their discretion upon such other
business that may properly come before the Lake Ariel special meeting.
Date: _________________ Signature(s)
__________________________
__________________________
__________________________
Please sign here exactly
as name(s) appear(s) on
the left. When signing as
attorney, executor,
administrator, trustee,
guardian, or in any other
fiduciary capacity, give
full title. If more than
one person acts as
trustee, all should sign.
All joint owners must
sign.
I plan to attend the Special Meeting:
Please mark (on reverse side), sign and date, and mail in the enclosed postage
paid envelope.
APPENDIX A
AGREEMENT AND PLAN OF MERGER
AMONG
NBT BANCORP INC.
AND
LAKE ARIEL BANCORP, INC.
August 16, 1999, as amended December 13, 1999
TABLE OF CONTENTS
PAGE
1. Combination......................................................................................................1
1.1 Merger of NBTB and LABN..................................................................................1
1.2 Effect of the Merger.....................................................................................2
1.3 Consideration for Merger.................................................................................5
1.4 No Fractional Shares.....................................................................................5
1.5 Dividends; Interest......................................................................................5
1.6 Designation of Exchange Agent............................................................................6
1.7 Notice of Exchange.......................................................................................7
1.8 Acts to Carry Out This Merger Plan.......................................................................7
1.9 Treatment of Stock Options...............................................................................7
1.10 Stock Option Agreement...................................................................................8
1.11 Executive Officers and Directors of LABN.................................................................8
1.12 Employee Benefits........................................................................................9
2. Effective Time..................................................................................................10
2.1 LABN Shareholder Approval...............................................................................10
2.2 NBTB Shareholder Approval...............................................................................10
2.3 Federal Reserve Approval................................................................................10
2.4 Pennsylvania Department of Banking Approval.............................................................10
2.5 Other Regulatory Approvals..............................................................................10
2.6 Expiration of Stays.....................................................................................10
2.7 Mutual Agreement........................................................................................10
3. Conditions Precedent to Performance of Obligations of the Parties...............................................11
3.1 Regulatory Approvals....................................................................................11
3.2 Registration Statement..................................................................................11
3.3 Approval by Shareholders of LABN........................................................................11
3.4 Approval by Shareholders of NBTB........................................................................11
3.5 Federal Income Taxation.................................................................................11
3.6 Adverse Legislation.....................................................................................11
3.7 Absence of Litigation...................................................................................12
4. Conditions Precedent to Performance of the Obligations of NBTB..................................................12
4.1 Representations and Warranties; Performance of Obligations..............................................12
4.2 Opinion of LABN Counsel.................................................................................12
4.3 Opinion of LABN Litigation Counsel......................................................................12
4.4 No Adverse Developments.................................................................................13
4.5 Consolidated Net Worth..................................................................................13
4.6 Loan Loss Reserve.......................................................................................13
4.7 CRA Rating..............................................................................................13
4.8 Employment Agreement....................................................................................14
4.9 Releases................................................................................................14
4.10 Accounting Treatment....................................................................................14
4.11 Affiliates' Agreement...................................................................................14
5. Conditions Precedent to Performance of Obligations of LABN......................................................14
5.1 Representations and Warranties; Performance of Obligations..............................................14
PAGE
5.2 Opinion of NBTB Counsel.................................................................................15
5.3 No Adverse Developments.................................................................................15
5.4 Status of NBTB Common Stock.............................................................................15
5.5 Change-in-Control Agreements............................................................................15
6. Representations and Warranties of LABN..........................................................................15
6.1 Organization, Powers, and Qualification.................................................................15
6.2 Execution and Performance of Agreement..................................................................15
6.3 Absence of Violations...................................................................................16
6.4 Compliance with Agreements..............................................................................16
6.5 Binding Obligations.....................................................................................16
6.6 Absence of Default; Due Authorization...................................................................17
6.7 Compliance with BHC Act; Certain Banking Regulatory Matters.............................................18
6.8 Subsidiaries............................................................................................18
6.9 Capital Structure.......................................................................................20
6.10 Articles of Incorporation, Bylaws, and Minute Books.....................................................21
6.11 Books and Records.......................................................................................22
6.12 Regulatory Approvals and Filings, Contracts, Commitments, etc...........................................22
6.13 Financial Statements....................................................................................23
6.14 Call Reports; Bank Holding Company Reports..............................................................24
6.15 Absence of Undisclosed Liabilities......................................................................24
6.16 Absence of Certain Developments.........................................................................25
6.17 Reserve for Possible Credit Losses......................................................................25
6.18 Tax Matters.............................................................................................26
6.19 Consolidated Net Worth..................................................................................27
6.20 Examinations............................................................................................27
6.21 Reports.................................................................................................27
6.22 FIRA Compliance and Other Transactions with Affiliates..................................................28
6.23 SEC Registered Securities...............................................................................28
6.24 Legal Proceedings ......................................................................................28
6.25 Absence of Governmental Proceedings.....................................................................28
6.26 Federal Deposit Insurance...............................................................................28
6.27 Other Insurance.........................................................................................29
6.28 Labor Matters...........................................................................................29
6.29 Employee Benefit Plans..................................................................................29
6.30 Compensation............................................................................................31
6.31 Fiduciary Activities....................................................................................31
6.32 Environmental Liability.................................................................................31
6.33 Intangible Property.....................................................................................33
6.34 Real and Personal Property..............................................................................33
6.35 Loans, Leases, and Discounts............................................................................33
6.36 Material Contracts......................................................................................34
6.37 Employment and Severance Arrangements...................................................................34
6.38 Material Contract Defaults..............................................................................34
ii
PAGE
6.39 Capital Expenditures....................................................................................34
6.40 Repurchase Agreements...................................................................................34
6.41 Internal Controls; Year 2000 Problem....................................................................34
6.42 Dividends...............................................................................................35
6.43 Brokers and Advisers....................................................................................35
6.44 Interest Rate Risk Management Instruments...............................................................35
6.45 Accounting Treatment....................................................................................36
6.46 COBRA Matters...........................................................................................36
6.47 Disclosure..............................................................................................36
6.48 Regulatory and Other Approvals..........................................................................36
7. Covenants of LABN...............................................................................................37
7.1 Rights of Access........................................................................................37
7.2 Monthly and Quarterly Financial Statements; Minutes of Meetings
and Other Materials..................................................................................37
7.3 Extraordinary Transactions..............................................................................38
7.4 Preservation of Business................................................................................39
7.5 Comfort Letter..........................................................................................39
7.6 Affiliates' Agreements..................................................................................40
7.7 Pooling Treatment.......................................................................................40
7.8 Shareholders' Meeting...................................................................................40
7.9 Dividend Coordination...................................................................................40
7.10 Inconsistent Activities.................................................................................41
7.11 COBRA Obligations.......................................................................................41
7.12 Updated Schedules.......................................................................................42
7.13 Subsequent Events.......................................................................................42
8. Representations and Warranties of NBTB..........................................................................42
8.1 Organization, Powers, and Qualification.................................................................42
8.2 Execution and Performance of Agreement..................................................................43
8.3 Binding Obligations; Due Authorization..................................................................43
8.4 Absence of Default......................................................................................43
8.5 Capital Structure.......................................................................................43
8.6 Books and Records.......................................................................................44
8.7 Financial Statements....................................................................................44
8.8 Nasdaq Reporting........................................................................................45
8.9 Absence of Certain Developments.........................................................................45
8.10 Brokers and Advisers....................................................................................45
8.11 Disclosure..............................................................................................45
8.12 Regulatory and Other Approvals..........................................................................45
9. Covenants of NBTB...............................................................................................46
iii
PAGE
9.1 Rights of Access........................................................................................46
9.2 Securities Reports......................................................................................46
9.3 Shareholders' Meeting...................................................................................46
9.4 Nasdaq Approval.........................................................................................46
9.5 Options.................................................................................................46
9.6 Indemnification of Directors and Officers...............................................................46
9.7 Subsequent Events.......................................................................................47
9.7 Registration of Shares Subject to Option................................................................47
10. Closing........................................................................................................47
10.1 Place and Time of Closing...............................................................................47
10.2 Events to Take Place at Closing.........................................................................47
11. Termination, Damages for Breach, Waiver, and Amendment.........................................................48
11.1 Termination by Reason of Lapse of Time..................................................................48
11.2 Grounds for Termination.................................................................................48
11.3 Effect of Termination...................................................................................51
11.4 Waiver of Terms or Conditions...........................................................................52
11.5 Amendment...............................................................................................52
12. General Provisions.............................................................................................52
12.1 Allocation of Costs and Expenses........................................................................52
12.2 Mutual Cooperation......................................................................................53
12.3 Form of Public Disclosures..............................................................................53
12.4 Confidentiality.........................................................................................53
12.5 Claims of Brokers.......................................................................................54
12.6 Information for Applications and Registration Statement.................................................54
12.7 Standard of Materiality and of Material Adverse Effect..................................................55
12.8 Adjustments for Certain Events..........................................................................56
12.9 Counterparts............................................................................................56
12.10 Entire Agreement........................................................................................56
12.11 Survival of Representations, Warranties, and Covenants..................................................56
12.12 Section Headings........................................................................................56
12.13 Notices.................................................................................................57
12.14 Choice of Law and Venue.................................................................................58
12.15 Knowledge of a Party....................................................................................58
12.16 Binding Agreement.......................................................................................58
IV
AGREEMENT AND PLAN OF MERGER
AS AMENDED
THIS AGREEMENT AND PLAN OF MERGER made as of the sixteenth day of August,
1999, as amended as of the thirteenth day of December, 1999, among NBT BANCORP
INC. ("NBTB"), a Delaware corporation having its principal office in Norwich,
New York and LAKE ARIEL BANCORP, INC. ("LABN"), a Pennsylvania corporation
having its principal office in Lake Ariel, Pennsylvania
W I T N E S S E T H T H A T :
WHEREAS, NBTB and LABN are bank holding companies which desire to affiliate
with each other through the merger of LABN with and into NBTB, with NBTB to be
the surviving corporation (the "Merger");
WHEREAS, the Board of Directors of LABN has determined that it would be in
the best interests of LABN, its shareholders, its customers, and the areas
served by LABN to become affiliated with NBTB through the Merger;
WHEREAS, subject to the terms and conditions hereof, the respective Boards
of Directors of NBTB and LABN have agreed to cause the Merger pursuant to the
provisions of section 251 et seq. of the Delaware General Corporation Law (the
"GCL") and section 1921 et seq.
of the Pennsylvania Business Corporation Law (the "BCL");
WHEREAS, the parties intend that the Merger qualify as a tax-free
reorganization under section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and that the business combination contemplated hereby be
accounted for under the "pooling-of-interests" accounting method; and
WHEREAS, the parties desire to make certain representations, warranties,
and agreements in connection with the Merger and also to prescribe certain
conditions to the Merger;
NOW, THEREFORE, in consideration of these premises and the mutual
agreements hereinafter set forth, intending to be legally bound, the parties
agree as follows:
1.COMBINATION.
1.1. MERGER OF NBTB AND LABN. Subject to the provisions of this Agreement,
on the date and at the time to be specified in the Certificate of Merger to be
filed on the date of the Closing with the Secretary of State of the State of
Delaware pursuant to the GCL and in the Articles of Merger to be filed on the
date of the Closing with the Secretary of State of the Commonwealth of
Pennsylvania pursuant to the BCL (the "Effective Time"), LABN will be merged
with and into NBTB.
1.2. EFFECT OF THE MERGER. At the Effective Time:
(a) LABN and NBTB (the "Constituent Corporations") shall be a single
corporation, which shall be NBTB. NBTB is hereby designated as the surviving
corporation in the Merger and is hereinafter sometimes called the "Surviving
Corporation."
(b) The separate existence of LABN shall cease.
(c) The Surviving Corporation shall have all the rights, privileges,
immunities, and powers and shall assume and be subject to all the duties and
liabilities of a corporation organized under the GCL.
(d) The Surviving Corporation shall thereupon and thereafter possess
all of the rights, privileges, immunities, and franchises, of a public as well
as of a private nature, of each of the Constituent Corporations; and all
property, real, personal and mixed, and all debts due on whatever account,
including subscriptions for shares and all other choses in action, and all and
every other interest of and belonging to or due to each of the Constituent
Corporations shall be taken and deemed to be transferred to and vested in the
Surviving Corporation without further action, act or deed; and the title to any
real estate, or any interest therein, vested in either of the Constituent
Corporations shall not revert or be in any way impaired by reason of the Merger.
(e) The Surviving Corporation shall thenceforth be responsible and
liable for all the liabilities and obligations of each of the Constituent
Corporations; and any claim existing or action or proceeding pending by or
against either of the Constituent Corporations may be prosecuted to judgment as
if the Merger had not taken place, or the Surviving Corporation may be proceeded
against or substituted in its place. The Surviving Corporation expressly assumes
and agrees to perform all of LABN's liabilities and obligations. Neither the
rights of creditors nor any liens upon the property of either of the Constituent
Corporations shall be impaired by the Merger.
(f) Any taxes, penalties, and public accounts of the Commonwealth of
Pennsylvania, claimed against either of the Constituent Corporations but not
settled, assessed, or determined prior to the Merger shall be settled, assessed,
or determined against the Surviving Corporation and, together with interest
thereon, shall be a lien against the franchises and property, both real and
personal, of the Surviving Corporation.
(g) CERTIFICATE OF INCORPORATION.
(i) In the event that, prior to the Effective Time, NBTB's
stockholders approve a proposed amendment to NBTB's Certificate of Incorporation
to increase the number of authorized shares of NBTB common stock from fifteen
million to thirty million (the "Share Increase Amendment"), and the NBTB Board
of Directors causes NBTB to file with the Delaware Secretary of State an
appropriate Certificate of Amendment reflecting such approval, NBTB's
Certificate of Incorporation as it exists immediately prior to the Effective
Time shall not be further amended in the Merger and shall be the Certificate of
Incorporation of the Surviving Corporation, until later amended pursuant to
Delaware law.
(ii)in the event that, prior to the Effective Time, (A) NBTB's
stockholders approve a proposed amendment to NBTB's Certificate of Incorporation
authorizing a change in NBTB's authorized stock from no par value shares to
shares having a par value of $.01 per share (the "Par Value Amendment"), and the
NBTB Board of Directors causes NBTB to file with the Delaware Secretary of State
an appropriate Certificate of Amendment reflecting such approval, but (B) NBTB's
stockholders do not approve the Share Increase Amendment, or NBTB's Board of
Directors does not cause NBTB to file with the Delaware Secretary of State an
appropriate Certificate of Amendment reflecting approval of the Share Increase
Amendment, the Certificate of Incorporation of NBTB as it exists immediately
prior to the Effective Time shall be amended in the Merger by amending Article
FOURTH thereof to read as follows:
"FOURTH: The total number of shares of all classes of stock which
the Corporation shall have the authority to issue is Twenty-Two Million
Five Hundred Thousand (22,500,000) shares, consisting of Twenty Million
(20,000,000) shares of Common Stock having a par value of $.01 per
share and Two Million Five Hundred Thousand (2,500,000) shares of
Preferred Stock having a par value of $.01 per share."
(iii) in the event that, prior to the Effective Time, (A) NBTB's
stockholders do not approve either the Par Value Amendment or the Share Increase
Amendment, or (B) NBTB's stockholders do not approve the Par Value Amendment and
NBTB's Board of Directors does not cause NBTB to file with the Delaware
Secretary of State an appropriate Certificate of Amendment reflecting approval
of the Share Increase Amendment, or (C) NBTB's stockholders do not approve the
Share Increase Amendment and NBTB's Board of Directors does not cause NBTB to
file with the Delaware Secretary of State an appropriate Certificate of
Amendment reflecting approval of the Par Value Amendment, or (D) NBTB's Board of
Directors does not cause NBTB to file with the Delaware Secretary of State
either an appropriate Certificate of Amendment reflecting approval of the Share
Increase Amendment or an appropriate Certificate of Amendment reflecting
approval of the Par Value Amendment, the Certificate of Incorporation of NBTB as
it exists immediately prior to the Effective Time shall be amended in the Merger
by amending Article FOURTH thereof to read as follows:
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"FOURTH: The total number of shares of all classes of stock which
the Corporation shall have authority to issue is Twenty-Two Million
Five Hundred Thousand (22,500,000) shares, consisting of Twenty Million
(20,000,000) 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."
As so amended, the Certificate of Incorporation of NBTB shall be the
Certificate of Incorporation of the Surviving Corporation, until later amended
pursuant to Delaware law.
(h) The By-Laws of NBTB as they exist immediately prior to the
Effective Time shall be the By-Laws of NBTB until later amended pursuant to
Delaware law.
(i) The authorized shares of capital stock of NBTB as of the Effective
Time (after giving effect to the Merger) shall be as set forth or referred to in
Section 1.2(g) hereof. The term "NBTB Common Stock" shall mean the common stock
of NBTB, no par value, $1.00 stated value, or the common stock of NBTB as
amended prior to or at the Effective Time, as the context may require.
(j) Subject to the terms, conditions, and limitations set forth herein,
at the Effective Time and until surrendered for exchange and payment, each
outstanding stock certificate which, prior to the Effective Time, represented
shares of the common stock, $0.21 par value, of LABN (the "LABN Common Stock"),
other than any shares of LABN Common Stock held by NBTB (other than in a
fiduciary, representative, or custodial capacity), which shall be canceled
without any payment therefor, except for any dividends declared prior to the
Effective Time but not yet paid as of the Effective Time, shall, by virtue of
this Agreement and without any action on the part of the holder or holders
thereof, cease to represent an issued and existing share and shall be converted
into a right to receive from NBTB, and shall for all purposes represent the
right to receive, upon surrender of the certificate formerly representing such
shares, a certificate representing the number of shares of NBTB Common Stock
specified in section 1.3 of this Agreement; provided that, with respect to any
matters relating to stock certificates representing LABN Common Stock, NBTB may
rely conclusively upon the record of stockholders maintained by LABN containing
the names and addresses of the holders of record of LABN's Common Stock at the
Effective Time.
1.3. CONSIDERATION FOR MERGER. Subject to the terms, conditions, and
limitations set forth herein, as a result of the Merger, each share of LABN
Common Stock other than shares of LABN Common Stock held by NBTB (other than in
a fiduciary, representative, or custodial capacity) shall be converted into the
right to receive, in exchange for each share of LABN Common Stock held of record
as of the Effective Time, that number of shares (the "Exchange Ratio") of NBTB
Common Stock calculated (subject to the next sentence and to the procedures
specified in section 11.2(d)(ii) of this Agreement) by dividing $18.50 by the
average of the closing bid price and the closing asked price per share for NBTB
Common Stock as reported on the Nasdaq National Market (or, in the absence
thereof, as reported by or determined by reference to such other source upon
which NBTB and LABN shall agree) for each of the twenty consecutive trading days
ending on and including the eighth trading day before the Effective Time (the
"Average Closing Price"). Notwithstanding the foregoing, however, (a) if the
ratio computed in accordance with the preceding sentence is less than 0.8315,
then the Exchange Ratio shall be 0.8315; and (b) if the ratio computed in
accordance with the preceding sentence is more than 0.9487, then the Exchange
Ratio shall be 0.9487.
1.4. NO FRACTIONAL SHARES. NBTB will not issue fractional shares of its
stock. In lieu of fractional shares of NBTB Common Stock, if any, each
shareholder of LABN who is entitled to a fractional share of NBTB Common Stock
shall receive an amount of cash equal to the product of such fraction times the
Average Closing Price. Such fractional share interest shall not include the
right to vote or to receive dividends or any interest thereon.
1.5. DIVIDENDS; INTEREST. No shareholder of LABN will be entitled to receive
dividends on his, her or its NBTB Common Stock until he, she or it exchanges
his, her or its certificates representing LABN Common Stock for NBTB Common
Stock. Any dividends declared on NBTB Common Stock to holders of record on or
after the Effective Time shall, with respect to stock to be delivered pursuant
to this Agreement to shareholders of LABN who have not exchanged their
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certificates representing LABN Common Stock for NBTB Common Stock, be paid to
the Exchange Agent (as designated in section 1.6 of this Agreement) and, upon
receipt from a former shareholder of LABN of certificates representing shares of
LABN Common Stock, the Exchange Agent shall forward to such former shareholder
of LABN (i) certificates representing his, her or its shares of NBTB Common
Stock, (ii) dividends declared thereon subsequent to the Effective Time (without
interest) and (iii) the cash value of any fractional shares determined in
accordance with section 1.4 hereof.
1.6. DESIGNATION OF EXCHANGE AGENT.
(a) The parties to this Agreement hereby designate American Stock
Transfer and Trust Company, New York, New York ("AST") as Exchange Agent to
effect the exchanges contemplated hereby.
(b) NBTB will, promptly after the Effective Time, issue and deliver to
AST the share certificates representing shares of NBTB Common Stock (each a "New
Certificate") and the cash to be paid to holders of LABN Common Stock in
accordance with this Agreement.
(c) If any New Certificate is to be issued in a name other than that in
which the certificate formerly representing LABN Common Stock (an "Old
Certificate") and surrendered for exchange was issued, the Old Certificate so
surrendered shall be properly endorsed and otherwise in proper form for transfer
and the person requesting such exchange shall pay to AST any transfer or other
taxes required by reason of the issuance of the New Certificate in any name
other than that of the registered holder of the Old Certificate surrendered, or
establish to the satisfaction of AST that such tax has been paid or is not
payable.
(d) In the event that any Old Certificates have not been surrendered
for exchange in accordance with this Agreement on or before the second
anniversary of the Effective Time, NBTB may at any time thereafter, with or
without notice to the holders of record of such Old Certificates, sell for the
accounts of any or all of such holders any or all of the shares of NBTB Common
Stock which such holders are entitled to receive under Section 1.3 hereof (the
"Unclaimed Shares"). Any such sale may be made by public or private sale or sale
at any broker's board or on any securities exchange in such manner and at such
times as NBTB shall determine. If, in the opinion of counsel for NBTB, it is
necessary or desirable, any Unclaimed Shares may be registered for sale under
the Securities Act of 1933, as amended (the "Securities Act") and applicable
state laws. NBTB shall not be obligated to make any sale of Unclaimed Shares if
it shall determine not to do so, even if notice of sale of the Unclaimed Shares
has been given. The net proceeds of any such sale of Unclaimed Shares shall be
held for holders of the unsurrendered Old Certificates whose Unclaimed Shares
have been sold, to be paid to them upon surrender of the Old Certificates. From
and after any such sale, the sole right of the holders of the unsurrendered Old
Certificates whose Unclaimed Shares have been sold shall be the right to collect
the net sale proceeds held by NBTB for their respective accounts, and such
holders shall not be entitled to receive any interest on such net sale proceeds
held by NBTB.
(e) If any Old Certificates are not surrendered prior to the date on
which such certificates would otherwise escheat to or become the property of any
governmental unit or agency, the unclaimed items shall, to the extent permitted
by abandoned property and any other applicable law, become the property of NBTB
(and to the extent not in its possession shall be paid over to it), free and
clear of all claims or interest of any person previously entitled to such
claims. Notwithstanding the foregoing, neither NBTB nor its agents or any other
person shall be liable to any former holder of LABN Common Stock for any
property delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
1.7. NOTICE OF EXCHANGE. Promptly after the Effective Time, AST shall mail
to each holder of one or more certificates formerly representing LABN Common
Stock a notice specifying the Effective Time and notifying such holder to
surrender his, her or its certificate or certificates to AST for exchange. Such
notice shall be mailed to holders by regular mail at their addresses on the
records of LABN.
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1.8. ACTS TO CARRY OUT THIS MERGER PLAN.
(a) LABN and its proper officers and directors shall do all such acts
and things as may be necessary or proper to vest, perfect, or confirm in NBTB
title to such property or rights as are specified in sections 1.2(c) and 1.2(d)
of this Agreement and otherwise to carry out the purposes of this Agreement.
(b) If, at any time after the Effective Time, NBTB shall consider or be
advised that any further assignments or assurances in law or any other acts are
necessary or desirable to (i) vest, perfect, or confirm, of record or otherwise,
in NBTB its right, title, or interest in or under any of the rights, properties,
or assets of LABN acquired or to be acquired by NBTB as a result of, or in
connection with, the Merger, or (ii) otherwise carry out the purposes of this
Agreement, LABN and its proper officers and directors shall be deemed to have
granted to NBTB an irrevocable power of attorney to execute and deliver all such
proper deeds, assignments, and assurances in law and to do all acts necessary or
proper to vest, perfect, or confirm title to and possession of such rights,
properties, or assets in NBTB and otherwise to carry out the purposes of this
Agreement; and the proper officers and directors of NBTB are fully authorized in
the name of LABN or otherwise to take any and all such action.
1.9. TREATMENT OF STOCK OPTIONS. At the Effective Time, each stock option
to purchase LABN Common Stock not exercised prior to the Effective Time (each, a
"Converted Option"), whether vested or unvested, shall automatically be
converted into an option (a "Replacement Option") to acquire, on the same terms
and conditions as were applicable under the terms of such Converted Option and
any option plan under which such Converted Option was issued (or as near thereto
as is practicable), a number of shares of NBTB Common Stock equal to (rounded
down to the nearest whole number of shares) (a) the number of shares of LABN
Common Stock subject to such Converted Option as of the Effective Time
multiplied by (b) the Exchange Ratio, at an exercise price per share (rounded
down to the nearest whole cent) equal to (x) the aggregate exercise price under
such Converted Option for all of the shares of LABN Common Stock subject to such
Converted Option at the Effective Time divided by (y) the number of shares of
NBTB Common Stock subject to such Replacement Option. Notwithstanding the
foregoing, each Converted Option which is intended to be an "incentive stock
option" (as defined in section 422 of the Code) shall be adjusted in accordance
with the requirements of section 424 of the Code. At or prior to the Effective
Time, LABN shall take all action, if any, necessary with respect to any
Converted Options or stock plans under which Converted Options have been issued
to permit the replacement of the Converted Options with Replacement Options as
contemplated by this section 1.9. At the Effective Time, NBTB shall assume such
stock plans; provided, that such assumption shall only be in respect of the
Replacement Options and that NBTB shall have no obligation with respect to any
awards under such plans other than the Replacement Options and shall have no
obligation to make any additional grants or awards under such assumed plans.
1.10. STOCK OPTION AGREEMENT. Simultaneously herewith, NBTB and LABN shall
execute and deliver the Stock Option Agreement in the form attached hereto as
Exhibit I. The option that is the subject of the Stock Option Agreement will
terminate as of, and will not be exercisable following, the Effective Time.
1.11. EXECUTIVE OFFICERS AND DIRECTORS OF LABN.
(a) At the Effective Time, in consideration for and against delivery of
a full and unconditional release granted in favor of NBTB, LABN, and LA Bank,
National Association ("LA Bank") by John G. Martines ("Martines") from any and
all claims, actions, or liabilities which Martines may have, may have had, or
could have against NBTB, LABN, or LA Bank (except entitlements granted to
Martines by this Agreement, the employment agreement described in section 4.8
hereof (the "Martines Employment Agreement"), the LA Bank, N.A. Salary
Continuation Agreement dated March 11, 1997 between LA Bank and Martines, the
Supplementary Retirement Benefit Agreement dated January 6, 1995 between LA Bank
and Martines, and the Salary Continuation Agreement dated May 5, 1989 between LA
Bank and Martines), and subject in every case to section 18(k) of the Federal
Deposit Insurance Act (12 U.S.C. ss. 1828(k)), NBTB will tender to Martines the
Martines Employment Agreement and the change-in-control agreement described in
section 5.5 hereof.
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(b) At the Effective Time, in consideration for and against delivery of
a full and unconditional release granted in favor of NBTB, LABN, and LA Bank,
National Association ("LA Bank") by Louis M. Martarano ("Martarano") from any
and all claims, actions, or liabilities which Martarano may have, may have had,
or could have against NBTB, LABN, or LA Bank (except entitlements granted to
Martarano by this Agreement or the LA Bank, N.A. Salary Continuation Agreement
dated March 11, 1997 between LA Bank and Martarano), and subject in every case
to section 18(k) of the Federal Deposit Insurance Act (12 U.S.C. ss. 1828(k)),
NBTB will tender to Martarano the change-in-control agreement described in
section 5.5 hereof.
(c) At the Effective Time, in consideration for and against delivery of
a full and unconditional release granted in favor of NBTB, LABN, and LA Bank,
National Association ("LA Bank") by Joseph J. Earyes ("Earyes") from any and all
claims, actions, or liabilities which Earyes may have, may have had, or could
have against NBTB, LABN, or LA Bank (except entitlements granted to Earyes by
this Agreement or the LA Bank, N.A. Salary Continuation Agreement dated March
11, 1997 between LA Bank and Earyes), and subject in every case to section 18(k)
of the Federal Deposit Insurance Act (12 U.S.C. ss. 1828(k)), NBTB will tender
to Earyes the change-in-control agreement described in section 5.5 hereof.
(d) Subject to the fiduciary duties of its directors to NBTB, as
promptly as practicable after the Effective Time NBTB will use its best efforts
to cause William C. Gumble ("Gumble"), Bruce D. Howe ("Howe"), and Martines to
be elected or appointed as directors of NBTB, with Gumble to serve as a director
of the class whose term expires in 2001, Martines to serve as a director of the
class whose term expires in 2000, and Howe to serve as a director of the class
whose term expires in 2002.
(e) At its next annual meeting of stockholders, NBTB will propose to
its stockholders that Martines be reelected to the board of directors of NBTB as
a member of the class whose term shall expire in 2003.
1.12. EMPLOYEE BENEFITS.
(a) If any employee of LABN or of LA Bank becomes a participant in any
employment benefit plan, practice, or policy of NBTB or NBT Bank, National
Association ("NBT Bank"), such employee shall be given credit under such plan,
practice, or policy for all service prior to the Effective Time with LABN or LA
Bank for purposes of eligibility and vesting, but not for benefit accrual
purposes, for which such service is taken into account or recognized, and, if
necessary, NBTB shall cause any and all pre-existing condition limitations and
eligibility waiting periods under group health plans to be waived with respect
to such participants and their eligible dependents (except to the extent such
pre-existing condition limitations are no more onerous than similar limitations,
or such waiting periods do not extend any waiting period, applicable to such
employee under the plans of LABN or LA Bank), provided that there be no
duplication of such benefits as are provided under any employee benefit plans,
practices, or policies of LABN or LA Bank that continue in effect following the
Effective Time.
(b) Each employee of LABN or LA Bank (except Martines, Martarano, and
Earyes) who becomes an employee of NBTB or any of its subsidiaries or who,
following the Effective Time, remains an employee of LA Bank and is terminated
by NBTB or any of its subsidiaries (including LA Bank) subsequent to the
Effective Time shall be entitled to severance pay, if any, in accordance with
the general severance policy of NBTB. Such employee's service with LABN or LA
Bank shall be treated as service with NBTB for purposes of determining the
amount of severance pay, if any, under the severance policy of NBTB.
2.EFFECTIVE TIME.
The Effective Time shall be the date and time specified in the certificate
of merger to be filed with the Secretary of State of the State of Delaware
pursuant to section 252 of the GCL to effectuate the Merger, the date of which
shall be the latest of:
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2.1. LABN SHAREHOLDER APPROVAL. The day upon which the shareholders of LABN
approve, ratify, and confirm the Merger by the affirmative vote of the holders
of at least 66_ percent of the outstanding shares of LABN Common Stock;
2.2. NBTB SHAREHOLDER APPROVAL. The day upon which the shareholders of
NBTB approve this Agreement;
2.3. FEDERAL RESERVE APPROVAL. The first to occur of (a) the date thirty
days following the date of the order of the Board of Governors of the Federal
Reserve System or the Federal Reserve Bank of New York acting pursuant to
authority delegated to it by the Board of Governors of the Federal Reserve
System (collectively, the "Board of Governors") approving the Merger, or (b) if,
pursuant to section 321(a) of the Riegle Community Development and Regulatory
Improvement Act of 1994 (the "Riegle Act"), the Board of Governors shall have
prescribed a shorter period of time with the concurrence of the Attorney General
of the United States, the date on which such shorter period of time shall
elapse; or
2.4. PENNSYLVANIA DEPARTMENT OF BANKING APPROVAL. The date ten days
following the date of the order of the Department of Banking of the Commonwealth
of Pennsylvania (the "Department") approving the transactions contemplated by
this Agreement;
2.5. OTHER REGULATORY APPROVALS. The date upon which any other material
order, approval, or consent of a federal or state regulator of financial
institutions or financial institution holding companies authorizing consummation
of the transactions contemplated by this Agreement is obtained or any waiting
period mandated by such order, approval, or consent has run;
2.6. EXPIRATION OF STAYS. Ten days after any stay of the approvals of any
of the Board of Governors or the Department of the transactions contemplated by
this Agreement or any injunction against closing of said transactions is lifted,
discharged, or dismissed; or
2.7. MUTUAL AGREEMENT. Such other date as shall be mutually agreed to by
NBTB and LABN.
3.CONDITIONS PRECEDENT TO PERFORMANCE OF OBLIGATIONS OF THE PARTIES.
The obligations of NBTB and LABN to consummate the Merger shall be subject
to the conditions that on or before the Effective Time:
3.1. REGULATORY APPROVALS. Orders, consents, and approvals required to
consummate the Merger shall have been entered by the requisite governmental
authorities, and all statutory waiting periods in respect thereof shall have
expired.
3.2. REGISTRATION STATEMENT.
(a) EFFECTIVENESS. The registration statement to be filed by NBTB with
the Securities and Exchange Commission (the "SEC") pursuant to the Securities
Act in connection with the registration of the shares of NBTB Common Stock to be
used as consideration in connection with the Merger (the "Registration
Statement") shall have become effective under the Securities Act, and NBTB shall
have received all required state securities laws or "blue sky" permits and other
required authorizations or confirmations of the availability of exemptions from
registration requirements necessary to issue NBTB Common Stock in the Merger.
(b) ABSENCE OF STOP-ORDER. Neither the Registration Statement nor any
such required permit, authorization, or confirmation shall be subject to a
stop-order or threatened stop-order by the SEC or any state securities
authority.
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3.3. APPROVAL BY SHAREHOLDERS OF LABN. The shareholders of LABN shall have
authorized, ratified, and confirmed the Merger by the affirmative vote of the
holders of at least 66_ percent of the outstanding shares of LABN Common Stock.
3.4. APPROVAL BY SHAREHOLDERS OF NBTB. The shareholders of NBTB shall have
approved this Agreement by the affirmative vote of the holders of a majority of
the outstanding shares of NBTB Common Stock.
3.5. FEDERAL INCOME TAXATION. NBTB and LABN shall have received a written
opinion of Saul, Ewing, Remick & Saul LLP, or of another firm mutually agreeable
to NBTB and LABN, applying existing law, that the Merger shall qualify as a
reorganization under section 368(a)(1) of the Code and the regulations and
rulings promulgated thereunder. In rendering such opinion, the firm rendering
the opinion may require and rely upon representations contained in certificates
of officers of NBTB, LABN, and others.
3.6. ADVERSE LEGISLATION. Subsequent to the date of this Agreement, no
legislation shall have been enacted and no regulation or other governmental
requirement shall have been adopted or imposed that renders or will render
consummation of the Merger impossible or illegal.
3.7. ABSENCE OF LITIGATION. No action, suit, or proceeding shall have been
instituted or shall have been threatened before any court or other governmental
body or by any public authority to restrain, enjoin, or prohibit the Merger, or
which would reasonably be expected to restrict materially the operation of the
business of LABN or that of LA Bank or the exercise of any rights with respect
thereto or to subject either of the parties hereto or any of their subsidiaries,
directors, or officers to any liability, fine, forfeiture, divestiture, or
penalty on the ground that the transactions contemplated hereby, the parties
hereto, or their subsidiaries, directors, or officers have breached or will
breach any applicable law or regulation or have otherwise acted improperly in
connection with the transactions contemplated hereby and with respect to which
the parties hereto have been advised by counsel that, in the opinion of such
counsel, such action, suit, or proceeding raises substantial questions of law or
fact which could reasonably be decided materially adversely to either party
hereto or its subsidiaries, directors, or officers.
4.CONDITIONS PRECEDENT TO PERFORMANCE OF THE OBLIGATIONS OF NBTB.
The obligations of NBTB hereunder are subject to the satisfaction, on or
prior to the Effective Time, of all the following conditions, compliance with
which or the occurrence of which may be waived in whole or in part by NBTB in
writing unless not so permitted by law:
4.1. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All
representations and warranties of LABN contained in this Agreement shall be true
and correct in all material respects as of the Effective Time with the same
effect as if such representations and warranties had been made or given at and
as of such date, except that representations and warranties of LABN contained in
this Agreement which specifically relate to an earlier date shall be true and
correct in all material respects as of such earlier date. All covenants and
obligations to be performed or met by LABN on or prior to the Effective Time
shall have been so performed or met. On the date of the Effective Time, the
president and chief executive officer and the chief financial officer of LABN
shall deliver to NBTB a certificate to that effect. The delivery of such
certificates shall in no way diminish the warranties, representations,
covenants, and obligations of LABN made in this Agreement.
4.2. OPINION OF LABN COUNSEL. NBTB shall have received a favorable opinion
from Saul, Ewing, Remick & Saul LLP, dated the date of the Effective Time,
substantially in form and substance as that set forth as Exhibit II attached
hereto.
4.3. OPINION OF LABN LITIGATION COUNSEL. NBTB shall have received a
favorable opinion from legal counsel handling litigation matters for LABN and LA
Bank, dated the date of the Effective Time, substantially in form and substance
as that set forth as Exhibit III attached hereto.
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4.4. NO ADVERSE DEVELOPMENTS.
(a) During the period from June 30, 1999 to the Effective Time, (i)
there shall not have been any material adverse effect as defined in section
12.7(d) (a "Material Adverse Effect") with respect to LABN; and (ii) none of the
events described in clauses (a) through (f) of section 6.16 of this Agreement
shall have occurred, and each of the practices and conditions described in
clauses (x) through (z) of that section shall have been maintained.
(b) As of the Effective Time, the capital structure of LABN and the
capital structure of LA Bank shall be as stated in section 6.9.
(c) As of the Effective Time, other than liabilities incurred in the
ordinary course of business subsequent to June 30, 1999, there shall be no
liabilities of LABN or LA Bank which are material to LABN on a consolidated
basis which were not reflected on the consolidated statement of condition of
LABN as of June 30, 1999 or in the related notes to the consolidated statement
of condition of LABN as of June 30, 1999.
(d) No adverse action shall have been instituted or threatened against
LABN or any of its subsidiaries by any governmental authority, or referred by a
governmental authority to another governmental authority, for the enforcement or
assessment of penalties for the violation of any laws or regulations relating to
equal credit opportunity, fair housing, or fair lending.
(e) NBTB shall have received a certificate dated the date of the
Effective Time, signed by the president and the chief financial officer of LABN,
certifying to the matters set forth in paragraphs (a), (b), (c), and (d) of this
section 4.4. The delivery of such officers' certificate shall in no way diminish
the warranties and representations of LABN made in this Agreement.
4.5. CONSOLIDATED NET WORTH. On and as of the Effective Time, the
consolidated net worth of LABN as determined in accordance with generally
accepted accounting principles shall not be less than the sum of (a)
$35,079,000, (b) the proceeds to LABN of the sale of treasury stock since June
30, 1999, and (c) the proceeds to LABN of the exercise of stock options to
purchase shares of LABN Common Stock since June 30, 1999.
4.6. LOAN LOSS RESERVE. On and as of the Effective Time, the aggregate
reserve for loan losses of LA Bank as determined in accordance with generally
accepted accounting principles shall not be less than $2,350,000.
4.7. CRA RATING. The CRA rating of LA Bank shall be no lower than "satis-
factory."
4.8. EMPLOYMENT AGREEMENT. Martines shall have entered into an employment
agreement with NBTB substantially in form and substance as that set forth as
Exhibit IV attached hereto.
4.9. RELEASES. The releases described in sections 1.11(a), (b), and (c)
shall have been delivered to NBTB.
4.10. ACCOUNTING TREATMENT. NBTB shall have received letters (the "Pooling
Letters") from KPMG LLP ("KPMG"), the independent auditing firm of NBTB, dated
the date of or shortly prior to each of the mailing date of the proxy materials
to the shareholders of LABN, and the date of the Effective Time, stating the
opinion of KPMG that the Merger shall qualify for pooling-of-interest accounting
treatment.
4.11. AFFILIATES' AGREEMENTS. NBTB shall have received a written agreement
substantially in form and substance as that set forth as Exhibit V attached
hereto (an "Affiliates Agreement"):
(a) on or before the date of this Agreement, from each person who, on
the date of this Agreement, is an "affiliate" of LABN (as that term is used in
section 7.6 of this Agreement), and
(b) not later than ten days after any other person becomes an
"affiliate" of LABN (as that term is used in section 7.6 of this Agreement),
from such person.
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5.CONDITIONS PRECEDENT TO PERFORMANCE OF OBLIGATIONS OF LABN.
The obligations of LABN hereunder are subject to the satisfaction, on or
prior to the Effective Time, of all the following conditions, compliance with
which or the occurrence of which may be waived in whole or in part by LABN in
writing unless not so permitted by law:
5.1. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All
representations and warranties of NBTB contained in this Agreement shall be true
and correct in all material respects as of the Effective Time with the same
effect as if such representations and warranties had been made or given at and
as of such date, except that representations and warranties of NBTB contained in
this Agreement which specifically relate to an earlier date shall be true and
correct in all material respects as of such earlier date. All covenants and
obligations to be performed or met by NBTB on or prior to the Effective Time
shall have been so performed or met. On the date of the Effective Time, either
the president or an executive vice president of NBTB shall deliver to LABN a
certificate to that effect. The delivery of such officer's certificate shall in
no way diminish the warranties, representations, covenants, and obligations of
NBTB made in this Agreement.
5.2. OPINION OF NBTB COUNSEL. LABN shall have received a favorable opinion
of Duane, Morris & Heckscher LLP, dated the date of the Effective Time,
substantially in form and substance as that set forth as Exhibit VI attached
hereto.
5.3. NO ADVERSE DEVELOPMENTS. During the period from June 30, 1999 to the
Effective Time, there shall not have been any Material Adverse Effect with
respect to NBTB, and LABN shall have received a certificate dated the date of
the Effective Time signed by either the President or an Executive Vice President
of NBTB to the foregoing effect. The delivery of such officer's certificate
shall in no way diminish the warranties and representations of NBTB made in this
Agreement.
5.4. STATUS OF NBTB COMMON STOCK. The shares of NBTB Common Stock to be
issued to the shareholders of LABN upon consummation of the Merger shall have
been authorized for inclusion on the Nasdaq National Market (or another national
securities exchange) subject to official notice of issuance.
5.5. CHANGE-IN-CONTROL AGREEMENTS. NBTB shall have tendered to each of
Martines, Martarano, and Earyes a change-in-control agreement substantially in
form and substance as that set forth as Exhibit VII attached hereto.
6.REPRESENTATIONS AND WARRANTIES OF LABN.
LABN represents and warrants to NBTB as follows:
6.1. ORGANIZATION, POWERS, AND QUALIFICATION. Each of LABN and LA Bank is a
corporation which is duly organized, validly existing, and in good standing
under the laws of its jurisdiction of incorporation and has all requisite
corporate power and authority to own and operate its properties and assets, to
lease properties used in its business, and to carry on its business as now
conducted. Each of LABN and LA Bank owns or possesses in the operation of its
business all franchises, licenses, permits, branch certificates, consents,
approvals, waivers, and other authorizations, governmental or otherwise, which
are necessary for it to conduct its business as now conducted, except for those
where the failure of such ownership or possession would not have a Material
Adverse Effect on LABN or LA Bank. Each of LABN and LA Bank is duly qualified
and licensed to do business and is in good standing in every jurisdiction with
respect to which the failure to be so qualified or licensed could result in a
Material Adverse Effect on LABN or LA Bank.
6.2. EXECUTION AND PERFORMANCE OF AGREEMENT. LABN has all requisite
corporate power and authority to execute and deliver this Agreement and to
perform its respective terms.
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6.3. ABSENCE OF VIOLATIONS.
(a) Neither LABN nor LA Bank is (i) in violation of its respective
charter documents or bylaws, (ii) in violation of any applicable federal, state,
or local law or ordinance or any order, rule, or regulation of any federal,
state, local, or other governmental agency or body, or (iii) in violation of or
in default with respect to any order, writ, injunction, or decree of any court,
or any order, license, regulation, or demand of any governmental agency, except,
in the case of (ii) or (iii), for such violations or defaults which in the
aggregate could not reasonably be expected to have a Material Adverse Effect on
LABN or LA Bank; and neither LABN nor LA Bank has received any claim or notice
of violation with respect thereto;
(b) neither LABN nor LA Bank nor any member of the management of either
of them is a party to any assistance agreement, supervisory agreement,
memorandum of understanding, consent order, cease and desist order or condition
of any regulatory order or decree with or by the Board of Governors, the Federal
Reserve Bank of Philadelphia, the Federal Deposit Insurance Corporation (the
"FDIC"), the SEC, the Department, any other banking or securities authority of
the United States or the Commonwealth of Pennsylvania, or any other regulatory
agency that relates to the conduct of the business of LABN or LA Bank or any of
their subsidiaries or their assets; and except as previously disclosed to NBTB
in writing, no such agreement, memorandum, order, condition, or decree is
pending or threatened;
(c) LA Bank has established policies and procedures to provide
reasonable assurance of compliance in a safe and sound manner with the federal
banking, credit, housing, consumer protection, and civil rights laws and the
regulations adopted under each of those laws, so that transactions be executed
and assets be maintained in accordance with such laws and regulations; and the
policies and practices of LA Bank with respect to all such laws and regulations
reasonably limit noncompliance and detect and report noncompliance to its
management; and
(d) LA Bank has established a CRA policy which provides for goals and
objectives consistent with CRA and for procedures whereby all significant
CRA-related activity is documented; and LA Bank has officially designated a CRA
officer who reports directly to the board of directors and is responsible for
the CRA program of LA Bank.
6.4. COMPLIANCE WITH AGREEMENTS. Neither LABN nor LA Bank is in violation
of any term of any security agreement, mortgage, indenture, or any other
contract, agreement, instrument, lease, or certificate, except for such
violations which in the aggregate could not reasonably be expected to have a
Material Adverse Effect on LABN or LA Bank.
6.5. BINDING OBLIGATIONS. Subject to the approval of its shareholders, this
Agreement constitutes valid, legal, and binding obligations of LABN, enforceable
against it in accordance with its terms, except as enforcement may be limited by
applicable bankruptcy, insolvency, moratorium or similar law, or by general
principles of equity. The execution, delivery, and performance of this Agreement
and the transactions contemplated thereby have been duly and validly authorized
by the board of directors of LABN.
6.6. ABSENCE OF DEFAULT; DUE AUTHORIZATION.
(a) None of the execution or the delivery of this Agreement, the
consummation of the transactions contemplated thereby, or the compliance with or
fulfillment of the terms thereof will conflict with, or result in a breach of
any of the terms, conditions, or provisions of, or constitute a default under
the organizational documents or bylaws of LABN or LA Bank or any subsidiary of
either of them. Such execution, consummation, and fulfillment will not (i)
conflict with, or result in a breach of the terms, conditions, or provisions of,
or constitute a violation, conflict, or default under, or, except as set forth
on Schedule 6.6 hereof, give rise to any right of termination, cancellation, or
acceleration with respect to, or result in the creation of any lien, charge, or
encumbrance upon, any property or assets of LABN or LA Bank or any subsidiary of
either of them pursuant to any agreement or instrument under which LABN or LA
Bank or any such subsidiary is obligated or by which any of its properties or
assets may be bound, including without limitation any lease, contract, mortgage,
promissory note, deed of trust, loan, credit arrangement, or other commitment or
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arrangement of LABN or LA Bank or any subsidiary of either of them in respect of
which it is an obligor, except for such conflicts, breaches, violations,
defaults, rights of termination, cancellation, or acceleration, or results which
in the aggregate could not reasonably be expected to have a Material Adverse
Effect on LABN or LA Bank; (ii) if the Merger is approved by the Board of
Governors under the Bank Holding Company Act of 1956, as amended (the "BHC
Act"), violate any law, statute, rule, or regulation of any government or agency
to which LABN or LA Bank or any subsidiary of either of them is subject and
which is material to its operations; or (iii) violate any judgment, order, writ,
injunction, decree, or ruling to which LABN or LA Bank or any subsidiary of
either of them or any of the properties or assets of any of them is subject or
bound. None of the execution or delivery of this Agreement, the consummation of
the transactions contemplated hereby, or the compliance with or fulfillment of
the terms hereof will require any authorization, consent, approval, or exemption
by any person which has not been obtained, or any notice or filing which has not
been given or done, other than approval of the transactions contemplated by this
Agreement by, notices to, or filings with by the Board of Governors, the
Securities and Exchange Commission (the "SEC"), state securities commissions,
the Department, the Secretary of State of the State of Delaware, and the
Secretary of State of the Commonwealth of Pennsylvania.
(b) Except for approval of this Agreement by the affirmative vote of
the holders of at least 66_ percent of the outstanding shares of LABN Common
Stock, no other corporate proceedings on the part of LABN are necessary to
approve or authorize this Agreement, the Merger, the Stock Option Agreement, the
issuance of the stock options contemplated by the Stock Option Agreement, the
subsequent exercise of the stock options thereby issued, or the other
transactions contemplated by this Agreement and the Stock Option Agreement or
the carrying out of the transactions contemplated hereby or thereby.
(c) The Board of Directors of LABN has taken all necessary action so
that the provisions of sections 2561 et seq. of the BCL (and any applicable
provisions of the takeover laws of any other state) and any comparable
provisions of LABN's articles of incorporation do not and will not apply to this
Agreement, the Merger, the Stock Option Agreement, or the transactions
contemplated hereby.
(d) LABN has not adopted any shareholder rights plan, "poison pill" or
similar plan, or any other plan which could result in the grant of any rights to
any person, or which could enable or require any rights to be exercised,
distributed or triggered, in the event of the execution, delivery, or
announcement of this Agreement or the Stock Option Agreement, or in the event of
the consummation of the Merger or any of the transactions contemplated by this
Agreement or the Stock Option Agreement.
6.7. COMPLIANCE WITH BHC ACT; CERTAIN BANKING REGULATORY MATTERS.
(a) LABN is duly registered as a bank holding company under the BHC
Act. All of the activities and investments of LABN conform to the requirements
applicable generally to bank holding companies under the BHC Act and the
regulations of the Board of Governors adopted thereunder.
(b) No corporation or other entity, other than LABN, is registered or
is required to be registered as a bank holding company under the BHC Act by
virtue of its control over LA Bank or over any company that directly or
indirectly has control over LA Bank.
(c) Each of the activities engaged in by LABN and its direct and
indirect subsidiaries has been determined by regulation of the Board of
Governors to be so closely related to banking or managing or controlling banks
as to be a proper incident thereto.
(d) The capital ratios of each of LABN and LA Bank comply fully with
all terms of all currently outstanding supervisory and regulatory requirements
and with the conditions of all regulatory orders and decrees.
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6.8. SUBSIDIARIES.
(a) Other than LA Bank, which is a direct, wholly-owned subsidiary of
LABN, LA Lease, Inc. ("LALI") and Ariel Financial Services, Inc. ("AFSI"), each
of which is a direct, wholly-owned subsidiary of LA Bank, and Premier Realty
Settlement Services ("Premier"), a Pennsylvania limited partnership currently in
organization in which AFSI will purchase a noncontrolling, 50-percent limited
partnership interest in exchange for an initial capital contribution of $5,000,
LABN does not have any direct or indirect subsidiaries and does not directly or
indirectly own, control, or hold with the power to vote any shares of the
capital stock of any company (except shares held by LA Bank for the account of
others in a fiduciary or custodial capacity in the ordinary course of its
business and shares of the Federal Reserve Bank of Philadelphia and the Federal
Home Loan Bank of Pittsburgh). There are no outstanding subscriptions, options,
warrants, convertible securities, calls, commitments, or agreements calling for
or requiring the issuance, transfer, sale, or other disposition of any shares of
the capital stock of LA Bank, LALI, or AFSI, or calling for or requiring the
issuance of any securities or rights convertible into or exchangeable for shares
of capital stock of LA Bank, LALI, or AFSI. There are no other direct or
indirect subsidiaries of LABN which are required to be consolidated or accounted
for on the equity method in the consolidated financial statements of LABN or the
financial statements of LA Bank prepared in accordance with generally accepted
accounting principles.
(b) Except as specified in the previous subsection, neither LABN nor LA
Bank has a direct or indirect equity or ownership interest which represents 5
percent or more of the aggregate equity or ownership interest of any entity
(including, without limitation, corporations, partnerships, and joint ventures).
(c) Each of LALI and AFSI is a corporation which is duly organized,
validly existing, and in good standing under the laws of its jurisdiction of
incorporation and has all requisite corporate power and authority to own and
operate its properties and assets, to lease properties used in its business, and
to carry on its business as now conducted. AFSI is duly registered as a
broker-dealer under each federal or state securities or "blue sky" law, if any,
under which registration is necessary for it to conduct its businesses as
presently conducted. AFSI is duly registered or licensed under each state
insurance law under which registration or licensure is necessary for it to
conduct its businesses as presently conducted. Each of LALI and AFSI owns or
possesses in the operation of its business all other franchises, licenses,
permits, branch certificates, consents, approvals, waivers, and other
authorizations, governmental or otherwise, which are necessary for it to conduct
its business as now conducted, except for those where the failure of such
ownership or possession would not have a Material Adverse Effect on LALI or
AFSI. Each of LALI and AFSI is duly qualified and licensed to do business and is
in good standing in every jurisdiction with respect to which the failure to be
so qualified or licensed could result in a Material Adverse Effect on LALI or
AFSI. Each of LALI and AFSI is not (i) in violation of its charter documents or
bylaws, (ii) in violation of any applicable federal, state, or local law or
ordinance or any order, rule, or regulation of any federal, state, local, or
other governmental agency or body, or (iii) in violation of or in default with
respect to any order, writ, injunction, or decree of any court, or any order,
license, regulation, or demand of any governmental agency, except, in the case
of (ii) or (iii), for such violations or defaults which in the aggregate could
not reasonably be expected to have a Material Adverse Effect on LABN or LA Bank;
and none of LABN, LA Bank, LALI, and AFSI has received any claim or notice of
violation with respect thereto.
(d) When it commences business, Premier (i) will be a limited
partnership duly organized, validly existing, and in good standing under the
laws of the Commonwealth of Pennsylvania and will have all requisite power and
authority to own and operate its properties and assets, to lease properties used
in its business, and to carry on its business as to be conducted, (ii) will be
duly registered or licensed under each state insurance law, if any, under which
registration or licensure will be necessary for it to conduct its businesses as
to be conducted, (iii) will own or possess in the operation of its business all
other franchises, licenses, permits, branch certificates, consents, approvals,
waivers, and other authorizations, governmental or otherwise, which will be
necessary for it to conduct its business as to be conducted, except for those
where the failure of such ownership or possession would not have a Material
Adverse Effect on Premier, (iv) will be duly qualified and licensed to do
business and be in good standing in every jurisdiction with respect to which the
failure to be so qualified or licensed could result in a Material Adverse Effect
on Premier, (v) will not be in violation of its organizational documents or
bylaws, and (vi) will not be in violation of any applicable federal, state, or
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local law or ordinance or any order, rule, or regulation of any federal, state,
local, or other governmental agency or body.
6.9. CAPITAL STRUCTURE.
(a) The authorized capital stock of LABN consists of (i) 1,000,000
shares of preferred stock, par value $1.25 per share ("LABN Preferred Stock"),
of which, as of the date of this Agreement, no shares are issued or outstanding,
and (ii) 10,000,000 shares of LABN Common Stock, of which, as of the date of
this Agreement, 4,850,753 shares have been duly issued and are validly
outstanding, fully paid, and nonassessable, and held by approximately 1,400
shareholders of record. The aforementioned shares of LABN Preferred Stock and
LABN Common Stock are the only voting securities of LABN authorized, issued, or
outstanding as of such date; and except as set forth on Schedule 6.9 hereof,
there are no outstanding subscriptions, options, warrants, convertible
securities, calls, commitments, or agreements calling for or requiring the
issuance, transfer, sale, or other disposition of any shares of the capital
stock of LABN, or calling for or requiring the issuance of any securities or
rights convertible into or exchangeable for shares of capital stock of LABN. No
shares of LABN Preferred Stock or LABN Common Stock are held as treasury shares.
None of the LABN Common Stock is subject to any restrictions upon the transfer
thereof under the terms of the articles of incorporation or bylaws of LABN.
(b) Schedule 6.9 hereof lists all options to purchase LABN securities
currently outstanding and, for each such option, the date of issuance, date of
exercisability, exercise price, type of security for which exercisable, and date
of expiration. Schedule 6.9 hereof further lists all shares of LABN Preferred
Stock and LABN Common Stock reserved for issuance pursuant to stock option
plans, agreements, or arrangements but not yet issued and all options upon
shares of LABN Preferred Stock and LABN Common Stock designated or made
available for grant but not yet granted.
(c) The authorized capital stock of LA Bank consists of 10,000,000
shares of common stock, $0.21 par value (the "LA Bank Common Stock"), of which,
as of the date of this Agreement, 4,850,753 shares have been duly issued and are
validly outstanding, fully paid, and nonassessable, and all of which are held of
record and beneficially by LABN directly, free and clear of any adverse claims.
The aforementioned shares of LA Bank Common Stock are the only voting securities
of LA Bank authorized, issued, or outstanding as of such date. None of the LA
Bank Common Stock is subject to any restrictions upon the transfer thereof under
the terms of the corporate charter or bylaws of LA Bank or under the terms of
any agreement to which LA Bank is a party or under which it is bound.
(d) None of the shares of LABN Common Stock or LA Bank Common Stock has
been issued in violation of the preemptive rights of any shareholder.
(e) As of the date hereof, to the best of the knowledge of LABN, and
except for this Agreement, there are no shareholder agreements, or other
agreements, understandings, or commitments relating to the right of any holder
or beneficial owner of more than 1 percent of the issued and outstanding shares
of any class of the capital stock of either LABN or LA Bank to vote or to
dispose of his, her or its shares of capital stock of that entity.
(f) The authorized capital stock of LALI consists of 100,000 shares of
common stock, $5.00 par value (the "LALI Common Stock"), of which, as of the
date of this Agreement, 2,000 shares have been duly issued and are validly
outstanding, fully paid, and nonassessable, and all of which are held of record
and beneficially by LA Bank directly, free and clear of any adverse claims. The
aforementioned shares of LALI Common Stock are the only voting securities of
LALI authorized, issued, or outstanding as of such date. None of the LALI Common
Stock is subject to any restrictions upon the transfer thereof under the terms
of the corporate charter or bylaws of LALI or under the terms of any agreement
to which LALI is a party or under which it is bound.
(g) The authorized capital stock of AFSI consists of 10,000 shares of
common stock, no par value (the "AFSI Common Stock"), of which, as of the date
of this Agreement, 100 shares have been duly issued and are validly outstanding,
fully paid, and nonassessable, and all of which are held of record and
beneficially by LA Bank directly, free and clear of any adverse claims. The
aforementioned shares of AFSI Common Stock are the only voting securities of
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AFSI authorized, issued, or outstanding as of such date. None of the AFSI Common
Stock is subject to any restrictions upon the transfer thereof under the terms
of the corporate charter or bylaws of AFSI or under the terms of any agreement
to which AFSI is a party or under which it is bound.
6.10. ARTICLES OF INCORPORATION, BYLAWS, AND MINUTE BOOKS. The copies of
the certificate or articles of incorporation and all amendments thereto and of
the bylaws, as amended, of LABN, LA Bank, LALI, and AFSI that have been provided
to NBTB are true, correct, and complete copies thereof. The copy of the limited
partnership agreement of Premier that has been provided to NBTB is a true and
correct copy thereof. The minute books of LABN, LA Bank, LALI, and AFSI that
have been made available to NBTB contain accurate minutes of all meetings and
accurate consents in lieu of meetings of the board of directors (and any
committee thereof) and of the shareholders of LABN, LA Bank, LALI, and AFSI
since their respective inceptions. These minute books accurately reflect all
transactions referred to in such minutes and consents in lieu of meetings and
disclose all material corporate actions of the shareholders and boards of
directors of LABN, LA Bank, LALI, and AFSI and all committees thereof. Except as
reflected in such minute books, there are no minutes of meetings or consents in
lieu of meetings of the board of directors (or any committee thereof) or of
shareholders of LABN, LA Bank, LALI, or AFSI.
6.11. BOOKS AND RECORDS. The books and records of each of LABN, LA Bank,
LALI, and AFSI fairly reflect the transactions to which it is a party or by
which its properties are subject or bound. Such books and records have been
properly kept and maintained and are in compliance in all material respects with
all applicable accounting and legal requirements. Each of LABN, LA Bank, LALI,
and AFSI follows generally accepted accounting principles applied on a
consistent basis in the preparation and maintenance of its books of account and
financial statements.
6.12. REGULATORY APPROVALS AND FILINGS, CONTRACTS, COMMITMENTS, ETC. LABN
has made available to NBTB:
(a) All regulatory approvals received since January 1, 1992, of LABN
and LA Bank relating to all bank and nonbank acquisitions or the establishment
of DE NOVO operations;
(b) All employment contracts, election contracts, retention contracts,
deferred compensation, non-competition, bonus, stock option, profit-sharing,
pension, retirement, consultation after retirement, incentive, insurance
arrangements or plans (including medical, disability, group life or other
insurance plans), and any other remuneration or fringe benefit arrangements
applicable to employees, officers, or directors of LABN or LA Bank, accompanied
by any agreements, including trust agreements, embodying such contracts, plans,
or arrangements, and all employee manuals and memoranda relating to employment
and benefit policies and practices of any nature whatsoever (whether or not
distributed to employees or any of them), and any actuarial reports and audits
relating to such plans;
(c) All material contracts, agreements, leases, mortgages, and
commitments to which LABN or LA Bank is a party or may be bound; or, if any of
the same be oral, true, accurate, and complete written summaries of all such
oral contracts, agreements, leases, mortgages, and commitments;
(d) All contracts, agreements, leases, mortgages, and commitments,
whether or not material, to which LABN or LA Bank is a party or may be bound and
which require the consent or approval of third parties to the execution and
delivery of this Agreement or to the consummation or performance of any of the
transactions contemplated thereby or, if any of the same be oral, true,
accurate, and complete written summaries of all such oral contracts, agreements,
leases, mortgages, and commitments;
(e) All deeds, leases, contracts, agreements, mortgages, and
commitments, whether or not material, to which LABN or LA Bank is a party or may
be bound and which relate to land, buildings, fixtures, or other real property
upon or within which LABN or LA Bank operates its businesses or is authorized to
operate its businesses, or with respect to which LABN or LA Bank has any
application pending for authorization to operate its businesses;
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(f) Any pending application, including any documents or materials
related thereto, which has been filed by LABN or LA Bank with any federal or
state regulatory agency with respect to the establishment of a new office or the
acquisition or establishment of any additional banking or nonbanking subsidiary;
and
(g) All federal, state, and local tax returns, including any amended
returns, filed by LABN or LA Bank for the years 1995 through 1997, a copy of the
calculation of the 1998 tax provision made by LABN for the year 1998 as recorded
on its books and records, and a copy of all substantive correspondence or other
documents with respect to any examination that has not yet been resolved, a copy
of the most recent examination from each state or local tax agency if any, for
each of LABN and LA Bank, and a copy of all substantive correspondence or other
documents with respect to any examination that has not yet been resolved, and
all tax rulings, closing agreements, settlement agreements, or similar documents
with respect to LABN or LA Bank received from or entered into with the Internal
Revenue Service (the "IRS") or any other taxing authority since January 1, 1989
or that would have continuing effect after the Effective Time.
6.13. FINANCIAL STATEMENTS. LABN has furnished to NBTB its consolidated
audited statement of condition as of each of December 31, 1996, December 31,
1997, and December 31, 1998, and its related audited consolidated statement of
income, consolidated statement of cash flows, and consolidated statement of
changes in stockholders' equity for each of the periods then ended, and the
notes thereto, and its consolidated unaudited statement of condition as of June
30, 1999 and its related unaudited consolidated statement of income,
consolidated statement of cash flows, and consolidated statement of changes in
stockholders' equity for the period then ended, and the notes thereto, each as
filed with the SEC (collectively, the "LABN Financial Statements"). All of the
LABN Financial Statements, including the related notes, (a) except as indicated
in the notes thereto, were prepared in accordance with generally accepted
accounting principles consistently applied in all material respects (subject, in
the case of unaudited statements, to recurring audit adjustments normal in
nature and amount), (b) are in accordance with the books and records of LABN and
LA Bank, (c) fairly reflect the consolidated financial position of LABN as of
such dates, and the consolidated results of operations of LABN for the periods
ended on such dates, and do not fail to disclose any material extraordinary or
out-of-period items, and (d) reflect, in accordance with generally accepted
accounting principles consistently applied in all material respects, adequate
provision for, or reserves against, the consolidated loan losses of LABN as of
such dates.
6.14. CALL REPORTS; BANK HOLDING COMPANY REPORTS.
(a) LA Bank has made available to NBTB its FFIEC Consolidated Reports
of Condition and Income ("Call Reports") for the calendar quarter dated March
31, 1996 and each calendar quarter thereafter. All of such Call Reports,
including the related schedules and memorandum items, were prepared in
accordance with generally accepted accounting principles consistently applied in
all material respects or, to the extent different from generally accepted
accounting principles, accounting principles mandated by the applicable
instructions to such Call Reports.
(b) No adjustments are required to be made to the equity capital
account of LA Bank as reported on any of the Call Reports referred to in
Subsection 6.14(a) hereof, in any material amount, in order to conform such
equity capital account to equity capital as would be determined in accordance
with generally accepted accounting principles as of such date.
(c) LABN has furnished to NBTB its annual report on Form FR Y-6 as
filed with the Board of Governors as of December 31, 1998 and all amendments and
periodic and current reports filed with the Board of Governors under the BHC Act
subsequent to December 31, 1998.
6.15. ABSENCE OF UNDISCLOSED LIABILITIES. At June 30, 1999, neither LABN
nor LA Bank had any obligation or liability of any nature (whether absolute,
accrued, contingent, or otherwise, and whether due or to become due) which was
material, or which when combined with all similar obligations or liabilities
would have been material, to LABN, except (a) as disclosed in the LABN Financial
Statements, or (b) as set forth on Schedule 6.15 hereof, or (c) for unfunded
loan commitments made by LABN or LA Bank in the ordinary course of their
business consistent with past practice. The amounts set up as current
liabilities for taxes in the LABN Financial Statements are sufficient for the
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payment of all federal, state, local and foreign income, payroll, withholding,
excise, sales, use, personal property, use and occupancy, business and
occupation, mercantile, real estate, gross receipts, license, employment,
severance, stamp, premium, windfall profits, social security (or similar
unemployment), disability, transfer, registration, value added, alternative, or
add-on minimum, estimated, or capital stock and franchise tax and other tax of
any kind whatsoever, including any interest, penalty or addition thereto,
whether disputed or not ("Tax" or "Taxes") accrued in accordance with generally
accepted accounting principles and unpaid at June 30, 1999. Since June 30, 1999,
neither LABN nor LA Bank has incurred or paid any obligation or liability that
would be material (on a consolidated basis) to LABN, except (x) for obligations
incurred or paid in connection with transactions by it in the ordinary course of
its business consistent with past practices, or (y) as set forth on Schedule
6.15 hereof, or (z) as expressly contemplated herein.
6.16. ABSENCE OF CERTAIN DEVELOPMENTS. Since June 30, 1999, except as set
forth on Schedule 6.16 hereof, there has been (a) no Material Adverse Effect
with respect to LABN and LA Bank, (b) no material deterioration in the quality
of the consolidated loan portfolio of LABN, and no material increase in the
consolidated level of nonperforming assets or non-accrual loans at LABN or in
the level of its consolidated provision for credit losses or its consolidated
reserve for credit losses; (c) no declaration, setting aside, or payment by LABN
or LA Bank of any regular dividend, special dividend, or other distribution with
respect to any class of capital stock of LABN or LA Bank, other than customary
cash dividends paid by LABN whose amounts have not exceeded $0.1025 per calendar
quarter and the intervals between which dividends have not been more frequent
than past practice, and other than customary cash dividends paid by LA Bank
whose amounts have not exceeded past practice and the intervals between which
dividends have not been more frequent than past practice; (d) no repurchase by
LABN of any of its capital stock; (e) no material loss, destruction, or damage
to any material property of LABN or LA Bank, which loss, destruction, or damage
is not covered by insurance; and (f) no material acquisition or disposition of
any asset, nor any material contract outside the ordinary course of business
entered into by LABN or LA Bank nor any substantial amendment or termination of
any material contract outside the ordinary course of business to which LABN or
LA Bank is a party, nor any other transaction by LABN or LA Bank involving an
amount in excess of $50,000 other than for fair value in the ordinary course of
its business. Since June 30, 1999, except as set forth on Schedule 6.16 hereof,
(x) each of LABN and LA Bank has conducted its business only in the ordinary
course of such business and consistent with past practice; (y) LABN, on a
consolidated basis, has maintained the quality of its loan portfolio and that of
each of its major components at approximately the same level as existed at June
30, 1999; and (z) LABN, on a consolidated basis, has administered its investment
portfolio pursuant to essentially the same policies and procedures as existed
during 1997 and 1998 and the first six months of 1999, and has taken no action
to lengthen the average maturity of the investment portfolio, or of any
significant category thereof, to any material extent.
6.17. RESERVE FOR CREDIT LOSSES. The most recent of the LABN Financial
Statements reflect a consolidated reserve for credit losses that is adequate in
accordance with generally accepted accounting principles to absorb reasonably
anticipated losses in the consolidated loan and lease portfolios of LABN, in
view of the size and character of such portfolios, current economic conditions,
and other pertinent factors. Management reevaluates the adequacy of such reserve
quarterly based on portfolio performance, current economic conditions, and other
factors.
6.18. TAX MATTERS.
(a) Except as set forth on Schedule 6.18 hereof, all Tax returns and
reports required to be filed by or on behalf of LABN or LA Bank have been timely
filed with the appropriate governmental agencies in all jurisdictions in which
such returns and reports are required to be filed, or requests for extensions
have been timely filed, granted, and have not expired for periods ending on or
before December 31, 1998, and all returns filed are complete and accurate and
properly reflect its Taxes for the periods covered thereby. All Taxes shown or
required to be shown on filed returns have been paid, except for any not yet due
and payable. As of the date hereof, there is no audit examination, deficiency,
or refund litigation or tax claim or any notice of assessment or proposed
assessment by the IRS or any other taxing authority, or any other matter in
controversy with respect to any Taxes that might result in a determination
adverse to LABN or LA Bank, except as reserved against in the LABN Financial
Statements. All Taxes due with respect to completed and settled examinations or
concluded litigation have been properly accrued or paid.
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(b) Except as set forth on Schedule 6.18 hereof, neither LABN nor LA
Bank has executed an extension or waiver of any statute of limitations on the
assessment or collection of any Tax due that is currently in effect.
(c) To the extent any Taxes are due from, but have not yet been paid
by, LABN or LA Bank for the period or periods beginning January 1, 1999 or
thereafter through and including the Effective Time, adequate provision on an
estimated basis has been made for the payment of such taxes by establishment of
appropriate tax liability accounts on the monthly financial statements of LABN.
(d) Deferred Taxes of LABN and LA Bank have been provided for in
accordance with generally accepted accounting principles as in effect on the
date of this Agreement.
(e) The deductions of LA Bank for bad debts taken and the reserve of LA
Bank for loan losses for federal income tax purposes at December 31, 1998, were
not greater than the maximum amount permitted under the provisions of section
585 of the Code.
(f) Other than liens arising under the laws of the Commonwealth of
Pennsylvania with respect to Taxes assessed and not yet due and payable, there
are no tax liens on any of the properties or assets of LABN or LA Bank.
(g) LABN and LA Bank (i) have timely filed all information returns or
reports required to be filed with respect to Taxes, including but not limited to
those required by sections 6041, 6041A, 6042, 6045, 6049, 6050H, and 6050J of
the Code, (ii) have properly and timely provided to all persons, other than
taxing authorities, all information reports or other documents (for example,
Form 1099s, Form W-2s, and so forth) required to be provided to such persons
under applicable law, and (iii) have exercised due diligence in obtaining
certified taxpayer identification numbers as required under applicable law.
(h) The taxable year end of LABN for federal income tax purposes is,
and since the inception of LABN has continuously been, December 31.
(i) LABN and LA Bank have in all material respects satisfied all
federal, state, local, and foreign withholding tax requirements including but
not limited to income, social security, and employment tax withholding.
(j) Neither LABN nor LA Bank (i) is, or has been, a member of a group
filing a consolidated, combined, or unitary tax return, other than a group the
common parent of which is or was LABN, or (ii) has any liability for the Taxes
of any person (other than LABN and LA Bank) under Treas. Reg. ss. 1.1502-6 (or
any similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
6.19. CONSOLIDATED NET WORTH. The consolidated net worth of LABN on the
date of this Agreement, as determined in accordance with generally accepted
accounting principles, is not less than the sum of (a) $35,079,000 and (b) the
proceeds to LABN of the exercise of stock options to purchase shares of LABN
Common Stock since June 30, 1999.
6.20. EXAMINATIONS. To the extent consistent with law, LABN has heretofore
disclosed to NBTB relevant information contained in the most recent
safety-and-soundness, compliance, Community Reinvestment Act, and other Reports
of Examination with respect to LABN issued by the Board of Governors and the
most recent safety-and-soundness, compliance, Community Reinvestment Act, and
other Reports of Examination with respect to LA Bank issued by the OCC. Such
information so disclosed consists of all material information with respect to
the financial, operational, and legal condition of the entity under examination
which is included in such reports.
6.21. REPORTS. Since January 1, 1996, each of LABN, LA Bank, LALI, and AFSI
has effected all registrations and filed all reports and statements, together
with any amendments required to be made with respect thereto, which it was
required to effect or file with (a) the Board of Governors, (b) the OCC, (c) the
FDIC, (d) the United States Department of the Treasury, (e) the Department, (e)
the Securities and Exchange Commission, and (f) any other governmental or
regulatory authority or agency having jurisdiction over its operations. Each of
such registrations, reports, and documents, including the financial statements,
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exhibits, and schedules thereto, does not contain any statement which, at the
time and in the light of the circumstances under which it was made, is false or
misleading with respect to any material fact or which omits to state any
material fact necessary in order to make the statements contained therein not
false or misleading.
6.22. FIRA COMPLIANCE AND OTHER TRANSACTIONS WITH AFFILIATES. Except as set
forth on Schedule 6.22 hereof, (a) none of the officers, directors, or
beneficial holders of 5 percent or more of the common stock of LABN or LA Bank
and no person "controlled" (as that term is defined in the Financial
Institutions Regulatory and Interest Rate Control Act of 1978) by LABN or LA
Bank (collectively, "Insiders") has any ongoing material transaction with LABN
or LA Bank on the date of this Agreement; (b) no Insider has any ownership
interest in any business, corporate or otherwise, which is a party to, or in any
property which is the subject of, business arrangements or relationships of any
kind with LABN or LA Bank not in the ordinary course of business; and (c) all
other extensions of credit by LABN or LA Bank to any Insider have heretofore
been disclosed in writing by LABN to NBTB.
6.23. SEC REGISTERED SECURITIES. Other than the LABN Common Stock, no
equity or debt securities of LABN or LA Bank are registered or required to be
registered under the Securities Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
6.24. LEGAL PROCEEDINGS. Except as disclosed in the LABN Financial
Statements or as set forth on Schedule 6.24 hereof, there is no claim, action,
suit, arbitration, investigation, or other proceeding pending against LABN, LA
Bank, LALI, or AFSI before any court, governmental agency, authority or
commission, arbitrator, or "impartial mediator" or, to the best of the knowledge
of LABN and LA Bank, threatened or contemplated against or affecting it or its
property, assets, interests, or rights, or any basis therefor of which notice
has been given, which, if adversely determined, would have a Material Adverse
Effect on LABN or which otherwise could prevent, hinder, or delay consummation
of the transactions contemplated by this Agreement.
6.25. ABSENCE OF GOVERNMENTAL PROCEEDINGS. Except as set forth on Schedule
6.25 hereof, none of LABN, LA Bank, LALI, AFSI, nor Premier is a party defendant
or respondent to any pending legal, equitable, or other proceeding commenced by
any governmental agency and, to the best of the knowledge of LABN and LA Bank,
no such proceeding is threatened.
6.26. FEDERAL DEPOSIT INSURANCE.
(a) The deposits held by LA Bank are insured within statutory limits by
the Bank Insurance Fund of the FDIC (the "BIF") pursuant to the provisions of
the Federal Deposit Insurance Act, as amended (12 U.S.C. ss. 1811 ET Seq.) (the
"FDI Act"), and LA Bank has paid all assessments and filed all related reports
and statements required under the FDI Act.
(b) LA Bank is a member of and pays insurance assessments to the BIF.
None of the deposits of LA Bank are insured by the Savings Association Insurance
Fund of the FDIC (the "SAIF"), and LA Bank pays no insurance assessments to the
SAIF.
(c) LA Bank has paid all regular premiums and special assessments and
filed all reports required of it under the FDI Act.
6.27. OTHER INSURANCE. Each of LABN and LA Bank carries insurance with
reputable insurers, including blanket bond coverage, in such amounts as are
reasonable to cover such risks as are customary in relation to the character and
location of its properties and the nature of its businesses. All such policies
of insurance are in full force and effect, and no notice of cancellation has
been received. All premiums to date have been paid in full. Neither LABN nor LA
Bank is in default with respect to any such policy which is material to it.
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6.28. LABOR MATTERS.
(a) Neither LABN nor LA Bank is a party to or bound by any collective
bargaining contracts with respect to any employees of LABN or LA Bank. Since
their respective inceptions there has not been, nor to the best of the knowledge
of LABN and LA Bank was there or is there threatened, any strike, slowdown,
picketing, or work stoppage by any union or other group of employees against
LABN or LA Bank or any of its premises, or any other labor trouble or other
occurrence, event, or condition of a similar character. As of the date hereof,
neither LABN nor LA Bank is aware of any attempts to organize a collective
bargaining unit to represent any of its employee groups.
(b) As of the date hereof, each of LABN and LA Bank is, to the best of
its knowledge, in compliance in all material respects with all federal and state
laws, regulations, and orders respecting employment and employment practices
(including Title VII of the Civil Rights Act of 1964), terms and conditions of
employment, and wages and hours; and neither LABN nor LA Bank is engaged in any
unfair labor practice. As of the date hereof, except as set forth on Schedule
6.28 hereof, no dispute exists between LABN or LA Bank and any of its employee
groups regarding any employee organization, wages, hours, or conditions of
employment which would materially interfere with the business or operations of
LABN or LA Bank.
6.29. EMPLOYEE BENEFIT PLANS.
(a) Schedule 6.29 hereto contains a complete list of all pension,
retirement, stock purchase, stock bonus, stock ownership, stock option,
performance share, stock appreciation right, phantom stock, savings, and
profit-sharing plans, all employment, deferred compensation, consulting, bonus,
and collective bargaining agreements, and group insurance contracts and other
incentive, welfare, life insurance, death or survivor's benefit, health
insurance, sickness, disability, medical, surgical, hospital, severance, layoff
and vacation plans, contracts, and arrangements and employee benefit plans and
agreements, whether or not subject to ERISA, whether formal or informal, whether
written or oral, whether legally binding or not, under which any current or
former employee of LABN or LA Bank has any present right to future benefits or
payments or under which LABN or LA Bank has any present or future liability
(together, the "LABN Plans").
(b) As to each of the LABN Plans, LABN has made available to NBTB true,
complete, current, and accurate copies of (i) the executed document or documents
governing the plan, including the related trust agreement, insurance policy, and
summary plan description (or other description in the case of an unwritten
plan); (ii) the most recent and prior two years' actuarial and financial report
prepared with respect to the plan if it constitutes a "qualified plan" under
section 401(a) of the Code; (iii) the Forms 5500 with all schedules for the last
three years; (iv) all IRS rulings, determination letters, and any open requests
for such rulings and letters that pertain to the plan; and (v) to the extent
they pertain to the plan, attorneys' responses to auditors' requests for
information for the last three years.
(c) Except for funding obligations and liabilities to the Pension
Benefit Guaranty Corporation ("PBGC") pursuant to section 4007 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), all of which have
been fully paid, neither LABN nor LA Bank has any tax, penalty, or liability
with respect to any LABN Plan under ERISA, the Code, or any other applicable
law, regulation, or ruling. As to each LABN Plan with respect to which a Form
5500 has been filed, no material change has occurred with respect to the matters
covered by the most recent Form 5500 since the date thereof, other than regular
accruals and contributions.
(d) Each LABN Plan intended to be a "qualified plan" under the Code
complies with ERISA and applicable provisions of the Code. Neither LABN nor LA
Bank has any material liability under any LABN Plan which is not reflected on
the LABN Financial Statements (other than such normally unrecorded liabilities
under the Plans for sick leave, holiday, education, bonus, vacation, incentive
compensation, and anniversary awards, provided that such liabilities are not in
any event material). There have not been any "prohibited transactions" with
respect to any LABN Plan within the meaning of section 406 of ERISA or, where
applicable, section 4975 of the Code, nor have there been any "reportable
events" within section 4043 of ERISA nor any accumulated funding deficiency
within section 302 of ERISA or section 402 of the Code. Neither LABN nor LA Bank
nor any entity under common control under section 414(b), (c), or (m) of the
Code has or had any obligation to contribute to any multiemployer plan. As to
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each LABN Plan that is subject to Title IV of ERISA, the value of assets of such
LABN Plan is at least equal to the present value of the vested and unvested
accrued benefits in such LABN Plan on a termination and ongoing basis, based
upon applicable PBGC regulations and the actuarial methods and assumptions used
in the most recent actuarial report. Neither LABN nor LA Bank has any obligation
to provide retiree welfare benefits.
(e) No action, claim, or demand of any kind has been brought or
threatened by any potential claimant or representative of such a claimant under
any plan, contract, or arrangement referred to in subsection (a) of this section
6.29, other than routine claims for benefits in the ordinary course, where LABN
or LA Bank may be either (i) liable directly on such action, claim, or demand;
or (ii) obligated to indemnify any person, group of persons, or entity with
respect to such action, claim, or demand which is not fully covered by insurance
maintained with reputable, responsible financial insurers or by a self-insured
plan.
6.30. COMPENSATION. Schedule 6.30 hereto contains a true and correct
statement of the names, relationships with LABN and LA Bank, present rates of
compensation (whether in the form of salary, bonuses, commissions, or other
supplemental compensation now or hereafter payable), and aggregate compensation
for the fiscal year ended December 31, 1998 of each director, officer, or other
employee of LABN and LA Bank whose aggregate compensation for the fiscal year
ended December 31, 1998 exceeded $60,000 or whose aggregate compensation at
present exceeds the rate of $60,000 per annum. Except as set forth on Schedule
6.30 hereto, since December 31, 1998 neither LABN nor LA Bank has changed the
rate of compensation of any of its directors, officers, employees, agents,
dealers, or distributors, nor has any LABN Plan or program been instituted or
amended to increase benefits thereunder. Except as set forth on Schedule 6.30
hereto, there is no contract, agreement, plan, arrangement, or understanding
covering any person that, individually or collectively, could give rise to the
payment of any amount that would not be deductible by LABN or LA Bank by reason
of section 280G of the Code.
6.31. FIDUCIARY ACTIVITIES. Each of LA Bank and AFSI is duly qualified and
registered and in good standing in accordance with the laws of each jurisdiction
in which it is required to so qualify or register as a result of or in
connection with its fiduciary or custodial activities as conducted as of the
date hereof. LA Bank is duly registered under and in compliance with all
requirements of the Investment Advisers Act of 1940 as amended, or is exempt
from registration thereunder and from compliance with the requirements thereof.
Since January 1, 1998, each of LA Bank and AFSI has conducted, and currently is
conducting, all fiduciary and custodial activities in all material respects in
accordance with all applicable law.
6.32. ENVIRONMENTAL LIABILITY.
(a) Except as set forth on Schedule 6.32 hereof, neither LABN nor LA
Bank is in violation of any judgment, decree, order, law, license, rule or
regulation pertaining to environmental matters, including those arising under
the Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA"), the Superfund
Amendments and Reauthorization Act of 1986, the Federal Water Pollution Control
Act, the Federal Clean Air Act, the Toxic Substances Control Act or any state or
local statute, regulation, ordinance, order or decree relating to health, safety
or the environment ("Environmental Laws").
(b) Except as set forth on Schedule 6.32 hereof, neither LABN, LA Bank,
nor, to the best of the knowledge of either of them, any borrower of LABN or of
LA Bank has received notice that it has been identified by the United States
Environmental Protection Agency as a potentially responsible party under CERCLA
with respect to a site listed on the National Priorities List, 40 C.F.R. Part
300 Appendix B, nor has LABN or LA Bank or, to the best of the knowledge of
either of them, any borrower of LABN or of LA Bank received any notification
that any hazardous waste, as defined by 42 U.S.C. ss. 6903(5), any hazardous
substances, as defined by 42 U.S.C. ss. 9601(14), any "pollutant or
contaminant," as defined by 42 U.S.C. ss. 9601(33), or any toxic substance,
hazardous materials, oil, or other chemicals or substances regulated by any
Environmental Laws ("Hazardous Substances") that it has disposed of has been
found at any site at which a federal or state agency is conducting a remedial
investigation or other action pursuant to any Environmental Law.
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(c) No portion of any real property at any time owned or leased by LABN
or LA Bank (collectively, the "LABN Real Estate") has been used by LABN or LA
Bank for the handling, processing, storage or disposal of Hazardous Substances
in a manner which violates any Environmental Laws and, to the best of the
knowledge of LABN and LA Bank, no underground tank or other underground storage
receptacle for Hazardous Substances is located on any of the LABN Real Estate.
In the course of its activities, neither LABN nor LA Bank has generated or is
generating any hazardous waste on any of the LABN Real Estate in a manner which
violates any Environmental Laws. There has been no past or present releasing,
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, disposing or dumping (collectively, a "Release") of
Hazardous Substances by LABN or LA Bank on, upon, or into any of the LABN Real
Estate. In addition, to the best of the knowledge of LABN and LA Bank, except as
set forth on Schedule 6.32 hereof, there have been no such Releases on, upon, or
into any real property in the vicinity of any of the LABN Real Estate that,
through soil or groundwater contamination, may be located on any of such LABN
Real Estate.
(d) With respect to any real property at any time held as collateral
for any outstanding loan by LABN or LA Bank (collectively, the "Collateral Real
Estate"), except as set forth on Schedule 6.32 hereof, neither LABN nor LA Bank
has since January 1, 1988 received notice from any borrower thereof or third
party, and has no knowledge, that such borrower has generated or is generating
any hazardous waste on any of the Collateral Real Estate in a manner which
violates any Environmental Laws or that there has been any Release of Hazardous
Substances by such borrower on, upon, or into any of the Collateral Real Estate,
or that there has been any Release on, upon, or into any real property in the
vicinity of any of the Collateral Real Estate that, through soil or groundwater
contamination, may be located on any of such Collateral Real Estate.
(e) As used in this section 6.32, each of the terms "LABN" and "LA
Bank" includes the applicable entity and any partnership or joint venture in
which it or any of its subsidiaries has an interest.
6.33. INTANGIBLE PROPERTY. To the best of the knowledge of LABN and LA
Bank, each of LABN, LA Bank, LALI, and AFSI owns or possesses the right, free of
the claims of any third party, to use all material trademarks, service marks,
trade names, copyrights, patents, and licenses currently used by it in the
conduct of its business. To the best of the knowledge of LABN and LA Bank, no
material product or service offered and no material trademark, service mark, or
similar right used by LABN, LA Bank, LALI, or AFSI infringes any rights of any
other person, and, as of the date hereof, neither LABN nor LA Bank has received
any written or oral notice of any claim of such infringement.
6.34. REAL AND PERSONAL PROPERTY. Except for property and assets disposed
of in the ordinary course of business, each of LABN, LA Bank, LALI, and AFSI
possesses good and marketable title to and owns, free and clear of any mortgage,
pledge, lien, charge, or other encumbrance or other third party interest of any
nature whatsoever which would materially interfere with the business or
operations of either LABN or LA Bank, its real and personal property and other
assets, including without limitation those properties and assets reflected in
the LABN Financial Statements as of June 30, 1999, or acquired by LABN, LA Bank,
LALI, or AFSI subsequent to the date thereof. The leases pursuant to which LABN,
LA Bank, LALI, and AFSI lease real or personal property as lessee are valid and
effective in accordance with their respective terms; and there is not, under any
such lease, any material existing default or any event which, with the giving of
notice or lapse of time or otherwise, would constitute a material default. The
real and personal property leased by either LABN, LA Bank, LALI, or AFSI as
lessee is free from any adverse claim which would materially interfere with its
business or operation taken as a whole. The material properties and equipment
owned or leased as lessee by LABN, LA Bank, LALI, and AFSI are in normal
operating condition, free from any known defects, except such minor defects as
do not materially interfere with the continued use thereof in the conduct of its
normal operations.
6.35. LOANS, LEASES, AND DISCOUNTS.
(a) To the best of the knowledge of LABN and LA Bank, each loan, lease,
and discount reflected as an asset of LABN in the LABN Financial Statements as
of June 30, 1999, or acquired since that date, is the legal, valid, and binding
obligation of the obligor named therein, enforceable in accordance with its
terms; and no loan, lease, or discount having an unpaid balance (principal and
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accrued interest) in excess of $50,000, and no outstanding letter of credit or
commitment to extend credit having a notional amount in excess of $50,000, is
subject to any asserted defense, offset, or counterclaim known to LABN or LA
Bank.
(b) Except as set forth on Schedule 6.35 hereof, neither LABN nor LA
Bank holds any loans or loan-participation interests purchased from, or
participates in any loans originated by, any person other than LABN or LA Bank.
6.36. MATERIAL CONTRACTS. None of LABN, LA Bank, LALI, nor AFSI nor any of
the assets, businesses, or operations of any of them is as of the date hereof a
party to, or is bound or affected by, or receives benefits under any material
agreement, arrangement, or commitment not cancelable by it without penalty,
other than (a) the agreements set forth on Schedule 6.36 hereof, and (b)
agreements, arrangements, or commitments entered into in the ordinary course of
its business consistent with past practice, or, if there has been no past
practice, consistent with prudent banking practices.
6.37. EMPLOYMENT AND SEVERANCE ARRANGEMENTS. Schedule 6.37 hereof sets
forth
(a) all employment contracts granted by LABN or LA Bank to any of its
officers, directors, shareholders, consultants, or other management officials
and any officer, director, shareholder, consultant, or management official of
any affiliate providing for increased or accelerated compensation in the event
of a change of control with respect to LABN or LA Bank or any other event
affecting the ownership, control, or management of LABN or LA Bank; and
(b) all employment and severance contracts, agreements, and
arrangements between LABN or LA Bank and any officer, director, consultant, or
other management official of any of them.
6.38. MATERIAL CONTRACT DEFAULTS. All contracts, agreements, leases,
mortgages, or commitments referred to in section 6.12(c) hereof are valid and in
full force and effect on the date hereof. As of the date of this Agreement and
as of the Effective Time, neither LABN nor LA Bank is or will be in default in
any material respect under any material contract, agreement, commitment,
arrangement, lease, insurance policy, or other instrument to which it is a party
or by which its assets, business, or operations may be bound or affected or
under which it or its assets, business, or operations receive benefits; and
there has not occurred any event that with the lapse of time or the giving of
notice or both would constitute such a default.
6.39. CAPITAL EXPENDITURES. Except as set forth on Schedule 6.39 hereof,
none of LABN, LA Bank, LALI, AFSI, nor Premier has any outstanding commitments
to make capital expenditures which in the aggregate exceed $50,000.
6.40. REPURCHASE AGREEMENTS. With respect to all agreements pursuant to
which LABN or LA Bank has purchased securities subject to an agreement to
resell, it has a valid, perfected first lien or security interest in the
securities securing the agreement, and the value of the collateral securing each
such agreement equals or exceeds the amount of the debt secured by such
collateral under such agreement.
6.41. INTERNAL CONTROLS; YEAR 2000 PROBLEM.
(a) Each of LABN and LA Bank maintains internal controls to provide
reasonable assurance to its board of directors and officers that its assets are
safeguarded, its records and reports are prepared in compliance with all
applicable legal and accounting requirements and with its internal policies and
practices, and applicable federal, state, and local laws and regulations are
complied with. These controls extend to the preparation of its financial
statements to provide reasonable assurance that the statements are presented
fairly in conformity with generally accepted accounting principles or, in the
case of LA Bank and to the extent different from generally accepted accounting
principles, accounting principles mandated by the OCC. The controls contain
self-monitoring mechanisms, and appropriate actions are taken on significant
deficiencies as they are identified.
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(b) Each of LABN and LA Bank has reviewed the areas within its business
and operations which could be adversely affected by, and has developed or is
developing a program to address on a timely basis the risk that certain computer
applications used by it or by any of its major suppliers may be unable to
recognize and perform properly date-sensitive functions involving dates prior to
and after December 31, 1999 (the "Year 2000 Problem"). The Year 2000 Problem
will not result, and is not reasonably expected to result, in any Material
Adverse Effect on LABN or LA Bank.
6.42. DIVIDENDS. Neither LABN nor LA Bank has paid any dividend to its
shareholders which caused its regulatory capital to be less than the amount then
required by applicable law, or which exceeded any other limitation on the
payment of dividends imposed by law, agreement, or regulatory policy.
6.43. BROKERS AND ADVISERS. Except as set forth on Schedule 6.43 hereof,
(a) there are no claims for brokerage commissions, finder's fees, or similar
compensation arising out of or due to any act of LABN or LA Bank in connection
with the transactions contemplated by this Agreement or based upon any agreement
or arrangement made by or on behalf of LABN or LA Bank, and (b) neither LABN nor
LA Bank has entered into any agreement or understanding with any party relating
to financial advisory services provided or to be provided with respect to the
transactions contemplated by this Agreement.
6.44. INTEREST RATE RISK MANAGEMENT INSTRUMENTS.
(a) Schedule 6.44 contains a true, correct, and complete list of all
interest-rate swaps, caps, floors, and options agreements and other
interest-rate risk management arrangements to which LABN or LA Bank is a party
or by which any of its properties or assets may be bound.
(b) All interest rate swaps, caps, floors, and option agreements and
other interest rate risk management arrangements to which LABN or LA Bank is a
party or by which any of its properties or assets may be bound were entered into
in the ordinary course of its business and, to the best of its knowledge, in
accordance with prudent banking practice and applicable rules, regulations, and
regulatory policies and with counterparties believed to be financially
responsible at the time and are legal, valid, and binding obligations
enforceable in accordance with their terms (except as may be limited by
bankruptcy, insolvency, moratorium, reorganization, or similar laws affecting
the rights of creditors generally and the availability of equitable remedies),
and are in full force and effect. LABN and LA Bank have duly performed in all
material respects of all of their respective obligations thereunder to the
extent that such obligations to perform have accrued; and to the best of the
knowledge of LABN and LA Bank, there are no breaches, violations or defaults or
allegations or assertions of such by any party thereunder.
6.45. ACCOUNTING TREATMENT. LABN is aware of no reason why the Merger
will fail to qualify for "pooling of interests" accounting treatment.
6.46. COBRA MATTERS. Schedule 6.46 sets forth the name, address, telephone
number, social security number, and date of Qualifying Event (as defined in
section 603 of ERISA) of each individuals covered under a group health plan that
is subject to section 601 of ERISA and sponsored by LABN or LA Bank or any of
their subsidiaries who have experienced a Qualifying Event since February 16,
1998, together with documentation of compliance by LABN or LA Bank, as the case
may be, with applicable notice requirements.
6.47. DISCLOSURE. No representation or warranty hereunder and no
certificate, statement, or other document delivered by LABN or LA Bank hereunder
or in connection with this Agreement or any of the transactions contemplated
thereunder contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein, in
light of the circumstances under which they were made, not misleading. There is
no fact known to LABN which reasonably might have a Material Adverse Effect on
LABN or LA Bank which has not been disclosed in the LABN Financial Statements or
a certificate or other document delivered to NBTB by LABN. All copies of
documents delivered to NBTB by LABN under this Agreement are true, correct, and
complete copies thereof and include all amendments, supplements, and
modifications thereto and all waivers thereunder.
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6.48. REGULATORY AND OTHER APPROVALS. As of the date hereof, LABN is not
aware of any reason why all material consents and approvals shall not be
procured from all regulatory agencies having jurisdiction over the transactions
contemplated by this Agreement, as shall be necessary for (a) consummation of
the transactions contemplated by this Agreement, and (b) the continuation after
the Effective Time of the business of LABN and LA Bank as such business is
carried on immediately prior to the Effective Time, free of any conditions or
requirements which, in the reasonable opinion of LABN, could have a Material
Adverse Effect on LABN. As of the date hereof, LABN is not aware of any reason
why all material consents and approvals shall not be procured from all other
persons and entities whose consent or approval shall be necessary for (y)
consummation of the transactions contemplated by this Agreement, or (z) the
continuation after the Effective Time of the business of LABN and LA Bank as
such business is carried on immediately prior to the Effective Time.
7.COVENANTS OF LABN.
LABN covenants and agrees as follows:
7.1. RIGHTS OF ACCESS. In addition and not in limitation of any other
rights of access provided to NBTB herein, until the Effective Time LABN and LA
Bank will give to NBTB and to its representatives, including its certified
public accountants, KPMG, full access during normal business hours to all of the
property, documents, contracts, books, and records of LABN, LA Bank, LALI, AFSI,
and Premier, and such information with respect to their business affairs and
properties as NBTB from time to time may reasonably request.
7.2. MONTHLY AND QUARTERLY FINANCIAL STATEMENTS; MINUTES OF MEETINGS AND
OTHER MATERIALS.
(a) LABN and LA Bank will continue to prepare all of the monthly and
quarterly financial statements and financial reports to regulatory authorities
for the months and quarterly periods ending between July 1, 1999 and the
Effective Time which it customarily prepared during the period between January
1, 1996 and June 30, 1999 and shall promptly provide NBTB with copies of all
such financial statements and reports. All of such financial statements and
reports, including the related notes, schedules, and memorandum items, will have
been prepared in accordance with generally accepted accounting principles
consistently applied in all material respects (except that Call Reports may be
prepared in accordance with the official instructions applicable thereto at the
time of filing).
(b) LABN and LA Bank shall promptly provide NBTB with (i) copies of all
of its periodic reports to directors and to shareholders, whether or not such
reports were prepared or distributed in connection with a meeting of the board
of directors or a meeting of the shareholders, prepared or distributed between
the date of this Agreement and the Effective Time, and (ii) complete copies of
all minutes of meetings of its board of directors and shareholders which
meetings take place between the date of this Agreement and the Effective Time,
certified by the secretary or cashier or an assistant secretary or assistant
cashier of LABN or LA Bank, as the case may be.
(c) From the date of this Agreement to the Effective Time, LABN shall,
contemporaneously with its filing with the SEC of any periodic or current report
pursuant to section 13 of the Exchange Act, deliver a copy of such report to
NBTB.
7.3. EXTRAORDINARY TRANSACTIONS. Without the prior written consent of NBTB,
neither LABN nor LA Bank will, on or after the date of this Agreement: (a)
subject to section 7.9, declare or pay any cash dividends or property dividends
with respect to any class of its capital stock, with the exception of (i)
customary periodic cash dividends paid by LABN to holders of its common stock in
amounts not exceeding $0.1025 per calendar quarter and at intervals that are not
shorter than past practice, (ii) customary periodic special cash dividends
typically declared by LABN in November and paid to holders of its common stock
the following December, in amounts not exceeding $0.03 per year and at intervals
that are not shorter than past practice, and (iii) customary cash dividends paid
by LA Bank whose amounts have not exceeded past practice and at intervals that
are not shorter than past practice; (b) declare or distribute any stock
dividend, authorize a stock split, or authorize, issue or make any distribution
of its capital stock or any other securities (except for issuances of LABN
Common Stock upon exercise of stock options outstanding on the date of this
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Agreement), or grant any options to acquire such additional securities; (c)
either (i) merge into, consolidate with, or sell or otherwise dispose of its
assets to any other corporation or person, or enter into any other transaction
or agree to effect any other transaction not in the ordinary course of its
business except as explicitly contemplated herein, or (ii) engage in any
discussions concerning such a possible transaction except as explicitly
contemplated herein unless the board of directors of LABN, based upon the advice
of Saul, Ewing, Remick & Saul LLP, determines in good faith that such action is
required for the board of directors to comply with its fiduciary duties to
stockholders imposed by law; (d) convert the charter or form of entity of LA
Bank from that in existence on the date of this Agreement to any other charter
or form of entity; (e) make any direct or indirect redemption, purchase, or
other acquisition of any of its capital stock; (f) except in the ordinary course
of its business or to accomplish the transactions contemplated by this
Agreement, incur any liability or obligation, make any commitment or
disbursement, acquire or dispose of any property or asset, make any contract or
agreement, pay or become obligated to pay any legal, accounting, or
miscellaneous other expense, or engage in any transaction; (g) other than in the
ordinary course of business, subject any of its properties or assets to any
lien, claim, charge, option, or encumbrance; (h) enter into or assume any one or
more commitments to make capital expenditures, any of which individually exceeds
$20,000 or which in the aggregate exceed $50,000; (i) except for increases in
the ordinary course of business in accordance with past practices, which
together with all other compensation rate increases do not exceed 4.5 percent
per annum of the aggregate payroll as of June 30, 1999, and except as explicitly
contemplated by this Agreement, increase the rate of compensation of any
employee or enter into any agreement to increase the rate of compensation of any
employee; (j) except as otherwise required by law, create or modify any pension
or profit sharing plan, bonus, deferred compensation, death benefit, or
retirement plan, or the level of benefits under any such plan, nor increase or
decrease any severance or termination pay benefit or any other fringe benefit;
(k) enter into any employment or personal services contract with any person or
firm, including without limitation any contract, agreement, or arrangement
described in section 6.37(a) hereof, except directly to facilitate the
transactions contemplated by this Agreement; nor (l) purchase any loans or
loan-participation interests from, or participate in any loans originated by,
any person other than LABN or LA Bank.
7.4. PRESERVATION OF BUSINESS. Each of LABN and LA Bank will (a) carry on
its business and that of LALI and AFSI and manage its assets and properties and
those of LALI and AFSI diligently and substantially in the same manner as
heretofore; (b) maintain the ratio of its loans to its deposits at approximately
the same level as existed at June 30, 1999, as adjusted to allow for seasonal
fluctuations of loans and deposits of a kind and amount experienced
traditionally by it; (c) manage its investment portfolio in substantially the
same manner and pursuant to substantially the same investment policies as in
1997 and 1998, and will take no action to change to any material extent the
percentage which its investment portfolio bears to its total assets, or to
lengthen to any material extent the average maturity of its investment
portfolio, or of any significant category thereof; (d) use commercially
reasonable efforts to continue in effect its present insurance coverage on all
properties, assets, business, and personnel; (e) use commercially reasonable
efforts to preserve its business organization intact, to keep available its
present employees, and to preserve its present relationships with customers and
others having business dealings with it; (f) not do anything and not fail to do
anything which will cause a breach of or default in any contract, agreement,
commitment, or obligation to which it, LALI, or AFSI is a party or by which it,
LALI, or AFSI may be bound; (g) conduct its affairs so that at the Effective
Time none of its representations and warranties will be inaccurate, none of its
covenants and agreements will be breached, and no condition in this Agreement
will remain unfulfilled by reason of its actions or omissions; and (h) not amend
its articles of incorporation or bylaws and not permit the amendment of the
articles of incorporation or bylaws of LALI or AFSI.
7.5. COMFORT LETTER. At the time of the effectiveness of the Registration
Statement, but prior to the mailing of the Joint Proxy Statement, and on the
date of the Effective Time, LABN shall furnish NBTB with a letter from Parente,
Randolph, Orlando, Carey & Associates, its independent auditors for the year
ended December 31, 1998, in form and substance acceptable to NBTB, stating that
(a) in their opinion the consolidated financial statements of LABN included in
the Registration Statement comply as to form in all material respects with the
applicable accounting requirements of the Securities Act and the published rules
and regulations thereunder, and (b) a reading of the latest available unaudited
consolidated financial statements of LABN and inquiries of certain officials of
LABN and LA Bank responsible for financial and accounting matters as to
transactions and events since the date of the most recent consolidated statement
of condition included in their most recent audit report with respect to LABN did
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not cause them to believe that (i) such latest available unaudited consolidated
financial statements of LABN are not stated on a basis consistent with that
followed in LABN's audited consolidated financial statements; or (ii) except as
disclosed in the letter, at a specified date not more than five business days
prior to the date of such letter, there was any change in LABN's capital stock
or any change in consolidated long-term debt or any decrease in the consolidated
net assets of LABN or the consolidated allowance for loan and lease losses of
LABN as compared with the respective amounts shown in the most recent LABN
audited consolidated financial statements. The letter shall also cover such
other matters pertaining to LABN's and LA Bank's financial data and statistical
information included in the Registration Statement as may reasonably be
requested by NBTB.
7.6. AFFILIATES' AGREEMENTS.
(a) LABN will furnish to NBTB (i) a list of all persons known to LABN
who at the date of this Agreement and (ii) if different from the list required
by section 7.6(a)(i), a list of all persons known to LABN who at the date of
LABN's special meeting of shareholders to vote upon the transactions
contemplated by this Agreement may be deemed to be "affiliates" of LABN within
the meaning of Rule 145 under the Securities Act and for purposes of qualifying
the Merger for "pooling of interests" accounting treatment.
(b) LABN will use commercially reasonable efforts to cause each such
"affiliate" of LABN to deliver to NBTB on or before the date of this Agreement
(or, in the case of any person who becomes an "affiliate" of LABN after the date
of this Agreement, not later than ten days after such person becomes an
"affiliate" of LABN) an Affiliates Agreement.
7.7. POOLING TREATMENT.
(a) LABN will take no action that would prevent or impede the Merger
from qualifying for "pooling of interests" accounting treatment or KPMG from
delivering the Pooling Letters.
(b) LABN shall deliver to KPMG such certificates or representations as
KPMG may reasonably request to enable it to deliver the Pooling Letters.
7.8. SHAREHOLDERS' MEETING. LABN shall hold a meeting of its shareholders
in accordance with the BCL as promptly as possible after the effectiveness of
the Registration Statement, after at least twenty days' prior written notice
thereof to the shareholders of LABN, to consider and vote upon the adoption of
this Agreement. Subject to its fiduciary duty to shareholders, the board of
directors of LABN shall approve this Agreement and recommend to its shareholders
that it be adopted.
7.9. DIVIDEND COORDINATION. The board of directors of LABN shall cause its
regular quarterly dividend record dates and payment dates for LABN Common Stock
to be the same as the regular quarterly dividend record dates and payment dates
for NBTB Common Stock (in particular, by deferring the record date for LABN
Common Stock by up to thirty days beginning in the quarter following the quarter
in which this Agreement is executed), and LABN shall not thereafter change its
regular dividend payment dates and record dates.
7.10. INCONSISTENT ACTIVITIES.
(a) Subject to subsection (b) of this section 7.10, unless and until
the Merger has been consummated or this Agreement has been terminated in
accordance with its terms, neither LABN nor LA Bank will (a) solicit or
encourage, directly or indirectly, any inquiries or proposals (each an
"Alternative Proposal") to acquire more than 1 percent of the LABN Common Stock
or any capital stock of LA Bank or any significant portion of the assets of
either of them (whether by tender offer, merger, purchase of assets, or other
transactions of any type) (each an "Alternative Transaction"); (b) afford any
third party which may be considering an Alternative Proposal or Alternative
Transaction access to its properties, books or records except as required by
mandatory provisions of law; (c) enter into any discussions or negotiations for,
or enter into any agreement or understanding which provides for, any Alternative
Transaction, or (d) authorize or permit any of its directors, officers,
employees or agents to do or permit any of the foregoing. If LABN or LA Bank
A-27
becomes aware of any Alternative Proposal or of any other matter which could
adversely affect this Agreement or the Merger, LABN and LA Bank shall
immediately give notice thereof to NBTB.
(b) Nothing contained in subsection (a) of this section 7.10 shall
prohibit the board of directors of LABN from furnishing information to or
entering into discussions or negotiations with any person that makes an
unsolicited bona fide Alternative Proposal if, and only to the extent that, (i)
the board of directors of the Company, based upon the advice of Saul, Ewing,
Remick & Saul LLP, determines in good faith that such action is required for the
board of directors to comply with its fiduciary duties to stockholders imposed
by law, (ii) prior to furnishing such information to, or entering into
discussions or negotiations with, such person, LABN provides written notice to
NBTB to the effect that it is furnishing information to, or entering into
discussions or negotiations with, such person, and (iii) LABN keeps NBTB
informed of the status and all material information with respect to any such
discussions or negotiations.
(c) Nothing in subsection (b) of this section 7.10 shall (i) permit
LABN to terminate this Agreement (except as specifically provided in section
11.1 or 11.2 of this Agreement), (ii) permit LABN or LA Bank to enter into any
agreement with respect to an Alternative Transaction for as long as this
Agreement remains in effect (it being agreed that for as long as this Agreement
remains in effect, LABN and LA Bank shall not enter into any agreement with any
person that provides for, or in any way facilitates, an Alternative Transaction
(other than a confidentiality agreement in customary form)), or (iii) affect any
other obligation of LABN or LA Bank under this Agreement.
7.11. COBRA OBLIGATIONS. For all individuals covered under a group health
plan that is subject to section 601 of ERISA and sponsored by LABN or LA Bank or
any of their subsidiaries, and who experience a Qualifying Event (as defined in
section 603 of ERISA) within thirty days of the date of this Agreement, LABN or
LA Bank, as the case may be, shall remain responsible for providing all notices
and election forms necessary to comply with ERISA and the Code, and will take
all steps necessary to implement elections pursuant to such notices.
7.12. UPDATED SCHEDULES. Not less than fifteen business days prior to the
Effective Time and as of the Effective Time, LABN will deliver to NBTB any
updates to the schedules to its representations which may be required to
disclose events or circumstances arising after the date hereof. Such schedules
shall be updated only for the purpose of making the representations and
warranties contained in this Agreement to which such part of such schedules
relate true and correct in all material respects as of the date such schedule is
updated, and the updated schedule shall not have the effect of making any
representation or warranty contained in this Agreement true and correct in all
material respects as of a date prior to the date of such updated schedule. For
purposes of determining whether the condition set forth in section 4.1 to NBTB's
obligations have been met, any such updated schedules delivered to NBTB shall be
disregarded unless NBTB shall have agreed to accept any changes reflected in
such updated schedules.
7.13. SUBSEQUENT EVENTS. Until the Effective Time, LABN will immediately
advise NBTB in a detailed written notice of any fact or occurrence or any
pending or threatened occurrence of which it obtains knowledge and which (if
existing and known at the date of the execution of this Agreement) would have
been required to be set forth or disclosed in or pursuant to this Agreement
which (if existing and known at any time prior to or at the Effective Time)
would make the performance by LABN of a covenant contained in this Agreement
impossible or make such performance materially more difficult than in the
absence of such fact or occurrence, or which (if existing and known at the time
of the Effective Time) would cause a condition to NBTB's obligations under this
Agreement not to be fully satisfied.
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8.REPRESENTATIONS AND WARRANTIES OF NBTB.
NBTB represents and warrants to LABN as follows:
8.1. ORGANIZATION, POWERS, AND QUALIFICATION. NBTB is a corporation which
is duly organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate power and
authority to own and operate its properties and assets, to lease properties used
in its business, and to carry on its business as now conducted. NBTB owns or
possesses in the operation of its business all franchises, licenses, permits,
branch certificates, consents, approvals, waivers, and other authorizations,
governmental or otherwise, which are necessary for it to conduct its business as
now conducted, except for those where the failure of such ownership or
possession would not have a Material Adverse Effect on NBTB. NBTB is duly
qualified and licensed to do business and is in good standing in every
jurisdiction with respect to which the failure to be so qualified or licensed
could result in a Material Adverse Effect on NBTB.
8.2. EXECUTION AND PERFORMANCE OF AGREEMENT. NBTB has all requisite
corporate power and authority to execute and deliver this Agreement and to
perform its respective terms.
8.3. BINDING OBLIGATIONS; DUE AUTHORIZATION. This Agreement constitutes the
valid, legal, and binding obligations of NBTB enforceable against it in
accordance with its terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, moratorium or similar law, or by general principles of
equity. The execution, delivery, and performance of this Agreement and the
transactions contemplated thereby have been duly and validly authorized by the
board of directors of NBTB. No other corporate proceedings on its part are
necessary to authorize this Agreement or the carrying out of the transactions
contemplated hereby.
8.4. ABSENCE OF DEFAULT. None of the execution or the delivery of this
Agreement, the consummation of the transactions contemplated hereby, or the
compliance with or fulfillment of the terms hereof will conflict with, or result
in a breach of any of the terms, conditions, or provisions of, or constitute a
default under the organizational documents or bylaws of NBTB. None of such
execution, consummation, or fulfillment will (a) conflict with, or result in a
material breach of the terms, conditions, or provisions of, or constitute a
material violation, conflict, or default under, or give rise to any right of
termination, cancellation, or acceleration with respect to, or result in the
creation of any lien, charge, or encumbrance upon, any of the property or assets
of NBTB pursuant to any material agreement or instrument under which it is
obligated or by which any of its properties or assets may be bound, including
without limitation any material lease, contract, mortgage, promissory note, deed
of trust, loan, credit arrangement or other commitment or arrangement of it in
respect of which it is an obligor, or (b) if the Merger is approved by the Board
of Governors under the BHC Act, and if the transactions contemplated by this
Agreement are approved by the Department, violate any law, statute, rule, or
regulation of any government or agency to which NBTB is subject and which is
material to its operations, or (c) violate any judgment, order, writ,
injunction, decree, or ruling to which it or any of its properties or assets is
subject or bound. None of the execution or delivery of this Agreement, the
consummation of the transactions contemplated hereby, or the compliance with or
fulfillment of the terms hereof will require any authorization, consent,
approval, or exemption by any person which has not been obtained, or any notice
or filing which has not been given or done, other than approval of the
transactions contemplated by this Agreement by, notices to, or filings with by
the Board of Governors, the SEC, state securities commissions, the Department,
the Secretary of State of the State of Delaware, and the Secretary of State of
the Commonwealth of Pennsylvania.
8.5. CAPITAL STRUCTURE.
(a) The authorized capital stock of NBTB as of the date of this
Agreement consists of (i) 2,500,000 shares of preferred stock, no par value,
stated value $1.00 per share ("NBTB Preferred Stock"), of which, as of the date
of this Agreement, no shares are issued or outstanding, and (ii) 15,000,000
shares of NBTB Common Stock, of which, as of the date of this Agreement,
12,391,351 shares have been duly issued and are validly outstanding and fully
paid, and 624,438 additional shares are issued and held in the treasury of NBTB.
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The aforementioned shares of NBTB Preferred Stock and NBTB Common Stock are the
only voting securities of NBTB authorized, issued, or outstanding as of such
date.
(b) None of the shares of NBTB Common Stock has been issued in
violation of the preemptive rights of any shareholder.
(c) As of the date hereof, to the best of the knowledge of NBTB, and
except for this Agreement, there are no shareholder agreements, or other
agreements, understandings, or commitments relating to the right of any holder
or beneficial owner of more than 1 percent of the issued and outstanding shares
of any class of the capital stock of NBTB to vote or to dispose of his, her or
its shares of capital stock of NBTB.
8.6. BOOKS AND RECORDS. The books and records of each of NBTB and NBT Bank
fairly reflect the transactions to which it is a party or by which its
properties are subject or bound. Such books and records have been properly kept
and maintained and are in compliance in all material respects with all
applicable accounting and legal requirements. Each of NBTB and NBT Bank follows
generally accepted accounting principles applied on a consistent basis in the
preparation and maintenance of its books of account and financial statements,
including but not limited to the application of the accrual method of accounting
for interest income on loans, leases, discounts, and investments, interest
expense on deposits and all other liabilities, and all other items of income and
expense. Each of NBTB and NBT Bank has made all accruals in amounts which
accurately report income and expense in the proper periods in accordance with
generally accepted accounting principles. Each of NBTB and NBT Bank has filed
all material reports and returns required by any law or regulation to be filed
by it.
8.7. FINANCIAL STATEMENTS. NBTB has furnished to LABN its consolidated
audited statement of condition as of each of December 31, 1996, December 31,
1997, and December 31, 1998, and its related audited consolidated statement of
income, consolidated statement of cash flows, and consolidated statement of
changes in stockholders' equity for each of the periods then ended, and the
notes thereto, and its consolidated unaudited statement of condition as of June
30, 1999, and its related unaudited consolidated statement of income,
consolidated statement of cash flows, and consolidated statement of changes in
stockholders' equity for the period then ended, and the notes thereto, each as
filed with the SEC (collectively, the "NBTB Financial Statements"). All of the
NBTB Financial Statements, including the related notes, (a) except as indicated
in the notes thereto, were prepared in accordance with generally accepted
accounting principles consistently applied in all material respects (subject, in
the case of unaudited statements, to recurring audit adjustments normal in
nature and amount), and (b) are in accordance with the books and records of
NBTB, (c) fairly reflect the consolidated financial position of NBTB as of such
dates, and the consolidated results of operations of NBTB for the periods ended
on such dates, and do not fail to disclose any material extraordinary or
out-of-period items, and (d) reflect, in accordance with generally accepted
accounting principles consistently applied in all material respects, adequate
provision for, or reserves against, the consolidated loan losses of NBTB as of
such dates.
8.8. NASDAQ REPORTING. Trading of NBTB Common Stock is, as of the date of
this Agreement, reported on the Nasdaq National Market.
8.9. ABSENCE OF CERTAIN DEVELOPMENTS. Since June 30, 1999, there has been
(a) no Material Adverse Effect with respect to NBTB, and (b) no material
deterioration in the quality of the loan portfolio of NBTB or of any major
component thereof, and no material increase in the level of nonperforming assets
or nonaccrual loans at NBTB or in the level of its provision for credit losses
or its reserve for credit losses.
8.10. BROKERS AND ADVISERS. Other than with respect to McConnell, Budd &
Downes, Inc., (a) there are no claims for brokerage commissions, finder's fees,
or similar compensation arising out of or due to any act of NBTB in connection
with the transactions contemplated by this Agreement or based upon any agreement
or arrangement made by or on behalf of NBTB, and (b) NBTB has not entered into
any agreement or understanding with any party relating to financial advisory
services provided or to be provided with respect to the transactions
contemplated by this Agreement.
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8.11. DISCLOSURE. No representation or warranty hereunder and no
certificate, statement, or other document delivered by NBTB hereunder or in
connection with this Agreement or any of the transactions contemplated
thereunder contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein, in
light of the circumstances under which they were made, not misleading. There is
no fact known to NBTB which might materially adversely affect its business,
assets, liabilities, financial condition, results of operations, or prospects
which has not been disclosed in the NBTB Financial Statements or a certificate
or other document delivered by NBTB to LABN. Copies of all documents delivered
to LABN by NBTB under this Agreement are true, correct, and complete copies
thereof and include all amendments, supplements, and modifications thereto and
all waivers thereunder.
8.12. REGULATORY AND OTHER APPROVALS. As of the date hereof, NBTB is not
aware of any reason why all material consents and approvals shall not be
procured from all regulatory agencies having jurisdiction over the transactions
contemplated by this Agreement, as shall be necessary for (a) consummation of
the transactions contemplated by this Agreement, and (b) the continuation after
the Effective Time of the business of NBTB as such business is carried on
immediately prior to the Effective Time, free of any conditions or requirements
which, in the reasonable opinion of NBTB, could have a Material Adverse Effect
on NBTB. As of the date hereof, NBTB is not aware of any reason why all material
consents and approvals shall not be procured from all other persons and entities
whose consent or approval shall be necessary for (y) consummation of the
transactions contemplated by this Agreement, or (z) the continuation after the
Effective Time of the business of NBTB as such business is carried on
immediately prior to the Effective Time.
9.COVENANTS OF NBTB.
NBTB covenants and agrees as follows:
9.1.RIGHTS OF ACCESS. From the date hereof to the Effective Time, NBTB
shall give to LABN and to its representatives, including its certified public
accountants, PricewaterhouseCoopers LLP, full access during normal business
hours to all of the property, documents, contracts, books, and records of NBTB,
and such information with respect to its business affairs and properties as LABN
from time to time may reasonably request.
9.2. SECURITIES REPORTS. From the date hereof to the Effective Time, NBTB
shall, contemporaneously with the filing with the SEC of any periodic or current
report pursuant to section 13 of the Exchange Act, deliver a copy of such report
to LABN.
9.3. SHAREHOLDERS' MEETING. NBTB shall hold a meeting of its shareholders
in accordance with the GCL as promptly as possible after the effectiveness of
the Registration Statement, after at least twenty days' prior written notice
thereof to the shareholders of NBTB, to consider and vote upon this Agreement.
Subject to its fiduciary duty to shareholders, the board of directors of NBTB
shall recommend to its shareholders that this Agreement be adopted.
9.4. NASDAQ APPROVAL. NBTB shall use its commercially reasonable efforts to
cause the shares of NBTB Common Stock to be issued in the Merger to be approved
for inclusion on the Nasdaq National Market, subject to official notice of
issuance, prior to the Effective Time.
9.5. OPTIONS. At or prior to the Effective Time, NBTB shall take all
corporate action necessary to reserve for issuance a sufficient number of shares
of NBTB Common Stock for delivery upon exercise of options to purchase LABN
Common Stock assumed by it in accordance with section 1.9 hereof. NBTB shall use
commercially reasonable efforts to maintain the effectiveness of the
registration statement that pertains to the shares subject to such options (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as such options remain outstanding. NBTB shall at and after the
Effective Time have reserved sufficient shares of NBTB Common Stock for issuance
with respect to such options. NBTB shall also take any action required to be
taken under any applicable state blue sky or securities laws in connection with
the issuance of such shares.
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9.6. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Following the Effective
Time NBTB will take no action to abrogate or diminish any right accorded under
the articles of incorporation or by-laws of LABN as they existed immediately
prior to the Effective Time to any person who, on or prior to the Effective
Time, was a director or officer of LABN to indemnification from or against
losses, expenses, claims, demands, damages, liabilities, judgments, fines,
penalties, costs, expenses (including without limitation reasonable attorneys
fees) and amounts paid in settlement pertaining to or incurred in connection
with any threatened or actual action, suit, claim, or proceeding (whether civil,
criminal, administrative, arbitration, or investigative) arising out of events,
matters, actions, or omissions occurring on or prior to the Effective Time. To
the extent not provided by the foregoing, following the Effective Time and to
the extent permitted by law, all rights to such indemnification accorded under
the articles of incorporation and by-laws of LABN to any person who, on or prior
to the Effective Time, was a director or officer of LABN shall survive the
Effective Time and, following the Merger, to the extent permitted by law, NBTB
will honor such obligations in accordance with their terms with respect to
events, acts, or omissions occurring prior to the Effective Time.
9.7. SUBSEQUENT EVENTS. Until the Effective Time, NBTB will immediately
advise LABN in a detailed written notice of any fact or occurrence or any
pending or threatened occurrence of which it obtains knowledge and which (if
existing and known at the date of the execution of this Agreement) would have
been required to be set forth or disclosed in or pursuant to this Agreement
which (if existing and known at any time prior to or at the Effective Time)
would make the performance by NBTB of a covenant contained in this Agreement
impossible or make such performance materially more difficult than in the
absence of such fact or occurrence, or which (if existing and known at the time
of the Effective Time) would cause a condition to LABN's obligations under this
Agreement not to be fully satisfied.
9.8. REGISTRATION OF SHARES SUBJECT TO OPTION. Within thirty days after the
Effective Time, NBTB shall file a registration statement on Form S-3 or Form
S-8, as the case may be (or any successor or other appropriate forms), with
respect to the shares of NBTB Common Stock subject to Replacement Options and
shall use its reasonable best efforts to maintain the current status of the
prospectus or prospectuses contained therein for so long as Replacement Options
remain outstanding.
10.CLOSING.
10.1. PLACE AND TIME OF CLOSING. Closing shall take place at the offices of
NBTB, 52 South Broad Street, Norwich, New York, or such other place as the
parties choose, commencing at 9:00 a.m., local time, on the date of the
Effective Time, provided that all conditions precedent to the obligations of the
parties hereto to close have then been met or waived.
10.2. EVENTS TO TAKE PLACE AT CLOSING. At the Closing, the following
actions will be taken:
(a) Such certificates and other documents as are required by this
Agreement to be executed and delivered at or prior to the Effective Time and
have not been so executed and delivered, and such other certificates and
documents as are mutually deemed by the parties to be otherwise desirable for
the effectuation of the Closing, will be so executed and delivered; and then
(b) the Merger and the issuance of shares incident thereto shall be
effected; provided, however, that the administrative and ministerial aspects of
the issuance of shares incident to the Merger will be settled as soon thereafter
as shall be reasonable under the circumstances.
11.TERMINATION, DAMAGES FOR BREACH, WAIVER, AND AMENDMENT.
11.1. TERMINATION BY REASON OF LAPSE OF TIME. This Agreement may be
terminated by any party on or after April 15, 2000, by instrument duly
authorized and executed and delivered to the other parties, unless (a) the
Effective Time shall have occurred on or before such date or (b) the failure of
the Effective Time to have occurred on or before such date has been due to the
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failure of the party seeking to terminate this Agreement to perform or observe
its covenants and agreements as set forth herein.
11.2. GROUNDS FOR TERMINATION. This Agreement may be terminated by written
notice of termination at any time before the Effective Time (whether before or
after action by shareholders of LABN or NBTB):
(a) by mutual consent of the parties hereto;
(b) by NBTB, upon written notice to LABN given at any time (i) if any
of the representations and warranties of LABN contained in section 6 hereof was
materially incorrect when made, or (ii) in the event of a material breach or
material failure by LABN of any covenant or agreement of LABN contained in this
Agreement which has not been, or cannot be, cured within thirty days after
written notice of such breach or failure is given to LABN, and which inaccuracy,
breach, or failure, if continued to the Effective Time, would result in any
condition set forth in section 4 hereof not being satisfied;
(c) by LABN, upon written notice to NBTB given at any time (i) if any
of the representations and warranties of NBTB contained in section 8 hereof was
materially incorrect when made, or (ii) in the event of a material breach or
material failure by NBTB of any covenant or agreement of NBTB contained in this
Agreement which has not been, or cannot be, cured within thirty days after
written notice of such breach or failure is given to NBTB, and which inaccuracy,
breach, or failure, if continued to the Effective Time, would result in any
condition set forth in section 5 hereof not being satisfied or (iii) if the
board of directors of LABN, based upon the advice of Saul, Ewing, Remick & Saul
LLP, determines in good faith that such termination is required for the board of
directors to comply with its fiduciary duties to stockholders imposed by law by
reason of an Alternative Proposal being made; provided that LABN shall notify
NBTB promptly of its intention to terminate this Agreement or enter into a
definitive agreement with respect to any Alternative Proposal, but in no event
shall such notice be given less than 48 hours prior to the public announcement
of LABN's termination of this Agreement;
(d) by LABN, in accordance with the following provisions:
(i) at any time during the three-business-day period beginning on
the Determination Date, if both of the following conditions are satisfied,
subject, however, to subsection 11.2(d)(ii):
(A) The Average Closing Price (determined for purposes of this
section 11.2(d)(i)(A) as if the second sentence of subsection 1.3 were deleted)
(the "Modified Average Closing Price") is less than $17.00; and
(B) The number, expressed as a percentage, obtained by
dividing the Modified Average Closing Price by $20.6875 is more than 15
percentage points less than the Index Differential.
(ii)If LABN chooses to exercise its right pursuant to this section
11.2(d), it shall give immediate written notice thereof to NBTB. During the
three-business-day period commencing with receipt of such notice, NBTB shall
have the option to agree that the Exchange Ratio shall be $17.00 divided by the
Modified Average Closing Price. If NBTB so elects within such three-business-day
period, it shall give immediate written notice thereof to LABN, whereupon no
termination shall have occurred pursuant to this section 11.2(d) and this
Agreement shall remain in effect in accordance with its terms (except that the
Exchange Ratio shall be $17.00 divided by the Modified Average Closing Price).
(iii) DEFINITIONS. The following terms used in this section
11.2(d) shall have the meanings set forth in this Subparagraph (iii).
(A) DETERMINATION DATE. The seventh business day preceding the
Effective Time.
(B) INDEX PRICE. For any member of the Index Group, the
Modified Average Closing Price calculated using, instead of NBTB Common Stock,
the common stock of that member of the Index Group.
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(C) INDEX DIFFERENTIAL. The sum of the respective numbers
(expressed as percentages), for each of the members of the Index Group, obtained
by multiplying the weighting (as set forth in section 11.2(d)(iii)(D)) of that
member of the Index Group times the quotient of the Index Price for that member
of the Index Group divided by the Base Price (as set forth in section
11.2(d)(iii)(D)) for that member of the Index Group.
(D) INDEX GROUP. The twenty companies listed below, the common
stock of all of which shall be publicly traded and as to which there shall not
have been a publicly announced proposal between the day before the date of the
execution of this Agreement and the Determination Date for any such company to
be Acquired. In the event that the common stock of any such company ceases to be
publicly traded or a proposal to Acquire that company is announced between the
day before the date of the execution of this Agreement and the Determination
Date, such company will be removed from the Index Group, and the weights
attributed to the remaining companies will be adjusted proportionately for
purposes of determining the Index Price. The twenty companies and the weights
attributed to them are as follows:
COMPANY WEIGHTING BASE PRICE
Arrow Financial Corporation, Glens Falls, NY 3.649% $26.2500
BSB Bancorp, Inc., Binghamton, NY 5.947% $26.2500
BT Financial Corporation, Johnstown, PA 7.783% $24.6250
CCBT Bancorp, Inc., Hyannis, MA 3.999% $17.5000
Century Bancorp, Inc., Medford, MA 2.680% $18.5000
Community Bank System, Inc., Dewitt, NY 4.841% $24.5000
Community Banks, Inc., Millersburg, PA 3.756% $21.2500
F&M Bancorp, Frederick, MD 6.969% $29.2500
Granite State Bankshares, Inc., Keene, NH 3.546% $23.3750
Harleysville National Corporation, Harleysville, PA 6.583% $35.0000
Independent Bank Corp., Rockland, MA 7.661% $13.3125
National Penn Bancshares, Inc., Boyertown, PA 9.140% $22.2500
Sandy Spring Bancorp, Inc., Olney, MD 6.514% $25.5000
State Bancorp, Inc., New Hyde Park, NY 2.721% $16.5625
Sterling Bancorp, New York, NY 4.221% $19.6875
Suffolk Bancorp, Riverhead, NY 4.119% $27.2500
Sun Bancorp, Inc., Vineland, NJ 3.540% $17.2500
U.S.B. Holding Co., Inc., Orangeburg, NY 6.225% $14.2500
Washington Trust Bancorp, Inc., Westerly, RI 4.442% $16.4375
Yardville National Bancorp, Mercerville, NJ 1.664% $12.7500
100.000%
(E) ACQUIRE. A company within the Index Group is deemed to
have been "Acquired" in any combination in which, immediately thereafter, its
equity holders do not control more than 50 percent of the equity of the entity
resulting from the combination;
(e) by either NBTB or LABN upon written notice given to the other if
the board of directors of either NBTB or LABN shall have determined in its sole
judgment made in good faith, after due consideration and consultation with
counsel, that the Merger has become inadvisable or impracticable by reason of
the institution of litigation by the federal government or the government of the
State of New York or the Commonwealth of Pennsylvania to restrain or invalidate
the transactions contemplated by this Agreement;
(f) by either NBTB or LABN upon written notice given to the other if
any of the approvals referred to in section 3.1 are denied and such denial has
become final and nonappealable; or
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(g) by either NBTB or LABN upon written notice given to the other if
the shareholders of either NBTB or LABN shall have voted on and failed to adopt
this Agreement, at the meeting of such shareholders called for such purpose.
11.3. EFFECT OF TERMINATION. In the event of the termination and
abandonment hereof pursuant to the provisions of section 11.1 or section 11.2,
this Agreement shall become void and have no force or effect, without any
liability on the part of NBTB, LABN, LA Bank, or their respective directors or
officers or shareholders, in respect of this Agreement. Notwithstanding the
foregoing, (a) as provided in section 12.4 of this Agreement, the
confidentiality agreement contained in that section shall survive such
termination; (b) the provisions of sections 11.3(b), 11.3(c), 12.1, and 12.11
shall survive; (c) if such termination is a result of any of the representations
and warranties of a party being materially incorrect when made or a result of
the material breach or material failure by a party of a covenant or agreement
hereunder, such party whose representations and warranties were materially
incorrect or who materially breached or failed to perform its covenant or
agreement shall be liable in the amount of $500,000 to the other party or
parties hereto that are not affiliated with it; and (d) if
(i) such termination is pursuant to section 11.2(c)(iii) of this
Agreement, or if
(ii)this Agreement is terminated for any reason specified in
section 11.2(b)(ii) of this Agreement and a definitive agreement with respect to
an Alternative Proposal is executed by LABN or LA Bank within one year after
such termination,
then in either case, and in addition to any amount payable or paid under
subsection (c) of this section 11.3, LABN shall be liable to NBTB for liquidated
damages in the further amount of $3,000,000, which amount will be payable to
NBTB in immediately available funds within two business days after such amount
becomes due. LABN acknowledges that the agreements contained in subsection (d)
of this section 11.3 are an integral part of the transactions contemplated in
this Agreement and that, without these agreements, NBTB would not enter into
this Agreement.
11.4. WAIVER OF TERMS OR CONDITIONS. Any of the terms or conditions of this
Agreement, to the extent legally permitted, may be waived at any time prior to
the Effective Time by the party which is, or whose shareholders are, entitled to
the benefit thereof, by action taken by that party (if an individual) or by the
board of directors of such party (if a corporation), or by its chairman, or by
its president; provided that such waiver shall be in writing and shall be taken
only if, in the judgment of the party, board of directors, or officer taking
such action, such waiver will not have a materially adverse effect on the
benefits intended hereunder to it or to the shareholders of its or his
corporation; and the other parties hereto may rely on the delivery of such a
waiver as conclusive evidence of such judgment and the validity of the waiver.
11.5. AMENDMENT. Anything herein or elsewhere to the contrary
notwithstanding, to the extent permitted by law, this Agreement and the exhibits
hereto may be amended, supplemented, or interpreted at any time prior to the
Effective Time by written instrument duly authorized and executed by each of the
parties hereto; provided, however, that (except as specifically provided herein
or as may be approved by such shareholders) this Agreement may not be amended
after:
(a) the action by shareholders of LABN in any respect that would change
(i) the amount or kind of shares, obligations, cash, property, or rights to be
received in exchange for or on conversion of the LABN Common Stock; (ii) any
term of the certificate of incorporation of NBTB to be effected by the Merger;
or (iii) any of the terms and conditions of this Agreement if the change would
adversely affect the shareholders of LABN, or
(b) the action by shareholders of NBTB in any respect that would change
(i) the amount or kind of shares, obligations, cash, property, or rights to be
received in exchange for the NBTB Common Stock to be delivered in the Merger;
(ii) any term of the certificate of incorporation of NBTB to be effected by the
Merger; or (iii) any of the terms and conditions of this Agreement if the change
would adversely affect the shareholders of NBTB.
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12.GENERAL PROVISIONS.
12.1. ALLOCATION OF COSTS AND EXPENSES. Except as provided in this section,
each party hereto shall pay its own fees and expenses, including without
limitation the fees and expenses of its own counsel and its own accountants and
tax advisers, incurred in connection with this Agreement and the transactions
contemplated thereby. For purposes of this section, (i) the cost of printing the
Joint Proxy Statement shall be apportioned between NBTB and LABN based upon the
number of copies each shall request to be printed, (ii) the cost of delivering
the Joint Proxy Statement and other material to be transmitted to shareholders
of NBTB shall be deemed to be incurred on behalf of NBTB, (iii) the cost of
delivering the Joint Proxy Statement and other material to be transmitted to
shareholders of LABN shall be deemed to be incurred on behalf of LABN, (iv) the
cost of registering under federal and state securities laws the stock of NBTB to
be received by the shareholders of LABN shall be deemed to be incurred on behalf
of NBTB, and (v) the cost of procuring the tax opinion referred to in section
3.5 of this Agreement shall be deemed to be incurred on behalf of LABN.
12.2. MUTUAL COOPERATION.
(a) Subject to the terms and conditions herein provided, each party
shall use its best efforts, and shall cooperate fully with the other party, in
expeditiously carrying out the provisions of this Agreement and in expeditiously
making all filings and obtaining all necessary governmental approvals, and as
soon as practicable shall execute and deliver, or cause to be executed and
delivered, such governmental notifications and additional documents and
instruments and do or cause to be done all additional things necessary, proper,
or advisable under applicable law to consummate and make effective on the
earliest practicable date the transactions contemplated hereby.
(b) NBTB and LABN shall promptly prepare and file with the SEC the
Joint Proxy Statement, and NBTB shall promptly prepare and file with the SEC the
Registration Statement in which the Joint Proxy Statement will be included as a
prospectus. NBTB and LABN shall use all reasonable efforts to have the
Registration Statement declared effective under the Securities Act as promptly
as practicable after such filing. Each party will supply in a timely fashion
such information concerning such party as shall be necessary or appropriate for
inclusion in the Joint Proxy Statement and Registration Statement.
12.3. FORM OF PUBLIC DISCLOSURES. NBTB and LABN shall mutually agree in
advance upon the form and substance of all public disclosures concerning this
Agreement and the transactions contemplated hereby.
12.4. CONFIDENTIALITY. NBTB, LABN, and their respective subsidiaries shall
use all information that each obtains from the other pursuant to this Agreement
solely for the effectuation of the transactions contemplated by this Agreement
or for other purposes consistent with the intent of this Agreement. Neither
NBTB, LABN, nor their respective subsidiaries shall use any of such information
for any other purpose, including, without limitation, the competitive detriment
of any other party. NBTB and LABN shall maintain as strictly confidential all
information each of them learns from the other and shall, at any time after
termination of this Agreement in accordance with the terms thereof, upon the
request of the other, return promptly to it all documentation provided by it or
made available to third parties. Each of the parties may disclose such
information to its respective affiliates, counsel, accountants, tax advisers,
and consultants, provided that such parties are advised of the confidential
nature of such information and agree to be bound by the terms of this section
12.4. The confidentiality agreement contained in this section 12.4 shall remain
operative and in full force and effect, and shall survive the termination of
this Agreement.
12.5. CLAIMS OF BROKERS.
(a) LABN shall indemnify, defend, and hold NBTB harmless for, from, and
against any claim, suit, liability, fees, or expenses (including, without
limitation, attorneys' fees and costs of court) arising out of any claim for
brokerage commissions, finder's fees, or similar compensation arising out of or
due to any of its acts in connection with the transactions contemplated by this
Agreement or based upon any agreement or arrangement made by it or on its behalf
with respect to NBTB.
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(b) NBTB shall indemnify, defend, and hold LABN harmless for, from, and
against any claim, suit, liability, fees, or expenses (including, without
limitation, attorneys' fees and costs of court) arising out of any claim for
brokerage commissions, finder's fees, or similar compensation arising out of or
due to any of its acts in connection with any of the transactions contemplated
by this Agreement or based upon any agreement or arrangement made by it or on
its behalf with respect to LABN.
12.6. INFORMATION FOR APPLICATIONS AND REGISTRATION STATEMENT.
(a) Each party represents and warrants that all information concerning
it which is included in any statement and application (including the
Registration Statement) made to any governmental agency in connection with the
transactions contemplated by this Agreement shall not, with respect to such
party, contain an untrue statement of a material fact or omit any material fact
required to be stated therein or necessary to make the statements made, in light
of the circumstances under which they were made, not misleading. The party so
representing and warranting will indemnify, defend, and hold harmless the other,
each of its directors and officers, each underwriter and each person, if any,
who controls the other within the meaning of the Securities Act, for, from and
against any and all losses, claims, suits, damages, expenses, or liabilities to
which any of them may become subject under applicable laws (including, but not
limited to, the Securities Act and the Exchange Act) and rules and regulations
thereunder and will reimburse them for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any actions
whether or not resulting in liability, insofar as such losses, claims, damages,
expenses, liabilities, or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in any such
application or statement or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary in order to make the statements therein not misleading, but only
insofar as any such statement or omission was made in reliance upon and in
conformity with information furnished in writing by the representing and
warranting party expressly for use therein. Each party agrees at any time upon
the request of the other to furnish to the other a written letter or statement
confirming the accuracy of the information contained in any proxy statement,
registration statement, report, or other application or statement, and
confirming that the information contained in such document was furnished
expressly for use therein or, if such is not the case, indicating the
inaccuracies contained in such document or draft or indicating the information
not furnished expressly for use therein. The indemnity agreement contained in
this section 12.6(a) shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of any of the other
parties, and shall survive the termination of this Agreement or the consummation
of the transactions contemplated thereby.
(b) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement contained in section 12.6(a) of
this Agreement is for any reason held by a court of competent jurisdiction to be
unenforceable as to any or every party, then the parties in such circumstances
shall contribute to the aggregate losses, claims, damages and liabilities
(including any investigation, legal and other expenses incurred in connection
with, and any amounts paid in settlement of, any action, suit or proceeding or
any claims asserted) to which any party may be subject in such proportion as the
court of law determines based on the relative fault of the parties.
12.7. STANDARD OF MATERIALITY AND OF MATERIAL ADVERSE EFFECT.
(a) For purposes of sections 4, 6, and 7 of this Agreement, the terms
"material" and "materially," when used with reference to items normally
expressed in dollars, shall be deemed to refer to amounts individually and in
the aggregate in excess of 3 percent of the shareholders' equity of LABN as of
June 30, 1999, as determined in accordance with generally accepted accounting
principles.
(b) For purposes of sections 5, 8, and 9 of this Agreement, the terms
"material" and "materially," when used with reference to items normally
expressed in dollars, shall be deemed to refer to amounts individually and in
the aggregate in excess of 3 percent of the shareholders' equity of NBTB as of
June 30, 1999, as determined in accordance with generally accepted accounting
principles.
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(c) For other purposes and, notwithstanding subsections (a) and (b) of
this section 12.7, when used anywhere in this Agreement with explicit reference
to any of the federal securities laws or to the Proxy Statement or the
Registration Statement, the terms "material" and "materially" shall be construed
and understood in accordance with standards of materiality as judicially
determined under the federal securities laws.
(d) The term "Material Adverse Effect" wherever used in this Agreement
shall mean, with respect to a person, a material adverse effect on the business,
results of operations, financial condition or prospects of such person and its
subsidiaries taken as a whole or a material adverse effect on such person's
ability to consummate the transactions contemplated hereby on a timely basis;
provided, that, in determining whether a Material Adverse Effect has occurred,
there shall be excluded any effect on the referenced person the cause of which
is (i) any change in banking laws, rules or regulations of general applicability
or interpretations thereof by courts or governmental authorities, (ii) any
change in generally accepted accounting principles or regulatory accounting
requirements applicable to banks or their holding companies generally, (iii) any
action or omission of LABN or any of its subsidiaries taken with the prior
written consent of NBTB, or of NBTB or any of its subsidiaries taken with the
prior written consent of LABN, or (iv) any changes in general economic
conditions affecting banks or their holding companies.
12.8. ADJUSTMENTS FOR CERTAIN EVENTS. Anything in this agreement to the
contrary notwithstanding, all prices per share, share amounts, per-share
amounts, and exchange ratios referred to in this Agreement (including without
limitation section 11.2(d) of this Agreement) shall be appropriately adjusted to
account for stock dividends, split-ups, mergers, recapitalizations,
combinations, conversions, exchanges of shares or the like, but not for normal
and recurring cash dividends declared or paid in a manner consistent with the
established practice of the payer.
12.9. COUNTERPARTS. This Agreement may be executed in two or more
counterparts each of which shall be deemed to constitute an original, but such
counterparts together shall be deemed to be one and the same instrument and to
become effective when one or more counterparts have been signed by each of the
parties hereto. It shall not be necessary in making proof of this Agreement or
any counterpart hereof to produce or account for the other counterpart.
12.10. ENTIRE AGREEMENT. This Agreement sets forth the entire understanding
of the parties hereto with respect to their commitments to each other and their
undertakings vis-a-vis each other on the subject matter hereof. Any previous
agreements or understandings among the parties regarding the subject matter
hereof are merged into and superseded by this Agreement. Nothing in this
Agreement express or implied is intended or shall be construed to confer upon or
to give any person, other than NBTB, LABN, and their respective shareholders,
any rights or remedies under or by reason of this Agreement.
12.11. SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS. None of the
representations, warranties, covenants, and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement (other than the Stock Option
Agreement, the employment agreement described in section 4.8 hereof, and the
change-in-control agreements described in section 5.5 hereof, each of which
shall terminate in accordance with its terms), shall survive the Effective Time,
except for sections 9.6, 12.4, 12.6, and those other covenants and agreements
contained herein and therein which by their terms apply in whole or in part
after the Effective Time.
12.12. SECTION HEADINGS. The section and subsection headings herein have
been inserted for convenience of reference only and shall in no way modify or
restrict any of the terms or provisions hereof. Any reference to a "person"
herein shall include an individual, firm, corporation, partnership, trust,
government or political subdivision or agency or instrumentality thereof,
association, unincorporated organization, or any other entity.
12.13. NOTICES. All notices, consents, waivers, or other communications
which are required or permitted hereunder shall be in writing and deemed to have
been duly given if delivered personally or by messenger, transmitted by telex or
telegram, by express courier, or sent by registered or certified mail, return
receipt requested, postage prepaid. All communications shall be addressed to the
appropriate address of each party as follows:
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If to NBTB:
NBT Bancorp Inc.
52 South Broad Street
Norwich, New York 13815
Attention: Mr. Daryl R. Forsythe
President and Chief Executive Officer
With a required copy to:
Brian D. Alprin, Esq.
Duane, Morris & Heckscher LLP
1667 K Street, N.W., Suite 700
Washington, D.C. 20006
If to LABN or LA Bank:
Lake Ariel Bancorp, Inc.
409 Lackawanna Avenue, Suite 201
Scranton, Pennsylvania 18503-2045
Attention: Mr. John G. Martines
Chief Executive Officer
With a required copy to:
John B. Lampi, Esq.
Saul, Ewing, Remick & Saul LLP
Penn National Insurance Tower
Two North Second Street, 7th Floor
Harrisburg, Pennsylvania 17101
All such notices shall be deemed to have been given on the date
delivered, transmitted, or mailed in the manner provided above.
12.14. CHOICE OF LAW AND VENUE. This Agreement shall be governed by,
construed, and enforced in accordance with the laws of the State of Delaware,
without giving effect to the principles of conflict of law thereof, except that
the BCL (in the case of LABN) shall govern with respect to the terms and
conditions of the Merger, the approval and effectiveness thereof, and the
authorization, cancellation, or issuance of the stock or options of LABN with
respect thereto. The parties hereby designate the Chancery Court in New Castle
County, Delaware to be the proper jurisdiction and venue for any suit or action
arising out of this Agreement. Each of the parties consents to personal
jurisdiction in such venue for such a proceeding and agrees that it may be
served with process in any action with respect to this Agreement or the
transactions contemplated thereby by certified or registered mail, return
receipt requested, or to its registered agent for service of process in the
State of Delaware. Each of the parties irrevocably and unconditionally waives
and agrees, to the fullest extent permitted by law, not to plead any objection
that it may now or hereafter have to the laying of venue or the convenience of
the forum of any action or claim with respect to this Agreement or the
transactions contemplated thereby brought in the courts aforesaid.
12.15. KNOWLEDGE OF A PARTY. References in this Agreement to the
knowledge of a party shall mean the actual knowledge possessed by the present
executive officers of such party.
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12.16. BINDING AGREEMENT. This Agreement shall be binding upon the
parties and their respective successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
NBT BANCORP INC.
By:/S/ DARYL R. FORSYTHE
Daryl R. Forsythe
President and Chief Executive Officer
By:/S/ JOHN D. ROBERTS
John D. Roberts
Senior Vice President and Secretary
LAKE ARIEL BANCORP, INC.
By:/S/ JOHN G. MARTINES
John G. Martines
Chief Executive Officer
By:/S/ DONALD E. CHAPMAN
Donald E. Chapman
Secretary
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)
State of New York )
) ss.
County of Chenango )
)
On this sixteenth day of August, 1999, before me personally appeared
Daryl R. Forsythe, to me known to be the President and Chief Executive Officer
of NBT Bancorp Inc., and John D. Roberts, to me known to be the Senior Vice
President and Secretary of NBT Bancorp Inc., and each acknowledged said
instrument to be the free and voluntary act and deed of said corporation, for
the uses and purposes therein mentioned, and on oath each stated that he was
authorized to execute said instrument and that the seal affixed is the corporate
seal of said corporation.
In Witness Whereof I have hereunto set my hand and affixed my official
seal the day and year first above written.
/S/ DAVID R. THELEMAN
Notary Public
DAVID R. THELEMAN
Notary Public, State of New York
Broome County, # 4940256
Commission Expires Aug. 8, 2000
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)
Commonwealth of Pennsylvania )
) ss.
County of Lackawanna )
)
On this sixteenth day of August, 1999, before me personally appeared
John G. Martines, to me known to be the Chief Executive Officer of Lake Ariel
Bancorp, Inc., and Donald E. Chapman, to me known to be the Secretary of Lake
Ariel Bancorp, Inc., and each acknowledged said instrument to be the free and
voluntary act and deed of said corporation, for the uses and purposes therein
mentioned, and on oath each stated that he was authorized to execute said
instrument and that the seal affixed is the corporate seal of said corporation.
In Witness Whereof I have hereunto set my hand and affixed my official
seal the day and year first above written.
/S/ SUSAN MROCZKA
Notary Public
Notarial Seal
Susan Mroczka, Notary Public
Archibald Boro, Lackawanna County
My Commission Expires Jan. 10, 2000
Member, Pennsylvania Association of Notaries
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The undersigned members of the Board of Directors of Lake Ariel
Bancorp, Inc. ("LABN"), acknowledging that NBT Bancorp Inc. ("NBTB") has relied
upon the action heretofore taken by the board of directors in entering into the
Agreement, and has required the same as a prerequisite to NBTB's execution of
the Agreement, do individually and as a group agree, subject to their fiduciary
duties to shareholders, to support the Agreement and to recommend its adoption
by the other shareholders of LABN.
The undersigned do hereby, individually and as a group, until the
Effective Time or termination of the Agreement, further agree to refrain from
soliciting or, subject to their fiduciary duties to shareholders, negotiating or
accepting any offer of merger, consolidation, or acquisition of any of the
shares or all or substantially all of the assets of LABN or LA Bank, National
Association.
/s/ WILLIAM C. GUMBLE /s/ BRUCE D. HOWE
/s/ KENNETH M. POLLOCK /s/ PETER O. CLAUSS
/s/ PAUL D. HORGER /s/ DONALD E. CHAPMAN
/s/ HARRY F. SCHOENAGEL /s/ JOHN G. MARTINES
A-43
APPENDIX B
ARTICLE FOURTH OF NBT'S CERTIFICATE OF INCORPORATION
If Proposal 1 -- to change the par value of the NBT capital stock -- is
adopted, Article FOURTH of the Certificate, as amended, will be further amended
to read as follows:
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, par value $.01 per share
and Two Million Five Hundred Thousand (2,500,000) shares of Preferred
Stock, par value $.01 per share.
Each share of Common Stock having no par value, stated value $1.00 per
share ('Existing Common Stock') outstanding on the effective date of
the amendment including this paragraph shall be reclassified as and
changed into one share of Common Stock, par value $.01 per share ("New
Common Stock"), upon the effectiveness of such amendment. The
certificates that prior to the effectiveness of such amendment
represented Existing Common Stock shall remain outstanding and shall
thereafter represent the shares of New Common Stock into which the
shares of Existing Common Stock have been reclassified as provided
herein.
If both Proposal 2 -- to increase the number of authorized shares of
NBT common stock -- and Proposal 1 are adopted, Article FOURTH of the
Certificate, as amended, would be further amended to read as follows:
FOURTH: The total number of shares of all classes of capital stock
which the Corporation shall have the authority to issue is Thirty-two
Million, Five Hundred Thousand (32,500,000) shares consisting of Thirty
Million (30,000,000) shares of Common Stock, par value $.01 per share
and Two Million Five Hundred Thousand (2,500,000) shares of Preferred
Stock, par value $.01 per share.
If Proposal 2 is adopted but Proposal 1 is not adopted, Article FOURTH
will be amended in the same manner as set forth above except that the references
to "par value $.01 per share" will be changed to "having no par value, stated
value $1.00 per share."
B-1
APPENDIX C
FAIRNESS OPINION OF MCCONNELL, BUDD & DOWNES, INC.
MCCONNELL, BUDD & DOWNES, INC.
365 South Street
Morristown, N.J. 07960
Corporate Finance
973-538-1680
Fax: 973-538-3679
New England
781-721-0024
Fax: 781-721-0034
December ___ , 1999
The Board of Directors
NBT Bancorp Inc.
52 South Broad Street
Norwich, New York 13815
The Board of Directors:
You have requested our opinion as to the fairness, from a financial
point of view, to the stockholders of' NBT Bancorp Inc. ("NBT") of the Floating
Exchange Ratio governing the exchange of shares of the common stock of Lake
Ariel Bancorp, Inc. (Lake Ariel) for shares of common stock of NBT in connection
with the proposed acquisition of Lake Ariel by NBT pursuant to an Agreement and
Plan of Merger (the "Merger Agreement') dated August 16, 1999 by and between
Lake Ariel and NBT. Pursuant to the Merger Agreement, Lake Ariel will merge with
and into NBT, with NBT being the surviving corporation.
As is more specifically set forth in the Merger Agreement, upon
consummation of the merger, each outstanding share of Lake Ariel common stock,
except for shares held by NBT and its subsidiaries or by Lake Ariel and its
subsidiaries (in both cases, other than shares held in a fiduciary capacity or
as a result of debts previously contracted), will be converted into and
exchangeable for the number of shares of NBT Common Stock with a market value
(based on the average closing bid price and the closing asked price per share
for NBT Common Stock as reported on the Nasdaq National Market for each of the
twenty consecutive trading days on and including the eighth trading day before
the Effective Time (Average Closing Price)) of $18.50 constrained by a minimum
exchange of 0.8731 shares of NBT Common Stock and a maximum exchange of 0.9961
shares of NBT Common Stock. The Merger Agreement may be terminated under certain
conditions prior to the effective time of the merger by the Board of Directors
of either party based on defined criteria.
McConnell, Budd & Downes, Inc., as part of its investment banking
business, is regularly engaged in the valuation of bank holding companies and
banks, thrift holding companies and thrifts and their securities in connection
with mergers and acquisitions, negotiated underwritings, private placements,
competitive bidding processes, market making as a NASD market maker, secondary
distributions of listed securities and valuations for corporate, estate and
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other purposes. Our experience and familiarity with NBT includes having worked
as a financial advisor to NBT since October 20, 1994 on a contractual basis and
specifically includes our participation in the process and negotiations leading
up to the proposed merger with Lake Ariel. In the course of our role as
financial advisor to NBT in connection with the merger, we have received fees
for our services and will receive additional fees contingent on the occurrence
of certain defined events. While the payment of all or a significant portion of
fees related to financial advisory services provided in connection with
arm's-length mergers and other business combination transactions upon
consummation of such transactions, as is the case with this transaction, might
be viewed as giving such financial advisors a financial interest in the
successful completion of such transactions, such compensation arrangements are
standard and customary for transactions of the size and type of this
transaction.
In arriving at our opinion, we have reviewed the Merger Agreement. We
have also reviewed publicly available business, financial and shareholder
information relating to NBT and its subsidiaries and certain publicly available
financial and shareholder information relating to Lake Ariel.
In connection with the foregoing, we have (i) reviewed Lake Ariel's
Annual Reports to Stockholders, Annual Reports on Form 10-K and related
financial information for the four calendar years ended December 31, 1998 and
Lake Ariel's Quarterly Report on Form 10-Q and related unaudited financial
information for the first three quarters of 1999; (ii) reviewed NBT's Annual
Reports to Stockholders, Annual Reports on Form 10-K and related financial
information for the four calendar years ended December 31, 1998 and NBT's
Quarterly Report on Form 10-Q and related unaudited financial information for
the first three quarters of 1999; (iii) reviewed certain internal financial
information and financial forecasts, relating to the business, earnings, cash
flows, assets and prospects of the respective companies furnished to McConnell,
Budd & Downes, Inc. by Lake Ariel and NBT, respectively; (iv) held discussions
with members of the senior management and board of NBT concerning the past and
current results of operations of NBT, its current financial condition and
management's opinion of its future prospects; (v) held discussions with members
of senior management of Lake Ariel concerning the past and current results of
operations of Lake Ariel, its current financial condition and management's
opinion of its future prospects; (vi) reviewed the historical record of reported
prices, trading volume and dividend payments for both NBT and Lake Ariel common
stock; (vii) considered the current state of and future prospects for the
economy of New York and Pennsylvania generally and the relevant market areas for
NBT and Lake Ariel in particular; (viii) reviewed specific merger analysis
models employed by McConnell, Budd & Downes, Inc. to evaluate potential business
combinations of financial institutions; (ix) reviewed the reported financial
terms of selected recent business combinations in the banking industry; and (x)
performed such other studies and analyses as McConnell, Budd & Downes, Inc.
considered appropriate under the circumstances associated with this particular
transaction.
On December 7, 1999, NBT agreed to acquire Pioneer American Holding
Company Corp. MB&D has reviewed the agreement with Pioneer American. MB&D acted
as NBT's financial advisor throughout the negotiations with Pioneer American.
The agreement with Pioneer American does not alter MB&D's opinion concerning
this transaction.
In the course of our review and analysis we considered, among other
things, such topics as the historical and projected future contributions of
recurring earnings by the parties, the anticipated future earnings per share
results for the parties on both a combined and stand-alone basis, the potential
to realize significant recurring operating expense reductions and the impact
thereof on projected future earnings per share, the relative capitalization and
capital adequacy of each of the parties, the availability of non-interest income
to each of the parties, the relative asset quality and apparent adequacy of the
reserve for loan losses for each of the parties. We also considered the
composition of deposits and the composition of the loan portfolio of each of
Lake Ariel and NBT. In addition, we considered the historical trading range,
trading pattern and relative market liquidity of the common shares of each of
the parties. In the conduct of our review and analysis we have relied upon and
assumed, without independent verification, the accuracy and completeness of the
financial information provided to us by Lake Ariel and NBT and or otherwise
publicly obtainable. In reaching our opinion we have not assumed any
responsibility for the independent verification of such information or any
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independent valuation or appraisal of any of the assets or the liabilities of
either Lake Ariel or NBT, nor have we obtained from any other source, any
current appraisals of the assets or liabilities of either Lake Ariel or NBT. We
have also relied on the management of Lake Ariel and NBT as to the
reasonableness of various financial and operating forecasts and of the
assumptions on which they are based, which were provided to us for use in our
analyses.
In the course of rendering this opinion, which is being rendered prior
to the receipt of certain required regulatory approvals necessary before
consummation of the merger, we assume that no conditions will be imposed by any
regulatory agency in connection with its approval of the merger that will have a
material adverse effect on the results of operations, the financial condition or
the prospects of NBT following consummation of the merger.
Based upon and subject to the foregoing, it is our opinion, that as of
the date of this letter, the floating exchange ratio is fair to the stockholders
of NBT from a financial point of view.
Very truly yours,
McConnell, Budd & Downes, Inc.
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APPENDIX D
FAIRNESS OPINION OF JANNEY MONTGOMERY SCOTT INC.
[TO BE FILED BY AMENDMENT]
D-1
APPENDIX E
SECTIONS 1571 THROUGH 1580 OF THE PENNSYLVANIA BUSINESS
CORPORATION LAW, REGARDING DISSENTERS' RIGHTS
PENNSYLVANIA Business Corporation Law
Subchapter D. Dissenters Rights
1571 APPLICATION AND EFFECT OF SUBCHAPTER. -- (a) General rule. Except as
otherwise provided in subsection (b), any shareholder of a business corporation
shall have the right to dissent from, and to obtain payment of the fair value of
his shares in the event of, any corporate action, or to otherwise obtain fair
value for his shares, where this part expressly provides that a shareholder
shall have the rights and remedies provided in this subchapter. See:
Section 1906(c) (relating to dissenters rights upon special treatment).
Section 1930 (relating to dissenters rights). Section 1931(d) (relating to
dissenters rights in share exchanges). Section 1932(c) (relating to
dissenters rights in asset transfers). Section 1952(d) (relating to
dissenters rights in division). Section 1962(c) (relating to dissenters
rights in conversion).
Section 2104(b) (relating to procedure).
Section 2324 (relating to corporation option where a restriction on transfer
of a security is held invalid).
Section 2325(b) (relating to minimum vote requirement). Section 2704(c)
(relating to dissenters rights upon election). Section 2705(d) (relating to
dissenters rights upon renewal of election).
Section 2907(a) (relating to proceedings to terminate breach of qualifying
conditions). Section 7104(b)(3) (relating to procedure).
(b)Exceptions. -- (I) Except as otherwise provided in paragraph (2), the
holders of the shares of any class or series of shares that, at the record date
fixed to determine the shareholders entitled to notice of and to vote at the
meeting at which a plan specified in any of section 1930, 1931(d), 1932(c) or
1952(d) is to be voted on, are either:
(i) listed on a national securities exchange; or
(ii) held of record by more than 2,000 shareholders;
shall not have the right to obtain payment of the fair value of any such shares
under this subchapter.
(2) Paragraph (1) shall not apply to and dissenters rights shall be
available without regard to the exception provided in that paragraph in the case
of:
(i) Shares converted by a plan if the shares are not converted solely into
shares of the acquiring, surviving, new or other corporation or solely into such
shares and money in lieu of fractional shares.
(ii) Shares of any preferred or special class unless the articles, the
plan or the terms of the transaction entitle all shareholders of the class to
vote thereon and require for the adoption of the plan or the effectuation of the
transaction the affirmative vote of a majority of the votes cast by all
shareholders of the class.
(iii)Shares entitled to dissenters rights under section 1906(c) (relating
to dissenters rights upon special treatment).
(3) The shareholders of a corporation that acquires by purchase, lease,
exchange or other disposition all or substantially all of the shares, property
or assets of another corporation by the issuance of shares, obligations or
otherwise, with or without assuming the liabilities of the other corporation and
with or without the intervention of another corporation or other person, shall
not be entitled to the rights and remedies of dissenting shareholders provided
in this subchapter regardless of the fact, if it be the case, that the
acquisition was accomplished by the issuance of voting shares of the corporation
to be outstanding immediately after the acquisition sufficient to elect a
majority or more of the directors of the corporation.
(c) Grant of optional dissenters rights. -- The bylaws or a resolution of
the board of directors may direct that all or a part of the shareholders shall
have dissenters rights in connection with any corporate action or other
transaction that would otherwise not entitle such shareholder to dissenters
rights.
(d) Notice of dissenters rights. -- Unless otherwise provided by statute, if
a proposed corporate action that would give rise to dissenters rights under this
subpart is submitted to a vote at a meeting of shareholders, there shall be
included in or enclosed with the notice of meeting:
(1) A statement of the proposed action and a statement that the shareholders
have a right to dissent and obtain payment of the fair value of their shares by
complying with the terms of this subchapter, and
(2) A copy of this subchapter.
(e) Other statutes. -- The procedures of this subchapter shall also be
applicable to any transaction described in any statute other than this 1part
that makes reference to this subchapter for the purpose of granting dissenters
rights.
(f) Certain provisions of articles ineffective. -- This subchapter may not
be relaxed by any provision of the articles.
(g) Cross references. -- See sections 1105 (relating to restriction on
equitable relief), 1904 (relating to de facto transaction doctrine abolished)
and 2512 (relating to dissenters rights procedure).
E-2
1572 DEFINITIONS. -- The following words and phrases when used in this
subchapter shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Corporation." The issuer of the shares held or owned by the dissenter
before the corporate action or the successor by merger, consolidation, division,
conversion or otherwise of that issuer. A plan of division may designate which
of the resulting corporations is the successor corporation for the purposes of
this subchapter. The successor corporation in a division shall have sole
responsibility for payments to dissenters and other liabilities under this
subchapter except as otherwise provided in the plan of division.
"Dissenter." A shareholder or beneficial owner who is entitled to and does
assert dissenters rights under this subchapter and who has performed every act
required up to the time involved for the assertion of those rights.
"Fair value." The fair value of shares immediately before the effectuation
of the corporate action to which the dissenter objects, taking into account all
relevant factors, but excluding any appreciation or depreciation in anticipation
of the corporate action.
"Interest." Interest from the effective date of the corporate action until
the date of payment at such rate as is fair and equitable under all the
circumstances, taking into account all relevant factors, including the average
rate currently paid by the corporation on its principal bank loans.
1573 RECORD AND BENEFICIAL HOLDERS AND OWNERS. -- (a) Record holders of
shares. -- A record holder of shares of a business corporation may assert
dissenters rights as to fewer than all of the shares registered in his name only
if he dissents with respect to all the shares of the same class or series
beneficially owned by any one person and discloses the name and address of the
person or persons on whose behalf he dissents. In that event, his rights shall
be determined as if the shares as to which he has dissented and his other shares
were registered in the names of different shareholders.
(b) Beneficial owners of shares. -- A beneficial owner of shares of a
business corporation who is not the record holder may assert dissenters rights
with respect to shares held on his behalf and shall be treated as a dissenting
shareholder under the terms of this subchapter if he submits to the corporation
not later than the time of the assertion of dissenters rights a written consent
of the record holder. A beneficial owner may not dissent with respect to some
but less than all shares of the same class or series owned by the owner, whether
or not the shares so owned by him are registered in his name.
1574 NOTICE OF ON TO DISSENT. -- If the proposed corporate action is
submitted to a vote at a meeting of shareholders of a business corporation, any
person who wishes to dissent and obtain payment of the fair value of his shares
must file with the corporation, prior to the vote, a written notice of intention
to demand that he be paid the fair value for his shares if the proposed action
is effectuated, must effect no change in the beneficial ownership of his shares
from the date of such filing continuously through the effective date of the
proposed action and must refrain from voting his shares in approval of such
action. A dissenter who fails in any respect shall not acquire any right to
payment of the fair value of his shares under this subchapter. Neither a proxy
nor a vote against the proposed corporate action shall constitute the written
notice required by this section.
1575 NOTICE TO DEMAND PAYMENT. -- (a) General rule. -- If the proposed
corporate action is approved by the required vote at a meeting of shareholders
of a business corporation, the corporation shall mail a further notice to all
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dissenters who gave due notice of intention to demand payment of the fair value
of their shares and who refrained from voting in favor of the proposed action.
If the proposed corporate action is to be taken without a vote of shareholders,
the corporation shall send to all shareholders who are entitled to dissent and
demand payment of the fair value of their shares a notice of the adoption of the
plan or other corporate action. In either case, the notice shall:
(1) State where and when a demand for payment must be sent and certificates
for certificated shares must be deposited in order to obtain payment.
(2) Inform holders of uncertificated shares to what extent transfer of
shares will be restricted from the time that demand for payment is received.
(3) Supply a form for demanding payment that includes a request for
certification of the date on which the shareholder, or the person on whose
behalf the shareholder dissents, acquired beneficial ownership of the shares.
(4) Be accompanied by a copy of this subchapter.
(b) Time for receipt of demand for payment. -- The time set for receipt of
the demand and deposit of certificated shares shall be not less than 30 days
from the mailing of the notice.
1576 FAILURE TO COMPLY WITH NOTICE TO DEMAND PAYMENT, ETC. -- (a) Effect of
failure of shareholder to act. -- A shareholder who fails to timely demand
payment, or fails (in the case of certificated shares) to timely deposit
certificates, as required by a notice pursuant to section 1575 (relating to
notice to demand payment) shall not have any right under this subchapter to
receive payment of the fair value of his shares.
(b) Restriction on uncertificated shares. -- If the shares are not
represented by certificates, the business corporation may restrict their
transfer from the time of receipt of demand for payment until effectuation of
the proposed corporate action or the release of restrictions under the terms of
section 1577(a) (relating to failure to effectuate corporate action).
(c) Rights retained by shareholder. -- The dissenter shall retain all other
rights of a shareholder until those rights are modified by effectuation of the
proposed corporate action.
1577 RELEASE OF RESTRICTIONS OR PAYMENT FOR SHARES. -- (a) Failure to
effectuate corporate reaction. -- Within 60 days after the date set for
demanding payment and depositing certificates, if the business corporation has
not effectuated the proposed corporate action, it shall return any certificates
that have been deposited and release uncertificated shares from any transfer
restrictions imposed by reason of the demand for payment.
(b) Renewal of notice to demand payment. -- When uncertificated shares have
been released from transfer restrictions and deposited certificates have been
returned, the corporation may at any later time send a new notice conforming to
the requirements of section 1575 (relating to notice to demand payment), with
like effect.
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(c) Payment of fair value of shares. -- Promptly after effectuation of the
proposed corporate action, or upon timely receipt of demand for payment if the
corporate action has already been effectuated, the corporation shall either
remit to dissenters who have made demand and (if their shares are certificated)
have deposited their certificates the amount that the corporation estimates to
be the fair value of the shares, or give written notice that no remittance under
this section will be made. The remittance or notice shall be accompanied by:
(1) The closing balance sheet and statement of income of the issuer of the
shares held or owned by the dissenter for a fiscal year ending not more than 16
months before the date of remittance or notice together with the latest
available interim financial statements.
(2) A statement of the corporation's estimate of the fair value of the
shares.
(3) A notice of the right of the dissenter to demand payment or supplemental
payment, as the case may be accompanied by a copy of this subchapter.
(d) Failure to make payment. -- If the corporation does not remit the amount
of its estimate of the fair value of the shares as provided by subsection (c),
it shall return any certificates that have been deposited and release
uncertificated shares from any transfer restrictions imposed by reason of the
demand for payment. The corporation may make a notation on any such certificate
or on the records of the corporation relating to any such uncertificated shares
that such demand has been made. If shares with respect to which notation has
been so made shall be transferred, each new certificate issued therefor or the
records relating to any transferred uncertificated shares shall bear a similar
notation, together with the name of the original dissenting holder or owner of
such shares. A transferee of such shares shall not acquire by such transfer any
rights in the corporation other than those that the original dissenter had after
making demand for payment of their fair value.
1578 ESTIMATE BY DISSENTER OF FAIR VALUE OF SHARES. -- (a) General rule. --
If the business corporation gives notice of its estimate of the fair value of
the shares, without remitting such amount, or remits payment of its estimate of
the fair value of a dissenter's shares as permitted by section 1577(c) (relating
to payment of fair value of shares) and the dissenter believes that the amount
stated or remitted is less than the fair value of his shares, he may send to the
corporation his own estimate of the fair value of the shares, which shall be
deemed a demand for payment of the amount or the deficiency.
(b) Effect of failure to file estimate. -- Where the dissenter does not file
his own estimate under subsection (a) within 30 days after the mailing by the
corporation of its remittance or notice, the dissenter shall be entitled to no
more than the amount stated in the notice or remitted to him by the corporation.
1579 VALUATION PROCEEDINGS GENERALLY. -- (a) General rule. --Within 60 days
after the latest of:
(1) Effectuation of the proposed corporate action;
(2)Timely receipt of any demands for payment under section 1575 (relating to
notice to demand payment); or
E-5
(3) Timely receipt of any estimates pursuant to section 1578 (relating to
estimate by dissenter of fair value of shares);
If any demands for payment remain unsettled, the business corporation may file
in court an application for relief requesting that the fair value of the shares
be determined by the court.
(b) Mandatory joinder of dissenters. -- All dissenters, wherever residing,
whose demands have not been settled shall be made parties to the proceeding as
in an action against their shares. A copy of the application shall be served on
each such dissenter. If a dissenter is a nonresident, the copy may be served on
him in the manner provided or prescribed by or pursuant to 42 Pa.C.S. Ch.
53 (relating to bases of jurisdiction and interstate and international
procedure).
(c) Jurisdiction of the court. -- The jurisdiction of the court shall be
plenary and exclusive. The court may appoint an appraiser to receive evidence
and recommend a decision on the issue of fair value. The appraiser shall have
such power and authority as may be specified in the order of appointment or in
any amendment thereof.
(d) Measure of recovery. -- Each dissenter who is made a party shall be
entitled to recover the amount by which the fair value of his shares is found to
exceed the amount, if any, previously remitted, plus interest.
(e) Effect of corporation's failure to file application. -- If the
corporation fails to file an application as provided in subsection (a), any
dissenter who made a demand and who has not already settled his claim against
the corporation may do so in the name of the corporation any time within 30 days
after the expiration of the 60-day period. If a dissenter does not file an
application within the 30-day period, each dissenter entitled to file an
application shall be paid the corporation's estimate of the fair value of the
shares and no more, and may bring an action to recover any amount not previously
remitted.
1580 COSTS AND EXPENSES OF VALUATION PROCEEDINGS. -- (a) General rule. --
The costs and expenses of any proceeding under section 1579 (relating to
valuation proceedings generally), including the reasonable compensation and
expenses of the appraiser appointed by the court, shall be determined by the
court and assessed against the business corporation except that any part of the
costs and expenses may be apportioned and assessed as the court deems
appropriate against all or some of the dissenters who are parties and whose
action in demanding supplemental payment under section 1578 (relating to
estimate by dissenter of fair value of shares) the court finds to be dilatory,
obdurate, arbitrary, vexatious or in bad faith.
(b) Assessment of counsel fees and expert fees where lack of good faith
appears. -- Fees and expenses of counsel and of experts for the respective
parties may be assessed as the court deems appropriate against the corporation
and in favor of any or all dissenters if the corporation failed to comply
substantially with the requirements of this subchapter and may be against either
the corporation or a dissenter, in favor of any other party, if the court finds
that the party against whom the fees and expenses are assessed acted in bad
faith or in a dilatory, obdurate, arbitrary or vexatious manner in respect to
the rights provided by this subchapter.
(c) Award of fees for benefits to other dissenters. -- If the court finds
that the services of counsel for any dissenter were of substantial benefit to
other dissenters similarly situated and should not be against the corporation,
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it may award to those counsel reasonable fees to be paid out of the amounts
awarded to the dissenters who were benefited.
E-7
PART II: INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
ARTICLE VI. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1. Each person who was or is made a party or is threatened to
be made a party to or is otherwise involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative (hereinafter a
"proceeding"), by reason of the fact that he or she is or was a director or an
officer of the Corporation or is or was serving at the request of the
Corporation as a director of another corporation or of a partnership, joint
venture, trust or other enterprise, or as a plan fiduciary with respect to an
employee benefit plan (hereinafter an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a Director, officer, or
plan fiduciary or in any other capacity while serving as a Director, officer or
plan fiduciary, shall be indemnified and held harmless by the Corporation to the
fullest extent authorized by the Delaware General Corporation Law, as the same
exists or may hereafter be amended, against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement) reasonably incurred or suffered by such
indemnitee in connection therewith; provided, however, that, except as provided
in Section 3 of this Article VI with respect to proceedings to enforce rights to
indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee only
if such proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation.
Section 2. The right to indemnification conferred in Section 1 of this
Article VI shall include the right to be paid by the Corporation the expenses
(including attorney's fees) incurred in defending any such proceeding in advance
of its final disposition (hereinafter an "advancement of expenses"); provided,
however, that, if the Delaware General Corporation Law requires, an advancement
of expenses incurred by an indemnitee in his or her capacity as a director or
officer (and not in any other capacity in which service was or is rendered by
such indemnitee, including, without limitation, service to an employee benefit
plan) shall be made only upon delivery to the Corporation of an undertaking
(hereinafter an "undertaking"), by or on behalf of such indemnitee, to repay all
amounts so advanced if it shall ultimately be determined by final judicial
decision from which there is no further right to appeal (hereinafter a "final
adjudication") that such indemnitee is not entitled to be indemnified for such
expenses under this Section 2 or otherwise. The rights to indemnification and to
the advancement of expenses conferred in Sections 1 and 2 of this Article VI
shall be contract rights and such rights shall continue as to an indemnitee who
has ceased to be a Director or officer and shall inure to the benefit of the
indemnitee's heirs, executors and administrators.
Section 3. If a claim under Sections 1 or 2 of this Article VI is not
paid in full by the Corporation within sixty (60) days after a written claim has
been received by the Corporation, except in the case of a claim for an
advancement of expenses, in which case the applicable period shall be twenty
(20) days, the indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If successful in whole or
in part in any such suit, or in a suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the indemnitee
shall be entitled to be paid also the expense of prosecuting or defending such
suit. In (i) any suit brought by the indemnitee to enforce a right to
indemnification hereunder (but not in a suit brought by the indemnitee to
enforce a right to an advancement of expenses) it shall be a defense that, and
(ii) in any suit brought by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the Corporation shall be
entitled to recover such expenses upon a final adjudication that, the indemnitee
has not met any applicable standard for indemnification set forth in the
Delaware General Corporation Law. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the Delaware General Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
indemnitee, be a defense to such suit. In any suit brought by the indemnitee to
enforce a right to indemnification or to an advancement of expenses hereunder,
or brought by the Corporation to recover an advancement of expenses pursuant to
the terms of an undertaking, the burden of proving that the indemnitee is not
entitled to be indemnified, or to such advancement of expenses, under this
Section 15 or otherwise shall be on the Corporation.
Section 4. The rights to indemnification and to the advancement of
expenses conferred in this Article VI shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, the
Corporation's Certificate of Incorporation, By-Laws, agreement, vote of
stockholders or disinterested Directors or otherwise.
Section 5. The Corporation may maintain insurance, at its expense, to
protect itself and any Director, officer, employee or agent of the Corporation
or of another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the Corporation would
have the power to indemnify such person against such expense, liability or loss
under the Delaware General Corporation Law.
Section 6. The Corporation may, to the extent authorized from time to
time by the Board of Directors, grant rights to indemnification and to the
advancement of expenses to any employee or agent of the Corporation, or any
person serving at the request of the Corporation as an officer, employee or
agent of another entity, to the fullest extent of the provisions of this Section
with respect to the indemnification and advancement of expenses of Directors and
officers of the Corporation.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENTS.
(a)The following exhibits are filed as part of this Registration Statement or
incorporated herein by reference:
EXHIBIT NO. DESCRIPTION
2.1 Agreement and Plan of Merger by and between NBT Bancorp
Inc. and Lake Ariel Bancorp, Inc., dated as of August 16,
1999, as amended on December 13, 1999 (included as
Appendix A in the Joint Proxy Statement/Prospectus
included in this Registration Statement; Exhibits I, IV,
and VII incorporated by reference to Exhibits 2.3, 2.4 and
2.5 of NBT's Schedule 13D filed on August 18, 1999).
3 By-laws of NBT Bancorp Inc. as amended and restated
through November 22, 1999.*
5 Opinion of Duane, Morris & Heckscher LLP as to the
legality of the securities.*
8 Opinion of Saul, Ewing, Remick & Saul LLP as to certain
tax matters.*
10 Stock Option Agreement, dated as of August 16, 1999, by
and between NBT and Lake Ariel (incorporated by
reference to Exhibit 2.3 of NBT's Schedule 13D filed
August 18, 1999)
II-2
23.1 Consent of KPMG LLP.*
23.2 Consent of Parente, Randolph, Orlando, Carey &
Associates.*
23.3 Consent of Janney Montgomery Scott Inc. (to be filed by
amendment).
23.4 Consent of McConnell, Budd & Downes, Inc.*
23.5 Consent of Duane, Morris & Heckscher LLP (included in
Exhibit 5).
23.6 Consent of Saul, Ewing, Remick & Saul LLP (included in
Exhibit 8).
23.7 Consent of John G. Martines.*
23.8 Consent of Bruce D. Howe.*
23.9 Consent of William C. Gumble.*
24.1 Power of Attorney (contained on signature pages to this
Registration Statement).
99.1 Opinion of McConnell, Budd & Downes, Inc. as to the
fairness of the transaction to NBT (attached as
Appendix C to the Joint Proxy Statement/ Prospectus
included in this Registration Statement).
99.2 Opinion of Janney Montgomery Scott Inc. as to the fairness
of the transaction to stockholders of Lake Ariel (attached
as Appendix D to the Joint Proxy Statement/Prospectus
included in this Registration Statement; to be filed by
amendment).
- ---------------
* Filed herewith.
(b) No financial statement schedules are required to be filed herewith
pursuant to Item 21(b) of this Form.
(c) The fairness opinion of McConnell, Budd & Downes, Inc. is attached
as Appendix C to the Joint Proxy Statement/Prospectus included in
this Registration Statement. The fairness opinion of Janney
Montgomery Scott Inc. is attached as Appendix D to the Joint Proxy
Statement/Prospectus included in this Registration Statement.
ITEM 22. UNDERTAKINGS.
II-3
The undersigned registrant hereby undertakes as follows:
(1) that, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(2) to deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3
under the Securities Exchange Act of 1934; and, where interim financial
information required to be presented by Article 3 of Regulation S-X is not set
forth in the prospectus, to deliver, or cause to be delivered to each person to
whom the prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the prospectus to provide such interim
financial information.
(3) that prior to any public reoffering of the securities registered
hereunder through the use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(4) that every prospectus (i) that is filed pursuant to paragraph (3)
immediately preceding, or (ii) that purports to meet the requirements of Section
10(a)(3) of the Securities Act of 1933, as amended, and is used in connection
with an offering of securities subject to Rule 415, will be filed as a part of
an amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(5) that insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described under Item 20
above, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(6) to respond to requests for information that is incorporated by
reference into the Joint Proxy Statement/Prospectus pursuant to Items 4, 10(b),
11 or 13 of Form S-4, within one business day of receipt of such request, and to
send the incorporated documents by first class mail or other equally prompt
means. This includes information contained in documents filed subsequent to the
Effective Date of the registration statement through the date of responding to
the request.
II-4
(7) to supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the registration statement when it became
effective.
(8) to file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement.
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(9) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Norwich, New York on
this 17th day of December, 1999.
NBT Bancorp Inc.
/S/ DARYL R. FORSYTHE
By: Daryl R. Forsythe
President and Chief
Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Daryl R. Forsythe and Michael J.
Chewens, and each of them, such person's true and lawful attorneys-in-fact and
agents with full power of substitution and resubstitution, for such person and
in such person's name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this registration
statement, and to file the same, with all exhibits thereto, and all documents in
connection therewith, with the Securities and Exchange Commission, granting unto
each said attorneys-in-fact and agents, full power and authority to do and
perform each and every act and thing requisite and necessary to be done, as
fully to all intents and purposes as such person might or could do in person,
hereby ratifying and confirming all that any said attorneys-in-fact and agents,
or either of them, or any substitute of them, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE CAPACITY DATE
/S/ DARYL R. FORSYTHE President, Chief Executive Officer December 17, 1999
- ----------------------
Daryl R. Forsythe and Director (Principal Executive
Officer)
/S/ MICHAEL J. CHEWENS Executive Vice President and December 17, 1999
- ----------------------
Michael J. Chewens Chief Financial and Operating Officer
(Principal Financial and Accounting
Officer)
/S/ EVERETT A. GILMOUR Chairman of the Board of Directors December 17, 1999
- ----------------------
Everett A. Gilmour
II-6
/S/ J. PETER CHAPLIN Director December 17, 1999
- --------------------
J. Peter Chaplin
/S/ PETER B. GREGORY Director December 17, 1999
- --------------------
Peter B. Gregory
/S/ ANDREW S. KOWALCZYK, JR. Director December 17, 1999
- ----------------------------
Andrew S. Kowalczyk, Jr.
/S/ DAN B. MARSHMAN Director December 17, 1999
- -------------------
Dan B. Marshman
/S/ JOHN C. MITCHELL Director December 17, 1999
- --------------------
John C. Mitchell
/S/ WILLIAM L. OWENS Director December 17, 1999
- --------------------
William L. Owens
/S/ PAUL O. STILLMAN Director December 17, 1999
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Paul O. Stillman
II-7
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
2.1 Agreement and Plan of Merger by and between NBT Bancorp
Inc. and Lake Ariel Bancorp, Inc., dated as of August 16,
1999, as amended on December 13, 1999 (included as
Appendix A in the Joint Proxy Statement/Prospectus
included in this Registration Statement; Exhibits I, IV,
and VII incorporated by reference to Exhibits 2.3, 2.4 and
2.5 of NBT's Schedule 13D filed on August 18, 1999).
3 By-laws of NBT Bancorp Inc. as amended and restated
through November 22, 1999.*
5 Opinion of Duane, Morris & Heckscher LLP as to the
legality of the securities.*
8 Opinion of Saul, Ewing, Remick & Saul LLP as to certain
tax matters.*
10 Stock Option Agreement, dated as of August 16, 1999, by
and between NBT and Lake Ariel (incorporated by
reference to Exhibit 2.3 of NBT's Schedule 13D filed
August 18, 1999).
23.1 Consent of KPMG LLP.*
23.2 Consent of Parente, Randolph, Orlando, Carey &
Associates.*
23.3 Consent of Janney Montgomery Scott Inc. (to be filed by
amendment).
23.4 Consent of McConnell, Budd & Downes, Inc.*
23.5 Consent of Duane, Morris & Heckscher LLP (included in
Exhibit 5).
23.6 Consent of Saul, Ewing, Remick & Saul LLP (included in
Exhibit 8).
23.7 Consent of John G. Martines.*
23.8 Consent of Bruce D. Howe.*
23.9 Consent of William C. Gumble.*
24.1 Power of Attorney (contained on signature pages to this
Registration Statement).
II-8
99.1 Opinion of McConnell, Budd & Downes, Inc. as to the
fairness of the transaction to NBT (attached as
Appendix C to the Joint Proxy Statement/Prospectus
included in this Registration Statement).
99.2 Opinion of Janney Montgomery Scott Inc. as to the fairness
of the transaction to stockholders of Lake Ariel (attached
as Appendix D to the Joint Proxy Statement/Prospectus
included in this Registration Statement; to be filed by
amendment).
- ---------------------
* Filed herewith.
II-9
EXHIBIT 3
BY-LAWS OF
NBT BANCORP INC.
(herein called the "Corporation")
ARTICLE I. OFFICES
Section 1. PRINCIPAL OFFICE. The principal office of the Corporation
shall be at:
52 South Broad Street
Norwich, New York 13815
or such other place as the Board of Directors may designate.
Section 2. OTHER OFFICES. In addition to its principal office, the
Corporation may have offices at such other places, within or without the State
of Delaware, as the Board of Directors may from time to time appoint or as the
business of the Corporation may require.
ARTICLE II. STOCKHOLDERS
Section 1. ANNUAL MEETINGS. The annual meeting of the stockholders of the
Corporation, for the purpose of electing directors for the ensuing year and for
the transaction of such other business as may properly come before the meeting,
shall be held at such time as may be specified by the Board of Directors.
Section 2. SPECIAL MEETINGS. A special meeting of the stockholders may be
called at any time by the Board of Directors or by the Chairman of the Board of
Directors, or, if there is none, by the President, or by the holders of not less
than one-half of all the shares entitled to vote at such meeting.
Section 3. PLACE OF MEETINGS. Each annual meeting of the stockholders
shall be held at the principal office of the Corporation, or at such other
place, within or without the State of Delaware, as the Board of Directors may
designate in calling such meeting.
Section 4. NOTICE OF MEETINGS. Written notice of each annual and each
special meeting of the stockholders shall be given by or at the direction of the
officer or other person calling the meeting. Such notice shall state the purpose
or purposes for which the meeting is called, the time when and the place where
it is to be held, and such other information as may be required by law. Except
as otherwise required by law, a copy thereof shall be delivered personally,
mailed in a postage prepaid envelope or transmitted electronically or by
telegraph, cable or wireless, not less than ten (10) days nor more than sixty
(60) days before such meeting to each stockholder of record entitled to vote at
such meeting; and if mailed, it shall be directed to such stockholder at his
address as it appears on the stock transfer books of the Corporation, unless he
shall have filed with the Secretary of the Corporation a written request that
notices intended for him be mailed to the address designated in such request.
Notwithstanding the foregoing, a waiver of any notice herein or by law required,
if in writing and signed by the person entitled to such notice, whether before
or after the time of the event for which notice was required to be given, shall
be the equivalent of the giving of such notice. A stockholder who attends shall
be deemed to have had timely and proper notice of the meeting, unless he attends
for the express purpose of objecting to the transaction of any business because
the meeting is not lawfully called or convened. Notice of any adjourned or
recessed meeting need not be given if the time and place thereof are announced
at the meeting at which the adjournment or recess is taken, unless the
adjournment or recess is for more than 30 days, or if after the adjournment or
recess a new record date is fixed for the adjourned or recessed meeting.
Section 5. QUORUM. Except as otherwise provided by law, at any meeting of
the stockholders of the Corporation, the presence in person or by proxy of the
holders of a majority of the total number of issued and outstanding shares of
Common Stock of the Corporation shall constitute a quorum for the transaction of
business. In the absence of a quorum, a majority in voting power of the
stockholders present in person or represented by proxy and entitled to vote may
adjourn the meeting from time to time and from place to place until a quorum is
obtained. At any such adjourned meeting at which a quorum is present any
business may be transacted which might have been transacted at the meeting as
originally called.
Section 6. ORGANIZATION. At every meeting of the stockholders, the
Chairman of the Board, or failing him the President, or, in the absence of the
Chairman of the Board and the President, a person chosen by a majority vote of
the stockholders present in person or by proxy and entitled to vote, shall act
as Chairman of the meeting. The Secretary, or an Assistant Secretary, or, in the
discretion of the Chairman, any person designated by him, shall act as a
secretary of the meeting.
Section 7. INSPECTIONS. The directors, in advance of any meeting, shall
appoint one or more inspectors of election to act at the meeting or any
adjournment thereof. In case any person who may be appointed as an inspector
fails to appear or act, the vacancy may be filled by appointment made by the
directors in advance of the meeting or at the meeting by the person presiding
thereat. Each inspector, before entering upon discharge of his duties, shall
take and sign an oath to execute faithfully the duties of inspector at such
meeting with strict impartiality and according to the best of his ability. The
inspector or inspectors shall determine the number of shares of stock
outstanding and the voting power of each, the shares of stock represented at the
meeting, the existence of a quorum, the validity and effect of proxies, and
shall receive and count votes, ballots or consents and hear and determine all
challenges and questions arising in connection with the right to vote. The
inspectors shall certify their determination of the number of shares represented
at the meeting, and their count of all votes and ballots, and shall make a
report in writing of any challenge, question or matter determined by him or them
and execute a certificate of any fact found by him or them.
Section 8. BUSINESS AND ORDER OF BUSINESS. At each meeting of the
stockholders such business may be transacted as may properly be brought before
such meeting, whether or not such business is stated in the notice of meeting or
in a waiver of notice thereof, except as expressly provided otherwise by law or
by these By-Laws. The order of business at all meetings of stockholders shall be
as follows:
1.Call to order.
2.Selection of secretary of the meeting.
2
3.Determination of quorum.
4.Appointment of voting inspectors.
5.Nomination and election of directors.
6.Other business.
Section 9. VOTING. Except as otherwise provided by law or by the
Certificate of Incorporation, holders of Common Stock of the Corporation shall
be entitled to vote upon matters to be voted upon by the stockholders. At each
meeting of stockholders held for any purpose, each stockholder of record of
stock entitled to vote thereat shall be entitled to vote the shares of such
stock standing in his name on the books of the Corporation on the date
determined in accordance with Section 11 of this Article II, each such share
entitling him to one vote.
If a quorum is present, the affirmative vote of a majority of the shares
present or represented at the meeting and entitled to vote on the subject matter
shall be the act of the stockholders, unless the vote of a greater number is
required by law or the Certificate of Incorporation.
The voting shall be by voice or by ballot as the Chairman may decide,
except that upon demand for a vote by ballot on any question or election, made
by any stockholder or his proxy present and entitled to vote on such question or
election, such vote by ballot shall immediately be taken.
Section 10. VOTING LIST. The Secretary of the Corporation shall make, at
least ten (10) days before each meeting of stockholders, a complete list of the
stockholders entitled to vote at any such meeting or any adjournment thereof,
with the address of and the number of shares held by each stockholder. Such list
shall be opened to the examination of any stockholder, for any purpose germane
to the meeting, during ordinary business hours, for a period of at least ten
(10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
Such list shall also be produced and kept open at the time and place of the
meeting and shall be subject to inspection by any stockholder during the whole
time of the meeting. The original stock transfer books shall be prima facie
evidence as to who are the stockholders entitled to examine such list or
transfer books or to vote at any meeting of stockholders.
If the requirements of this Section 10 have not been substantially
complied with, the meeting shall, on the demand of any stockholder in person or
by proxy, be adjourned until the requirements are complied with.
Section 11. RECORD DATES. (a) In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action other than stockholder action by written
consent, the Board of Directors may fix a record date, which shall not precede
the date such record date is fixed and shall not be more than sixty nor less
than ten days before the date of such meeting, nor more than sixty days prior to
any such other action. If no record date is fixed, the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given and the record date for any other purpose other than
stockholder action by written consent shall be at the close of business on the
day on which the Board of Directors adopts the resolution relating thereto. A
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determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
(b) In order that the Corporation may determine the stockholders entitled
to consent to corporate action in writing without a meeting, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than 10 days after the date upon
which the resolution fixing the record date is adopted by the Board of
Directors. Any stockholder of record seeking to have the stockholders authorize
or take corporate action by written consent shall, by written notice to the
Secretary, request the Board of Directors to fix a record date. The Board of
Directors shall promptly, but in all events within 10 days after the date on
which such a request is received, adopt a resolution fixing the record date. If
no record date has been fixed by the board of Directors within 10 days of the
date on which such a request is received, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting, when no prior action by the Board of Directors is required by
applicable law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
Corporation by delivery to its registered office in the State of Delaware, its
principal place of business, or any officer or agent of the Corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the Corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested. If no record date
has been fixed by the Board of Directors and prior action by the Board of
Directors is required by applicable law, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the date on which the Board of
Directors adopts the resolution taking such prior action.
Section 12. ADJOURNMENT. Any meeting of stockholders, annual or special,
may adjourn from time to time to reconvene at the same or some other place, and
notice need not be given of any such adjourned meeting if the time and place
thereof are announced at the meeting at which the adjournment is taken. At the
adjourned meeting, the Corporation may transact any business which might have
been transacted at the original meeting. If the adjournment is for more than
thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 13. ACTION BY STOCKHOLDERS WITHOUT A MEETING. Any action required
or permitted to be taken at any annual or special meeting of stockholders of the
Corporation may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and voted
and shall be delivered to the Corporation by delivery to its registered office
in the State of Delaware, its principal place of business or to an officer or
agent of the Corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Delivery made to the Corporation's
registered office shall be by hand or by certified or registered mail, return
receipt requested. Prompt notice of the taking of any action by written consent
shall be given to stockholders who have not consented in writing and who, if the
action had been taken at a meeting, would have been entitled to notice of the
meeting if the record date for such meeting had been the date that written
consents signed by a sufficient number of stockholders to take the action were
delivered to the Corporation as provided herein.
Section 14. PROXIES. At any meeting of the stockholders, each stockholder
entitled to vote thereat may vote either in person or by proxy. Such proxy shall
be in writing, subscribed by the stockholder or his duly authorized attorney,
but need not be sealed, witnessed or acknowledged, and shall be filed with the
Secretary at or before the meeting; provided, however, that no proxy shall be
voted or acted upon after eleven months from its date, unless said proxy
provides for a longer period.
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ARTICLE III. DIRECTORS
Section 1. GENERAL POWERS. The business and affairs of the Corporation
shall be managed by or under the direction of the Board of Directors, and all
corporate powers shall be exercised by or under the direction of the Board of
Directors, except as otherwise expressly required by these By-Laws, by the
Certificate of Incorporation or by law.
Section 2. QUALIFICATION, NUMBER, CLASSIFICATION AND TERM OF OFFICE.
Every director must be a citizen of the United States and have resided in the
State of New York, or within two hundred miles of the location of the principal
office of the Corporation, for at least one year immediately preceding his
election, and must own $1,000.00 aggregate book value of Corporate Stock. The
number of directors shall be not less than five nor more than twenty-five. A
Board of Directors shall be elected in the manner provided in these By-Laws.
Each director shall have one vote at any directors' meeting.
The Board of Directors shall be divided into three classes: Class 1,
Class 2 and Class 3, which shall be as nearly equal in number as possible. Each
director shall serve for a term ending on the date of the third Annual Meeting
of Shareowners 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 Shareowners in 1987; each initial director in Class 2
shall hold office until the Annual Meeting of Shareowners in 1988; and each
initial director in Class 3 shall hold office until the Annual Meeting of
Shareowners in 1989.
In the event of any increase or decrease in the authorized number of
directors, (1) each director then serving as such shall 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 apportioned 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 Section 2, each
director shall serve until his successor is elected and qualified or until his
earlier resignation, removal from office or death.
This Article III, Section 2, shall not be altered, amended or repealed
except by an affirmative vote of at least eighty (80%) of the total number of
shareowners.
Section 3. ELECTION OF DIRECTORS. At each meeting of the stockholders for
the election of directors, a quorum being present, as defined in Section 5 of
Article II, the election shall proceed as provided in these By-Laws and under
applicable Delaware law. No election need be by written ballot.
If the election of directors shall not be held on the day designated for
any annual meeting or at any adjournment of such meeting, the Board of Directors
shall cause the election to be held at a special meeting of the stockholders as
soon thereafter as may be convenient.
Nominations of candidates for election as directors of the Corporation
must be made in writing and delivered to or received by the President of the
Corporation within ten days following the day on which public disclosure of the
date of any shareholders' meeting called for the election of directors is first
given. Such notification shall contain the name and address of the proposed
nominee, the principal occupation of the proposed nominee, the number of shares
of Common Stock that will be voted for the proposed nominee by the notifying
shareowner, including shares to be voted by proxy, the name and residence of the
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notifying shareowner and the number of shares of Common Stock beneficially owned
by the notifying shareowner.
No person except Everett A. Gilmour shall be eligible for election or
re-election as a director if he or she shall have attained the age of 72 years.
Everett A. Gilmour shall not be eligible for election or re-election as director
if he shall have attained the age of 78 years.
Nominations not made in accordance herewith may be disregarded by the
Chairman of the meeting.
Section 4. REMOVAL OF DIRECTORS. Any director may be removed at any time,
but only for cause, by the affirmative vote of a majority in voting power of the
stockholders of record entitled to elect a successor, and present in person or
by proxy at a special meeting of such stockholders for which express notice of
the intention to transact such business was given and at which a quorum shall be
present.
Section 5. ORGANIZATION. The Board of Directors, by majority vote, may
from time to time appoint a Chairman of the Board who shall preside over its
meetings. The period and terms of the appointment shall be determined by the
Board of Directors. The Secretary of the Corporation, or an Assistant Secretary,
or, in the discretion of the Chairman, any person appointed by him, shall act as
secretary of the meeting.
Section 6. PLACE OF MEETING, ETC. The Board of Directors may hold its
meetings at such place or places within or without the State of Delaware as the
Board of Directors may from time to time, by resolution determine, or (unless
contrary to resolution of the Board of Directors), at such place as shall be
specified in the respective notices or waivers of notice thereof. Unless
otherwise restricted by law or by the Certificate of Incorporation, members of
the Board of Directors or any committee thereof may participate in a meeting of
the Board of Directors such committee by means of a conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation in a meeting pursuant to this
Section 6 shall constitute presence at such meeting. The Chairman or any person
appointed by him shall act as secretary of the meeting.
Section 7. ANNUAL MEETING. The Board of Directors may meet, without
notice of such meeting, for the purpose of organization, the election of
officers and the transaction of other business, on the same day as, at the place
at which, and as soon as practicable after each annual meeting of stockholders
is held. Such annual meeting of directors may be held at any other time or place
specified in a notice given as hereinafter provided for special meetings of the
Board of Directors, or in a waiver of notice thereof.
Section 8. REGULAR MEETINGS. Regular meetings of the Board of Directors
may be held at such times and places as may be fixed from time to time by action
of the Board of Directors. Unless required by resolution of the Board of
Directors, notice of any such meeting need not be given.
Section 9. SPECIAL MEETINGS. Special meetings of the Board of Directors
shall be held whenever called by the Chief Executive Officer, or by any three or
more directors, or, at the direction of any of the foregoing, by the Secretary.
Notice of each such meeting shall be mailed to each director, addressed to him
at his residence or usual place of business, not less than three (3) days before
the date on which the meeting is to be held; or such notice shall be sent to
each director at such place by telegraph, cable, telephone or wireless, not less
than twenty-four (24) hours before the time at which the meeting is to be held.
Every such notice shall state the time and place of the meeting. Notice of any
adjourned or recessed meeting of the directors need not be given.
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Section 10. WAIVERS OF NOTICE OF MEETINGS. Anything in these By-Laws or
in any resolution adopted by the Board of Directors to the contrary
notwithstanding, proper notice of any meeting of the Board of Directors shall be
deemed to have been given to any director if such notice shall be waived by him
in writing (including telegraph, cable or wireless) before or after the meeting.
A director who attends a meeting shall be deemed to have had timely and proper
notice thereof, unless he attends for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called.
Section 11. QUORUM AND MANNER OF ACTING. A majority of the directors
shall constitute a quorum for the transaction of business. Except as may
otherwise be expressly provided by these By-Laws, the act of a majority of the
directors present at any meeting at which a quorum is present, shall be the act
of the Board of Directors. In the absence of a quorum, a majority of the
directors present may adjourn the meeting from time to time until a quorum be
had. The directors shall act only as a Board and the individual directors shall
have no power as such.
Section 12. RESIGNATIONS. Any director of the Corporation may resign at
any time, in writing, by notifying the Chief Executive Officer, or the President
or the Secretary of the Corporation. Such resignation shall take effect at the
time therein specified; and, unless otherwise specified, the acceptance of such
resignation shall not be necessary to make it effective.
Section 13. MANNER OF FIXING THE NUMBER OF DIRECTORS; VACANCIES.
The number of directors authorized to serve until the next annual meeting
of stockholders of the Corporation shall be the number designated, at the annual
meeting and prior to the election of directors, by the stockholders entitled to
vote for the election of directors, by the stockholders entitled to vote for the
election of directors at that meeting. Between annual meetings of the
stockholders of the Corporation, the Board of Directors shall have the power to
increase, by not more than three (3), the number of directors of the
Corporation.
Any vacancy in the Board of Directors, caused by death, resignation,
removal, disqualification, increase in the number of directors, or any other
cause (other than an increase by more than three (3) in the number of
directors), may be filled by the majority vote of the remaining directors then
in office, though less than a quorum, at any regular meeting of the Board of
Directors. If, at the time of the next election of directors by the
stockholders, the term of office of any vacancy filled by the remaining
directors has not expired, then the stockholders shall fill such vacancy for the
remainder of the unexpired term. Any vacancy, including one caused by an
increase in the number of directors, may be filled at a meeting called for such
purpose, by vote of the stockholders.
Section 14. COMMITTEES. The Board of Directors may designate one or more
Committees, each Committee to consist of one or more of the Directors of the
Corporation, which to the extent provided in said resolution or resolutions,
shall have and may exercise the powers of the Board of Directors in the
management of the business and affairs of the Corporation to the fullest extent
permitted by law and shall have power to authorize the seal of the Corporation
to be affixed to all papers which may require it. Such Committee or Committees
shall have such name or names as may be determined from time to time by
resolution adopted by the Board of Directors.
In the absence or disqualification of any member of any Committee
appointed by the Board, the member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board to act at a meeting in the place
of any such absent or disqualified member, subject, however, to the right of the
Board of Directors to designate one or more alternate members of such Committee,
which alternate members all have power to serve, subject to such conditions as
the Board may prescribe, as a member or members of said Committee during the
absence or inability to act of any one or more members of said Committee. The
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Board of Directors shall have the power at any time to change the membership of
any Committee, to fill vacancies in it, or to dissolve it. A Committee may make
rules for the conduct of its business and shall act in accordance therewith,
except as otherwise provided herein or required by law. A majority of the
members of the Committee shall constitute a quorum. A Committee shall keep
regular minutes of its proceedings and report the same to the Board when
required.
The Chief Executive Officer, if he is a director, shall be a voting
member of all Committees of the Board of Directors, except the Audit Committee
and the Compensation and Benefits Committee.
Section 15. DIRECTORS' ACTION WITHOUT A MEETING. Unless otherwise
provided by the Certificate of Incorporation, any action required to be taken at
a meeting of the directors, or any action which may be taken at a meeting of the
directors or of a committee, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed before such action
by all the directors, or all the members of the committee, as the case may be.
Such consent shall have the same force and effect as a unanimous vote.
Section 16. COMPENSATION. Directors, as such, shall not receive any
stated compensation for their services, but by resolution of the Board of
Directors a fixed sum and expenses of attendance, if any, may be allowed for
attendance at each meeting of the Board. Nothing in this section shall be
construed to preclude a Director from serving the Corporation in any other
capacity and receiving compensation therefor.
ARTICLE IV. OFFICERS
Section 1. OFFICERS. The officers of the Corporation shall be a Chairman
of the Board of Directors, one or more Vice Chairmen of the Board of Directors,
a President, a Treasurer and a Secretary, and where elected, one or more
Vice-Presidents, and the holders of such other offices as may be established in
accordance with the provisions of Section 3 of this Article. Any two or more
offices may be held by the same person; provided only, that the same person
shall not hold the offices of Chairman and Secretary.
Section 2. ELECTION, TERM OF OFFICE AND QUALIFICATIONS. The officers
shall be elected annually by the Board of Directors, as soon as practicable
after the annual election of directors in each year. Each officer shall hold
office until his successor shall have been duly chosen and shall qualify, or
until his death, resignation or removal in the manner hereinafter provided.
Section 3. SUBORDINATE OFFICERS. The Board of Directors may from time to
time establish offices in addition to those designated in Section 1 of this
Article IV with such duties as are provided in these By-Laws, or as they may
from time to time determine.
Section 4. REMOVAL. Any officer may be removed, either with or without
cause, by resolution declaring such removal to be in the best interests of the
Corporation and adopted at any regular or special meeting of the Board of
Directors by a majority of the directors then in office. Any such removal shall
be without prejudice to the recovery of damages for breach of contract rights,
if any, of the person removed. Election of appointment of an officer or agent
shall not of itself, however, create contract rights.
Section 5. RESIGNATIONS. Any officer may resign at any time by giving
written notice to the Board of Directors or the Chairman of the Board of
Directors, the President or the Secretary of the Corporation. Any such
resignation shall take effect at the date of receipt of such notice or at any
later time therein specified; and, unless otherwise specified, the acceptance of
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such resignation shall not be necessary to make it effective. However, no
resignation hereunder, or the acceptance thereof by the Board of Directors,
shall prejudice the contract or other rights, if any, of the Corporation with
respect to the person resigning.
Section 6. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled for
the unexpired portion of the term by the Board of Directors.
Section 7. COMPENSATION. Salaries or other compensation of the officers
may be fixed from time to time by the Board of Directors or in such manner as it
shall determine. No officer shall be prevented from receiving his salary by
reason of the fact that he is also a director of the Corporation.
Section 8. CHAIRMAN OF THE BOARD OF DIRECTORS. Where there is a Chairman
of the Board of Directors he shall be an officer and a director; and he may be
the Chief Executive Officer of the Corporation and as such may have general
supervision of the business of the Corporation, subject, however, to the control
of the Board of Directors and of any duly authorized committee of directors. The
Chief Executive Officer shall have full power and authority to cast any votes
which the Corporation is entitled to cast as a shareholder of another
corporation. Where there is no Chairman of the Board, or he is unable to
discharge his duties, the powers of the Chairman shall be vested in the
President. The Chairman of the Board shall preside at all meetings of
stockholders and of the Board of Directors at which he is present.
Section 9. VICE CHAIRMAN OF THE BOARD OF DIRECTORS. The Vice Chairman
shall be a director of the Corporation. In general, he shall perform all duties
incident to the office of Vice Chairman and such other duties as may from time
to time be designated to him by the Board of Directors or by any duly authorized
committee of directors, and shall have such other powers and authorities as are
conferred upon him elsewhere in these By-Laws.
Section 10. PRESIDENT. The President shall be a director and may be the
Chief Executive Officer or the Chief Operating Officer of the Corporation. In
general, he shall perform all duties incident to the office of the President and
such other duties as may from time to time be designated to him by the Board of
Directors or by any duly authorized committee of directors, and shall have such
other powers and authorities as are conferred upon him elsewhere in these
By-Laws.
Section 11. THE VICE PRESIDENTS. The Vice Presidents shall perform such
duties as from time to time may be assigned to them by the Board of Directors,
or by any duly authorized committee of directors or by the President, and shall
have such other powers and authorities as are conferred upon them elsewhere in
these By-Laws.
Section 12. TREASURER. Except as may otherwise be specifically provided
by the Board of Directors or any duly authorized committee thereof, the
Treasurer shall have the custody of, and be responsible for, all funds and
securities of the Corporation; receive and receipt for money paid to the
Corporation from any source whatsoever; deposit all such monies in the name of
the Corporation in such banks, trust companies, or other depositories as shall
be selected in accordance with the provisions of these By-Laws; against proper
vouchers, cause such funds to be disbursed by check or draft on the authorized
depositories of the Corporation signed in such manner as shall be determined in
accordance with the provisions of these By-Laws; regularly enter or cause to be
entered in books to be kept by him or under his direction, full and adequate
accounts of all money received and paid by him for account of the Corporation;
in general, perform all duties incident to the office of Treasurer and such
other duties as from time to time may be assigned to him by the Board of
Directors, or by any duly authorized committee of directors, or by the Chief
Executive Officer, and have such other powers and authorities as are conferred
upon him elsewhere in these By-Laws.
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Section 13. SECRETARY. The Secretary shall act as Secretary of all
meetings of the stockholders and of the Board of Directors of the Corporation;
shall keep the minutes thereof in the proper books to be provided for that
purpose; shall see that all notices required to be given by the Corporation are
duly given and served; shall be the custodian of the seal of the Corporation and
shall affix the seal or cause it to be affixed to all documents the execution of
which on behalf of the Corporation under its seal is duly authorized in
accordance with the provisions of these By-Laws; shall have charge of the books,
records and papers of the Corporation relating to its organization and
management as a corporation, and shall see that any reports or statements
relating thereto, required by law or otherwise, are properly kept and filed;
shall, in general, perform all the duties incident to the office of Secretary
and such other duties as from time to time may be assigned to him by the Board
of Directors, or by any duly authorized committee of directors or by the Chief
Executive Officer, and shall have such other powers and authorities as are
conferred upon him elsewhere in these By-Laws.
Section 14. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The Assistant
Treasurers and Assistant Secretaries shall perform such duties as shall be
assigned to them by the Treasurer and by the Secretary, respectively, or by the
Board of Directors, or by any duly authorized committee of directors, or by the
Chief Executive Officer, and shall have such other powers and authorities as are
conferred upon them elsewhere in these By-Laws.
ARTICLE V. SHARES OF STOCK
Section 1. REGULATION. Subject to the terms of any contract of the
Corporation, the Board of Directors may make such rules and regulations as it
may deem expedient concerning the issue, transfer, and registration of
certificates for shares of the stock of the Corporation, including the issue of
new certificates for lost, stolen or destroyed certificates and including the
appointment of transfer agents and registrars.
Section 2. STOCK CERTIFICATES. Certificates for shares of the stock of
the Corporation shall be respectively numbered serially for each class of
shares, or series thereof and, as they are issued, shall be impressed with the
corporate seal or a facsimile thereof, and shall be signed by the Chairman of
the Board, the Vice Chairman, the President or any Vice President and by the
Secretary or any Assistant Secretary, or any two officers of the Corporation
designated by the Board of Directors, provided that such signatures may be
facsimiles on any certificate countersigned by a transfer agent other than the
Corporation or its employee or by a registrar other than the Corporation or its
employee. Each certificate shall exhibit the name of the Corporation, the class
(or series of any class) and number of shares represented thereby and the name
of the holder. Each certificate shall be otherwise in such form as may be
prescribed by the Board of Directors.
ARTICLE VI. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1. Each person who was or is made a party or is threatened to be
made a party to or is otherwise involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative (hereinafter a
"proceeding"), by reason of the fact that he or she is or was a director or an
officer of the Corporation or is or was serving at the request of the
Corporation as a director of another corporation or of a partnership, joint
venture, trust or other enterprise, or as a plan fiduciary with respect to an
employee benefit plan (hereinafter an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a Director, officer, or
plan fiduciary or in any other capacity while serving as a Director, officer or
plan fiduciary, shall be indemnified and held harmless by the Corporation to the
fullest extent authorized by the Delaware General Corporation Law, as the same
exists or may hereafter by amended, against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement) reasonably incurred or suffered by such
indemnitee in connection therewith; provided, however, that, except as provided
in Section 3 of this Article VI with respect to proceedings to enforce rights to
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indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee only
if such proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation.
Section 2. The right to indemnification conferred in Section 1 of this
Article VI shall include the right to be paid by the Corporation the expenses
(including attorney's fees) incurred in defending any such proceeding in advance
of its final disposition (hereinafter an "advancement of expenses"); provided,
however, that, if the Delaware General Corporation Law requires, an advancement
of expenses incurred by an indemnitee in his or her capacity as a director or
officer (and not in any other capacity in which service was or is rendered by
such indemnitee, including, without limitation, service to an employee benefit
plan) shall be made only upon delivery to the Corporation of an undertaking
(hereinafter an "undertaking"), by or on behalf of such indemnitee, to repay all
amounts so advanced if it shall ultimately by determined by final judicial
decision from which there is no further right to appeal (hereinafter a "final
adjudication") that such indemnitee is not entitled to be indemnified for such
expenses under this Section 2 or otherwise. The rights to indemnification and to
the advancement of expenses conferred in Section 1 and 2 of this Article VI
shall be contract rights and such rights shall continue as to an indemnitee who
has ceased to be a Director or officer and shall inure to the benefit of the
indemnitee's heirs, executors and administrators.
Section 3. If a claim under Sections 1 or 2 of this Article VI is not
paid in full by the Corporation within sixty (60) days after a written claim has
been received by the Corporation, except in the case of a claim for an
advancement of expenses, in which case the applicable period shall be twenty
(20) days, the indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If successful in whole or
in part in any such suit, or in a suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the indemnitee
shall be entitled to be paid also the expense of prosecuting or defending such
suit. In (i) any suit brought by the indemnitee to enforce a right to
indemnification hereunder (but not in a suit brought by the indemnitee to
enforce a right to an advancement of expenses) it shall be a defense that, and
(ii) in any suit brought by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the Corporation shall be
entitled to recover such expenses upon a final adjudication that, the indemnitee
has not met any applicable standard for indemnification set forth in the
Delaware General Corporation Law. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the Delaware General Corporation Law, nor an actual determination by the
Corporation (including its Board of Director, independent legal counsel, or its
stockholders) that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
indemnitee, be a defense to such suit. In any suit brought by the indemnitee to
enforce a right to indemnification or to an advancement of expenses hereunder,
or brought by the Corporation to recover an advancement of expenses pursuant to
the terms of an undertaking, the burden of proving that the indemnitee is not
entitled to be indemnified, or to such advancement of expenses, under this
Section 15 or otherwise shall be on the Corporation.
Section 4. The rights to indemnification and to the advancement of
expenses conferred in this Article VI shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, the
Corporation's Certificate of Incorporation, By-Laws, agreement, vote of
stockholders or disinterested Directors or otherwise.
Section 5. The Corporation may maintain insurance, at its expense, to
protect itself and any Director, officer, employee or agent of the Corporation
or of another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the Corporation would
have the power to indemnify such person against such expense, liability or loss
under the Delaware General Corporation Law.
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Section 6. The Corporation may, to the extent authorized from time to
time by the Board of Directors, grant rights to indemnification and to the
advancement of expenses to any employee or agent of the Corporation, or any
person serving at the request of the Corporation as an officer, employee or
agent of another entity, to the fullest extent of the provisions of this Section
with respect to the indemnification and advancement of expenses of Directors and
officers of the Corporation.
ARTICLE VII. MISCELLANEOUS
Section 1. SEAL. The corporate seal of the Corporation shall contain the
name of the Corporation, the year of its creation, and the words "Corporate
Seal, Delaware," and shall be in such form as may be approved by the Board of
Directors.
Section 2. FISCAL YEAR. The fiscal year of the Corporation shall be as
set by the Board of Directors.
Section 3. LOANS. Any officer or officers or agent or agents of the
Corporation thereunto authorized by the Board of Directors or by any duly
authorized committee of directors may effect loans or advances at any time for
the Corporation, in the ordinary course of the Corporation's business, from any
bank, trust company or other institution or from any firm, corporation or
individual, and for such loans and advances may make, execute and deliver
promissory notes, bonds or other certificates or evidences of indebtedness of
the Corporation, and when authorized to do so may pledge and hypothecate or
transfer any securities or other property of the Corporation as security for any
such loans or advances. Such authority conferred by the Board of Directors or
any duly authorized committee of directors may be general or confined to
specific instances.
Section 4. CHECKS, DRAFTS, WITHDRAWAL OF SECURITIES, SAFE DEPOSIT BOXES,
ETC. All checks, drafts and other orders for payment of money out of the funds
of the Corporation shall be signed on behalf of the Corporation in such manner
as shall from time to time be determined by resolution of the Board of Directors
or of any duly authorized committee of directors. The Corporation shall furnish
to each depository, bank, custodian and entity providing safe deposit boxes, a
certified copy of its resolution regarding the authorization of disbursements
and the entry to safe deposit boxes or withdrawal of securities from
safekeeping.
Section 5. DEPOSITS. The funds of the Corporation, not otherwise
employed, shall be deposited from time to time to the order of the Corporation
in such banks, trust companies or other depositories as the Board of Directors
or any duly authorized committee of directors may from time to time select, or
as may be selected by an officer or officers, or agent or agents, of the
Corporation to whom such power may from time to time be delegated by the Board
of Directors or any duly authorized committee of directors.
Section 6. CONTRACTS, ETC., HOW EXECUTED. The Chief Executive Officer,
and those officers who are designated by resolution of the Board, shall be
authorized to enter into any contract or execute and deliver any instrument in
the name and on behalf of the Corporation, and such authority may be delegated,
in specific instances to such other officers, employees or agents as such
authorized officers may designate.
Section 7. VOTING OF STOCK OR OTHER SECURITIES HELD. Unless otherwise
provided by resolution of the Board of Directors, the Chief Executive Officer
may from time to time appoint an attorney or attorneys or agent or agents of
this Corporation, in the name and on behalf of this Corporation to cast the
votes which this Corporation may be entitled to cast as a stockholder or
otherwise in any other corporation, any of whose stock or securities may be held
by this Corporation, at meetings of the holders of the stock or other securities
of such other corporations, or to consent in writing to any action by any such
12
other corporation, and may instruct the person or persons so appointed as to the
manner of casting such votes or giving such consent, and may execute or cause to
be executed on behalf of this Corporation and under its corporate seal, or
otherwise, such written proxies, consents, waivers or other instruments that
they may deem necessary or proper in the premises; or the Chief Executive
Officer may attend any meeting of the holders of stock or other securities of
any such other corporation and thereat vote or exercise any or all other powers
of this Corporation as the holder of such stock or other securities of such
other corporation.
Section 8. WAIVERS OF NOTICE. Whenever any notice is required to be given
under the provisions of the statutes or of the Certificate of Incorporation, or
of these By-Laws, a waiver thereof in writing signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.
ARTICLE VIII. AMENDMENTS
Section 1. BY THE DIRECTORS. The Board of Directors by a majority vote
thereof shall have the power to make, alter, amend or repeal the By-Laws of the
Corporation at any regular or special meeting of the Board of Directors. This
power shall not be exercised by any committee of the Board of Directors.
Section 2. BY THE STOCKHOLDERS. All By-Laws shall be subject to
amendment, alteration or repeal by the vote of a majority of the total number of
issued and outstanding shares of Common Stock of the Corporation entitled to
vote at any annual or special meeting. The stockholders, at any annual or
special meeting, may provide that certain By-Laws by them adopted, approved or
designated may not be amended, altered or repealed except by a certain specified
percentage in interest of the stockholders or by a certain specified percentage
in interest of a particular class of stockholders.
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EXHIBIT 5
Duane, Morris & Heckscher LLP
1667 K Street, N.W., Suite 700
Washington, D.C. 20006-1608
(202) 776-7800
December 17, 1999
NBT Bancorp Inc.
52 South Broad Street
Norwich, New York 13815
Gentlemen:
We have acted as counsel to NBT Bancorp Inc., a Delaware
corporation ("NBT") in connection with the Agreement and Plan of Merger dated as
of August 16, 1999, as amended as of December 13, 1999 (the "Plan of Merger")
between NBT and Lake Ariel Bancorp, Inc., a Pennsylvania corporation ("Lake
Ariel"), whereby Lake Ariel will be merged into NBT, with NBT being the
surviving corporation (the "Merger"). At its special meeting of stockholders,
NBT will request its stockholders to consider and approve (a) the Plan of
Merger, (b) the amendment of NBT's Certificate of Incorporation to change the
par value of the NBT common stock from no par value, stated value $1.00 per
share to $.01 par value per share and (c) the amendment of NBT's Certificate of
Incorporation to increase the number of authorized shares of NBT common stock
from 15 million to 30 million. At the Effective Time of the Merger, the
outstanding shares of Lake Ariel common stock, par value $.21 per share ("Lake
Ariel Common Stock"), will be canceled and immediately converted into the right
of holders of Lake Ariel Common Stock to receive, in exchange for each share of
Lake Ariel Common Stock, between 0.8731 and 0.9961 of a share of NBT common
stock, no par value, stated value $1.00 per share or $.01 par value per share,
as the case may be (in either case, referred to herein as "NBT Common Stock"),
up to an aggregate of approximately 4,601,910 shares (the "Shares") of NBT
Common Stock for all of the outstanding shares of Lake Ariel Common Stock.
We are also acting as counsel to NBT in connection with the
Registration Statement on Form S-4 (the "Registration Statement") to be filed by
NBT with the Securities and Exchange Commission for the purpose of registering
under the Securities Act of 1933, as amended, the Shares into which outstanding
shares of Lake Ariel Common Stock will be converted upon effectiveness of the
Merger. This opinion is being furnished for the purpose of being filed as an
exhibit to the Registration Statement.
In connection with this opinion, we have examined, among other
things:
(1) an executed copy of the Plan of Merger;
(2) a copy certified to our satisfaction of the Certificate of
Incorporation of NBT as in effect on the date hereof;
(3) copies certified to our satisfaction of resolutions
adopted by the Board of Directors of NBT on August 16,
1999, including resolutions approving the Plan of Merger
and the issuance of the Shares;
(4) copies certified to our satisfaction of resolutions
adopted by the Board of Directors of NBT on November 22,
1999, including resolutions approving amendments to the
Plan of Merger, as adopted on August 16, 1999, the
amendments to NBT's Certificate of Incorporation changing
the par value of the NBT common stock and authorizing
additional shares of the NBT common stock; and
(5) such other documents, corporate proceedings,
and statutes as we considered necessary to enable us to
furnish this opinion.
We have assumed for the purpose of this opinion that:
(1) the Plan of Merger has been duly and
validly authorized, executed, and delivered by Lake Ariel,
and such authorization remains fully effective and has not
been revised, superseded or rescinded as of the date of
this opinion;
(2) the Merger will be consummated in accordance with the terms
of the Plan of Merger; and
(3) NBT will file with the Secretary of State of Delaware on a
timely basis all requisite amendments to NBT's Certificate
of Incorporation.
We have assumed the authenticity of all documents submitted to us
as originals, the genuineness of all signatures, the legal capacity of natural
persons, and the conformity to the originals of all documents submitted to us as
copies. We have assumed that the certifications and representations dated
earlier than the date hereof on which we have expressed reliance herein continue
to remain accurate, insofar as material to our opinions, from such earlier date
through the date hereof.
Based upon the foregoing, we are of the opinion that the Shares to
be issued by NBT as described in the Registration Statement, when and to the
extent issued in accordance with the Plan of Merger, will be legally issued,
fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and to the reference to us under the caption "Legal
Matters" in the Joint Proxy Statement/Prospectus forming a part of the
Registration Statement.
Very truly yours,
/s/ DUANE, MORRIS & HECKSCHER LLP
2
EXHIBIT 8
OPINION OF SAUL, EWING, REMICK & SAUL LLP
LAW OFFICES OF
SAUL, EWING, REMICK & SAUL LLP
PHILADELPHIA, PENNSYLVANIA PENN NATIONAL INSURANCE TOWER
NEW YORK, NEW YORK
BALTIMORE, MARYLAND 2 NORTH SECOND STREET, 7th FLOOR
PRINCETON, NEW JERSEY
BERWYN, PENNSYLVANIA HARRISBURG, PA 17101
WILMINGTON, DELAWARE
(717) 257-7500
Fax: (717) 238-4622
December 10, 1999
Lake Ariel Bancorp, Inc.
409 Lackawanna Avenue, Suite 201
Scranton, Pennsylvania 18503-2045
Attention: Mr. John G. Martines
Chief Executive Officer
NBT Bancorp Inc.
52 South Broad Street
Norwick, New York 13815
Attention: Mr. Daryl R. Forsythe
President & Chief Executive Officer
Gentlemen:
We have acted as special tax counsel to Lake Ariel Bancorp, Inc., a
Pennsylvania corporation ("LABN") in connection with the planned merger (the
"Merger") of LABN with and into NBT Bancorp Inc., a Delaware corporation
("NBTB") on the terms set forth in the Agreement and Plan of Merger between LABN
and NBTB (the "Merger Agreement").
In connection with the opinions set forth below with respect to the
Merger, we have reviewed and relied upon the following documents.
(i) The charter, bylaws and directors' and stockholders'
resolutions of LABN;
(ii) The charter, bylaws, organizational documents and
directors' resolutions of NBTB;
(iii) The Merger Agreement between LABN and NBTB;
(iv) Articles of Merger which will be filed in Pennsylvania;
(v) Certificate of Merger which will be filed in Delaware;
(vi) Certificates of Officers of both LABN and NBTB; and
(vii) Such other documents as we have deemed relevant or
appropriate to our opinion.
In rendering this opinion, we have relied upon the accuracy and
authenticity of the information contained in such documents. This opinion is
further based upon the following assumptions which we have made with your
consent and upon which we are relying:
(i) The LABN shareholders will receive shares of NBTB voting
common stock in exchange for their shares of LABN voting common stock
surrendered in the exchange based upon a formula provided in the Agreement and
Plan of Merger;
(ii) Immediately following the transaction, NBTB will possess
all of the assets and liabilities as possessed by LABN immediately prior to the
transaction;
(iii) NBTB will continue the historic business of LABN or will
use a significant portion of LABN's assets in the continuing business of NBTB.
(iv) The Merger will be consummated in accordance with the
Merger Agreement (including satisfaction of all covenants and conditions to the
obligations of the parties without amendment or waiver thereof);
(v) The Merger will qualify as a merger under the applicable
laws of Pennsylvania and Delaware; and
(vi) The Merger Agreement and all other documents and
instruments referred to therein are valid and binding in accordance with their
terms.
Based upon the foregoing facts, documents and assumptions, it is our
opinion that for U.S. federal income tax purposes:
(i) The merger of LABN into NBTB will constitute a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), and LABN and NBTB will each be a party to
the "reorganization" within the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized by LABN or NBTB as a
result of the Merger;
2
(iii) No gain or loss will be recognized by the stockholders
upon the exchange of their shares of LABN voting common stock solely for shares
of NBTB voting common stock pursuant to the Merger;
(iv) The aggregate tax basis of the shares of NBTB received
solely in exchange for shares of LABN pursuant to the Merger will be the same as
the aggregate tax basis of the shares of LABN exchanged therefor;
(v) The holding period for the shares of NBTB received in
exchange for shares of LABN pursuant to the Merger will include the holding
period of the shares of LABN exchanged therefor, provided such shares of LABN
were held as capital assets by the stockholder at the effective date of the
Merger;
(vi) The payment of cash in lieu of fractional share interests
of NBTB Common Stock will be treated as if the fractional share interests were
distributed as part of the Merger and then redeemed by NBTB. Such cash payments
will be treated as having been received as a distribution in full payment in
exchange for the fractional share interest redeemed, as provided in Section
302(a) of the Code;
(vii) As provided in Section 381(c)(2) of the Code and related
Treasury Regulations, NBTB will succeed to and take into account the earnings
and profits, or deficit in earnings and profits, of LABN as of the Merger. Any
deficit in the earnings and profits of NBTB or LABN will be used only to offset
the earnings and profits accumulated after the Merger; and
(viii) Pursuant to Section 381(a) of the Code and related
Treasury Regulations, NBTB will succeed to and take into account the items of
LABN described in Section 381(c) of the Code. Such items will be taken into
account by NBTB subject to the conditions and limitations of Sections 381, 382,
383 and 384 of the Code and the Treasury Regulations thereunder.
The above opinions are based solely upon the documents, facts and
assumptions stated above. Any inaccuracy in, or breach of, any of the
aforementioned agreements, documents or assumptions, or any change after the
date hereof in the applicable law could adversely affect our opinion.
Furthermore, the tax consequences described above may not be applicable to
stockholders subject to special treatment under certain federal income tax laws,
such as foreign holders or holders whose stock was acquired pursuant to the
exercise of an option.
No opinion is expressed as to any matter not specifically addressed
above. Also, no opinion is expressed as to the tax consequences of any of the
transactions under any foreign, state or local tax law. Furthermore, our opinion
is based on current federal income tax law and administrative practice, and we
do not undertake to advise you as to any changes in federal income tax law or
administrative practice that may affect our opinion after the effective date of
the Merger.
We hereby consent to the use of this opinion in the Registration
Statement on Form S-4 of NBTB, and we further consent to the reference to our
name in the Joint Proxy Statement/Prospectus, included as part of the
Registration Statement, under the captions "Material Federal Income Tax
Consequences" and "Legal Matters."
3
Sincerely,
/s/ Saul, Ewing, Remick & Saul LLP
SAUL, EWING REMICK, & SAUL LLP
4
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
NBT Bancorp Inc.:
We consent to incorporation by reference in the registration statement
on Form S-4 related to the registration of shares for the merger between NBT
Bancorp Inc. and Lake Ariel Bancorp, Inc., filed by NBT Bancorp Inc. under the
Securities Act of 1933 of our audit report dated January 22, 1999, relating to
the consolidated balance sheets of NBT Bancorp Inc. and subsidiary as of
December 31, 1998 and 1997, and the related consolidated statements of income,
stockholders' equity, cash flows and comprehensive income for each of the years
in the three-year period ended December 31, 1998 which report has been
incorporated by reference in the December 31, 1998 annual report on Form 10-K of
NBT Bancorp Inc., incorporated by reference herein, and to the reference to our
firm under the heading "Experts" in the Prospectus.
/s/ KPMG LLP
KPMG LLP
Syracuse, New York
December 15, 1999
1
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Lake Ariel Bancorp, Inc.:
We consent to incorporation by reference in the registration statement
on Form S-4 related to the registration of shares for the merger between NBT
Bancorp Inc. and Lake Ariel Bancorp, Inc., filed by NBT Bancorp Inc. under the
Securities Act of 1933 of our audit report dated January 25, 1999, relating to
the consolidated balance sheets of Lake Ariel Bancorp, Inc. and subsidiaries as
of December 31, 1998 and 1997, and the related consolidated statements of
income, stockholders' equity, and cash flows for each of the years in the
three-year period ended December 31, 1998 which report has been incorporated by
reference in the December 31, 1998 annual report on Form 10-K of Lake Ariel
Bancorp Inc., incorporated by reference herein, and to the reference to our firm
under the heading "Experts" in the Prospectus.
/s/ Parente, Randolph, Orlando, Carey & Associates
Wilkes-Barre, Pennsylvania
December 15, 1999
1
EXHIBIT 23.3
[CONSENT OF JANNEY MONTGOMERY SCOTT INC.]
[TO BE FILED BY AMENDMENT]
1
EXHIBIT 23.4
CONSENT OF FINANCIAL ADVISOR
We hereby consent to the inclusion of the Opinion of McConnell, Budd &
Downes, Inc. in Appendix C to this Registration Statement on Form S-4 of NBT
Bancorp Inc. ("NBT") and Joint Proxy Statement/Prospectus to be filed with the
Securities and Exchange Commission in connection with the proposed merger of NBT
and Lake Ariel Bancorp, Inc. and to the references to the work completed by our
firm as financial advisor to NBT, therein. In giving such consent, we do not
thereby admit that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933 or the rules and
regulations of the Securities and Exchange Commission thereunder, nor do we
thereby admit that we are experts with respect to any part of such Registration
Statement within the meaning of the term "expert" as used in the Securities Act
of 1933 as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder.
/s/ McConnell, Budd & Downes, Inc.
December 21, 1999
1
EXHIBIT 23.7
CONSENT OF JOHN G. MARTINES
The undersigned hereby consents, pursuant to Rule 438 of the
Securities Act of 1933, as amended, to the reference to him in the Joint Proxy
Statement/Prospectus of NBT Bancorp Inc. and Lake Ariel Bancorp, Inc., which is
part of the Registration Statement on Form S-4 of NBT Bancorp Inc. under the
circumstances described therein.
/s/ John G. Martines
December 7, 1999
1
EXHIBIT 23.8
CONSENT OF BRUCE D. HOWE
The undersigned hereby consents, pursuant to Rule 438 of the
Securities Act of 1933, as amended, to the reference to him in the Joint Proxy
Statement/Prospectus of NBT Bancorp Inc. and Lake Ariel Bancorp, Inc., which is
part of the Registration Statement on Form S-4 of NBT Bancorp Inc. under the
circumstances described therein.
/s/ Bruce D. Howe
December 7, 1999
1
EXHIBIT 23.9
CONSENT OF WILLIAM C. GUMBLE
The undersigned hereby consents, pursuant to Rule 438 of the Securities
Act of 1933, as amended, to the reference to him in the Joint Proxy
Statement/Prospectus of NBT Bancorp Inc. and Lake Ariel Bancorp, Inc., which is
part of the Registration Statement on Form S-4 of NBT Bancorp Inc. under the
circumstances described therein.
/s/ William C. Gumble
December 7, 1999
1