<PAGE>
As filed with the Securities and Exchange Commission on August 1, 2000
Registration Statement No. 333-___________________
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--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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NBT BANCORP INC.
(Exact Name of Registrant as specified in its Charter)
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DELAWARE 6712 16-1268674
(State or Other (Primary Standard Industrial (I.R.S. Employer
Jurisdiction of Classification Code Number) Identification No.)
Incorporation or
Organization)
52 South Broad Street
Norwich, New York 13815
(607) 337-2265
(Address, Including Zip Code, and Telephone Number, Including
Area Code of Registrant's Principal Executive Offices)
DARYL R. FORSYTHE
President and Chief Executive Officer
NBT Bancorp Inc.
52 South Broad Street
Norwich, New York 13815
(607) 337-2265
(Name, Address, Including Zip Code, and Telephone
Number, Including Area Code, of Agent for Service)
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<PAGE>
---------------
Copies to:
Brian D. Alprin, Esq. Stuart G. Stein, Esq.
Duane, Morris & Heckscher LLP Hogan & Hartson, L.L.P.
1667 K Street, NW, Suite 700 555 13th Street, N.W.
Washington, D.C. 20006 Washington, D.C. 20004
(202) 776-7800 (202) 637-8575
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after the registration statement is declared
effective and the satisfaction or waiver of all of the conditions to the
proposed merger of BSB Bancorp, Inc. with and into NBT Bancorp Inc., as is
described in the enclosed joint proxy statement/prospectus.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Each Class Amount to Proposed Maximum Maximum Amount of
of Securities to be be Offering Price Per Aggregate Offering Registration Fee
Registered Registered(1) Unit Price(4)
<S> <C> <C> <C> <C>
Common Stock, $.01 25,000,000(2) (3) $197,489,466 $52,272
par value per
share
</TABLE>
(1) 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.
(2) Represents the estimated maximum number of shares of NBT common stock,
$.01 par value per share, to be issued to stockholders of BSB Bancorp,
Inc. in connection with the merger.
(3) Not applicable.
(4) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(f)(1) and based upon the market value of the
outstanding shares of BSB Bancorp, Inc. common stock, par value $.01 per
share, on July 26, 2000 (the latest practicable date prior to filing the
registration statement) of $197,489,466, such stock to be canceled upon
effectiveness of the merger described in the proxy statement/prospectus
included in this registration statement.
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 AND BSB TRADEMARKS IN RIGHT AND LEFT TOP CORNERS]
MERGER PROPOSED -- YOUR VOTE IS VERY IMPORTANT
The boards of directors of NBT Bancorp Inc. and BSB Bancorp, Inc. have
unanimously agreed that BSB and NBT should merge. Following the merger, NBT
will be the surviving corporation and will operate under the new name [TBD
Bancorp Inc.] 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 adopt the merger agreement. Each of us will hold a meeting
of our stockholders to consider and vote on the merger agreement.
After the merger, NBT stockholders will continue to own the shares of NBT
that they currently own. These shares will be shares of [TBD Bancorp Inc.], the
newly named combined company. BSB stockholders will receive two shares of [TBD]
common stock for each share of BSB common stock that they own. The merger will
be a tax-free transaction for BSB stockholders, except for any cash they may
receive instead of fractional shares of [TBD] common stock. After completion of
the merger, the stockholders of NBT and the former stockholders of BSB will own,
respectively, approximately 53% and 47% of the outstanding stock of the combined
company. NBT common stock trades on the Nasdaq National Market under the symbol
"NBTB." If the merger agreement is adopted by the stockholders of both
companies and the Nasdaq National Market accepts NBT's application to list the
shares of [TBD Bancorp Inc.], the common stock of the combined company will
trade on the Nasdaq National Market under the new symbol "________."
We cannot complete the merger unless the holders of a majority of the
outstanding shares of both companies vote to adopt the merger agreement.
This joint proxy statement/prospectus provides you with detailed
information about the merger of NBT and BSB. We encourage you to read this
entire document carefully. This joint proxy statement/prospectus incorporates
important business and financial information about NBT and BSB. See "Where You
Can Find More Information" on page ___________________.
The dates, times and places of the special stockholders' meetings are:
For NBT stockholders: For BSB stockholders:
____, 2000 at __ a.m./p.m. local time _____ 2000 at ___ a.m./p.m. local time
Holiday Inn Arena Holiday Inn Arena
2-8 Hawley Street 2-8 Hawley Street
Binghamton, New York Binghamton, New York
Please complete, sign, date and promptly return the enclosed proxy card in
the enclosed postage-paid envelope or vote your proxy by telephone using the
number provided on your proxy card.
Daryl R. Forsythe Thomas L. Thorn
President and Chief Executive Officer of Acting President and
NBT Bancorp Inc. Chief Executive Officer of
BSB Bancorp, Inc.
Neither the SEC nor any state securities commission has approved or
disapproved of the common stock 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 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. Neither the FDIC nor any other governmental
agency insures or guarantees any loss to you of your investment value in the
common stock.
Joint proxy statement/prospectus dated ____________________, 2000, and
first mailed to stockholders on or about _________________, 2000.
<PAGE>
NBT Bancorp Inc.
52 South Broad Street
Norwich, New York 13815
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
NBT Bancorp Inc. will hold a special meeting of stockholders at the Holiday
Inn Arena, 2-8 Hawley Street, Binghamton, New York on ______________, 2000 at
_______ [a.m./p.m.] local time to consider and vote upon a proposal to adopt the
agreement and plan of merger, dated as of April 19, 2000, and amended as of May
17, 2000, between NBT and BSB Bancorp, Inc., a Delaware corporation, under
which, among other things:
. BSB will merge with NBT, with NBT being the surviving corporation;
. the certificate of incorporation of NBT will be amended to change the
name of NBT to [TBD Bancorp Inc.] and to increase the total number of
all classes of stock from 35,000,000 to 105,000,000 shares, consisting
of 100,000,000 shares of common stock and 5,000,000 shares of
preferred stock;
. [TBD] will issue approximately 20.5 million shares of common stock to
the BSB stockholders upon completion of the merger; and
. the board of directors of the combined company will include seven of
the current members of the BSB board and eight of the current members
of the NBT board, including one NBT director from among the former
members of the board of Lake Ariel Bancorp, Inc. and one NBT director
from among the former members of the board of Pioneer American Holding
Company Corp.
We describe the merger agreement more fully in the attached joint proxy
statement/prospectus, which includes as Appendix A a copy of the merger
agreement, and the amendment. We have fixed the close of business on
[_____________ , 2000] as the record date for determining the 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"
adoption of the merger agreement. The affirmative vote of the holders of a
majority of the outstanding shares of NBT common stock is required to adopt the
merger agreement. NBT stockholders do not have the right to dissent to the
merger agreement and receive a payment in cash of the fair value of their NBT
shares.
The board of directors of NBT requests that you complete and sign the
enclosed proxy card and mail it promptly in the accompanying postage-prepaid
envelope or vote by telephone using the number provided on your proxy card. You
may revoke any proxy that you deliver prior to the NBT special meeting by
delivering a written notice to NBT stating that you have revoked your proxy by
delivering a later-dated proxy, or by a subsequent telephonic vote at any time
prior to the meeting. Stockholders of record of NBT common stock who attend the
NBT special meeting may vote in person, even if they have previously delivered a
signed or telephonic proxy.
By Order of the Board of Directors of
NBT Bancorp Inc.
Daryl R. Forsythe
President and Chief Executive Officer
Norwich, New York
[____________________, 2000]
2
<PAGE>
BSB Bancorp, Inc.
58-68 Exchange Street
Binghamton, New York 13901
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
BSB Bancorp, Inc. will hold a special meeting of stockholders at
__________________________ on [ ____________, 2000] at [___________ a.m./p.m.]
local time to consider and vote upon a proposal to adopt the agreement and plan
of merger, dated as of April 19, 2000, and amended as of May 17, 2000, between
BSB and NBT Bancorp Inc.
The merger agreement is described more fully in the attached joint proxy
statement/prospectus which includes as Appendix A a copy of the merger
agreement, and the amendment. We have fixed the close of business on
[_____________, 2000] as the record date for determining the stockholders of BSB
entitled to vote at the BSB special meeting and any adjournments or
postponements of the meeting. Only holders of record of BSB common stock at the
close of business on that date are entitled to notice of and to vote at the BSB
special meeting.
The board of directors of BSB unanimously recommends that you vote "FOR"
adoption of the merger agreement. The affirmative vote of the holders of a
majority of the outstanding shares of BSB common stock is required to adopt the
merger agreement. BSB stockholders do not have the right to dissent to the
merger agreement and receive a payment in cash of the fair value of their BSB
shares.
The board of directors of BSB requests that you complete and sign the
enclosed proxy card and mail it promptly in the accompanying postage-prepaid
envelope or vote by telephone using the number provided on your proxy card. You
may revoke any proxy that you deliver prior to the BSB special meeting by
delivering a written notice to BSB stating that you have revoked your proxy by
delivering a later-dated proxy, or by a subsequent telephonic vote at any time
prior to the meeting. Stockholders of record of BSB common stock who attend the
BSB special meeting may vote in person, even if they have previously delivered a
signed or telephonic proxy.
By Order of the Board of Directors of
BSB Bancorp, Inc.
Thomas L. Thorn
Acting President and Chief Executive Officer
Binghamton, New York
[_______________, 2000]
3
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHY ARE THE TWO COMPANIES PROPOSING TO MERGE?
A: The board of directors of NBT and BSB believe that this merger will
strengthen the position of both banks in the financial services industry, which
is rapidly changing, growing more competitive and consolidating.
Q: WHAT WILL BE THE NAME OF THE COMBINED COMPANY?
A: The combined company will be named [TBD Bancorp Inc.]
Q: WILL THE COMBINED COMPANY HAVE A NEW SYMBOL ON NASDAQ?
A: Yes. The new symbol on the NASDAQ National Market will be
"________________."
Q: WHAT WILL BSB STOCKHOLDERS RECEIVE FOR THEIR BSB SHARES?
A: BSB stockholders will receive two shares of [TBD Bancorp Inc.] common stock
for each share of BSB common stock that they own. [TBD Bancorp Inc.] will not
issue fractional shares in the merger. As a result, the total number of shares
of [TBD Bancorp Inc.] common stock that each BSB stockholder will receive in the
merger will be rounded down to the nearest whole number, and each BSB
stockholder will receive a cash payment for the value of the remaining
fractional share of BSB common stock that he or she would otherwise receive, if
any.
Q: WILL NBT STOCKHOLDERS RECEIVE ANY SHARES AS A RESULT OF THE MERGER?
A: No. NBT stockholders will continue to hold the NBT shares they currently
own.
Q: DO THE SHARES HELD BY NBT STOCKHOLDERS REPRESENT SHARES IN THE COMBINED
COMPANY EVEN THOUGH THERE WILL BE A NEW NAME FOR THE COMBINED COMPANY?
A: Yes. The stock certificates currently held by NBT stockholders will
represent a stockholding interest in the combined company even though the NBT
name will be changed to [TBD Bancorp Inc.]
Q: WHO WILL MANAGE THE COMBINED COMPANY?
A: A new board of directors of [TBD Bancorp Inc.] consisting of fifteen
directors, including eight current NBT directors and seven current BSB
directors, will take office if the merger is completed. A complete list of the
directors and officers of the combined company is on page _______.
Q: WHAT DO I NEED TO DO NOW?
A: After you have carefully read this joint proxy statement/prospectus,
indicate on your proxy card how you want your shares to be voted, then sign,
date and mail it in the enclosed postage-paid envelope or vote your proxy by
telephone as soon as possible so that your shares may be represented and voted
at the NBT special meeting or the BSB special meeting as applicable.
In addition, you may attend your company's meeting in person and vote,
whether or not you have signed and mailed your proxy card or vote your proxy by
telephone.
If you sign and send in your proxy and do not indicate how you want to vote,
your proxy will be counted as a vote in favor of the proposal. If you do not
vote or abstain from voting, it will have the effect of a vote against the
proposal.
4
<PAGE>
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
A: Your broker will vote your shares only if you provide your broker
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 have the
same effect as a vote against the proposal.
Q: CAN I CHANGE MY VOTE?
A: Yes. There are four ways for you to revoke your proxy and change your vote.
First, you may send a later-dated, signed proxy card before the meeting of your
company. Second, you may attend your company's meeting in person and vote.
Third, you may revoke any proxy by written notice to the chief executive officer
of NBT or the corporate secretary of BSB, as appropriate, prior to your
company's meeting. Fourth, you may submit a subsequent vote by telephone at any
time prior to the 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. After the
merger, the certificates currently representing shares of NBT common stock will
then represent an equal number of shares of common stock of [TBD Bancorp Inc.]
Following the merger, [TBD Bancorp Inc.] will mail instructions to all former
BSB stockholders for exchanging their stock certificates.
Q: WHEN DO YOU EXPECT TO MERGE?
A: We are working towards completing the merger as quickly as possible after
receipt of stockholder and regulatory approvals. We expect to complete the
merger in the fourth quarter of 2000.
Q: WHOM SHOULD I CALL WITH QUESTIONS OR TO OBTAIN ADDITIONAL COPIES OF THIS
JOINT PROXY STATEMENT/PROSPECTUS?
NBT Bancorp Inc. BSB Bancorp, Inc.
52 South Broad Street 58-68 Exchange Street
Norwich, New York 13815 Binghamton, New York 13901
Attention: Michael J. Chewens, CPA Attention: Larry G. Denniston
Phone Number: (607) 337-6520 Phone Number: (607) 779-2406
5
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
MERGER PROPOSED -- YOUR VOTE IS VERY IMPORTANT ............................. 1
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS .................................. 2
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS .................................. 3
SUMMARY .................................................................... 8
Selected Historical and Pro Forma Combined Financial Data ...... 14
Unaudited Comparative Per Share Data ........................... 18
THE STOCKHOLDERS' MEETINGS ................................................. 20
The NBT Special Meeting ........................................ 20
The BSB Special Meeting ........................................ 23
PROPOSAL 1 ................................................................. 26
ADOPTION OF THE MERGER AGREEMENT ........................................... 26
General ........................................................ 26
Background of and Reasons for the Merger ....................... 26
Recommendation of the BSB Board and BSB's Reasons for the Merger 30
Opinion of NBT's Financial Advisor ............................. 32
Compensation of MB&D ........................................... 45
Opinion of BSB's Financial Advisor ............................. 45
Compensation of KBW ............................................ 53
Other Interests of Officers and Directors in the Merger ........ 53
Stock Option Agreements ........................................ 55
Accounting Treatment ........................................... 57
Appraisal Rights ............................................... 58
Inclusion of NBT's Common Stock on Nasdaq National Market ...... 58
Dividends ...................................................... 58
Exchange of BSB Certificates ................................... 58
BSB Stock Options .............................................. 59
Representations and Warranties ................................. 59
Conduct of Business Pending Completion of the Merger ........... 60
Conditions to Complete the Merger .............................. 63
Termination and Termination Fees ............................... 64
Survival of Certain Provisions ................................. 66
Restrictions on Resales by Affiliates .......................... 66
Stockholder Agreements and Irrevocable Proxies ................. 67
Allocation of Costs and Expenses ............................... 67
MATERIAL FEDERAL INCOME TAX CONSEQUENCES ................................... 68
REGULATORY APPROVALS ....................................................... 69
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
PRICE RANGE OF COMMON STOCK AND DIVIDENDS .................................. 71
COMPARISON OF STOCKHOLDERS' RIGHTS ......................................... 72
OTHER MATTERS .............................................................. 74
LEGAL MATTERS .............................................................. 74
EXPERTS .................................................................... 74
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS .................. 74
WHERE YOU CAN FIND MORE INFORMATION ........................................ 75
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENT ................. 78
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS ....... 85
Appendix A -- Agreement and Plan of Merger, dated as of April 19, 2000, and
Amendment to Agreement and Plan of Merger, dated as of
May 17, 2000.
Appendix B --Fairness Opinion of McConnell, Budd & Downes, Inc.
Appendix C -- Fairness Opinion of Keefe, Bruyette and Woods, Inc.
</TABLE>
7
<PAGE>
SUMMARY
This summary does not contain all of the information that is important to
you. You should carefully read this entire document and the documents that we
refer to in "Where You Can Find More Information" on [page ________].
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, among other things, NBT Bank,
National Association, 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. On February 17, 2000, NBT completed its acquisition of Lake
Ariel Bancorp, Inc., the parent holding company of LA Bank, N.A. Upon
completion of the merger, LA Bank became a wholly-owned subsidiary of NBT. LA
Bank provides commercial banking products and services in northeastern
Pennsylvania. On July 1, 2000, NBT completed its acquisition of Pioneer
American Holding Company Corp., the parent holding company of Pioneer American
Bank, N.A. Upon completion of the merger, Pioneer American Bank became a
wholly-owned subsidiary of NBT. Pioneer American Bank provides commercial
banking products and services in Northeastern Pennsylvania. NBT intends to
merge LA Bank and Pioneer American Bank in order to create one wholly owned
subsidiary with banking operations in Northeastern Pennsylvania. The following
financial information reflects the merger of NBT, Lake Ariel and Pioneer
American on a pooled basis. In fiscal year 1999, NBT's net income was $26.3
million while in fiscal year 1998, NBT's net income was $26.9 million. As of
June 30, 2000, NBT's total assets were approximately $2.5 billion, total
deposits were approximately $1.9 billion and stockholders' equity was
approximately $200.6 million. On April 28, 2000, NBT became a financial holding
company under the Gramm-Leach-Bliley Financial Modernization Act of 1999.
BSB Bancorp, Inc.
58-68 Exchange Street
Binghamton, New York 13901
(607) 779-2406
BSB, a registered bank holding company incorporated in the State of
Delaware, is the parent holding company of BSB Bank & Trust Company, a New York-
chartered commercial bank and trust company. BSB Bank provides commercial
banking products and services in the Southern Tier of New York as well as the
greater Rochester and Syracuse areas. In fiscal year 1999, BSB's net income was
$18.2 million while in calendar year 1998, BSB's net income was $21.5 million.
As of June 30, 2000, BSB's total assets were approximately $2.3 billion, total
deposits were approximately $1.9 billion and stockholders' equity was
approximately $161.7 million.
8
<PAGE>
The Merger
Nature of the Merger (see page ...)
The merger combines NBT and BSB, two approximately equal-sized entities.
Transactions like these are frequently referred to as "mergers of equals."
Following the merger, the combined company will operate under the new name [TBD
Bancorp Inc.] which was selected by NBT and BSB. We will accomplish the merger
through the statutory merger of BSB into NBT and issue shares of the entity
formerly known as NBT to the stockholders of BSB. Because NBT's corporate entity
will survive the merger as the continuing corporation, and for ease of
reference, we sometimes refer to the continuing corporation as "the combined
company," although it will have the new name [TBD Bancorp Inc.] beginning at the
time of the merger.
At the time of the merger, we will also merge our banking subsidiaries, NBT
Bank, National Association and BSB Bank & Trust Company. We will accomplish the
merger of these banks through the statutory merger of BSB Bank & Trust into NBT
Bank. Because NBT Bank's corporate entity will survive the merger as the
continuing bank, and for ease of reference, we sometimes refer to the continuing
bank as "the combined bank," although it will have the new name [TBD Bank,
National Association] beginning at the time of the merger.
What BSB Stockholders Will Receive as a Result of the Merger (see page ____)
BSB stockholders will receive two shares of [TBD] common stock for each
share of BSB common stock that they own. The merger agreement provides for
adjustment of the exchange ratio in certain circumstances but not for
fluctuations in the market prices of BSB and NBT common stock.
NBT Stockholders Will Not Exchange Their NBT Shares
Stockholders of NBT will continue to own their existing shares after the
merger and will not be required to exchange their stock certificates for
certificates of [TBD].
Ownership of Combined Company Following the Merger
As a result of the merger, the former BSB stockholders will own
approximately 47% of the outstanding common stock of the combined company, and
the stockholders of NBT will own approximately 53% of the outstanding common
stock of the combined company.
Inclusion of Shares of [TBD] Stock for Trading on the Nasdaq National Market
(see page _______)
Before the merger, NBT will list the shares of common stock to be issued to
BSB common stockholders in the merger on the Nasdaq National Market. After the
merger, the combined company will deregister the BSB common stock for purposes
of the Securities Exchange Act of 1934.
The Combined Company Plans to Continue the Cash Dividend Policy of NBT Following
the Merger (see page ___)
The current annualized rate of cash dividends on the shares of NBT common
stock is $0.68 per share. The current annualized rate of cash dividends on BSB
common stock is $1.00 per share. After the merger, [TBD] expects that it will
continue to pay quarterly cash dividends in a manner that is consistent with the
past practices of NBT, subject to approval and declaration by its board. The
payment of cash dividends by [TBD] in the future will depend on its financial
condition and earnings, business conditions and other factors.
9
<PAGE>
Transaction Generally Tax-Free (see page_______)
BSB Stockholders. In general, we expect that no gain or loss will be recognized
by BSB stockholders who receive shares of [TBD] common stock in exchange for
their BSB common stock pursuant to the merger. Cash received by BSB
stockholders instead of a fractional share, if any, in the merger generally will
be taxable.
NBT Stockholders. Neither NBT nor its stockholders will recognize a gain or
loss as a result of the merger.
NBT and BSB 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.
NBT and BSB Stockholders Will Not Have Appraisal Rights (see pages _____ and
_______)
Under Delaware law, the NBT and BSB stockholders will not have dissenters'
rights or appraisal rights in connection with the merger.
Board of Directors and Management of the Combined Company Following the Merger
(see page _____)
A new board of directors for the combined company, comprising fifteen
directors, will take office if the merger is completed. Seven individuals who
are presently directors of BSB will serve on the board of the combined company
following the merger. NBT has designated eight members from NBT's current board
of directors to serve on the board after the merger, including one former member
from each of the boards of Lake Ariel Bancorp, Inc. (which was acquired by NBT
in February 2000) and Pioneer American Holding Company Corp. (which was acquired
by NBT in July 2000).
Daryl R. Forsythe, currently serving as NBT's president and chief executive
officer of NBT, will be chairman, president and chief executive officer of [TBD]
and chairman and chief executive officer of [TBD Bank]. William C. Craine,
currently serving as BSB's chairman, will be vice chairman of [TBD]. Martin A.
Dietrich, currently serving as NBT Bank's president and chief operating officer,
will be president and chief operating officer of [TBD Bank]. Michael J. Chewens,
currently serving as NBT's and NBT Bank's executive vice president, chief
financial officer, and treasurer, will be chief financial officer and treasurer
of [TBD] and [TBD Bank]. Douglas R. Johnson, currently serving as BSB Bank's
senior vice president and trust officer, will be senior vice president for trust
and investments of [TBD Bank]. Larry G. Denniston, currently serving as BSB's
senior vice president and corporate secretary, will be a senior vice president
and secretary of [TBD Bank] and secretary of [TBD]. It is also the intention of
NBT and BSB that at the effective time, Joe C. Minor, currently serving as
executive vice president of NBT and NBT Bank and chief operating officer of the
financial services arm of NBT, will head the financial services arm of the
combined company, and John G. Martines, currently chairman and chief executive
officer of LA Bank, N.A., will head the Pennsylvania banking unit of [TBD].
Recently BSB's senior credit officer and three loan officers who reported
to him left BSB. NBT and BSB cannot currently assess the extent of loss of
customer relationships that will result from these departures or the effect of
any such loss of customer relationships upon the business prospects of BSB or
[TBD].
Comparative Per Share Market Price Information (see page ________)
Shares of NBT common stock and shares of BSB common stock trade on the
Nasdaq National Market. On April 19, 2000, the last full trading day prior to
the public announcement of the signing of the merger agreement, and on
[____________________], 2000, the last trading day prior to the printing of this
document, the closing prices of NBT common stock and BSB common stock were as
follows:
10
<PAGE>
April 19, 2000 [ ], 2000
-------------- - -------
NBT .............................. $ 12.00 $[ ]
BSB .............................. $ 17.87 $[ ]
Equivalent Market Value of NBT Per
Share of BSB ..................... $ 24.00 $[ ]
The market prices of NBT and BSB common stock will fluctuate between the
date of this proxy statement/prospectus and the date on which the merger takes
place. Under the terms of the merger agreement, regardless of any fluctuation
in the market prices, the exchange ratio of two shares of [TBD] common stock for
one share of BSB common stock will remain the same. You should obtain current
market quotations for NBT common stock and BSB 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 ______ and ______)
NBT. NBT received a written opinion from McConnell, Budd & Downes, Inc., its
financial advisor, to the effect that, as of the date of this proxy
statement/prospectus, the exchange ratio was fair to the NBT stockholders from a
financial point of view. We attach a copy of the McConnell, Budd & Downes
opinion as Appendix B to this joint proxy statement/prospectus.
BSB. BSB received a written opinion from Keefe, Bruyette & Woods, Inc., its
financial advisor, to the effect that, as of the date of this proxy
statement/prospectus, the exchange ratio was fair to the BSB stockholders from a
financial point of view. We attach a copy of the Keefe, Bruyette & Woods
opinion as Appendix C to this joint proxy statement/prospectus.
We recommend that each NBT and BSB stockholder read each opinion carefully
in its entirety to understand the assumptions made, matters considered, and
limitations on the review undertaken by each financial advisor.
Accounting Treatment (see page _____)
It is a condition to completing the merger that the merger 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 NBT and BSB receive
letters from their independent auditors to the effect that the merger qualifies
for pooling of interests accounting treatment.
When We Expect the Merger to Close (see page _____)
We expect completion of the merger as soon as practicable following
approval of the merger by the stockholders of NBT and BSB at their respective
special stockholders meetings and satisfaction of all other conditions to the
merger, including the receipt of regulatory approval. We anticipate completion
of the merger during the fourth quarter of 2000.
Our Reasons for the Merger (see pages ___ through ____)
NBT and BSB are proposing to merge because we believe that by merging we
can create a stronger, more visible, and more diversified banking franchise in
the Southern Tier and Central New York and Northeastern Pennsylvania that will
provide significant benefits to our stockholders and customers alike. We also
believe that by bringing our customers and banking products together we can do a
better job of growing our combined revenues than we could if we did not merge.
We believe that the merger will strengthen our position as a competitor in the
financial services industry, which is rapidly changing, growing more competitive
and consolidating.
11
<PAGE>
We Recommend That NBT Stockholders and BSB Stockholders Adopt the Merger
Agreement (see pages _____ and ____)
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
adopt the merger agreement.
BSB. The BSB 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
adopt the merger agreement.
Other Interests of NBT and BSB Officers and Directors in the Merger (see page
______)
Some of our directors and officers have interests in the merger that are
different from, or in addition to, their interests as stockholders in NBT or
BSB. These interests exist because the merger agreement names them to occupy
specified positions with the combined company or the combined bank, or provides
for their selection for these positions; and because of rights that the officers
and directors have under applicable compensation, benefit or change in control
agreements or plans maintained by NBT and BSB.
The members of our boards of directors knew about these additional
interests, and considered them, when they approved the merger.
We Have Not Yet Received the Required Regulatory Approvals
Completion of the merger and the bank merger requires the approval of the
Comptroller of the Currency and the approval of or waiver of jurisdiction by the
Federal Reserve Board. In addition, the U.S. Department of Justice will review
the effect the transaction could have on competition and may delay or attempt to
stop the transaction or subject the transaction to certain conditions. Once the
Comptroller of the Currency and, if necessary, the Federal Reserve Board,
approve the merger, we have to wait at least 15 days and may have to wait for up
to 30 days before we can complete the merger.
We have filed all of the required applications with the Comptroller of the
Currency and have requested certain waivers from the Federal Reserve Board.
The Stockholders' Meetings
NBT. NBT will hold its special meeting of stockholders at the Holiday Inn
Arena, 2-8 Hawley Street, Binghamton, New York on ______________ , 2000 at
__________ [a.m./ p.m.] local time.
BSB. BSB will hold its special meeting of stockholders at the
Holiday Inn Arena, 2-8 Hawley Street, Binghamton, New York on [__________, 2000]
at [_________ a.m./p.m.] local time.
12
<PAGE>
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 BSB Stockholders:
NBT Bancorp Inc. BSB Bancorp, Inc.
52 South Broad Street 58-68 Exchange Street
Norwich, NY 13815 Binghamton, NY 13901
Attention: Michael J. Chewens, CPA Attention: Larry G. Denniston
Phone Number: (607) 337-6520 Phone Number: (607) 779-2406
13
<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 BSB, and selected unaudited pro forma combined financial data for the
combined company. The historical financial information for NBT has been restated
to include the effects of its mergers with Lake Ariel Bancorp, Inc. and Pioneer
American Holding Company Corp., which were completed on February 17, 2000 and
July 1, 2000, respectively, and have each been accounted for as poolings of
interests. The historical financial information for BSB has been restated to
include the effects of its merger with Skaneateles Bancorp, Inc., which was
completed on July 1, 1999 and has been accounted for as a pooling of
interests. We have derived the selected historical financial data from the
consolidated financial statements and interim consolidated financial statements
of NBT, BSB, Lake Ariel and Pioneer American and the supplemental consolidated
financial statements of NBT. NBT has filed on August 1, 2000 a current report on
Form 8-K with the SEC which contains supplemental consolidated financial
statements of NBT as of December 31, 1999 and 1998 and for each of the years in
the three year period ended December 31, 1999, which have been restated to
include the effects of the Lake Ariel and Pioneer American mergers. Stockholders
of each of NBT and BSB should read this information in conjunction with the
historical financial statements and related notes of each of NBT and BSB and the
unaudited pro forma condensed combined financial statements and related notes of
the combined company presented on pages _______ through ________. The NBT and
BSB combined results of operations give effect to NBT's proposed merger with BSB
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 period-end combined balance sheet information reflects
estimated non-recurring charges that will be incurred in connection with the NBT
and BSB merger. Only non-recurring charges incurred through March 31, 2000 in
connection with the Lake Ariel Bancorp, Inc. and Pioneer American Holding
Company Corp. mergers are reflected in the selected historical and pro forma
condensed combined financial data. 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
Lake Ariel Bancorp Inc., Pioneer American Holding Company Corp., Skaneateles
Bancorp, Inc and BSB mergers, 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 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.
14
<PAGE>
<TABLE>
<CAPTION>
AS OF AND FOR THE 3 MONTHS ENDED AS OF AND FOR THE 12 MONTHS ENDED
-------------------------------- ---------------------------------
NBT Bancorp Inc.
Selected Financial Data
(in thousands, except per share data) 3/31/00 3/31/99 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
For Period Ended
<S> <C> <C> <C> <C> <C> <C> <C>
Interest and fee income $ 44,866 $ 38,787 $ 164,778 $ 158,602 $ 147,338 $ 129,020 $ 119,610
Interest expense 21,618 17,581 75,480 74,736 68,892 57,422 55,581
Net interest income 23,248 21,206 89,298 83,866 78,446 71,598 64,029
Provision for loan losses 1,454 1,195 5,440 6,149 4,820 4,325 2,783
Noninterest income excluding net
securities gains 4,336 4,251 17,448 16,307 13,894 12,358 10,555
Net securities gains - 668 1,804 1,567 34 1,222 941
Noninterest expense 17,758 14,689 62,882 61,547 54,460 52,168 49,862
Income before income taxes 8,372 10,241 40,228 34,044 33,094 28,685 22,880
Net income $ 5,280 $ 6,659 $ 26,257 $ 26,895 $ 22,188 $ 18,914 $ 15,119
Per Common Share*
Basic earnings $ 0.23 $ 0.29 $ 1.14 $ 1.16 $ 1.00 $ 0.86 $ 0.68
Diluted earnings $ 0.23 $ 0.28 $ 1.12 $ 1.14 $ 0.98 $ 0.85 $ 0.67
Cash dividends paid $ 0.17 $ 0.16 $ 0.66 $ 0.59 $ 0.42 $ 0.34 $ 0.29
Stock dividends distributed 0% 0% 5% 5% 5% 5% 5%
Book value at period-end $ 8.36 $ 8.81 $ 8.19 $ 9.03 $ 8.31 $ 7.21 $ 7.07
Tangible book value at period-end $ 7.99 $ 8.38 $ 7.87 $ 8.39 $ 7.89 $ 6.69 $ 6.50
Average common shares outstanding 23,198 23,132 23,089 23,199 22,239 21,979 22,353
Average diluted common shares outstanding 23,345 23,423 23,382 23,691 22,698 22,287 22,636
Period Ended
Securities available for sale $ 602,767 $ 597,853 $ 606,727 $ 523,254 $ 590,021 $ 505,329 $ 517,463
Securities held to maturity 114,518 113,188 113,318 180,663 120,834 81,525 78,661
Loans 1,540,798 1,319,583 1,466,867 1,277,241 1,157,548 1,036,146 936,240
Allowance for loan losses 20,688 18,472 19,711 18,231 16,450 15,053 13,519
Assets 2,444,834 2,214,376 2,380,207 2,169,855 2,018,784 1,767,105 1,678,772
Deposits 1,823,623 1,639,552 1,777,091 1,664,307 1,588,276 1,465,461 1,370,043
Borrowings 406,727 351,925 394,237 283,840 221,989 129,037 139,788
Stockholders' equity 194,625 204,864 191,472 204,038 192,556 157,699 156,045
Average Balances
Assets $2,401,744 $2,157,289 $2,268,122 $2,111,855 $1,931,317 $1,714,416 $1,608,687
Earning assets 2,282,108 2,021,266 2,134,116 1,980,093 1,813,492 1,599,126 1,500,520
Loans 1,503,001 1,297,519 1,366,298 1,217,833 1,098,967 994,615 916,434
Deposits 1,792,817 1,641,626 1,695,606 1,614,766 1,540,597 1,442,041 1,337,734
Stockholders' equity 194,007 205,011 199,059 198,538 167,585 152,499 146,166
Key Ratios
Return on average assets 0.88% 1.25% 1.16% 1.27% 1.15% 1.10% 0.94%
Return on average equity 10.95% 13.17% 13.19% 13.55% 13.24% 12.40% 10.34%
Average equity to average assets 8.08% 9.50% 8.78% 9.40% 8.68% 8.90% 9.09%
Net interest margin 4.25% 4.38% 4.32% 4.34% 4.44% 4.60% 4.38%
Efficiency 57.95% 57.11% 57.31% 60.45% 57.73% 60.75% 65.31%
Cash dividend per share payout 73.91% 57.86% 58.57% 51.49% 42.96% 39.76% 43.58%
Tier 1 leverage 8.56% 9.05% 8.63% 8.81% 9.08% 8.55% 8.61%
Tier 1 risk-based capital 13.20% 14.71% 13.78% 14.68% 15.44% 13.90% 14.89%
Total risk-based capital 14.36% 15.89% 14.95% 15.87% 16.64% 15.11% 16.11%
</TABLE>
*All share and per share data has been restated to give retroactive effect to
stock dividends and splits.
15
<PAGE>
<TABLE>
<CAPTION>
AS OF OR FOR THE 3 MONTHS ENDED AS OF OR FOR THE 12 MONTHS ENDED
------------------------------- --------------------------------
BSB Bancorp, Inc.
Selected Financial Data
(in thousands, except per share data) 3/31/00 3/31/99 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
For Period Ended
<S> <C> <C> <C> <C> <C> <C> <C>
Interest and fee income $ 46,280 $ 42,505 $ 176,721 $ 166,166 $ 141,348 $ 123,414 $ 114,905
Interest expense 23,901 21,393 89,576 84,786 71,452 61,582 59,029
Net interest income 22,379 21,112 87,145 81,380 69,896 61,832 55,876
Provision for loan losses 4,608 3,461 19,137 12,931 10,814 10,146 7,568
Noninterest income excluding net
securities gains 3,361 2,790 12,602 9,446 7,768 9,145 7,317
Net securities gains - (401) (231) (851) 380 1,285 (2)
Noninterest expense 11,713 11,164 50,663 41,983 36,940 35,463 33,450
Income before income taxes 9,419 8,876 29,716 35,061 30,290 26,653 22,173
Net income $ 5,748 $ 5,536 $ 18,225 $ 21,519 $ 18,649 $ 16,685 $ 13,646
Per Common Share
Basic earnings $ 0.56 $ 0.55 $ 1.80 $ 2.15 $ 1.88 $ 1.63 $ 1.25
Diluted earnings $ 0.56 $ 0.54 $ 1.77 $ 2.08 $ 1.82 $ 1.59 $ 1.21
Cash dividends paid $ 0.25 $ 0.22 $ 0.95 $ 0.83 $ 0.69 $ 0.54 $ 0.39
Stock dividends distributed - - - - - - -
Book value at period-end $ 15.31 $ 15.53 $ 15.11 $ 15.35 $ 13.92 $ 12.76 $ 12.29
Tangible book value at period-end $ 15.16 $ 15.35 $ 14.95 $ 15.15 $ 13.69 $ 12.48 $ 11.99
Average common shares outstanding 10,243 10,071 10,138 10,006 9,905 10,233 10,890
Average diluted common shares outstanding 10,337 10,341 10,312 10,365 10,258 10,490 11,306
Period Ended
Securities available for sale $ 361,879 $ 375,749 $ 366,427 $ 397,304 $ 263,457 $ 253,683 $ 224,458
Securities held to maturity 13,079 9,848 14,472 12,537 23,134 36,365 33,085
Loans 1,745,959 1,706,005 1,724,973 1,595,222 1,427,683 1,216,457 1,099,325
Allowance for loan losses 31,705 26,149 29,134 25,030 21,768 19,168 17,179
Assets 2,230,864 2,222,050 2,240,948 2,135,327 1,816,672 1,605,302 1,449,683
Deposits 1,899,278 1,756,544 1,901,204 1,709,860 1,457,526 1,323,081 1,185,584
Borrowings 165,982 287,778 172,045 259,736 196,701 138,683 113,335
Stockholders' equity 157,016 156,589 154,493 154,091 138,538 124,957 131,713
Average Balances
Assets $2,241,463 $2,161,491 $2,232,498 $2,000,092 $1,697,458 $1,504,615 $1,397,609
Earning assets 2,122,536 2,052,076 2,116,328 1,894,274 1,607,808 1,421,268 1,326,168
Loans 1,701,785 1,613,978 1,681,952 1,497,982 1,299,365 1,145,206 1,072,197
Deposits 1,887,463 1,726,803 1,800,103 1,608,754 1,347,024 1,248,047 1,138,035
Stockholders' equity 166,258 155,000 159,763 145,517 133,142 128,446 130,188
Key Ratios
Return on average assets 1.03% 1.02% 0.82% 1.08% 1.10% 1.11% 0.98%
Return on average equity 13.83% 14.29% 11.41% 14.79% 14.01% 12.99% 10.48%
Average equity to average assets 7.42% 7.17% 7.16% 7.28% 7.84% 8.54% 9.32%
Net interest margin 4.22% 4.12% 4.12% 4.30% 4.35% 4.35% 4.21%
Efficiency 45.52% 46.72% 50.61% 45.93% 47.38% 49.96% 52.91%
Cash dividend per share payout 44.56% 40.97% 52.95% 38.28% 36.48% 33.09% 31.05%
Tier 1 leverage 8.09% 7.46% 7.85% 7.44% 7.67% 7.90% 9.15%
Tier 1 risk-based capital 9.92% 9.12% 9.83% 9.41% 9.28% 9.99% 11.59%
Total risk-based capital 11.18% 10.37% 11.08% 10.66% 10.54% 11.24% 12.84%
</TABLE>
*All share and per share data has been restated to give retroactive effect to
stock dividends and splits.
16
<PAGE>
<TABLE>
<CAPTION>
As of and for the 3 months ended As of and for the 12 months ended
-------------------------------- ---------------------------------
Pro Forma Combined
Selected Financial Data
(in thousands, except per share data) 3/31/00 3/31/99 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
For Period Ended
<S> <C> <C> <C> <C> <C> <C> <C>
Interest and fee income $ 91,146 $ 81,292 $ 341,499 $ 324,768 $ 288,686 $ 252,434 $ 234,515
Interest expense 45,519 38,974 165,056 159,522 140,344 119,004 114,610
Net interest income 45,627 42,318 176,443 165,246 148,342 133,430 119,905
Provision for loan losses 6,062 4,656 24,577 19,080 15,634 14,471 10,351
Noninterest income excluding securities gains 7,697 7,041 30,050 25,753 21,662 21,503 17,872
Net Securities gains - 267 1,573 716 414 2,507 939
Noninterest expense 29,471 25,853 113,545 103,530 91,400 87,631 83,312
Income before income taxes 17,791 19,117 69,944 69,105 63,384 55,338 45,053
Net income $ 11,028 $ 12,195 $ 44,482 $ 48,414 $ 40,837 $ 35,599 $ 28,765
Per Common Share
Basic earnings $ 0.25 $ 0.28 $ 1.03 $ 1.12 $ 0.97 $ 0.84 $ 0.65
Diluted earnings $ 0.25 $ 0.28 $ 1.01 $ 1.09 $ 0.94 $ 0.82 $ 0.64
Cash dividends paid $ 0.17 $ 0.16 $ 0.66 $ 0.59 $ 0.42 $ 0.34 $ 0.29
Stock dividends distributed 0% 0% 5% 5% 5% 5% 5%
Book value at period-end $ 7.76 $ 8.33 $ 7.93 $ 8.30 $ 7.69 $ 6.82 $ 6.61
Tangible book value at period-end $ 7.52 $ 8.05 $ 7.69 $ 8.01 $ 7.41 $ 6.48 $ 6.25
Average common shares outstanding 43,684 43,274 43,365 43,211 42,049 42,447 44,133
Average diluted common shares outstanding 44,019 44,105 44,006 44,421 43,214 43,269 45,248
Period Ended
Securities available for sale $ 964,646 $ 973,602 $ 973,154 $ 926,155 $ 853,478 $ 759,012 $ 741,921
Securities held to maturity 127,597 123,036 127,790 193,200 143,968 117,890 111,746
Loans 3,286,757 3,025,588 3,191,840 2,872,463 2,585,231 2,252,603 2,035,565
Allowance for loan losses 52,393 44,621 48,845 43,261 38,218 34,221 30,698
Assets 4,680,198 4,436,426 4,621,155 4,305,182 3,835,456 3,372,407 3,128,455
Deposits 3,722,901 3,396,096 3,678,295 3,374,167 3,045,802 2,788,542 2,555,627
Borrowings 572,709 639,703 566,282 543,576 418,690 267,720 253,123
Stockholders' equity 339,641 361,453 345,965 358,129 331,094 282,656 287,758
Average Balances
Assets $ 4,643,207 $4,318,780 $4,500,620 $4,111,947 $ 3,628,775 $3,113,302 $3,006,296
Earning assets 4,404,644 4,073,342 4,250,444 3,874,367 3,421,300 3,020,394 2,826,688
Loans 3,204,786 2,911,497 3,048,250 2,715,815 2,398,332 2,139,821 1,988,631
Deposits 3,680,280 3,368,429 3,495,709 3,223,520 2,887,621 2,690,088 2,475,769
Stockholders' equity 360,265 360,011 358,822 344,055 300,727 280,945 276,354
Key Ratios
Return on average assets 0.96% 1.15% 0.99% 1.18% 1.13% 1.11% 0.96%
Return on average equity 12.31% 13.74% 12.40% 14.07% 13.58% 12.67% 10.41%
Average equity to average assets 7.76% 8.34% 7.97% 8.37% 8.29% 8.73% 9.19%
Net interest margin 4.24% 4.28% 4.22% 4.32% 4.40% 4.48% 4.30%
Efficiency 52.06% 52.14% 54.12% 53.60% 53.06% 55.87% 59.69%
Cash dividend per share payout 68.00% 57.86% 64.95% 53.85% 44.79% 41.22% 45.63%
Tier 1 leverage 8.33% 8.25% 8.25% 8.13% 8.41% 8.20% 8.86%
Tier 1 risk-based capital 11.43% 11.51% 11.60% 11.71% 12.01% 11.79% 13.10%
Total risk-based capital 12.64% 12.73% 12.82% 12.93% 13.24% 13.03% 14.34%
</TABLE>
Note: Dividends per share represent historical dividends of stand alone NBT.
*All share and per share data has been restated to give retroactive effect to
stock dividends and splits.
17
<PAGE>
Unaudited Comparative Per Share Data
We have summarized below the per common share combined information for NBT
and BSB on a historical, pro forma combined, and pro forma equivalent basis.
The financial information for NBT has been restated to include the effects of
its mergers with Lake Ariel Bancorp, Inc. and Pioneer American Holding Company
Corp., which were completed on February 17, 2000, and July 1, 2000,
respectively, and have each been accounted for as pooling of interests. The
historical financial information for BSB has been restated to include the
effects of the BSB merger with Skaneateles Bancorp, Inc., which was completed on
July 1, 1999 and was accounted for as a pooling of interests. The pro
forma information gives effect to the merger with BSB accounted for as a pooling
of interests, on the assumption that our companies had always been combined for
accounting and financial reporting purposes.
You should read this information in conjunction with the historical
financial statements and related notes of NBT and BSB as well as the
supplemental consolidated financial statements of NBT and related notes, which
have been restated to include the effects of the Lake Ariel and Pioneer American
mergers, 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 condensed combined financial
information set forth under the heading "Unaudited Pro Forma Condensed 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 BSB pro forma equivalent data
represent the combined company pro forma data before rounding, multiplied by the
exchange ratio of 2.0 shares of NBT common stock for each share of BSB common
stock, and thereby reflect the effect of the merger on a share of BSB common
stock. Dividends per share of the combined company represent historical
dividends of stand alone NBT.
18
<PAGE>
Historical Pro Forma
---------- ---------
Combined BSB
NBT BSB Company Equivalent
--- --- ------- ----------
Per Common Share
BASIC EARNINGS
Quarter - Ended:
March 31, 2000 $0.23 $ 0.56 $0.25 $ 0.50
Year - Ended:
December 31, 1999 $1.14 $ 1.80 $1.03 $ 2.05
December 31, 1998 $1.16 $ 2.15 $1.12 $ 2.24
December 31, 1997 $1.00 $ 1.88 $0.97 $ 1.94
DILUTED EARNINGS
Quarter - Ended:
March 31, 2000 $0.23 $ 0.56 $0.25 $ 0.50
Year - Ended:
December 31, 1999 $1.12 $ 1.77 $1.01 $ 2.02
December 31, 1998 $1.14 $ 2.08 $1.09 $ 2.18
December 31, 1997 $0.98 $ 1.82 $0.94 $ 1.89
CASH DIVIDEND PAID
Quarter - Ended:
March 31, 2000 $0.17 $ 0.25 $0.17 $ 0.34
Year - Ended:
December 31, 1999 $0.66 $ 0.95 $0.66 $ 1.31
December 31, 1998 $0.59 $ 0.83 $0.59 $ 1.17
December 31, 1997 $0.42 $ 0.69 $0.42 $ 0.84
BOOK VALUE
As of:
March 31, 2000 $8.36 $15.31 $7.76 $15.51
December 31, 1999 $8.19 $15.11 $7.93 $15.86
TANGIBLE BOOK VALUE
As of:
March 31, 2000 $7.99 $15.16 $7.52 $15.05
December 31, 1999 $7.87 $14.95 $7.69 $15.37
19
<PAGE>
THE STOCKHOLDERS' MEETINGS
The NBT Special Meeting
When and Where the NBT Special Meeting Will Be Held
NBT will hold a special meeting of stockholders at [Holiday Inn Arena, 2-8
Hawley Street, Binghamton, New York] on ______________ , 2000 at __________
[a.m./ p.m.] local time.
What Will Be Voted on at the NBT Special Meeting
Stockholders will consider and vote upon a proposal to adopt the agreement
and plan of merger, dated as of April 19, 2000, and amended as of May 17, 2000,
between NBT and BSB Bancorp, Inc., under which, among other things:
. BSB will merge with NBT, with NBT being the surviving corporation;
. the certificate of incorporation of NBT will be amended to change the
name of NBT to [TBD Bancorp Inc.] and to increase the total number of
all classes of stock from 35,000,000 to 105,000,000 shares, consisting
of 100,000,000 shares of common stock and 5,000,000 shares of
preferred stock;
. NBT will issue approximately 20.5 million shares of common stock to
the BSB stockholders upon completion of the merger; and
. the board of directors of the combined company will include seven of
the current members of the BSB board and eight of the current members
of the NBT board, including one NBT director from among the former
members of the board of Lake Ariel Bancorp, Inc. and one NBT director
from among the former members of the board of Pioneer American Holding
Company Corp.
We may take action on the above matters at the NBT special meeting on
____________, 2000, or on any later date to which the special meeting is
postponed or adjourned.
The NBT board is unaware of other matters to be voted on at 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 the purpose of 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 proxy card.
Stockholders Entitled to Vote
NBT has set ______________, 2000 as the record date to determine which NBT
stockholders will be entitled to vote at the NBT special meeting. Only NBT
stockholders who held their shares of record as of the close of business on
_________________, 2000, will be entitled to receive notice of and to vote at
the NBT special meeting. As of ______________________ [RECORD DATE], there
were 23,692,365 outstanding shares of NBT common stock. Each NBT stockholder on
the record date is entitled to one vote per share, which the stockholder may
cast either in person or by properly executed proxy. At June 30, 2000, NBT's
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401(k) Plan and Employee Stock Ownership Plan owned of record 925,006 shares of
NBT's common stock on behalf of the plan's employee beneficiaries, representing
3.90% of the outstanding shares of NBT's common stock. Employees of NBT vote the
shares held under NBT's 401(k) and Employee Stock Ownership Plan
Twenty-one stockholders of NBT, all of whom were directors or officers of
NBT or NBT Bank at the time the merger agreement was signed, have agreed
individually that they will vote in favor of adoption of the merger agreement
and that they will use their best efforts to cause all action to be taken to
consummate the merger. The number of shares subject to these agreements
aggregate 1,216,175 shares or approximately 5.13% of the outstanding common
stock of NBT, or June 30, 2000.
Vote Required to Adopt the Merger Agreement
The affirmative vote, either in person or by proxy, of the holders of a
majority of the outstanding NBT shares of common stock entitled to vote at the
special meeting is required to adopt the merger agreement.
Abstentions and broker non-votes on the proposal to adopt the merger
agreement will effectively count as votes against that proposal.
Voting Your Shares
The NBT board is soliciting proxies from the NBT stockholders. This will
give you an opportunity to vote at the NBT special meeting. The NBT board urges
NBT stockholders to complete, date and sign the accompanying proxy card and
return it promptly in the enclosed postage-paid envelope. When you deliver a
valid proxy, the shares represented by that proxy will be voted in accordance
with your instructions by a named agent. If you do not either vote by proxy or
attend the special meeting and vote in person, your vote will be counted as not
present for quorum purposes and will effectively count as a vote against the
proposal to adopt the merger agreement. If you vote by proxy but make no
specification on your proxy card that you have otherwise properly executed, the
named agent will vote "FOR" adoption of the merger agreement and the related
matters.
You may grant a proxy by dating, signing and mailing your proxy card. You
may also cast your vote in person at the meeting.
Mail. To grant your proxy by mail, please complete your proxy card and
sign, date and return it in the enclosed envelope. To be valid, a returned
proxy card must be signed and dated.
Telephone. If you hold NBT common stock in your own name and not through a
broker or other nominee, you can vote your shares of NBT common stock by
telephone by dialing the toll-free telephone number printed on your proxy card.
Telephone voting is available 24 hours a day until _______ a.m. (EDT) on
______________, 2000. Telephone voting procedures are designed to authenticate
shareholders by using the individual control numbers on your proxy card. If you
vote by telephone, you do not need to return your proxy card.
In person. If you attend the NBT special meeting in person, you may vote
your shares by completing a ballot at the meeting.
Establishing a Quorum of Stockholders
If a majority of the total number of issued and outstanding shares of NBT
common stock are present at the special meeting, either in person or by proxy,
the special meeting will have the quorum of stockholders required to transact
business.
Nasdaq rules prohibit brokers who hold shares of NBT common stock in
nominee or "street name" from giving a proxy without specific instructions from
the beneficial owners of the shares. We will count these so-called "broker non-
votes," which we receive, for purposes of determining whether a quorum exists.
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Changing Your Vote
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:
. delivering a written notice to the chief executive officer of NBT
bearing a later date than the proxy;
. giving a later-dated proxy by mail or by telephone; or
. appearing in person and voting at the NBT special meeting. Attendance
at the NBT special meeting will not by itself constitute a revocation
of a proxy, unless you complete and submit a ballot.
You should send any written notice of revocation or subsequent proxy to NBT
Bancorp Inc., 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
Representatives of KPMG LLP, NBT's independent auditors, will be present at
the NBT special meeting and will have the opportunity to make a statement if
they desire to do so and be available to respond to appropriate questions.
Solicitation of Proxies and Costs
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 directors, officers and employees may solicit proxies from the NBT
stockholders. 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,
executive vice president, chief financial officer and treasurer of NBT, by
telephone at (607) 337-6520.
Regardless of the number of shares you own, your vote is important to NBT.
Please complete, sign, date and promptly return the accompanying proxy card in
the enclosed postage-paid envelope or vote by telephone using the telephone
number on your proxy card.
Recommendations of NBT Board
The NBT board has unanimously approved the merger agreement, the merger and
the related matters. The NBT board believes that the merger agreement, the
merger and the related matters are in the best interests of NBT and the NBT
stockholders, and recommends that the NBT stockholders vote "FOR" adoption of
the merger agreement. See "Proposal 1 -- Adoption of the Merger Agreement --
Recommendation of the NBT Board and NBT's Reasons for the Merger."
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The BSB Special Meeting
When and Where the BSB Special Meeting Will Be Held
BSB will hold a special meeting of stockholders at the Holiday Inn Arena,
2-8 Hawley Street, Binghampton, New York on [___________________] at ___________
local time.
What Will Be Voted on at the BSB Special Meeting
Stockholders will consider and vote upon a proposal to adopt the agreement
and plan of merger, dated as of April 19, 2000, and amended as of May 17, 2000,
between BSB and NBT under which, among other things:
. BSB will merge with NBT, with NBT being the surviving corporation;
. the certificate of incorporation of NBT will be amended to change the
name of NBT to [TBD Bancorp Inc.] and to increase the total number of
all classes of stock from 35,000,000 to 105,000,000 shares, consisting
of 100,000,000 shares of common stock and 5,000,000 shares of
preferred stock;
. [TBD] will issue approximately 20.5 million shares of common stock to
the BSB stockholders upon completion of the merger; and
. the board of directors of the combined company will include seven of
the current members of the BSB board and eight of the current members
of the NBT board, including one NBT director from among the former
members of the board of Lake Ariel Bancorp, Inc. and one NBT director
from among the former members of the board of Pioneer American Holding
Company Corp.
We may take action on the above matters at the BSB special meeting on
_____________________, or any later date to which the special meeting is
postponed or adjourned.
The BSB board is unaware of other matters to be voted on at the BSB special
meeting. If other matters do properly come before the BSB special meeting,
including consideration of a motion to adjourn the special meeting to another
time and/or place for the purpose of soliciting additional proxies, BSB intends
that the persons named in the proxies will vote, or not vote, in their
discretion the shares represented by proxies in the accompanying proxy card.
Stockholders Entitled to Vote
BSB has set [______________], 2000 as the record date to determine which
BSB stockholders will be entitled to vote at the BSB special meeting. Only BSB
stockholders at the close of business on [__________________], 2000, will be
entitled to receive notice of and to vote at the BSB special meeting. As of
___________________ [record date] there were [10,259,193] issued and
outstanding shares of BSB common stock. Each BSB stockholder on the record date
is entitled to one vote per share, and may cast such votes either in person or
by properly executed proxy. At June 30, 2000, BSB's 401(K) Plan and Employee
Stock Purchase Plan owned of record 95,729 shares of BSB's common stock on
behalf of the plan's employee beneficiaries, representing 0.9% of the
outstanding shares of BSB's common stock. A trustee of BSB's 401(K) Plan votes
the BSB shares held under the 401(K) Plan and BSB employees vote the shares held
under the Employee Stock Purchase Plan.
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Seventeen stockholders of BSB, all of whom were officers, directors or
other affiliates of BSB at the time the merger agreement was signed, have agreed
individually that they will vote in favor of adoption of the merger agreement
and that they will use their best efforts to cause all action to be taken to
consummate the merger. The number of shares subject to these agreements
aggregate 793,433 shares or approximately 7.76% of the outstanding common stock
of BSB, as of June 30, 2000.
Vote Required to Adopt the Merger Agreement
The affirmative vote, either in person or by proxy, of the holders of a
majority of the outstanding BSB shares of common stock entitled to vote at the
special meeting is required to adopt the merger agreement.
Abstentions and broker non-votes on the proposal to adopt the merger
agreement will effectively count as votes against that proposal.
Number of Shares that Must Be Represented for a Vote to Be Taken
In order to have a quorum, a majority of the total voting power of the
outstanding shares of BSB's common stock entitled to vote at the BSB special
meeting must be represented in person or by proxy.
Voting Your Shares
The BSB board is soliciting proxies from the BSB stockholders. This will
give you an opportunity to vote at the BSB special meeting. The BSB board urges
BSB stockholders to complete, date and sign the accompanying proxy card and
return it promptly in the enclosed postage-paid envelope. When you deliver a
valid proxy, the shares represented by that proxy will be voted in accordance
with your instructions by a named agent. If you do not either vote by proxy or
attend the special meeting and vote in person, your vote will be counted as not
present for quorum purposes and will effectively count as a vote against the
proposal to adopt the merger agreement. If you vote by proxy but make no
specification on your proxy card that you have otherwise properly executed, the
agent will vote the shares FOR adoption of the merger agreement.
You may grant a proxy by dating, signing and mailing your proxy card. You
may also cast your vote in person at the meeting.
Mail. To grant your proxy by mail, please complete your proxy card and
sign, date and return it in the enclosed envelope. To be valid, a returned
proxy card must be signed and dated.
Telephone. If you hold your common stock in your own name and not through a
broker or other nominee, you can vote your shares of NBT common stock by
telephone by dialing the toll-free telephone number printed on your proxy card.
Telephone voting is available 24 hours a day until _______ a.m. (EDT) on
______________, 2000. Telephone voting procedures are designed to authenticate
shareholders by using the individual control numbers on your proxy card. If you
vote by telephone, you do not need to return your proxy card.
In person. If you attend the BSB special meeting in person, you may vote
your shares by completing a ballot at the meeting.
Establishing a Quorum of Stockholders
If a majority of the total number of issued and outstanding shares of BSB
common stock are present at the special meeting, either in person or by proxy,
the special meeting will have the quorum of stockholders required to transact
business.
Nasdaq rules prohibit brokers who hold shares of BSB common stock in
nominee or "street name" from giving a proxy without specific instructions from
the beneficial owners of the shares. We will count these so called "broker non-
votes," which we receive, for purposes of determining whether a quorum exists.
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Changing Your Vote
Any BSB 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:
. delivering a written notice to the corporate secretary of BSB bearing
a later date than the proxy;
. granting a later-dated proxy by mail or telephone; or
. appearing in person and voting at the BSB special meeting. Attendance
at the BSB special meeting will not by itself constitute a revocation
of a proxy, unless you complete and submit a ballot.
You should send any written notice of revocation or subsequent proxy to BSB
Bancorp, Inc., 58-68 Exchange Street, Binghamton, New York 13901, Attention:
Corporate Secretary, or hand deliver the notice of revocation or subsequent
proxy to the corporate secretary of BSB at or before the taking of the vote at
the BSB special meeting.
Independent Auditors to Be Present at the Special Meeting
BSB expects representatives of PricewaterhouseCoopers LLP, BSB's
independent auditors will be present at the BSB special meeting and have the
opportunity to make a statement if they desire to do so and will be available to
respond to appropriate questions.
Solicitation of Proxies and Costs
BSB will bear its own costs of solicitation of proxies. BSB will make
arrangements with brokerage houses, custodians, nominees and fiduciaries for
forwarding of proxy solicitation materials to beneficial owners of shares held
of record by such brokerage houses, custodians, nominees and fiduciaries, and
BSB 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, BSB's directors, officers and
employees may solicit proxies from the BSB stockholders. BSB 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 Larry G. Denniston,
Corporate Secretary of BSB, by telephone at (607) 779-2406.
Regardless of the number of shares you own, your vote is important to BSB.
Please complete, sign, date and promptly return the accompanying proxy card in
the enclosed postage-paid envelope.
Recommendation of BSB Board
The BSB board has unanimously approved the merger agreement, the merger and
the related matters. The BSB board believes that the merger agreement, the
merger and related matters are in the best interests of BSB and the BSB
stockholders, and recommends that the BSB stockholders vote "FOR" adoption of
the merger agreement. See "Proposal 1--Adoption of the Merger Agreement --
Recommendation of the BSB board and BSB's Reasons for the Merger."
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PROPOSAL 1
(All Stockholders of NBT and All Stockholders of BSB)
ADOPTION OF THE
MERGER AGREEMENT
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, including the amendment to the merger agreement, 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 fourth quarter of 2000. The name
of the surviving corporation in the merger will be [TBD Bancorp Inc.] (the
surviving corporation is sometimes also referred to herein as the "combined
company"). 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 the combined company. Each share of BSB common
stock issued and outstanding at the effective time of the merger will convert
into the right to receive two shares of common stock of the combined company
upon completion of the merger.
Upon completion of the merger, [TBD] will issue to the former BSB
stockholders two shares of common stock of [TBD] for each share of BSB common
stock outstanding as of the effective time of the merger. [TBD] will issue an
aggregate of approximately 20.5 million of its shares of common stock to the
former BSB stockholders at the effective time of the merger.
Under the merger agreement, BSB will merge with and into NBT, the separate
corporate existence of BSB will cease, and NBT will survive and continue its
corporate existence under the laws of the State of Delaware under the new name
[TBD]. Subject to the satisfaction or waiver of conditions set forth in the
merger agreement and described in "Adoption of the Merger Agreement --
Conditions to Complete the Merger," the merger of BSB with and into NBT will
become effective on the date and at the time specified in the certificate of
merger to be filed with the Secretary of State of the State of Delaware.
Simultaneously with the completion of the NBT and BSB merger, BSB Bank & Trust
Company will merge with and into NBT Bank, National Association, the separate
corporate existence of BSB Bank will cease, and NBT Bank will be the surviving
bank in the bank merger and continue its national association existence under
the laws of the United States of America under the new name [TBD Bank, National
Association] (the surviving bank is referred to herein as the "TBD Bank").
At the effective time, the NBT certificate of incorporation, as amended,
will be further amended to authorize the issuance of additional shares of common
stock and the certificate of incorporation, as amended, of NBT and the bylaws of
NBT will be amended to reflect the new name and the relocation of the corporate
offices of the combined company to Binghamton, New York. As so amended, the
certificate of incorporation, as amended, and bylaws of NBT will be the
certificate of incorporation and bylaws of the combined company upon completion
of the merger. The certificate of incorporation and bylaws of NBT Bank will be
amended to reflect the new name of the combined bank and, as so amended, will be
the articles of association and bylaws of the combined bank upon completion of
the bank merger.
Background of and Reasons for the Merger
Following the resignation and retirement of BSB's then-president and chief
executive officer in February 2000, the BSB board appointed director Thomas L.
Thorn as acting president and chief executive officer, and director William
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C. Craine as chairman of the board. During mid- to late-February, the BSB board
considered a number of strategic alternatives in response to its management
needs. Those alternatives included appointing new senior officers either from
within the current organization or from the outside, as well as combining BSB
with another organization that could complement BSB's management strengths with
its then-current needs. Also in mid-February, Keefe, Bruyette & Woods, Inc.,
referred to herein as KBW, BSB's financial advisor, presented an analysis of
strategic alternatives for BSB, including potential merger candidates, to
certain BSB board members.
In the midst of the BSB board's internal considerations, Messrs. Craine and
Thorn met in mid-February 2000 with Daryl R. Forsythe, the president and chief
executive officer of NBT, based on a long-standing social relationship between
Messrs. Craine and Forsythe. At that meeting, the parties discussed on a very
preliminary basis a possible combination of NBT and BSB. Subsequent to that
meeting, Messrs. Craine and Thorn informally updated members of BSB's board of
directors regarding their conversation with Mr. Forsythe.
At a regular meeting of the NBT board of directors on February 28, 2000,
Mr. Forsythe reported on this preliminary discussion in which he and the BSB
representatives considered a merger of equals concept. The board of directors
authorized Mr. Forsythe to proceed with further discussions with BSB.
During the next few weeks, Mr. Forsythe had a number of conversations with
Mr. Craine and/or Mr. Thorn regarding various issues to determine if a possible
merger should be considered. These issues included business strategy of a
merger, the financial future of a combined company, the economies that could be
realized through a merger of NBT and BSB, the potential effect of job reductions
on the Binghamton and Norwich communities, the status of NBT's recently
completed acquisition of Lake Ariel Bancorp and the then-pending acquisition of
Pioneer American Holding Company Corp. and how the Pioneer American
acquisition would affect a combined NBT and BSB, and the likely reaction to the
merger of NBT and BSB from stockholders of both NBT and BSB and the markets
generally. Other issues discussed included the issue of management succession,
the need for a new name for a combined company, and the appropriate location of
the corporate offices of a combined company.
At a special meeting of the board of directors of NBT on March 9, 2000, Mr.
Forsythe reported on his continuing discussions with Messrs. Craine and Thorn.
Mr. Forsythe reported that he and the BSB representatives were progressing on
the plan of a combined NBT and BSB, and that new names would need to be selected
both for the combined company and for the bank that would result from merging
NBT Bank and BSB Bank.
Messrs. Forsythe, Craine and Thorn met on March 13, 2000 to discuss issues
in connection with a possible merger. They discussed the financial terms of a
proposed stock-for-stock exchange, including an exchange ratio in the range of
two shares of NBT common stock for each share of BSB common stock, and further
discussed the management and board of directors make-up of the combined company
and its subsidiaries and that the corporate offices of the combined company
would be located in Binghamton. They also discussed the need to allocate fairly
the effects of any required reductions in labor force in the Norwich and
Binghamton markets, to the extent possible. In view of the progress that had
been made in discussions on these issues, Messrs. Forsythe, Craine and Thorn
determined to commence reciprocal due diligence.
On March 14, 2000, representatives of KBW again met with Messrs. Thorn and
Craine to review strategic alternatives for BSB. Thereafter the BSB board of
directors met on March 17, 2000. BSB management was authorized to proceed with
the due diligence investigation of NBT.
NBT and BSB entered into a customary confidentiality agreement with respect
to the exchange of information in connection with their mutual consideration of
the transaction, and off-site due diligence with respect to both companies
commenced on the afternoon of March 17, 2000.
At the regular meeting of the board of directors of NBT on March 27, 2000,
Mr. Forsythe presented a report of the status of the discussions with BSB
representatives and was instructed by the board to continue to work toward
reaching an agreement on outstanding issues.
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Regular discussions between NBT and BSB representatives continued during
the ensuing three weeks. No agreement was reached at this time, however.
At a special meeting of the board of directors of NBT on April 7, 2000, Mr.
Forsythe discussed with the board the progress in the negotiations. Based on
this report, the NBT board authorized Mr. Forsythe to proceed to negotiate
formal merger documentation to present to the board for its consideration.
Over the next ten days, the parties negotiated definitive documentation.
A special meeting of the board of directors of NBT was convened on April
17, 2000 to review in detail the proposed definitive agreement and consider
action on the merger. After presentations which covered applicable legal
considerations and the fiduciary duties of the directors and a financial
analysis of the proposed transaction, the NBT board of directors reviewed in
detail the proposed agreement and plan of merger, stock option agreements, and
stockholder agreements and then deliberated extensively before recessing to
await the outcome of the consideration by the board of directors of BSB of its
agreement. The board of directors of NBT reconvened on April 18, 2000 to
continue its discussion and, after further deliberation, recessed without voting
on the merger.
Also on the morning of April 17, 2000, a special meeting of the board of
directors of BSB was convened to review in detail the proposed definitive
agreement and consider action on the merger. At that meeting, the board
considered detailed presentations by counsel regarding fiduciary duties and the
terms and conditions of the various proposed agreements and stock options, and
also considered a financial analysis by KBW of the proposed transaction and
alternative transactions. KBW also expressed its opinion as to the fairness of
the proposed merger consideration from a financial point of view. The BSB board
of directors held extensive discussions regarding the proposed merger and the
other alternatives available to BSB. There was further discussion with counsel,
KBW and representatives of PricewaterhouseCoopers, BSB's independent auditors.
The board meeting continued until early evening, at which time it was adjourned
until the next day. The BSB directors reconvened on April 18, 2000 to continue
its discussion and review of the various agreements. Upon conclusion of the
meeting, the board determined to meet again on the afternoon of April 19, 2000
to consider approving the merger agreement. Following discussion and review
with its advisers, on April 19, 2000, the BSB board unanimously approved the
merger and the related agreements.
On April 19, 2000, the NBT board reconvened once again. Discussion
continued until approximately 5:30 p.m., at which time Mr. Thorn telephoned Mr.
Forsythe and reported that the board of directors of BSB had unanimously
approved the merger. The NBT board then requested an oral opinion from NBT's
financial advisor, McConnell, Budd & Downes, Inc., referred to herein as MB&D,
as to whether the proposed exchange ratio was fair to the stockholders of NBT
from a financial point of view. Upon receiving a favorable oral opinion in this
regard, which opinion was subject to the procedures followed, assumptions made,
matters considered and limitations on the review undertaken, the NBT board
engaged in additional deliberations and then voted unanimously to approve the
merger. The agreement and plan of merger, stock option agreements, and
stockholder agreements were executed after the adjournment of the meeting. Early
the next morning, NBT and BSB issued a joint press release announcing execution
of the agreement and plan of merger.
Recommendation of the NBT Board and NBT's Reasons for the Merger
In reaching its determination to approve and adopt the merger agreement,
the NBT board considered a number of factors, including, without limitation, the
following:
. the NBT board's familiarity with and review of the business,
operations, financial condition and earnings of NBT on both a
historical and a prospective basis;
. the NBT board's familiarity with NBT's historical stock price;
. the NBT board's knowledge and review of the business, operations,
financial condition and earnings of BSB on both a historical and a
prospective basis; the historical stock price of BSB; and the pro
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forma financial condition, earnings, and prospects of the combined NBT
and BSB following their merger;
. the detailed financial presentation of NBT's financial advisor, MB&D
to the directors of NBT on April 17, 2000 and April 19, 2000,
including the oral opinions of MB&D rendered to the board of directors
of NBT on April 17, 2000 and April 19, 2000 to the effect that, as of
such dates and based upon and subject to the procedures followed,
assumptions made, matters considered and limitations on the review
undertaken, the proposed exchange ratio was fair from a financial
point of view to the holders of NBT common stock;
. the terms of the merger agreement;
. the general impact that the merger is expected to have on various
constituencies of NBT, including its customers, employees, and
communities;
. the NBT board's assessment of the current and prospective economic and
competitive environment facing the financial services industry
generally, and NBT in particular, including the continued rapid
consolidation in the industry, the increasing importance of
operational scale in remaining competitive and supporting the
necessary investments in technology, and the benefits of geographic
and product diversification;
. the consistency of the merger with NBT's long-term business
strategies;
. the relative strength of the markets served by NBT in comparison with
more robust economies, and the fact that the merger would result in a
more geographically diverse financial institution, introducing NBT
into the Syracuse market and greatly expanding NBT's opportunities in
the Binghamton market, both of which markets offer higher growth
potential than the major markets traditionally served by NBT;
. the cost of investment in technology which could improve the
efficiency and, accordingly, the competitive posture of NBT;
. the current and prospective economic, regulatory and competitive
environment facing financial institutions, including NBT;
. the expectation that the merger will be tax-free for federal income
tax purposes to NBT and its stockholders;
. the option agreements, including the possibility that the existence of
the stock option agreements could discourage third parties from
offering to acquire NBT or BSB by increasing the financial cost of
acquisitions by a third party, and the recognition that NBT's and
BSB's entering into the stock option agreements was a condition to
both parties' willingness to enter into the merger agreement;
. the likelihood of receiving all of the regulatory approvals required
for the merger to take place;
. the belief of the NBT board that the terms of the agreement and plan
of merger are attractive in that the agreement allows stockholders of
NBT to become stockholders of an institution with approximately double
the assets, stockholders' equity, and shares of common stock
outstanding compared with the current NBT, and that the larger total
market capitalization of the combined company will provide NBT
stockholders with the opportunity to participate in a company with
higher trading volumes and enhanced trading liquidity, will help to
enhance the appeal of the stock of the combined company as an
investment among both individual and institutional investors, and will
assist
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the combined company in achieving greater recognition and credibility
within the financial services industry and among stock analysts and
other industry observers;
. the anticipated operating synergies to be realized through the merger,
although no assurances can be given in this regard, including the
opportunity to reduce significantly the aggregate non-interest expense
that NBT and BSB currently incur in areas such as salaries and
benefits, occupancy expense, professional and outside service fees,
information services and communications, and other areas, and although
no assurances can be given in this regard, the anticipated effect of
these synergies upon earnings per share;
. the anticipated opportunities for revenue enhancements expected to be
available to the combined company following the merger, although no
assurances can be given in this regard;
. the fact that BSB and NBT share many cultural traits, including a
history of community service, dedication to smaller and lower-growth
markets, loyalty to their historical markets during periods of
fluctuations in economic fortunes, and concern for employee welfare;
. the level of experience and business acumen to be added to the board
of directors of the combined company; and
. the fact that the existing senior management of NBT will become
members of senior management of the combined company.
The discussion in this section of the information and factors considered by
the NBT board is not intended to be exhaustive but includes all material factors
considered by the board. In view of the wide variety of material factors
considered in connection with its evaluation of the merger, the board of
directors of NBT did not find it practicable to, and did not, quantify or
otherwise attempt to assign any relative weight to the various factors
considered. In addition, individual directors may have given differing weights
to different factors.
For the reasons described above, the board of directors of NBT approved the
merger agreement and believes the merger is fair to, and is in the best interest
of, its stockholders. Accordingly, the board of directors of NBT unanimously
recommends that holders of NBT common stock vote "FOR" the merger agreement.
Recommendation of the BSB Board and BSB's Reasons for the Merger
The BSB board of directors has approved the merger agreement and has
determined that the merger of NBT and BSB is in the best interests of BSB and
its stockholders. The BSB board unanimously recommends that you vote to adopt
the merger agreement. In reaching its decision to adopt the merger agreement,
the BSB board consulted with its financial advisor, KBW, and special outside
counsel and considered a variety of factors, including the following:
. the BSB board's familiarity with, and review of, the business,
financial condition, results of operations and prospects of BSB,
including, but not limited to, its potential growth, overhead
considerations, profitability, and returns on assets and equity that
BSB is likely to achieve on a stand-alone basis from continuing
operations, and the business risks associated with these
considerations;
. the BSB board's familiarity with, and review of, a range of strategic
alternatives designed to enhance stockholder value, including growth
by acquisitions and remaining independent;
. current and prospective operating environment, including national and
local economic conditions, the highly competitive environment for
financial institutions generally, and in the Southern Tier
30
<PAGE>
and Central New York particularly, the changing regulatory
environment, and the trend toward consolidation in the financial
services industry;
. recent performance and the potential for appreciation in market and
book value of BSB's common stock on both a short- and long-term basis,
as a stand-alone entity;
. the process BSB and KBW used to identify potential strategic partners;
. information concerning NBT's business, financial condition, results of
operations, asset quality and prospects, including the long-term
growth potential of NBT common stock, the future growth prospects of
NBT combined with BSB following the merger, the potential synergies
expected from the merger and the business risks associated with the
merger;
. the terms of the merger agreement, the stock option agreements and the
transactions and agreements contemplated by these agreements,
including without limitation, that NBT's offer of NBT's common stock
in exchange for BSB's common stock can be effected on a tax-free basis
for BSB's stockholders;
. the BSB board's assessment of the potential for appreciation and
growth in the market and book value of NBT's common stock following
the proposed merger;
. KBW's presentations to the BSB board, in particular the presentation
on April 17, 2000 and the opinion of KBW, that the merger
consideration to be paid pursuant to the merger agreement is fair to
BSB's stockholders from a financial point of view;
. the advantages and disadvantages to the stockholders, customers and
employees of BSB in remaining an independent institution or
affiliating with another entity;
. the stock option agreements, including the possibility that the
existence of the stock option agreements could discourage third
parties from offering to acquire BSB or NBT by increasing the
financial cost of acquisitions by a third party, and the recognition
that BSB's and NBT's entering into the stock option agreements was a
condition to both parties' willingness to enter into the merger
agreement;
. the likelihood of receiving all of the regulatory approvals required
for the merger to take place;
. the short- and long-term interests of BSB and its stockholders, the
interests of BSB Bank & Trust Company's employees, customers,
creditors and suppliers, and the interests of the communities served
by BSB Bank & Trust Company that may benefit from an appropriate
affiliation with a comparable institution to better serve all of the
banking needs of the community; and
. the compatibility of businesses and management philosophies of BSB and
NBT, and BSB's and NBT's strong commitments to the communities they
serve.
The discussion in this section of the information and factors considered by
the BSB board is not intended to be exhaustive but includes all material factors
considered by the board. In reaching its determination to approve and recommend
the merger agreement and the merger, the BSB board did not assign any relative
or specific weights to the factors considered. Individual directors may have
given differing weights to different factors. After deliberating on the merger
and the other transactions contemplated by the merger agreement, and
considering, among other things, the matters discussed above and the fairness
opinion of KBW referred to above, the BSB board unanimously approved the merger
agreement and the other transactions contemplated by the merger agreement, and
the stock option agreements, as being in the best interests of BSB and its
stockholders.
Accordingly, the board of directors of BSB unanimously recommends that
holders of BSB common stock vote "FOR" the merger agreement.
31
<PAGE>
Opinion of NBT's Financial Advisor
On April 19, 2000, MB&D, NBT's financial advisor, delivered its oral
opinion to the board of directors of NBT, that as of that date, the exchange
ratio at which shares of NBT common stock will be prospectively exchanged for
shares of BSB common stock was fair from a financial point of view to NBT
stockholders. The oral opinion has been updated for purposes of this proxy
statement/prospectus and has been rendered in written form, as attached to this
proxy statement/prospectus in Appendix B. The exchange ratio of two shares of
NBT common stock for each share of BSB common stock, was negotiated in an arms
length process based on consideration of numerous factors, including the
following:
. an analysis of the historical and projected future contributions to
recurring earnings by the parties;
. an analysis of the possible future earnings per share results for the
parties on both a combined and a stand-alone basis;
. consideration of the anticipated dilutive or accretive effects of the
prospective transaction on future earnings per share equivalent of
NBT;
. consideration of the prospects for the parties to achieve certain
operational cost savings as a result of the transaction;
. the probable impact on dividends per share to be received by NBT
stockholders as a result of the contemplated transaction;
. the composition of loan portfolios and the methodology of creating
reserves for possible loan and lease losses used by the parties;
. the apparent adequacy or inadequacy of the reserves for possible loan
and lease losses, as of a point in time for each of the parties;
. the apparent relative asset quality of the respective loan portfolios
as disclosed by the parties;
. an analysis of the composition of the deposit bases of each of the
parties;
. consideration of the liquidity position and liquidity strategy being
pursued by each of the parties;
. analysis of the historical trading range, trading patterns,
institutional ownership, and apparent relative liquidity of the common
shares of each of the parties;
. consideration of the accounting equity capitalization, tangible equity
capitalization and the projected adequacy thereof for the parties and
the combined company;
. consideration of the pro forma market capitalization of the
anticipated combination;
. consideration of the relationship of each of the parties with their
primary regulators and the status of BSB with respect to an
outstanding memorandum of understanding with its regulator; and
. contemplation of other factors, including certain intangible factors.
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<PAGE>
MB&D has acted as a general financial advisor to NBT on a contractual basis
since October 20, 1994 in connection with the development and implementation of
the NBT strategic plan and has assisted NBT in the evaluation of numerous
hypothetical and/or potential affiliation opportunities since that date. During
1999, for example, MB&D represented NBT in connection with its completed
acquisition of Lake Ariel Bancorp, Inc., a bank holding company based in
Scranton, Pennsylvania. Also during 1999, MB&D assisted NBT in the negotiation
of the acquisition of Pioneer American, a bank holding company based in
Carbondale, Pennsylvania. With respect to the pending transaction involving
BSB, MB&D advised NBT during the evaluation and participated in the due
diligence and negotiation process leading up to the execution of the agreement
and provided NBT with a number of analyses as to the range of financially
feasible exchange ratios that might be agreed to in a hypothetical transaction.
Representatives of MB&D met with the executive management and board of directors
of NBT or designated committees thereof on seven separate occasions during the
period from February 17, 2000 to April 19, 2000, in connection with the analysis
of the strategic and tactical options available to NBT and the negotiation of
the terms of the pending transaction. The determination of the applicable
exchange ratio was arrived at in an arms length negotiation between BSB and NBT
in a process in which MB&D advised NBT and participated both directly and
indirectly 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 and of the
Eastern United States banking markets in general, as well as its experience with
merger and acquisition transactions involving banking institutions. As a part
of its investment banking business, MB&D is regularly engaged in the valuation
of financial institutions and their securities in connection with mergers and
acquisitions and in connection with its equity brokerage business, which
specializes in the securities of financial institutions. MB&D also publishes
proprietary earnings estimates and equity research reports on numerous financial
institutions. 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 broker-dealer, MB&D
may, from time to time, purchase securities from and sell securities to NBT or
BSB and as a market maker in securities, MB&D and/or certain of its employees
may, from time to time, have a long or short position in, and buy or sell debt
or equity securities of NBT or BSB for their own accounts or for the accounts of
customers of MB&D.
The full text of the opinion of MB&D, which sets forth assumptions made,
matters considered and limits on the review undertaken by MB&D, is attached
hereto as a part of Appendix B. Because the summary description of the analyses
conducted by MB&D set forth in this proxy statement/prospectus is more complete
and thorough than the summary description thereof contained in the opinion
letter, NBT stockholders are urged to read both this section of the proxy
statement/prospectus titled Opinion of NBT's Financial Advisor and the opinion
letter in Appendix B.
The MB&D opinion is directed solely to the exchange ratio at which shares
of NBT common stock will be exchanged for shares of BSB common stock. The MB&D
opinion does not constitute a recommendation to any holder of NBT common stock
as to how such holder should vote at the NBT Special Meeting.
MB&D's opinion and the analysis presented in this proxy
statement/prospectus are necessarily based upon conditions as of the date of the
opinion and upon information made available to MB&D through the date thereof. In
terms of the analytical process followed, no limitations were imposed by the NBT
board upon MB&D with respect to the investigations made, matters considered or
procedures followed by MB&D in the course of rendering its opinions.
In arriving at its oral opinion and updating the opinion for inclusion in
written form in this proxy statement/prospectus, MB&D reviewed the following
materials:
. the merger agreement by and between NBT and BSB, dated April 19, 2000,
as well as the merger agreement amendment, dated May 17, 2000;
. this proxy statement/prospectus in substantially the form to be sent
to NBT stockholders;
. BSB annual reports to stockholders for 1996, 1997, 1998 and 1999;
33
<PAGE>
. BSB annual reports on Form 10-K for 1996, 1997, 1998 and 1999;
. BSB quarterly reports on Form 10-Q for the first three calendar
quarters of 1999 and the first calendar quarter of 2000;
. NBT annual reports to stockholders for 1996, 1997, 1998 and 1999;
. NBT annual reports on Form 10-K for 1996, 1997, 1998 and 1999;
. NBT quarterly reports on Form 10-Q for the first three calendar
quarters of 1999 and the first calendar quarter of 2000;
. The NBT press release concerning unaudited results for the first
calendar quarter of 2000;
. The NBT supplemental financial statements on Form 8-K and filed on
March 31, 2000;
. the separate proxy statement/prospectus relating to the acquisition of
Pioneer American, as amended and supplemented to reference the pending
transaction with BSB;
. internal financial information and financial forecasts relating to the
business, earnings expectations, assets, liabilities, reserves for
loan and lease losses and general prospects of the respective
companies furnished to MB&D by BSB and NBT respectively;
. the recent historical record of reported prices, trading volume and
trading patterns for both BSB and NBT; and
. the recent historical record of cash and stock dividend payments for
both BSB and NBT.
In arriving at its oral opinion and updating the opinion for purposes of
this proxy statement/prospectus MB&D also completed the following:
. it held discussions with members of the senior management of BSB
concerning the past and current results of operations of BSB, its
current financial condition and management's opinion of its future
prospects;
. it 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;
. based primarily on anecdotal information, supplemented by the analysis
of certain available demographic data, it 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 BSB
and NBT in particular;
. it employed specific merger analysis models developed by MB&D to
evaluate potential business combinations of financial institutions
using both historical reported information and projected future
results, including the achievement of specific amounts of cost savings
as a result of the proposed transaction, and reviewed the results; and
. it performed such other studies and analyses as it considered
appropriate under the circumstances associated with this particular
transaction.
MB&D's opinion takes into account its assessment of general economic,
market and financial conditions and its experience in other transactions, as
well as its experience in securities valuation and its knowledge of the banking
industry generally. For purposes of rendering its opinion, MB&D has assumed
and relied upon the accuracy and completeness of the
34
<PAGE>
information provided to it by NBT and BSB and does not assume any responsibility
for the independent verification of such information. 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 NBT or BSB and has not been provided
with such valuations or appraisals from any other source. With respect to the
financial projections reviewed by MB&D in the course of rendering its opinion,
MB&D has assumed without independent verification that such projections have
been reasonably prepared to reflect the best currently available estimates and
judgment of the management of each of NBT and BSB as to the most likely future
performance of their respective companies.
The following is a summary of the material analyses employed by MB&D in
connection with rendering its 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 all the matters 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 numerous 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 NBT or BSB. Estimates which are
referred to in MB&D's analyses are not necessarily indicative of actual values
or predictive of future results or values, which may vary significantly from
those set forth.
Contribution Analysis. Based on audited reported financial data for NBT
and BSB as of December 31, 1999, and assuming for purposes of the analysis, that
the acquisition of Pioneer American had been completed as of December 31, 1999,
the relative percentage contributions by the two companies to the prospective
combined company would have been approximately as follows. The data is presented
on a pooling accounting basis as if the transaction had been completed by such
date.
Pro forma Contribution Table
As of December 31, 1999
Item NBT BSB
Assets 51.5% 48.5%
Equity 54.2 45.8
Loans (net) 46.0 54.0
Reserve for loan losses 40.3 59.7
Deposits 48.3 51.7
Net Income for 1999 59.0 41.0
Updated Contribution Analysis. Based on unaudited reported financial
data for NBT and BSB as of March 31, 2000, the relative percentage contributions
by the two companies to the prospective combined company would have been
approximately as follows. The data is presented on a pooling accounting basis,
as if the transaction had been completed as of such date.
Pro forma Contribution Table
As of March 31, 2000
Item NBT BSB
Assets 52.3% 47.7%
Equity 55.4 44.6
Loans 47.0 53.0
Reserve for loan losses 39.5 60.5
35
<PAGE>
Deposits 49.0 51.0
Reported Quarterly Income 47.9* 52.1
* Includes $1,122,000 in merger and acquisition charges related to another
transaction.
Based on the pro forma fully diluted shares outstanding for the two
companies as of March 31, 2000 and the negotiated exchange ratio, NBT
stockholders will own approximately 53% of the pro-forma shares outstanding of
the new holding company while BSB stockholders will own approximately 47%. In
light of the historical contribution to pro forma earnings and equity of NBT, as
well as the anticipated future contribution to earnings and equity, MB&D
believes that the exchange ratio of 2.0 shares of [TBD] common stock for each
share of BSB common stock and the implicit 1.0 shares of [TBD] common stock for
each share of the common stock of NBT represents a reasonable expression of
ownership interests in [TBD].
The terms of the proposed transaction call for the exchange of 2.0
shares of the common stock of [TBD] for each issued and outstanding share of
common stock of BSB (subject to certain adjustments in the event of defined
actions by NBT). Shares of BSB covered by option agreements will be converted
into options for [TBD] common stock on a basis where the number of shares and
the terms of their exercise will be adjusted to reflect the exchange ratio.
Holders of NBT common stock need not take any action to convert their shares of
NBT common stock into shares of [TBD] common stock. Similarly, no adjustments
are necessary with respect to outstanding NBT stock options. One share of NBT
common stock will be equivalent to one share of [TBD] common stock. One reason
that the exchange ratio is different for BSB stockholders than it is for NBT
stockholders reflects the fact that although the total assets and equity of the
two companies is similar, NBT has nearly twice the number of common shares
outstanding as does BSB. In addition, the exchange ratio reflects the
negotiation process. The methodology for determination of the applicable
exchange ratio was based primarily on the anticipated future contribution to
earnings by the two parties to the transaction.
Projected Values. Based upon the negotiated exchange ratio of 2.0 for 1
and projected 2001 earnings on a stand alone basis for each of the participants
(excluding non-recurring items) and giving effect to the partial realization of
anticipated cost savings during 2001, it is possible for MB&D to project a range
of possible market values for a single share of [TBD] common stock. It must be
emphasized that this is an exercise by MB&D and does not represent a projection
by either NBT or BSB as to earnings or market values for the year 2001.
Management of NBT and BSB complete annual budgets as a recurring part of their
management process. Furthermore, while engaging in various strategic planning
exercises the respective management teams have in the past looked out more than
one year ahead to estimate possible earnings scenarios. However, they do not
make earnings per share estimates with specificity (even for internal purposes)
farther out than one year. It should be further noted that cost savings and
income enhancements are anticipated to result from the contemplated transaction.
If realized, such cost savings and income enhancements may result in higher
earnings per share values than those used in this exercise. If not realized, or
if realized on a time table that is slower than expected, the earnings per share
estimates used in MB&D's exercise may be higher than actual results resulting in
projected stock prices which could be too high. It should also be recognized
that future trading price/earnings ratios for the common stocks of financial
institutions might be higher or lower than the mean and median derived from the
comparison group examined for this exercise. The use of bank comparison group
price/earnings multiples and forecast earnings for both NBT and BSB to attempt
to estimate a probable trading value range for a share of [TBD] common stock is
a forward looking theoretical exercise. The earnings of financial institutions
are subject to the influence of a variety of factors such as the level of
interest rates, the shape of the yield curve, the state of the national economy,
the state of the local economy (or economies) in which the institutions are
doing business, the credit quality of earning assets and related adequacy of
reserves for loan losses and a variety of other factors, a number of which are
interrelated and many of which are neither controlled nor controllable, by
management or the board of directors. Assuming that the merger is completed
prior to the end of the year 2000, the year 2001 will be the first complete year
of combined operations for [TBD] and
36
<PAGE>
will reflect partial realization of anticipated expense savings and income.
Based on information supplied by NBT and BSB, MB&D estimates that EPS for the
year 2001 for [TBD] will fall in a range of from $1.28 per share to $1.41 per
share. This estimate is the result of work completed by MB&D and although it has
been discussed with the management of NBT, does not constitute an estimate by
the management of either NBT or BSB. The following tables (see tables 1, 2 and
3) evaluate a range of theoretical possible EPS results based on the mean and
the median price/earnings ratios for a comparison group consisting of 20
selected bank holding companies as of May 24, 2000 (see table 1). The companies
chosen for comparison are domestic bank holding companies ranging in size from
$3.5 billion to $6.9 billion, selected from the Mid-Atlantic, Midwest and
Northeast banking markets. MB&D believes that these companies represent a
reasonable comparison group for purposes of examining trading price/earnings
ratios. None of the companies are identical to [TB&D] and none of the examined
companies are identical to any other company in the comparison group. We have
employed the described information to generate possible trading values for a
share of [TBD] at some point in 2001. Thereafter, one can compare such possible
market values of a share of [TBD] common stock to the reported closing market
price for NBT as of April 19, 2000. Each step involved in creating such an array
of hypothetical values involves the use of estimates, assumptions and
statistical measures of data. Although MB&D has attempted to estimate with care
and has considered the assumptions at length, the possibility of errors arising
from such a process is implicit. The results consequently should be understood
to illustrate possible outcomes.
Table 1 (This table will be updated just prior to printing)
Selected Mid-Atlantic, Northeast and Midwest Bank Holding Companies Comparison
Group
<TABLE>
<CAPTION>
Price/
Est.
Total 06-08-00 Price/ 2000
Assets Price EPS/*/ EPS
Company Name Ticker State ($000) ($) (x) (x)
<S> <C> <C> <C> <C>
AMCORE Financial, Inc. AMFI IL 4,369,639 19.859 13.70 11.75
Chittenden Corporation CHZ VT 3,839,034 28.188 NM 11.55
Commerce Bancorp, Inc. CBH NJ 6,926,821 48.938 21.85 19.65
Community First Bankshares, Inc. CFBX ND 6,248,153 17.000 11.18 10.00
F.N.B. Corporation FBAN PA 3,762,325 19.000 10.67 10.00
First Commonwealth Financial FCF PA 4,321,165 9.250 10.63 10.76
First Financial Bancorp. FFBC OH 3,972,272 18.375 16.70 14.13
First Midwest Bancorp, Inc. FMBI IL 5,768,724 24.313 14.05 13.29
Fulton Financial Corporation FULT PA 6,129,914 20.875 15.35 13.82
Provident Bankshares Corporation PBKS MD 5,247,507 14.125 8.51 8.07
Republic Bancorp Inc. RBNC MI 4,407,911 9.875 28.21 8.82
Riggs National Corporation RIGS DC 5,630,669 14.063 11.34 11.43
Susquehanna Bancshares, Inc. SUSQ PA 4,833,998 13.875 11.66 9.38
Trust Company of New Jersey (The) TCNJ NJ 3,573,928 18.500 12.17 NA
Valley National Bancorp VLY NJ 6,292,744 25.750 15.33 14.63
Mean 5,021,654 14.4 11.9
Median 4,833,998 12.9 11.5
</TABLE>
---------------------
/*/ Price divided by last four quarters reported earnings.
37
<PAGE>
Applying the comparison group mean and median P/E multiples to the
estimated minimum and maximum EPS results generates the following results:
Table 2
Derived Price based on minimum earnings estimate for 2001 of $1.28
<TABLE>
<CAPTION>
P/E Derived P/E 2000 X Derived
market market
price price
<S> <C> <C> <C> <C>
Mean 14.4 $18.40 11.9 $15.20
Median 12.9 $16.50 11.5 $14.70
</TABLE>
Table 3
Derived Price based on maximum earnings estimate for 2001 of $1.41
<TABLE>
<CAPTION>
P/E Derived P/E 2000 X Derived
LTM X market market
price price
<S> <C> <C> <C> <C>
Mean 14.4 $20.30 11.9 $16.60
Median 12.9 $18.20 11.5 $16.20
</TABLE>
The italicized and underlined values represent the maximum and minimum
values generated utilizing the methodology described. The mid-point between the
lowest value from table 2 and the highest value from table 3 is $17.50. The
lowest value ($14.70) is derived from the median P/E ratio from the comparison
group multiplied by the low earnings estimate. The highest value ($20.30) is
derived from multiplying the mean P/E ratio from the comparison group times the
high earnings estimate.
It should be understood that the trading value of a share of [TBD] common
stock in the future is subject to a large number of variables, including
significant factors, which are beyond the control of the management of either
NBT or BSB. Such factors are equally beyond the capabilities of MB&D to
accurately predict. The tables above, consequently, should be understood to
depict possible outcomes and are based on assumptions, which may not prove to be
accurate in the future. We are comfortable however, that to the extent our
assumptions are accurate, the projected maximum and minimum market prices
derived from the means and medians depicted in the above tables 2 and 3 will
encompass a probable trading range for [TBD] common stock at some point during
the year 2001, absent a dramatic further change (upward or downward) in general
P/E ratios for the equity securities of financial institutions. Consequently,
based on the highest and lowest earnings estimates for [TBD] in 2001 together
with the highest mean and lowest median of the comparison group multiples, MB&D
derives a minimum expected price of $14.70 and a maximum expected price of
$20.30 as the result of this exercise. Accordingly, subject to the noted
caveats, MB&D would expect [TBD] common stock to trade at a level which would
fall somewhere between such minimum and maximum values at some point in 2001.
The subject transaction, a "merger of equals," is one in which control of
two publicly traded financial institutions is proposed to be combined on a basis
in which the respective prior stockholder ownership groups receive shares in the
pro forma entity on a basis of anticipated relative contribution to earnings in
future periods.
Multiple of Earnings for NBT Common Stock. The maximum cited theoretical
value of $20.30 represents a multiple of 14.20 times reported earnings per share
for 1999, which were $1.43. The minimum cited projected value of $14.70 is the
equivalent of 10.28 times reported earnings per share for 1999. The maximum and
minimum projected values represent 16.92 times and 12.25 times estimated NBT
stand-alone earnings per share for 2000 and 15.03 times and 10.88 times
estimated earnings for 2001 for [TBD]. The estimates referred to have been
developed by MB&D.
38
<PAGE>
Multiple of Book Value of NBT Common Stock. The cited theoretical maximum
and minimum values of $20.30 and $14.70 represent multiples of 2.44 and 1.76
times NBT's reported $8.33 book value per share as of March 31, 2000.
Percentage of Market Value of NBT Common Stock. Based upon the mid point
between the cited theoretical values of $20.30 and $14.70 or $17.50 which is
greater than the last reported trade of NBT common stock as of the day prior to
the announcement of the transaction, the cited mid-point value represents 145%
of the last reported trade for NBT common stock which was $12.00 on such date.
The cited theoretical mid-point value consequently represents a 45% premium from
the last reported trade for NBT common stock as of April 19, 2000. As of
July___, 2000 (the trading date most proximate to the mailing of this document
to stockholders), the last reported trade for NBT common stock was $______.
Consequently, the difference between the mid-point between the cited theoretical
values and the actual trading value as of such date was $_______ or _____%.
Specific Acquisition Analysis. MB&D employs a proprietary analysis model
to examine hypothetical transactions involving banking and/or thrift 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 alternative or combined uses of common equity, cash, debt or
other securities, to fund a transaction). The model distinguishes between
purchase and pooling accounting treatments and inquires into the likely economic
feasibility of a given hypothetical 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 that might be achieved and various potential implementation
timetables for such savings as well as the possibility of income enhancement
opportunities, which may arise in a given hypothetical transaction. The model
also permits an examination of pro forma capital adequacy.
In this transaction, a "merger of equals" which is a transaction in which
the resulting ownership interests for stockholders is based largely on the
anticipated contribution to future earnings by the respective parties, MB&D
evaluated an exchange ratio of 2:1 for BSB and an implicit 1:1 for NBT in a
transaction which is to be accounted for as a pooling of interests. We believe
that the proposed transaction viewed from the vantage point of an NBT
stockholder will be feasible from an earnings per share dilution perspective,
generating a modest amount of nominal dilution (less than 2.0% per share) to
expected earnings (excluding transaction costs and other non-recurring items)
for 2000. Our calculations demonstrate that such modest dilution can be
eliminated by a reduction of less than 2.5% of the combined annualized run rate
for non-interest expense for the two companies (excluding non-recurring items).
We believe, and management of NBT concurs, that such an objective is achievable
for the participants and that the transaction has the capability to become not
only neutral to earnings per share, but accretive to earnings per share from the
vantage point of a NBT stockholder on a cost savings basis alone. NBT has
established a cost savings goal equal to $7.4 million annually, which represents
approximately 6.6% of the combined annualized run rate for non-interest expense.
In addition to anticipated cost savings, MB&D also anticipates that income
improvements will be achieved as [TBD] and [TBD Bank], for example, offer the
combined services of a financial services subsidiary which encompasses a
substantial trust business and a brokerage business, with selected insurance
powers. We are also satisfied that the proforma capitalization of [TBD] and the
[TBD Bank] subsidiaries will be adequate after the completion of the
transaction.
Discounted Cash Flow Analysis. MB&D reviewed a discounted cash flow
analysis to permit the conceptual examination of the present discounted values
of potential future results employing selected assumptions and discount rates.
In the discounted cash flow analysis, MB&D reviewed a proprietary discounted
cash flow model with the management of NBT that employed a projection of
hypothetical earnings for NBT on an independent stand-alone basis for calendar
years 2000 through 2003. A similar exercise was completed for the hypothetical
combination of NBT and BSB (giving due consideration to the expected realization
of identified potential cost savings) for the same period. As part of each
exercise, a hypothetical dividend payout ratio assumption which depicted average
annual payouts as a percentage of earnings was used to project dividend streams
which would be available to stockholders. MB&D employed a range of possible
future market trading price/earnings ratios ranging from a minimum of 9 times
earnings to a maximum of 15 times earnings in order to project possible future
trading values for a share of either NBT common stock on an independent basis or
an equivalent amount of
39
<PAGE>
[TBD] common stock reflecting the negotiated exchange ratio. Given the model
time horizon and a range of discount rates running from 12% to 14%, these
assumptions resulted in an array of present discounted values for a share of NBT
common stock on an independent basis. Such values ranged from $11.56 to $18.81
and include consideration of the present discounted value of the projected
stream of cash dividends, which might be received by a stockholder during the
cited period. The same exercise completed for the hypothetical [TBD] generated
an array of present discounted values, using the same range of multiples and
discount rates, which ranged from $11.85 to $19.29. These values represent the
discounted present values of the sum of the future possible trading values of
the equivalent of one share of [TBD] common stock plus the discounted value of
the stream of cash dividends which are projected to have been received between
the present and the future valuation date at the end of 2003. The discount rates
employed represent the sum of a factor for the time value of money and a range
of factors representing different risk premiums. In each case reviewed, the full
range of present discounted values for the hypothetical combination of NBT and
BSB as [TBD], exceeded the full range of present discounted values for NBT on a
stand-alone basis. (See table 4) It is also of interest that the projected value
analysis (discussed on page _____), utilizing MB&D forecast earnings and
comparison group derived earnings multiples generated a maximum projected
trading value in 2001 for {TBD} of $20.30 and a minimum projected trading value
for [TBD] in 2001 of $14.70. (See tables 2 and 3) The mid-point between the
maximum and minimum discounted cash flow values derived for the stock of [TBD],
which is $15.57, falls within and below the mid-point of the trading range
projected. (See table 4).
Table 4
Discounted Cash Flow Analysis
Future earnings multiples
NBT on a stand-alone basis
<TABLE>
<CAPTION>
================================================
Discount rates 9X 11X 13X 15X
================================================
<S> <C> <C> <C> <C>
12% $12.08 $14.33 $16.57 $18.81
================================================
13% $11.82 $14.00 $16.18 $18.37
================================================
14% $11.56 $13.69 $15.81 $17.94
================================================
</TABLE>
Future earnings multiples
[TBD]
<TABLE>
<CAPTION>
Discount rates 9X 11X 13X 15X
================================================
<S> <C> <C> <C> <C>
12% $12.38 $14.68 $16.99 $19.29
================================================
13% $12.11 $14.35 $16.59 $18.84
================================================
14% $11.85 $14.03 $16.21 $18.40
================================================
</TABLE>
The point of a discounted cash flow exercise is not to make a precise estimate
of the price at which either NBT, on a stand-alone basis, or [TBD] will be
trading at a specified point in the future. MB&D acknowledges that with the
large number of variables involved, including many that are beyond the control
of management, such predictions with any degree of precision are well beyond the
capability of MB&D, NBT or BSB. Rather, the point of the exercise is to employ
"feasible" future point earnings estimates to complete an analysis designed to
test a hypothesis that the result of one course of action (completing the
merger), is likely to be better over time than another (not completing the
merger). In our opinion, the results of the present discounted cash flow
analysis provide comfort that the stockholders of NBT are likely to be better
off (from a financial point of view) as a result of completing the pending
transaction with BSB than they would likely be by remaining an independent
financial institution. The most important factor which will influence the
degree to which such stockholders are likely to be better off having completed
the transaction than they might have been on a continued independent basis will
be the degree to which the projected cost savings are realized or exceeded and
the time-table within which such realization is completed.
40
<PAGE>
The discount factors employed embody both the concept of a time value of
money and a range of risk factors that reflect the uncertainty of the forecast
cash flows and terminal price/earnings multiples. Use of higher discount rates
would result in lower discounted present values. Conversely, use of lower
discount rates would result in higher discounted present values. At the same
time, use of projected P/E multiples greater than 15 times, would result in
higher present discounted values and the use of projected P/E multiples lower
than 9 times, would result in lower present discounted values. MB&D advised the
NBT board of directors that although discounted cash flow analysis is a
regularly used valuation methodology, it relies on a large number of
assumptions, including discount rates, terminal trading multiples, future
earnings performance, the realization of projected cost savings as well as
projected dividend payout ratios. While MB&D has endeavored to thoughtfully
specify its assumptions, the accurate specification of such assumptions for time
periods more than one year in the future is a very difficult process and
contains a possibility of error. Consequently, any or all of the assumptions
used may vary from actual future events and results. Any errors made in the
selection of assumptions for such an exercise can interact with one another and
can lead to conclusions, which may demonstrate little resemblance to actual
future results.
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 analyses
can fail to adequately take into consideration such factors as:
. material differences in the underlying capitalization of the
compared institutions which are being acquired which can distort
reported multiples of book value for a given transaction relative
to transactions to which it is being compared;
. differences in the historic earnings (or loss) patterns recorded
by the compared institutions which can depict very different
trends than might be implied by examining only recent reported
financial results;
. failure to adjust for non-recurring profit or loss items in the
historical earnings streams of target companies in a pending
transaction relative to the presence or absence of such
adjustments in the earnings streams of the target companies in
transactions to which they are being compared. This can lead to
material distortions in the apparent earnings multiples being
compared;
. material differences in the form or forms of consideration
proposed to complete the pending transaction relative to the
transaction(s) to which it is being compared;
. differences between the planned method of accounting for the
contemplated transaction and the planned method of accounting for
the transaction(s) to which it is being compared;
. failure to take into consideration 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;
. comparable analysis generally cites transaction multiples and
premiums as of the date of announcement only and often fails to
adjust such multiples and premiums for subsequent changes in the
trading values of the securities of the acquirers. MB&D believes
that this failure can render such comparisons (which are already
subject to question), virtually meaningless. This is particularly
the case where there has been a material general adjustment in
the equity prices of financial institutions between the date of
announcement for the pending transaction and the date(s) of
announcement for the transaction(s) to which it is being
compared. There has been a continuing broad based downward
adjustment in the equity trading prices of financial institutions
since the announcement of the subject transaction that renders
such announcement date comparisons more
41
<PAGE>
than usually suspect. Consequently any use of comparable analysis
requires that updating market price adjustments must be made;
. Another problem associated with the use of market based multiples
associated with "comparable" transactions has to do (particularly
in this case) with the relative paucity of recent "merger of
equals" transactions to which to compare the subject transaction.
We experienced difficulty in specifying transactions announced
within the past three years in the geographic area within which
the subject companies are doing business. Transactions announced
more than three years ago are likely to have occurred in the
context of substantively different market for the equity
securities of financial institutions than the market context in
which the subject transaction was negotiated. This raises
appropriate questions as to the relevance of comparables dating
back to an earlier period;
. comparable analysis rarely seems to take into consideration the
degree of facilities overlap between the acquirer's market and
that of the target for the pending transaction and the presence
or absence of such overlap for the transaction to which it is
being compared. Consequently potentially significant cost savings
opportunity differentials between two otherwise apparently
comparable transactions may be ignored;
. comparable analysis also generally fails to incorporate the
projected impact of deposit divestitures that may be required by
regulators in a given transaction and which are not required in a
so-called comparable transaction; and
. comparable analysis is heavily dependent on the comparison of
various measures of premiums associated, most frequently, with
the outright acquisition of one company by another. The subject
transaction has been structured as a type of merger of equals in
which the ownership structure and resulting exchange ratio have
been negotiated to reflect the expected contribution to earnings
by each of the respective parties. MB&D believes that comparable
analysis presents more difficulties than usual in such cases.
Obtaining the necessary information to permit adjustments to reflect some
of the above factors can be difficult and is often not possible. Also, since
certain of the adjustments must necessarily be subjective in nature, it is
probably not possible to apply such adjustments on a consistent basis in
separate cases. Consequently, for the multiple reasons cited, MB&D believes
that comparable analysis has inherent limitations and should not be relied on to
any material extent in an evaluation of the subject transaction. Conclusions
from such an analysis that fails to give appropriate consideration to the issues
enumerated can range from misleading to simply meaningless. Accordingly, MB&D
would caution members of management, the board of directors and shareholders of
NBT not to place excessive emphasis on the results of comparable analysis in the
process of considering the presumed merits of this transaction, regardless of
whether or not the purported comparisons show the subject transaction in a
favorable or an unfavorable light.
In spite of MB&D's reservations concerning the utility and meaning of
comparables analysis, MB&D compiled information for a selection of "merger of
equals" transactions that are, in theory, comparable to the pending transaction.
Table 5 lists the transactions to which the pending transaction is compared.
The specification of which entity has been the buyer and which the seller is
usually difficult in "mergers of equals" transactions. MB&D generally specified
the entity that enjoyed a 1:1 exchange ratio as the buyer, but not in every
case. In MB&D's opinion, the term buyer and seller are not particularly
meaningful in such transactions, anyway. Table 6 lists selected statistics
concerning both the pending transaction and the mean and median values for the
compared transactions.
42
<PAGE>
Table 5
Merger of Equals Transactions
<TABLE>
<CAPTION>
Buyer Name Seller Name Seller Seller Assets Date Annc'd deal
State $(000) Annc'd. value
$(Millions)
<S> <C> <C> <C> <C> <C> <C>
1 National Commerce CCB Financial Corp. NC 8,186,298 03-20-2000 1,926.9
Bancorporation
2 BankIllinois Financial First Decatur IL 461,133 08-13-1999 111.2
Corporation Bancshares
Incorporated
3 Santa Barbara Bancorp Pacific Capital Bancorp CA 783,474 07-20-1998 302.3
4 Citizens Bancshares Inc. Mid Am Inc. OH 2,239,113 05-21-1998 650.0
5 Heritage Bancorp, Inc. BCB Financial Services PA 440,890 11-19-1997 78.1
Corp
6 First Chicago Corporation NBD Bancorp, Inc. MI 47,755,844 07-12-1995 5,107.0
7 Southern National BB&T Financial NC 9,878,471 08-01-1994 932.8
Corporation Corporation
8 KeyCorp Society Corporation OH 25,919,760 10-04-1993 4,039.6
9 Comerica Incorporated Manufacturers National MI 12,506,902 10-28-1991 1,147.4
Corporation
10 Planters Corporation Peoples Bancorporation NC 1,263,119 01-17-1990 106.5
NBT Bancorp Inc. BSB Bancorp Inc. NY 2,240,948 04-20-2000 248.7
</TABLE>
43
<PAGE>
Table 6
Statistics for the "Compared transactions"
<TABLE>
<CAPTION>
Data at announcement Data adjusted for market changes/1/
"Buyer" "Seller" P/B/2/% P/TB/3/% P/EPS/4/ P/B% P/TB% P/EPS
<S> <C> <C> <C> <C> <C> <C>
National Commerce CCB Financial 265.15 271.26 12.90 229.81 235.11 11.18
BankIllinois Financial First Decatur 201.45 NA 18.61 169.65 NA 15.67
Santa Barbara Bancorp Pacific Capital 361.95 373.43 26.11 289.02 298.18 20.85
Citizens Bancshares MidAm 164.41 173.67 9.840 192.78 203.63 11.53
Heritage Bancorp, Inc. BCB Financial 236.04 236.04 25.51 91.19 91.19 9.86
First Chicago NBD Bancorp 146.53 162.18 9.13 135.26 149.70 8.43
Southern National BB&T 138.16 144.96 9.82 175.77 184.42 12.49
KeyCorp Society Corp 196.02 230.50 10.73 117.61 138.30 6.44
Comerica Manu. National .45 .48 3.09 155.03 165.80 10.62
Planters Corporation Peoples 125.21 135.65 8.90 260.24 281.95 18.49
Mean 183.54 192.02 13.46 181.64 194.25 12.56
Median 180.22 173.67 10.29 172.71 184.42 11.36
NBT Bancorp Inc. BSB Bancorp Inc. 158.84 160.54 13.56 136.50 137.96 11.65
Variance from mean -24.7 -31.48 .10 -45.14 -56.29 -.91
Variance from median -21.38 -13.13 3.27 -36.21 -46.46 .29
</TABLE>
For the numerous reasons stated, MB&D is willing to provide the above
information but is not comfortable drawing any conclusions based on such
comparisons.
Other Factors. MB&D has given consideration to a number of additional
factors associated with the pending transaction, which it believes are generally
favorable from the point of view of an NBT shareholder. Completion of this
transaction will give NBT access to markets, which display demographics, which
are similar to, and are, in some cases, superior to, the market demographics
associated with markets currently served by NBT. The significant pro forma
deposit share of [TBD] in selected markets suggests the possibility of
meaningful cost savings associated with item processing, data processing and
advertising. The pending transaction will create potentially positive
opportunities associated with the capacity to offer a generally broader array of
products across banking subsidiaries in two states with respect to the
generation of earning assets and the deposit liabilities that fund them. MB&D
believes that the exchange ratio negotiated reflects a reasonable share of
ownership for NBT shareholders based on both historic and projected future
contribution analyses. MB&D has also given consideration to possible
qualitative differences in the relative asset quality of the loan portfolios of
the two participants. The
----------------------
/1/ Formulas are as described below with market values adjusted to reflect
recent market prices.
/2/ Depicts transaction price at time of announcement divided by book value.
/3/ Depicts transaction price at time of announcement divided by tangible book
value.
/4/ Depicts transaction price at time of announcement divided by trailing 4
quarters EPS.
44
<PAGE>
definitive agreement contains provisions designed to permit NBT to satisfy
itself that conformity exists at BSB with respect to both the classification of
assets and the methodology employed to specify required reserves for possible
loan and lease losses as a condition that must be satisfied prior to closing of
the pending transaction. MB&D has assumed that NBT will take advantage of such
terms to the extent that, in the opinion of NBT, they prove to be necessary.
Key members of current NBT management will have meaningful defined roles in
the management of the pro forma entity including the positions of chairman,
president and chief executive officer of [TBD], the position of president of
[TBD Bank] (the merged New York banking subsidiary), the position of president
of Pennbank (the merged Pennsylvania banking subsidiary) and the position of
chief financial officer of [TBD]. The current president of the NBT financial
services subsidiary will also continue as president of the financial services
subsidiary of [TBD]. Initially, former NBT stockholders will be represented by
eight of fifteen directors on the board of directors of [TBD]. MB&D anticipates
that the pro forma entity (approaching $5 billion in total assets) will be a
more visible financial institution in the financial markets and is likely to
attract research coverage by a larger number of equity analysts and greater
interest by institutional investors. The occurrence of research coverage by a
larger number of equity analysts or the development of greater interest in the
company by institutional investors each would tend to generate greater trading
liquidity over time, than has been the case for NBT on a stand-alone basis.
MB&D also believes that NBT stockholders will sustain and eventually increase
their prospects for annual cash dividends based upon current and projected
earnings streams and growth expectations for the combined entities. MB&D
believes that each of the enumerated factors is favorable viewed from the
perspective of NBT stockholders.
MB&D has delivered to the Board of Directors of NBT its opinion, as of
July______, 2000 that the exchange ratio is fair, from a financial point of view
to NBT's stockholders. The opinion appears in Appendix B of this document and we
recommend that stockholders read it.
Compensation of MB&D
Pursuant to a letter agreement with NBT dated April 12, 2000, MB&D will
receive a fee of $2,000,000 in connection with the completion of the pending
transaction. The fee is payable in three specific payments each conditioned on
and related to the completion of specified events. MB&D was paid $250,000
after the execution of the Agreement and Plan of Merger for the pending
transaction with BSB and will be paid an additional $250,000 upon issuance of
its Opinion to be included as an exhibit to this Proxy Statement/Prospectus.
Payment of the balance of the fee (75% of the total), an amount equal to
$1,500,000, is conditioned on the closing of the transaction, the receipt of
all required regulatory approvals and the approval of shareholders. The fee
represents compensation for services rendered in connection with the analysis of
the hypothetical transaction, support of the negotiations and for the rendering
of MB&D's Opinions. In addition, NBT has agreed to reimburse MB&D for 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
MB&D's engagement, including liabilities under the federal securities laws.
Opinion of BSB's Financial Advisor
On April 19, 2000, BSB signed an engagement letter with KBW whereby KBW was
engaged to act as its financial advisor and to render an opinion as to the
fairness, from a financial point of view, to BSB stockholders of the merger
consideration to be received in connection with the proposed merger. Pursuant
to the terms of its engagement, KBW agreed to assist BSB in analyzing,
structuring, negotiating and effecting a transaction with NBT. BSB selected KBW
because KBW is a nationally recognized investment banking firm with substantial
experience in transactions similar to the merger and is familiar with BSB and
its business. As part of its investment banking business, KBW is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions.
Representatives of KBW participated in a meeting of the BSB board held on
April 17, 2000 at which the BSB board considered the merger agreement and
presented its financial analyses of the merger. Subsequently, KBW participated
in a telephonic board meeting on April 19, 2000 at which the BSB board
considered and approved the merger agreement. During the April 19, 2000 meeting,
KBW rendered an oral opinion (subsequently confirmed in writing) that, as of
such date, the exchange ratio was fair to the holders of shares of BSB common
stock from a financial point of view. Such opinion was reconfirmed in writing
as of the date of this proxy statement/prospectus.
45
<PAGE>
KBW's opinion of April 19, 2000 has been updated for purposes of this proxy
statement/prospectus. The full text of KBW's opinion dated as of the date of
this proxy statement/prospectus is attached as Appendix C to this proxy
statement/prospectus and is incorporated herein by reference. The description
of the opinion set forth herein is qualified in its entirety by reference to
Appendix C. BSB stockholders are urged to read the opinion in its entirety for
a description of the procedures followed, assumptions made, matters considered,
and qualifications and limitations on the review undertaken by KBW in connection
therewith.
KBW'S OPINION IS DIRECTED TO THE BSB BOARD AND ADDRESSES ONLY THE EXCHANGE
RATIO. IT DOES NOT ADDRESS THE UNDERLYING BUSINESS DECISION TO PROCEED WITH THE
MERGER AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY BSB STOCKHOLDER AS TO HOW
SUCH STOCKHOLDER SHOULD VOTE AT THE SPECIAL MEETING WITH RESPECT TO THE MERGER
OR ANY OTHER MATTER RELATED THERETO.
In connection with rendering its opinion, KBW reviewed:
. BSB's annual reports on Form 10-K and related audited financial
information for the three fiscal years ended December 31, 1999;
. NBT's annual reports on Form 10-K and related audited financial
information for the three fiscal years ended December 31, 1999;
. preliminary interim financial information for BSB and NBT for the
quarters ended March 31, 2000;
. certain limited financial information, including financial
forecasts, relating to the respective businesses, earnings,
assets and prospects of BSB and NBT furnished to KBW by senior
management of BSB and NBT as well as projected cost savings
estimates and transaction related expenses expected to result
from the merger furnished to it by senior management of BSB and
NBT;
. the historical market prices and trading activity for BSB common
stock and NBT common stock and a comparison of such prices with
that of certain publicly traded companies which KBW deemed to be
relevant;
. the respective results of operations of BSB and NBT as compared
to those of certain companies which KBW deemed to be relevant;
. the proposed financial terms of the merger contemplated by the
merger agreement as compared to the financial terms of certain
other mergers and acquisitions which KBW deemed to be relevant;
. the amount and timing of the expected savings following the
merger as prepared, and discussed with KBW, by senior management
of BSB;
. based upon information provided by BSB's senior management, the
pro forma impact of the merger on the earnings and book value per
share, consolidated capitalization and certain balance sheet and
profitability ratios of BSB;
. the merger agreement and the exhibits thereto;
46
<PAGE>
. the stock option agreements;
. such other financial studies and analyses, such other BSB
investigations and such other matters as KBW deemed necessary;
and
. certain limited discussions with members of senior management of
BSB and NBT concerning the respective businesses, financial
condition, earnings, assets, liabilities, operations, regulatory
condition, financial forecasts, contingencies and prospects of
BSB and NBT and their respective views as to the future financial
performance of BSB, NBT, and the combined company, as the case
may be, following the merger.
In preparing its opinion, KBW also reviewed the quarterly reports on Form
10-Q for BSB and NBT for the quarter ended March 31, 2000, and certain publicly
released earnings information for NBT for the quarter ended June 30, 2000.
In preparing its opinion, KBW, with BSB's consent, assumed and relied on
the accuracy and completeness of all financial and other information supplied or
otherwise made available to it by BSB and NBT, including that contemplated in
the items above, and KBW has not assumed responsibility for independently
verifying such information or undertaken an independent evaluation or appraisal
of the assets or liabilities, contingent or otherwise, of BSB or NBT or any of
their subsidiaries, nor has it been furnished any such evaluation or appraisal.
KBW is not an expert in the evaluation of allowances for loan losses, and, with
BSB's consent, it has not made an independent evaluation of the adequacy of the
allowance for loan losses of BSB or NBT, nor has it reviewed any individual
credit files relating to BSB or NBT, and has assumed that the respective
aggregate allowances for loan losses for both BSB and NBT are adequate to cover
such losses and will be adequate on a pro forma basis for the combined company.
In addition, it has not conducted any physical inspection of the properties or
facilities of BSB or NBT. With BSB's consent, KBW also assumed and relied upon
the senior management of BSB and NBT as to the reasonableness and achievability
of the financial forecasts (and the assumptions and bases therefor) provided
to, and discussed with, KBW. In that regard, KBW has assumed that such
forecasts, including without limitation, financial forecasts, evaluations of
contingencies, expected savings and operating synergies resulting from the
merger and projections regarding underperforming and non-performing assets, net
charge-offs, adequacy of reserves, future economic conditions and results of
operations reflect the best currently available estimates and judgments of the
senior management of BSB and NBT and/or the combined company, as the case may
be. KBW's opinion is predicated on the merger receiving the tax and accounting
treatment contemplated in the merger agreement. KBW's opinion was based
necessarily on economic, market and other conditions as in effect on, and the
information made available to it as of, the date of its opinion.
KBW's opinion was rendered without regard to the necessity for, or level
of, any restrictions, obligations, undertakings or divestitures which may be
imposed or required in the course of obtaining regulatory approval for the
merger.
In connection with rendering its opinion, dated April 19, 2000, KBW
performed a variety of financial analyses consisting of those summarized below.
The summary set forth below does not purport to be a complete description of the
analyses performed by KBW in this regard, although it describes all material
analyses performed by KBW. The preparation of a fairness opinion involves
various determinations as to the most appropriate and relevant methods of
financial analysis and the application of these methods to the particular
circumstances and, therefore, such an opinion is not readily susceptible to a
partial analysis or summary description. Accordingly, notwithstanding the
separate factors summarized below, KBW believes that its analyses must be
considered as a whole and that selecting portions of its analyses and factors
considered by it, without considering all analyses and factors, or attempting to
ascribe relative weights to some or all such analyses and factors, could create
an incomplete view of the evaluation process underlying KBW's opinion.
In performing its analyses, KBW made numerous assumptions with respect to
industry performance, general business and economic conditions and other
matters, many of which are beyond the control of BSB, NBT and KBW. The analyses
performed by KBW are not necessarily indicative of actual values or future
results, which may be significantly more or less favorable than suggested by
such analyses. Such analyses were prepared solely as part of KBW's analysis of
the fairness to the stockholders of BSB of the exchange ratio and were provided
to the BSB board of directors in connection with the delivery of
47
<PAGE>
KBW's opinion. KBW gave the various analyses described below approximately
similar weight and did not draw any specific conclusions from or with regard to
any one method of analysis. With respect to the comparison of selected companies
analysis and the analysis of selected merger transactions summarized below, no
company utilized as a comparison is identical to BSB or NBT. Accordingly, an
analysis of comparable companies and comparable business combinations is not
mathematical; rather it involves complex considerations and judgments concerning
the differences in financial and operating characteristics of the companies and
other factors that could affect the public trading values or announced merger
transaction values, as the case may be, of the companies concerned. The analyses
do not purport to be appraisals or to reflect the process at which BSB and NBT
might actually be sold or the prices at which any securities may trade at the
present time or at any time in the future. In addition, as described above,
KBW's opinion is just one of many factors taken into consideration by the BSB
board.
The projections furnished to KBW and used by it in certain of its analyses
were prepared by the senior management of BSB and NBT. BSB and NBT do not
publicly disclose internal management projections of the type provided to KBW in
connection with its review of the merger, and as a result, such projections were
not prepared with a view towards public disclosure. The projections were based
on numerous variables and assumptions which are inherently uncertain, including,
without limitation, factors related to general economic and competitive
conditions, and accordingly, actual results could vary significantly from those
set forth in such projections.
The following is a summary of the material analyses performed by KBW in
connection with KBW's opinion.
Analysis of Selected Merger Transactions. KBW reviewed certain financial
data related to fourteen acquisitions of northeastern bank holding companies
announced between January 1, 1999 and April 14, 2000 with announced deal values
from $50 million to $1 billion. The transactions included in the group were as
follows:
Niagara Bancorp / Iroquois Bancorp
Sterling Financial / Hanover Bancorp
Mercantile Bankshares / Union National Bancorp
NBT Bancorp / Pioneer American
Summit Bancorp / NMBT Corp.
Staten Island Bancorp / First State Bancorp
NBT Bancorp / Lake Ariel Bancorp
Tompkins Trustco / Letchworth Independent
Webster Financial / New England Community
Hudson United / So. Jersey Bancorp of Delaware
Hudson United / JeffBanks
Peoples Heritage Financial Group / Banknorth Group
Summit Bancorp / Prime Bancorp
Independent Community Bank / Broad National Bancorp
BB&T Corporation / Mason-Dixon Bankshares.
Comparisons were based on both announced transaction values and adjusted
values, calculated by adjusting the announced value proportionately with the
interim change in the buyer's stock price for those transactions in which stock
was issued. The results of KBW's review are set forth in the following table:
Announced Announced Adjusted Adjusted
Average Median Average Median
------- ------ ------- ------
Deal Price / Book Value 256% 261% 190% 199%
Deal Price / Tangible 270% 285% 200% 210%
Book Value
Deal Price / Trailing
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<PAGE>
12 Months Earnings per 21.88x 21.68x 16.32x 15.96x
Share
Deal Price / Forward 18.86x 18.45x 14.10x 14.17x
Earnings per Share
Deal Price / Total Assets 20.73% 20.10% 15.43% 14.22%
Core Deposit Premium 19.92% 20.51% 14.62% 13.74%
No company or transaction used as a comparison in the above analysis is
identical to BSB, NBT or the merger. KBW noted when presenting the preceding
analysis that it was indicative of pricing multiples associated with sale of
control transactions, as opposed to mergers of equals. Accordingly, an analysis
of the results of the foregoing is not mathematical; rather, it involves complex
considerations and judgments concerning differences in financial and operating
characteristics of the companies and other factors that could affect the public
trading value of the companies to which they are being compared.
Analysis of Additional Merger Transactions. KBW reviewed certain financial
data related to selected nationwide acquisitions of bank holding companies in
which a sale premium and significant social considerations were obtained by the
seller, and selected nationwide mergers of equals. Comparisons were then made
to data related to the merger. The transactions included in the premium
acquisition group were:
National Commerce / CCB Financial
Peoples Heritage Financial Group / Banknorth Group
AmSouth Bancorp / First American
Firstar Corp. / Mercantile Bancorp
SunTrust Banks / Crestar Financial
Star Banc Corp. / Firstar Corp.
Regions Financial Corp. / First Commercial
First Bank System / US Bancorp
UJB Financial / Summit Bancorp
The transactions included in the mergers of equals group were:
Fleet Financial / BankBoston
Wells Fargo / Norwest Corporation
Citizens Bancshares / Mid Am
NationsBank Corp. / BankAmerica
Bank One Corp. / First Chicago NBD
First Chicago Corp. / NBD Bancorp
Southern National / BB&T Financial Corp.
Keycorp / Society Corporation
The results of KBW's review are set forth in the following table.
<TABLE>
<CAPTION>
Mergers
Premium Premium of Mergers of
Acquisitions Acquisitions Equals Equals
BSB / NBT Average Median Average Median
<S> <C> <C> <C> <C> <C>
Premium to 28.7% 28.6% 28.0% 4.7% 1.9%
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
Market
<S> <C> <C> <C> <C> <C>
Seller Pro Forma
Ownership 46.5% 40.2% 35.4% 50.1% 49.3%
Seller Ownership
as % of Earnings
Contribution 99.4% 105.9% 106.3% 102.6% 104.3%
Seller Ownership
as % of Market
Cap. Contribution 114.5% 116.9% 116.4% 101.1% 100.7%
Multiple Paid as
% of Buyers Multiple 92.2% 109.3% 110.5% 108.0% 110.0%
</TABLE>
No company or transaction used as a comparison in the above analysis is
identical to BSB, NBT or the merger. Accordingly, an analysis of the results of
the foregoing is not mathematical; rather, it involves complex considerations
and judgments concerning differences in financial and operating characteristics
of the companies and other factors that could affect the public trading value of
the companies to which they are being compared.
Selected Peer Groups Analyses. KBW compared the financial performance and
market performance of BSB, NBT and the pro forma company based on various
financial measures of earnings performance, operating efficiency, capital
adequacy and asset quality and various measures of market performance, including
market/book values, price to earnings and dividend yields to those of a group of
comparable northeastern bank and thrift holding companies. For purposes of such
analysis, the financial information used by KBW was as of and for the quarter
ended March 31, 2000 for BSB and NBT, data for NBT was normalized for the
acquisitions of Lake Ariel Bancorp Inc. and Pioneer American Holding Company
Corp., and financial information for peers was as of and for the quarter ended
December 31, 1999. Stock price information was as of April 14, 2000. The
companies in the peer group were:
TrustCo Bank Corp of NY
Community Bank System
U.S.B. Holding Co.
Premier National Bancorp
Financial Institutions
The results of these comparisons are set forth in the following table.
<TABLE>
<CAPTION>
BSB NBT Pro Forma Peer Group Average Peer Group Median
--- --- --------- ------------------ -----------------
<S> <C> <C> <C> <C> <C>
Return on Average Assets 1.12% 1.08% 1.19% 1.36% 1.34%
Return on Average Equity 16.06% 13.75% 15.98% 17.51% 17.88%
</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net Interest Margin 4.18% 4.14% 4.16% 4.39% 4.38%
Efficiency Ratio 45.52% 57.26% 48.41% 50.57% 53.02%
Equity / Assets 7.06% 7.87% 7.48% 7.65% 7.13%
Tangible Equity / Tangible 7.00% 7.53% 7.28% 6.83% 6.58%
Assets
Loan Loss Reserves / 251% 328% 282% 349% 285%
Non-performing Loans
Net Charge Offs / Average 0.74% 0.30% 0.53% 0.15% 0.15%
Loans
Non-performing Assets / 0.73% 0.48% 0.61% 0.78% 0.75%
Loans + Other Real Estate
Owned
Stock Price / Book Value 1.16x 1.40x 1.45x 1.99x 1.65x
Stock Price / Tangible Book
Value 1.17x 1.46x 1.50x 2.32x 2.19x
Stock Price / 2000 Earnings
per Share 7.17x 9.99x 8.91x 10.72x 10.04x
Stock Price / 2001 Earnings
per Share 6.58x 8.58x 7.93x 9.86x 9.27x
Dividend Yield 5.59% 5.91% 5.91% 3.73% 4.22%
</TABLE>
For purposes of the above calculations, all earnings estimates are from First
Call Corporation, a nationally recognized earnings consolidator.
Contribution Analysis. KBW analyzed the relative contribution of each of
BSB and NBT to the pro forma balance sheet and income statement items of the
combined company, including assets, common equity, tangible equity, deposits,
loans, market capitalization, estimated 2000 and 2001 net income, and estimated
2000 and 2001 cash net income. KBW relied on budgeted projections for 2000 net
income and cash net income, as well as estimated growth rates for 2001, provided
by NBT and BSB. KBW compared the relative contribution of balance sheet and
income statement items with the estimated pro forma ownership for NBT based on
an exchange ratio of 2.000. This analysis was performed twice, considering the
results if NBT closed the Pioneer American Holding Company Corp. transaction
and if NBT did not close the transaction. The results of KBW's analysis are set
forth in the following table.
51
<PAGE>
<TABLE>
<CAPTION>
With Pioneer American Without Pioneer American
----------------------- --------------------------
NBT BSB NBT BSB
--- --- --- ---
<S> <C> <C> <C> <C>
2000 Net Income 51.5% 48.5% 47.1% 52.9%
2000 Cash Net Income 52.0% 48.0% 47.7% 52.3%
2001 Net Income 53.2% 46.8% 47.1% 52.9%
2001 Cash Net Income 53.5% 46.5% 47.7% 52.3%
Common Equity 55.0% 45.0% 50.7% 49.3%
Tangible Equity 54.0% 46.0% 49.6% 50.4%
Total Assets 52.3% 47.7% 47.6% 52.4%
Total Deposits 49.1% 50.9% 44.5% 55.5%
Total Loans 46.9% 53.1% 41.1% 58.9%
Market Capitalization 59.4% 40.6% 53.1% 46.9%
Ownership 53.5% 46.5% 47.5% 52.5%
</TABLE>
Financial Impact Analysis. KBW performed pro forma merger analysis
that combined projected income statement and balance sheet information for both
a scenario assuming NBT closed the Pioneer American merger transaction and a
scenario in which the merger transaction with Pioneer American did not close.
Assumptions regarding the accounting treatment, acquisition adjustments and cost
savings were used to calculate the financial impact that the merger would have
on certain projected financial results of BSB. This analysis indicated that the
merger is expected to be accretive to estimated earnings per share and cash
earnings per share in 2000 and 2001 for both scenarios. The analysis also
indicated that the merger is expected to be accretive to BSB's book value per
share and tangible book value per share for both scenarios. This analysis was
based on internal 2000 budgets provided by BSB and NBT, estimated growth rates
provided by BSB and NBT, and on BSB management's estimates of the expected
savings. Assuming current dividends for both companies and the exchange ratio,
BSB stockholders will receive a 36% dividend increase from the transaction. For
all of the above analyses, the actual results achieved by BSB following the
merger will vary from the projected results, and the variations may be material.
Discounted Cash Flow Analysis. KBW estimated the present value of the
future cash flows that would accrue to a holder of a share of BSB common stock
assuming the stockholder held the stock from the year 2000 through the year 2004
and then sold it at the end of year 2004. This stand-alone analysis was based
on several assumptions, including earnings per share of $2.50 in 2000, a
discount rate of 12% and an eventual sale of BSB in 2004. A terminal valuation
for BSB was calculated by multiplying projected 2004 earnings per share by a
price-to-earnings multiple reflecting adjusted northeastern acquisition pricing
since January 1, 1999. The discount rate was applied to the terminal valuation
and the estimated dividends. KBW presented a table showing the analysis with a
range of terminal multiples from 8.0 times to 14.0 times and a range of earnings
per share growth rates from 6.0% to 12.0%, resulting in a range of present
values for a share of BSB common stock of $18.82 to $34.76. These values were
determined by adding (i) the present value of the estimated future dividend
stream that BSB could generate over the period beginning January 2000 and ending
in December 2004, and (ii) the present value of the "terminal value" of the BSB
common stock.
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<PAGE>
KBW also estimated the present value of future cash flows that would
accrue to a holder of a share of BSB pro forma for the merger, assuming the
stockholder held the stock from the year 2000 through the year 2004 and then
sold it for a multiple to that year's earnings equivalent. The analysis was
performed for scenarios in which NBT closed and did not close the acquisition of
Pioneer American. This analysis was based on several assumptions, including a
discount rate of 12.0%, pro forma earnings per share estimates of $1.29 in 2000
and $1.45 in 2001 for the scenario with NBT pro forma for Pioneer American, and
pro forma earnings per share estimates of $1.35 and $1.47 for the scenario with
NBT absent Pioneer American. The stand-alone analysis methodology was repeated
with a range of terminal multiples from 9.0 times to 15.0 times and a range of
post-2001 earnings per share growth rates from 6.0% to 12.0%, resulting in a
range of present values for a share of BSB common stock of $24.06 to $41.55 for
the NBT pro forma with Pioneer American scenario, and a range of $24.93 to
$43.03 for the NBT absent Pioneer American scenario.
KBW stated that the discounted cash flow analysis is a widely-used
valuation methodology but noted that it relies on numerous assumptions,
including asset and earnings growth rates, dividend payout rates, terminal
values and discount rates. The analysis did not purport to be indicative of the
actual values or expected values of BSB common stock.
In connection with its opinion dated as of the date of this proxy
statement/prospectus, KBW performed procedures to update, as necessary, certain
of the analyses described above and reviewed the assumptions on which such
analyses described above were based and the factors considered in connection
therewith. KBW did not perform any analyses in addition to those described
above in updating its April 19, 2000 opinion.
KBW has been retained by the board of directors of BSB as an
independent contractor to act as financial adviser to BSB with respect to the
merger. KBW, as part of its investment banking business, is continually engaged
in the valuation of banking businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. As specialists in the
securities of banking companies, KBW has experience in, and knowledge of, the
valuation of banking enterprises. In the ordinary course of its business as a
broker-dealer, KBW may, from time to time, purchase securities from, and sell
securities to, BSB and NBT and, as a market maker in securities, KBW may, from
time to time, have a long or short position in, and buy or sell, debt or equity
securities of BSB and NBT for KBW's own account and for the accounts of its
customers.
Compensation of KBW
BSB and KBW have entered into a letter agreement executed March 19,
2000 relating to the services to be provided by KBW in connection with the
merger. BSB has agreed to pay KBW fees as follows: a cash fee of $100,000
following the signing of the definitive agreement, and an additional cash fee of
$1,900,000 at the time of closing. Pursuant to the KBW engagement agreement,
BSB also agreed to reimburse KBW for reasonable out-of-pocket expenses and
disbursements incurred in connection with its retention and to indemnify KBW
against certain liabilities, including liabilities under the federal securities
laws.
Other Interests of Officers and Directors in the Merger
In considering the independent recommendations of the NBT board and
the BSB board with respect to the merger, NBT stockholders and BSB stockholders
should be aware that officers and directors of NBT and BSB have interests in the
merger that are different from, or in addition to, the interests of the
stockholders of NBT and BSB generally. Certain executive officers and directors
of NBT and BSB will serve as executive officers and directors of the combined
company following the merger. Furthermore, as described below, certain members
of the management of NBT and BSB have entered into agreements or amendments to
existing agreements relating to their employment with the combined company that
will provide employment and severance benefits following the merger. The NBT
board and the BSB board were aware of such interests and considered them, among
many other matters, in approving the merger agreement and the matters
contemplated by the merger agreement, including the merger.
53
<PAGE>
As of June 30, 2000, the directors and executive officers of BSB owned
an aggregate of approximately 796,555 shares of BSB common stock and held
options to purchase an aggregate of approximately 259,221 shares of BSB common
stock at a weighted average exercise price of approximately $20.35. Under the
terms of the merger agreement, BSB's directors and executive officers will
receive the same consideration for their shares of BSB common stock as the other
BSB stockholders.
Options to purchase BSB common stock, which have not been 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 BSB's
stock option plans.
Each BSB stock option will convert into a replacement option to
acquire a number of shares of [TBD] common stock equal to (rounded down to the
nearest whole number of shares) the number of shares of BSB common stock subject
to the converted option as of the effective time multiplied by the exchange
ratio for the merger. The exercise price per share (rounded up to the nearest
whole cent) will equal the exercise price per share under the converted option
for all of the shares of BSB common stock subject to the converted option at the
effective time divided by the exchange ratio for the merger.
Each BSB 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.
We describe the treatment of options more fully under "Adoption of the
Merger Agreement -- BSB Stock Options."
Employee Benefits and Severance Plans. The merger agreement provides
that the combined company will honor all employment agreements, supplemental
retirement agreements, death benefits agreements, salary and wage continuation
plans, restricted stock agreements, and change in control severance agreements
to which NBT or BSB was a party prior to its entry into the merger agreement.
The merger, as structured, will not constitute a change in control of NBT under
the change in control severance agreements to which NBT is a party.
BSB entered into three-year change of control severance agreements on
June 28, 1999, referred to herein as the severance agreements, with the
following BSB executive officers:
Name Title
---- -----
Arthur C. Smith Executive Vice President
Rexford C. Decker Senior Vice President and Chief Financial Officer
Larry G. Denniston Senior Vice President and Corporate Secretary
Douglas R. Johnson Senior Vice President
In addition, BSB entered into a two-year change of control severance agreement
with its chief information officer, Matthew W. Schaefer, on April 19, 2000. The
merger, as structured, will constitute a change in control of BSB under the
change in control severance agreements. The severance agreements provide that
if, before a change of control at the request of the acquiring party or during
the twelve-month period following a change in control, the executive's
employment is terminated as a result of:
. an involuntary termination of employment other than for good cause, or
. a voluntary termination for good reason,
the executive is entitled to continued payments of salary at a rate equal to the
higher of the executive's base salary on the date of the change in control or
the date of termination of employment, and other benefits, for a period of up to
two years. In these events, all options become immediately exercisable and
remain exercisable for not less than ninety days, and to the extent that such
acceleration of vesting or exercisability is not permitted under the applicable
plan, a lump-sum payment, equal to the value of the options, will be made. In
the event any of the payments to an executive under the severance agreements are
subject to the
54
<PAGE>
excise tax described in the U.S. internal revenue code, the executive is
entitled to an additional payment, referred to as a gross-up payment, to equal
to the excise tax imposed on the payments plus income and excise taxes imposed
on the gross-up payment. The gross-up payment will not apply if the after-tax
benefit would be less than $10,000 more than the maximum after-tax amount the
executive could receive without incurring the excise tax. The severance
agreements do not contain any provision restricting the right of the executive
officers to compete against the resulting bank upon termination of employment.
The merger agreement also provides that employees of NBT, and
employees of BSB who are not parties to an employment, change in control or
severance agreement with NBT, and who become employees of the combined company
and are subsequently terminated after December 31, 2000 will be entitled to
severance payments under a new severance plan to be developed and instituted by
the combined company. The combined company will treat prior service with NBT or
BSB as service with the combined company under this severance plan. If any
employee is terminated after the effective time of the merger but before January
1, 2001, the employee will be covered by the severance plan of his or her former
employer.
Directors and Officers Indemnification. The merger agreement provides
that, after the effective time of the merger through its sixth anniversary, or
until the final disposition of claims asserted within that period, NBT will
indemnify, defend and hold harmless the present and former officers, directors
and employees of BSB against losses, expenses, claims, damages, liabilities or
amounts that are paid in settlement of, or in connection with, any claim based
on the fact that such person is or was a director, officer or employee, and will
purchase for the benefit of the persons serving as executive officers and
directors of BSB immediately prior to the effective time, directors' and
officers' liability insurance coverage for three years after the effective time.
Stock Option Agreements
The following is a description of the material terms of the stock
option agreements which NBT and BSB granted to each other, as an inducement of
each party's willingness to enter into the merger agreement. We urge all
stockholders of NBT and BSB to read the stock option agreements in their
entirety for a complete description of the terms of the agreements. We have
previously filed copies of the stock option agreements with the SEC.
As a condition to each party's (each, as such, the "grantee")
willingness to enter into the merger agreement, the other party (each, as such,
the "option issuer") entered into a stock option agreement, dated as of April
19, 2000, with the grantee. Each stock option agreement provides that the
option issuer grants to the grantee an irrevocable option to purchase up to
19.9% of the currently outstanding shares of the common stock of the option
issuer, at a price per share equal to the closing market price as of the close
of business on the day before execution. The number of shares issuable upon
exercise of the option is subject to adjustment in the event of any change in
the applicable option issuer's common stock by reason of stock dividends, split-
ups, recapitalizations, combinations, subdivisions, conversions, exchanges of
shares or other issuances of additional shares.
Parties to merger agreements often enter into arrangements such as the
stock option agreements 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 agreements may have the effect of discouraging offers by third
parties to acquire BSB 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 BSB pursuant to the merger agreement. Similarly,
the stock option agreements may have the effect of discouraging offers by third
parties to acquire NBT prior to the merger.
The option is exercisable at any time after the occurrence of a
Purchase Event (as defined below), provided that the option shall terminate upon
the occurrence of an Exercise Termination Event (as defined below).
A "Purchase Event" means, in substance:
. the acquisition by any person other than the parties, or any of
their subsidiaries, of beneficial ownership of 20% or more of the
then outstanding shares of common stock of the option issuer;
55
<PAGE>
. the entry by the option issuer, without the grantee's consent,
into a letter of intent or definitive agreement to engage in an
Acquisition Transaction (as defined below) with any person other
than the grantee or the recommendation of the option issuer's
board of directors that the stockholders approve or accept such
an Acquisition Transaction;
. the termination of the merger agreement by the grantee based on
the option issuer's willful or intentional breach of any material
representation, warranty, covenant or agreement set forth in the
merger agreement; or
. the termination of the merger agreement by one party where the
board of directors of the other party authorizes the other party
to enter into a binding agreement concerning a Superior Competing
Transaction (as defined below) and the other party does not make
a counter-offer on terms at least as favorable to the
stockholders of the other party as the Superior Competing
Transaction.
An "Acquisition Transaction" is defined to mean a merger or other
business combination involving the option issuer, an acquisition of all or
substantially all of the assets of the option issuer, or an acquisition of
beneficial ownership of securities representing 20% or more of the voting power
of the option issuer.
A "Superior Competing Transaction" shall mean any of the following
involving a party or any of their subsidiaries: any inquiry, proposal or offer
made by a third party to acquire, directly or indirectly, including pursuant to
a tender offer, exchange offer, merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction, for
consideration consisting of cash and/or securities, more than 50% of the
combined voting power of the shares of a party's common stock then outstanding
or all or substantially all the assets of a party and otherwise on terms which
the board of directors of such party determines in its good faith judgment
(based on the opinion of their respective financial advisor) to be more
favorable to its stockholders than the merger and for which financing, to the
extent required, is then committed or which if not committed is, in the good
faith judgment of its board of directors, reasonably capable of being obtained
by such third party.
An "Exercise Termination Event" includes:
. the occurrence of the effective time of the merger;
. 12 months after the first occurrence of a Purchase Event;
. 12 months after the termination of the merger agreement following
a Preliminary Purchase Event (as defined below);
. the termination of the merger agreement, if no Purchase Event or
Preliminary Purchase Event has occurred, by the option issuer for
breach of any material representation, warranty, covenant or
agreement by the grantee, by both parties by mutual consent, or
by either party if the effective time has not occurred on or
before November 30, 2000, due to no fault of the terminating
party, or an injunction preventing consummation of the merger
shall have become final and nonappealable;
. the termination of the merger agreement by either party by reason
of the grantee's stockholder approval not being obtained or the
option issuer's stockholder approval not being obtained if no
Purchase Event or Preliminary Purchase Event has occurred prior
to the meeting of the option issuer's stockholders to vote on the
merger; or
. 12 months after the termination of the merger agreement by the
grantee as a result of a breach of any material representation,
warranty, covenant or agreement by the option issuer, or by the
grantee or the option issuer as a result of the party's board of
directors authorizing it to enter into a Superior Competing
Transaction and the other party does not make an equivalent or
better offer, subject to the payment of the other party's
expenses.
A "Preliminary Purchase Event" is defined to include any of the
following transactions:
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<PAGE>
. the entry by the option issuer, without the grantee's consent,
into a letter of intent or definitive agreement to engage in an
Acquisition Transaction with any person other than the grantee or
the recommendation of the option issuer's board of directors that
the stockholders approve or accept such an Acquisition
Transaction;
. the acquisition by any person other than the parties, or any of
their subsidiaries, of beneficial ownership of 20% or more of the
then outstanding shares of common stock of the option issuer;
. the making of a bona fide proposal by any person other than the
parties, or any of their subsidiaries, to the option issuer or,
by public announcement or written communication that is or
becomes subject to public disclosure, to the option issuer's
stockholders prior to the option issuer's stockholder meeting
regarding the merger to engage in an Acquisition Transaction or
the filing of a registration statement with respect to a tender
offer or exchange offer to purchase any shares of the option
issuer's common stock such that, upon consummation of such offer,
such person would have beneficial ownership of 20% or more of the
then outstanding shares of common stock of the option issuer, and
the option issuer's stockholders do not adopt the merger;
. there shall exist a willful or intentional breach under the
merger agreement by the option issuer and such breach would
entitle the grantee to terminate the merger agreement; or
. the option issuer's stockholder meeting to vote on the merger
shall not have been held pursuant to the merger agreement or
shall have been canceled prior to consummation of the merger
agreement, or the option issuer's board of directors shall have
failed to recommend, or shall have withdrawn or modified in a
manner adverse to grantee the recommendation that the option
issuer's stockholders adopt the merger agreement, or if the
option issuer or its board of directors fails to oppose any
proposal described in the agreement.
Each stock option agreement includes standard representations and
warranties by the option issuer regarding corporate power and authority to
execute and deliver the stock option agreement and to consummate the
transactions contemplated thereby.
Each stock option agreement is not assignable without the written
consent of the other party except that the grantee may assign the stock option
agreement to a wholly owned subsidiary and may assign its rights in whole or in
part after the occurrence of a Preliminary Purchase Event.
To the best knowledge of BSB and NBT, no event giving rise to any
rights to exercise the stock options 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 BSB stockholders will be deemed to
have combined their existing voting stock interests by virtue of the exchange of
shares of BSB common stock for shares of [TBD] common stock. Accordingly, the
book value of the assets, liabilities and stockholders' equity of each of NBT
and BSB, 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. Additionally, all historical consolidated balance sheets and
consolidated operating results will be restated as if the NBT/BSB merger had
been completed as of the beginning of the earliest period presented.
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<PAGE>
It is a condition to consummation of the merger that NBT and BSB
receive a letter from their respective independent auditors that the merger
qualifies for pooling of interests accounting treatment. See "Adoption of the
Merger Agreement -- Conditions to Complete the Merger."
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 Historical and Pro Forma Combined Financial Data" and "Summary --
Unaudited Comparative Per Share Data."
Appraisal Rights
Neither NBT nor BSB stockholders are entitled to appraisal rights
under Delaware law in connection with the merger.
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 deregister the BSB common stock under the Securities Exchange Act and
the new Nasdaq National Market symbol for the combined company will be
"______________" See "Price Range of Common Stock and Dividends."
Dividends
After the merger, the combined company, subject to approval and
declaration by its board of directors, will continue the current cash dividend
policy of NBT and declare regularly scheduled quarterly cash dividends on the
shares of its common stock consistent with NBT's past practices. The current
annualized rate of cash dividends on the shares of NBT common stock is $0.68 per
share.
BSB expects to continue to declare regularly scheduled dividends on
the BSB common stock until the merger closes, including regular quarterly cash
dividends of $0.25 per share, subject to the terms of the merger agreement. The
right of holders of BSB common stock to receive dividends from BSB will end upon
the completion of the merger when the separate corporate existence of BSB will
cease. See "Price Range of Common Stock and Dividends."
Exchange of BSB Certificates
As of the effective time, NBT will deposit or cause to be deposited
with the exchange agent, American Stock Transfer and Trust Company, New York,
New York, certificates representing the shares of [TBD] common stock that are
issuable in connection with the merger for shares of BSB common stock. NBT will
also deposit with the exchange agent an estimated amount of cash payable instead
of fractional shares, if any. Within two business days after the effective
time, [TBD] will cause the exchange agent to send to each holder of record of a
certificate or certificates which immediately prior to the effective time
represented shares of BSB common stock transmittal materials for use in the
exchange of the merger consideration for certificates representing BSB common
stock. The exchange agent will deliver to holders of BSB 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 [TBD] common stock to which
such holders are entitled. [TBD] will not issue any fractional shares.
Instead, [TBD] will pay each holder of BSB common stock who would otherwise be
entitled to a fractional share of [TBD] common stock an amount in cash, without
interest, calculated by multiplying such fraction by the average of the daily
closing prices per share for NBT common stock for the twenty consecutive trading
days on which shares of NBT are actually traded on the Nasdaq National Market
ending on the third trading day preceding the effective time of the merger as
reported by the Wall Street Journal.
Until properly surrendering their certificates, holders of unexchanged
shares of BSB common stock will not be entitled to receive any dividends or
distributions with respect to [TBD] common stock. After surrender of the
certificates representing BSB common stock, the record holder of such shares
will be entitled to receive any such dividends or other distributions,
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without interest, which had previously become payable with respect to shares of
[TBD] common stock represented by such certificate.
Holders of BSB common stock should not send in certificates
representing BSB common stock until they receive transmittal materials from the
exchange agent.
Holders of NBT common stock should keep their certificates because no
exchange of certificates is necessary.
BSB Stock Options
At the effective time of the merger, [TBD] will assume the former BSB
stock option plan. At the effective time of the merger, all outstanding and
unexercised BSB stock options will no longer represent a right to acquire shares
of BSB common stock but will convert automatically into options to purchase
shares of common stock of [TBD]. [TBD] will assume such BSB stock options
subject to the terms and conditions of the BSB stock option or similar plans and
related option agreements as in effect immediately prior to the effective time
under which BSB issued the assumed stock options.
After the effective time of the merger, the number of shares of [TBD]
common stock purchasable upon exercise of any such BSB option will equal the
number of shares of BSB common stock that were purchasable under such BSB 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 of [TBD] common stock under the assumed option shall be
equal to the exercise price per share of BSB common stock under the option
originally granted by BSB, as previously adjusted, divided by the exchange
ratio, provided that such exercise price shall be rounded up to the nearest
whole cent. The duration and other terms of each new [TBD] stock option will be
substantially the same as the prior BSB stock option.
Representations and Warranties
The merger agreement contains representations and warranties made by
NBT and/or BSB relating to the following matters:
. due organization, corporate power, good standing and due
registration as a bank holding company;
. capitalization;
. subsidiaries;
. corporate power and authority to conduct business, own or lease
properties and assets and enter into the merger agreement and
related transactions;
. non-contravention of certain organizational documents, agreements
or governmental orders;
. 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 the documents;
. consolidated financial statements;
. examinations by bank regulatory agencies;
. undisclosed liabilities;
. litigation and regulatory action;
. compliance with laws;
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. material contracts;
. contractual defaults;
. brokers and financial advisers;
. tax and accounting matters;
. environmental matters;
. affiliates;
. absence of certain material changes and events;
. required regulatory approvals;
. vote required;
. fairness opinion;
. employee benefit plans; and
. deposit insurance
Conduct of Business Pending Completion of the Merger
The merger agreement contains various covenants and agreements that
govern BSB's and NBT's actions prior to the effective time of merger. However,
the following agreements may be waived upon written consent of the parties:
Conduct of Business. Each of BSB and NBT have agreed that they and
their respective subsidiaries will conduct their respective businesses in the
ordinary course of business in a manner consistent with past practices and use
their respective reasonable best efforts to preserve intact their respective
business organizations, and to keep available the services of their respective
current officers, employees and consultants and to preserve their respective
current business relationships.
Capital Stock. BSB and NBT have agreed to restrictions on their
respective abilities to authorize, issue or make any distribution of their
respective capital stock, or grant any options to acquire additional securities,
or declare or distribute any stock dividend or authorize a stock split. BSB and
NBT have agreed not to make any direct or indirect redemption, purchase or other
acquisition of their respective capital stock. BSB and NBT have further agreed
not to take any action which would prevent or impede the merger from qualifying
for pooling of interests accounting.
Dividends. BSB and NBT have agreed not to declare or pay any dividend
except for quarterly dividends, or, in the case of the periodic stock dividends
of NBT, annual declarations and payments in accordance with past practice and in
per share amounts not in excess of historical per share dividend amounts. In
addition, each of BSB and NBT have agreed that they will coordinate with the
other party the declaration of any cash dividends with respect to their common
stock and the record dates and payment dates of such dividends.
Accounting. BSB and NBT have agreed not to change any of their
respective methods of accounting in effect at December 31, 1999.
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Reserves. BSB has agreed to establish such additional accruals and
reserves as may be necessary to conform to NBT's credit loss reserve practices,
as a result of their differing practices with respect to the resolution of
problem credits, after the parties receive all necessary governmental and
stockholder approvals to consummate the merger.
Compensation; Employment Agreements; Benefit Plans. BSB and NBT have
agreed not to:
. increase in any manner the compensation or fringe benefits of any
employee or enter into any agreement to increase in any manner
the compensation or fringe benefits of any employee, except for
increases in the ordinary course of business in accordance with
past practices or as required by existing plans or agreements;
nor
. create or modify any pension, retirement, profit sharing or
welfare benefit plan or agreement or employment agreement with or
for the benefit of any employee, except in the ordinary course of
business consistent with past practice, or accelerate the vesting
of any deferred compensation, stock option or other stock based
compensation.
Dispositions, Acquisitions and Capital Expenditures. BSB and NBT have
agreed not to effect any reorganization or recapitalization, purchase or
otherwise acquire any assets or stock of any corporation, bank or other business
for consideration which in the aggregate exceeds $10 million, except that such
amount shall be $30 million in the case of any such transaction as to which NBT
gives BSB advance written notice and the opportunity to confer and that would
not delay the transaction contemplated by the merger agreement, or liquidate,
sell, dispose of or encumber any assets for consideration which in the aggregate
exceeds $25 million (except for bank borrowings and operations in the ordinary
course).
Material Contracts. BSB and NBT have agreed not to enter into or
terminate any material contract or agreement, or make any change in any material
lease or contract (other than renewals of contracts and leases without material
adverse changes of terms), except for:
. transactions in the ordinary course of business consistent with
past practice;
. agreements entered into or terminated in connection with merger
transactions involving NBT and Pioneer American Holding Company
Corp. and NBT and Lake Ariel Bancorp, Inc.; and
. certain other transactions specified on NBT's disclosure schedule
to the merger agreement.
Indebtedness BSB and NBT have agreed not to incur any indebtedness
for borrowed money (other than indebtedness among their respective corporate
affiliates or short-term indebtedness incurred to refinance short-term
indebtedness), or assume, guarantee, endorse or otherwise as an accommodation
become responsible for the obligations of any other individual, corporation or
other entity, other than:
. in the ordinary course of business consistent with past practice;
or
. by operation of law in connection with merger transactions
involving NBT and Pioneer American Holding Company Corp., NBT and
Lake Ariel Bancorp, Inc. and NBT and other permitted
transactions.
Amendments. The merger agreement provides that neither BSB nor any of
its subsidiaries nor NBT nor any of its subsidiaries will propose or adopt any
amendments to their certificate of incorporation or bylaws except as provided in
the merger agreement.
Representations and Warranties. BSB and NBT have agreed that they and
their respective subsidiaries will not take any action that is intended or may
reasonably be expected to result in any of their respective representations and
warranties
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being or becoming untrue prior to the effective time or any condition in the
merger agreement not being satisfied or to violate any provision of the merger
agreement.
Acquisition Proposals. BSB and NBT have agreed to cease any existing
discussions relating to a Competing Proposal (as defined below) and not to
solicit or encourage any inquiries or the making of any proposal that
constitutes or may be expected to lead to a Competing Proposal. Each party,
however, may, prior to its stockholders' approval of the merger, (i) in
connection with a Superior Competing Transaction (as defined below), have
discussions with and furnish information to any person (the "Inquiring Person")
that makes an unsolicited bona fide proposal to acquire such party if (a) the
party's board of directors determines in good faith that such action is required
to comply with its fiduciary duty to stockholders, (b) prior to the furnishing
of information or entering into discussions, the party provides written notice
to the other party of what it intends to do and obtains a confidentiality
agreement with the Inquiring Person, and (c) such party keeps the other party
informed on a current basis of the details of the discussions; or (ii) comply
with Rule 14e-2 promulgated under the Exchange Act.
A "Competing Proposal" shall mean any of the following involving BSB
or any BSB subsidiary, on the one hand, or NBT or any NBT subsidiary, on the
other hand: any inquiry, proposal or offer from any person relating to the
acquisition by such person of a business of NBT or BSB, as applicable, that
constitutes 15% or more of the net revenues, net income or assets of NBT or BSB
and their respective subsidiaries, taken as a whole, or 15% or more of any class
of equity securities of NBT or BSB or any of their respective subsidiaries, any
tender or exchange offer that if consummated would result in any person
beneficially owning 15% or more of any class of equity securities of NBT or BSB
or any of their respective subsidiaries, and any merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving NBT or BSB or any of their respective subsidiaries, other than the
transactions contemplated by the merger agreement and transactions in which
stockholders of NBT and BSB, as applicable, continue to own a majority of the
voting stock of NBT or BSB, as applicable, following the transaction.
A "Superior Competing Transaction" shall mean any of the following
involving BSB or any BSB subsidiary, on the one hand, or NBT or any NBT
subsidiary, on the other hand: any inquiry, proposal or offer made by a third
party to acquire, directly or indirectly, including pursuant to a tender offer,
exchange offer, merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction, for consideration consisting of
cash and/or securities, more than 50% of the combined voting power of the shares
of BSB common stock or NBT common stock, as applicable, then outstanding or all
or substantially all the assets of BSB and NBT, as applicable, and otherwise on
terms which the board of directors of BSB or NBT, as applicable, determines in
its good faith judgment (based on the opinion of their respective financial
advisor) to be more favorable to its stockholders than the merger and for which
financing, to the extent required, is then committed or which if not committed
is, in the good faith judgment of its board of directors, reasonably capable of
being obtained by such third party.
Termination Benefits and Severance Obligations. Each employee of BSB,
any BSB subsidiary, NBT, or any NBT subsidiary who becomes an employee of [TBD]
or any of its subsidiaries immediately following the effective time of the
merger, or who, following the effective time, remains an employee of BSB, any
BSB subsidiary, NBT or any NBT subsidiary and is terminated by [TBD] or any of
its subsidiaries subsequent to December 31, 2000, will be entitled to severance
pay, if any, in accordance with the new severance plan of [TBD] or its
subsidiary, as applicable, developed on or before December 31, 2000, in
accordance with the merger agreement. Such employee's service with BSB, BSB
subsidiary, NBT or NBT subsidiary shall be treated as service with [TBD] or its
subsidiary, as applicable, for purposes of determining the amount of severance
pay, if any, under the new severance plan. If any employee is terminated after
the effective time but prior to January 1, 2001, such employee shall be covered
by his former employer's severance plan.
Regulatory Applications and Filings. NBT and BSB have agreed that
they will cooperate and use their reasonable best efforts to effect all filings
and obtain all necessary government approvals to complete the transactions
contemplated by the merger agreement.
Post-Closing Governance. The combined company will have a board of
directors composed of fifteen individuals to be designated by the boards of NBT
and BSB. The board will include, of the fifteen current members of the NBT
board, Messrs. Daryl R. Forsythe, Peter B. Gregory, Andrew S. Kowalczyk, Jr.,
Dan B. Marshman, John G. Martines, John C. Mitchell, Joseph G. Nasser, and
William L. Owens. Mr. Martines is a former Lake Ariel board member who joined
the NBT
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board upon completion of the merger between NBT and Lake Ariel that closed on
February 17, 2000. Mr. Nasser is a former Pioneer American board member who
joined the NBT board upon completion of the merger between NBT and Pioneer
American that closed on July 1, 2000. The BSB board of directors designated
seven directors from among the existing membership of BSB's board; namely: Mrs.
Diana J. Bendz and Messrs. David A. Niermeyer, Ferris G. Akel, Robert W. Allen,
William C. Craine, Thomas L. Thorn and John P. Driscoll.
The merger agreement further provides that initially William C. Craine
will be chairman of the executive committee, Thomas L. Thorn will be chairman of
the audit committee, Andrew S. Kowalczyk, Jr. will be chairman of the
compensation and benefits committee, Peter B. Gregory will be chairman of the
financial services committee, and Daryl R. Forsythe will be chairman of the loan
committee of the board of directors of the combined bank.
The merger agreement further provides that the combined bank will have
a board of directors consisting of the chairman of the board of directors of the
combined company, who shall serve as the chairman of the board of the combined
bank, and eight, ten or twelve other persons, half of whom will be designated by
each party. The president of the combined bank will be one of the designees of
NBT.
The merger agreement further provides that, at the effective time, the
senior executive officers of [TBD] shall be the following individuals serving in
the capacities noted next to their names: Daryl R. Forsythe -- chairman and
chief executive officer; William C. Craine - vice chairman; Joe C. Minor --
treasurer; Larry G. Denniston - secretary. In view of Mr. Minor's anticipated
responsibilities as the president and chief executive officer of the financial
services arm of [TBD], NBT and BSB now anticipate that Mr. Minor will relinquish
the treasurer position and that Michael Chewens will be elected as treasurer of
[TBD].
Under the terms of the merger agreement, the certificate of
incorporation of NBT will be amended to (a) reflect the new name of the combined
company and (b) to increase the total number of authorized shares of all classes
of NBT stock to 105,000,000 shares, consisting of 100,000,000 shares of common
stock, $.01 par value per share, and 5,000,000 shares of preferred stock, $.01
par value per share.
Certain Other Covenants. The merger agreement contains other covenants
of the parties relating to:
. the preparation and distribution of this joint proxy
statement/prospectus;
. the respective NBT and BSB stockholders' meetings and the
recommendations of the respective boards of directors;
. cooperation in issuing public announcements;
. access to information;
. confidentiality;
. inclusion of the NBT common stock issuable to the holders of
shares of BSB common stock for trading on the Nasdaq National
Market; and
. the delivery of BSB stockholder information to NBT.
Conditions to Complete the Merger
The obligations of each of NBT and BSB to complete the merger are
subject to the satisfaction or waiver, subject to compliance with applicable
law, of conditions, including:
. obtaining the requisite votes of approval from the respective
stockholders of BSB and NBT;
. obtaining all governmental approvals required to complete the
merger;
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. the absence of injunctions, decrees, orders, laws, statutes or
regulations enjoining, preventing or making illegal the
completion of the merger;
. the absence of any pending action, proceeding or investigation
before any court or administrative agency or by any government
agency or any other person (i) challenging or seeking material
damages in connection with the merger or (ii) seeking to
restrain, prohibit or limit the exercise of full rights of
ownership or operation by NBT or its subsidiaries of all or any
portion of the business or assets of BSB or any BSB subsidiary,
which in either case has or would have a material adverse effect
on NBT;
. 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;
. the delivery of an opinion of Duane, Morris & Heckscher LLP to
NBT and BSB 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 and that
NBT and BSB will each be a party to that reorganization within
the meaning of Section 368(b);
. the approval for inclusion on the Nasdaq National Market of the
NBT common stock issuable to BSB's stockholders and holders of
BSB options in the merger; and
. the receipt by NBT and BSB of an opinion from their respective
independent auditors stating that the merger qualifies for
"pooling of interests" accounting treatment.
The obligations of each of NBT and BSB to complete the merger are
further subject to satisfaction or waiver of the following conditions:
. the representations and warranties of the other party in the
merger agreement are to be true and correct in all material
respects as of the closing date of the merger, except for
representations and warranties made as of an earlier date which
will be true and correct in all material respects as of such
earlier date, and the other party has provided a certificate of
its chief executive officer to that effect;
. all of the obligations 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 the other party has provided a certificate of its chief
executive officer to that effect; and
. all other required consents, waivers, approvals, authorizations
or orders have been obtained and all required filings have been
made to complete the merger.
The obligations of NBT to complete the merger are further subject to
satisfaction or waiver of the condition that the reserves and accruals required
to be established by BSB, if any, as a result of their differing practices with
respect to the resolution of problem credits, have been established; provided,
however, that the definition of "Material Adverse Effect" in the merger
agreement carves out the first $10 million of those reserves and accruals from
that definition.
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 BSB stockholders or NBT stockholders:
. by mutual written consent of the parties;
. by either NBT or BSB if any of the following occurs:
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(1) the merger has not occurred by November 30, 2000;
(2) an injunction preventing the consummation of the merger shall
have become final and nonappealable;
(3) at a duly called and held stockholders' meeting therefor, the
merger agreement shall fail to receive the requisite vote for
approval and adoption by NBT's stockholders;
(4) at a duly called and held stockholders' meeting therefor, the
merger agreement shall fail to receive the requisite vote for
approval and adoption by BSB's stockholders; or
(5) at a duly called and held stockholders' meeting therefor, the
amendments of NBT's Certificate of Incorporation to increase the
number of shares of NBT common stock and to provide a new name
for NBT in connection with the merger shall fail to receive the
requisite vote for approval.
. by BSB if any of the following occur:
(1) there has been a breach of any material representation, warranty,
covenant or agreement on the part of NBT set forth in the merger
agreement, or if any representation or warranty of NBT shall have
become untrue, and such breach is not cured within 30 days after
written notice thereof to NBT by BSB; or
(2) BSB's board of directors authorizes it to enter into a Superior
Competing Transaction (as defined on p. _______) and NBT does not
make an equivalent or better offer, subject to the payment of
certain of NBT's expenses.
. by NBT if either of the following occurs:
(1) there has been a breach of any material representation, warranty,
covenant or agreement on the part of BSB set forth in the merger
agreement, or if any representation or warranty of BSB shall have
become untrue, and such breach is not cured within 30 days after
written notice thereof to BSB by NBT; or
(2) NBT's board of directors authorizes it to enter into a Superior
Competing Transaction (as defined on p. _______) and BSB does not
make an equivalent or better offer, subject to the payment of
certain of BSB's expenses.
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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, among others, will survive and remain effective:
. procedures for the issuance of [TBD] common stock and [TBD] stock
options in exchange for BSB common stock and outstanding BSB stock
options;
. the services at the effective time of Daryl R. Forsythe, William C.
Craine, Joe C. Minor and Larry G. Denniston as the senior executive
officers of [TBD];
. the designation of directors of [TBD] as provided in the merger
agreement;
. the composition of the board of directors of [TBD] Bank;
. indemnification of BSB directors, officers and employees;
. continuation of employee benefits and development of new employee
benefit plans; and
. executive agreements and equal opportunities to employees of NBT and
its subsidiaries and BSB and its subsidiaries.
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, among others, will survive and
remain effective:
. confidentiality of information obtained in connection with the merger
agreement;
. expenses incurred in connection with the proposed merger; and
. effect of termination.
Restrictions on Resales by Affiliates
NBT has registered the shares of common stock issuable to the BSB
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 BSB may trade their shares
freely without restriction.
Any subsequent transfer of shares acquired in the merger by any person
who is an affiliate of NBT or BSB at the time of submission of the merger
agreement to the BSB stockholders for their vote will, under existing law,
requires:
. the further registration under the Securities Act of the shares of
[TBD] common stock to be transferred;
. compliance with Rule 145 promulgated under the Securities Act, which
permits limited sales under certain circumstances; or
. the availability of another exemption from registration of the shares.
An affiliate of a person is a person who directly, or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with that person. We expect these restrictions to apply to the
directors and executive officers of BSB and the holders of 10% or more of the
BSB 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
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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 BSB 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 BSB 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 [TBD].
Stockholder Agreements and Irrevocable Proxies
Each person who is an affiliate of BSB has delivered a stockholder
agreement to NBT requiring, among other things, each such affiliate's compliance
with all applicable federal and state securities laws in connections with any
sale of the NBT common stock received in exchange for BSB common stock in the
merger, including the trading and volume limitations as to sales by affiliates
contained in Rule 145 under the Securities Act of 1933, as amended, and each
affiliate of BSB and NBT has executed a stockholder agreement providing that he
or she will vote his or her respective shares in favor of the merger agreement,
the merger and the transactions contemplated thereby. The affiliates of each of
BSB and NBT have executed an irrevocable proxy authorizing the members of the
board of directors of the other party to vote the affiliate's shares of stock in
favor of adoption of the merger agreement.
Each person who is an affiliate of NBT or BSB, as applicable, has also
agreed, among other things, not to sell, pledge, transfer or dispose of his or
her shares of [TBD] common stock prior to the public release by [TBD] of an
earnings report to its stockholders covering at least one month of operations
after consummation of the merger.
Allocation of Costs and Expenses
The merger agreement provides that each party to the merger agreement
will be responsible for paying its own expenses, including the fees and expenses
of counsel, accountants, investment bankers, experts and consultants, incurred
in connection with the merger agreement. However, the merger agreement
expressly allocates certain specified expenses as follows:
. the cost of printing and filing the registration statement and
the joint proxy statement and all other regulatory filing fees
will be shared equally;
. in the event the merger agreement is terminated by one party by
reason of a material breach by the other, the breaching party
shall pay all documented, reasonable costs and expenses of the
terminating party up to $350,000;
. in the event the merger agreement is terminated by one party by
reason of the other party not acquiring the required stockholder
approval, the party failing to obtain stockholder approval shall
pay all documented, reasonable costs and expenses of the
terminating party up to $350,000; and
. in the event the merger agreement is terminated by one party by
reason of the other party having agreed to enter into a Superior
Competing Transaction as defined on page _______, other than as
contemplated by the merger agreement, the party agreeing to enter
into the Superior Competing Transaction shall pay all documented,
reasonable costs and expenses of the terminating party up to
$350,000.
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MATERIAL FEDERAL INCOME TAX CONSEQUENCES
We requested Duane, Morris & Heckscher LLP, counsel to NBT, to deliver an
opinion as to the anticipated material federal income tax consequences of the
merger. In rendering its opinion, Duane, Morris & Heckscher LLP assumed, among
other things, that the merger and related transactions will take place as
described in the merger agreement. Consummation of the merger is conditioned
upon the receipt of an opinion that the merger will qualify as a reorganization
under (S) 368(a)(1) of the Internal Revenue Code of 1986, as amended.
The discussion below and the opinion of Duane, Morris & Heckscher LLP are
based upon the Internal Revenue Code, Treasury Regulations thereunder and
administrative rulings and court decisions as of the date of this proxy
statement/prospectus. The opinion of Duane, Morris & Heckscher LLP is based on
the facts, representations and assumptions set forth or referred to in the
opinion, including representations contained in certificates executed by
officers of NBT and BSB. No rulings have been, or will be, requested from the
Internal Revenue Service as to the federal income tax consequences of the
merger. In addition, the opinion of counsel is not binding on the Internal
Revenue Service, and there can be no assurance that the Internal Revenue Service
will not take a position contrary to one or more positions reflected in the
opinions or that the positions reflected in the opinion will be upheld by the
courts if challenged by the Internal Revenue Service. Future legislative,
judicial or administrative changes or interpretations could alter or modify the
statements and conclusions set forth below, and any such changes or
interpretations could be retroactive and could affect the tax consequences to
stockholders of BSB.
The following would be the material federal income tax consequences of the
merger:
(1) the merger will qualify as a "reorganization" under Section 368(a)(1)
of the Internal Revenue Code of 1986, as amended;
(2) no gain or loss will be recognized by BSB or NBT in the merger;
(3) no gain or loss will be recognized by the stockholders of BSB upon
their receipt of NBT common stock in exchange for their BSB 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. A stockholder of BSB who receives cash instead of
a fractional share of NBT common stock will recognize gain or loss
equal to the difference between the cash received and the
stockholder's basis in that fractional share, and that gain or loss
will be capital gain or loss if the fractional share would have been a
capital asset in the hands of the stockholder;
(4) the tax basis of the shares of NBT common stock (including fractional
interests) received by the BSB stockholders will be the same as the
tax basis of their BSB common stock exchanged for the NBT stock; and
(5) the holding period of the NBT common stock in the hands of former BSB
stockholders will include the holding period of their BSB common stock
exchanged for the NBT stock, provided the BSB common stock is held as
a capital asset at the effective date of the merger.
The discussion and the opinion of Duane, Morris & Heckscher LLP do not
purport to deal with all tax aspects of federal income taxation that may affect
particular stockholders of BSB in light of their individual circumstances, and
are not intended for holders subject to special treatment under the tax law
(including dealers in securities, financial institutions, insurance companies,
tax-exempt organizations, non-United States persons, holders who hold their
stock as part of a hedging transaction, an appreciated financial position,
straddle or conversion transaction, holders who do not hold their stock as
capital assets and holders who acquired their stock pursuant to the exercise of
options or otherwise as compensation). In addition, the discussion and the
opinion do not consider the effect of any applicable state, local or foreign tax
laws.
Each stockholder of BSB is urged to consult his or her tax advisor as to
the particular tax consequences to the stockholder of the merger, including the
applicability and effect of any state, local or foreign tax laws, and of changes
in applicable tax laws.
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<PAGE>
REGULATORY APPROVALS
Because NBT and BSB are bank holding companies registered under the Bank
Holding Company Act, the merger is subject to the application and approval
requirements of the Bank Holding Company Act. Since, however, the merger is
part of a simultaneous transaction in which NBT Bank and BSB Bank are merging,
and since the merger of the banks requires the prior approval of the Comptroller
of the Currency under the Bank Merger Act and certain other requirements set
forth in regulations of the Board of Governors of the Federal Reserve System are
met, the application and approval requirements of the Bank Holding Company Act
are subject to waiver by the Board of Governors. NBT has filed a notice with
the Board of Governors requesting such a waiver. As of the date of this joint
proxy statement/prospectus, the Board of Governors had not informed NBT whether
this waiver will be granted.
If the Board of Governors does not grant a waiver of the application and
approval requirements of the Bank Holding Company Act, NBT will file an
application with the Board of Governors for approval of the merger. This
application, if filed, would describe the terms of the merger, the parties
involved, the activities to be conducted by the combined company as a result of
the merger, and other financial and managerial information. In evaluating such
an application, the Board of Governors would consider the financial and
managerial resources (including the competence, experience and integrity of the
officers, directors and principal stockholders) and prospects of the existing
and combined institutions and the benefits that may be expected from the merger.
Among other things, the Board of Governors would evaluate the capital adequacy
of NBT before and after completion of the merger. In addition, under the
Community Reinvestment Act of 1977, the Board of Governors will take into
account the record of performance of NBT and BSB in meeting the credit needs of
their communities, including low- and moderate-income neighborhoods.
The Board of Governors may deny an application if it determines that the
transaction would result in a monopoly or be in furtherance of any combination
or conspiracy to monopolize or attempt to monopolize a given business activity
in any part of the United States. The Board of Governors may also deny an
application if it determines that the transaction would substantially lessen
competition or would tend to create a monopoly in any section of the country, or
would in any other manner result in a restraint of trade, unless the Board of
Governors finds that the anti-competitive effects of the transaction are clearly
outweighed by the probable effects of the transaction in providing benefits to
the public.
Applicable federal law provides for the publication of notice and public
comment on any application filed by NBT with the Board of Governors for approval
of the merger. Under current law, if an application is required, the merger may
not be completed until the Board of Governors has approved the merger and a
period of 30 days, or fewer if prescribed by the Board of Governors with the
concurrence of the Attorney General of the United States, following the date of
approval of the merger by the Board of Governors, has expired. The commencement
of an antitrust action by the U.S. Department of Justice would stay the
effectiveness of the approval of the Board of Governors, unless a court
specifically orders otherwise.
NBT Bank and BSB Bank have filed an application with the Comptroller of the
Currency requesting approval of the bank merger. Copies of this application
have been provided to the U.S. Department of Justice and other governmental
agencies. The application describes the terms of the merger, the parties
involved, the activities to be conducted by the combined bank as a result of the
merger, and provides other financial and managerial information. In evaluating
the application, the Comptroller of the Currency will consider the financial and
managerial resources and prospects of the existing and combined institutions and
the benefits that may be expected from the bank merger. Among other things, the
Comptroller of the Currency will evaluate the capital adequacy of the combined
bank after completion of the bank merger. In addition, under the Community
Reinvestment Act of 1977, the Comptroller of the Currency will take into account
the record of performance of NBT Bank and BSB Bank in meeting the credit needs
of their communities, including low- and moderate-income neighborhoods.
The Comptroller of the Currency may deny an application if it determines
that the transaction would result in a monopoly or be in furtherance of any
combination or conspiracy to monopolize or attempt to monopolize the business of
banking in any part of the United States. The Comptroller of the Currency may
also deny an application if it determines that the transaction would
substantially lessen competition or would tend to create a monopoly in any
section of the country, or would in
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<PAGE>
any other manner result in a restraint of trade, unless the Comptroller of the
Currency finds that the anticompetitive effects of the transaction are clearly
outweighed by the probable effects of the transaction in providing benefits to
the public.
Applicable federal law provides for the publication of notice and public
comment on the application filed by NBT Bank and BSB Bank with the Comptroller
of the Currency. Under current law, the merger may not be completed until the
Comptroller of the Currency has approved the merger and a period of 30 days, or
fewer if prescribed by the Comptroller of the Currency with the concurrence of
the Attorney General of the United States, following the date of approval of the
merger by the Comptroller of the Currency, has expired. As of the date of this
joint proxy statement-prospectus, the Comptroller of the Currency had not acted
on the application of NBT Bank and BSB Bank. The commencement of an antitrust
action by the U.S. Department of Justice would stay the effectiveness of the
approval of the Comptroller of the Currency, unless a court specifically orders
otherwise.
The approval of an application means only that the regulatory criteria for
approval have been satisfied or waived. It does not mean that the approving
authority has determined that the consideration to be received by BSB
stockholders is fair. Regulatory approval does not constitute an endorsement or
recommendation of the merger or the bank merger.
NBT and BSB are not aware of any governmental approvals or requirements
under banking laws and regulations whose receipt or satisfaction are necessary
for the merger to become effective other than those described above. NBT and
BSB intend to seek any other approval and to take any other action that may be
required to effect the merger and the bank merger.
The merger and the bank merger cannot be completed unless all necessary
regulatory approvals are granted and all statutory waiting periods thereafter
have expired. There can be no assurance that any required approval can be
obtained either prior to or after the special meetings or, if obtained, there
can be no assurance as to the date of any of those approvals or the absence of
any litigation challenging those approvals. There can likewise be no assurance
that the U.S. Department of Justice, the Attorney General of the State of New
York, or private persons will not challenge the merger on antitrust grounds, or,
if a challenge is made, the result of the challenge.
The Comptroller of the Currency and the U.S. Department of Justice are
reviewing the merger to determine if it will have a significant adverse effect
upon competition in any section of the country. In an effort to avoid delay or
dispute with respect to competitive factors, NBT Bank and BSB Bank have
indicated their willingness to divest a branch office, assuming agreement by the
Comptroller of the Currency and the Department of Justice that the proposed
divestiture resolves any competitive issues with respect to the merger. The
parties would agree to divest BSB Bank's only branch in Chenango County, New
York, together with the deposits and loans booked to that facility, which
approximated $62.1 million in deposits and $6.1 million in loans at June 30,
2000. The unaudited pro forma combined financial statements do not reflect the
potential impact of such a divestiture or any other divestiture that the
Comptroller of the Currency or the Department of Justice might request.
Although such divestiture or any other divestiture may affect certain pro forma
combined financial statement amounts, merger and restructuring costs and cost
savings and revenues, NBT and BSB believe that the aggregate amount and
financial impact of any such divestiture or divestitures will not have a
material adverse effect on the combined company.
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<PAGE>
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 [TBD] common stock will continue
to trade on the Nasdaq National Market under the symbol "__________________."
BSB common stock trades on the Nasdaq National Market under the symbol "BSBN."
Following the merger, NBT will deregister the BSB common stock under the
Exchange Act, and the common stock of BSB will cease trading on the Nasdaq
National Market.
The following table has been restated to reflect the payment by NBT of any
stock dividends or splits and sets forth for the periods indicated (1) the range
of high and low sales prices of the NBT common stock and the BSB common stock,
and (2) the amount of cash dividends declared per share by each company:
<TABLE>
<CAPTION>
NBT BSB
--- ---
Sales Prices Sale Prices
------------ -----------
High Low Dividends High Low Dividends
---- --- --------- ---- --- ---------
1998
<S> <C> <C> <C> <C> <C> <C>
First Quarter $19.05 $15.99 $ 0.117 $36.00 $28.00 $.20
Second Quarter 23.48 18.37 0.154 35.25 27.50 .20
Third Quarter 23.81 17.58 0.154 32.75 25.63 .20
Fourth Quarter 24.29 19.72 0.162 33.00 22.00 .23
1999
First Quarter $23.33 $19.89 $ 0.162 $32.68 $24.25 $.22
Second Quarter 21.19 19.05 0.162 28.00 24.25 .23
Third Quarter 20.90 16.43 0.162 27.63 24.00 .25
Fourth Quarter 17.98 14.63 0.170 24.88 18.50 .25
2000
First Quarter $16.50 $11.38 $0.170 $22.97 $16.75 $.25
Second Quarter 14.50 9.38 0.170 21.75 17.50 .25
</TABLE>
The timing and amount of future dividends will depend upon earnings,
cash requirements, the financial condition of [TBD] and its subsidiaries (and,
prior to completion of the merger, of NBT and its subsidiaries insofar as NBT
dividends are covered and BSB and its subsidiaries insofar as BSB dividends are
concerned), applicable government regulations, and other factors deemed relevant
by the [TBD] board (and by the boards of NBT and BSB prior to completion of the
merger). Various federal and state laws limit the ability of affiliated banks to
pay dividends to their parent corporations. The merger agreement restricts the
cash dividends payable on BSB common stock, pending completion of the merger.
See "Adoption of the Merger Agreement -- Conduct of Business Pending Completion
the Merger."
On April 19, 2000, the last full trading day prior to the public
announcement of the proposed merger, the highest sales price of NBT common stock
was $12.125 per share, the lowest sales price of NBT common stock was $11.25 per
share and the last reported sales price of NBT common stock was $12.00 per
share. On ___________, 2000, 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. We urge stockholders to obtain
current market quotations prior to making any decisions with respect to the
merger.
On April 19, 2000, the last full trading day prior to the public
announcement of the proposed merger, the highest sales price of BSB common stock
was $18.25 per share, the lowest sales price of BSB common stock was $17.88 per
share and the last reported sales price of BSB common stock was $17.875 per
share. On ______________, 2000, the most recent practicable date prior to the
printing of this joint proxy statement/prospectus, the last reported sales price
of BSB common stock was _______ per share. We urge stockholders to obtain
current market quotations prior to making any decisions with respect to the
merger.
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<PAGE>
COMPARISON OF STOCKHOLDERS' RIGHTS
Upon completion of the merger, the stockholders of BSB will become
stockholders of NBT, which will be renamed [TBD]. The rights of BSB
stockholders are presently governed by Delaware law, the BSB certificate of
incorporation, as amended, and the BSB bylaws, as amended. The rights of former
BSB stockholders will be governed by Delaware law, the NBT certificate of
incorporation, as amended, and the NBT bylaws, as amended. The following chart
summarizes the material differences between the rights of holders of BSB common
stock prior to and after completion of the merger. This summary does not
purport to be complete and we qualify the summary in its entirety by reference
to the BSB certificate of incorporation, as amended, the BSB bylaws, as amended,
the NBT certificate of incorporation, as amended, and the NBT bylaws, as
amended, and the relevant provisions of Delaware law. You can obtain copies of
the governing corporate instruments of NBT and BSB, without charge, by following
the instructions listed under "Where You Can Find More Information."
<TABLE>
<CAPTION>
BSB Stockholders' NBT Stockholders'
Rights Rights
------ ------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Special Meeting of Special meetings of the stockholders may be Special meetings may be called by the board of
Stockholders called at any time by affirmative vote of a directors or the chairman of the board, or if there is
majority of the board of directors and may none, by the president, or by the holders of at least
not be called by stockholders of BSB. 50% of all shares entitled to vote at the meeting.
------------------------------------------------------------------------------------------------------------------------------------
Vacancies on the board of Any vacancies in the board of directors for Stockholders may fill vacancies at a stockholders'
directors and Additional any reason and any newly created directorship meeting. Directors may fill vacancies by a majority
Directors from any increase in the number of directors vote of the directors then in office. The director
may be filled only by the board of directors, chosen by the current directors to fill the vacancy
acting by a vote of a majority of the holds the office until the time of the next election
directors then in office. Any director so of directors, at which point the stockholders shall
chosen to fill a vacancy shall serve until fill the vacancy for the remainder of the unexpired
the next election of the class for which the term of office. Directors may also fill newly-created
director will have been chosen, and until his directorships other than an increase by more than
or her successor is elected and qualified. three in the number of directors. Any director
Any director appointed to the board of appointed to the board of directors by reason of
directors by reason of an increase of increase of directors shall serve until the successor
directors shall serve until that director's is elected and qualified.
term shall end.
------------------------------------------------------------------------------------------------------------------------------------
Liability of Directors Directors are not personally liable to BSB or Directors are not personally liable to NBT or its
its stockholders for monetary damages for any stockholders for monetary damages for breaches of
action taken or for any failure to take any fiduciary duty, except (1) for breach of the
action, unless the director has (1) breached director's duty of loyalty, (2) for acts and omissions
or failed to perform his or her fiduciary not in good faith or which involve intentional
duties of loyalty, good faith and due care or misconduct or a knowing violation of law, (3) for
(2) authorized any unlawful dividend, stock unlawful payments of dividends or unlawful stock
purchase, or stock payment or derived any purchases or redemptions or (4) for any transaction
improper personal benefit. where the director received an improper personal
benefit.
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
72
<PAGE>
<TABLE>
<CAPTION>
BSB Stockholders' NBT Stockholders'
Rights Rights
------ ------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Indemnification of A BSB director, officer, employee or agent is An NBT director or officer is entitled to
Directors, Officers, entitled to indemnification to the full indemnification if he or she acted in good faith and
Employees or Agents extent authorized by law. in a manner he or she reasonably believed to be in, or
not opposed to, the best interest of NBT and, with
respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was
unlawful.
------------------------------------------------------------------------------------------------------------------------------------
Restrictions upon Certain Any business combination involving BSB or a Any business combination involving NBT or a subsidiary
Business Combinations subsidiary and a major stockholder or and a major stockholder or affiliate requires the
affiliate of such major stockholder requires affirmative vote of the holders of not less than 80%
the affirmative vote of the holders of the of the outstanding shares of NBT common stock,
holders of a majority of the outstanding excluding the shares owned by the major stockholder
shares of BSB common or preferred stock and its affiliates. The certificate defines "major
entitled to vote and not owned or controlled stockholder" as any person who beneficially owns 5% or
by any major stockholder. The certificate more of NBT's voting stock.
defines "major stockholder" as any person who
beneficially owns 10% or more of BSB's voting However, such an affirmative vote will not apply to a
stock. business combination involving a major stockholder or
its affiliate if the business combination is approved
However, such an affirmative vote will not by two-thirds of the directors who were directors
apply to a business combination involving a prior to the time when the major stockholder became a
major stockholder or its affiliate if the major stockholder.
business combination is approved by a
majority of the directors who were directors
prior to the time when the major stockholder
became a major stockholder or the transaction
meets other specific requirements outlined in
the certificate of incorporation of BSB.
------------------------------------------------------------------------------------------------------------------------------------
Amendments to Certificate Amendments generally require the approval of Amendments generally require the approval of the board
of Incorporation the board of directors and the approval of of directors and the approval of the holders of a
two-thirds of the outstanding stock entitled majority of the outstanding stock entitled to vote
to vote upon the amendment. However, only a upon the amendment. Any amendment to those provisions
majority of the outstanding stock entitled to of the certificate of incorporation that relate to
vote upon the amendment is required if the business combinations involving NBT or a subsidiary
proposed amendment is approved by a vote of and a major stockholder or affiliate require the
75% of the board of directors. affirmative vote of at least 80% of the outstanding
shares of voting stock, and if there is a major
stockholder, 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 and its affiliates.
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
73
<PAGE>
<TABLE>
<CAPTION>
BSB Stockholders' NBT Stockholders'
Rights Rights
------ ------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Amendments to Bylaws A majority of the directors or stockholders A majority of the directors, or stockholders holding a
holding a majority of the outstanding shares majority of the outstanding shares entitled to vote,
entitled to vote may make, amend or repeal may make, amend or repeal the bylaws. The NBT bylaws
the 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.
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
OTHER MATTERS
The board of directors of NBT and BSB are unaware of other matters to be
voted on at either the NBT special meeting or the BSB special meeting. If other
matters do properly come before the respective meetings, including consideration
of a motion to adjourn the special meeting to another time and/or place for the
purpose of soliciting additional proxies, each of NBT and BSB intend that the
persons appointed in the respective proxies will vote, or not vote for such
matters in their discretion the shares represented by proxies in the
accompanying proxy card.
LEGAL MATTERS
The validity of the common stock to be issued in connection with the merger
and certain federal income tax consequences of the merger will be passed upon by
Duane, Morris & Heckscher LLP, Washington, D.C.
EXPERTS
The supplemental consolidated financial statements of NBT, included in the
current report on Form 8-K dated August 1, 2000, as of December 31, 1999 and
1998 and for each of the years in the three-year period ended December 31, 1999
have been incorporated by reference in this registration statement in reliance
upon the report of KPMG LLP, independent auditors, which is incorporated herein
by reference, and upon the authority of said firm as experts in accounting and
auditing.
The consolidated financial statements of BSB as of December 31, 1999 and
1998 and for each of the years in the three-year period ended December 31, 1999
have been incorporated by reference in this registration statement in reliance
upon the report of PricewaterhouseCoopers LLP, independent auditors, given on
the authority of said firm as experts in accounting and auditing.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
NBT and BSB 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 BSB have used these statements to describe our expectations
and estimates in various sections of this joint proxy statement/prospectus,
including:
. Summary -- Our Reasons for the Merger;
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<PAGE>
. Summary -- Selected Historical and Pro Forma Combined Financial Data;
. The Merger -- Background of the Merger;
. The Merger -- Recommendation of the NBT Board and NBT's Reasons for
the Merger;
. The Merger -- Recommendation of the BSB Board and BSB's Reasons for
the Merger;
. The Merger -- Opinion of NBT's Financial Advisor;
. The Merger -- Opinion of BSB's Financial Advisor; and
. 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 BSB 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; and legislation or
regulatory changes which adversely affect the ability of the combined company to
conduct its current and future operations. NBT and BSB 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.
WHERE YOU CAN FIND MORE INFORMATION
NBT and BSB 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, N.W., 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 at the Nasdaq National Market, 1735 K
Street, N.W., Washington, D.C. 20006-1500, and BSB's SEC filings at Nasdaq. Our
Internet addresses are [www.nbtbank.com] with respect to NBT and
[www.bsbbank.com] with respect to BSB.
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 BSB 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 BSB for the NBT special meeting and the BSB 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
. annual report on Form 10-K for the year ended December 31, 1999;
75
<PAGE>
. quarterly report on Form 10-Q for the calendar quarter ended March 31,
2000;
. current reports on Form 8-K, filed with the SEC on February 22, 2000,
March 3, 2000, March 31, 2000, April 19, 2000, and August 1, 2000;
. prospectus/proxy statement, dated March 31, 2000, included in the
registration statement on Form S-4 (File No. 333-30988);
. prospectus/proxy statement supplement, dated May 10, 2000, included in
the registration statement on Form S-4 (File No. 333- 30988); and
. description of registrant's securities, dated February 24, 2000, in
the registration statement on Form 8-A/A (File No. 00014703).
BSB Bancorp, Inc. SEC Filings
. annual report on Form 10-K for the year ended December 31, 1999;
. quarterly report on Form 10-Q for the calendar quarter ended March 31,
2000;
. current reports on Form 8-K, filed with the SEC on January 4, 2000 and
April 19, 2000; and
. description of registrant's securities, dated March 21, 1988, in
registration statement on Form S-4 (File No. 333-20403).
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.
NBT has supplied all information contained or incorporated by reference in
this joint proxy statement/prospectus relating to NBT and BSB has supplied all
such information relating to BSB.
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. BSB Bancorp, Inc.
52 South Broad Street 58-68 Exchange Street
Norwich, New York 13815 Binghamton, New York 13901
Attention: Michael J. Chewens, CPA Attention: Larry G. Denniston
Tel: (607) 337-6520 Tel: (609) 779-2406
If you would like to request documents from us, please do so by
[____________________, 2000] to receive them prior to the NBT special meeting
and BSB special meeting.
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 BSB proposal. We have not authorized anyone to provide you with
information that is different from what is contained in
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<PAGE>
this joint proxy statement/prospectus. This joint proxy statement/prospectus is
dated [_______________________________]. 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.
77
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined balance sheet presents the
financial position of NBT and BSB as of March 31, 2000 assuming that the merger
had occurred as of March 31, 2000 after giving effect to certain pro forma
adjustments described in the accompanying notes. The following unaudited pro
forma condensed combined statements of income for the three months ended March
31, 2000 and 1999, and the years ended December 31, 1999, 1998 and 1997 present
the combined historical results of operations of NBT and BSB as if the merger
had been completed as of the first day of the period presented. The financial
information for NBT has been restated to include the effects of the mergers with
Lake Ariel Bancorp, Inc. and Pioneer American Holding Company Corp., which were
completed on February 17, 2000 and July 1, 2000, respectively, and have been
accounted for as poolings of interests. Pro forma earnings per common share are
based on the exchange ratio of 2.0 shares of NBT common stock for each share of
BSB common stock issued and outstanding. The fiscal years of NBT and BSB end
December 31. The unaudited pro forma condensed combined balance sheet reflects
estimated non-recurring charges that may be incurred in connection with the
mergers.
The unaudited pro forma condensed combined financial statements were
prepared giving effect to the merger on the pooling of interests accounting
method. Under this method of accounting, the recorded assets, liabilities,
stockholders' equity, income and expense of NBT and BSB are combined and
reflected at their historical amounts, except as noted in the accompanying
notes.
The combined company expects to achieve certain merger benefits in the form
of operating expense reductions and revenue enhancements. The unaudited pro
forma condensed combined statements of income do not reflect potential operating
expense reductions or revenue enhancements that are expected to result from the
mergers, 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 condensed 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 BSB and the
supplemental consolidated financial statements of NBT and accompanying notes,
included in Current Report on Form 8-K filed August 1, 2000, which have been
restated to include the effects of the Lake Ariel and Pioneer American mergers,
which we incorporate by reference herein. The unaudited pro forma condensed
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 completed on March 31, 2000 or at the beginning of the respective periods
presented or that may be attained in the future.
78
<PAGE>
Unaudited Pro Forma Condensed Combined Balance Sheet
March 31, 2000
(in thousands)
<TABLE>
<CAPTION>
NBT BSB Pro Forma Combined
Bancorp Inc. Bancorp, Inc. Adjustments Pro Forma
ASSETS
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 74,039 $ 47,718 $ - $ 121,757
Securities available for sale, at fair value 602,767 361,879 - 964,646
Securities held to maturity (fair value-NBT Bancorp Inc.
$110,368 and BSB Bancorp, Inc. $13,208) 114,518 13,079 - 127,597
Loans 1,540,798 1,745,959 3,286,757
Less: Allowance for loan losses 20,688 31,705 - 52,393
--------------------------------------------------------------------------------------------------------------------
Net loans 1,520,110 1,714,254 - 3,234,364
Premises and equipment, net 46,202 15,541 - 61,743
Other assets 87,198 78,393 4,500 170,091
--------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 2,444,834 $ 2,230,864 $ 4,500 $ 4,680,198
====================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand (noninterest bearing) $ 256,421 $ 139,639 $ - 396,060
Savings,NOW, and money market 601,208 653,091 - 1,254,299
Time 965,994 1,106,548 - 2,072,542
--------------------------------------------------------------------------------------------------------------------
Total deposits 1,823,623 1,899,278 - 3,722,901
Borrowings 406,727 135,982 - 542,709
Other liabilities 19,859 8,588 16,500 44,947
Mandatorily redeemable preferred securities of subsidiary - 30,000 - 30,000
--------------------------------------------------------------------------------------------------------------------
Total liabilities 2,250,209 2,073,848 16,500 4,340,557
--------------------------------------------------------------------------------------------------------------------
Commitments and Contingencies
Stockholders' equity:
Preferred stock - - - -
Common stock 237 114 91 442
Additional paid in capital 180,163 37,590 (13,548) 204,205
Retained earnings 46,580 143,481 (12,000) 178,061
Accumulated other comprehensive loss (21,044) (10,712) - (31,756)
Common stock in treasury, at cost (11,311) (13,457) 13,457 (11,311)
--------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 194,625 157,016 (12,000) 339,641
--------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,444,834 $ 2,230,864 $ 4,500 $ 4,680,198
====================================================================================================================
</TABLE>
See accompanying notes to the unaudited pro forma condensed combined financial
statements.
79
<PAGE>
Unaudited Pro Forma Condensed Combined Statement of Income
For the Three Months Ended March 31, 2000
(in thousands, except per share data)
<TABLE>
<CAPTION>
NBT BSB Pro Forma Combined
Bancorp Inc. Bancorp, Inc. Adjustments Pro Forma
Interest and fee income:
<S> <C> <C> <C> <C>
Loan $32,237 $39,593 $ - $71,830
Securities 12,223 6,674 - 18,897
Other 406 13 - 419
--------------------------------------------------------------------------------------------------------------
Total interest and fee income: 44,866 46,280 - 91,146
--------------------------------------------------------------------------------------------------------------
Interest expense:
Deposits 16,083 21,319 - 37,402
Borrowings 5,535 2,582 - 8,117
--------------------------------------------------------------------------------------------------------------
Total interest expense 21,618 23,901 - 45,519
--------------------------------------------------------------------------------------------------------------
Net interest income 23,248 22,379 - 45,627
Provision for loan losses 1,454 4,608 - 6,062
--------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 21,794 17,771 - 39,565
--------------------------------------------------------------------------------------------------------------
Noninterest income:
Trust 860 331 - 1,191
Service charges on deposit accounts 2,146 1,213 - 3,359
Net security gains (losses) - - - -
Other 1,330 1,817 - 3,147
--------------------------------------------------------------------------------------------------------------
Total noninterest income 4,336 3,361 - 7,697
--------------------------------------------------------------------------------------------------------------
Noninterest expense:
Salaries and employee benefits 8,403 5,899 - 14,302
Office supplies and postage 711 393 - 1,104
Occupancy 1,501 727 - 2,228
Equipment 1,362 442 - 1,804
Professional fees and outside services 996 1,479 - 2,475
Data processing and communications 1,228 416 - 1,644
Amortization of intangible assets 322 96 - 418
Merger and acquisition charges 1,122 - - 1,122
Other operating 2,113 2,261 - 4,374
--------------------------------------------------------------------------------------------------------------
Total noninterest expense 17,758 11,713 - 29,471
--------------------------------------------------------------------------------------------------------------
Income before income taxes 8,372 9,419 - 17,791
Income taxes 3,092 3,671 - 6,763
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Net Income $ 5,280 $ 5,748 $ - $11,028
==============================================================================================================
Weighted Average Shares Outstanding
Basic 23,198 10,243 43,684
Diluted 23,345 10,337 44,019
Earnings Per Share
Basic $ 0.23 $ 0.56 $ 0.25
Diluted $ 0.23 $ 0.56 $ 0.25
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements.
80
<PAGE>
Unaudited Pro Forma Condensed Combined Statement of Income
For the Three Months End March 31, 1999
(in thousands, except per share data)
<TABLE>
<CAPTION>
NBT BSB Pro Forma Combined
Bancorp Inc. Bancorp, Inc. Adjustments Pro Forma
Interest and fee income:
<S> <C> <C> <C> <C>
Loan $ 27,491 $ 35,463 $ - $ 62,954
Securities 10,756 6,838 - 17,594
Other 540 204 - 744
-------------------------------------------------------------------------------------------------------------------------
Total interest and fee income: 38,787 42,505 - 81,292
-------------------------------------------------------------------------------------------------------------------------
Interest expense:
Deposits 13,735 17,927 - 31,662
Borrowings 3,846 3,466 - 7,312
-------------------------------------------------------------------------------------------------------------------------
Total interest expense 17,581 21,393 - 38,974
-------------------------------------------------------------------------------------------------------------------------
Net interest income 21,206 21,112 - 42,318
Provision for loan losses 1,195 3,461 - 4,656
-------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 20,011 17,651 - 37,662
-------------------------------------------------------------------------------------------------------------------------
Noninterest income:
Trust 835 251 - 1,086
Service charges on deposit accounts 1,925 1,000 - 2,925
Net security gains (losses) 668 (401) - 267
Other 1,491 1,539 - 3,030
-------------------------------------------------------------------------------------------------------------------------
Total noninterest income 4,919 2,389 - 7,308
-------------------------------------------------------------------------------------------------------------------------
Noninterest expense:
Salaries and employee benefits 7,301 5,081 - 12,382
Office supplies and postage 782 433 - 1,215
Occupancy 1,309 773 - 2,082
Equipment 1,189 427 - 1,616
Professional fees and outside services 880 1,331 - 2,211
Data processing and communications 1,090 490 - 1,580
Amortization of intangible assets 339 96 - 435
Other operating 1,799 2,533 - 4,332
-------------------------------------------------------------------------------------------------------------------------
Total noninterest expense 14,689 11,164 - 25,853
-------------------------------------------------------------------------------------------------------------------------
Income before income taxes 10,241 8,876 - 19,117
Income taxes 3,582 3,340 - 6,922
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
Net Income $ 6,659 $ 5,536 $ - $ 12,195
=========================================================================================================================
Weighted Average Shares Outstanding
Basic 23,132 10,071 43,274
Diluted 23,423 10,341 44,105
Earnings Per Share
Basic $ 0.29 $ 0.55 $ 0.28
Diluted $ 0.28 $ 0.54 $ 0.28
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements.
81
<PAGE>
Unaudited Pro Forma Condensed Combined Statement of Income
For the Twelve Months Ended December 31, 1999
(in thousands, except per share data)
<TABLE>
<CAPTION>
NBT BSB Pro Forma Combined
Bancorp Inc. Bancorp, Inc. Adjustments Pro Forma
Interest and fee income:
<S> <C> <C> <C> <C>
Loans $ 115,896 $ 151,001 $ - $ 266,897
Securities 48,175 25,038 - 73,213
Other 707 682 - 1,389
-------------------------------------------------------------------------------------------------------------------------------
Total interest and fee income: 164,778 176,721 - 341,499
-------------------------------------------------------------------------------------------------------------------------------
Interest expense:
Deposits 56,586 75,542 - 132,128
Borrowings 18,894 14,034 - 32,928
-------------------------------------------------------------------------------------------------------------------------------
Total interest expense 75,480 89,576 - 165,056
-------------------------------------------------------------------------------------------------------------------------------
Net interest income 89,298 87,145 - 176,443
Provision for loan losses 5,440 19,137 - 24,577
-------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 83,858 68,008 - 151,866
-------------------------------------------------------------------------------------------------------------------------------
Noninterest income:
Trust 3,305 1,104 - 4,409
Service charges on deposit accounts 7,938 4,382 - 12,320
Net security gains (losses) 1,804 (231) - 1,573
Other 6,205 7,116 - 13,321
-------------------------------------------------------------------------------------------------------------------------------
Total noninterest income 19,252 12,371 - 31,623
-------------------------------------------------------------------------------------------------------------------------------
Noninterest expense:
Salaries and employee benefits 30,504 20,386 - 50,890
Office supplies and postage 2,970 1,684 - 4,654
Occupancy 5,379 2,874 - 8,253
Equipment 5,220 1,733 - 6,953
Professional fees and outside services 4,330 6,001 - 10,331
Data processing and communications 4,528 1,930 - 6,458
Amortization of intangible assets 1,317 386 - 1,703
Merger and acquisition charges 798 5,408 - 6,206
Other operating 7,836 10,261 - 18,097
-------------------------------------------------------------------------------------------------------------------------------
Total noninterest expense 62,882 50,663 - 113,545
-------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 40,228 29,716 - 69,944
Income taxes 13,971 11,491 - 25,462
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
Net Income $ 26,257 $ 18,225 $ - $ 44,482
===============================================================================================================================
Weighted Average Shares Outstanding
Basic 23,089 10,138 43,365
Diluted 23,382 10,312 44,006
Earnings Per Share
Basic $ 1.14 $ 1.80 $ 1.03
Diluted $ 1.12 $ 1.77 $ 1.01
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements.
82
<PAGE>
Unaudited Pro Forma Condensed Combined Statement of Income
For the Twelve Months Ended December 31, 1998
(in thousands, except per share data)
<TABLE>
<CAPTION>
NBT BSB Pro Forma Combined
Bancorp Inc. Bancorp, Inc. Adjustments Pro Forma
Interest and fee income:
<S> <C> <C> <C> <C>
Loans $ 108,492 $ 139,374 $ - $ 247,866
Securities 49,099 25,926 - 75,025
Other 1,011 866 - 1,877
-------------------------------------------------------------------------------------------------------------------------------
Total interest and fee income: 158,602 166,166 - 324,768
-------------------------------------------------------------------------------------------------------------------------------
Interest expense:
Deposits 58,898 72,387 - 131,285
Borrowings 15,838 12,399 - 28,237
-------------------------------------------------------------------------------------------------------------------------------
Total interest expense 74,736 84,786 - 159,522
-------------------------------------------------------------------------------------------------------------------------------
Net interest income 83,866 81,380 - 165,246
Provision for loan losses 6,149 12,931 - 19,080
-------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 77,717 68,449 - 146,166
-------------------------------------------------------------------------------------------------------------------------------
Noninterest income:
Trust 3,115 994 - 4,109
Service charges on deposit accounts 6,729 3,714 - 10,443
Net security gains (losses) 1,567 (851) - 716
Other 6,463 4,738 - 11,201
-------------------------------------------------------------------------------------------------------------------------------
Total noninterest income 17,874 8,595 - 26,469
-------------------------------------------------------------------------------------------------------------------------------
Noninterest expense:
Salaries and employee benefits 29,286 19,528 - 48,814
Office supplies and postage 3,029 1,998 - 5,027
Occupancy 5,159 2,911 - 8,070
Equipment 4,372 1,466 - 5,838
Professional fees and outside services 4,402 4,086 - 8,488
Data processing and communications 4,279 2,027 - 6,306
Amortization of intangible assets 1,314 386 - 1,700
Other operating 9,706 9,581 - 19,287
-------------------------------------------------------------------------------------------------------------------------------
Total noninterest expense 61,547 41,983 - 103,530
-------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 34,044 35,061 - 69,105
Income taxes 7,149 13,542 - 20,691
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
Net Income $ 26,895 $ 21,519 $ - $ 48,414
===============================================================================================================================
Weighted Average Shares Outstanding
Basic 23,199 10,006 43,211
Diluted 23,691 10,365 44,421
Earnings Per Share
Basic $ 1.16 $ 2.15 $ 1.12
Diluted $ 1.14 $ 2.08 $ 1.09
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements.
83
<PAGE>
Unaudited Pro Forma Condensed Combined Statement of Income
For the Twelve Months Ended December 31, 1997
(in thousands, except per share data)
<TABLE>
<CAPTION>
NBT BSB Pro Forma Combined
Bancorp Inc. Bancorp, Inc. Adjustments Pro Forma
<S> <C> <C> <C> <C>
Interest and fee income:
Loans $ 99,789 $ 120,750 $ - $ 220,539
Securities 46,622 20,398 - 67,020
Other 927 200 - 1,127
--------------------------------------------------------------------------------------------------
Total interest and fee income: 147,338 141,348 - 288,686
--------------------------------------------------------------------------------------------------
Interest expense:
Deposits 56,966 60,180 - 117,146
Borrowings 11,926 11,272 - 23,198
--------------------------------------------------------------------------------------------------
Total interest expense 68,892 71,452 - 140,344
--------------------------------------------------------------------------------------------------
Net interest income 78,446 69,896 - 148,342
Provision for loan losses 4,820 10,814 - 15,634
--------------------------------------------------------------------------------------------------
Net interest income after provision for loan los73,626 59,082 - 132,708
--------------------------------------------------------------------------------------------------
Noninterest income:
Trust 2,675 709 - 3,384
Service charges on deposit accounts 6,339 3,297 - 9,636
Net security gains (losses) 34 380 - 414
Other 4,880 3,762 - 8,642
--------------------------------------------------------------------------------------------------
Total noninterest income 13,928 8,148 - 22,076
--------------------------------------------------------------------------------------------------
Noninterest expense:
Salaries and employee benefits 27,151 17,121 - 44,272
Office supplies and postage 2,757 1,886 - 4,643
Occupancy 4,780 2,547 - 7,327
Equipment 3,317 1,378 - 4,695
Professional fees and outside services 3,385 2,716 - 6,101
Data processing and communications 3,422 1,358 - 4,780
Amortization of intangible assets 1,544 386 - 1,930
Other operating 8,104 9,548 - 17,652
--------------------------------------------------------------------------------------------------
Total noninterest expense 54,460 36,940 - 91,400
--------------------------------------------------------------------------------------------------
Income before income taxes 33,094 30,290 - 63,384
Income taxes 10,906 11,641 - 22,547
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Net Income $ 22,188 $ 18,649 $ - $ 40,837
==================================================================================================
Weighted Average Shares Outstanding
Basic 22,239 9,905 42,049
Diluted 22,698 10,258 43,214
Earnings Per Share
Basic $ 1.00 $ 1.88 $ 0.97
Diluted $ 0.98 $ 1.82 $ 0.94
</TABLE>
84
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED 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 BSB for each applicable period based on
the exchange ratios of 2.0.
(2) Pro forma entry to retire treasury stock held by BSB Bancorp, Inc.
(approximately 1,174,216 shares having a par value of $.01 per share)
<TABLE>
<CAPTION>
<S> <C> <C>
Common $11,742
Surplus $13,445,258
Treasury Stock $13,457,000
BSB Common Stock - Issued at March 31, 2000 11,430,761
less treasury retired-above (1,174,216)
-----------
BSB common stock issued and outstanding 10,256,545
==========
Pro forma entry to issue 2.0 shares of NBT Bancorp Inc. Common Stock in
exchange for each share of BSB Bancorp, Inc. Common Stock to be issued is
determined as follows:
NBT Bancorp Inc. common share issued 23,793,509
BSB Bancorp, Inc. common shares issued, after
retirement of treasury stock
(10,256,545 common shares times conversion ration of 2.0) 20,513,090
----------
Combined pro forma total common shares issued 44,306,599
Par value per common share of NBT 0.01
-------
Combined pro forma total par value 443,066
Actual par value of common stock at March 31, 2000
NBT Bancorp, Inc. 237,935
BSB Bancorp, Inc. (after retirement of treasury shares) 102,566 340,501
-------
Required increase in par value 102,565
=======
Entry to conform to par value of common stock:
Surplus 102,565
Common Stock 102,565
Summary of pro forma entries above
</TABLE>
85
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Surplus 13,547,823
Common stock 90,823
Treasury stock 13,457,000
</TABLE>
(3) Authorized, issued and outstanding share information is as follows at
March 31, 2000:
<TABLE>
<CAPTION>
NBT BSB NBT/BSB
Pro Forma
Preferred
<S> <C> <C> <C>
Authorized 2,500,000 2,500,000 2,500,000
Issued and Outstanding - - -
Common
Par Value $ 0.01 $ 0.01 $ 0.01
Authorized 30,000,000 30,000,000 100,000,000
Issued 23,793,509 11,430,761 44,306,599
Outstanding 23,270,942 10,256,545 43,784,032
</TABLE>
(4) The unaudited pro forma condensed combined balance sheet at March
31, 2000 reflects anticipated merger and integration costs for the BSB merger.
Costs related to the BSB merger are estimated to be in the range at $16.0
million to $17.0 million ($11.5 million to $12.5 million after taxes). These
estimates include primarily investment banking, legal, accounting, printing,
employee and contract termination costs. Anticipated merger and integration cost
estimates are not included in the unaudited pro forma condensed combined
statements of income for any of the periods presented.
The pro forma statements do not reflect potential expense reductions
or revenue enhancements expected to be realized subsequent to consummation of
the merger.
The unaudited pro forma condensed combined balance sheet at March 31,
2000 only reflects merger and integration costs related to the Lake Ariel and
Pioneer American mergers that were incurred through March 31, 2000. It is
anticipated that there will be an additional $10.1 million of merger and
integration costs incurred in the future in connection with the Lake Ariel and
Pioneer American mergers. These additional costs are not recognized in the
unaudited pro forma condensed combined balance sheet at March 31, 2000.
The entries to record the anticipated merger and integration costs on
the unaudited pro forma condensed combined balance sheet are:
BSB
---
Current Tax Receivable $4,500,000
Retained Earnings $12,000,000
Other Liabilities $ 16,500,000
86
<PAGE>
NBT BANCORP INC.
Proxy Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Michael Nearing and Adelbert L. Button, and
either of them, with full power of substitution, proxies to vote all of the
stock of NBT Bancorp Inc. ("NBT") which the undersigned is entitled to vote at
the special meeting of stockholders of NBT to be held at the on , 2000 at
[a.m./p.m.] local time, or at any adjournment or postponement thereof, with all
power which the undersigned would possess if personally present, upon the
following proposal described in the accompanying joint proxy
statement/prospectus, in accordance with the following instructions. THIS PROXY,
WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED. IF NO
DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR THE FOLLOWING PROPOSAL.
To consider and vote upon a proposal to adopt the agreement and plan
of merger, dated as of April 19, 2000, and amended as of May 17, 2000, between
NBT and BSB Bancorp, Inc., a Delaware corporation.
[_] FOR [_] AGAINST [_] ABSTAIN
X Please mark your
votes as in this
example.
(Continued and to be signed on reverse side) SEE REVERSE SIDE
TO VOTE BY TELEPHONE (TOUCH TONE ONLY)
--------------------------------------
Please call toll-free 1-800-______________ and follow the
instructions. Have your control number and this proxy card available when you
call.
The control number is _____________.
<PAGE>
(Continued from other side)
Date: Signature(s)
----------------------
-----------------------------------
-----------------------------------
-----------------------------------
Please sign here exactly as name(s)
appear(s) on this proxy card. 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>
BSB BANCORP, INC.
Proxy Solicited on Behalf of Board of Directors
The undersigned hereby appoints [ ] or any one or more of them, with
full power of substitution, proxies, to vote all of the stock of BSB Bancorp,
Inc., which the undersigned is entitled to vote at the Special Meeting of
Stockholders of BSB to be held at on , 2000 at [a.m./p.m.] local time or at any
adjournment or postponement thereof, with all power which the undersigned would
possess if personally present, upon the following proposal described in the
accompanying joint proxy statement/prospectus, in accordance with the following
instructions. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY
THE UNDERSIGNED. IF NO DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR THE
FOLLOWING PROPOSAL.
To consider and vote upon a proposal to adopt the agreement and plan
of merger, dated as of April 19, 2000, and amended as of May 17, 2000, between
NBT Bancorp Inc. and BSB, a Delaware corporation.
[_] FOR [_] AGAINST [_] ABSTAIN
X Please mark your
votes as in this
example.
(Continued and to be signed on reverse side) SEE REVERSE SIDE
TO VOTE BY TELEPHONE (TOUCH TONE ONLY)
--------------------------------------
Please call toll-free 1-800-_______________ and follow the
instructions. Have your control number and this proxy card available when you
call.
The control number is __________________.
<PAGE>
(Continued from other side)
Date: Signature(s)
----------------------
-----------------------------------
-----------------------------------
-----------------------------------
Please sign here exactly as name(s)
appear(s) on this proxy card. 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
BY AND BETWEEN
NBT BANCORP INC.
AND
BSB BANCORP, INC.
dated as of April 19, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I THE MERGER ........................................................ 2
SECTION 1.01. The Merger ................................................. 2
SECTION 1.02. Effective Time ............................................. 2
SECTION 1.03. Effect of the Merger ....................................... 3
SECTION 1.04. Certificate of Incorporation and Bylaws .................... 3
SECTION 1.05. Senior Executive Officers .................................. 3
SECTION 1.06. Representation on the Board of the Surviving Corporation ... 4
SECTION 1.07. Composition of the Board of the Resulting Bank.............. 5
SECTION 1.08. Conversion of Common Stock ................................. 5
SECTION 1.09. Exchange of Certificates ................................... 6
SECTION 1.10. Treatment of Stock Options ................................. 9
SECTION 1.11. Stock Transfer Books ....................................... 10
SECTION 1.12. Anti-Dilution Adjustment ................................... 10
SECTION 1.13. Tax Consequences ........................................... 11
ARTICLE II REPRESENTATIONS AND WARRANTIES OF BSB ............................ 11
SECTION 2.01. Organization and Qualification of BSB; Subsidiaries ........ 11
SECTION 2.02. Certificate of Incorporation and Bylaws .................... 12
SECTION 2.03. Capitalization ............................................. 13
SECTION 2.04. Authority; State Takeover Laws; Certificate of Incorporation 13
SECTION 2.05. No Conflict; Required Filings and Consents ................. 14
SECTION 2.06. Compliance ................................................. 16
SECTION 2.07. Securities and Banking Reports; Financial Statements ....... 16
SECTION 2.08. Absence of Certain Changes or Events ....................... 17
SECTION 2.09. Absence of Litigation and Agreements ....................... 17
SECTION 2.10. Employee Benefit Plans ..................................... 18
SECTION 2.11. Material Contracts ......................................... 21
SECTION 2.12. Environmental Matters ...................................... 21
SECTION 2.13. Taxes ...................................................... 22
SECTION 2.14. Affiliates ................................................. 24
SECTION 2.15. Derivative Instruments ..................................... 24
SECTION 2.16. Regulatory Approvals ....................................... 25
SECTION 2.17. Brokers .................................................... 25
SECTION 2.18. Pooling of Interests and Tax Matters ....................... 25
SECTION 2.19. Vote Required .............................................. 25
SECTION 2.20. Fairness Opinion ........................................... 25
SECTION 2.21. Rights Agreement ........................................... 26
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
ARTICLE III REPRESENTATIONS AND WARRANTIES OF NBT ........................... 26
SECTION 3.01. Organization and Qualification of NBT; Subsidiaries ........ 26
SECTION 3.02. Certificate of Incorporation and Bylaws .................... 27
SECTION 3.03. Capitalization ............................................. 27
SECTION 3.04. Authority .................................................. 28
SECTION 3.05. No Conflict; Required Filings and Consents ................. 29
SECTION 3.06. Compliance ................................................. 30
SECTION 3.07. Securities and Banking Reports; Financial Statements ....... 31
SECTION 3.08. Absence of Certain Changes or Events ....................... 32
SECTION 3.09. Absence of Litigation and Agreements ....................... 32
SECTION 3.10. Employee Benefit Plans ..................................... 33
SECTION 3.11. Material Contracts ......................................... 36
SECTION 3.12. Environmental Matters ...................................... 36
SECTION 3.13. Taxes ...................................................... 37
SECTION 3.14. Affiliates ................................................. 38
SECTION 3.15. Derivative Instruments ..................................... 38
SECTION 3.16. Regulatory Approvals ....................................... 39
SECTION 3.17. Brokers .................................................... 39
SECTION 3.18. Pooling of Interest and Tax Matters ........................ 39
SECTION 3.19. Votes Required ............................................. 39
SECTION 3.20. Fairness Opinion ........................................... 39
SECTION 3.21. Right Agreement ............................................ 40
ARTICLE IV COVENANTS OF BSB AND NBT ......................................... 40
SECTION 4.01. Affirmative Covenants ...................................... 40
SECTION 4.02. Negative Covenants ......................................... 40
ARTICLE V ADDITIONAL AGREEMENTS ............................................. 43
SECTION 5.01. Registration Statement; Joint Proxy Statement .............. 43
SECTION 5.02. Meetings of Shareholders ................................... 45
SECTION 5.03. Access to Information; Confidentiality ..................... 46
SECTION 5.04. Appropriate Action; Consents; Filings ...................... 46
SECTION 5.05. No Solicitation of Transactions ............................ 47
SECTION 5.06. Indemnification ............................................ 49
SECTION 5.07. Employee Benefits .......................................... 51
SECTION 5.08. Executive Agreements and Employee Severance ................ 52
SECTION 5.09. Notification of Certain Matters ............................ 53
SECTION 5.10. Public Announcements ....................................... 53
SECTION 5.11. Expenses ................................................... 53
SECTION 5.12. Delivery of Stockolder List ................................ 54
SECTION 5.13. Letters of Accountants ..................................... 54
SECTION 5.14. BSB Reports ................................................ 54
SECTION 5.15. NBT Reports ................................................ 55
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SECTION 5.16. Pooling .................................................... 55
SECTION 5.17. Disclosure Schedules ....................................... 55
SECTION 5.18. Regulatory Matters ......................................... 56
ARTICLE VI CONDITIONS OF MERGER ............................................. 57
SECTION 6.01. Conditions to Obligation of Each Party to Effect the Merger 57
SECTION 6.02. Additional Conditions to Obligations of NBT ................ 58
SECTION 6.03. Additional Conditions to Obligations of BSB ................ 59
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER ............................... 60
SECTION 7.01. Termination ................................................ 60
SECTION 7.02. Effect of Termination ...................................... 61
SECTION 7.03. Amendment .................................................. 62
SECTION 7.04. Waiver ..................................................... 62
ARTICLE VIII GENERAL PROVISIONS ............................................. 62
SECTION 8.01. Closing .................................................... 62
SECTION 8.02. Non-Survival of Representations, Warranties and
Agreements ................................................. 62
SECTION 8.03. Notices .................................................... 63
SECTION 8.04. Additional Definitions ..................................... 63
SECTION 8.05. Headings ................................................... 64
SECTION 8.06. Severability ............................................... 64
SECTION 8.07. Entire Agreement ........................................... 65
SECTION 8.08. Assignment ................................................. 65
SECTION 8.09. Parties in Interest ........................................ 65
SECTION 8.10. Governing Law .............................................. 65
SECTION 8.11. Counterparts ............................................... 65
</TABLE>
EXHIBITS
--------
A Bank Plan of Merger
B BSB Stock Option Agreement
C NBT Stock Option Agreement
D Certificate of Merger
E Senior Executive Officers
F BSB Stockholder Agreement
G NBT Stockholder Agreement
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 19, 2000 (this
"Agreement"), by and between NBT BANCORP INC, a Delaware corporation ("NBT"),
---------- ---
and BSB BANCORP, INC, a Delaware corporation ("BSB") (at times, referred to
---
herein as the "Party" or the "Parties").
----- -------
W I T N E S S E T H:
WHEREAS, NBT is a registered bank holding company with the Board of
Governors of the Federal Reserve System ("FRB") under the Bank Holding Company
---
Act of 1956, as amended (the "BHCA"); and
----
WHEREAS, BSB is a registered bank holding company with the FRB under
the BHCA; and
WHEREAS, the Boards of Directors of NBT and BSB have determined it is
advisable and in the best interests of their respective companies and
stockholders to consummate the business combination transaction provided for
herein in which BSB will, subject to the terms and conditions set forth herein,
merge with and into NBT, with NBT being the Surviving Corporation (as
hereinafter defined) (the "Merger"); and
------
WHEREAS, prior to consummation of the Merger, NBT and BSB will cause
BSB Bank & Trust Company, a New York-chartered commercial bank and trust company
headquartered in Binghamton, New York and wholly owned subsidiary of BSB ("BSB
---
Bank"), and NBT Bank, National Association, a national banking association
----
headquartered in Norwich, New York and wholly owned subsidiary of NBT ("NBT
---
Bank"), to enter into a bank plan of merger, in the form attached hereto as
Exhibit A (the "Bank Merger Agreement"), providing for the merger of BSB Bank
--------- ---------------------
with and into NBT Bank (the "Bank Merger"), with NBT Bank being the resulting
-----------
bank of the Bank Merger (the "Resulting Bank"), and it is intended that the Bank
--------------
Merger be consummated immediately after consummation of the Merger; and
WHEREAS, in order to effect the aforementioned combination, the
respective Boards of Directors of NBT and BSB have (i) determined in accordance
with the General Corporation Law of the State of Delaware ("Delaware Law") that
------------
the Merger, pursuant and subject to the terms and conditions of this Agreement,
is advisable and in the best interests of their respective corporations and
their stockholders, and (ii) adopted a resolution approving this Agreement and
the other transactions contemplated hereby; and
<PAGE>
WHEREAS, the Board of Directors of NBT has resolved to recommend
approval of this Agreement and the Merger by the stockholders of NBT; and
WHEREAS, the Board of Directors of BSB has resolved to recommend
approval of this Agreement and the Merger by the stockholders of BSB; and
WHEREAS, NBT and BSB intend to effect a merger that qualifies for
pooling of interests accounting treatment and that qualifies as a reorganization
under Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code") with this Agreement representing the plan of reorganization for purposes
----
of the Code; and
WHEREAS, as a condition and inducement to NBT to enter into this
Agreement, BSB will enter into a stock option agreement in the form attached
hereto as Exhibit B (the "BSB Stock Option Agreement"); and
--------- --------------------------
WHEREAS, as a condition and inducement to BSB to enter into this
Agreement, NBT will enter into a stock option agreement in the form attached
hereto as Exhibit C (the "NBT Stock Option Agreement"); 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 the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the Parties hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger.
----------
Subject to the terms and conditions of this Agreement, in accordance
with Delaware Law, at the Effective Time (as defined in Section 1.02) BSB shall
merge with and into NBT. As a result of the Merger, the separate corporate
existence of BSB shall cease and NBT will continue as the surviving corporation
of the Merger (the "Surviving Corporation").
---------------------
SECTION 1.02. Effective Time.
--------------
The Merger shall become effective on the date and at the time
specified in the Certificate of Merger (the "Certificate of Merger") in
---------------------
substantially the form attached as Exhibit D hereto, as filed with the Secretary
---------
of State of the State of Delaware (the date and time so specified in the
Certificate of Merger is hereinafter referred to as the "Effective Time").
--------------
2
<PAGE>
SECTION 1.03. Effect of the Merger.
--------------------
(a) Legal Effect. At and after the Effective Time, the Merger shall
------------
have the effects set forth in Sections 259 and 261 of Delaware Law.
(b) Name Changes. The names of the Surviving Corporation and the
------------
Resulting Bank shall be changed at the Effective Time to new names to be
determined by mutual agreement of the Parties within 45 days after the execution
of this Agreement; provided that neither the Surviving Corporation's new name
nor the Resulting Bank's new name shall include "NBT" or "BSB."
(c) Post-Merger Operations. Upon the Merger, the Parties intend that
----------------------
the headquarters and principal offices of the Surviving Corporation will be in
Binghamton, New York. It is further anticipated that the Surviving Corporation
and its subsidiaries will, for the foreseeable future, maintain significant
operations in Chenango and Oneida Counties, New York and in Lackawanna County,
Pennsylvania.
SECTION 1.04. Certificate of Incorporation and Bylaws.
---------------------------------------
(a) At the Effective Time, the Certificate of Incorporation, as
amended, of NBT in effect immediately prior to the Effective Time shall be
amended in the Merger by (i) amending Article FIRST thereof to reflect the new
name of the Surviving Corporation and by (ii) 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 One Hundred Five
Million (105,000,000) shares, consisting of One Hundred Million
(100,000,000) shares of Common Stock having a par value of $.01 per
share and Five Million (5,000,000) shares of Preferred Stock having a
par value of $.01 per share."
As so amended, the Certificate of Incorporation of NBT shall be the Certificate
of Incorporation of the Surviving Corporation. At the Effective Time, the
Bylaws of NBT in effect immediately prior to the Effective Time shall become the
Bylaws of the Surviving Corporation, except that the Bylaws shall be revised to
reflect the new name of the Surviving Corporation.
(b) At the Effective Time, the Certificate of Organization, Articles
of Association and Bylaws of NBT Bank in effect immediately prior to the
Effective Time shall become the Certificate of Organization, Articles of
Association and Bylaws of the Resulting Bank, except that such organizational
documents shall be amended to reflect the new name of the Resulting Bank.
SECTION 1.05. Senior Executive Officers..
--------------------------
At the Effective Time, the persons listed in Exhibit E attached hereto
---------
shall serve as the senior
3
<PAGE>
executive officers of the Surviving Corporation and the senior executive
officers of the Resulting Bank in the capacities noted opposite their respective
names.
SECTION 1.06. Representation on the Board of the Surviving
--------------------------------------------
Corporation
-----------
(a) (i) If the proposed acquisition of Pioneer American Holding
Company Corp. ("Pioneer") by NBT is consummated prior to the Effective Time, at
the Effective Time, the board of directors of the Surviving Corporation shall
consist of 15 directors, seven of whom shall be designated by BSB's board of
directors and six of whom shall be designated by NBT's board of directors from
among the existing membership of their respective boards of directors
immediately prior to the Effective Time. In designating these directors, each of
BSB and NBT shall allocate those directors to Class 1, Class 2 and Class 3 as
equally as possible. In addition, NBT shall designate one director, from among
the former members of the board of directors of Lake Ariel Bancorp, Inc. (the
"Former Lake Members") who are serving on the board of NBT at the Effective
Time. If there are no such Former Lake Members, NBT shall designate another
Former Lake Member. NBT shall also designate one director from among the former
members of the board of directors of Pioneer (the "Former Pioneer Members") who
are serving on the Board of NBT at the Effective Time. If there are no such
Former Pioneer Members at the Effective Time, NBT shall designate another Former
Pioneer Member. The Former Lake Member and the Former Pioneer Member so
designated shall become directors of the Surviving Corporation and shall be
allocated to the classes on the board of directors as equally as possible. (ii)
If the proposed acquisition of Pioneer is not consummated prior to the Effective
Time, the board of directors of the Surviving Corporation shall consist of 13
directors, six of whom shall be designated by BSB's board of directors, six of
whom shall be designated by NBT's board of directors and one Former Lake Member
designated by NBT who is serving on the Board of NBT at the Effective Time. If
there are no such Former Lake Members, NBT shall designate another Former Lake
Member. The directors designated by each of BSB and NBT shall be allocated to
classes as equally as possible. (iii) The selections to be made pursuant to this
Section 1.06(a) shall be made no later than 20 Business Days following the date
of this Agreement and shall be noted on Schedule 1.06(a) to be attached to and
deemed a part of this Agreement. It is agreed that if any individual so
designated shall be unable or unwilling to serve as a director of the Surviving
Corporation at the Effective Time, the party that designated such individual
shall designate another individual, who was eligible under this Section 1.06(a)
to have been so designated on or before 20 Business Days following the date of
this Agreement, to serve in such individual's place. If no other individual is
so eligible, then the size of the board of directors of the Surviving
Corporation shall be reduced by one. BSB and NBT agree to establish within 20
Business Days following the date of this Agreement transition committees to be
comprised of the individuals designated to serve on the Board of Directors of
the Surviving Corporation ("Transition Committees") and such Transition
Committees shall meet periodically at times to be decided by mutual agreement of
BSB and NBT until the Effective Date.
4
<PAGE>
(b) It is agreed that the composition of the board of directors of the
Surviving Corporation outlined in paragraph (a) of this Section 1.06 implements
an interim program that will change over time as the board of directors of the
Surviving Corporation is expanded to include persons who are not currently
directors of NBT, BSB, or Pioneer and whose membership on the board of directors
of the Surviving Corporation will afford representation to communities within
the present and prospective service area of the Surviving Corporation which are
not currently represented on the board of directors of the Surviving
Corporation.
(c) The initial chairmanships of the committees of the Board of
Directors of the Surviving Corporation shall be as set forth in Schedule
1.06(c), to be attached and deemed a part of this Agreement.
SECTION 1.07 Composition of the Board of the Resulting Bank
----------------------------------------------
At the Effective Time, the board of directors of the Resulting Bank
shall consist of the chairman of the board of directors of the Surviving
Corporation, who shall serve as the chairman of the board of the Resulting Bank,
and eight, ten or twelve other persons, half of whom will be designated by NBT
and half of whom will be designated by BSB. The number of such other persons
shall be agreed upon by NBT and BSB, and in the absence of timely agreement such
number shall be set at ten. The number of directors and the selection of
directors to be designated by NBT and BSB under this paragraph shall be
determined and made no later than 20 Business Days following the date of this
Agreement and shall be noted on Schedule 1.07 to be attached to and deemed a
part of this Agreement, provided, that the president of the Resulting Bank shall
be one of the directors so designated by NBT.
SECTION 1.08. Conversion of Common Stock.
--------------------------
At the Effective Time, by virtue of the Merger and without any action
on the part of NBT, BSB, or the holders of any of the following securities:
(a) Each share of BSB common stock, par value $.01 per share ("BSB
---
Common Stock") (all such shares of BSB Common Stock being hereinafter
------------
collectively referred to as the "Shares") issued and outstanding immediately
------
prior to the Effective Time (other than any Shares to be cancelled pursuant to
Section 1.8(b)) shall, by virtue of this Agreement and without any action on the
part of the holder thereof, be converted, in accordance with Section 1.09, into
the right to receive two shares, as may be adjusted as provided elsewhere
herein, of NBT common stock, par value $.01 per share ("NBT Common Stock") (the
----------------
"Exchange Ratio"). As of the Effective Time, all such Shares shall no longer be
--------------
outstanding and shall automatically be cancelled and retired and shall cease to
exist, and each certificate previously representing any such Shares shall
thereafter represent the right to receive a certificate representing shares of
NBT Common Stock into which such Shares are convertible. For the purposes of
this Agreement, references to BSB Common Stock shall be deemed to include, where
appropriate, references to the right to receive shares of BSB Series A Junior
Participating Preferred Stock pursuant to the Rights Agreement, dated as of May
24, 1999, as amended between BSB and American Stock Transfer & Trust Company
("AST") (the "BSB Rights Agreement"). Certificates
--- --------------------
5
<PAGE>
previously representing Shares shall be exchanged for certificates representing
whole shares of NBT Common Stock issued in consideration therefor upon the
surrender of such certificates in accordance with the provisions of Section
1.09, without interest. No fractional shares of NBT Common Stock shall be
issued, and, in lieu thereof, a cash payment shall be made pursuant to Section
1.09 hereof.
(b) Each Share held in the treasury of BSB and each Share owned by NBT
or any direct or indirect wholly owned subsidiary of NBT immediately prior to
the Effective Time (other than Shares held, directly or indirectly, by NBT, any
NBT Subsidiary, BSB or any BSB Subsidiary in trust accounts, managed accounts
and the like or otherwise held in a fiduciary or custodial capacity that are
beneficially owned by third parties and Shares held by NBT, any NBT Subsidiary,
BSB or any BSB Subsidiary in respect of debt previously contracted) shall be
cancelled and extinguished without any conversion thereof and no payment shall
be made with respect thereto.
SECTION 1.09. Exchange of Certificates.
------------------------
(a) Exchange Agent. As of the Effective Time, NBT shall deposit, or
--------------
shall cause to be deposited, with American Stock Transfer & Trust Company (the
"Exchange Agent"), solely for the benefit of the holders of Shares, for exchange
---------------
in accordance with this Article I through the Exchange Agent, certificates
representing the shares of NBT Common Stock (such certificates for shares of NBT
Common Stock, and cash in lieu of fractional shares (if any), together with any
dividends or distributions with respect thereto, being hereinafter referred to
as the "Exchange Fund", issuable pursuant to Section 1.08 in exchange for
-------------
outstanding Shares.
(b) Exchange Procedures. Within two Business Days after the Effective
-------------------
Time, NBT shall cause the Exchange Agent to mail or personally deliver to each
holder of record (or his or her attorney-in-fact) of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding Shares (the "Certificates"), whose Shares were converted into the
------------
right to receive shares of NBT Common Stock pursuant to Section 1.08 and cash in
lieu of fractional shares of NBT Common Stock (if any), (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as NBT and BSB may reasonably specify) and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for certificates
representing whole shares of NBT Common Stock together with any dividends or
distributions with respect thereto and any cash in lieu of fractional shares.
Upon surrender of a Certificate for cancellation to the Exchange Agent, together
with such letter of transmittal, duly executed, and such other documentation as
may be required pursuant to such instructions, the holder of such Certificate
shall be entitled to receive in exchange therefor a certificate representing
that number of whole shares of NBT Common Stock, which such holder has the right
to receive in respect of the Shares formerly represented by such Certificate
surrendered pursuant to the
6
<PAGE>
provisions of this Article I (after taking into account all Shares then held by
such holder) and cash in lieu of fractional shares of NBT Common Stock (if any)
to which such holder is entitled pursuant to Section 1.09(e) and any dividends
or other distributions to which such holder is entitled pursuant to Section
2.02(c), and the Certificate so surrendered shall forthwith be cancelled. In the
event of a transfer of ownership of Shares which is not registered in the
transfer records of BSB, a certificate representing the proper number of shares
of NBT Common Stock may be issued to a transferee if the Certificate
representing such Shares is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 1.09, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the certificate representing shares of NBT Common Stock, cash in lieu
of any fractional shares of NBT Common Stock to which such holder is entitled
pursuant to Section 1.09(e) and any dividends or other distributions to which
such holder is entitled pursuant to Section 1.09(c).
(c) Distributions with Respect to Unexchanged Shares. No dividends or
------------------------------------------------
other distributions declared or made after the Effective Time with respect to
NBT Common Stock with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Certificate with respect to the shares of NBT
Common Stock represented thereby, and no cash payment in lieu of fractional
shares of NBT Common Stock (if any) shall be paid to any such holder pursuant to
Section 1.09(e), until the holder of such Certificate shall surrender such
Certificate. Subject to the effect of applicable laws, following surrender of
any such Certificate, there shall be paid to the holder of the certificates
representing whole shares of NBT Common Stock issued in exchange therefor,
without interest, (i) promptly, the amount of any cash payable with respect to a
fractional share of NBT Common Stock to which such holder is entitled pursuant
to Section 1.09(e) and the amount of dividends or other distributions with a
record date after the Effective Time theretofore paid with respect to such whole
shares of NBT Common Stock, and (ii) at the appropriate payment date, the amount
of dividends or other distributions, with a record date after the Effective Time
but prior to surrender and a payment date occurring after surrender, payable
with respect to such whole shares of NBT Common Stock.
(d) No Further Rights in the Shares. All shares of NBT Common Stock
-------------------------------
issued upon conversion of the Shares in accordance with the terms hereof
(including any cash paid pursuant to Section 1.09(e)) shall be deemed to have
been issued in full satisfaction of all rights pertaining to such Shares. In
accordance with Delaware Law, there shall be no appraisal rights available to
holders of BSB Common Stock or NBT Common Stock in connection with the Merger.
(e) No Fractional Shares. Notwithstanding anything to the contrary
--------------------
contained herein, no certificates or scrip representing fractional shares of NBT
Common Stock shall be issued upon the surrender for exchange of Certificates,
and such fractional share interest will not entitle the owner thereof to vote or
to any other rights of a stockholder of NBT. Each holder of a fractional share
interest shall
7
<PAGE>
be paid an amount in cash equal to the product obtained by multiplying (i) such
fractional share interest to which such holder (determined after taking into
account all fractional share interests then held by such holder) would otherwise
be entitled to receive pursuant to Section 1.08 hereof multiplied by (ii) the
actual market value of NBT Common Stock, which shall be deemed to be the average
of the daily closing prices per share of NBT Common Stock for the twenty
consecutive trading days on which shares of NBT are actually traded on the
Nasdaq National Market ending on the third trading day preceding the date of the
Effective Time as reported by the Wall Street Journal.
-------------------
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
----------------------------
which remains undistributed to the stockholders of BSB for twelve months after
the Effective Time shall be delivered to NBT, upon demand, and any stockholders
of BSB who have not theretofore complied with this Article I shall thereafter
look only to NBT for the shares of NBT Common Stock, any cash in lieu of
fractional shares of NBT Common Stock to which they are entitled pursuant to
Section 1.09(e) and any dividends or other distributions with respect to NBT
Common Stock to which they are entitled pursuant to Section 1.09(c). Any
portion of the Exchange Fund remaining unclaimed by holders of Shares as of a
date which is immediately prior to such time as such amounts would otherwise
escheat to or become property of any government entity shall, to the extent
permitted by applicable Law, become the property of NBT free and clear of any
claims or interest of any person previously entitled thereto.
(g) No Liability. Neither NBT, or BSB shall be liable to any holder
------------
of Shares for any such Shares (or dividends or distributions with respect
thereto) or cash delivered to a public official pursuant to any abandoned
property, escheat or similar Law.
(h) Withholding Rights. NBT shall be entitled to deduct and withhold
------------------
from the consideration otherwise payable pursuant to this Agreement to any
holder of Shares such amounts as NBT is required to deduct and withhold with
respect to the making of such payment under the Code, or any provision of state,
local or foreign tax law. To the extent that amounts are so withheld by NBT,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the Shares in respect of which such deduction
and withholding were made by NBT.
(i) Lost, Stolen or Destroyed Certificates. In the event any
--------------------------------------
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if required by NBT, the posting by such person of a
bond in such amount as NBT may reasonably direct as indemnity against any claim
that may be made against it with respect to such Certificate, the NBT will issue
or cause to be issued, in exchange for such lost, stolen or destroyed
Certificate, the number of whole shares of NBT Common Stock and pay or cause to
be paid the amounts deliverable in respect thereof pursuant to Sections 1.09(e)
and 1.09(c) of this Agreement.
8
<PAGE>
SECTION 1.10. Treatment of Stock Options.
--------------------------
(a) At the Effective Time, each option granted (including any option
heretofore assumed) by BSB to purchase Shares which is outstanding and
unexercised immediately prior thereto shall be assumed by NBT. Such options
shall cease to represent a right to acquire Shares and shall be converted
automatically into an option to purchase shares of NBT Common Stock in an amount
and at an exercise price determined as provided below:
(i) the number of shares of NBT Common Stock to be subject to the
assumed option shall be equal to the product of the number of shares of BSB
Common Stock subject to the option originally granted by BSB, as previously
adjusted, and the Exchange Ratio; provided that any fractional shares of
--------
NBT Common Stock resulting from such multiplication shall be rounded down
to the nearest whole share; and
(ii) the exercise price per share of NBT Common Stock under the
assumed option shall be equal to the exercise price per share of BSB Common
Stock under the option originally granted by BSB, as previously adjusted,
divided by the Exchange Ratio, provided that such exercise price shall be
--------
rounded up to the nearest whole cent.
(b) The assumption of BSB options by NBT, as provided herein, shall
comply with the requirements of Section 424(a) of the Code. The duration and
other terms of the assumed option shall be the same as the original option
except as provided in Sections 1.10(a)(i) and (ii) and except that all
references to BSB shall be deemed to be references to NBT. Nothing herein shall
be construed as preventing any option holder from exercising an option prior to
the Effective Time in accordance with the terms thereof.
(c) At the Effective Time, by virtue of the Merger and without the
need of any further corporate action, NBT shall assume the BSB 1986 Long-Term
Incentive and Capital Accumulation Plan, as amended, the 1996 Long-Term
Incentive and Capital Accumulation Plan, as amended, and the Directors Stock
Option Plan (the "BSB Stock Plans"), with the result that all obligations of BSB
---------------
under the BSB Stock Plans, including with respect to stock options issued by BSB
that are outstanding at the Effective Time under each BSB Stock Plan, shall be
obligations of NBT following the Effective Time.
(d) No later than 45 days after the Effective Time, NBT shall prepare
and file with the SEC a registration statement on Form S-8 (or another
appropriate form) registering a number of shares of NBT Common Stock equal to
the number of shares subject to the options assumed hereunder. Such
registration statement shall be kept effective (and the current status of the
prospectus or prospectuses required thereby shall be maintained) at least for so
long as any assumed options may remain outstanding.
9
<PAGE>
(e) As soon as practicable after the Effective Time, NBT shall deliver
to the holders of options to purchase BSB Common Stock appropriate notices
setting forth such holders' rights pursuant to BSB Stock Plans and the
agreements pursuant to which such options were issued, and the agreements
evidencing the grant of such options shall be assumed by NBT and shall continue
in effect on the same terms and conditions (subject to the adjustments required
by this Section 1.10 after giving effect to the Merger).
(f) Prior to the Effective Time, NBT and BSB shall take commercially
reasonably steps necessary to cause the transactions contemplated hereby and any
other dispositions of equity securities of BSB (including derivative securities)
or acquisitions of NBT equity securities (including derivative securities) in
connection with this Agreement by each individual who (a) is a director or
officer of NBT or (b) at the Effective Time, will become a director or officer
of NBT, that may qualify for exemption under Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") to be exempt
thereunder.
SECTION 1.11. Stock Transfer Books.
--------------------
At the Effective Time, the stock transfer books of BSB shall be closed
and there shall be no further registration of transfers of Shares thereafter on
the records of BSB. From and after the Effective Time, the holders of
Certificates shall cease to have any rights with respect to such Shares except
as otherwise provided herein or by any Laws. On or after the Effective Time,
any Certificates presented to the Exchange Agent or NBT for any reason shall be
treated in accordance with this Article I, any cash in lieu of fractional shares
of NBT Common Stock to which the holders thereof are entitled pursuant to
Section 1.09(e) and any dividends or other distributions to which the holders
thereof are entitled pursuant to Section 1.09(c).
SECTION 1.12. Anti-Dilution Adjustment-.
------------------------
If, subsequent to the date hereof and prior to the Effective Time, NBT
shall pay a stock dividend or make a distribution on NBT Common Stock or other
capital stock of NBT in shares of NBT Common Stock or other capital stock of NBT
or any security convertible into NBT Common Stock or other capital stock of NBT
or shall combine, subdivide, reclassify or recapitalize its stock, then in each
such case, from and after the record date for determining the stockholders
entitled to receive such dividend or distribution of the securities from such
combination or subdivision, an appropriate adjustment shall be made to the
Exchange Ratio, for purposes of determining the number of shares of NBT Common
Stock into which BSB Common Stock shall be converted pursuant to Section 1.8
hereof. For purposes hereof, the payment of a dividend in NBT Common Stock, or
the distribution on NBT Common Stock of securities convertible into NBT Common
Stock, shall be deemed to have effected an increase in the number of outstanding
shares of NBT Common Stock equal to the number of shares of NBT Common Stock
into which such securities shall be
10
<PAGE>
initially convertible without the payment by the holder thereof of any
consideration other than the surrender for cancellation of such convertible
securities.
SECTION 1.13 Tax Consequences.
----------------
It is intended that the Merger and Bank Merger shall each constitute a
reorganization within the meaning of Section 368(a) of the Code, and that this
Agreement shall constitute a "plan of reorganization" for purposes of the Code.
In the event that the requirements of such section would not be satisfied as a
result of the Merger or the Bank Merger, NBT and BSB will use commercially
reasonable efforts to restructure the transaction in a manner that would satisfy
such requirements.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF BSB
Except as set forth in the disclosure schedule delivered by BSB to NBT
prior to the execution of this Agreement which shall identify exceptions by
specific Section references (provided that disclosure in one schedule will be
--------
deemed to satisfy disclosure in another schedule) (the "BSB Disclosure
--------------
Schedule"), BSB hereby represents and warrants to NBT that:
SECTION 2.01. Organization and Qualification of BSB; Subsidiaries.
---------------------------------------------------
(a) BSB is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. BSB is duly registered as a
bank holding company with the Board of Governors of the FRB under the BHCA. BSB
has the corporate power and authority to own or lease all of its properties and
assets and to carry on in its business as it is now being conducted and is duly
licensed or qualified to do business in each jurisdiction in which the nature of
any material business conducted by it or the character or the location of any
material properties or assets owned or leased by it makes such licensing or
qualification necessary.
(b) BSB Bank is a New York-chartered commercial bank and trust company
duly organized and validly existing and in good standing under the laws of the
State of New York. The deposit accounts of BSB Bank are insured to the
applicable limits by the Federal Deposit Insurance Corporation ("FDIC") through
----
the Bank Insurance Fund ("BIF") to the fullest extent permitted by law, and all
---
premiums and assessments required in connection therewith have been paid by BSB
Bank. BSB Bank has the corporate power and authority to own or lease all of its
properties and assets and to carry on in its business as it is now being
conducted and is duly licensed or qualified to do business in each jurisdiction
in which the nature of any material business conducted by it or the character or
the location of any material properties or assets owned or leased by it makes
such licensing or qualification necessary.
11
<PAGE>
(c) Section 2.01(c) of the BSB Disclosure Schedule sets forth a true
and complete list of each of BSB's subsidiaries (the "BSB Subsidiaries") and all
----------------
outstanding equity securities of each BSB Subsidiary and the percentage owned by
BSB of such equity securities. Each BSB Subsidiary is wholly owned, directly or
indirectly, by BSB. Except as set forth in Section 2.01(c) of the BSB
Disclosure Schedule, all outstanding shares of capital stock of BSB Subsidiaries
are validly issued, fully paid and nonassessable and are free and clear of any
lien, claim, charge, option, encumbrance, agreement, mortgage, pledge, security
interest or restriction (each, a "Lien") with respect thereto. Each BSB
----
Subsidiary is a corporation, partnership, savings bank, savings and loan, bank
or trust company duly incorporated or organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization.
(d) Each of BSB and each BSB Subsidiary has the requisite corporate
power and authority and is in possession of all franchises, grants,
authorizations, licenses, permits, easements, consents, certificates, approvals
and orders ("BSB Permits") necessary to own, lease and operate its properties
-----------
and to carry on its business as is now being conducted, except where the failure
to be so organized, existing and in good standing or to have such power,
authority and BSB Permits would not, either individually or in the aggregate,
have a Material Adverse Effect (as defined in Section 8.04 hereof) on BSB and
the BSB Subsidiaries, taken as a whole. BSB has not received any notice of
proceedings relating to the revocation or modification of any BSB Permits,
except for any such revocation or modification which would not, either
individually or in the aggregate, have a Material Adverse Effect on BSB and the
BSB Subsidiaries, taken as a whole. BSB and each BSB Subsidiary is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to be so duly
qualified or licensed and in good standing that would not, either individually
or in the aggregate, have a Material Adverse Effect on BSB and the BSB
Subsidiaries, taken as a whole.
(e) Section 2.01(e) of the BSB Disclosure Schedule sets forth a true,
complete and correct list of all corporations, partnerships, limited liability
companies or other organizations, whether an incorporated or unincorporated
organization (each a "Corporate Entity") of which BSB or any BSB Subsidiary
----------------
holds or beneficially owns 5% or more of the outstanding shares of any class of
voting securities, a general partnership interest or other controlling interest,
more than 24.9% of the outstanding capital stock (whether voting or nonvoting)
and subordinated debt or is otherwise deemed to be a subsidiary within the
meaning of the BHCA.
SECTION 2.02. Certificate of Incorporation and Bylaws.
---------------------------------------
BSB and the BSB Subsidiaries have heretofore furnished or made
available to NBT a complete and correct copy of their respective Certificates of
Incorporation and the Bylaws, as amended or restated. Such Certificates of
12
<PAGE>
Incorporation and Bylaws are in full force and effect and none of BSB or the BSB
Subsidiaries are in violation of any of the provisions of their respective
Certificates of Incorporation or Bylaws.
SECTION 2.03. Capitalization.
---------------
(a) Capitalization of BSB. The authorized capital stock of BSB as of
---------------------
March 31, 2000 consists of (i) 30,000,000 Shares, of which, 10,256,545 shares
were issued and outstanding, all of which are validly issued, fully paid and
non-assessable, and all of which have been issued in compliance with applicable
securities laws, and (ii) 2,500,000 shares of serial preferred stock, par value
$.01 per share ("BSB Preferred Stock"), of which no shares are issued and
-------------------
outstanding. Since January 31, 2000 no shares of BSB Common Stock have been
issued, except for shares issued upon exercise of options outstanding as of
January 31, 2000 under the BSB Stock Plans. As of March 31, 2000, BSB had
outstanding 963,730 options issued under the BSB Stock Plans, of which 619,346
were exercisable. No options have been granted since February 28, 2000 to the
date of this Agreement under the BSB Stock Plans. As of the date of this
Agreement, 1,174,216 shares of BSB Common Stock are held as treasury stock by
BSB. Other than pursuant to the BSB Rights Agreement, the BSB Stock Plans and
the BSB Stock Option Agreement, there are no options, warrants or other rights,
rights of first refusal, agreements, arrangements, or commitments of any
character relating to the issued or unissued capital stock of BSB or obligating
BSB to issue or sell any shares of capital stock of, or other equity interests
in, BSB. There are no obligations, contingent or otherwise, of BSB to
repurchase, redeem or otherwise acquire any shares or to provide funds to or
make any investment (in the form of a loan, capital contribution or otherwise)
in any other entity (including any BSB Subsidiary) other than pursuant to the
BSB Rights Agreement.
(b) Capital Stock of the BSB Subsidiaries. Except as set forth in
-------------------------------------
Section 2.03(b) of the BSB Disclosure Schedule, there are no options, warrants
or other rights, rights of first refusal, agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock of
the BSB Subsidiaries or obligating any BSB Subsidiary to issue or sell any
shares of capital stock of, or other equity interests in any BSB Subsidiary.
There are no obligations, contingent or otherwise, of any BSB Subsidiary to
repurchase, redeem or otherwise acquire any shares of the capital stock of any
BSB Subsidiary or to provide funds to or make any investment (in the form of a
loan, capital contribution or otherwise) in any other entity.
SECTION 2.04. Authority; State Takeover Laws; Certificate of
-----------------------------------------------
Incorporation.
--------------
(a) BSB has the requisite corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions
13
<PAGE>
contemplated hereby. The execution and delivery of this Agreement by BSB and the
consummation by BSB of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of BSB and no
other corporate proceedings on the part of BSB are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby (other than the
approval of this Agreement by the holders of a majority of the outstanding BSB
Common Stock entitled to vote thereon in accordance with Delaware Law and BSB's
Certificate of Incorporation and Bylaws). This Agreement has been duly and
validly executed and delivered by BSB and, assuming the due authorization,
execution and delivery by NBT, constitutes the legal, valid and binding
obligation of BSB enforceable in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally and by general principles of equity.
(b) The Board of Directors of BSB has taken all actions necessary
under Delaware Law and BSB's Certificate of Incorporation, including approving
the transactions contemplated herein, to insure that the restrictions on
business combinations set forth in Delaware Law do not or will not apply to this
Agreement, the transactions contemplated herein, the BSB Stock Option Agreement
or the transactions contemplated therein or any transaction between NBT or its
affiliates, on the one hand, and BSB or its affiliates, on the other hand,
following the exercise of the option granted under the BSB Stock Option
Agreement.
SECTION 2.05. No Conflict; Required Filings and Consents.
------------------------------------------
(a) Except as set forth in Section 2.05(a) of the BSB Disclosure
Schedule, the execution and delivery of this Agreement by BSB does not, and the
performance of this Agreement by BSB shall not, (i) conflict with or violate the
Certificate of Incorporation or Bylaws of BSB or any BSB Subsidiary, (ii)
conflict with or violate any domestic (federal, state or local) or foreign law,
statute, ordinance, rule, regulation, order, judgment, decision, writ,
injunction or decree (collectively, "Laws") applicable to BSB or any BSB
----
Subsidiary, or by which its respective properties are bound or affected, or
(iii) result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, or result
in the creation of a Lien on any of the properties or assets of BSB or any BSB
Subsidiary pursuant to any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which BSB
or any BSB Subsidiary is a party or by which BSB or any BSB Subsidiary or its
respective properties are bound or affected, except (in the case of clauses (ii)
and (iii) of this Section 2.05(a)) for any such conflicts, violations, breaches,
defaults or other occurrences that would not, either individually or in the
aggregate, have a Material Adverse Effect on BSB and the BSB Subsidiaries, taken
as a whole.
(b) The execution and delivery of this Agreement by BSB does not, and
the performance of this Agreement by BSB shall not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, domestic or foreign, ("Approvals") except
---------
(i) the filing of applications, notices and waiver requests, as applicable, as
to the Merger and the
14
<PAGE>
Bank Merger with the FRB under the BHCA and the Office of the Comptroller of the
Currency ("OCC") under the National Bank Act, 12 USC section 1 et seq.
---
("National Bank Act") and the Bank Merger Act, 12 USC 1828(c) (the "Bank Merger
----------------- -----------
Act"), and the approval of the foregoing applications, notices and waiver
---
requests; (ii) the filing of any required applications or notices with the OCC
as to the subsidiary activities of BSB Bank, and the approval of the foregoing
applications and notices; (iii) courtesy notice of the Bank Merger to the New
York State Banking Department (the "NYSBD") and, if deemed necessary by the
-----
NYSBD, the filing of an application with the NYSBD for NBT to become a bank
holding company under New York law for a moment in time and the approval of such
application; (iv) the filing with the SEC of a registration statement on Form
S-4 to register the shares of NBT Common Stock to be issued in connection with
the Merger (including the shares of NBT Common Stock that may be issued upon the
exercise of the options referred to in Section 1.10 hereof), which will include
the joint proxy statement/prospectus to be used in soliciting the approval of
BSB and NBT stockholders at special meetings to be held in connection with this
Agreement and the transactions contemplated hereby (such joint proxy statement
as amended or supplemented is referred to herein as the "Joint Proxy
-----------
Statement"), (v) the approval of this Agreement by the requisite vote of the
---------
stockholders of BSB, (vi) the approval by NBT stockholders of (A) this Agreement
and the issuance of NBT Common Stock in the Merger pursuant to this Agreement
and (B) the amendments to NBT's Certificate of Incorporation to increase the
number of shares of NBT Common Stock that NBT is authorized to issue and to
provide a new name for the Surviving Corporation; (vii) the filing of the
Certificate of Merger with the Secretary of State of Delaware pursuant to the
Delaware Law, (viii) the filings required by the National Bank Act and OCC
regulations, (ix) the filings required by NASDAQ to list additional shares; (x)
such consents, approvals, orders, authorizations, registrations, declarations
and filings as may be required under applicable federal, foreign and state
securities (or related) laws and, if applicable, the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the securities or
-------
antitrust laws of any foreign country, and (xi) such filings, authorizations or
approvals as may be set forth in Section 2.05(b) of the BSB Disclosure Schedule.
No consents or approvals of or filings or registrations with any court,
administrative agency or commission or other governmental authority or
instrumentality (each a "Governmental Entity"), or with any third party are
-------------------
necessary in connection with (1) the execution and delivery by BSB of this
Agreement and the BSB Stock Option Agreement, (2) the consummation by BSB of the
Merger and the other transactions contemplated hereby, (3) the execution and
delivery by BSB Bank of the Bank Merger Agreement, (4) the performance by BSB of
its obligations under the BSB Stock Option Agreement; and (5) the consummation
by BSB Bank of the Bank Merger and the transactions contemplated thereby,
except, in each case, for such consents, approvals or filings, the failure of
which to obtain will not have a Material Adverse Effect on the ability of BSB to
consummate the transactions contemplated hereby.
(c) BSB hereby represents to NBT that it has no knowledge of any
reason why approval or effectiveness of any of the applications, notices or
filings referred to in Section 2.05 cannot be obtained or granted on a timely
basis.
15
<PAGE>
SECTION 2.06. Compliance.
----------
Neither BSB nor any BSB Subsidiary is in conflict with, or in default
or violation of (i) any Law applicable to BSB or the BSB Subsidiaries or by
which any of their respective properties are bound or affected, or (ii) any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which BSB or any BSB Subsidiary
is a party or by which BSB or any BSB Subsidiary or any of their respective
properties are bound or affected, except for any such conflicts, defaults or
violations which would not, either individually or in the aggregate, have a
Material Adverse Effect on BSB and the BSB Subsidiaries, taken as a whole.
SECTION 2.07. Securities and Banking Reports; Financial Statements.
----------------------------------------------------
(a) BSB and the BSB Subsidiaries have filed, except as set for in
Schedule 2.07 of the BSB Disclosure Schedule, all material forms, reports,
registrations, statements and documents, together with any amendments required
to be made with respect thereto that were required to be filed since January 1,
1995 with (i) the SEC and (ii)(A) any self regulatory organization ("SRO"), (B)
---
any other federal, state or foreign governmental or regulatory agency or
authority (collectively with the SEC and the SROs, "Regulatory Agencies") and
-------------------
(C) all other reports and statements (the filings made with the entities listed
in subclause (ii) (being referred to as "Other Reports") required to be filed by
-------------
BSB and any BSB Subsidiary since January 1, 1995, and paid all fees and
assessments due and payable in connection therewith, except, in the case of the
Other Reports, where failure to file such form, report, registration, statement
or document or pay such fees and assessments would not, either individually or
in the aggregate, have a Material Adverse Effect on BSB and the BSB
Subsidiaries, taken as a whole (all such forms, reports, registrations,
statements and documents are collectively referred to as the "BSB Reports").
-----------
The BSB Reports, including all BSB Reports filed after the date of this
Agreement, (i) were, or will be, prepared in accordance with the requirements of
applicable Law and (ii) did not at the time they were filed, or will not at the
time they are filed, contain any untrue statement of material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of circumstances under which they were
made, not misleading.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in any filings with the SEC since
January 1, 1995 (the "BSB SEC Reports"), including any BSB SEC Reports filed
---------------
since the date of this Agreement and prior to or at the Effective Time, have
been, or will be, prepared in accordance with generally accepted accounting
principles applied on a consistent basis ("GAAP") throughout the periods
----
involved (except as may be indicated in the notes thereto) and each fairly
presents, or will fairly present, in all material respects, the consolidated
financial position of BSB and the BSB Subsidiaries as of the respective dates
thereof and the consolidated results of its operations and changes in financial
position for the periods indicated, except that any unaudited interim
16
<PAGE>
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount.
(c) Except as and to the extent set forth on the consolidated balance
sheet of BSB and the BSB Subsidiaries as of December 31, 1999, including all
notes thereto (the "BSB Balance Sheet"), neither BSB nor any BSB Subsidiary has
-----------------
any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise), except for (i) liabilities or obligations incurred in
the ordinary course of business since December 31, 1999 and (ii) liabilities or
obligations that would not, either individually or in the aggregate, have a
Material Adverse Effect on BSB and the BSB Subsidiaries, taken as a whole.
SECTION 2.08. Absence of Certain Changes or Events.
------------------------------------
Except as disclosed in the BSB SEC Reports filed prior to the date of
this Agreement, since December 31, 1999, (a) BSB and the BSB Subsidiaries have
conducted their businesses only in the ordinary course and in a manner
consistent with past practice and (b) there has been no event which has had, or
is reasonably likely to result in, either individually or in the aggregate, a
Material Adverse Effect on BSB and the BSB Subsidiaries, taken as a whole.
SECTION 2.09. Absence of Litigation and Agreements.
------------------------------------
(a) Except as disclosed in the BSB SEC Reports filed prior to the date
of this Agreement or set forth in Section 2.09 of the BSB Disclosure Schedule,
(i) neither BSB nor any BSB Subsidiary is subject to any continuing order of, or
written agreement or memorandum of understanding with, or continuing
investigation by, any federal or state savings and loan or bank regulatory
authority or other governmental entity or regulatory authority, or any judgment,
order, writ, injunction, decree or award of any governmental entity or
regulatory authority or arbitrator, including, without limitation, cease-and-
desist or other orders which, either individually or in the aggregate, would
have or reasonably be expected to have a Material Adverse Effect on BSB and the
BSB Subsidiaries, taken as a whole; (ii) there is no claim of any kind, action,
suit, litigation, proceeding, arbitration, investigation, or controversy
affecting BSB or the BSB Subsidiaries pending or, to the knowledge of BSB,
threatened, except (A) as of the date of this Agreement, for matters which
individually seek damages not in excess of $500,000 and (B) as of the Closing
(as defined in Section 8.01), for matters which otherwise cannot reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect on BSB and the BSB Subsidiaries, taken as a whole; and (iii) there are
not uncured violations, or violations with respect to which refunds or
restitutions may be required, cited in any compliance report to BSB or the BSB
Subsidiaries as a result of the examination by any bank regulatory authority,
which would have or reasonably be expected to have, either individually or in
the aggregate, a Material Adverse Effect on BSB and the BSB Subsidiaries, taken
as a whole.
17
<PAGE>
(b) Except as set forth on the BSB Disclosure Schedule at Section
2.09, neither BSB nor any of the BSB Subsidiaries is a party to any written
agreement or memorandum of understanding with, or party to any commitment
letter, board resolution submitted to a regulatory authority or similar
undertaking to, or is subject to any order or directive by, or is a recipient of
any extraordinary supervisory letter from any governmental entity or agency
which restricts materially the conduct of its business, or in any manner relates
to its capital adequacy, its credit or reserve policies or its management nor
has BSB or any BSB Subsidiary (i) been advised by any governmental entity or
agency that it is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, extraordinary supervisory letter, commitment letter
or similar submission or (ii) have knowledge of any pending or threatened
regulatory investigation. Neither BSB nor any BSB Subsidiary is required by
Section 32 of the Federal Deposit Insurance Act to give prior notice to a
Federal banking agency of the proposed addition of an individual to its board of
directors or the employment of an individual as a senior executive officer.
SECTION 2.10. Employee Benefit Plans.
----------------------
(a) Section 2.10 of the BSB Disclosure Schedule sets forth a true and
complete list of all benefit plans, arrangements, commitments and payroll
practices (whether or not employee benefit plans ("BSB Plans" or "BSB Plan") as
--------- --------
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), including, without limitation, sick leave, vacation pay,
-----
severance pay, salary continuation for disability, consulting or other
compensation arrangements, retirement, deferred compensation, bonus, incentive
compensation, stock purchase, stock option, health, including hospitalization,
medical and dental, life insurance and scholarship programs maintained as of the
date of this Agreement or within the last six years of the date of this
Agreement, for the benefit of any present or former employees of BSB, any of the
BSB Subsidiaries or any other entity which together with BSB would be deemed a
"single employer" within the meaning of Section 4001 of ERISA or Code Sections
414(b), (c), (m) or (o) ("BSB ERISA Affiliate") or to which BSB or any BSB ERISA
-------------------
Affiliate has contributed or is or was within the last six years obligated to
make payments.
(b) With respect to each BSB Plan, BSB has heretofore delivered or
made available to NBT true, correct and complete copies of the plan document,
trust agreement, if any, all insurance policies, if any, and all material
related documents, including, but not limited to, (i) the actuarial report for
each BSB Plan that is a defined benefit plan, funded welfare plan or other plan
requiring actuarial valuation for each of the last five years, (ii) the most
recent determination letter from the Internal Revenue Service ("IRS"), if such
---
BSB Plan is intended to be a qualified plan under Section 401(a) of the Code,
(iii) the current summary plan description and each summary of material
modification, (iv) each Form 5500 series filed for the preceding five plan
years, (v) each agreement with each fiduciary and service provider relating to
such BSB Plan, and (vi) all substantive correspondence relating to such BSB Plan
addressed to or received from the IRS, the U.S. Department of Labor ("DOL"), the
---
18
<PAGE>
Pension Benefit Guaranty Corporation ("PBGC") or any other governmental agency;
----
(vii) each bond required by Section 412 of ERISA, each fiduciary liability
insurance policy, and each agreement to indemnify any fiduciary, including each
amendment to any such document.
(c) Except as set forth in Section 2.10(c) of the BSB Disclosure
Schedule:
(i) Each BSB Plan has been operated and administered in all material
respects in compliance with the terms of its governing document(s) and
instrument(s) and applicable Laws, including, but not limited to, ERISA and the
Code, and the funding, filing, termination, reporting and disclosure and
continuation coverage obligations pursuant to Title V of the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA");
-----
(ii) Each BSB Plan that is intended to be "qualified" within the
meaning of Section 401(a) of the Code is and from its inception has been so
qualified, and any trust created pursuant to any such Plan is exempt from
federal income tax under Section 501(a) of the Code, each such Plan has received
from the Internal Revenue Service a favorable determination letter to such
effect upon which BSB or a BSB ERISA Affiliate is entitled to rely as to such
matters and which is currently applicable, and neither BSB nor any BSB ERISA
Affiliate is aware of any circumstance or event which would jeopardize the tax-
qualified status of any BSB Plan or the tax-exempt status of any related trust,
or which would cause the imposition of any liability, penalty or tax under ERISA
or the Code with respect to any BSB Plan;
(iii) With respect to each BSB Plan that is subject to Title IV of
ERISA, the present value of accrued benefits under such BSB Plan, based upon the
actuarial assumptions used by the PBGC to determine the level of funding
required in the event of termination of such Plan, did not, as of its latest
valuation date, exceed the then current value of the assets of such Plan
allocable to such accrued benefits;
(iv) No BSB Plan provides benefits, including, without limitation,
death or medical benefits (whether or not insured), with respect to current or
former employees of BSB or any BSB ERISA Affiliate beyond their retirement or
other termination of employment with BSB or a BSB ERISA Affiliate, other than
coverage mandated by applicable Law, death benefits or retirement benefits under
a Plan that is an "employee pension plan," as defined by Section 3(2) of ERISA,
deferred compensation benefits under a BSB Plan that are accrued as liabilities
on the books of BSB or any BSB ERISA Affiliate, or benefits the full cost of
which is borne by the current or former employee (or his beneficiary);
(v) No liability under Title IV of ERISA has been incurred by BSB or
any BSB ERISA Affiliate that has not been satisfied in full as of the date of
this Agreement, and no condition exists that presents a material risk of BSB or
any BSB ERISA Affiliate incurring a material liability thereunder;
19
<PAGE>
(vi) No BSB Plan is a "multiemployer plan," as such term is defined in
Section 3(37) of ERISA, nor has BSB or any BSB ERISA Affiliate ever had any
obligation to contribute to a multiemployer plan or otherwise incurred or
assumed any liability for complete or partial withdrawal from such a plan that
is a pension plan subject to Title IV of ERISA;
(vii) All contributions or other amounts payable by BSB or any BSB
ERISA Affiliate as of the Effective Time with respect to each BSB Plan and all
other liabilities of each such entity with respect to each such BSB Plan, with
respect to current or prior plan years, have been paid or accrued in accordance
with GAAP and Section 412 of the Code;
(viii) Neither BSB nor any BSB ERISA Affiliate nor any BSB Plan has
engaged in any transaction with respect to which any of the aforementioned
entities could be subject to either a civil liability or civil penalty assessed
pursuant to Sections 409, 501(i) or 502(l) of ERISA or a tax imposed pursuant to
Section 4975 or 4976 of the Code;
(ix) There are and, for the past three years there have been, no
inquiries, proceedings, claims, suits pending or, to the knowledge of BSB,
threatened (other than routine claims for benefits) by any governmental agency
or authority or by any participant or beneficiary against any of the BSB Plans,
the assets of any of the trusts under such Plans or the Plan sponsor or the Plan
administrator, or against any fiduciary of any of such BSB Plans with respect to
the design or operation of a BSB Plan;
(x) Each BSB Plan could be terminated as of the Effective Time without
material liability to BSB or any BSB ERISA Affiliate in excess of the amount
accrued with respect to such Plan on the financial statements of BSB or such BSB
ERISA Affiliate;
(xi) No BSB Plan, either individually or collectively, provides for
any payment by BSB or any BSB ERISA Affiliate that would not be deductible under
Code Sections 162(a)(1), 162(m) or 404, or that would, after giving effect to
the transactions contemplated by this Agreement, constitute an "excess parachute
payment" within the meaning of Code Section 280G, nor would the transactions
contemplated by this Agreement accelerate the time of payment or vesting, or
increase the amount of compensation due to any employee;
(xii) No "accumulated funding deficiency" as defined in Section
302(a)(2) of ERISA or Section 412 of the Code, whether or not waived, and no
"unfunded current liability" as determined under Section 412(l) of the Code
exists with respect to any BSB Plan subject to Section 412 of the Code and
Section 302 of ERISA, and there are no unsatisfied liabilities to participants,
the IRS, the DOL, or the PBGC as a result of the termination of any BSB Plan
other than any such liabilities that have not become due or that are being
contested in good faith;
20
<PAGE>
(xiii) No BSB Plan has experienced a "reportable event" (as such term
is defined in Section 4043(b) of ERISA) that is not subject to an administrative
or statutory waiver from the reporting requirement;
(xiv) All reports and information required to be filed with the DOL,
IRS and PBGC or with plan participants and their beneficiaries with respect to
each BSB Plan have been filed, and all annual reports (including Form 5500
series) of such Plans were certified without qualification by each Plan's
accountants and actuaries. Any annual reports which are not yet due but are
required to be filed with respect to a plan year which ended on or prior to the
Effective Date and any annual reports which are required to be filed with
respect to current plan years shall be filed on a timely basis.
(xv) Any bond required under ERISA with respect to any BSB Plan has
been obtained and is in full force and effect and no funds held by or under the
control of BSB are plan assets of any BSB Plan.
SECTION 2.11. Material Contracts.
------------------
Except as set forth in Section 2.11 of the BSB Disclosure Schedule, as
of the date of this Agreement, neither BSB nor any BSB Subsidiary is a party to
or bound by (a) any contract or commitment for capital expenditures in excess of
$500,000 for any one project, (b) contracts or commitments for the purchase of
materials or supplies or for the performance of services over a period of more
than 60 days from the date of this Agreement and calling for aggregate future
payments of $1,000,000 or more during the term of such contract or commitment,
(c) any contract which is a "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC) that has not been filed or incorporated
by reference in the BSB SEC Reports, (d) any contract which contains non-compete
or exclusivity provisions or restrictions with respect to any business or
geographic area or (e) any contract which would prohibit or materially delay the
consummation of the Merger or any other transaction contemplated by this
Agreement. Each contract, arrangement, commitment or understanding of the type
described in this Section 2.11, whether or not set forth in Section 2.11 of the
BSB Disclosure Schedule, is referred to herein as a "BSB Contract". Neither BSB
------------
nor any BSB Subsidiary knows of, or has received notice of, any violation of any
BSB Contract by any of the other parties thereto, except for violations which,
individually or in the aggregate, would not result in a Material Adverse Effect
on BSB and the BSB Subsidiaries, taken as a whole.
SECTION 2.12. Environmental Matters.
---------------------
(a) Each of BSB and the BSB Subsidiaries is in compliance in all
material respects with all applicable federal and state laws and regulations
relating to pollution or protection of the environment (including without
limitation, laws and regulations relating to emissions, discharges, releases and
threatened releases of Hazardous Materials (as hereinafter defined), or
otherwise relating to the
21
<PAGE>
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials.
(b) There is no suit, claim, action, proceeding, investigation or
notice pending or, to the knowledge of BSB, threatened (or, to the knowledge of
BSB, past or present actions or events that could form the basis of any such
suit, claim, action, proceeding, investigation or notice), in which BSB or any
BSB Subsidiary has been or, with respect to threatened suits, claims, actions,
proceedings, investigations or notices may be, named as a defendant (i) for
alleged material noncompliance (including by any predecessor), with any
environmental law, rule or regulation or (ii) relating to any material release
or threatened release into the environment of any Hazardous Material, occurring
at or on a site owned, leased or operated by BSB or any BSB Subsidiary, or to
the knowledge of BSB, relating to any material release or threatened release
into the environment of any Hazardous Material, occurring at or on a site not
owned, leased or operated by BSB or any BSB Subsidiary.
(c) During the period of BSB's or any BSB Subsidiary's ownership or
operation of any of its properties, there has not been to BSB's knowledge any
material release of Hazardous Materials in, on, under or affecting any such
property.
(d) To the knowledge of BSB, neither BSB nor any BSB Subsidiary has
made or participated in any loan to any person who is subject to any suit,
claim, action, proceeding, investigation or notice, pending or threatened, with
respect to (i) any alleged material noncompliance as to any property securing
such loan with any environmental law, rule or regulation, or (ii) the release or
the threatened release into the environment of any Hazardous Material at a site
owned, leased or operated by such person on any property securing such loan.
(e) For purposes of this Agreement, the term "Hazardous Material"
------------------
means any hazardous waste, petroleum product, polychlorinated biphenyl,
chemical, pollutant, contaminant, pesticide, radioactive substance, or other
toxic material, or other material or substance (in each such case, other than
small quantities of such substances in retail containers) regulated under any
applicable environmental or public health statute, law, ordinance, rule or
regulation.
SECTION 2.13. Taxes.
-----
(a) Each of BSB and the BSB Subsidiaries has duly filed all Tax
Returns required to be filed by it on or prior to the date hereof (all such
returns being accurate and complete in all material respects) and has duly paid
or made provision on the financial statements referred to in Sections 2.07 and
5.14 hereof in accordance with GAAP for the payment of all material Taxes which
have been incurred or are due or claimed to be due from it by Taxing Authorities
on or prior to the date hereof other than Taxes (a) which (x) are not yet
delinquent or (y) are being contested in good faith and set forth in Section
2.13(a) of the BSB Disclosure Schedule and (b) which have not been finally
determined. All liability with respect to the Tax
22
<PAGE>
Returns of BSB and the BSB Subsidiaries has been satisfied for all years to and
including 1998. The IRS has not notified BSB of, or otherwise asserted, that
there are any material deficiencies with respect to the federal income Tax
Returns of BSB subsequent to tax year 1995. Except as set forth in Section 2.13
of the BSB Disclosure Schedule, there are no material disputes pending, or
claims asserted for Taxes or assessments upon BSB or any BSB Subsidiary, nor has
BSB or any BSB Subsidiary been requested to give any currently effective waivers
extending the statutory period of limitation applicable to any federal or state
income Tax Return for any period. In addition, Tax Returns which are accurate
and complete in all material respects have been filed by BSB and the BSB
Subsidiaries for all periods for which returns were due with respect to income
tax withholding, Social Security and unemployment taxes and the amounts shown on
such Tax Returns to be due and payable have been paid in full or adequate
provision therefor in accordance with GAAP has been included by BSB in the
financial statements referred to in Sections 2.07 hereof and 5.14 hereof. All
BSB Tax Returns relating to federal income taxes have been examined by the
relevant Taxing Authorities, or closed without audit by applicable statutes of
limitations, and all deficiencies proposed as a result of such examinations have
been paid or settled, for all periods before and including the taxable year
ended 1995. Except as set forth in Section 2.13 of the BSB Disclosure Schedule,
neither BSB nor any BSB Subsidiary has consented to any waiver or extension of
any statute of limitations with respect to any Tax. Neither BSB nor any BSB
Subsidiary has made an election under Section 341(f) of the Code. BSB has
provided or made available to NBT complete and correct copies of its Tax Returns
and all material correspondence and documents, if any, relating directly or
indirectly to taxes for each taxable year or other relevant period as to which
the applicable statute of limitations has not run on the date hereof. For this
purpose, "correspondence and documents" include, without limitation, amended Tax
Returns, claims for refunds, notices from Taxing Authorities of proposed changes
or adjustments to Taxes or Tax Returns, consents to assessment or collection of
Taxes, acceptances of proposed adjustments, closing agreements, rulings and
determination letters and requests therefor, and all other written
communications to or from Taxing Authorities relating to any material Tax
liability of BSB or any BSB Subsidiary. BSB will not be a "foreign person" as
that term is used in (S) 1.1445-2 of the Treasury Regulations promulgated under
the Code. BSB Bank is not a "United States real property holding corporation"
within meaning of (S) 897 of the Code and was not a "United States real property
holding corporation" on any "determination date" (as defined in (S) 1.897-2(c)
of such Regulations) that occurred during any relevant period.
(b) For purposes of this Agreement:
"Tax" means any tax (including any income tax, capital gains tax,
---
value-added tax, sales tax, property tax, gift tax, or estate tax), levy,
assessment, tariff, duty (including any customs duty), deficiency, or other fee,
and any related charge or amount (including any fine, penalty, interest, or
addition to tax), imposed, assessed, or collected by or under the authority of
any Taxing Authority or payable pursuant to any tax-sharing agreement or any
other contract relating to the sharing or payment of any such tax, levy,
assessment, tariff, duty, deficiency, or fee.
23
<PAGE>
"Tax Return" means any return (including any information return),
----------
report, statement, schedule, notice, form, or other document or information
filed with or submitted to, or required to be filed with or submitted to, any
Taxing Authority in connection with the determination, assessment, collection,
or payment of any Tax or in connection with the administration, implementation,
or enforcement of or compliance with any law, regulation or other legal
requirement relating to any Tax.
"Taxing Authority" means any:
----------------
(i) nation, state, county, city, town, village, district, or
other jurisdiction of any nature;
(ii) federal, state, local, municipal, foreign, or other
government;
(iii) governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department,
official, or entity and any court or other tribunal);
(iv) multi-national organization or body; or
(v) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory,
or taxing authority or power of any nature.
SECTION 2.14. Affiliates.
----------
Each director, executive officer and other person who is an
"affiliate" (for purposes of Rule 145 under the Securities Act of 1933, as
amended (the "Securities Act"), and for purposes of qualifying the Merger for
--------------
"pooling-of-interests" accounting treatment) of BSB is listed at Section 2.14 of
the BSB Disclosure Schedule, and except as indicated thereon, each such person
has delivered to NBT concurrently with the execution of this Agreement, a
stockholder agreement in the form of Exhibit F hereto (the "BSB Stockholder
--------- ---------------
Agreement").
---------
SECTION 2.15. Derivative Instruments.
----------------------
All swap, forward, future, option, cap, floor or collar financial
contracts, and any other interest rate protection contracts ("Derivative
----------
Instruments") to which BSB or any BSB Subsidiary is a party or to which any of
-----------
their properties or assets may be subject were entered into in the ordinary
course of business and, to the knowledge of BSB, in accordance with prudent
banking practice and applicable rules, regulations, and policies of the
regulatory agencies and with counterparties believed to be financially
responsible at the time and, to the knowledge of BSB, 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, to the knowledge of BSB, are in full force and effect. BSB and
each BSB
24
<PAGE>
Subsidiary has duly performed in all material respects all of its obligations
under any such Derivative Instruments, and to the knowledge of BSB, there are no
breaches, violations, or defaults or allegations or assertions of such by any
party thereunder except for any such breaches, violations, or defaults or
allegations or assertions which would not, individually or in the aggregate,
have a Material Adverse Effect on BSB and the BSB Subsidiaries, taken as a
whole.
SECTION 2.16. Regulatory Approvals.
--------------------
BSB is not aware of any aspect of, or issues relating to, its or the
BSB Subsidiaries' operations and business that would prevent the condition of
Closing set forth in Section 6.01(c) from being satisfied.
SECTION 2.17. Brokers.
-------
Except as contemplated by or referenced in the March 17, 2000 letter
agreement between Keefe, Bruyette & Woods, Inc. ("KBW") and BSB, a true and
---
complete copy of which BSB has delivered to NBT, no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of BSB or any BSB Subsidiary.
SECTION 2.18. Pooling of Interests and Tax Matters.
------------------------------------
Neither BSB nor, to the knowledge of BSB, any of its affiliates (as
defined in Section 2.14) has through the date of this Agreement taken or agreed
to take any action that would prevent NBT from accounting for the business
combination to be effected by the Merger and the Bank Merger as a pooling of
interests in accordance with GAAP or would prevent the Merger from qualifying as
a reorganization under Section 368(a) of the Code. BSB has no reason to believe
that the Merger will not qualify as a pooling of interests or as a
reorganization under Section 368(a) of the Code.
SECTION 2.19. Vote Required.
-------------
The requisite affirmative vote of the holders of a majority of the
outstanding BSB Common Stock entitled to vote with respect to the approval of
this Agreement is the only vote of the holders of any class or series of BSB's
capital stock required in connection with the Merger.
SECTION 2.20. Fairness Opinion.
----------------
BSB has received an opinion from KBW on or prior to the date of this
Agreement to the effect that, as of the date of such opinion, the Exchange Ratio
is fair to the stockholders of BSB, from a financial point of view ("BSB
---
Fairness Opinion") and KBW has consented to the inclusion of the BSB Fairness
------------------
Opinion in the Registration Statement.
25
<PAGE>
SECTION 2.21 Rights Agreement.
----------------
The Board of Directors of BSB has taken such action as is necessary to
render the Series A junior participating preferred stock purchase rights of BSB
under the BSB Rights Agreement inapplicable to the Merger and the other
transactions contemplated by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NBT
Except as set forth in the disclosure schedule delivered by NBT to BSB
prior to the execution of this Agreement (the "NBT Disclosure Schedule") which
-----------------------
shall identify exceptions by specific Section references (provided that
--------
disclosure in one schedule will be deemed to satisfy disclosure in another
schedule), NBT hereby represents and warrants to BSB that:
SECTION 3.01. Organization and Qualification of NBT; Subsidiaries.
---------------------------------------------------
(a) NBT is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. NBT is duly registered as a
bank holding company with the Board of Governors of the FRB under the BHCA. NBT
has the corporate power and authority to own or lease all of its properties and
assets and to carry on in its business as it is now being conducted and is duly
licensed or qualified to do business in each jurisdiction in which the nature of
any material business conducted by it or the character or the location of any
material properties or assets owned or leased by it makes such licensing or
qualification necessary.
(b) NBT Bank is a national association organized and validly existing
and in good standing under the laws of the United States. The deposit accounts
of NBT Bank are insured by the FDIC through the BIF to the fullest extent
permitted by law, and all premiums and assessments required in connection
therewith have been paid by NBT Bank. NBT Bank has the corporate power and
authority to own or lease all of its properties and assets and to carry on in
its business as it is now being conducted and is duly licensed or qualified to
do business in each jurisdiction in which the nature of any material business
conducted by it or the character or the location of any material properties or
assets owned or leased by it makes such licensing or qualification necessary.
(c) Section 3.01(c) of the NBT Disclosure Schedule sets forth a true
and complete list of each of NBT's subsidiaries (the "NBT Subsidiaries"), all
----------------
outstanding equity securities of each NBT Subsidiary and the percentages owned
by NBT of such equity securities. Except as set forth in Section 3.01(c) of the
NBT Disclosure Schedule, each NBT Subsidiary is wholly owned, directly or
indirectly, by NBT. Except as set forth in Section 3.01(c) of the NBT
Disclosure Schedule, all outstanding shares of capital stock of the NBT
Subsidiaries are validly issued, fully paid and nonassessable and are free and
clear of any Lien, with respect thereto.
26
<PAGE>
Each NBT Subsidiary is a corporation, partnership, savings bank, savings and
loan, bank or trust company duly incorporated or organized validly existing and
in good standing under the laws of its jurisdiction of incorporation or
organization.
(d) Each of NBT and each NBT Subsidiary has the requisite corporate
power and authority and is in possession of all franchises, grants,
authorizations, licenses, permits, easements, consents, certificates, approvals
and orders ("NBT Permits") necessary to own, lease and operate its properties
-----------
and to carry on its business as it is now being conducted, except where the
failure to be so organized, existing and in good standing or to have such power,
authority and NBT Permits would not, either individually or in the aggregate,
have a Material Adverse Effect on NBT and the NBT Subsidiaries, taken as a
whole. NBT has not received any notice of proceedings relating to the
revocation or modification of any NBT Permits, except for any such revocation or
modification which would not, either individually or in the aggregate, have a
Material Adverse Effect on NBT and the NBT Subsidiaries, taken as a whole. NBT
and each NBT Subsidiary is duly qualified or licensed as a foreign corporation
to do business, and is in good standing, in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
activities makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that would
not, either individually or in the aggregate, have a Material Adverse Effect on
NBT and the NBT Subsidiaries, taken as a whole.
(e) Section 3.01(e) of the NBT Disclosure Schedule sets forth a true,
complete and correct list of all Corporate Entities of which NBT or any NBT
Subsidiary holds or beneficially owns 5% or more of the outstanding shares of
any class of voting securities, a general partnership interest or other
controlling interest, more than 24.9% of the outstanding capital stock (whether
voting or nonvoting) and subordinated debt or is otherwise deemed to be a
subsidiary within the meaning of the BHCA.
SECTION 3.02. Certificate of Incorporation and Bylaws.
---------------------------------------
NBT and the NBT Subsidiaries have heretofore furnished or made
available to BSB a complete and correct copy of their respective Certificates of
Incorporation and Bylaws, as amended or restated. Such Certificates of
Incorporation and Bylaws are in full force and effect and none of NBT nor any
NBT Subsidiary is in violation of any of the provisions of its respective
Certificate of Incorporation or Bylaws.
SECTION 3.03. Capitalization.
--------------
(a) Capitalization of NBT. The authorized capital stock of NBT as of
---------------------
March 31, 2000 consists of (i) 30,000,000 shares of NBT Common Stock, of which
18,623,435 shares were issued and 18,100,868 were outstanding, all of which are,
and the shares of NBT Common Stock to be issued pursuant to the Merger, when so
issued will be, validly issued, fully paid and non-assessable, and all of which
have
27
<PAGE>
been or will be issued in compliance with applicable securities laws, and
(ii) 2,500,000 shares of preferred stock, par value $0.01 per share ("NBT
---
Preferred Stock"), of which no shares are issued and outstanding. Since
---------------
February 17, 2000, no shares of NBT Common Stock have been issued. As of March
31, 2000, NBT had outstanding 1,172,575 options issued under the NBT Stock Plans
(as defined below), of which 560,400 were exercisable. No options have been
granted since January 24, 2000 to the date of this Agreement under the NBT Stock
Plans. As of the date of this Agreement, 522,567 shares of the NBT Common Stock
are held as treasury stock by NBT. Other than pursuant to the NBT Rights
Agreement, the NBT Stock Plans, the Agreement and Plan of Merger with Pioneer
American Holding Company Corp., dated December 7, 1999, as amended as of March
7, 2000, the Agreement and Plan of Reorganization with M. Griffith Inc., dated
March 15, 2000, the NBT Stock Option Agreement, the 1994 Stock Option Plan of
Lake Ariel Bancorp, Inc., the 1997 Stock Option Plan of Lake Ariel Bancorp,
Inc., employment agreements between NBT and each of Daryl R. Forsythe, Joe C.
Minor, Martin A. Dietrich, John R. Bradley, and John G. Martines (the "NBT Stock
---------
Plans"), and dividend reinvestment, employee stock purchase and similar plans of
-----
NBT, there are no options, warrants or other rights, rights of first refusal,
agreements, arrangements, or commitments of any character relating to the issued
or unissued capital stock of NBT or obligating NBT to issue or sell any shares
of capital stock of, or other equity interests in, NBT. Except as set forth in
Schedule 3.03(b) of the NBT Disclosure Schedule, there are no obligations,
contingent or otherwise, of NBT to repurchase, redeem or otherwise acquire any
shares of NBT Common Stock or to provide funds to or make any investment (in the
form of a loan, capital contribution or otherwise) in any other entity
(including any NBT Subsidiary) other than pursuant to the Rights Agreement,
dated as of November 15, 1994, by and between NBT Bank and AST ("NBT Rights
----------
Agreement").
---------
(b) Capital Stock of the NBT Subsidiaries. Except as set forth in
-------------------------------------
Section 3.03(b) of the NBT Disclosure Schedule, there are no options, warrants
or other rights, rights of first refusal, agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock of
the NBT Subsidiaries or obligating any NBT Subsidiary to issue or sell any
shares of capital stock of, or other equity interests in any NBT Subsidiary.
Except as set forth in Section 3.03(b) of the NBT Disclosure Schedule, there are
no obligations, contingent or otherwise, of any NBT Subsidiary to repurchase,
redeem or otherwise acquire any shares of the capital stock of any NBT
Subsidiary or to provide funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in any other entity.
SECTION 3.04. Authority.
---------
(a) NBT has the requisite corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by NBT and the consummation by NBT of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
on the part of NBT and no other corporate proceedings on the part of NBT are
necessary to authorize this Agreement or to consummate the transactions
28
<PAGE>
contemplated hereby (other than, with respect to the Merger, the approval by the
holders of a majority of the outstanding shares of NBT Common Stock entitled to
vote thereon of (A) this Agreement and the issuance of NBT Common Stock in the
Merger pursuant to this Agreement and (B) amendments to NBT's Certificate of
Incorporation to increase the number of shares of NBT Common Stock that NBT is
authorized to issue and to provide a new name for the Surviving Corporation, in
accordance with Delaware Law, the rules of the Nasdaq Stock Market and NBT's
Certificate of Incorporation and Bylaws). This Agreement has been duly and
validly executed and delivered by NBT and assuming the due authorization,
execution and delivery by BSB, constitutes the legal, valid and binding
obligation of NBT enforceable in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally and by general principles of equity.
(b) The Board of Directors of NBT has taken all actions necessary
under Delaware Law and NBT's Certificate of Incorporation, including approving
the transactions contemplated herein, to insure that the restrictions on
business combinations set forth in Delaware Law do not or will not apply to this
Agreement, the transactions contemplated herein, the NBT Stock Option Agreement
or the transactions contemplated therein or any transaction between BSB or its
affiliates, on the one hand, and NBT or its affiliates, on the other hand,
following the exercise of the option granted under the NBT Stock Option
Agreement.
SECTION 3.05. No Conflict; Required Filings and Consents.
------------------------------------------
(a) Except as set forth in Section 3.05(a) of the NBT Disclosure
Schedule, the execution and delivery of this Agreement by NBT does not, and the
performance of this Agreement by NBT shall not, (i) conflict with or violate the
Certificate of Incorporation or Bylaws of NBT or any NBT Subsidiary, (ii)
conflict with or violate any Laws applicable to NBT or any NBT Subsidiary, or by
which its respective properties are bound or affected, or (iii) result in any
breach of or constitute a default (or an event that with notice or lapse of time
or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a Lien on any of the properties or assets of NBT or any NBT
Subsidiary pursuant to any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which NBT
or any NBT Subsidiary is a party or by which NBT or any NBT Subsidiary or its
respective properties are bound or affected, except (in the case of clauses (ii)
and (iii) of this Section 3.05(a)) for any such conflicts, violations, breaches,
defaults or other occurrences that would not, either individually or in the
aggregate, have a Material Adverse Effect on NBT and the NBT Subsidiaries, taken
as a whole.
(b) The execution and delivery of this Agreement by NBT does not, and
the performance of this Agreement by NBT shall not, require any Approvals,
except (i) the filing of applications, notices and waiver requests, as
applicable, as to the Merger and the Bank Merger with the FRB under the BHCA and
OCC under the National Bank Act and the Bank Merger Act, and the approval of the
foregoing
29
<PAGE>
applications, notices and waiver requests; (ii) the filing of any required
applications or notices with the OCC as to the subsidiary activities of BSB
Bank, and the approval of the foregoing applications and notices; (iii) courtesy
notice of the Bank Merger to the NYSBD and, if deemed necessary by the NYSBD,
the filing of an application with the NYSBD for NBT to become a bank holding
company under New York law for a moment in time and the approval of such
application; (iv) the filing with the SEC of a registration statement on Form S-
4 to register the shares of NBT Common Stock to be issued in connection with the
Merger (including the shares of NBT Common Stock that may be issued upon the
exercise of the options referred to in Section 1.10 hereof), which will include
the Joint Proxy Statement, (v) the approval of this Agreement by the requisite
vote of the stockholders of BSB, (vi) the approval by NBT stockholders of (A)
this Agreement and the issuance of NBT Common Stock in the Merger pursuant to
this Agreement and (B) the amendments to NBT's Certificate of Incorporation to
increase the number of shares of NBT Common Stock that NBT is authorized to
issue and to provide a new name for the Surviving Corporation; (vii) the filing
of the Certificate of Merger with the Secretary of State of Delaware pursuant to
the Delaware Law, (viii) the filings required by the National Bank Act and OCC
Regulations, (ix) the filings required by NASDAQ to list additional shares, (x)
such consents, approvals, orders, authorizations, registrations, declarations
and filings as may be required under applicable federal, foreign and state
securities (or related) laws and, if applicable, the HSR Act, and the securities
or antitrust laws of any foreign country, and (xi) such filings, authorizations
or approvals as may be set forth in Section 3.05(b) of the NBT Disclosure
Schedule. No consents or approvals of or filings or registrations with any
Governmental Entity, or with any third party are necessary in connection with
(1) the execution and delivery by NBT of this Agreement and the NBT Stock Option
Agreement, (2) the consummation by NBT of the Merger and the other transactions
contemplated hereby, (3) the execution and delivery by NBT Bank of the Bank
Merger Agreement, (4) the performance by NBT of its obligations under the NBT
Stock Option Agreement; and (5) the consummation by NBT Bank of the Bank Merger
and the transactions contemplated thereby, except, in each case, for such
consents, approvals or filings, the failure of which to obtain will not have a
Material Adverse Effect on the ability of NBT to consummate the transactions
contemplated hereby.
(c) NBT hereby represents to BSB that it has no knowledge of any
reason why approval or effectiveness of any of the applications, notice or
filings referred to in Section 3.05 cannot be obtained or granted on a timely
basis.
SECTION 3.06. Compliance.
----------
Neither NBT nor any NBT Subsidiary is in conflict with, or in default
or violation of, (i) any Law applicable to NBT or the NBT Subsidiaries or by
which any of their respective properties are bound or affected, or (ii) any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which NBT or any NBT Subsidiary
is a party or by which NBT or any NBT Subsidiary or any of their respective
properties are bound or affected, except for any such conflicts, defaults or
violations which would not, either individually or in the
30
<PAGE>
aggregate, have a Material Adverse Effect on NBT and the NBT Subsidiaries, taken
as a whole.
SECTION 3.07. Securities and Banking Reports; Financial Statements.
----------------------------------------------------
(a) NBT and the NBT Subsidiaries have filed all material forms,
reports, registrations, statements and documents, together with any amendments
required to be made with respect thereto that were required to be filed since
January 1, 1995 with the Regulatory Agencies and all Other Reports required to
be filed by NBT and any NBT Subsidiary since January 1, 1995, and paid all fees
and assessments due and payable in connection therewith, except, in the case of
the Other Reports, where failure to file such form, report, registration,
statement or document or pay such fees and assessments would not, either
individually or in the aggregate, have a Material Adverse Effect on NBT and the
NBT Subsidiaries, taken as a whole (all such reports, registrations, statements
and documents are collectively referred to as the "NBT Reports"). The NBT
-----------
Reports, including all NBT Reports filed after the date of this Agreement, (i)
were, or will be, prepared in accordance with the requirements of applicable Law
and (ii) did not at the time they were filed, or will not at the time they are
filed, contain any untrue statement of material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in any filings with the SEC since
January 1, 1995 (the "NBT SEC Reports"), including any NBT SEC Reports filed
---------------
since the date of this Agreement and prior to or at the Effective Time, have
been, or will be, prepared in accordance with GAAP throughout the periods
involved (except as may be indicated in the notes thereto) and each fairly
presents, or will fairly present, in all material respects, the consolidated
financial position of NBT and the NBT Subsidiaries as of the respective dates
thereof and the consolidated results of its operations and changes in financial
position for the periods indicated, except that any unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments
which were not or are not expected to be material in amount.
(c) Except as and to the extent set forth on the consolidated balance
sheet of NBT and the NBT Subsidiaries as of December 31, 1999, including all
notes thereto (the "NBT Balance Sheet"), neither NBT nor any NBT Subsidiary has
-----------------
any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise), except for (i) liabilities or obligations incurred in
the ordinary course of business since December 31, 1999 or by operation of law
in the merger with Lake Ariel Bancorp, Inc. on February 17, 2000 and (ii)
liabilities or obligations that would not, either individually or in the
aggregate, have a Material Adverse Effect on NBT and the NBT Subsidiaries, taken
as a whole.
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SECTION 3.08. Absence of Certain Changes or Events.
------------------------------------
Except as disclosed in the NBT SEC Reports filed prior to the date of
this Agreement, since December 31, 1999, (a) NBT and the NBT Subsidiaries have
conducted their businesses only in the ordinary course and in a manner
consistent with past practice and (b) there has been no event which has had, or
is reasonably likely to result in, either individually or in the aggregate, a
Material Adverse Effect on NBT and the NBT Subsidiaries, taken as a whole.
SECTION 3.09. Absence of Litigation and Agreements.
------------------------------------
(a) Except as disclosed in the NBT SEC Reports filed prior to the date
of this Agreement or set forth in Section 3.09 of the NBT Disclosure Schedule,
(i) neither NBT nor any NBT Subsidiary is subject to any continuing order of, or
written agreement or memorandum of understanding with, or continuing
investigation by, any federal or state savings and loan or bank regulatory
authority or other governmental entity or regulatory authority, or any judgment,
order, writ, injunction, decree or award of any governmental entity or
regulatory authority or arbitrator, including, without limitation, cease-and-
desist or other orders which, either individually or in the aggregate, would
have or reasonably be expected to have a Material Adverse Effect on NBT and the
NBT Subsidiaries, taken as a whole; (ii) there is no claim of any kind, action,
suit, litigation, proceeding, arbitration, investigation, or controversy
affecting NBT or the NBT Subsidiaries pending or, to the knowledge of NBT,
threatened, except (A) as of the date of this Agreement, for matters which
individually seek damages not in excess of $500,000 and (B) as of the Closing,
for matters which otherwise cannot reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect on NBT and the NBT
Subsidiaries, taken as a whole; and (iii) there are not uncured violations, or
violations with respect to which refunds or restitutions may be required, cited
in any compliance report to NBT or the NBT Subsidiaries as a result of the
examination by any bank regulatory authority, which would have or reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect on NBT and the NBT Subsidiaries, taken as a whole.
(b) Except as set forth on the NBT Disclosure Schedule at Section
3.09, neither NBT nor any of the NBT Subsidiaries is a party to any written
agreement or memorandum of understanding with, or party to any commitment
letter, board resolution submitted to a regulatory authority or similar
undertaking to, or is subject to any order or directive by, or is a recipient of
any extraordinary supervisory letter from any governmental entity or agency
which restricts materially the conduct of its business, or in any manner relates
to its capital adequacy, its credit or reserve policies or its management nor
has NBT or any NBT Subsidiary (i) been advised by any governmental entity or
agency that it is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, extraordinary supervisory letter, commitment letter
or similar submission or (ii) have knowledge of any pending or threatened
regulatory investigation. Neither NBT nor any NBT Subsidiary is required
32
<PAGE>
by Section 32 of the Federal Deposit Insurance Act to give prior notice to a
Federal banking agency of the proposed addition of an individual to its board of
directors or the employment of an individual as a senior executive officer.
SECTION 3.10. Employee Benefit Plans.
----------------------
(a) Section 3.10 of the NBT Disclosure Schedule sets forth a true and
complete list of all benefit plans, arrangements, commitments and payroll
practices (whether or not employee benefit plans ("NBT Plans" or "Plan") as
--------- ----
defined in Section 3(3) of ERISA, including, without limitation, sick leave,
vacation pay, severance pay, salary continuation for disability, consulting or
other compensation arrangements, retirement, deferred compensation, bonus,
incentive compensation, stock purchase, stock option, health, including
hospitalization, medical and dental, life insurance and scholarship programs
maintained as of the date of this Agreement, or within the last six years of the
date of this Agreement, for the benefit of any present or former employees of
NBT, any of the NBT Subsidiaries or any other entity which together with NBT
would be deemed a "single employer" within the meaning of Section 4001 of ERISA
or Code Section 414(b), (c), (m) or (o) ("NBT ERISA Affiliate") or to which NBT
-------------------
or any NBT ERISA Affiliate has contributed or is or was within the last six
years obligated to make payments.
(b) With respect to each NBT Plan, NBT has heretofore delivered or
made available to BSB true, correct and complete copies of the plan document,
trust agreement, if any, all insurance policies, if any, and all material
related documents, including, but not limited to, (i) the actuarial report for
each NBT Plan that is a defined benefit plan, funded welfare plan or other plan
requiring actuarial valuation for each of the last five years, (ii) the most
recent determination letter from the IRS, if such NBT Plan is intended to be a
qualified plan under Section 401(a) of the Code, (iii) the current summary plan
description and each summary of material modification, (iv) each Form 5500
series filed for the preceding five plan years, (v) each agreement with each
fiduciary and service provider relating to such NBT Plan, and (vi) all
substantive correspondence relating to such NBT Plan addressed to or received
from the IRS, the DOL, PBGC or any other governmental agency, (vii) each bond
required by Section 412 of ERISA, each fiduciary liability insurance policy, and
each agreement to indemnify any fiduciary, including each amendment to any such
document.
(c) Except as set forth in Section 3.10(c) of the NBT Disclosure
Schedule:
(i) Each NBT Plan has been operated and administered in all
material respects in compliance with the terms of its governing document(s) and
instrument(s) and applicable Laws, including, but not limited to, ERISA and the
Code, and the funding, filing, termination, reporting and disclosure and
continuation coverage obligations pursuant to Title V of COBRA;
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<PAGE>
(ii) Each NBT Plan that is intended to be "qualified" within the
meaning of Section 401(a) of the Code is and from its inception has been so
qualified, and any trust created pursuant to any such Plan is exempt from
federal income tax under Section 501(a) of the Code, each such Plan has received
from the IRS a favorable determination letter to such effect upon which NBT or
an NBT ERISA Affiliate is entitled to rely as to such matters and which is
currently applicable, and neither NBT nor any NBT ERISA Affiliate is aware of
any circumstance or event which would jeopardize the tax-qualified status of any
NBT Plan or the tax-exempt status of any related trust, or which would cause the
imposition of any liability, penalty or tax under ERISA or the Code with respect
to any NBT Plan;
(iii) With respect to each NBT Plan that is subject to Title IV
of ERISA, the present value of accrued benefits under such NBT Plan, based upon
the actuarial assumptions used by the PBGC to determine the level of funding
required in the event of termination of such Plan, did not, as of its latest
valuation date, exceed the then current value of the assets of such Plan
allocable to such accrued benefits;
(iv) No NBT Plan provides benefits, including, without
limitation, death or medical benefits (whether or nor insured), with respect to
current or former employees of NBT or any NBT ERISA Affiliate beyond their
retirement or other termination of employment with NBT or an NBT ERISA
Affiliate, other than coverage mandated by applicable Law, death benefits or
retirement benefits under a Plan that is an "employee pension plan," as defined
by Section 3(2) of ERISA, deferred compensation benefits under an NBT Plan that
are accrued as liabilities on the books of NBT or any NBT ERISA Affiliate, or
benefits the full cost of which is borne by the current or former employee (or
his beneficiary);
(v) No liability under Title IV of ERISA has been incurred by NBT
or any NBT ERISA Affiliate that has not been satisfied in full as of the date of
this Agreement, and no condition exists that presents a material risk of NBT or
any NBT ERISA Affiliate incurring a material liability thereunder;
(vi) No NBT Plan is a "multiemployer plan," as such term is
defined in Section 3(37) of ERISA, nor has NBT or any NBT ERISA Affiliate ever
had any obligation to contribute to a multiemployer plan or otherwise incurred
or assumed any liability for complete or partial withdrawal from such a plan
that is a pension plan subject to Title IV of ERISA.
(vii) All contributions or other amounts payable by NBT or any
NBT ERISA Affiliate as of the Effective Time with respect to each NBT Plan, and
all other liabilities of each such entity with respect to such NBT Plan, with
respect to current or prior plan years, have been paid or accrued in accordance
with GAAP and Section 412 of the Code;
(viii) Neither NBT nor any NBT ERISA Affiliate nor any NBT Plan
has engaged in any transaction with respect to which any of the aforementioned
entities could be subject to either a civil liability or civil penalty assessed
pursuant to
34
<PAGE>
Section 409, 501(i) or 502(1) of ERISA or a tax imposed pursuant to Section 4975
or 4976 of the Code;
(ix) There are, and for the past three years there have been, no
inquiries, proceedings, claims, suits pending or, to the knowledge of NBT,
threatened (other than routine claims for benefits) by any governmental agency
or authority or by any participant or beneficiary against any of the NBT Plans,
the assets of any of the trusts under such Plans or the Plan sponsor or the Plan
administrator, or against any fiduciary of any of such NBT Plans with respect to
the design or operation of an NBT Plan;
(x) Each NBT Plan could be terminated as of the Effective Time
without material liability to NBT or any NBT ERISA Affiliate in excess of the
amount accrued with respect to such Plan on the financial statements of NBT or
such NBT ERISA Affiliate;
(xi) No NBT Plan, either individually or collectively, provides
for any payments by NBT or any NBT ERISA Affiliate that would not be deductible
under Code Sections 162(a)(1), 162(m) or 404, or that would, after giving effect
to the transactions contemplated by this Agreement, constitute an "excess
parachute payment" within the meaning of Code Section 280G, nor would the
transactions contemplated by this Agreement accelerate the time of payment or
vesting, or increase the amount of compensation due to any employee;
(xii) No "accumulated funding deficiency" as defined in Section
302(a)(2) of ERISA or Section 412 of the Code, whether or not waived, and no
"unfunded current liability" as determined under Section 412(1) of the Code
exists with respect to any NBT Plan subject to Section 412 of the Code and
Section 302 of ERISA, and there are no unsatisfied liabilities to participants,
the IRS, the DOL or the PBGC as a result of the termination of any NBT Plan
other than any such liabilities that have not become due or that are being
contested in good faith;
(xiii) No NBT Plan has experienced a "reportable event" (as such
term is defined in Section 4043(b) of ERISA) that is not subject to an
administrative or statutory waiver from the reporting requirement;
(xiv) All reports and information required to be filed with the
DOL, IRS and PBGC or with plan participants and their beneficiaries with respect
to each NBT Plan have been filed, and all annual reports (including Form 5500
series) of such Plans were certified without qualification by each Plan's
accountants and actuaries. Any annual reports which are not yet due but are
required to be filed with respect to a plan year which ended on or prior to the
Effective Date and any annual reports which are required to be filed with
respect to current plan years shall be filed on a timely basis.
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<PAGE>
(xv) Any bond required under ERISA with respect to any NBT Plan
has been obtained and is in full force and effect and no funds held by or under
the control of NBT are plan assets of any NBT Plan.
SECTION 3.11. Material Contracts.
------------------
Except as set forth in Section 3.11 of the NBT Disclosure Schedule, as
of the date of this Agreement, neither NBT nor any NBT Subsidiary is a party to
or bound by (a) any contract or commitment for capital expenditures in excess of
$500,000 for any one project, (b) contracts or commitments for the purchase of
materials or supplies or for the performance of services over a period of more
than 60 days from the date of this Agreement and calling for aggregate future
payments of $1,000,000 or more during the term of such contract or commitment,
(c) any contract which is a "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC) that has not been filed or incorporated
by reference in the NBT SEC Reports, (d) any contract which contains non-compete
or exclusivity provisions or restrictions with respect to any business or
geographic area or (e) any contract which would prohibit or materially delay the
consummation of the Merger or any other transaction contemplated by this
Agreement. Each contract, arrangement, commitment or understanding of the type
described in this Section 3.11, whether or not set forth in Section 3.11 of NBT
Disclosure Schedule, is referred to herein as an "NBT Contract". Neither NBT
------------
nor any NBT Subsidiary knows of, or has received notice of, any violation of any
NBT Contract by any of the other parties thereto, except for violations which,
individually or in the aggregate, would not result in a Material Adverse Effect
on NBT and NBT Subsidiaries, taken as a whole.
SECTION 3.12. Environmental Matters.
---------------------
(a) Each of NBT and the NBT Subsidiaries is in compliance in all
material respects with all applicable federal and state laws and regulations
relating to pollution or protection of the environment (including without
limitation, laws and regulations relating to emissions, discharges, releases and
threatened releases of Hazardous Materials, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials.
(b) There is no suit, claim, action, proceeding, investigation or
notice pending or, to the knowledge of NBT, threatened (or, to the knowledge of
NBT, past or present actions or events that could form the basis of any such
suit, claim, action, proceeding, investigation or notice), in which NBT or any
NBT Subsidiary has been or, with respect to threatened suits, claims, actions,
proceedings, investigations or notices may be, named as a defendant (i) for
alleged material noncompliance (including by any predecessor), with any
environmental law, rule or regulation or (ii) relating to any material release
or threatened release into the environment of any Hazardous Material, occurring
at or on a site owned, leased or operated by NBT or any NBT Subsidiary, or to
the knowledge of NBT relating to any material release or
36
<PAGE>
threatened release into the environment of any Hazardous Material, occurring at
or on a site not owned, leased or operated by NBT or any NBT Subsidiary.
(c) During the period of NBT's or any NBT Subsidiary's ownership or
operation of any of its properties, there has not been, to NBT's knowledge, any
material release of Hazardous Materials in, on, under or affecting any such
property.
(d) To the knowledge of NBT, neither NBT nor any NBT Subsidiary has
made or participated in any loan to any person who is subject to any suit,
claim, action, proceeding, investigation or notice, pending or threatened, with
respect to (i) any alleged material noncompliance as to any property securing
such loan with any environmental law, rule or regulation, or (ii) the release or
the threatened release into the environment of any Hazardous Material at a site
owned, leased or operated by such person on any property securing such loan.
SECTION 3.13. Taxes.
-----
Each of NBT and the NBT Subsidiaries has duly filed all Tax Returns
required to be filed by it on or prior to the date hereof (all such returns
being accurate and complete in all material respects) and has duly paid or made
provision on the financial statements referred to in Sections 3.07 and 5.15
hereof in accordance with GAAP for the payment of all material Taxes which have
been incurred or are due or claimed to be due from it by Taxing Authorities on
or prior to the date hereof other than Taxes (a) which (x) are not yet
delinquent or (y) are being contested in good faith and set forth in Section
3.13 of the NBT Disclosure Schedule and (b) which have not been finally
determined. All liability with respect to the Tax Returns of NBT and the NBT
Subsidiaries has been satisfied for all years to and including 1998. The IRS
has not notified NBT of, or otherwise asserted, that there are any material
deficiencies with respect to the federal income Tax Returns of NBT subsequent to
tax year 1995. There are no material disputes pending, or claims asserted for
Taxes or assessments upon NBT or any NBT Subsidiary, nor has NBT nor any NBT
Subsidiary been requested to give any currently effective waivers extending the
statutory period of limitation applicable to any federal or state income Tax
Return for any period. In addition, Tax Returns which are accurate and complete
in all material respects have been filed by NBT and the NBT Subsidiaries for all
periods for which returns were due with respect to income tax withholding,
Social Security and unemployment taxes and the amounts shown on such Tax Returns
to be due and payable have been paid in full or adequate provision therefor in
accordance with GAAP has been included by NBT in the financial statements
referred to in Sections 3.07 and 5.15 hereof. All NBT Tax Returns relating to
federal income taxes have been examined by the relevant Taxing Authorities, or
closed without audit by applicable statutes of limitations, and all deficiencies
proposed as a result of such examinations have been paid or settled, for all
periods before and including the taxable year ended 1995. Except as set forth
in Section 3.13 of the NBT Disclosure Schedule, neither NBT nor any NBT
Subsidiary has consented to any waiver or extension of any statute of
limitations with respect to any Tax. Neither NBT nor any NBT Subsidiary has
made an election under
37
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Section 341(f) of the Code. NBT has provided or made available to BSB complete
and correct copies of its Tax Returns and all material correspondence and
documents, if any, relating directly or indirectly to taxes for each taxable
year or other relevant period as to which the applicable statute of limitations
has not run on the date hereof. For this purpose, "correspondence and documents"
include, without limitation, amended Tax Returns, claims for refunds, notices
from Taxing Authorities of proposed changes or adjustments to Taxes or Tax
Returns, consents to assessment or collection of Taxes, acceptances of proposed
adjustments, closing agreements, rulings and determination letters and requests
therefor, and all other written communications to or from Taxing Authorities
relating to any material Tax liability of NBT or any NBT Subsidiary. NBT will
not be a "foreign person" as that term is used in (S) 1.1445-2 of the Treasury
Regulations promulgated under the Code. NBT Bank is not a "United States real
property holding corporation" within meaning of (S) 897 of the Code and was not
a "United States real property holding corporation" on any "determination date"
(as defined in (S) 1.897-2(c) of such Regulations) that occurred during any
relevant period.
SECTION 3.14. Affiliates.
-----------
Each director, executive officer and other person who is an
"affiliate" (for purposes of Rule 145 under the Securities Act, and for purposes
of qualifying the Merger for "pooling-of-interests" accounting treatment) of NBT
is listed at Section 3.14 of the NBT Disclosure Schedule, and except as
indicated thereon, each such person has delivered to BSB concurrently with the
execution of this Agreement, a stockholder agreement in the form of Exhibit G
---------
hereto (the "NBT Stockholder Agreement").
-------------------------
SECTION 3.15. Derivative Instruments.
----------------------
All Derivative Instruments to which NBT or any NBT Subsidiary is a
party or to which any of their properties or assets may be subject were entered
into in the ordinary course of business and, to the knowledge of NBT, in
accordance with prudent banking practice and applicable rules, regulations, and
policies of the regulatory agencies and with counterparties believed to be
financially responsible at the time and, to knowledge of NBT, 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, to the knowledge of NBT, are in full force and effect.
NBT and each NBT Subsidiary has duly performed in all material respects all of
its obligations under any such Derivative Instruments, and to the knowledge of
NBT, there are no breaches, violations, or defaults or allegations or assertions
of such by any party thereunder except for any such breaches, violations, or
defaults or allegations or assertions which would not, individually or in the
aggregate, have a Material Adverse Effect on NBT and the NBT Subsidiaries, taken
as a whole.
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SECTION 3.16. Regulatory Approvals.
--------------------
NBT is not aware of any aspect of, or issues relating to, its or the
NBT Subsidiaries' operations and business that would prevent the condition of
Closing set forth in Section 6.01(c) from being satisfied.
SECTION 3.17. Brokers.
-------
Except as contemplated by or referenced in the April 12, 2000 letter
agreement between McConnell, Budd & Downes, Inc. ("MBD") and NBT, a true and
---
complete copy of which NBT has delivered to BSB, no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of NBT or any NBT Subsidiary.
SECTION 3.18. Pooling of Interest and Tax Matters.
-----------------------------------
Neither NBT nor, to the knowledge of NBT, any of its affiliates (as
defined in Section 2.14) has through the date of this Agreement taken or agreed
to take any action that would prevent NBT from accounting for the business
combination to be effected by the Merger and the Bank Merger as a pooling of
interests in accordance with GAAP or would prevent the Merger from qualifying as
a reorganization under Section 368(a) of the Code. NBT has no reason to believe
that the Merger will not qualify as a pooling of interests or as a
reorganization under Section 368(a) of the Code.
SECTION 3.19. Votes Required.
--------------
The requisite affirmative votes of holders of a majority of the
outstanding shares of NBT Common Stock entitled to vote with respect to the
approval of this Agreement and the issuance of NBT Common Stock in the Merger
pursuant to this Agreement and the amendments to NBT's Certificate of
Incorporation to increase the number of shares of NBT Common Stock that NBT is
authorized to issue and to provide a new name for the Surviving Corporation are
the only votes of the holders of any class or series of NBT's capital stock
required in connection with the Merger.
SECTION 3.20. Fairness Opinion.
-----------------
NBT has received an opinion of MBD on or prior to the date of this
Agreement to the effect that, as of the date of such opinion, the Exchange Ratio
is fair to the stockholders of NBT, from a financial point of view ("NBT
---
Fairness Opinion") and MBD has consented to the inclusion of the NBT Fairness
----------------
Opinion in the Registration Statement.
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SECTION 3.21 Rights Agreement.
----------------
The Board of Directors of NBT has taken such action as is necessary to
render the NBT Rights Agreement inapplicable to the Merger and the other
transactions contemplated by this Agreement.
ARTICLE IV
COVENANTS OF BSB AND NBT
SECTION 4.01. Affirmative Covenants.
---------------------
(a) Each of BSB and NBT hereby covenants and agrees with the other
that prior to the Effective Time, unless the prior written consent of the other
shall have been obtained and except as otherwise contemplated herein, BSB will,
and will cause each BSB Subsidiary to, and NBT will, and will cause each NBT
Subsidiary to, conduct their respective businesses in the ordinary course of
business in a manner consistent with past practice, use their respective
reasonable best efforts to preserve intact their respective business
organizations, keep available the services of their respective current officers,
employees and consultants and to preserve their respective current business
relationships.
(b) Notwithstanding that BSB believes that it has established all
reserves and taken all provisions for possible loan losses required by GAAP and
applicable laws, rules and regulations, BSB recognizes that NBT may have adopted
different loan, accrual and reserve policies (including loan classifications and
levels of reserves for possible loan losses). In that regard, BSB shall
establish such additional accruals and reserves as may be necessary to conform
the accounting and credit loss reserve practices and methods of BSB to those of
NBT, provided, that no such action need be effected until the parties receive
all necessary governmental and stockholder approvals and consents to consummate
the transactions contemplated hereby.
SECTION 4.02. Negative Covenants.
------------------
Except as set forth in Section 4.02 of the BSB Disclosure Schedule or
the NBT Disclosure Schedule, as applicable, and except as specifically
contemplated by this Agreement, from the date of this Agreement until the
Effective Time, each of BSB and NBT shall not do, and, in the case of BSB,
permit the BSB Subsidiaries to do, and, in the case of NBT, permit the NBT
Subsidiaries to do, without the prior written consent of NBT or BSB, as
applicable, any of the following:
(a) adjust, split, combine or reclassify any capital stock,
declare or pay any dividend on, or make any other distribution in respect of,
its outstanding shares of capital stock, except for quarterly dividends or, in
the case of the periodic stock dividends of NBT, annual declarations and
payments in accordance
40
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with past practice and in per share amounts not in excess of historical per
share dividend amounts; provided, however, that after the date of this
-------- -------
Agreement, each of NBT and BSB shall coordinate with the other the declaration
of any cash dividends in respect of NBT Common Stock and BSB Common Stock and
the record dates and payment dates relating thereto, it being the intention of
the parties hereto that holders of NBT Common Stock and BSB Common Stock shall
not receive two cash dividends, or fail to receive one cash dividend, for any
quarter with respect to their shares of NBT Common Stock and/or BSB Common Stock
and any shares of NBT Common Stock any such holder receives in exchange therefor
in the Merger;
(b) (i) redeem, purchase or otherwise acquire any shares of its
capital stock or any securities or obligations convertible into or exchangeable
for any shares of its capital stock, or any options, warrants, conversion or
other rights to acquire any shares of its capital stock or any such securities
or obligations, (ii) effect any reorganization or recapitalization, (iii)
purchase or otherwise acquire any assets or stock of any corporation, bank or
other business for consideration which in the aggregate exceeds $10 million,
except that such amount shall be $30 million in the case of any such transaction
as to which NBT gives BSB advance written notice and the opportunity to confer
and that would not delay the transaction contemplated by this Agreement, or (iv)
liquidate, sell, dispose of or encumber any assets for consideration which in
the aggregate exceeds $25 million (except for bank borrowings and operations in
the ordinary course);
(c) issue, deliver, award, grant or sell, or authorize or propose the
issuance, delivery, award, grant or sale of, any shares of any class of its
capital stock (including shares held in treasury) or any rights, warrants or
options to acquire, any such shares;
(d) propose or adopt any amendments to its certificate of
incorporation or bylaws;
(e) change any of its methods of accounting in effect at December 31,
1999, or change any of its methods of reporting income or deductions for federal
income tax purposes from those employed in the preparation of the federal income
tax returns for the taxable year ending December 31, 1998, except as may be
required by law or GAAP;
(f) other than in the ordinary course of business consistent with past
practice, or by operation of law in connection with merger transactions set
forth in Section 4.02 of the NBT Disclosure Schedule, incur any indebtedness for
borrowed money (other than (x) short-term indebtedness incurred to refinance
short-term indebtedness or (y) indebtedness among its corporate affiliates), or
assume, guarantee, endorse or otherwise as an accommodation become responsible
for the obligations of any other individual, corporation or other entity;
(g) except for transactions in the ordinary course of business
consistent with past practice, and except for agreements entered into or
terminated in
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connection with merger transactions set forth in Section 4.02 of the NBT
Disclosure Schedule (other than any such termination by mutual agreement of the
parties), enter into or terminate any material contract or agreement, or make
any change in any of its material leases or material contracts, other than
renewals of such contracts and leases without material adverse changes of terms;
(h) increase in any manner the compensation or fringe benefits of any
of its employees, except as required by existing plans or agreements or pay any
pension or retirement allowance not required by any existing plan or agreement
to any such employees or become a party to, adopt, terminate, amend or commit
itself to any pension, retirement, profit sharing or welfare benefit plan or
agreement or employment agreement with or for the benefit of any employee other
than, in each case, in the ordinary course of business consistent with past
practice, or except as required by existing plans or agreements, or accelerate
the vesting of any deferred compensation, stock options or other stock-based
compensation;
(i) settle any claim, action or proceeding involving money damages,
except in the ordinary course of business consistent with past practices;
(j) take any action that would prevent or impede the Merger from
qualifying (i) for pooling of interests accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of the Code: provided, however,
-------- -------
that nothing contained herein shall limit the ability of NBT or BSB to exercise
its rights under the BSB Stock Option Agreement or the NBT Stock Option
Agreement, respectively;
(k) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this Agreement
being or becoming untrue in any material respect at any time prior to the
Effective Time, or in any of the conditions to the Merger set forth in Article
VI not being satisfied or in a violation of any provision of this Agreement,
except, in each case, as may be required by applicable law;
(l) take any action or fail to take any action which individually or
in the aggregate can be reasonably expected to have a Material Adverse Effect
on, in the case of BSB, BSB and the BSB Subsidiaries, taken as a whole or, in
the case of NBT, NBT and the NBT Subsidiaries, taken as a whole; or
(m) agree in writing or otherwise to do any of the foregoing.
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ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Registration Statement; Joint Proxy Statement.
----------------------------------------------
(a) As promptly as practicable after the execution of this Agreement,
(i) BSB and NBT shall prepare the Joint Proxy Statement which shall constitute
the joint proxy statement of BSB and NBT and the prospectus of NBT relating to
the meetings of BSB's and NBT's stockholders to be held to consider approval and
adoption of this Agreement and, with respect to NBT, related amendments to its
Certificate of Incorporation, and (ii) NBT shall prepare and file with the SEC a
registration statement on Form S-4 (together with any amendments thereto, the
"Registration Statement") which shall include the Joint Proxy Statement, with
-----------------------
respect to the registration of the shares of NBT Common Stock to be issued to
the stockholders and option holders of BSB in the Merger. NBT and BSB shall
each use its reasonable best efforts to cause the Registration Statement to
become effective as soon as reasonably practicable. BSB will furnish to NBT all
information concerning BSB and the BSB Subsidiaries required to be set forth in
the Registration Statement and NBT will provide BSB and its counsel the
opportunity to review such information as set forth in the Registration
Statement and Joint Proxy Statement. NBT and BSB will each render to the other
its full cooperation in preparing, filing, prosecuting the filing of, and
amending the Registration Statement such that it comports at all times with the
requirements of the Securities Act and the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Each of NBT and BSB will promptly advise the
------------
other if at any time prior to the Effective Time any information provided by it
for inclusion in the Registration Statement or the Joint Proxy Statement appears
to have been, or shall have become, incorrect or incomplete and will furnish the
information necessary to correct such misstatements or omissions. As promptly
as practicable after the Registration Statement shall have become effective,
each of BSB and NBT will mail the Joint Proxy Statement to its respective
stockholders. NBT shall also take any action required to be taken under any
applicable blue sky laws in connection with the issuance of the shares of NBT
Common Stock to be issued as set forth in this Agreement and BSB and the BSB
Subsidiaries shall furnish all information concerning BSB, the BSB Subsidiaries
and the holders of Shares and other assistance as NBT may reasonably request in
connection with such action.
(b) (i) The Joint Proxy Statement shall include the recommendation of
the Board of Directors of BSB to the stockholders of BSB in favor of approval
and adoption of this Agreement; provided, however, that, in connection with
-------- -------
recommending approval of a Superior Competing Transaction (as defined in Section
5.05), the Board of Directors of BSB may, at any time prior to such time as the
stockholders of BSB shall have adopted and approved this Agreement in accordance
with Delaware Law, withdraw, modify or change any such recommendation to the
extent that the Board of Directors of BSB determines in good faith, after
consultation with and based upon the advice of independent legal counsel, that
the failure to so withdraw, modify or change its recommendation would cause the
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Board of Directors of BSB to breach its fiduciary duties to BSB's stockholders
under applicable law and, notwithstanding anything to the contrary contained in
this Agreement, any such withdrawal, modification or change of recommendation
shall not constitute a breach of this Agreement by BSB.
(ii) The Joint Proxy Statement shall include the recommendation
of the Board of Directors of NBT to the stockholders of NBT in favor of approval
and adoption of this Agreement and the issuance of NBT Common Stock in the
Merger pursuant to the Agreement and the amendment of NBT's Certificate of
Incorporation to increase the number of shares of NBT Common Stock that NBT is
authorized to issue and to provide for a new name for the Surviving Corporation;
provided, however, that, in connection with recommending approval of a Superior
-------- -------
Competing Transaction, the Board of Directors of NBT may, at any time prior to
such time as the stockholders of NBT shall have adopted and approved this
Agreement in accordance with Delaware Law withdraw, modify, or change any such
recommendation to the extent that the Board of Directors of NBT determines in
good faith, after consultation with and based upon the advice of independent
legal counsel, that the failure to so withdraw, modify or change its
recommendation would cause the Board of Directors of NBT to breach its fiduciary
duties to NBT's stockholders under applicable law and, notwithstanding anything
to the contrary contained in this Agreement, any such withdrawal, modification
or change of recommendation shall not constitute a breach of this Agreement by
NBT.
(c) Notwithstanding any withdrawal, modification or change in any
approval or recommendation of the Board of Directors of BSB or NBT, as the case
may be, each of BSB and NBT agree to hold their respective Stockholders'
Meetings in accordance with the time period specified in Section 5.02.
(d) No amendment or supplement to the Joint Proxy Statement or the
Registration Statement will be made by NBT or BSB without the approval of the
other party (which will not be unreasonably withheld or delayed). NBT and BSB
each will advise the other, promptly after it receives notice thereof, of the
time when the Registration Statement has become effective or any supplement or
amendment has been filed, the issuance of any stop order, the suspension of the
qualification of the NBT Common Stock issuable in connection with the Merger for
offering or sale in any jurisdiction, or any request by the SEC for amendment of
the Joint Proxy Statement or the Registration Statement, or comments thereon and
responses thereto or requests by the SEC for additional information.
(e) NBT shall as promptly as reasonably practicable prepare and submit
to the NASDAQ a listing application covering the shares of NBT Common Stock
issuable in the Merger and the shares of NBT Common Stock underlying the BSB
options outstanding immediately prior to the Effective Time, and shall use its
reasonable best efforts to obtain, prior to the Effective Time, approval for the
listing of such NBT Common Stock, subject to official notice of issuance and BSB
shall cooperate with NBT with respect to such listing.
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(f) The information supplied by NBT for inclusion in the Registration
Statement or the Joint Proxy Statement (including incorporation by reference)
shall not, at (i) the time the Registration Statement is declared effective,
(ii) the time the Joint Proxy Statement (or any amendment thereof or supplement
thereto), is first mailed to the stockholders of NBT and BSB, respectively, and
(iii) the time of each of the Stockholders' Meetings, and (iv) the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading. If at any time prior to the Effective Time,
any event or circumstance relating to NBT or any NBT Subsidiary, or their
respective officers or directors, should be discovered by NBT that pursuant to
the Securities Act or the Exchange Act should be set forth in an amendment or a
supplement to the Registration Statement or the Joint Proxy Statement, NBT shall
promptly inform BSB. All documents that NBT is responsible for filing with the
SEC in connection with the transactions contemplated herein will comply as to
form and substance in all material aspects with the applicable requirements of
the Securities Act and the rules and regulations promulgated thereunder and the
Exchange Act and the rules and regulations promulgated thereunder.
(g) The information supplied by BSB for inclusion in the Registration
Statement or the Joint Proxy Statement (including incorporation by reference)
shall not, at (i) the time the Registration Statement is declared effective,
(ii) the time the Joint Proxy Statement (or any amendment thereof or supplement
thereto), is first mailed to the stockholders of NBT and BSB, respectively, and
(iii) the time of each of the Stockholders' Meetings, and (iv) the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading. If at any time prior to the Effective Time,
any event or circumstance relating to BSB or any BSB Subsidiary, or their
respective officers or directors, should be discovered by BSB that pursuant to
the Securities Act or the Exchange Act should be set forth in an amendment or a
supplement to the Registration Statement or the Joint Proxy Statement, BSB shall
promptly inform NBT. All documents that BSB is responsible for filing with the
SEC in connection with the transactions contemplated herein will comply as to
form and substance in all material respects with the applicable requirements of
the Securities Act and the rules and regulations promulgated thereunder and the
Exchange Act and the rules and regulations promulgated thereunder.
SECTION 5.02. Meetings of Stockholders.
------------------------
(a) Each of BSB and NBT shall call and hold a meeting of its
stockholders (collectively, the "Stockholders' Meetings"), as promptly as
----------------------
practicable for the purpose of voting upon the adoption of this Agreement, and
BSB and NBT shall hold the Stockholders' Meetings as soon as practicable after
the date on which the Registration Statement becomes effective and will use
reasonable best efforts to hold the Stockholders' Meetings on the same day.
Each of BSB and NBT shall use its reasonable best efforts to solicit from its
stockholders proxies in favor of the adoption
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of this Agreement, and shall take all other action necessary or advisable to
secure the vote(s) of its stockholders required by the Delaware Law in each case
as applicable to obtain such approvals; provided, however, that BSB or NBT, as
-------- -------
applicable, shall not be obligated to solicit proxies in favor of the adoption
of this Agreement at its Stockholders' Meeting to the extent that the Board of
Directors of BSB or NBT, as applicable, determines in good faith that such
failure to solicit proxies is required in order to comply with its fiduciary
duties under applicable Law after receiving advice to such effect from
independent legal counsel (who may be such party's regularly engaged outside
legal counsel); provided further, however, that notwithstanding anything to the
contrary in the foregoing, each of BSB and NBT shall hold its Stockholders'
Meeting in accordance with the time periods specified in the first sentence of
this Section 5.02.
SECTION 5.03. Access to Information; Confidentiality.
--------------------------------------
(a) From the date hereof to the Effective Time, to the extent
permitted by applicable Laws and contracts, BSB will provide to NBT (and its
officers, directors, employees, accountants, consultants, legal counsel,
investment bankers, advisors, agents and other representatives, collectively,
"Representatives") access to all information and documents which NBT may
reasonably request regarding the business, assets, liabilities, employees,
contracts and other aspects of BSB.
(b) From the date hereof to the Effective Time, to the extent
permitted by applicable Law and contracts, NBT will provide to BSB and its
Representatives access to all information and documents which BSB may reasonably
request regarding the business, assets, liabilities, employees, contracts and
other aspects of NBT.
(c) The Parties shall comply with and shall cause their respective
Representatives to comply with, all their respective obligations under the
Confidentiality Agreements entered into by the parties (the "Confidentiality
---------------
Agreements"), it being understood that the Parties hereto shall have the rights
----------
as beneficiaries under such agreements.
(d) No investigation pursuant to this Section 5.03 shall affect any
representation or warranty in this Agreement of any Party hereto or any
condition to the obligations of the parties hereto.
SECTION 5.04. Appropriate Action; Consents; Filings.
-------------------------------------
BSB and NBT shall use all reasonable efforts to (i) take, or cause to
be taken, all appropriate action, and do, or cause to be done, all things
necessary, proper or advisable under applicable law to consummate and make
effective the transactions contemplated by this Agreement; (ii) obtain all
consents, licenses, permits, waivers, approvals, authorizations or orders
required under Law (including, without limitation, all foreign and domestic
(federal, state and local) governmental and regulatory rulings and approvals and
parties to contracts) in connection with the authorization, execution and
delivery of this Agreement and the consummation by
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them of the transactions contemplated hereby and thereby, including, without
limitation, the Merger; and (iii) make all necessary filings, and thereafter
make any other required submissions, with respect to this Agreement and the
Merger required under (A) the Securities Act and the Exchange Act and the rules
and regulations promulgated thereunder, and any other applicable federal or
state securities laws; (B) any applicable federal or state banking laws
(including, without limitation, filing a notice with the FRB with respect to
approval of the Merger under the BHCA and the applicable regulations promulgated
thereunder or a request for waiver of the jurisdiction of the FRB under the
BHCA); and (C) any other applicable law (including, without limitation, any
applicable state insurance laws). BSB and NBT shall cooperate with each other in
connection with the making of all such filings, including providing copies of
all such documents to the non-filing party and its advisors prior to filing. BSB
and NBT shall furnish all information required for any application or other
filing to be made pursuant to the rules and regulations of any applicable law
(including all information required to be included in the Joint Proxy Statement
and the Registration Statement) in connection with the transactions contemplated
by this Agreement. In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and directors of each party to this Agreement shall use all
reasonable efforts to take all such necessary action. Anything in this Agreement
notwithstanding, neither BSB nor NBT shall be required by virtue of this
Agreement to comply with or agree to any regulatory order, condition, demand, or
request that seeks the divestiture of deposits, branches, or loans whose
divestiture would constitute a Material Adverse Effect with respect to the
Surviving Corporation.
SECTION 5.05. No Solicitation of Transactions.
-------------------------------
(a) BSB shall immediately cease and cause to be terminated any
existing discussions or negotiations relating to a Competing Proposal (as
defined below), other than with respect to the Merger, with any parties
conducted heretofore. BSB will not, directly or indirectly, and will instruct
its Representatives not to, directly or indirectly, initiate, solicit or
encourage (including by way of furnishing information or assistance), or take
any other action to facilitate, any inquiries or the making of any proposal that
constitutes, or reasonably may be expected to lead to, any Competing Proposal,
or enter into or maintain discussions or negotiate with any person in
furtherance of or relating to such inquiries or to obtain a Competing Proposal,
or agree to or endorse any Competing Proposal, or authorize or permit any
Representative of BSB or any of its subsidiaries to take any such action, and
BSB shall use its reasonable best efforts to cause the Representatives of BSB
and the BSB Subsidiaries not to take any such action, and BSB shall promptly
notify NBT if any such inquiries or proposals are made regarding a Competing
Proposal, and BSB shall keep NBT informed, on a current basis, of the status and
terms of any such proposals; provided, however, that prior to such time as the
-------- -------
stockholders of BSB shall have adopted and approved this Agreement in accordance
with Delaware Law, nothing contained in this Section 5.05 shall prohibit the
Board of Directors of BSB from (i), in connection with a Superior Competing
Transaction (as defined below), furnishing information to, or entering into
discussions or negotiations with, any
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person that makes an unsolicited bona fide proposal to acquire BSB pursuant to a
merger, consolidation, share exchange, business combination or other similar
transaction, if, and only to the extent that, (A) the Board of Directors of BSB,
after consultation with and based upon the advice of independent legal counsel,
determines in good faith that such action is required for the Board of Directors
of BSB to comply with its fiduciary duties to stockholders imposed by Delaware
Law, (B) prior to furnishing such information to, or entering into discussions
or negotiations with, such person, BSB provides written notice to NBT to the
effect that it is furnishing information to, or entering into discussions or
negotiations with, such person, (C) prior to furnishing such information to such
person, BSB receives from such person an executed confidentiality agreement with
terms no less favorable to BSB than those contained in the Confidentiality
Agreements, and (D) BSB keeps NBT informed, on a current basis, of the status
and details of any such discussions or negotiations; or (ii) complying with Rule
14e-2 promulgated under the Exchange Act.
(b) NBT shall immediately cease and cause to be terminated any
existing discussions or negotiations relating to a Competing Proposal, other
than with respect to the Merger, with any parties conducted heretofore. NBT
will not, directly or indirectly, and will instruct its Representatives not to,
directly or indirectly, initiate, solicit or encourage (including by way of
furnishing information or assistance), or take any other action to facilitate,
any inquiries or the making of any proposal that constitutes, or may reasonably
may be expected to lead to, any Competing Proposal, or enter into or maintain
discussions or negotiate with any person in furtherance of or relating to such
inquiries or to obtain a Competing Proposal, or agree to or endorse any
Competing Proposal, or authorize or permit any Representative of NBT or any of
its subsidiaries to take any such action, and NBT shall use its reasonable best
efforts to cause the Representatives of NBT and the NBT Subsidiaries not to take
any such action, and NBT shall promptly notify BSB if any such inquiries or
proposals are made regarding a Competing Proposal, and NBT shall keep BSB
informed, on a current basis, of the status and terms of any such proposals;
provided, however, that prior to such time as the stockholders of NBT shall have
-------- -------
adopted and approved this Agreement in accordance with Delaware Law, nothing
contained in this Section 5.05 shall prohibit the Board of Directors of NBT from
(i) in connection with a Superior Competing Transaction, furnishing information
to, or entering into discussions or negotiations with, any person that makes an
unsolicited bona fide proposal to acquire NBT pursuant to a merger,
consolidation, share exchange, business combination or other similar
transaction, if, and only to the extent that, (A) the Board of Directors of NBT,
after consultation with and based upon the advice of independent legal counsel,
determines in good faith that such action is required for the Board of Directors
of NBT to comply with its fiduciary duties to stockholders imposed by Delaware
Law, (B) prior to furnishing such information to, or entering into discussions
or negotiations with, such person, NBT provides written notice to BSB to the
effect that it is furnishing information to, or entering into discussions or
negotiations with, such person, (C) prior to furnishing such information to such
person, NBT receives from such person an executed confidentiality agreement with
terms no less favorable to NBT than those contained in the Confidentiality
Agreements, and (D) NBT keeps BSB informed, on a current basis,
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of the status and details of any such discussions or negotiations; or (ii)
complying with Rule 14e-2 promulgated under the Exchange Act.
(c) For purposes of this Agreement, "Competing Proposal" shall mean
------------------
any of the following involving BSB or any BSB Subsidiary, on the one hand, or
NBT or any NBT Subsidiary, on the other hand: any inquiry, proposal or offer
from any person relating to any direct or indirect acquisition or purchase by
such person of a business of BSB or NBT, as applicable, that constitutes 15% or
more of the net revenues, net income or assets of BSB or NBT, as applicable, and
its subsidiaries, taken as a whole, or 15% or more of any class of equity
securities of BSB or NBT, as applicable, or any of its subsidiaries, any tender
offer or exchange offer that if consummated would result in any person
beneficially owning 15% or more of any class of equity securities of BSB or NBT,
as applicable, or any of its subsidiaries, any merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving BSB or NBT, as applicable, or any of its subsidiaries, other than the
transactions contemplated by this Agreement.
(d) For purposes of this Agreement "Superior Competing Transaction"
------------------------------
shall mean any of the following involving BSB or any BSB Subsidiary, on the one
hand, or NBT or any NBT Subsidiary, on the other hand: any proposal made by a
third party to acquire, directly or indirectly, including pursuant to a tender
offer, exchange offer, merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction, for
consideration consisting of cash and/or securities, more than 50% of the
combined voting power of the shares of BSB Common Stock or NBT Common Stock, as
applicable, then outstanding or all or substantially all the assets of BSB and
NBT, as applicable, and otherwise on terms which the Board of Directors of BSB
or NBT, as applicable, determines in its good faith judgment (based on the
opinion of KBW or MBD, as applicable, or another financial advisor of nationally
recognized reputation) to be more favorable to its stockholders than the Merger
and for which financing, to the extent required, is then committed or which if
not committed is, in the good faith judgment of its Board of Directors,
reasonably capable of being obtained by such third party.
SECTION 5.06. Indemnification.
---------------
(a) From and after the Effective Time through the sixth anniversary
thereof, or until the final disposition of such Claim (as herein defined) with
respect to any Claim asserted within the period, NBT and the Surviving
Corporation shall, jointly and severally, indemnify, defend and hold harmless
the present and former officers, directors and employees of BSB determined as of
the Closing Date (collectively, the "Indemnified Parties") against all losses,
-------------------
expenses, claims, damages, liabilities or amounts that are paid in settlement of
(with the approval of NBT and the Surviving Corporation, which will not be
unreasonably withheld), or in connection with, any claim, action, suit,
proceeding or investigation (a "Claim"), based in whole or in part on the fact
-----
that such person is or was such a director, officer or employee and arising out
of actions or omissions occurring at or prior to the Effective Time (including
the transactions contemplated by this
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Agreement), in each case to the fullest extent permitted under Delaware Law and
the Federal Deposit Insurance Act ("FDIA") and NBT's Certificate of
----
Incorporation and Bylaws (and shall pay expenses in advance of the final
disposition of any such action or proceeding to each Indemnified Party to the
fullest extent permitted under Delaware Law and the FDIA, upon receipt from the
Indemnified Party to whom expenses are advanced of the undertaking to repay such
advances; provided that the person to whom expenses are advanced provides an
--------
undertaking to repay such expenses if it is ultimately determined that such
person is not entitled to indemnification).
(b) Any Indemnified Party wishing to claim indemnification under this
Section 5.06, upon learning of any such Claim, shall notify NBT and the
Surviving Corporation (although the failure so to notify NBT and the Surviving
Corporation shall not relieve either thereof from any liability that NBT or the
Surviving Corporation may have under this Section 5.06, except to the extent
such failure materially prejudices such party). NBT and the Surviving
Corporation shall have the right to assume the defense thereof and if such right
is exercised NBT and the Surviving Corporation shall not be liable to such
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if NBT and the Surviving Corporation elect not
to assume such defense or there is a conflict of interest between NBT and the
Surviving Corporation and the Indemnified Parties, the Indemnified Parties may
retain counsel satisfactory to them, and, in such case, NBT and the Surviving
Corporation shall pay all reasonable fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are received; provided,
--------
however, that (i) NBT and the Surviving Corporation shall not, in connection
-------
with any one such action or proceeding or separate but substantially similar
actions or proceedings arising out of the same general allegations, be liable
for the fees and expenses of more than one separate firm of attorneys at any
time for all Indemnified Parties except to the extent that local counsel, in
addition to such parties' regular counsel, is necessary or desirable in order to
effectively defend against such action or proceeding, (ii) NBT, the Surviving
Corporation and the Indemnified Parties will cooperate in the defense of any
such matter, or (iii) NBT and the Surviving Corporation shall not be liable for
any settlement effected without its prior written consent, which consent will
not be unreasonably withheld or delayed, and provided, further, that the
Surviving Corporation shall not have any obligation hereunder to any Indemnified
Party when and if a court of competent jurisdiction shall ultimately determine,
and such determination shall have become final and not subject to further
appeal, that the indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law. No Indemnified Party shall
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release, in form and substance reasonably
satisfactory to such Indemnified Party, from all liability in respect of such
claim or litigation for which such Indemnified Party would be entitled to
indemnification hereunder.
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(c) NBT shall purchase for the benefit of the persons serving as
executive officers and directors of BSB immediately prior to the Effective Time,
directors' and officers' liability insurance coverage for three years after the
Effective Time, under either BSB's policy in existence on the date hereof, or
under a policy of similar coverage and amounts containing terms and conditions
which are generally not less advantageous than BSB's current policy, and in
either case, with respect to acts or omissions occurring prior to the Effective
Time which were committed by such executive officers and directors in their
capacity as such provided, however, that in no event shall NBT be required to
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expend pursuant to this Section 5.06(c) more than the amount equal to 150 % of
the current annual amount expended by BSB to maintain or procure insurance
coverage pursuant hereto. In connection with the foregoing, BSB agrees to
provide such insurer or substitute insurer with such representations as such
insurer may reasonably request with respect to the reporting of any prior
claims.
(d) This Section 5.06 is intended to be for the benefit of, and shall
be enforceable by, the Indemnified Parties referred to herein, their heirs and
personal representatives and shall be binding on NBT and the Surviving
Corporation and their respective successors and assigns.
SECTION 5.07. Employee Benefits.
-----------------
(a) If any employee of BSB, any BSB Subsidiary, NBT or any NBT
Subsidiary becomes a participant in any employee benefit plan, practice, or
policy of the Surviving Corporation, the Resulting Bank or any related entity,
such employee shall be given credit under such plan, practice, or policy for all
service prior to the Effective Time with BSB, such BSB Subsidiary, NBT, or such
NBT Subsidiary for purposes of eligibility and vesting, but not for benefit
accrual purposes under any such plan, practice, or policy in which such employee
was not a participant before the Effective Time (except that, if any such
employee benefit plan which is instituted or assumed ("Assumed DB Plan") by the
Surviving Corporation, the Resulting Bank or related entity pursuant to Section
5.07(c) is a defined benefit plan with a cash balance feature, each such
employee shall receive credit under such Assumed DB Plan for his service with
his employer prior to the Effective Time for benefit accrual purposes, except
that the benefit accrual under any predecessor defined benefit plan in which
such employee participated shall be taken into account under the Assumed DB
Plan), for which such service is taken into account or recognized, and, if
necessary, the Surviving Corporation, the Resulting Bank, or related entity as
applicable, 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 BSB or any BSB Subsidiary), provided that there be
no duplication of such benefits as are provided under any employee benefit
plans, practices, or policies of BSB, any BSB Subsidiary, NBT or any NBT
Subsidiary that are instituted or continued in effect following the Effective
Time.
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(b) Each employee of BSB, any BSB Subsidiary, NBT or any NBT
Subsidiary (except any employee who is a party to an employment, change of
control or other agreement providing for severance with BSB or any BSB
Subsidiary) who becomes an employee of the Surviving Corporation, Resulting Bank
or any related entity or who, following the Effective Time, remains an employee
of BSB, any BSB Subsidiary, NBT or any NBT Subsidiary and is terminated by the
Surviving Corporation, the Resulting Bank or any related entity subsequent to
December 31, 2000 shall be entitled to severance pay, if any, in accordance with
the Surviving Corporation's, Resulting Bank's or related entity's new severance
plan developed and instituted pursuant to Section 5.07(c) on or before December
31, 2000. Such employee's service with BSB, such BSB Subsidiary, NBT or such
NBT Subsidiary shall be treated as service with the Surviving Corporation,
Resulting Bank or related entity for purposes of determining the amount of
severance pay, if any, under the new severance plan of the Surviving
Corporation, Resulting Bank or related entity. If any employee is terminated
after the Effective Time but prior to January 1, 2001, such employee shall be
covered by his former employer's severance policy.
(c) On or before January 1, 2001, the Parties will review their
respective Plans, and develop and institute new plans effective January 1, 2001.
The overall benefits program so developed and instituted for the Surviving
Corporation, Resulting Bank and each related entity, to the extent feasible,
shall be comparable to the previous overall benefit programs of BSB, BSB Bank,
NBT and NBT Bank. In order to effect the foregoing, the Surviving Corporation,
Resulting Bank, and related entities, as applicable, shall, on or before January
1, 2001, adopt any new plan documents, or amend existing Plan documents
(including the Assumed DB Plan referred to in Section 5.07(a) above) and shall
file any form that may be required to comply with the terms of the resulting
Plans, the Code and ERISA. In the event that employees who were employees of
BSB or any BSB Subsidiary at the Effective Time become participants in a defined
benefit plan of the Surviving Corporation, Resulting Bank or a related entity
that has a cash balance feature, the Surviving Corporation will use commercially
reasonable efforts to provide such employees with substantially similar
elections with respect to participation in such plan as were provided to
similarly situated employees of NBT and NBT Bank with respect to such plan.
Nothing in this Section 5.07(c) shall be deemed to require any duplication of
benefits. Moreover, nothing in this Agreement shall limit the right and
authority of the Surviving Corporation, the Resulting Bank or related entities
after the Effective Time to adopt, amend, modify or terminate any Plan.
SECTION 5.08. Executive Agreements and Employee Severance.
-------------------------------------------
(a) NBT and BSB agree to cause the Surviving Corporation and each
relevant BSB Subsidiary or NBT Subsidiary to honor, without modification, and
perform its obligations under, the contracts, plans and arrangements listed in
Section 5.08(a) of BSB Disclosure Schedule and the NBT Disclosure Schedule.
(b) Following the Merger, it is the intent of NBT and the Surviving
Corporation that such entities will, and will cause any of their respective
52
<PAGE>
direct and indirect subsidiaries to, in connection with reviewing candidates for
employment positions, give equal opportunity for such positions to employees of
NBT and any NBT Subsidiaries and employees of BSB and any BSB Subsidiaries. In
addition, employees of BSB will be accorded equal priority in the hiring
process.
SECTION 5.09. Notification of Certain Matters.
-------------------------------
BSB shall give prompt notice to NBT, and NBT shall give prompt notice
to BSB, of (i) the occurrence, or non-occurrence, of any event the occurrence,
or non-occurrence, of which would be likely to cause any representation or
warranty contained in this Agreement to be untrue or inaccurate, and (ii) any
failure of BSB or NBT, as the case may be, to comply with or satisfy any
covenant, condition, or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
-------- -------
Section 5.09 shall not limit or otherwise affect the remedies available
hereunder to the Party receiving such notice.
SECTION 5.10. Public Announcements.
--------------------
NBT and BSB shall consult with each other before issuing any press
release or otherwise making any public statements with respect to the Merger and
shall not issue any such press release or make any such public statement prior
to such consultation and with mutual consent of both parties, except as may be
required by law or any listing agreement with the Nasdaq Stock Market.
SECTION 5.11. Expenses.
--------
(a) All Expenses (as described below) incurred by NBT and BSB shall be
borne by the Party which has incurred the same, except that the Parties shall
share equally in the cost of filing the Registration Statement with the SEC,
printing the Joint Proxy Statement and all other regulatory filing fees incurred
in connection with this Agreement. Except as set forth in the next sentence, in
the event that this Agreement is terminated by either NBT or BSB by reason of a
material breach pursuant to Sections 7.01(c) or (d) hereof or by NBT or BSB
pursuant to Sections 7.01(e) and (f) hereof, the other Party shall pay all
documented, reasonable costs and expenses up to $350,000 incurred by the
terminating Party in connection with this Agreement and the transactions
contemplated hereby. In the event that this Agreement is terminated by NBT or
BSB under Section 7.01(e) by reason of stockholders not having given any
required approval, the Party not receiving the required approval shall pay all
documented, reasonable costs and expenses up to $350,000 incurred by the other
Party in connection with this Agreement and the transactions contemplated
hereby. In the event that this Agreement is terminated by NBT or BSB under
Section 7.01(g) or (h) by reason of one of the Parties having agreed to enter
into an Superior Competing Transaction other than as contemplated hereby, the
Party entering into the Superior Competing Transaction shall pay all documented,
reasonable costs and expenses up to $350,000 incurred by the other Party in
connection with this Agreement and the transactions contemplated hereby.
(b) "Expenses" as used in this Agreement shall include all reasonable
out-of-pocket expenses (including, without limitation, all fees and
53
<PAGE>
expenses of counsel, accountants, investment bankers, experts and consultants to
the Party and its affiliates) incurred by a Party or on its behalf in connection
with or related to the authorization, preparation and execution of this
Agreement, BSB Stock Option Agreement and the NBT Stock Option Agreement, the
solicitation of stockholder approvals and all other matters related to the
closing of the transactions contemplated hereby.
SECTION 5.12. Delivery of Stockholder List.
----------------------------
BSB shall arrange to have its transfer agent deliver to NBT or its
designee, from time to time prior to the Effective Time, a true and complete
list setting forth the names and addresses of the stockholders of BSB, their
holdings of stock as of the latest practicable date, and such other stockholder
information as NBT may reasonably request.
SECTION 5.13. Letters of Accountants.
----------------------
(a) BSB shall use its reasonable efforts to cause to be delivered to
NBT a "comfort" letter of PricewaterhouseCoopers LLP, BSB's independent public
accountants, dated and delivered on the date on which the Registration Statement
shall become effective and as the date of the Effective Time, and addressed to
NBT, in the form, scope and content contemplated by Statement on Auditing
Standards No. 72 issued by the American Institute of Certified Public
Accountants, Inc. ("SAS 72"), relating to the financial statements and other
------
financial data with respect to BSB and its consolidated subsidiaries included or
incorporated by reference in the Joint Proxy Statement and such other matters as
may be reasonably required by NBT, and based upon procedures carried out to a
specified date not earlier than five days prior to the date thereof.
(b) NBT shall use its reasonable efforts to cause to be delivered to
BSB a "comfort" letter of KPMG LLP, NBT's independent public accountants, dated
and delivered on the date on which the Registration Statement shall become
effective and as of the date of the Effective Time, and addressed to BSB, in the
form, scope and content contemplated by SAS 72, relating to the financial
statements and other financial data with respect to NBT and its consolidated
subsidiaries included in or incorporated by reference in the Joint Proxy
Statement and such other matters as may be reasonably required by BSB, and based
upon procedures carried out to a specified date not earlier than five days prior
to the date thereof.
SECTION 5.14. BSB Reports.
-----------
(a) BSB shall timely file all required BSB Reports, each of which (i)
shall be prepared in all material respects in accordance with, in the case of
filings with the SEC, the requirements of the Securities Act and the Exchange
Act and the rules and regulations of the SEC promulgated thereunder, and in the
case of all other BSB Reports, the requirements of any Regulatory Agency
applicable to such BSB Reports and (ii) shall not at the time they are filed
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or
54
<PAGE>
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in BSB SEC Reports filed after the date of
this Agreement and prior to the Effective Time shall be prepared in accordance
with the published rules and regulations of the SEC and GAAP throughout the
periods indicated and each shall present fairly, in all material respects, the
consolidated financial position, results of operations and cash flows of BSB and
its consolidated subsidiaries at the respective dates thereof and for the
respective periods indicated therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments which are not expected,
individually or in the aggregate, to have a Material Adverse Effect upon BSB).
SECTION 5.15. NBT Reports.
-----------
(a) NBT shall timely file all required NBT Reports, each of which (i)
shall be prepared in all material respects in accordance with, in the case of
filings with the SEC, the requirements of the Securities Act and the Exchange
Act and the rules and regulations of the SEC promulgated thereunder, and in the
case of all other NBT Reports, the requirements of any Regulatory Agency
applicable to such NBT Reports and (ii) shall not at the time they are filed
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the NBT SEC Reports filed after the date
of this Agreement and prior to the Effective Time shall be prepared in
accordance with the published rules and regulations of the SEC and GAAP
throughout the periods indicated and each shall present fairly, in all material
respects, the consolidated financial position, results of operations and cash
flows of NBT and its consolidated subsidiaries as at the respective dates
thereof and for the respective periods indicated therein (subject, in the case
of unaudited statements, to normal and recurring year-end adjustments which are
not expected, individually or in the aggregate, to have a Material Adverse
Effect upon NBT).
SECTION 5.16. Pooling.
-------
NBT and BSB shall take all reasonable actions to insure pooling of
interest treatment for the Merger.
SECTION 5.17 Disclosure Schedules.
--------------------
NBT and BSB shall promptly advise the other party of any change or
event that, individually or in the aggregate, has or would be reasonably likely
to have a Material Adverse Effect on NBT or BSB, as the case may be, or to cause
or constitute a breach of any of its representations, warranties or covenants
contained
55
<PAGE>
herein. From time to time prior to the Closing Date, each party will promptly
supplement or amend its disclosure schedule delivered in connection with the
execution of this Agreement to reflect any matter which, if existing, occurring
or known at the date of this Agreement, would have been required to be set forth
or described in such disclosure schedule or which is necessary to correct any
information in such disclosure schedule which has been rendered inaccurate
thereby. No supplement or amendment to such disclosure schedule shall have any
effect for the purpose of determining satisfaction of the conditions set forth
in Articles II or III hereof, as the case may be, or the compliance by NBT or
BSB, as the case may be, with the respective covenants set forth in Article IV
hereof.
SECTION 5.18 Regulatory Matters.
------------------
(a) As promptly as practicable following the execution and delivery of
this Agreement, if applicable, BSB and NBT will prepare and file with the United
States Federal Trade Commission (the "FTC") and the Antitrust Division of the
---
United States Department of Justice (the "DOJ") Notification and Report Forms
---
relating to the transactions contemplated herein if and as required by the HSR
Act, as well as comparable pre-merger notification forms required by the merger
notification or control laws and regulations of any applicable jurisdiction, as
agreed by the parties (the "Antitrust Filings"). The Parties will comply with
-----------------
any requests for additional information relating to the Antitrust Filings and
will use their reasonable best efforts to secure all required approvals of the
Antitrust Filings.
(b) The Parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings (which
shall include the Antitrust Filings), and to obtain as promptly as practicable
all permits, consents, approvals and authorizations of all third parties and
Governmental Entities which are necessary or advisable to consummate the
transactions contemplated by this Agreement (including without limitation the
Merger). BSB and NBT shall have the right to review in advance, and to the
extent practicable each will consult the other on, in each case subject to
applicable laws relating to the exchange of information, all the information
relating to BSB and NBT, as the case may be, which appears in any filing made
with, or written materials submitted to, any third party or any Governmental
Entity in connection with the transactions contemplated by this Agreement and
will promptly notify each other of any communication with any Governmental
Entity and provide the other with an opportunity to participate in any meetings
with a Governmental Entity relating thereto; provided, however, that nothing
contained herein shall be deemed to provide either Party with a right to review
any information provided to any Governmental Entity on a confidential basis in
connection with the transactions contemplated hereby. In exercising the
foregoing right, each of the Parties hereto shall act reasonably and as promptly
as practicable. The Parties hereto agree that they will consult with each other
with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Entities necessary or
advisable to consummate the transactions contemplated by this Agreement and each
Party will keep the other apprised of the status of matters relating to
contemplation of the transactions contemplated herein.
56
<PAGE>
(c) BSB and NBT shall promptly advise each other upon receiving any
communication from any Governmental Entity whose consent or approval is required
for consummation of the transactions contemplated by this Agreement which causes
such party to believe that there is a reasonable likelihood that any requisite
regulatory approval will not be obtained or that the receipt of any such
approval will be materially delayed.
ARTICLE VI
CONDITIONS OF MERGER
SECTION 6.01. Conditions to Obligation of Each Party to Effect the
----------------------------------------------------
Merger.
------
The respective obligations of each Party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Effectiveness of the Registration Statement. The Registration
-------------------------------------------
Statement shall have been declared effective by the SEC under the Securities
Act. No stop order suspending the effectiveness of the Registration Statement
shall have been issued by the SEC and no proceedings for that purpose shall, on
or prior to the Effective Time, have been initiated or, to the knowledge of NBT
or BSB, threatened by the SEC. NBT shall have received all other federal or
state securities permits and other authorizations necessary to issue NBT Common
Stock in exchange for BSB Common Stock and to consummate the Merger.
(b) Stockholder Approvals. This Agreement shall have been approved
---------------------
and adopted by the requisite vote of the stockholders of BSB. The Agreement and
the issuance of shares of NBT Common Stock in the Merger pursuant to this
Agreement and the amendments to NBT's Certificate of Incorporation to increase
the number of shares of NBT Common Stock that NBT is authorized to issue and to
provide a new name for the Surviving Corporation shall have been approved by the
requisite vote of the stockholders of NBT.
(c) Regulatory Approvals. All requisite approvals of this Agreement
--------------------
and the transactions contemplated hereby shall have been received from the FRB
and any other applicable regulatory authority, and all conditions required to be
satisfied prior to the Effective Time imposed by the terms of such approvals
shall have been satisfied and all waiting periods relating to such approvals
shall have expired.
(d) Nasdaq Listing. The shares of NBT Common Stock that are to be
--------------
issued to the stockholders of BSB and holders of BSB options in the Merger shall
have been authorized for listing on the Nasdaq Stock Market's National Market,
subject to notice of issuance.
(e) No Order. No federal or state governmental or regulatory
--------
authority or other agency or commission, or federal or state court of competent
57
<PAGE>
jurisdiction, shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, executive order, decree, injunction or other order
(whether temporary, preliminary or permanent) which is in effect restricting,
preventing or prohibiting consummation of the transactions contemplated by this
Agreement.
(f) No Challenge. There shall not be pending any action, proceeding
------------
or investigation before any court or administrative agency or by any government
agency or any other person (i) challenging or seeking material damages in
connection with the Merger or (ii) seeking to restrain, prohibit or limit the
exercise of full rights of ownership or operation by NBT or the NBT Subsidiaries
of all or any portion of the business or assets of BSB or any BSB Subsidiary,
which in either case has or would have a Material Adverse Effect on NBT and the
Surviving Corporation taken as a whole.
(g) Pooling Opinions. NBT and BSB shall have received an opinion from
----------------
KPMG LLP and PriceWaterhouseCoopers LLP, respectively, to the effect that the
Merger qualifies for pooling of interests accounting treatment if consummated in
accordance with this Agreement.
(h) NBT Tax Opinion. NBT and BSB shall have received an opinion of
---------------
Duane, Morris & Heckscher LLP, special counsel for NBT dated the Closing Date
(as defined in Section 8.01), based upon appropriate assumptions and
qualifications, to the effect that the Merger and the Bank Merger will each be
treated under existing law for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code, and that NBT and BSB will each
be a party to that reorganization within the meaning of Section 368(b) of the
Code that shall have been delivered and that shall not have been withdrawn or
modified. In such opinion, special counsel for NBT shall be entitled to rely
upon representations of NBT, BSB and any other party reasonably satisfactory in
form and substance to such counsel.
SECTION 6.02. Additional Conditions to Obligations of NBT.
-------------------------------------------
The obligation of NBT to effect the Merger is also subject to the
following conditions:
(a) Representation and Warranties. Each of the representations and
-----------------------------
warranties of BSB set forth in this Agreement shall be true and correct in all
material respects as of the Closing Date (except to the extent such
representations and warranties speak only as of an earlier date, in which case
such representations and warranties shall be true and correct in all material
respects as of such date) as though made as of the Closing Date; provided,
--------
however, that for purposes of this paragraph, such representations and
-------
warranties shall be deemed true and correct in all material respects unless the
failure or failures of such representations and warranties to be so true and
correct, individually or in the aggregate, would have a Material Adverse Effect
on BSB. Such determination of aggregate Material Adverse Effect shall be made
as if there were no materiality
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<PAGE>
qualifications in such representations and warranties. NBT shall have received a
certificate of the Chief Executive Officer of BSB dated the Closing Date to that
effect.
(b) Agreements and Covenants. BSB shall have performed or complied in
------------------------
all material respects with all obligations required to be performed by it under
this Agreement on or prior to the Effective Time. NBT shall have received a
certificate of the Chief Executive Officer of BSB dated the Closing Date to that
effect.
(c) Consents Obtained. All consents, waivers, approvals,
-----------------
authorizations or orders required to be obtained, and all filings required to be
made by BSB for the authorization, execution and delivery of this Agreement and
the consummation by it of the transactions contemplated hereby shall have been
obtained and made by BSB, except when the failure to obtain or make the same,
individually or in the aggregate, would not have a Material Adverse Effect on
BSB and BSB Subsidiaries, taken as a whole, or the NBT and the NBT Subsidiaries,
taken as a whole.
(d) Reserves and Accruals. The reserves and accruals described
---------------------
in Section 4.01(b) shall have been established.
SECTION 6.03. Additional Conditions to Obligations of BSB.
-------------------------------------------
The obligation of BSB to effect the Merger is also subject to the
following conditions:
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties of NBT set forth in this Agreement shall be true and correct in all
material respects as of the Closing Date (except to the extent such
representation and warranties speak as of an earlier date, in which case such
representation and warranties shall be true and correct in all material respects
as of such earlier date) as though made as of the Closing Date; provided,
--------
however, that for purposes of this paragraph, such representations and
-------
warranties shall be deemed true and correct in all material respects unless the
failure or failures of such representations and warranties to be so true and
correct, individually or in the aggregate, would have a Material Adverse Effect
on NBT. Such determination of aggregate Material Adverse Effect shall be made
as if there were no materiality qualifications in such representations and
warranties. BSB shall have received a certificate of the Chief Executive
Officer of NBT dated the Closing Date to that effect.
(b) Agreements and Covenants. NBT shall have performed or complied in
------------------------
all material respects with all obligations required to be performed by it under
this Agreement on or prior to the Effective Time. BSB shall have received a
certificate of the Chief Executive Officer of NBT dated the Closing Date to that
effect.
(c) Consents Obtained. All consents, waivers, approvals,
-----------------
authorizations or orders required to be obtained, and all filings required to be
made by NBT for the authorization, execution and delivery of this Agreement and
the consummation by it of the transactions contemplated hereby shall have been
obtained
59
<PAGE>
and made by NBT, except when the failure to obtain or make the same,
individually or in the aggregate, would not have a Material Adverse Effect on
BSB and BSB Subsidiaries, taken as a whole, or the NBT and the NBT Subsidiaries,
taken as a whole.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. Termination.
-----------
This Agreement may be terminated at any time prior to the Effective
Time, whether before or after approval by the stockholders of BSB and NBT of the
matters presented in connection with the Merger:
(a) by mutual written consent duly authorized by the Boards of
Directors of each of NBT and BSB;
(b) by either NBT or BSB if either (i) the Effective Time shall not
have occurred on or before November 30, 2000; provided, however, that the right
-------- -------
to terminate this Agreement under this Section 7.01(b) shall not be available to
any Party whose failure to fulfill any obligation under this Agreement has been
the cause of, or resulted in, the failure of the Effective Time to occur on or
before such date or (ii) any injunction preventing the consummation of the
Merger shall have become final and nonappealable;
(c) by NBT, if there has been a breach of any material representation,
warranty, covenant or agreement on the part of BSB set forth in this Agreement,
or if any representation or warranty of BSB shall have become untrue, in either
case such that the conditions set forth in Section 6.02(a) or Section 6.02(b)
would not be satisfied and such breach is not cured within 30 days after written
notice thereof to BSB by NBT;
(d) by BSB, if there has been a breach of any material representation,
warranty, covenant or agreement on the part of NBT set forth in this Agreement,
or if any representation or warranty of NBT shall have become untrue, in either
case such that the conditions set forth in Section 6.03(a) or Section 6.03(b)
would not be satisfied and such breach is not cured within 30 days after written
notice thereof to NBT by BSB;
(e) by either NBT or BSB if (i) at a duly called and held
stockholders' meeting therefor, this Agreement shall fail to receive the
requisite vote for approval and adoption by BSB's stockholders, or (ii) at a
duly called and held stockholders' meeting therefor, this Agreement and the
issuance of shares of NBT Common Stock in connection with the Merger pursuant to
this Agreement shall fail to receive the requisite vote for approval and
adoption by NBT's stockholders;
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(f) by either NBT or BSB, if at a duly called and held stockholders'
meeting therefor, the amendments of NBT's Certificate of Incorporation to
increase the number of shares of NBT Common Stock that NBT is authorized to
issue and to provide a new name for the Surviving Corporation in connection with
the Merger pursuant to this Agreement shall fail to receive the requisite vote
for approval by NBT's stockholders;
(g) by BSB, if (i) the Board of Directors of BSB authorizes BSB,
subject to complying with the terms of this Agreement, to enter into a binding
written agreement concerning a transaction that constitutes a Superior Competing
Transaction and the BSB notifies NBT in writing that it intends to enter into
such an agreement, attaching the most current version of such agreement (or a
description of all material terms and conditions thereof) to such notice, (ii)
NBT does not make, within three business days of receipt of BSB's written
notification of its intention to enter into a binding agreement for a Superior
Competing Transaction, an offer that the Board of Directors of BSB determines,
in good faith after consultation with its financial advisors, is at least as
favorable to the stockholders of BSB as the Superior Competing Transaction, it
being understood that BSB shall not enter into any such binding agreement during
such three day period and (iii) BSB prior to such termination pursuant to this
Section 7.01(g) pays to NBT in immediately available funds the fees required to
be paid pursuant to Section 5.11. BSB agrees to notify NBT promptly if its
intention to enter into a written agreement referred to in its notification
shall change at any time after giving such notification; or
(h) by NBT, if (i) the Board of Directors of NBT authorizes NBT,
subject to complying with the terms of this Agreement, to enter into a binding
written agreement concerning a transaction that constitutes a Superior Competing
Transaction and NBT notifies BSB in writing that it intends to enter into such
an agreement, attaching the most current version of such agreement (or a
description of all material terms and conditions thereof) to such notice, (ii)
BSB does not make, within three business days of receipt of NBT's written
notification of its intention to enter into a binding agreement for a Superior
Competing Transaction, an offer that the Board of Directors of NBT determines,
in good faith after consultation with its financial advisors, is at least as
favorable to the stockholders of NBT as the Superior Competing Transaction, it
being understood that NBT shall not enter into any such binding agreement during
such three day period and (iii) NBT prior to such termination pursuant to this
Section 7.01(h) pays to BSB in immediately available funds the fees required to
be paid pursuant to Section 5.11. NBT agrees to notify BSB promptly if its
intention to enter into a written agreement referred to in its notification
shall change at any time after giving such notification.
SECTION 7.02. Effect of Termination.
---------------------
Except as provided in Section 8.02, in the event of termination of
this Agreement pursuant to Section 7.01, this Agreement shall forthwith become
void, there shall be no liability under this Agreement on the part of NBT or BSB
or any of their respective officers or directors and all rights and obligations
of each Party hereto
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shall cease; provided that notwithstanding anything to the contrary in this
--------
Agreement, none of NBT or BSB shall be released from any liabilities or damages
arising out of its willful breach of any provision of this Agreement.
SECTION 7.03. Amendment.
---------
This Agreement may be amended by the Parties hereto by action taken by
or on behalf of their respective Boards of Directors at any time prior to the
Effective Time; provided, however, that, after approval of this Agreement by the
-------- -------
stockholders of BSB and NBT, no amendment may be made which would (i) alter or
change the amount or kind of consideration into which each Share shall be
converted pursuant to this Agreement upon consummation of the Merger, (ii) alter
or change any term of the certificate of incorporation of the Surviving
Corporation to be effected by the Merger or (iii) alter or change any of the
terms or conditions of this Agreement if such alteration or change would
adversely affect the holders of BSB Common Stock or NBT Common Stock. This
Agreement may not be amended except by an instrument in writing signed by the
Parties hereto.
SECTION 7.04. Waiver.
------
At any time prior to the Effective Time, any Party hereto may (a)
extend the time for the performance of any of the obligations or other acts of
the other Party hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto and (c)
waive compliance with any of the agreements or conditions contained herein. Any
such extension or waiver shall be valid if set forth in an instrument in writing
signed by the Party or Parties to be bound thereby.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Closing.
-------
Subject to the terms and conditions of this Agreement, the closing
(the "Closing") of the Merger will take place at 10:00 a.m. on a date and place
-------
specified by the Parties, which shall be no later than three business days after
the satisfaction or waiver (subject to applicable law) of the latest to occur of
the conditions set forth in Article VI unless extended by mutual agreement of
the Parties (the "Closing Date").
------------
SECTION 8.02. Non-Survival of Representations, Warranties and
-----------------------------------------------
Agreements.
----------
The representations, warranties and agreements in this Agreement shall
terminate at the Effective Time or upon the termination of this Agreement
pursuant to Article VII, except that the agreements set forth in Article I shall
survive the Effective
62
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Time indefinitely and those set forth in Sections 5.03(c), 5.06, 5.07, 5.08,
5.11, 7.02 and Article VIII hereof shall survive termination indefinitely.
SECTION 8.03. Notices.
-------
All notices and other communications given or made pursuant hereto
shall be in writing and shall be deemed to have been duly given or made as of
the date delivered or mailed if delivered personally or mailed by registered or
certified or overnight mail (postage prepaid, return receipt requested) to the
Parties at the following addresses (or such other address for a Party as shall
be specified by like changes of address) and shall be effective upon receipt:
(a) If to NBT:
NBT Bancorp Inc.
52 South Broad Street
Norwich, New York 13815
Attention: Mr. Daryl R. Forsythe
With a copy (which shall not constitute notice) to:
Duane, Morris & Heckscher LLP
1667 K Street, N.W., Suite 700
Washington, D.C. 20006
Attention: Brian D. Alprin, Esq.
(b) If to BSB:
BSB Bancorp, Inc.
58-68 Exchange Street
Binghamton, NY 13902
Attention: President and Chief Executive Officer
With a copy (which shall not constitute notice) to:
Hogan & Hartson, L.L.P.
555 13th Street, N.W.
Washington, D.C. 20004
Attention: Stuart G. Stein, Esq.
SECTION 8.04. Additional Definitions.
----------------------
For purposes of this Agreement, the term:
(a) "beneficial owner" with respect to any Shares, means a person who
shall be deemed to be the beneficial owner of such Shares (i) which such person
or any of its affiliates or associates beneficially owns, directly or
indirectly, (ii) which person or any of its affiliates or associates (as such
term is defined in Rule
63
<PAGE>
12b-2 of the Exchange Act) has, directly or indirectly, (A) the right to acquire
(whether such right is exercisable immediately or subject only to the passage of
time), pursuant to any agreement, arrangement or understanding or upon the
exercise of consideration rights, exchange rights, warrants or options, or
otherwise, or (B) the right to vote pursuant to any agreement, arrangement or
understanding, (iii) which are beneficially owned, directly or indirectly, by
any other persons with whom such person or any of its affiliates or associates
has any agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any Shares, or (iv) pursuant to Section 13(d) of
the Exchange Act and any rules or regulations promulgated thereunder;
(b) "Business Day" means any day other than a day on which banks in
New York are required or authorized to be closed;
(c) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock or as trustee or
executor, by contract or credit arrangement or otherwise;
(d) "Material Adverse Effect" means any adverse change, effect,
circumstance, event or condition that is or is reasonably likely to be
materially adverse to NBT or BSB, as the case may be, and their respective
subsidiaries taken as a whole, business, results of operations, properties,
financial condition, individually or in the aggregate, or the ability of such
Party to consummate the transactions contemplated by this Agreement, except that
a Material Adverse Effect shall not be deemed to have occurred as a result of
any change, effect, circumstance, event or condition resulting from (i) general
changes in economic conditions or the securities markets in general; (ii)
general changes in the banking/financial institutions industry; (iii) the Merger
or the transactions contemplated thereby (except that the first $10 million of
reserves and accruals described in Section 4.01(b) shall be excepted from this
definition of "Material Adverse Effect") or the announcement thereof; and (iv) a
change in the trading prices of either NBT's or BSB's equity securities between
the date of the Agreement and the Effective Time of the Merger.
(e) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d) of the Exchange Act).
SECTION 8.05. Headings.
--------
The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
SECTION 8.06. Severability.
------------
If any term or other provision of this Agreement is invalid, illegal
or incapable of being enforced by any rule of law or public policy, all other
conditions
64
<PAGE>
and provisions of this Agreement shall nevertheless remain in full force and
effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any Party. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the Parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the Parties as
closely as possible in an acceptable manner to the end that transactions
contemplated hereby are fulfilled to the extent possible.
SECTION 8.07. Entire Agreement.
----------------
This Agreement, together with the BSB and NBT Disclosure Schedules and
the Exhibits hereto, constitutes the entire agreement of the Parties and
supersedes all prior agreements and undertakings, both written and oral, between
the Parties, or any of them, with respect to the subject matter hereof and,
except as otherwise expressly provided herein, is not intended to confer upon
any other person any rights or remedies hereunder.
SECTION 8.08. Assignment.
----------
This Agreement shall not be assigned by operation of law or otherwise.
SECTION 8.09. Parties in Interest.
-------------------
This Agreement shall be binding upon and inure solely to the benefit
of each Party hereto, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any right, benefit or remedy
of any nature whatsoever under of by reason of this Agreement.
SECTION 8.10. Governing Law.
-------------
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of law.
SECTION 8.11. Counterparts.
------------
This Agreement may be executed in one or more counterparts, and by the
different Parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
65
<PAGE>
IN WITNESS WHEREOF, NBT and BSB have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
NBT BANCORP INC.
By: /s/ Daryl R. Forsythe
---------------------------------------
Name: Daryl R. Forsythe
Title: President and Chief Executive Officer
BSB BANCORP, INC.
By: /s/ Thomas L. Thorn
---------------------------------------
Name: Thomas L. Thorn
Title: Acting President and Chief Executive
Officer
66
<PAGE>
AMENDMENT TO AGREEMENT AND PLAN OF MERGER
-----------------------------------------
AMENDMENT TO AGREEMENT AND PLAN OF MERGER dated as of May 17, 2000 (this
"Amendment"), by and between NBT BANCORP INC., a Delaware corporation ("NBT"),
---
and BSB BANCORP, INC., a Delaware corporation ("BSB") (at times, referred to
---
herein as the "Party" or the "Parties").
----- -------
BACKGROUND
----------
A. The Parties entered into that certain Agreement and Plan of Merger
dated as of April 19, 2000 (the "Agreement"), pursuant to which BSB will be
---------
merged with and into NBT, subject to the terms and conditions thereof (the
"Merger").
-------
B. The Agreement provides that the Parties will cause BSB Bank & Trust
Company, a New York-chartered commercial bank and trust company headquartered in
Binghamton, New York and wholly owned subsidiary of BSB ("BSB Bank"), and NBT
--------
Bank, National Association, a national banking association headquartered in
Norwich, New York and wholly owned subsidiary of NBT ("NBT Bank"), to enter into
--------
a bank plan of merger providing for the merger of BSB Bank with and into NBT
Bank (the "Bank Merger"), and specifies the Parties' intention that the Bank
-----------
Merger be consummated immediately after consummation of the Merger.
C. The Parties now wish to amend the Agreement to specify the Parties'
intention that the Bank Merger be consummated simultaneously with the
consummation of the Merger and to make certain other changes to the Agreement in
connection therewith, and to extend the time for the Parties to determine the
number of directors of the Resulting Bank and for the designation of the
directors of the Resulting Bank by NBT and BSB to no later than 40 Business Days
following the date of the Agreement. Capitalized terms used but not defined
herein shall have the meanings given to them in the Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
Parties agree as follows:
1. Amendment.
---------
(a) The fourth recital of the Agreement is amended and restated in its
entirety as follows:
WHEREAS, prior to consummation of the Merger, NBT and BSB will cause
BSB Bank & Trust Company, a New York-chartered commercial bank and
trust company headquartered in Binghamton, New York and wholly owned
subsidiary of BSB ("BSB Bank"), and NBT Bank, National Association, a
--------
national banking association head-quartered in Norwich, New York and
wholly owned subsidiary of NBT ("NBT Bank"), to enter into a bank plan
--------
of merger, in the form attached hereto as Exhibit A (the "Bank Merger
--------- -----------
Agreement"), providing for the merger of BSB Bank with and into NBT
---------
Bank (the "Bank Merger"), with
-----------
<PAGE>
NBT Bank being the resulting bank of the Bank Merger (the "Resulting
Bank"), and it is intended that the Bank Merger be consummated
simultaneously with consummation of the Merger; and
(b) Exhibit A to the Agreement is amended and restated in its entirety
in the form attached hereto as Exhibit A.
(c) Section 1.07 of the Agreement is amended and restated in its
entirety as follows:
At the Effective Time, the board of directors of the Resulting Bank
shall consist of the chairman of the board of directors of the
Surviving Corporation, who shall serve as the chairman of the board of
the Resulting Bank, and eight, ten or twelve other persons, half of
whom will be designated by NBT and half of whom will be designated by
BSB. The number of such other persons shall be agreed upon by NBT and
BSB, and in the absence of timely agreement such number shall be set
at ten. The number of directors and the selection of directors to be
designated by NBT and BSB under this paragraph shall be determined and
made no later than 40 Business Days following the date of this
Agreement and shall be noted on Schedule 1.07 to be attached to and
deemed a part of this Agreement, provided, that the president of the
Resulting Bank shall be one of the directors so designated by NBT.
(d) Section 2.05(b)(iii) of the Agreement is amended and restated in
its entirety as follows:
(iii) courtesy notice of the Bank Merger to the New York State
Banking Department (the "NYSBD");
-----
(e) Section 3.05(b)(iii) of the Agreement is amended and restated in
its entirety as follows:
(iii) courtesy notice of the Bank Merger to the NYSBD;
(f) Section 8.02 of the Agreement is amended and restated in its
entirety as follows:
The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this
Agreement pursuant to Article VII, except that the agreements set
forth in Article I and in Sections 5.06, 5.07 and 5.08 shall survive
the Effective Time indefinitely and those set forth in Sections
5.03(c), 5.11, 7.02 and Article VIII hereof shall survive termination
indefinitely.
<PAGE>
2. Representations and Warranties. Each of the Parties hereby represents
------------------------------
and warrants to the others as follows:
(a) It has the power to execute and deliver this Amendment and has
taken all necessary action to authorize the execution and delivery of this
Amendment and the performance of the Agreement as amended hereby;
(b) The execution and delivery of this Amendment and the performance
of the Agreement as amended hereby will not violate any provision of any
applicable law or regulation or of any writ or decree of any court or
governmental instrumentality, or its certificate or articles of incorporation,
by-laws, or other similar organizational documents.
3. Reaffirmation. Except as amended hereby, all of the terms, covenants and
-------------
conditions of the Agreement are ratified, reaffirmed and confirmed and shall
continue in full force and effect as therein written.
4. Binding Effect. This Amendment shall be binding upon and inure solely to
--------------
the benefit of each Party hereto, and nothing in this Amendment, express or
implied, is intended to or shall confer upon any other person any right, benefit
or remedy of any nature whatsoever under of by reason of this Amendment.
5. Counterparts. This Amendment may be executed in one or more
------------
counterparts, and by the different Parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
6. Governing Law. This Amendment shall be governed by, and construed in
-------------
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law.
IN WITNESS WHEREOF, NBT and BSB have caused this Amendment to be executed
as of the date first written above by their respective officers thereunto duly
authorized.
NBT BANCORP INC.
By: /s/ Daryl R. Forsythe
---------------------------------
Name: Daryl R. Forsythe
Title: President and Chief Executive Officer
BSB BANCORP, INC.
By: /s/ Thomas L. Thorn
---------------------------------
Name: Thomas L. Thorn
Title: Acting President and Chief Executive Officer
<PAGE>
Exhibit A
---------
BANK PLAN OF MERGER
This Bank Plan of Merger (this "Plan of Merger") is made and entered
into as of the ____ day of __________, 2000 between NBT BANK, NATIONAL
ASSOCIATION, a national banking association located in Norwich, New York ("NBT
Bank") and BSB Bank & Trust Company, a New York-chartered commercial bank and
trust company located in Binghamton, New York ("BSB Bank").
WITNESSETH
WHEREAS, NBT Bancorp Inc., a Delaware corporation ("NBT"), and BSB
Bancorp, Inc., a Delaware corporation ("BSB"), have entered into an Agreement
and Plan of Merger, dated as of April ____, 2000 (the "Agreement");
WHEREAS, NBT Bank is a wholly owned subsidiary of NBT and BSB Bank is
a wholly owned subsidiary of BSB;
WHEREAS, BSB will merge with and into NBT pursuant to the terms of the
Agreement (the "Merger"), and simultaneously therewith BSB Bank will merge with
and into NBT Bank pursuant to this Plan of Merger, with NBT Bank surviving as
the resulting bank; and
WHEREAS, NBT Bank has _______ shares of common stock outstanding,
$1.00 par value per share, and BSB Bank has 1,000 shares of capital stock
outstanding, $1.00 par value per share.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and in the Agreement, the parties
hereto do mutually agree, intending to be legally bound, as follows:
ARTICLE 1
DEFINITIONS
Except as otherwise provided herein, the capitalized terms set forth
below shall have the following meanings:
1.1 "Bank Merger" shall mean the merger of BSB Bank with and into NBT Bank
as provided in Section 2.1 of this Plan of Merger.
1.2 "Effective Time" shall mean the date and time at which the Bank Merger
becomes effective as provided in Section 2.2 hereof.
<PAGE>
1.3 "Merging Banks" shall mean, collectively, BSB Bank and NBT Bank.
1.4 "OCC" shall mean the Office of the Comptroller of the Currency.
1.5 "Resulting Bank" shall refer to NBT Bank as the surviving bank in the
Bank Merger.
ARTICLE 2
TERMS OF THE BANK MERGER
2.1 The Bank Merger
(a) Subject to the terms and conditions set forth in the Agreement,
and in accordance with the National Bank Act and the Federal Bank Merger Act and
the regulations of the OCC promulgated thereunder, and the New York Banking Law
and the regulations of the New York Banking Board and the New York
Superintendent of Banks, at the Effective Time, BSB Bank shall be merged with
and into NBT Bank pursuant to and upon the terms set forth in this Plan of
Merger. NBT Bank shall continue as the Resulting Bank in the Bank Merger and the
separate existence of BSB Bank shall cease.
(b) As a result of the Bank Merger, (i) each share of capital stock,
par value $1.00 per share, of BSB Bank issued and outstanding immediately prior
to the Effective Time shall be canceled, and (ii) each share of common stock,
par value $1.00 per share, of NBT Bank issued and outstanding immediately prior
to the Effective Time shall remain issued and outstanding and shall constitute
the only shares of common stock of the Resulting Bank issued and outstanding
immediately after the Effective Time.
(c) On and after the Effective Time, the Bank Merger shall have the
effects set forth in Section 215a(c) of the National Bank Act and Section 602 of
the New York Banking Law.
2.2 Effective Time
The Bank Merger shall become effective at the same date and time as
the Merger becomes effective pursuant to Section 1.02 of the Agreement (the
"Effective Time").
2.3 Name of the Resulting Bank
The name of the Resulting Bank shall be "________________________."
-2-
<PAGE>
2.4 Articles of Association
On and after the Effective Time, the Articles of Association of NBT
Bank shall be the Articles of Association of the Resulting Bank, unless and
until amended in accordance with applicable law except that the corporate title
shall be changed in accordance with Section 2.3 of this Plan of Merger and the
main office shall be changed in accordance with Section 2.8 of this Plan of
Merger.
2.5 Bylaws
On and after the Effective Time, the bylaws of NBT Bank shall be the
bylaws of the Resulting Bank, unless and until amended in accordance with
applicable law except that the corporate title shall be changed in accordance
with Section 2.3 of this Plan of Merger.
2.6 Directors and Officers
The directors and executive officers of the Resulting Bank shall be as
set forth in Annex 1 hereto.
2.7 Corporate Action
This Plan of Merger and the consummation of the transactions
contemplated hereby have been duly and validly adopted and approved by at least
a majority of the Board of Directors of NBT Bank and BSB Bank, and the sole
shareholder of each of the Merging Banks.
2.8 Offices of the Resulting Bank
NBT Bank, as the Resulting Bank, shall relocate its main office to
Binghamton, New York, and shall establish a branch office at its former main
office location and also shall establish as branch offices the principal office
and branch offices of BSB Bank (except the facility, if any, of BSB that becomes
the main office of the Resulting Bank). The location of the main office and
other offices of the Resulting Bank shall be as set forth at Annex 2 hereto.
ARTICLE 3
MISCELLANEOUS
3.1 Successors
This Plan of Merger shall be binding on the successors of NBT Bank and
BSB Bank.
-3-
<PAGE>
3.2 Counterparts
This Plan of Merger may be executed in two counterparts, each of which
shall be deemed an original, but which taken together shall constitute one and
the same document.
[SIGNATURE PAGE FOLLOWS]
-4-
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Plan of Merger
to be duly executed on its behalf by an officer thereunto duly authorized, all
as of the day and year first above written.
NBT BANK, NATIONAL ASSOCIATION
ATTEST:
By: By:
------------------------------------- ----------------------------
Name: John D. Roberts Name: Daryl R. Forsythe
Title: Senior Vice President and Title: Chairman and Chief
Corporate Secretary Executive Officer
BSB BANK & TRUST COMPANY
ATTEST:
By: By:
------------------------------------- ----------------------------
Name: Larry G. Denniston Name: Thomas L. Thorn
Title: Executive Vice President Title: Acting President and Chief
and Secretary Executive Officer
-5-
<PAGE>
Annex 1
Directors and Officers of Resulting Bank after the Bank Merger
--------------------------------------------------------------
-6-
<PAGE>
Annex 2
Offices of Resulting Bank after the Bank Merger
At the Effective Time of the Bank Merger, NBT Bank will have the
following offices:
Location of Main Office
-----------------------
Location of Branch Offices
--------------------------
-7-
<PAGE>
[form of opinion]
APPENDIX B
__________ __, 2000
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 Exchange
Ratio governing the exchange of shares of the common stock of BSB Bancorp, Inc.
("BSB") for shares of common stock of NBT in connection with the proposed merger
of NBT and BSB pursuant to an Agreement and Plan of Merger (the "Merger
Agreement') dated April 19, 2000 by and between BSB and NBT. Pursuant to the
Merger Agreement, BSB will merge with NBT.
As is more specifically set forth in the Merger Agreement, upon
consummation of the merger, each outstanding share of BSB common stock, except
for shares held by NBT and its subsidiaries or by BSB and its subsidiaries (in
both cases, other than shares held in a fiduciary capacity or as a result of
debts previously contracted), will be exchanged into 2.0 shares of NBT Common
Stock.
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
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 BSB. 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.
<PAGE>
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 BSB.
In connection with the foregoing, we have (i) reviewed BSB's Annual
Reports to Stockholders, Annual Reports on Form 10-K and related financial
information for the four calendar years ended December 31, 1999 and BSB's
Quarterly Report on Form 10-Q and related unaudited financial information for
2000; (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, 1999 and NBT's Quarterly Report on Form 10-Q and related unaudited
financial information for 2000; (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 BSB 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 BSB concerning the past and current results of
operations of BSB, 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 BSB common stock; (vii)
considered the current state of and future prospects for the economy of New York
generally and the relevant market areas for NBT and BSB 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.
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 BSB
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 BSB 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 independent valuation or
appraisal of any of the assets or the liabilities of either BSB or NBT, nor have
we obtained from any other source, any current appraisals of the assets or
liabilities of either BSB or NBT. We have also relied on the management of BSB
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.
2
<PAGE>
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 exchange ratio is fair to the stockholders of NBT
from a financial point of view.
Very truly yours,
McConnell, Budd & Downes, Inc.
3
<PAGE>
[form of opinion]
APPENDIX C
April 19, 2000
BSB Bancorp, Inc.
58-68 Exchange Street
Binghamton, NY 13902-1056
Members of the Board:
You have requested our opinion as investment bankers as to the
fairness, from a financial point of view, to the shareholders of BSB Bancorp,
Inc. ("BSB") of the exchange ratio in the proposed merger (the "Merger") of BSB
with NBT Bancorp Inc. ("NBT"), pursuant to the Agreement and Plan of Merger
dated as of April 19, 2000 between BSB and NBT (the "Agreement"). Under the
terms of the Merger, each outstanding share of common stock of BSB will be
exchanged for 2.00 shares of common stock of NBT (the "Exchange Ratio"). Keefe,
Bruyette & Woods, Inc. ("KBW") was informed by BSB, and assumed for purposes of
its opinion, that the Merger (as defined herein) would be accounted for as a
pooling-of-interests under generally accepted accounting principles and that the
Merger will otherwise be consummated on the terms contemplated by the Agreement.
KBW as part of its investment banking business is continually
engaged in the valuation of banking businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. As
specialists in the securities of banking companies we have experience in, and
knowledge of, the valuation of banking enterprises. In the ordinary course of
our business as a broker-dealer, we may, from time to time, purchase securities
from, and sell securities to BSB and NBT and as a market maker in securities, we
may from time to time have a long or short position in, and buy or sell, debt or
equity securities of BSB and NBT for our own account and for the accounts of our
customers. To the extent we have any such position as of the date of this
opinion it has been disclosed to BSB. We have acted as a financial advisor to
the Board of Directors of BSB in rendering this fairness opinion and will
receive a fee from BSB for our services.
In connection with this opinion, we have reviewed, among other
things, the Agreement and the related stock option agreement; Annual Reports to
Stockholders of BSB and NBT for the three years ended December 31, 1999; certain
interim reports to stockholders and Quarterly Reports on Form 10-Q of BSB and
NBT, and certain internal financial analyses and adjusted budget forecasts for
BSB and NBT prepared by management. We also have held discussions with members
of the senior management
<PAGE>
BSB Bancorp, Inc.
Board of Directors
Page 2
of BSB and NBT regarding the past and current business operations, regulatory
relationships, financial condition and future prospects of their respective
companies. In addition, we have compared certain financial and stock market
information for BSB and NBT with similar information for certain other companies
the securities of which are publicly traded, reviewed the financial terms of
certain recent business combinations in the banking industry and performed such
other studies and analyses as we considered appropriate.
In conducting our review and arriving at our opinion, we have relied
upon and assumed the accuracy and completeness of all of the financial and other
information provided to us or publicly available and we have not assumed any
responsibility for independently verifying any of such information. We have
relied upon the management of BSB and NBT as to the reasonableness and
achievability of the adjusted budget forecasts (and the assumptions and bases
therefor) provided to us, and we have assumed that such forecasts reflect the
best currently available estimates and judgments of NBT and BSB and that such
forecasts will be realized in the amounts and in the time period currently
estimated by such managements. We have also assumed that the aggregate
allowances for loan losses for BSB and NBT are adequate to cover such losses. In
rendering our opinion, we have not made or obtained any evaluations or
appraisals of the property of BSB or NBT nor have we examined any individual
credit files.
We have considered such financial and other factors as we have
deemed appropriate under the circumstances, including among others the
following: (i) the historical and current financial position and results of
operations of BSB and NBT; (ii) the assets and liabilities of BSB and NBT; and
(iii) the nature and terms of certain other merger transactions involving banks
and bank holding companies. We have also taken into account our assessment of
general economic, market and financial conditions and our experience in other
transactions, as well as our experience in securities valuation and our
knowledge of the banking industry generally. Our opinion is necessarily based
upon conditions as they exist and can be evaluated on the date hereof and the
information made available to us through the date hereof.
Based upon and subject to the foregoing, it is our opinion that, as
of the date hereof, the Exchange Ratio pursuant to the Agreement is fair, from a
financial point of view, to the common shareholders of BSB.
Very truly yours,
KEEFE, BRUYETTE & WOODS, INC.
<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 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.
<PAGE>
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
BSB Bancorp, Inc., dated as of April 19, 2000, (included as part
of Appendix A in the Joint Proxy Statement/Prospectus included in
this Registration Statement; Exhibits A, B, C, F and G thereto
incorporated by reference to Exhibits A, B, C, F and G of Exhibit
2.1 of NBT's Form 8-K filed on April 28, 2000)
2.2 Amendment to Agreement and Plan of Merger, dated as of May 17,
2000 (included as part of Appendix A in the Joint Proxy Statement
included in this Registration Statement)
3.1 NBT's Form S-4 filed on December 21, 1999 (File No. 333-93197)
4 Description of NBT's Securities and Certificate of Amendment of
Certificate of Incorporation (incorporated by reference to Form
8-A12G/A filed on February 24, 2000 and Exhibit 3.1 thereto)
5 Opinion of Duane, Morris & Heckscher LLP as to the validity of
securities. *
8 Opinion of Duane, Morris & Heckscher LLP as to certain tax
matters. *
10.1 Form of Bank Plan of Merger by and between NBT Bank, National
Association and BSB Bank & Trust Company (incorporated by
reference to Exhibit A of 2.2 above).
10.2 BSB Bancorp, Inc. Stock Option Agreement, dated as of April 19,
2000, by and between NBT and BSB (incorporated by reference to
Exhibit B of Exhibit 2.1 of NBT's Form 8-K on April 28, 2000)
10.3 NBT Bancorp Inc. Stock Option Agreement, dated as of April 19,
2000, by and between NBT and BSB (incorporated by reference to
Exhibit C of Exhibit 2.1 of NBT's Form 8-K on April 28, 2000)
10.4 BSB Bancorp, Inc. Stockholder Agreement dated as of April 19,
2000, by and between NBT and BSB (incorporated by reference to
Exhibit F of Exhibit 2.1 of NBT's Form 8-K on April 28, 2000)
10.5 NBT Bancorp Inc. Stockholder Agreement, dated as of April 19,
2000, by and between NBT and BSB (incorporated by reference to
Exhibit G of Exhibit 2.1 of NBT's Form 8-K on April 28, 2000)
<PAGE>
13.1 BSB Bancorp, Inc. 1999 Annual Report (incorporated by reference
to Exhibit 13 to BSB Bancorp, Inc.'s Form 10-K for the year ended
December 31, 1999, SEC File No. 0-17177)
13.2 BSB Bancorp, Inc.'s Quarterly Report on Form 10-Q for the quarter
ended March 31, 2000 (incorporated by reference to the Quarterly
Report on Form 10-Q for the quarter ended March 31, 2000, SEC
File No. 0-17177)
23.1 Consent of KPMG LLP
23.2 Consent of PricewaterhouseCoopers LLP
23.3 Consent of Keefe, Bruyette & Woods, Inc.*
23.4 Consent of McConnell, Budd & Downes, Inc.*
23.5 Consents of Duane, Morris & Heckscher LLP (included in Exhibits 5
and 8)
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 B to the Joint Proxy
Statement/ Prospectus included in this Registration Statement)*
99.2 Opinion of Keefe, Bruyette & Woods, Inc. as to the fairness of
the transaction to stockholders of BSB (attached as Appendix C to
the Joint Proxy Statement/Prospectus included in this
Registration Statement)*
----------------
* Final documents to be filed by amendment; form of such documents filed
herewith.
(b) No financial statement schedules are required to be filed herewith
pursuant to Item 21(b) of this Form.
Item 22. Undertakings.
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.
<PAGE>
(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.
(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.
<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 31st
day of July, 2000.
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>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/s/ Daryl R. Forsythe
------------------------------------ President, Chief Executive Officer July 31, 2000
Daryl R. Forsythe and Director (Principal Executive
Officer)
/s/ Michael J. Chewens
------------------------------------ Executive Vice President and July 31, 2000
Michael J. Chewens Chief Financial Officer
(Principal Financial and Accounting
Officer)
/s/ Everett A. Gilmour
------------------------------------ Chairman of the Board of Directors July 31, 2000
Everett A. Gilmour
/s/ J. Peter Chaplin
------------------------------------ Director July 31, 2000
J. Peter Chaplin
/s/ Richard Chojnowski
------------------------------------ Director July 31, 2000
Richard Chojnowski
/s/ Gene E. Goldenziel
----------------------------------- Director July 31, 2000
Gene E. Goldenziel
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ Peter B. Gregory
------------------------------------ Director July 31, 2000
Peter B. Gregory
/s/ William C. Gumble
-------------------------------------- Director July 31, 2000
William C. Gumble
/s/ Bruce D. Howe
--------------------------------------- Director July 31, 2000
Bruce D. Howe
/s/ Andrew S. Kowalczyk, Jr.
--------------------------------------- Director July 31, 2000
Andrew S. Kowalczyk, Jr.
/s/ Dan B. Marshman
---------------------------------------- Director July 31, 2000
Dan B. Marshman
/s/ John G. Martines
----------------------------------------- Director July 31, 2000
John G. Martines
/s/ John C. Mitchell
------------------------------------------ Director July 31, 2000
John C. Mitchell
/s/ Joseph G. Nasser
------------------------------------------ Director July 31, 2000
Joseph G. Nasser
/s/ William L. Owens
------------------------------------------ Director July 31, 2000
William L. Owens
/s/ Paul O. Stillman
------------------------------------------- Director July 31, 2000
Paul O. Stillman
</TABLE>
<PAGE>
EXHIBIT INDEX
Exhibit No Description
---------- -----------
2.1 Agreement and Plan of Merger by and between NBT Bancorp Inc. and
BSB Bancorp, Inc., dated as of April 19, 2000, as amended as of
May 17, 2000 (included as Appendix A in the Joint Proxy
Statement/Prospectus included in this Registration Statement;
Exhibits A, B, C, F and G thereto incorporated by reference to
Exhibits A, B, C, F and G of Exhibit 2.1 of NBT's Form 8-K filed
on April 28, 2000)
2.2 Amendment to Agreement and Plan of Merger, dated as of May 17,
2000 (included as part of Appendix A in the Joint Proxy Statement
included in this Registration Statement)
3.1 NBT's By-laws filed on Form S-4 on December 21, 1999 (File No.
333-93197)
4 Description of NBT's Securities and Certificate of Amendment of
Certificate of Incorporation (incorporated by reference to Form
8-A12G/A filed on February 24, 2000 and Exhibit 3.1 thereto)
5 Opinion of Duane, Morris & Heckscher LLP as to the validity of
securities.*
8 Opinion of Duane, Morris & Heckscher LLP as to certain tax
matters.*
10.1 Form of Bank Plan of Merger by and between NBT Bank, National
Association and BSB Bank & Trust Company (incorporated by
reference to Exhibit A of 2.2 above)
10.2 BSB Bancorp, Inc. Stock Option Agreement, dated as of April 19,
2000, by and between NBT and BSB (incorporated by reference to
Exhibit B of Exhibit 2.1 of NBT's Form 8-K on April 28, 2000)
10.3 NBT Bancorp Inc. Stock Option Agreement, dated as of April 19,
2000, by and between NBT and BSB (incorporated by reference to
Exhibit C of Exhibit 2.1 of NBT's Form 8-K on April 28, 2000)
10.4 BSB Bancorp, Inc. Stockholder Agreement, dated as of April 19,
2000, by and between NBT and BSB (incorporated by reference to
Exhibit F of Exhibit 2.1 of NBT's Form 8-K on April 28, 2000)
10.5 NBT Bancorp Inc. Stockholder Agreement, dated as of April 19,
2000, by and between NBT and BSB (incorporated by reference to
Exhibit G of Exhibit 2.1 of NBT's Form 8-K on April 28, 2000)
13.1 BSB Bancorp, Inc. 1999 Annual Report (incorporated by reference
to Exhibit 13 to BSB Bancorp, Inc.'s Form 10-K for the year ended
December 31, 1999, SEC File No. 0-17177)
13.2 BSB Bancorp, Inc.'s Quarterly Report on Form 10-Q for the quarter
ended March 31, 2000 (incorporated by reference to the Quarterly
Report on Form 10-Q for the quarter ended March 31, 2000, SEC
File No. 0-17177)
23.1 Consent of KPMG LLP
23.2 Consent of PricewaterhouseCoopers LLP
23.3 Consent of Keefe, Bruyette & Woods, Inc.*
23.4 Consent of McConnell, Budd & Downes, Inc.*
23.5 Consents of Duane, Morris & Heckscher LLP (included in Exhibits 5
and 8)*
24.1 Power of Attorney (contained on signature pages to this
Registration Statement)
<PAGE>
99.1 Opinion of McConnell, Budd & Downes, Inc. as to the fairness of
the transaction to NBT (attached as Appendix B to the Joint Proxy
Statement/ Prospectus included in this Registration Statement)*
99.2 Opinion of Keefe, Bruyette & Woods, Inc. as to the fairness of
the transaction to stockholders of BSB (attached as Appendix C to
the Joint Proxy Statement/Prospectus included in this
Registration Statement)*
--------------------
*Final documents to be filed by amendment; form of such docments filed
herewith.
