NBT BANCORP INC
S-4, 1999-12-21
NATIONAL COMMERCIAL BANKS
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      As filed with the Securities and Exchange Commission on December 21, 1999

                         Registration Statement No. 333-

         ---------------------------------------------------------------
         ---------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                 ---------------

                                    FORM S-4
                             REGISTRATION STATEMENT
                        UNDER THE SECURITIES ACT OF 1933

                                 ---------------

                                NBT BANCORP INC.
             (Exact Name of Registrant as specified in its Charter)

                                 ---------------

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)

<PAGE>
                                  -----------
                                   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. [_]

<TABLE>
<CAPTION>

                         CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------

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

<S>                      <C>                    <C>                    <C>                    <C>
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
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

(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).
<PAGE>
(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.

<PAGE>
[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.

<PAGE>
          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
<PAGE>

                                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
<PAGE>

                            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
<PAGE>
<TABLE>
<CAPTION>

                                TABLE OF CONTENTS

                                                                                                                     PAGE

<S>                                                                                                                   <C>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
</TABLE>

                                       8
<PAGE>
                                     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
<PAGE>
         |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
<PAGE>
                                   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
<PAGE>
         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

<TABLE>
<CAPTION>
                                            AUGUST 13, 1999                           , 1999
                                            ---------------                -----------------

<S>                                                  <C>                     <C>
NBT.................................                 $19.29                  $
                                                                              ---------
Lake Ariel..........................                 $13.00                  $
                                                                              ---------
Equivalent Market Value Per
    Share of Lake Ariel.............                 $19.21                  $
                                                                              ---------
</TABLE>

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
<PAGE>
         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
<PAGE>
                           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
<PAGE>
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
<PAGE>
          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
<PAGE>
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
<PAGE>
                      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
<PAGE>
            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
<PAGE>
<TABLE>
<CAPTION>

NBT BANCORP INC.
SELECTED FINANCIAL DATA
(in thousands, except per share data)                         SEPT. 30, 1999  SEPT. 30, 1998      1998          1997         1996
                                                              --------------  --------------      ----          ----         ----

<S>                                                           <C>             <C>              <C>          <C>           <C>
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%

</TABLE>

                                       20
<PAGE>

<TABLE>
<CAPTION>

NBT BANCORP INC.
SELECTED FINANCIAL DATA
(in thousands, except per share data)                               1995          1994
                                                                    ----          ----
<S>                                                              <C>          <C>
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%

<FN>
*All share and per share data has been  restated to give  retroactive  effect to
stock dividends and splits.
</FN>
</TABLE>

                                       21
<PAGE>

<TABLE>
<CAPTION>
LAKE ARIEL BANCORP, INC.
SELECTED FINANCIAL DATA
(in thousands, except per share data)                          SEPT. 30, 1999  SEPT. 30, 1998       1998         1997         1996
                                                               --------------  --------------       ----         ----         ----
<S>                                                            <C>             <C>              <C>           <C>          <C>
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%

</TABLE>

                                       22
<PAGE>

<TABLE>
<CAPTION>
LAKE ARIEL BANCORP, INC.
SELECTED FINANCIAL DATA
(in thousands, except per share data)                                1995        1994
                                                                     ----        ----
<S>                                                               <C>         <C>
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%

<FN>
*All share and per share data has been  restated to give  retroactive  effect to
stock dividends and splits.
</FN>
</TABLE>

                                       23
<PAGE>

<TABLE>
<CAPTION>

PRO FORMA COMBINED
SELECTED FINANCIAL DATA
(in thousands, except per share data)                          SEPT. 30, 1999    SEPT. 30, 1998       1998          1997
                                                               --------------    --------------       ----          ----

<S>                                                            <C>              <C>               <C>           <C>
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%

</TABLE>

                                       24
<PAGE>

<TABLE>
<CAPTION>

PRO FORMA COMBINED
SELECTED FINANCIAL DATA
(in thousands, except per share data)                                  1996         1995            1994
                                                                       ----         ----            ----

<S>                                                                <C>           <C>          <C>
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%

<FN>
*All share and per share data has been  restated to give  retroactive  effect to
stock dividends and splits.
</FN>
</TABLE>

                                       25
<PAGE>

                      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.

<TABLE>
<CAPTION>
                                                                 HISTORICAL                      PRO FORMA
                                                       --------------------------------- ----------------------------
                                                             NBT          LAKE ARIEL       COMBINED     LAKE ARIEL
                                                        BANCORP INC.     BANCORP, INC.     COMPANY      EQUIVALENT
<S>                                                      <C>              <C>              <C>           <C>
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

</TABLE>

                                       26
<PAGE>
           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
<PAGE>
                           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
<PAGE>
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
<PAGE>
         |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
<PAGE>
         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.

                                       31
<PAGE>
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
<PAGE>
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
<PAGE>
                                   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
<PAGE>
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
<PAGE>
         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
<PAGE>
         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.

                                       37
<PAGE>
                                   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
<PAGE>
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
<PAGE>
         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
<PAGE>
         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
<PAGE>
         |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
<PAGE>
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
<PAGE>
         |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
<PAGE>

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
<PAGE>
         |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
<PAGE>
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
<PAGE>

         |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
<PAGE>
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:

<TABLE>
<CAPTION>
                                             PROFORMA CONTRIBUTION TABLE
                                                     @ 09-30-99

- ------------------------------------------------------------- ---------------------------- -------------------------

                            ITEM                                          NBT                     LAKE ARIEL
- ------------------------------------------------------------- ---------------------------- -------------------------
- ------------------------------------------------------------- ---------------------------- -------------------------

<S>                                                                      <C>                        <C>
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%
- ------------------------------------------------------------- ---------------------------- -------------------------
</TABLE>

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
<PAGE>

         |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.

<TABLE>
<CAPTION>
                                         "COMPARABLE" STATISTICS AS OF THE ANNOUNCEMENT DATE:


- ---------------------------------------- -------------------------------- ------------------------------------------

                                              ANNOUNCED TRANSACTION        ANNOUNCED TRANSACTION PRICE/TRAILING 12
          COMPARED STATISTICS               PRICE/TANGIBLE BOOK VALUE                  MONTHS EARNINGS
- ---------------------------------------- -------------------------------- ------------------------------------------
- ---------------------------------------- -------------------------------- ------------------------------------------

<S>                                                   <C>                                   <C>
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
- ---------------------------------------- -------------------------------- ------------------------------------------
</TABLE>

                                       50
<PAGE>
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
<PAGE>
         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
<PAGE>
         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
<PAGE>
         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
<PAGE>
         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
<PAGE>
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


                                       56
<PAGE>
                  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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<PAGE>
         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;

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<PAGE>

         |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


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<PAGE>
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.


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<PAGE>
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."

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<PAGE>
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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<PAGE>
         |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.

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<PAGE>
         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


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<PAGE>
                  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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<PAGE>
         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;

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<PAGE>
         |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

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<PAGE>
                  (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


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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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<PAGE>
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


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<PAGE>

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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<PAGE>
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


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<PAGE>
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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<PAGE>
         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.

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<PAGE>
         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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
         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:

<TABLE>
<CAPTION>
                                                        NBT BANCORP INC.                 LAKE ARIEL BANCORP, INC.
                                               ------------------------------------ ------------------------------------
                                                   SALES PRICES                          SALE PRICE
                                               ---------------------                ----------------------
                                                   HIGH       LOW         DIVIDENDS      HIGH       LOW        DIVIDENDS
<S>        <C>                                    <C>        <C>           <C>          <C>        <C>          <C>
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)
</TABLE>


                                       79
<PAGE>
         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
<PAGE>

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
<PAGE>
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."

<TABLE>
<CAPTION>
                                     LAKE ARIEL STOCKHOLDERS'                    LAKE ARIEL STOCKHOLDERS'
                                         RIGHTS PRE-MERGER                          RIGHTS POST-MERGER

<S>                          <C>                                        <C>
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.

                                       82
<PAGE>

                                     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.

                                       83
<PAGE>
                                     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.

                                       84
<PAGE>
                                     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.
</TABLE>

         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


                                       85
<PAGE>

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


                                       86
<PAGE>

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


                                       87
<PAGE>
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

                                       88
<PAGE>
         |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


                                       89
<PAGE>
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


                                       90
<PAGE>
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."

                                       91
<PAGE>
         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.

                                       92
<PAGE>
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.

                                       93
<PAGE>
                                  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
<PAGE>
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
<PAGE>
         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
<PAGE>
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
<PAGE>
<TABLE>
<CAPTION>
                                    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)
<S>                                                          <C>             <C>                    <C>        <C>
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
                                                             ==================================================================
</TABLE>


                                       98
<PAGE>
<TABLE>
<CAPTION>
                                                                                      AT SEPTEMBER 30, 1999
                                                             ---------------------------------------------------
                                                                                                          NBT
                                                                     PIONEER                          LAKE ARIEL
                                                                     AMERICAN         PRO FORMA        PIONEER
                                                                 HOLDING COMPANY     ADJUSTMENTS    COMBINED PRO
                                                                      CORP.                             FORMA
(in thousands)
<S>                                                                    <C>                <C>           <C>
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
                                                             ===================================================
</TABLE>

See accompanying notes to the unaudited pro forma combined financial statements.


                                       99
<PAGE>
<TABLE>
<CAPTION>

                                      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)

<S>                                                       <C>              <C>              <C>              <C>
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
</TABLE>


                                      100
<PAGE>
<TABLE>
<CAPTION>
                        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)
<S>                                                            <C>             <C>             <C>
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.
</TABLE>


                                      101
<PAGE>
<TABLE>
<CAPTION>

                                      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)
<S>                                                       <C>              <C>              <C>                <C>
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

</TABLE>

                                      102
<PAGE>
<TABLE>
<CAPTION>

                                      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)
<S>                                                             <C>           <C>              <C>
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

</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements.


                                      103
<PAGE>
<TABLE>
<CAPTION>

                                      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)
<S>                                                       <C>               <C>                <C>             <C>
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

</TABLE>


                                      104
<PAGE>
<TABLE>
<CAPTION>

                                      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)
<S>                                                             <C>             <C>            <C>
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

</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements.


                                      105
<PAGE>
<TABLE>
<CAPTION>

                                      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)
<S>                                                       <C>               <C>               <C>              <C>
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

</TABLE>

                                      106
<PAGE>
<TABLE>
<CAPTION>

                           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)
<S>                                                              <C>            <C>             <C>
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

</TABLE>

See accompanying notes to the unaudited pro forma combined financial statements.


                                      107
<PAGE>

<TABLE>
<CAPTION>

                                      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)
<S>                                                       <C>                <C>              <C>              <C>
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

</TABLE>

                                      108
<PAGE>
<TABLE>
<CAPTION>

                                      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)
<S>                                                             <C>              <C>           <C>
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

</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements.


                                      109
<PAGE>
           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:

<TABLE>

<S>                                                                 <C>                       <C>
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
</TABLE>

For purposes of the above calculations, it is assumed that no dissenters' shares
existed.


                                      110
<PAGE>
<TABLE>
<CAPTION>

         (3) Authorized,  issued and outstanding share information is as follows
at September 30, 1999:

- --------------------------------------- ---------------------- --------------------- -------------------------------
                                                     NBT                LAKE ARIEL          NBT/LAKE ARIEL PRO FORMA
- --------------------------------------- ---------------------- --------------------- -------------------------------
<S>                                                 <C>                   <C>                             <C>
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
- --------------------------------------- ---------------------- --------------------- -------------------------------
</TABLE>

         (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:

<TABLE>

<S>                                                                             <C>                       <C>
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

</TABLE>


                                      111
<PAGE>
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
<PAGE>
                                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

<PAGE>
(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.
<PAGE>
                            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.

<PAGE>
                                   APPENDIX A





                          AGREEMENT AND PLAN OF MERGER

                                      AMONG

                                NBT BANCORP INC.

                                       AND

                            LAKE ARIEL BANCORP, INC.










                  August 16, 1999, as amended December 13, 1999

<PAGE>
<TABLE>
<CAPTION>
                                                  TABLE OF CONTENTS
                                                                                                                 PAGE

<S>                                                                                                               <C>
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>
                                                                                                                 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>
                                                                                                                 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>
                                                                                                                 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

</TABLE>

                                       IV
<PAGE>

                                            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

<PAGE>
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:


                                       A-2
<PAGE>

              "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


                                       A-3
<PAGE>
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.

                                       A-4
<PAGE>

     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.

                                       A-5
<PAGE>
         (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:

                                      A-6
<PAGE>
     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.

                                       A-7
<PAGE>
     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.

                                       A-8
<PAGE>
     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.

                                       A-9
<PAGE>
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.

                                       A-10
<PAGE>
     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


                                       A-11
<PAGE>
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.

                                       A-12
<PAGE>
     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


                                      A-13
<PAGE>
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


                                       A-14
<PAGE>
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;

                                       A-15
<PAGE>
         (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


                                       A-16
<PAGE>
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.

                                       A-17
<PAGE>
         (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,


                                       A-18
<PAGE>
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.

                                       A-19
<PAGE>
     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


                                       A-20
<PAGE>
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.

                                       A-21
<PAGE>
         (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


                                      A-22
<PAGE>
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.

                                       A-23
<PAGE>
         (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.

                                       A-24
<PAGE>
     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


                                       A-25
<PAGE>
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


                                       A-26
<PAGE>
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
<PAGE>
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.

                                       A-28
<PAGE>
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.


                                       A-29
<PAGE>
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.

                                       A-30
<PAGE>
     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.

                                       A-31
<PAGE>
     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


                                       A-32
<PAGE>
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.

                                       A-33
<PAGE>
                  (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

                                       A-34
<PAGE>
         (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.

                                       A-35
<PAGE>
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.

                                       A-36
<PAGE>
         (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.

                                       A-37
<PAGE>
         (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:

                                       A-38
<PAGE>
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.

                                       A-39
<PAGE>
           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


                                       A-40
<PAGE>

                                                         )
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


                                       A-41
<PAGE>

                                                         )
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


                                       A-42
<PAGE>

         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
<PAGE>

                                   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
<PAGE>

                                   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


                                       C-1
<PAGE>
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


                                      C-2
<PAGE>
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.


                                       C-3
<PAGE>

                                   APPENDIX D
                FAIRNESS OPINION OF JANNEY MONTGOMERY SCOTT INC.



                           [TO BE FILED BY AMENDMENT]



                                       D-1
<PAGE>

                                   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.


<PAGE>
       (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
<PAGE>
    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


                                       E-3
<PAGE>
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.

                                       E-4
<PAGE>
    (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
<PAGE>
    (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,


                                       E-6
<PAGE>

it may  award to those  counsel  reasonable  fees to be paid out of the  amounts
awarded to the dissenters who were benefited.


                                       E-7
<PAGE>
                 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

<PAGE>
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
<PAGE>
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
<PAGE>
       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
<PAGE>

       (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.

                                      II-5
<PAGE>

                                   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.

<TABLE>

<S>                                 <C>                                          <C>
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
<PAGE>

/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
- --------------------
Paul O. Stillman
</TABLE>

                                       II-7
<PAGE>

                                  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
<PAGE>
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
<PAGE>



                                    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,


<PAGE>
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
<PAGE>
       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


                                       3
<PAGE>
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.


                                       4
<PAGE>
                             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


                                       5
<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
       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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<PAGE>
       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
<PAGE>
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.


                                       13
<PAGE>

                                    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;

<PAGE>
             (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
<PAGE>


                                    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;

<PAGE>
               (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
<PAGE>
                  (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
<PAGE>

                                              Sincerely,

                                              /s/ Saul, Ewing, Remick & Saul LLP

                                               SAUL, EWING REMICK, & SAUL LLP



                                       4
<PAGE>


                                  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
<PAGE>


                                  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
<PAGE>



                                  EXHIBIT 23.3

                  [CONSENT OF JANNEY MONTGOMERY SCOTT INC.]



                           [TO BE FILED BY AMENDMENT]



                                       1
<PAGE>



                                  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
<PAGE>




                                  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
<PAGE>



                                  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
<PAGE>



                                  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



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